572915 57700 Direct Tax Short Notes for CA Final Student

S 1

SEC.

ABOUT REQUIREMENT

TIME LIMIT FOR ISSUE

142(1)(i) Assessee not file ROI till due datet then he NO TIME LIMIT required to furnish ROI within time limit in notice

TIME LIMIT FOR SERVE NO TIME LIMIT

OTHER NOTES 1. If not compliance then 144 ,not required notice 144 2. Return filed u/s 142(1)(i) may revised but loss can not

carried forward

2

142(1)(ii) For making assessment A.O. can require furnish a/c,documents,information,statement of A&L

whether return filed or not

3

142(2A) Special Audit :- complexities in the Accounts and having interest of revenue

1. No appeal against 142(2A) 2. if not show cause to assessee or he proves that no coplexities but A.O. direct for S.A. then assessee can file writ in H.C. against direction of S.A. then H.C. shall quash

Require the said item not more then 3 years prior to p/y

imp Note - in 147 no evidence that income is escaped but a.o. want to give direction for special audit - No 142(2A) possible because intt of revenue is not Note - A.O will give an opportunity of being heard (execept where 144 is made) if any material gathered on the basis of 142(2A) is proposed to be utilised for the purposes of assessment

1. If ask statement of A&L which not include in a/c then J.C. approval required 2. Alone by 142(1)(ii) assessement is not possible 1. Case should pending in a assessement/reassessement

2. Approval of CC or Commissioner 3. C.A. and fees will apoint by CC/C 4. Total time limit is max. 180 days (after extention) from the date on which direction received by assessee on requestof assessee or by sue- moto by A.O. but not on request ofC.A. 6. If delay in audit/a. report by C.A. firm then no 144 7. Assessee will furnished report to A.O. rather C.A.

4

142A

Valuation for u/s 69/69a/69b and also 56(2)

5

143(1)

1. Intimation will sand only if- REFUND,TAX and INTT. DUES, LOSS ADJUSTED or REDUCED or INCREASE

1. Not appeal against valuation report but appeal can move against A.O. order

No intimation of 143(1) can be sand after end of one year from F/Y in which ROI is filed

2. In any other case no requirement of intimation and ack. Will be treated as deemed intimation

1. If no intimation in point 1. then no demand payable

2. Assessee shall be deemed in default without sanding demand notice 156 - in case of inti 143(1) - 30 days from receving - in case of deemed inti 143(1) - next day 3. Only 154 possible within time limit 4.No inti sand after 143(2), tax will recover in 143(3)

5

143(2)

Requiring the assessee either to attendance or produce Books,evidences

No notice shall be served after the expiry of 6 months from the end of F/Y in which ROI filed note:- in case of revised return the 6 months from end of f/y in which ROI filed

1. If ROI filed in 139(1),142(1)(i) 2. Subsequent notice will valid if 1st valid 3. Without 143(2), 143(3) will invalid

6

143(3)

To ensure that not understated income,excessive loss, underpaid tax in any manner

7

144

If any person fails i). 139(1),139(4) up to date of issue SCN ii). Comply with all terms of 1421(i),1421(ii) 142(2A),143(2)

Order shall be passed (signed) within 2 years from the end of the relevent A/Y

1. A.O can not reduce income, increase loss below ROI

1. No time limit to issue notice for 144 2. Time limit for assessment same as 143(3)

1. Can not reduce income or increase loss below ROI

2. Point 9 on page 34 in book is imp. 3. Reason to believe not required

3. if reply of SCN u/s 144 is satisfactory for non-filing ROI then 144 procedings shall droped

2. A.O. can not take an arbitary manner or adhoc basis for making assessment 3. Assessement must be based on the collected materials from last ROI,growth rate, on scientific basis

4. A.O. must specify the basis of compute the income in assessement order 5. 144 is Best judgment and Ex-party assessement

8

144A

Direction of J.C. 1. If case is pending in assessment/reassessm

-

imp 1. Direction shall be binding on A.O. 2. No directions prejudicial before being heard

imp 3. No appeal possible against direction

2. by own motion of J.C or on request of A.O / Assessee

9

148

If Reason to believe for escap income- then Require to furnish ROI within time limit in notice note:- i) if assessee file ROI in 148 then A.O. make 147 in

1. Notice 148 shall be issue in time

Serve may after but necessary

in 149(1),151- refer to Book 2. Exception of Time Limit u/s 149(1) of issue notice 148 -

note:- i) if assessee do not file ROI in 148 then A.O.

i) first proviso- 148 can not issued after expiry of 4 years if all following conditions are satisfied-

make 147 in manner of 144

- earliar assessement u/s 143(3),147 completed and

manner of 143(3)

- assessee has field ROI in any sec. of income tax and - assessee has disclosed fully and truly all material fact necessary for assessment

ii) Asset located outside India - up to 16 years iii) Notice issue to N.R - upto 6 years iv) No Time Limit in these cases -

1. If any matters has gone in revision/appeal then that matter can not be re-opened in 147 2. Recording of reasons of doing so is requir 3. Reason to believe is - S.C. judgement,Retro, Evidence in possession, mistake apparent,CAG 4. Separate notice for Separate A/Y 5. Return file in 148 can not reviesed 6. On demand on assessee A.O. is duty bound to supply reasons, after filing ROI othewise he can not further processed 7. If reason recorded is invalid then assessee can file writ in H.C. ,H.C. can quash the issued notice 148

- in order to give effect in order of S.C. or Any other Law - to All Assessee - in order to give effect in order of H.C. - Only to Juridictional Assessee - in order to give effect in order of H.C. - Only to Juridictional Assessee - in order to give effect in order of 250,254,263,264 - this is possible only two cases £ - any income is excluded from the toral income of the assessee for an A/Y and include in another A/Y for that assessee £ - any income is excluded from the toral income of the one person and include in another person

3. Retro spective amendments refer to book pg. 58

10 147

a notice u/s 143(2) for books,evidence and personal

No order of 147 may pass after the expiry of 1 year from the end of F/Y in which 148 has been served

attendance of assessee within 6 months from the end of

Note- The assessment can be said to be complete when Income is

Note- For 143(3),144,147,153(2A) time increase by 1 year in T.P.

the F/Y in which return filed u/s 148 other wise 147 will

determined and tax is levied

Note- in 147 income can not be reduced below the income

Note- when return filed in 148 then A.O. should serve

Sec. 152,Sun Engineering refer to book

origionaly assessed note: 147 is in the benefit of Revenue

invalid even all compliances of 147 is fullfilled Note- if A.O. do 147 in the form of 144 he shall issue 142(1)(ii) for books etc. Note:- In 147 A.O. may assess the income of any issue whether such issue comes to his notice subsequently Note:- i) where a person is found to have any asset, located outside India or ii) where the assessee has failed to furnish a report of T.P. in respect of any international transaction which was required u/s 92E

and both of these are not declared in books of assessee then deemed that income is escaped assessment. Then A.O. shall be empowered to issue notice u/s 148 to make assessment/ re-assement and time limit for this purpose shall be…………..

11 153(2A) Time limit where assessment is cancelled/set-aside and order to A.O to make fressh assessment Time limit for completion is 1 year from the end of P/Y in which order 263,264 passed by CIT OR order 254 received by CIT 1. This overruled sec. 153(1),153(2)

Note- it is possible only in 254,263,264.because H.C.,S.C. decide only case law while cancelled is the metter of fact

2. A.O. shall complete the fress assessment in same sec.

imp 3. No required to give new notice 143(2),144,148 imp 4. A.O. can call for documents by notice in plain paper "NOTE:- FRESH/RE-ASSESSMENT OR ANY TIME LIMIT IS NOT APPLICAPLE IF ASSESSMENT IS AFIRM,DELETE,VOID BY HIGHER AUTHORITY" because the assessment shall end(not finished) When H.C or S.C. order to make fresh assessment then no any time limit but other thing will same as sec.153(2A).it will happen when all impact of assessem is being change due to decide case law

12 150

Only these are cases where no time limit for issue 148 See sec 148 point (iv)

Note:- in case of a firm, an assessment is made on the partner of the firm in consequence of 147 on the firm then there is no time limit 13 153(3)

Only these are cases where no time limit for completion of assessment 147 See sec 148 point (iv)

Note:- in case of a firm, an assessment is made on the partner of the firm in consequence of 147 on the firm then there is no time limit note:- see explation 1 on pg. 68 14 154

Mistake Apparent from record

1. 154 order shall be passed till 4 years from the end of the F/Y in which order/Intimat sought to be amended was passed imp

imp 2. If assessee make application within prescribed time no time limit for

1. Whose order there is mistake,will rectify in 154 2. 154 is possible on the basis of S.C./Retro judgement but time will 4 years

passing order if 154 if is beneficial to assessee

3. Own motion by I.T. authority or Mistake bought notice

3. Application can be moved same period as above said in p.no. 1&2

by assessee or Mistake bought notice by A.O. to CIT(A)

4. ROI filing date will be the date of deemed intimation imp

4. 154 order shall pass within 6 months from the end of the month in which the application is received by A.O.

Note: point 10 case law imp. See book pg. 77

but time limit of 6 month will not apply if 4 years expired

Note : If the amendment has the effect enhancing the tax liability, reducing the refund then 154 is not possible without SCN

15

Prorective Assessment/ Alternative Assessment

The authoritiesa are merely making an assessment and leaving it as apaper assessment until the matter is decided

16 158A

Repetitive Appeals

See Book pg no. 79

17 133

Power to call for Information/Requisition by A.O / CIT(A)

18 133A

1. while protective assessment is permissible but a protective order for recovery is not permissible

1. Department ask info through letter and assessee is also required to furnish info. through a letter imp 2. Reason to believe is not required 3. See pg. 123 133(6) imp.

Power to Survey

1. I.T.Authority may enter only at which Business/profession is carried and other place where relevant things is kept

1. To detect tax evesion so reason to believe is not required

2. Only during the hours at such place is open for conduct of business and in other place,only after sunrise before sunset

3. whether proceedings are panding or not

Note : Inspector,ITO,AC/DC shall take prior approval of JC for survey Power of an I.T.Authority i) place marks on the books,documents,take copies ii) impound and retain in his custody books and other documents inspected by him- after recording his reasons for so doing but not more than 10 day(excl Holiday) if more approval of CC or DG iii) counting of cash,stock or valuable article but can not impound iv) record statement of any person which may usefull for proceedings note: if any person refuses or evades to do so as above then 131(1) shall apply Note : A.O and inspector enter territory and extra territory and other authorized place where business/profession carried on

19 133B

Power to Collect Information

1. A.O and inspector enter territory and extra territory where business/profession carried on

2. Only during business hours 3. No item can be impound 20 131(1)

Power to Summon I.T.Authority & DRP have power as civil courti) discovery and inspection- i.e. he can go at the site ii) enforcing the attendance of any person and examining him on oath (receiver can not sand others on his behalf)

iii) compelling the production of books,documents iv) issuing commissions i.e. appoint some one to give report on certain matter

1. Proceedings panding not required

Note-Impound and retain in his custody books and other documents before it- after recording reasons for so doing but not more than 15 day (excl Holiday) if more approval of CC or DG,CIT,D Note- For making an inquiry or investigation in respect of any person in relation to an agreement referred to in sec. 90 or 90A for any I.T.Auth. Not below A.C. to exercise the powers of 131(1)

21 132

Search and Seizure

Conduct by authorized A.O.

1. Every place shall have to required separate warrant

Note : Search can be take place at any time and at any place even in mid night at businesh place or resindential place

2. Search may be authorized by Jurid CCIT,DG,CIT,D

Note- Such authorisation could take place if the authority(in 1&2) on the basis of infor.in his possession , has reasons to believe that-

Note :- Power at the time of Raid - see book pg. 130,132

3. However search can be authorized by Jurid AD, AC,JD,JC only if he is empowered by CBDT to do so

Deemed/Constructive Seiqure : See book on pag.130

4.Assessee can never demand reasons of conducting raid

5. Can not seize any type SIT

Reason to Search - authority who will authorise have reason to believe thati) a person whom 131 or 142(1) has been issued, has been faild to comply this ii) a person is in possisson of any article or any things, mony etc. which is concealed Order of Restraint : See book on pag.131, note- such order shall not be in force for a period exceeding 60 days from the date of the order in any case

imp

Note : Authorised officer shall not retained seized books,other documents for a period exceeding 30days from date of the order of assessment u/s 153A unless the reasons for retaining are recorded by him in writing and approval of CCIT,CIT for such retention is obtained but further it is noted that CCIT,CIT shall not authorise the retention for a period exceeding 30 days after all

proceedings are completed (i.e. proceedings of penalties etc.) Note : Where the authorised officer has no jurisdiction over the person searched by him, the books or other documents,all other valuable article shall be handed over to A.O. having jurisdiction over such person within 60 days from the date on which search was completed note:- imp. On pg. 131 point 4,5

22 153A

Assessment in case of Search 1. A.O shall issue notice to such person requirinig him to furnish ROI for 6 A/Y falling withiin six A/Ys immediately preceding the P/Y in which search was started, whether assessee has been filed ROI in any sec.or any proceedings are pending in any sec or there is no escape income in any year or income is blow max limit not chargable to tax 2. In relevant a/y in which search was started it is required to make 143(3)/147 3. Only one notice is required for point 1 and but seprate-2 order shall pass for point no. 2 imp 4. There is no time limit for sanding notice in point no. 1 & 2

5. The time limit of completion of 153A,143(3)/144 will 2 years (excl. stay period) form the end of the F/Y in which search was completed imp 6. If assessement/reassessment of any specified years in u/s 143(1),144,147 are pending on the date of initiation of search u/s 132,then such pending assessment/reassess

shall abate.and the assessment/reassessment shall be made in u/s 153A only imp 7. The appeal/revision/154 proceedings pending on the date of initiation of search then, such proceeding shall not abate but shall continue 8. All other provisions of I.T.Act shall apply to assessment/reasses made u/s 153A ex. Penalties for concealment ,non-filing of ROI,interest u/s 234A,B,C, prosecution,appeal imp 9. No order of assessment/reass shall be passed by an A.O. below the rank of J.C. in respect of each 6 years and p/y except with the prior approval of the J.C. 10. A.O. can direct to assess for audit u/s 142(2A)

23 153C

Assessment of other person

Where the A.O of the person on whom sec 153A is applicable satisfy that all seized items are blong to other porson then said A.O shall do hand over such items to respective A.O who have juridiction on such other person and that A.O. shall assess/reassess income of such other person as same in sec. 153A and the date of search shall be deemed tha date will same - Time limit for completion of search -: same as in point 5 of sec. 153A or 1 year from the end of F/Y in which seized books or other asset are handed over to respective A.O (which ever is later)

24 153A(2) If order of assessment/reassement of 153A has been annulled by higher authority(in appeal,writ) then the assessement/reassm relating to any A/Y which was abated shall stand revived from the date of receipt of such annulment order by the CIT and further suvh revival shall cease to have effect,if such order of annulment is set aside And in above case the time limit of completion revived asssessment/reassessment of 143(3),144,147 will be as - whichever is later - within 1 year from the end of the month of such revival or

- time limits given u/s 153(1) - 21 months from the end of the F/Y in which search was completed And the time limit of completion revived asssessment/reassessment of 153(A) shall be increased by the following time period asimp

25 132A

- the period commencing from the date of annulment of proceedings u/s 153A till the date of order setting aside the order of such annulment by the CIT Powers to requisition books of accounts,etc. Where the DG.D,CCIT,CIT, in consequence of information in his possession, has reason to believe that -

see book pg. no. 133

then the said authority may authorise any A.O. (called requisitioning officer) to require to take delivery such books,other documents of assesst after it when the other law authority if of the opinion that it is no longer necessary to retaiin the same in his or its custody then that shall be delivered to reuisition officier at last when requisition officer will received above items then sec 132,132B shall apply

26 132B i)

ii) iii)

Application of seized or requisitioned Assets the seized u/s 132,132A may be dealt with the following manner- the amount of existing liability(demand raised till the date of raid) under the I.T.ACT,W.T.ACT,G.T.ACT - the amount of liability determined on completion of assessment/reasse u/s 153A,current year 143(3)/144 - Assessee in default amount provided that where the person concerned makes an appplication to the A.O. within 30 days from the end of the month in which the asset was seized and for release of asset and the nature and source of acquisitionof any such assest is explained to the satisfaction of the A.O. then that A.O. shall release said asset after recover the exiting liability with prior approval of CCIT,CIT,withen period of 120 days from the date on which search was completed or assets/books were delivered to the requisitioning officer see book pg. 134 see book pg. 134 Point 2,3,4 also book pg 134,135

27 amend

Sec.-: The processing of a return shall not be necessary, where a notice of 143(2) has been issued to the assessee even iin case of refund is due on the basis of ROI

28 amend

No exemption would be available to a trust or institutuion for tha p/y in which the receipts from commercial/trading activities exceed Rs. 25 Lacs. Whether or not approval granted to such trust or institution has been cancelled. And also iin sec 143(3) in such a circumstances no effect shall be given by A.O., of exemption in that p/y. these rule shall see in seprate-2 year

29 30

The Loss of PGBP and C.G. cannot C/F if ROI is not furnished within time Condone of Delay in filing of ROI having a claim of C/F - If the returned oss is upto Rs. 10000 -- CIT - If the returnedloss exceeds 10000 but upto Rs. 100000 --- CCIT - If the returned loss exceeds 100000 --- CBDT

31

ROI can be filed/revised up to the date of 139(1),139(4),139(5) or the date of completion of assessment- which ever is earlier

32 imp

When A.O. is doing 143(3) and A.O. required any iniformation to assessee u/s 143(2) and assessee does not give reply then A.O. shall do 144 and issue SCN u/s 144 if after assessee give repl of SCN u/s 144 satisfactory then A.O. shall drop 144 and should complete 143(3)

33

Consequences of Non-compliance of 142(1)(i), 142(1)(ii), 143(2), 142(2A) - It may result 144 or - Penalty of Rs. 10000 for each failure - Prosection - imprisonment upto 1 year

34

sec. 152

35

If case is not panding any where then any judgement of S.C. or Juridictional H.C. is come out in any other assessee cases then assessee can go for 154 or 264 within time liimit if not expired

36

imp. on pg. 136

e

I

e

S

SEC.

1

55

ABOUT REQUIREMENT Cost of acquisition of Intengible asset If acquired - the amount of purchase In any other case - nil

OTHER NOTES FMV on 01/01/1981 option is not available because it is no possible to find out

Note - there are some self generated asset where C.G. shall chargable to tax otherwise no tax see pg 21

2

55

3

Cost of Improvement Goodwill of business,Right to manuf,produ,process,right to carry on business - NIL Any other assets - all capital expenditure on/after 01/04/1981 even in the case of Previous owner Indexation is not availavle on debentures and bonds (except capital index bond)

4

50C

5

10(38) i) ii) iii)

SDV - It is applicable in the case of sale (not in gift) of Land, Bulding,Both held as capital asset not SIT L.T. capital assets which are entered(in i&ii) in Recognized S.E (subject to STT). Sales of equity shares 0.125% Sale of unit of an qquity oriented fund 0.125% Sale unit of equity oriented M.f. to M.f. 0.025% as above case L.T.C.G. will exempt u/s10(38). If said hold as Capital Asset but not SIT Deduction of STT is available if security held as SIT 10(38) is not available buyback,openoffer for sale,sale of right etc Acquisition mode is not relevant

Tax Planning Sales the share other than on stock exchange LTCL will be allowed to be set off and c/f since 10(38) is not applicable imp.

6

111A

pg. no. 35 proviso to section 112 If said asset in point no. 5 is short term capital gain then sec. 111A shall applicable and s.t.c.g. tax rate will 15% note- the other balance income(excl. 111A) of such person shall the total income

note- extra benefit to an individual or HUF, who are resident of india. See pg. 30 note- Chapter VI-A shall not allowed from 111A but it will allowed from other Income

7

Proviso Transfer of a long term capital asset, being to sec.112 listed securities (eg. Shares,scrips,bonds,debentures,debenture stock units zero coupon bond and if benefit of indexation is not taken then L.T.C.G. shall be taxable @ 10% note - this proviso is applicable to Residents as well as Non-Residents

7

56(2)(vii) Purchase/Gift received by INDIVIDUAL or HUF as capital asset in the hand of receipient a) b)

any sum money- without consideration - aggregate value exceed Rs. 50,000 any immovable property- without consideration - in every case value exceed Rs. 50,000

c)

any *movable property - without consideration or less than the FMB - aggregate value exceed Rs. 50,000

* movable property means- shares & securities,jewellery,archaeological,drawings,paintings,sculptures,any work or art,bullion Note - 56(2)(vii) shall not applicable in case - see book on p.g. 179 Note - If movable property gift /sales less then FMV by transferer(trader) who hold such asset as SIT then 56(2)(vii) shall applicable Note - If immovable property gift by transferer(trader) who hold such asset as SIT then 56(2)(vii) shall applicable Note- if imovable property received by indi/huf as gift in the form of SIT then 56(2)(vii) will not apply and also 50C shall not applicable

Note- in case of 56(2)(vii) the COA in the hand of receiver shall- FMV/SDV on the date of transfer Note- in case of 56(2)(vii) the POH shall be from the date of transfer Note - also see determination of FMV on pg. 198 to 200

8

56(2)(viia) where a Firm or Closely Held Company receives *Shares of a closely held company from any person

without consideration consideration less than FMV Note - if said assessee received other asset then 56(2)(viia) is not applicable

* shares means equity or preference shares 9

first proviso of sec. 48

No Indexation in case of any Non-Resident even co. - it applicable on the shares or debenture,bonds(also covered govt co. bond but not cover C.G,RBI bond) - such asset was purchased in the foreign currency or it should be a case of re-investment - It will not apply on units of UTI and M.F - it is applicable for both short term/long term - no metter of cost of improvement arise in case of securties note- expenditure on transfer shall be considered on the date of transfer even incurred different dates L.T.C.G. - 10% S.T.C.G. - 15%(is STT paid), otherwise N.RATE

10 45(1A)

i) If capital asset destroyed and no insurance compensation received - No Tax Treatment,even scrap sold ii) If capital asset destroyed (due to certain reason see pg. 54)insurance compensation received then -

IMP.

- Year of taxable = in the year in which such receipt will be received - Value of considetation = Value of Money or FMV of Asset on the date of such receipt

IMP.

- POH and indexation = till to date of destroyed

IMP.

- COA of new asset = FMV on date of receipt - POH of new asset = From the date when new asset receipt

iii) If capital asset destroyed (any other reason)insurance compensation received then - Genrel rules shall applied iv) If asset is partly destroyed and composation received then no C.G. shall arise

11 45(2)

Note - if SIT received without any cost then the FMV on that date shall be deemed the COA Note - if shares convert in SIT and after sales in recognized stock exchange and STT paid then 10(38) shall not applicable

12

i) If Bonus share/security or right share were issued before 01//04/81 then FMV option is available and if such asset issued before said period without any cost then COA will be FMV ii) Equity share/P.Share,Unit of UTI,Unit of M.F./Zero coupon bond/Listed Debenture - L.T if POH is more than 12 months

13

i) If Bonus,Right share/security alloted then POH shall count from the date of such share/security allotment

ii) In case of renounced share/security - the POH shall be count from- in hand of renouncer - from the date when co. make offer - in hand of renounceree - date of allotment

14

15 45(3)

A.o can not take FMV as sales consideration except following cases i) 45(1A) - insurance claim on damage ii) 45(2) - conversion of capital asset into SIT iii) 45(4) - distribution of asset on partition of FIRM/AOP/BOI iv) 46(2) v) 55 Capital Asset transfer by partner/member to Firm/AOP/BOI then S.C will the amount recorded in Books (Whether capital contribution or otherwise) [in case of firm subject to 56(2)(viia)]

Note - excep- 50C

16 Imp.

Where a firm is dissolved but business is not discontinued - its SIT must be valued at the FMV or Cost (whichever is less) Where a firm is dissolved and business is also discontinued - its SIT must be valued only at the FMV (PGBP income) Exp.- where firm is dissolved and business has been taken by one partner,company,other firm,any company then stock shall be valued at FMV or Cost whichever is less

17 45(4)

Capital Asset transfer by Firm/AOP/BOI to Partner/Member - (whether dissolution or otherwise) i) Sales Consideration in hand of firm - FMV on the date of dissolution ii) IFOS sec. 56(2)(vii) in hand of partner/member - if FMV is more then his capital

18

47 i)

Certain transactions not regarded as transfer - so no capital gains will arise any distribution of capital assets on the partition of a HUF note- logic of indian is that the such asset is tranfer to an indian assessee then such asset will remain in the hand of indian assessee in future such indian assess will sell such asset then it will atract capital gain. If assessee was no indian then in future C.G. will not attract in india

ii)

any transfer of capital asset under a gift,will,an irrevocble trust note- see 43c

iii)

any transfer of capital asset by amalgamating co. to INDIAN amalgamated co. note- see 43c

iv)

any transfer of capital asset by holding co. to its INDIAN subdidiary co. (100% holding with nominee) Sec. 47A- if holding co. with nominee cease to hold shares or capital asset converted in to SIT (for both 8 years from the date when asset was transfered) then past capital gain shall be charged in the year of such event Sec. 155- where sec. 47A is attracted,the assessment of the transferer co. will be rectified in sec. 154 and 4 years shall count from the end of the previous year in which the such event occured note - when 47A attracted them COA in the hand of transferee shall be the price was charged by transferor

v)

any transfer of capital asset by subsidiary co. to its INDIAN holding co. (100% holding with nominee) Sec. 47A- same as in (iv) Sec. 155- same as in (iv) note - when 47A attracted them COA in the hand of transferee shall be the price was charged by transferor note - if capital asset is transgerred as stock in trade in (iv) & (v) both then exemption u/s 47 shall not available

vi)

Any transfer in a scheme of amalgamation, of shares held in an indian company,by the amalgamating foreign co. to amalgamated foreign co. if following condition are satisfied- see book pg. 100

49(1)

In above I to VII said cases cost of acquisition of the asset shall be deemed to the cost of previous owner (also consid COI) (except in the case of gift to indi/huf)

2(42A)

in above I to VII cases the period of holding of previous owner shall be considered (except in the case of gift to indi/huf)

vii)

see book pg. 101 , sec. 49(1) & 2(42A) shall not applicable

viii)

Any transfer of bonds etc. see pg. 101

ix)

Any transfer of a capital asset, being any work of art, archaeological, scientific, or art collection, book, manuscript, drawing, painting, photograph, print to the GVT.,UNIVERSITY,N.MUSEUM,N.A.G. etc.

x)

Any transfer by ways of conversion of bonds, or debentures or debenture stock of deposit certificates of a company into the shares or debentures of that company

xa)

as per book pg. 103

xi)

Any transfer by a shareholder, in a scheme of amalgamation of the shares held by him in the amalgamating company ifa- the transfer is made in consideration of allotment to him of the shares ini the amalgamated company and b- the amalgamated company is an indian company

then sec. 49(2), 2(42A) shall apply Note - if shareholder of amalgamating company receives shares and also cash,debenture etc from amalgamated company, then C.G. shall chargable to tax

xii)

see book pg. 106

xv) xiii)

see book pg. 107 Where Part. Firm is succeeded by a Company in the Business carried on by it as a result of which the firm sells of otherwise transfers any capital asset or intangible asset to the company provided that - all assets and liabilities of firm relating to business immediately before succession become assets and liabilities of co. - all the partners of firm immediately before the succession become the shareholders(equity or preferance or both) of co. in same proportion in which their capital a/c stood in books of firm on the date of succession - but after this ratio may be changed -the partners of firm do not receive any consideration/benfit,directly or indirectly,in any form,other than by way of allotment of shares in co

- the aggregate of the shareholding(equity) in co. of partners is not less than 50% of the total voting power in co. and their shareholding continues to be as such for a period of 5 years from the date of the succession - old shares held by partners shall also include Note- if the co. allots shares to the wife or friends of partners then this will assume that such shares are transferred by the partners and sec. 56(2)vii attract in hand of receiver but relative will safe Note- sec. 49(1) and 2(42A) shall apply Sec. 47A - if fails in any condition then exempt tax shall be chargable to tax in the hand of successor company in that year note- see book pg. no.109- analysis of sec. 47(xiii)

xiv)

Where Prop. Firm is succeeded by a Company in the Business carried on by it as a result of which the firm sells of otherwise transfers any capital asset or intangible asset to the company provided that - all assets and liabilities of prop. firm relating to business immediately before succession become assets and liabilities of co. -the prop. of firm do not receive any consideration/benfit,directly or indirectly,in any form,other than by way of allotment of shares in co

- the aggregate of the shareholding(equity) in co. of prop. is not less than 50% of the total voting power in co. and his shareholding continues to be as such for a period of 5 years from the date of the succession - old shares held by propr. shall also include Note- if the co. allots shares to the wife or friends of partners then this will assume that such shares are transferred by the partners and sec. 56(2)vii attract in hand of receiver but relative will safe Note- same as in xiii) Note - same as in xiii) Sec. 47A - same as in xiii)

(xiiib)

Transfer of a capital asset/intangible asset by private co. or unlisted public co. to LLP or transfer of a shares held in the co. by a shareholder

- all assets and liabilities of co. immediately before the conversion become assets and liabilities of LLP - all shareholders(equity/preferance) of co. immediately before conversion become the partners of LLP and their capital contribution and profit sharing ratio in LLP are in the same proportion as their shareholding in the co . on the date of conversion - shareholders of co. do not receive any consideration directly or indirectly,in any form,except share in profit and capital contribution in LLP - aggregate of profit sharing ratio of shareholders of co. in LLP shall not be less than 50% at any time during 5 years from date of conversion - total turnover of co. in any 3 p/y preceding to p/y in which conversion take place does not exceed 60 lacs rupees. Even current year exceed - no amount is paid, either directly of indirectly, to partner out of balance of accumulated profit standing in Books of co. on the date of conversion for a period of 3 years from the date of conversion Note- sec. 49(1) and 2(42A) shall apply Sec. 47A - if fails in any condition then exempt tax shall be chargable to tax in the hand of LLP in that year Note- MAT credit of co. shall not allowed to LLP Note- where capital asset of u/s 35AD received to LLP then actual cost shall be NIL to LLP Note- BOA shall be same as Co. to LLP Note- Dep. shall be apportioned between co. and the LLP in the ratio of the no. of days for which asset was used Note- VRS incurred by the co. shall be amortised in hands of LLP as if such conversion has not taken place

xii)

transfer of capital asset, being land of a sick industrial co . made, where such sick industrial co. is being managed by its workers' co-operative

provided conditionthis transfer of land should be made during = the period commencing from p/y in which said co. has vecome as sick industrial co. and ending with the p/y during which the entire net worth of such co. becomes equal to or exceeds the accumulated losses note- sick co. means a co. whose accoumulated loss is exceed net worth

xiii)

any transfer of a capital asset to a company in the course of demutualisation or corporatisation of a recognised stock exchange in india as a result of which an AOP/BOI is succeeded by such copmany- provided some condition - all the assets and liabilities of AOP/BOI relating to business immeediately before succession become assets and liabilities of company - a scheme should be approved by SEBI note- Actual Cost and WDV of capital Asset in hand of co. shall be same as R.S.E.

xiiia)

any transfer of a capital asset being a membership right held by a member of a R.S.E. in india for acquisition of shares and trading or clearing rights acquired by such member in that R.S.E. in accordance with a scheme approved by SEBI COA- For equity shares - cost of acquisition of his origional membership of the exchange COA- For trading and clearing rights of R.S.E. - nil POH- for both equity & trading and clearing right - from that person was the member in R.S.E.

19

43C 1)

Special provision for computation of COA in certain cases A capital asset transfers as SIT by amalgamating co. to amalgamated co. then COA shall be the aggregate of- COA of said asset to the amalgamating co.

- expenditure on improvement of the said asset incurred by both co. - expenditure incurred in connection with the transfer by transferor co.

2)

A capital asset transfers as SIT by amalgamating co. to amalgamated co. then COA shall be the aggregate of- COA of said asset to the transferor

- expenditure on improvement of the said asset incurred by both - expenditure incurred in connection with the transfer by transferor inclu. Gift tax,exp. On partition of huf,create a trust

note for 1) & 2)-: FMV as on 01/014/81 is not available for sec. 43C note for 1) & 2)-: Cost of improvement incurred before 01.04.81 shall be considered for sec. 43C

20

72A

21 22

Revers Mortgage- read from book on pg. 130 S.SALE

It will be applicable for all type assessee Definition of slum sale, undertaking - book pg no. 139 COA & COI -: net worth of the undertaking of the division shall be deemed note- in regarding of net worth the report of C.A. shall be furnished note- if the agreement for transfer specifies the individual value of each asset to be transgerred,then the provisions of slump sale shall not be applocable and C.G. on each asset shall be computed separately note - if undertaking is hold more than 36 months then L.T.C.G. note - benefit of Indexation shall not be available in slump sale note - no profit under P/G/B/P shall arise in case of a slump sale even if stock is transferred in slump sale COMPUTAION OF CAPITAL GAIN -Slump Sale consideration - Net worth

computation of net worth ----

a) Dep. Asset - WDV of block of Assets b) Non-Dep. Asset - Book value of such asset C) Less-: Liabilities appearing in Books and also should be transferred

computation of WDV of Block of Assets --

see book pg. 142

Note - Revaluation of assets shall be ignored whether current year or past years Note - U/D of the said undertaking shall not be available to the transferee for carry forward while U/L will available

imp 23

G.Note - only one block of asset should create for same rate assets even there are more than one business is runing by same assessee

some important point i)- if any asset is transfer due to family disputes/settelment there shall no capital gain arise ii)- if land and building is transferred then capital gain shall find out sepreate-2 on land and building if in sale deed composite sale price is given then this sales price shall allocated for both on the basis of FMV of both

24

45(5)

Compulsory Acquisition of an asset and consideration is determined by C.G.or R.B.I. - chargeable in the year in which original compensation or part thereof is first received by assessee - the nature of enhanced compensation shall be same as original compensation POH - form the date the asset was acquired by the assessee to the date on which asset was transferred - COA & COI of enhanced compensation shall be NILL, however legal exp. Incurred to obtain enhan compens are deductible from EH.Comp

- Interest in enhance compulsory acquisition shall be taxable on cash bases even assess followed accrual system, In IFOS only 50% - the enhace comps. Received by any other person by any reason then the C.G shall be chargeable in hand of receiver - while original compensation shall be chargeable in hand of original assessee note - if compensation is reduced then any authority can be done 155(15) till 4 years from the end of the year in which the order of reducing was passed by court

25

10(37)

Exemption in respect of C.G. in case of Urban Agricultural Land - if assessee is an individual of a HUF - income is chargeable in C.G. and arising from agricultural land providedi)- during two years immediately preceding date of transfer, was being used for agricul puroses by HUF or individual or his parent ii) transfer is by way of compulsory acquisition under law, or a transfer consideration for which is determined/approved by C.G. or RBI

not- rural agriculture land is exempt for capital gain in all cases 26

50

C.G. on depreciable asset always S.T.C.G. and sec. 50 shall applicable

S SEC.

ABOUT REQUIREMENT

OTHER NOTES

Note: i) Amount received of keyman insurance policy shall be taxable in hand of employee under head Salary ii) Amount recd of keyman insurance policy and if employee-employer relation is not exit then it shall taxable in hand of receiver in head IFOS Note: Any benefit or perquisite ,whether convertible into money or not,arising from any business/profession shall be taxable under head PGBP Note: any sum on a/c or any capital asset(other than land or goodwill or financial instrument) being demolised,destroyed,discarded or transferred,

if the whole of the expenditure on such capital asset has been allowed u/s 35AD shall chargeable in PGBP Note: If any assessee is purchaseing trading and clearing right in stock exchange then it shall be treated as intagible asset Note: It is not required that asset should be registered in the name of assessee beneficial ownership is sufficient Note: For calaiming Dep. Actual put to use is required rather than ready to use,except standby assets Note: Tea bushes or livestock are not included in P&M Note: A building shall be deemed to be used mainly for residential purposes if the built up floor area used for residential purposes is not less than 66.67% of the totoal built up floor area

Note: Insurance compensation received/receivable shall be deductiable from WDV in the year in which assets destroyed while Capital Gain shall be taxable in the year in which compensation is received

1

50 Computation of C.G. in case of Depreciable Assets. Note- always S.T.C.G/L on Depreciable Assets (A) the total sales consideration arising as a result of transfer of one or more asset but Block of asset is exit Sales Consideration Less:

A

i) Opening W.D.V. of Block of Asseets

X Y

ii) Actual cost of the assets falling within the block acquired during the previous year

Z

iii) Expenditure incurred in connection with the transfer S.T.C.G(in this case there will be gain only.Loss shall remain in block)

A-X-Y-Z

OR (B) where any block of assets ceased to exist for the reason that all assets in that block are transferred during the p/y

A

Sales Consideration Less:

X

i) Opening W.D.V. of Block of Asseets ii) Actual cost of the assets falling within the block acquired during the previous year

Y

iii) Expenditure incurred in connection with the transfer

Z A-X-Y-Z

S.T.C.G/L

imp Note:- if any asset is not the part of BLOCK OF ASSET then sce. 50 shall not applicable and C.G. shall calculated as normal and it is not mandatory to claim dep.

imp Note:- Exp. on transfer shall not deduct from WDV,while it shall be considered at the time of C.G.

2

If an asset is stolen/damaged from BOA and no insurance compensation is received A) if there are other assets in Block then no tax treatment .Loss shall be contained in WDV and dep. Shall allowed B) if there are no other assets in Block then No Tax Treatment. It shall capital loss Note:- for A&B Sec 50 shall not applicable because it shall not treated transfer

3

Revaluation of Assets should be ignored

4

Proviso to sec 32(1):- Apportioned of Dep. i) ii) iii)

5

Predecessor and successor- i.e. Firm to Co.,Prop to Co.,Unlisted Co. to LLP,170 Amalgamation co. to Amalgamaed co. Demerged co. to Resultinig co.

Additional Depreciation- only on new Plant & Machinery @ 20% (if used less 180 days then 10%) - Only in the Business of Manufacture of Production of any article or thing Or - In the Business of Genetation or Generation and Distribution of Power Provided# Not on ships and aircraft, road transport # Before installation used outside india by other person # Any office appliances # Any P&M ,the whole of the actual cost of which is allowed as a deduction (by way of depreciation or otherwise)

5 imp Example 15 on page 31

6 5 5

Format of WDV pg.21 Intt. Treatment pg no. 33 Note : If subsidy is given for acquiring asset or subsidy is computed in reference of asset even given to seeting up business in Backward area, then

subsidy shall deduct from cost of such asset

4 43(1) Actual Cost means the actual cost of the asset to the assessee DETERMINATION OF ACTUAL COST IN SPECIAL CASES: "Note- for the purose of C.G. the S.C. shall remain same it is only for WDV"

i) ii)

Special Case

Actual Cost

asset is used in scientific research

- nil the actual cost to the previous owner

asset is acquired by way of gift or inheritance (Note: if p/o not claim dep. then dep. not deduct ) (logic- on which part of asset p/o calimed dep. then the

less- dep. Actually allowed up to a/y 1987-88 less- dep. allowable after a/y 1987-88 as if the asset was only asset in BOA

new assessee can not claim) Note: gift sec. 56(2)(vii) shall not apply on PGBP because this actual cost is determined u/s 43(1) for the purpose of claiming Dep.

iii)

If before transfering asset the P/O was using asset

- A.O. may determine actual cost with previous approval of J.C.

in his busi/prof and A.O. is satisfied that main

iv)

purpose of transfer is avoidence the tax liability

- the actual cost to him in past

where asset which had once belonged to assessee

less- dep. Actually allowed up to a/y 1987-88

and used by him in Busi/Prof and after transfer

less- dep. allowable after a/y 1987-88 as if the asset was only asset in BOA

and after re-acquired by him

note- dep. Till to date when asset hold by assessee in actual i.e. in other word w.d.v. at the time of transfer

or actual price for which the asset is reacquired by him which is lower

v)

vii)

where asset acquire by assessee (first person) and after

the actual cost to the other person (seller) at the time of transfer

leased/hire to other peson(seller who also calim dep.

note- if more then one intermediate seller then W.D.V. at the time of first sales

on that asset)

assuming that such asset was only asset in BOA

where a asset transfer by holding to subsidiary

- if transferer not claimed dep. then- actual cost

note: subsidiary is indian co. and whole share

- if whole BOA is transferred and condition of 47 satisfied then-transferer has claimed dep.

capital held by holding and its nominal co.

then- W.D.V. of BOA in hand of holding co. at beginning of the P/Y in which transfer made

- if single asset transferred then assume this is only asset in Block

vii)

where a asset transfer bysubsidiary to holding

same as above

note: holding is indian co. and whole share capital held by holding and its nominal co.

viii)

where asset is transferred in amalgamation

ix)

personal asset other than building brought into business

- Actual cost to assessee

personal asset If building brought into business

less: notional dep(from purchasing date). At the rate applicable on that date

Where c.asset which was acquired outside india by assessee,

- Actual cost to assessee

being N.R.I, is brought by him to india and used in his business

less: notional dep(from purchasing date). At the rate applicable on that date

x)

same as above

(note: whether used for personal or business purpose)

(note: this will not applicable if N.R. sells asset to company/firm in india in which he is shareholder/partner respectively)

xi)

when private co. or unlisted public co. convert

- WDV of BOA shall be actual coston the date of conversion

into LLP and all condition satisfied, then

5 10

If income is derived,partly from agriculture and partly from business then dep Shall be computed as if entire income is business income and such dep shall fully allowed

Where assessee is carrying on the business of TEA, COFFEE, RUBBER and deposit amount in Development Account before the due date of furnishing the ROI

then-

he shall be allowed a deduction- which ever is lower a) Amount Deposited b) 40% of *"TOTAL INCOME" of such business

*NOTE- after deduction expenditure on this business note- after it balance income the PGBP income shall be 35% for rubber, 25% coffee, 40% tea of said income note: Account should be audited

NOTE:- Any amount can be withdrawn from following said purpos from account i) for the purposes *specified in the scheme of Board or ii) in following circumstances- to see pg. 64 * non specified purposes- see pg. 65 note- amount withdrawn and not utilized fully or partly for specified purpose in same year in which was withdrawn or If said asset is sold or transferred in any P/Y before the expiry of 8 years from end of P/Y in which it was acquired then it shall taxable as PGBP(40%of said amount) excpt. of above note- Asset can sold/transferred to govt,a local authority, a corporation,govt co.,succession of firm by a company before 8 years

11

SITE RESTORATION FUND where an assessee is carrying on business of prospecting for, or extraction or prodiction of, petroleum or natural gas in india,and in relation to which the C.G. has entered into an agreement with assessee - and assessee has before the end of the p/ya) deposited with SBI any amount b) deposited with special account any amount - allowed deduction-: i) a sum aqual to the amount so deposited or ii) 20 % of profit of such business which is less note: all other point as point 10 ( tea,coffee)

11

35 Expenditure on Scientific Research a) Any revenue expenditure :- 100% i) related to the business of assessee ii) where any such expenditure has been incurred before the commencement of business then only payment of SALARY(not perquisite,R.M in scientific research and these exp. should incurred within 3 years and said exp. shall be prescribed by authority

b)

Any sum paid to research association or to a University, College, or Other Institutions to be used for S.Research : 175% i) above should be approved by prescrived authority ii) S.R. whether related or not related to assessee's business imp- which main object is only S.R

c)

Any sum paid to company 125% provided that such co. should be registered in india, main object is S.R.,approve by prescribe authority

d)

Any sum paid to a research association or to a University, College, or Other Institutions to be used for Social Science or Statistical Research: 125%

i) above should be approved by prescrived authority ii) S.R. whether related or not related to assessee's business

e)

Capital expenditure on S.R. 100% i) related to the business of assessee ii) where such expenditure has been incurred before the commencement of business then these exp. Should be incurred within 3 years immediately precding the commencement of business iii) it is not necessary that the assessee should do S.R. shelf

note : expenditure on Land is not addmisible Note: when S.R asset is soldi)When asset is sold without having been used for other purposesa) PGBP income- least of the following - S.C. - WDV(Cost-Deduction)

- Deduction Allowed b) Capital Gain (only when S.C. is more than original cost) - S.C. - Actual cost of asset(subject to indexation)

f)

Higher deduction on payment made to

* APPROVED SPECIFIED PERSON for S.R. 200%

* National Laboratory or a University or an IIT or Other Specified person, under a programme approvedby prescribed authority g)

In House Scientific Research 100% - Only for Company which are engaged in business of Manufacture or Production of Articles except- not being exp. in the nature of cost of Land or Building

Note:- this deduction shall be allowed only if the co. has entered into an agreement with the prescribed authority

imp

NOTE: if a asset is not eligible for deduction u/s 35 then normal dep. can claim

ANY SUM PAID for obtaining LICENCE TO OPERATE TELECOMMUNICATION 12 35ABB note:- either before the commencement of business or thereafter BUT payment has actually been made to obtain licence note:- the expenditure shall allow in four equal installment in *relevant previous years

*relevant p/y means- i) in case where the said payment is made before the commencment of business-

the p/y beginning with the

p/y in which such business commenced till the p/y in which licence will expired ii) in any other case, the p/y beginning with the p/y in which said payment has made till the p/y in which licence will expired

where the licence is transferredi) where fully licence transfer and S.C. is less than WDV :- if WDV(cost-deduction allowed) - S.C

= Loss allowed PGBP in same p/y

ii) where a part of the licence is transferred and S.C. is less than WDV -: - WDV- S.C. = Loss allowed in balance no. of years as PGBP in equal and in this case no C.G/C.L.

iii) where fully or any part transferred and S.C. is more than WDV :a) PGBP income- least of the following - S.C. - WDV(Cost-Deduction)

- Deduction Allowed b) Capital Gain (only when S.C. is more than original cost) - S.C. - Actual cost of asset(subject to indexation)

imp imp imp

note: for computation of L.T.C.G or S.T.C.G. period of holding shall count from the date of obtaing licence to the date of transfer note: indexation is available if asset is transferred to indian co. in case of amalgamation/demerger then above rule of tranfering not applicabe

where deduction u/s 35ABB allowed then dep. not allowed 13

35CCA :- on pg. no. 83

14 35D

Amortisation of Certain Preliminary Exp. INDIAN COMPANY or RESIDENT NON-CORPORATE ASSESSEE - incurs any expenditure on *specified purpose - Before commencement of his business or - After commencement of his business, in connection with extension of his undertaking or in connection with setting up a new unit than shall be eligible to deduction of said above exp. in 5 successive p/y begininng with p/y in which business commences,or the p/y in which extension completed

*Expenditure on specified purposes means the following expenditure incurred on- see book pg. 84 Amount of Deduction- see book pg. 85 point 4 Cost of project, Capital employed- see book pg. 85 note : see note on pg. 84 & 85 note: in case of amalgamation, demerger the deduction shall be allowed to resulting indian co. note : audit is mandatory

15 35DD Amortisation of amalgamation or Demerger expenses note: Assessee should be INDIAN COMPANY who incurs expenditure for above said porpose - 1/5th of such expenditure, deduction shall be allowed till 5years

- note : if exp. Incurred by amalgamating co. then it can calim only 1/5th exp. in ithe year of amalgamation not: if amalgamation/demerger scheme is disapproved by court then these exp. will allowed as revenue exp. not exp u/s 35DD

16 Amortisation of expenditure incurred under VRS 35DDA - Only for INDIAN COMPANY incurs - 1/5th from the P/Y in which actual payment is made till 5 years

note- in case of amalgamation,demerger,converion of private/unlisted co. in to LLP than the deduction shall allowed to resulting co.

17 Expenditure on Agricultural Extension Project 35CCC Any Assessee incures exp. on said project notified by the board than 150% deduction of such expenditure 18 Expenditure on Skill Development Project 35CCC where a COMPANY incures exp.(not being Land or Building) on said project notified by board than 150% deduction of such expenditure 19 35AD 150% DEDUCTION AVAILABLE TO ASSESSEES CARRYING ON SPECIFIED BUSINESS- IF ESSENTIAL FOR INDIAN ECONOMY i) to v) see amended pg

if exp capital nature-

150%

if exp revenue nature- 100% note 1: if said business commence before 01/04/2012 then 100% if after said date then 150% deduction note:- if exp. Incurred prior to the commencement of its operation and the amount is capitalized in the books of account on date of commencement of its operations then the said exp. shall allow subject to note 1

100% DEDUCTION AVAILABLE TO ASSESSEES CARRYING ON SPECIFIED BUSINESS

i) to vi) see amended pg if exp capital nature-

100%

if exp revenue nature- 100% note:- if exp. Incurred prior to the commencement of its operation and the amount is capitalized in the books of account on date of commencement of its operations then the said exp. shall allow subject to note 1 Expenditure not eligible for deduction u/s 35AD i)- land,ii) goodwill, iii) financial instrument note: condition, additional condition, 73A, from book pg 93 to 95

No capital gain/loss- so (i) if sale price/insurance compensation of such asset shall be taxable as "PGBP". note: in case of slum sale the value of said asset shall be taken nil Actual cost in various cases on pg. 94- shall be taken nil

20 35E

An Assessee who is engaged in the operation of - Prospecting for, or Extraction of, or Production of :- any mineral like coal, limestone, iron, zink, gold - expenditure incurred on any operation prospecting for minerals OR on the development of a mine during the year of production and four years immediately preceding said p/y i.e. qualifying expenditure

note- exp. met by other shall not include - period of deduction- 1/10th of qualifying expendityre subject to income of all mines till 10 p/y. if 1/10th is more than all mines income than that portion of more shall be add in 1/10th of next year note- in case of amalgamation,demerger,converion of private/unlisted co. in to LLP than the deduction shall allowed to resulting co.

21 22 24 25 26 27

Premium for insurance on health of Employees allowed deduction provided that any mode of payment other than cash Bonus or Commission paid to Employees for services rendered whether it exceed Bonus Act but it would have not been payable as profits to employee

Interest is not deductible where borrowed money is loaned to a director without charging any interest Guarantee Commission paid to the bank in relation to income tax deptt, is not allowed as exp. Tax Audit Fees,Litigation exp. In relation to income tax cases are allowable as deduction Discount on Zero Coupon Bond zero coupon bond means- a bond issued by any infrastructure capital co,infrastructure capital fund, public sector co., scheduled bank , in respect of which no payment and benefit is received or receivable before maturity/redemption Discount:- the difference between the amount received/receivable at the time of issuing the bond and the amount payable at the time of maturity/redemption Computation of pro-rata amount of discount- the period of life of the bond shall be converted onto number of calendar month

28

P.F. pg. no. 106-107

29

A Bed Debt shall be allowed as deduction if the following conditions are satisfiedi) the bed debt should be written off as irrecoverable in books of account of the assessee for the p/y in which deduction is claimed ii) the debt should have been taken into account in computing the income of the any p/y OR debt represents the money lending the ordinary course of business of money lending /banking carried on by the assessee

30

where a bed debt deduction has been allowed and sebsequently recovered, then the amount so recovered shall be deemed to be income of PGBP of the p/y in which amount is so recovered even business/profession is not in existence but assessee should same note: who claimed the deduction of bed debt and the assessee who recovers the bed debt must be same

31

Deduction of revenue expenditure incurred by a company for the purposes of promoting family planning amongst its employees where Capital Expenditure incurred on family planning for employees then 1/5th deduction allowed till 5 years note: when said capital asset sold thennote- in case of amalgamation,demerger than the deduction shall allowed to resulting indian co.

14

Provision for Bad and Doubtful Debts relating to banks- panding

15

Transfer to special reserve- panding

16

Some important General Point - Penalties/fine imposed for infraction of law are not deductible - Interest paid under EPF & Misc provision act is allowable if it is compensatory and not penal - Donations to political party and electoral trust are disallowed - The deduction for the loss on embezzlement shall be allowed in the year in which loss on a/c of embezzlement is discovered

17

Any sum payable to (i) outside india or (ii) in india to a non-resident or to foreign co TDS shall be deduct and paid- for april to feb.- 31st march, march- 30th april provided that if not paid within above time this deduction shall allowed in the subsequent p/y in which TDS deposit and Deductor shall deemed to be Assessee in Default

18

Any sum payable to RESIDENT TDS shall be deduct and paid- date of 139(1) provided that if not paid within above time this deduction shall allowed in the subsequent p/y in which TDS deposit and Deductor shall deemed to be Assessee in Default except-: if these condition are followed i) the resident payee has furnished his ROI ii) the residence payee has taken onto account such sum iii) the residence payee has paid the tax due on iincome declared by him in ROI iv) the DEDUCTOR has to furnish a certificate to this effect from a C.A. in prescribed form

19 41(1) i) where any loss or expenditure has been allowed as deduction and subsequently any amount is received then it shall be taxable as PGBP even business is not in existence . In case of successor it shall be taxable in hand of successor ii) where a deduction has been allowed in respect of a trading liability and subsequently there is a remission/cessation of trading liability, then it shall be taxable as PGBP even business is not in existence. In case of successor same as in point i)

20

pg no 135 point 2,3,4

21

Insurance compensation received for loss of SIT that shall taxable as PGBP

22

Bank waived- i) Loan amount ii) Intt thereon then loan is not trading liabilityso 41(1) not applicable and Intt would have disallowed u/s 43B

23

40A(3) pg. 140

24

Foreign Exchange Fluctuations - pg. 153

25 43B

Certain Deductions are allowed on Payment Basis a) Gvt. Dues- any sum payable by the assessee to tax,dut,cess,fee under any law for the time being force b) Employees- any sum payable by the assessee as an employer by way of contribution to any P.F., S.F., G.F., other fund c) any bonus or commission payable to the employees d) Intt. on loan/advance to financial institution e) Provision of leive in cashment if above exp. Paid till due date of ROI, in the year in which libality to be paid arise then allowed otherwise in which p/y in that payment is made

26 43D

Interest Income on Bad and Doubtful Debts a) in case of an assessee being Financial Insititution/Bank- prescribed by R.B.I. b) In cae of Public Co. - prescribed by National Housing Bank shall be chargeable to taxi) in the p/y in which it is credited by the assessee to its P/L ii) in the p/y in which it is actually received by the assessee which ever is earlier

27

Some important General Point i) Exp. On issue of Right shares ii) Exp. Paid to ROC for enhancement of authorized capital iii) Issue of shares to public shall not allowed as revenue exp. Except exp. on issue of bonus shares,Loan

28 44AB PGBP of Shipping Business in case of Non-Resident - overruled sec.28 to 43A A sum equal to 7.50% of the aggregate of the following sum shall be deemed to be the PGBP a) amount paid or payable, whether in india or outside india , shipped at any port in india

b) amount received or deemed to be received in india, shipped at any port outside india

note: in 44B business loss can carried forward while U/D can not carried forward note: in 44B chapter VIA deduction can claimed

172 Shipping Business of Non- Residents - this sec. overrulled entire I.Tax act - provisions are for levy and recovery of tax in case of a ship, shipped at any port in india - 7.5% of the amount paid/payable to the charterer or any person in his behalf , whether that sum is payable in india or outsided india , shall be deemed to be he income arising to the owner/charterrer - before departure from any port in india of any such ship, the master of the ship shall prepare and furnish to A.O. areturn of full amount paid/payable to the owner/charterer/other

- on receipt of a return, A.O. shall assess income and determine sum payable as tax thereon as rates which is applicable to the total income of a co. - NO order assessing the income shall pass after expiry of 9 months from the end of f/y in which the return under point 5 is furnished

note: owner of charter can claim before the expiry of relevent assessment year that an assessment should be made on his total income of the p/y accordance with 44 B. then the tax paid by him in 172 shall be deemed as advance tax note:- no set off is permissible, no VI A allowed

29

PGBP from operation of Aircraft in case of A Non-Resident - overruled sec.28 to 43A A sum equal to 7.50% of the aggregate of the following sum shall be deemed to be the PGBP a) amount paid or payable, whether in india or outside india , carriage form any place in india b) amount received or deemed to be received in india, carriage from any place outside india

30

PGBP of Foreign companies engaged in the business of Civil Construction etc. in certain turnkey power project - overruled sec.28 to 44AA where a foreign company is engaged in business of civil construction, or business of erection of P&M, or testing & commissioning thereof

- in connection with a turnkey project approved by C.G. - 10% of sum payable to assessee shall be deemed PGBP

31 44BB

where A non- residence is engaged in business of Exploration, Etc. of Mineral Oils

- overruled sec.28 to 43A A sum equal to 10% of the aggregate of the following sum shall be deemed to be the PGBP a) amount paid/payable , whether in or out of India , to assessee or any person on his behalf on account of provision of services/facilities/supply of plant or machine on hire to be used in prospecting/extraction/production of mineral oil in INDIA b) amount received or deemed to be received in India , on account of provision of services/facilities/supply of plant or machine on hire to be used in prospecting/extraction/production of mineral oil Outside INDIA

32 44AD from book 199 32 44AE "

APPEAL TO CIT(APPEAL) At the tiime of appeal these documents are required- Two copies of form 32 - Two copies of statement of fact - Two copies of form ground of appeal - Two copies of Order passed - Original copy of demand notic u/s 156 - Challan fees - Our summission (it may be summit at the heiring time)

1

2

Appeal shall be furnished within 30 days of the following date (if holyday on 30th day then the day before) a) where the appeal is u/s 248- the date of payment of tax b) where the appeal is relates to any assessment or penalty- the date of service of notice of demand c) in any other case- the date on which order sought to be appealed is served note : appeal may admit after expiry of the above said period if assessee has sufficient cause imp note : if the CIT(A) does not admit appeal then no remedy except 264 No appeal shall be admitted unless at the time of filling the appeal a) where a return has been furnished - the assessee has paid the due tax on the return income b) where a return has not been furnish - the assessee has paid the tax assessed by assessing officer

3

Exception of'b'-on application of assessee CIT(A) may exempt(fully /partly) to assessee from condition of payment by recording good and sufficient reason in writing

note:- if assessee has not paid tax on demand in case a) or b) or Exception of 'b' then whether appeal is admitted but assessee shall be deemed to be assessee for in default non- payment of demand, unless stay of demand taken

4

Stay of Demand - where an assessee file an appeal to CIT(A), then A.O may in his discretion and subject to such conditions, treat the assessee as not being in default In respect of the amount in dispute in the appeal, from begaining to the date till such appeal is not disposed off note: no appeal is possible against refuesal of A.O. in above regarding note: A.O may grant stay while the time period of 30 days of payment of demand has expired note: assessee can give application to CIT.CCIT for granting stay of demand when case is panding before CIT(A) and A.O. refuesed to grant stay note:if application of stay of demand is panding before higher authority then A.O can not deemed in default to assessee untill the request is rejectied by that authority

- where A.O. has refused to grant stay of demand then CIT(A) can grant stay at the time when appeal is pending before him, from the first day when payment is required to made till to date of appeal dispossed - where CIT(A) has refused to grant stay of demand then CCIT can grant stay at the time when appeal is pending before CIT(A), from first day when payment is required to made till to date of appeal dispossed

- where CIT(A) or CCIT has refused to grant stay of demand then ITAT can grant stay at the time when appeal is pending before ITAT, from the first day when payment is required to made till to date of appeal dispossed but if ITAT can grant stay then ITAT shall dispossed the case within 180 days otherwises stay will expire after 180 days and assess shall be treated in default from begaining. provided that if the delay is cause by ITAT then ITAT can extend stay but total stay time will 365 days. If appeal is not dispossed in this time then after 365 days asssess deemed in default

5

imp

note: H.C., S.C. can not provide stay of demand

imp

For filing an appeal to CIT(A),H.C,S.C there is no condition in law that the demand should be paid CIT(A) may at the time of disposing of any appeal make such further inquiry as he thinks fit or may direct the A.O. to make further inquiry and report the result of the same to the CIT(A)

6

CIT(A) may allow to go any ground of appeal which is discussed in order if he satisfy that there is no willful or unreasonable of omission

7

The additional documents/evidence can not produce to CIT(A) excepti) where A.O. has refused to admit evidence ii) appellant was prevented by sufficient cause iii) where A.O. did not provide sufficient time to produce evidence Providedi) no additional evidence shall be admitted unless the CIT(A) record in writing the reason for it admission ii) CIT(A) shall not admit any addition evidence produced unless the A.O. has been given a reasonable opportunity to cross examine the evidence and witness

8 imp " The CIT(A) may pass order u/s 250 within 1 year from the end of the F/Y in which such appeal is filed"

9

If assessee has not claimed a deduction in ROI while deduction was available then assessee can not claim this dedution at the time of appeal to CIT(A). Decided in case of Gurjargravures P.LTD

10

If assessee has not claimed a deduction(on based on case of law even available) in ROI or At the time of Assessment and that the ground became available on account of change in circumtances or law, then CIT(A) can admit this dedution

11

Power of CIT(A) i) To confirm, reduce, enhance or *annul(void) the assessment * where technical requirment is not fullfilled by A.O. now A.O. shall not make fress assessment in same sec.

ii) To confirm, cancel, or vary an order imposing penalty * CIT(A) can cancel penalty order while can not direct the A.O. to levy fresh penalty

iii) To pass such orders as deemed fit Note: show cause notic is required note: CIT(A) may consider and decide any matter arising out of the proceediings(assessment/reassessment) in which the order appealed against was passed while such matter was not raised in appeal before it note: CIT(A) can add income from new sources of income or items which have not been considred by A.O.

12

Where under an agreement, the tax deductible on any income,u/s 195 is to borne by the deductor,and such person having paid tax, claim that no tax was required to be deducted on sich income, he may appeal to CIT(A)

13

Appealable Orders before CIT(A) - as per book

APPEALS TO ITAT 14 15

Appealable Orders before ITAT - as per book on page 58

Order against which an appeal can be filed by A.O. to ITAT a) order of CIT(A) u/s 250 b) order of CIT(A) u/s 154

16

Appeal should be filed within 60 days from the date on which the appealable order is communicated to assessee or to CIT except. If there was sufficient cause to not file within said time

17

Appeal filed to ITAT by Department

Appeal filed to ITAT by Assessee

i)- ITAT shall send a notice to assessee informing

i)- ITAT shall send a notice to dpartment informing

him that an appeal has been filed by department

him that an appeal has been filed by asessee

ii)- Assessee may file memorandum of cross objection to ITAT withiin 30 days

ii)- Dpt. may file memorandum of cross objection to ITAT withiin 30 days

mamorandom of cross objection can be file after 30 days if sufficient cause

18

ITAT any time within 4 year from the date of own order , can rectify u/s 254(2) on application of A.O./Assessee/Suo-moto. If in benefit of

19 20

ITAT shall decide appeal within a period of 4 years from the end of the F/Y in which such appeal is filed

assessee then no time limit On a question of fact determined by ITAT, a writ petition can be filed to H.C . challenging the fact finding process adopted by ITAT . If H.C. is satisfied then it will quash the order of ITAT and direct to ITAT to do the fact finding in a proper manner and/or as per the direction of H.C.

21

If the writ petition is dismissed by H.C., then assessee can file a SLP to the S.C. challenging the fact finding process of ITAT . If S.C. is satisfied

22

The ITAT has power to admit any ground,deduction,additional evidence which is not presented/claim before A.O. or CIT(A)/ROI with

then it will quash the order of ITAT and direct to ITAT to do the fact finding in a proper manner and/or as per the direction of S.C. permission of ITAT after giving opportunity of being heard to assessee and department and also do suo-moto on said matter except. 80A

23 24 25

The ITAT during the rectification processing can not admit additional evidence Pg. 81 imp. If Deduction of chapter VI A other than 80A is not claim in ROI then it can be claim in 154 if proper evidence is available

APPEALS TO HIGH COURT Appeal should be filed within 120 days from the date on which appealable orderexcept if sufficient cause 26 If H.C. is satisfied that a substantial question of law is involved in any case ,it shall formulate that question 27 28 imp No appeal can be file against the rejection order of H.C. while SLP in S.C. can be file The appeal shall be heard only on the question of law so formulated . However if H.C satisfied that b then 29

apeal can be hear even substantial question of law is not formulated

30 imp The H.C. may determine any issue whicha) has not been determined by the ITAT. i.e. raised in ITAT but ITAT did not decide by forgetten[note: assessee may opt 254(2) or 260A] b) has been wrongly determined by the appellate tribunal by reason of question of law note: new issue even inbolve question of law can not raise in H.C. which is not raised in ITAT

31 imp Only ITAT,H.C.,S.C. may award the cost APPEALS TO SUPREME COURT 32

An appeal shall lie to S.C. against any judgement of H.C., in any case where the H.C. certifies to be a fit one for appeal to the S.C. If not certifies by H.C. then no remedy

33

If Deptt. not filed the appeal against reason other than monetary limit then it will deemed that Deptt accept defeat so Deptt can not file appeal in tha case of same assessee in other A/Y or other assessee in any A/Y

Apeal in Inocme Tax Matter Before ITAT Before H.C. Before S.C.

Monetary Limit 300000 1000000 2500000

34 imp see pg. 269 SEC. 263 REVISION BY COMMISSIONER 35

36

If these condition satisfyi) Only Order of A.O. ii) ***Record iii) *erroneous iv) **prejudicial to the interest of the revenue then revision u/s 263 by CIT is possible imp note: Intimation/Deemed intimation u/s 143(1) is not an order therefore can not be revised u/s 263 *A.O. order may be erroneous only in these casesi) a supreme court judgement ii) a retrospective amendment in law iii) evidence in his possession that the assessee has understated the income iv) evidence in his possession that the assessee has claimed excessive loss,deductions and relief v) mistake apparent from record imp note: 263/147 can not possible on account of change in personal opinion **A order can be said to be prejudicial to the revenue ifi) income has been under assessed or losses have been over assessed ii) income has been assessed at a lower rate iii) excessive loss, deductions, allowances and reliefs allowed *** "Record" means the information available at the time of Revision by CIT If A.O. has completed the assessment without initiating penalty proceedings, then the order of A.O. cannot be said to be erroneous therefore the CIT in u/s 263 cannot set aside the order of assessment of A.O. and direct him to initiate penalty proceedings for applicability of sec. 263, these are two requisites- i) order must be erroneous, ii) order must be prejudicial to revenue

33

CIT u/s 263 can do i) Increase the income by passing an order u/s 263 or ii) Cancel/set aside the assessment and direct the A.O. to make fress assessment note:- an opportunity of being heard is required before passes order u/s 263 otherwise it will void-ab-initio

34

If CIT starts revision proceedings u/s 263 and assessee proves that no income has escaped then CIT shall drop proceedings u/s 263

35 imp The Order u/s 263 shall not be made after expiry of two years from end of the F/Y in which A.O. order to be revised was passed except give effect to the order of H.C./S.C

36 imp Note: if a deduction is retrospectively disallowed,revison u/s 263 is possible upto 2 years from the end of the F/Y in which order sought to be revised was passed

37 imp CIT u/s 263 cancel the assessment and direct A.O. to make fresh assessment then A.O. shall complete that assessment in origional sec. and if assessee is not satisfy with order of fresh assessment then the appeal can move to CIT(A) not in ITAT

38

comparision of Sec. 263 and Sec. 264 form book pg. no. 76

SEC. 264 REVISION BY COMMISSIONER 37

Any order (other than an order of 263),passed by A.O. can be revised

38

CIT can do 264 either of his own motion or on an application by the assessee for revision

39 imp After 263, 264 is not possible while after 264, 263 is possible on other issue 40

263 may be many time for same A/Y while 264 may only once

41 imp DRP order can not revise in u/s 263 or 264 42

The CIT may pass an order not being and order prejudicial to the assessee

43 imp CIT under section 264 can cancel/set aside the order of assessment of A.O. and direct him to make a fresh assessment and such direction shall not be prejudicial to the assessee

44

CIT shall not revise any order on his own motion if order has been made more than 1 year previously from the date of passing order

45

Assessee can make application for revision within 1 year from the date on which the order was served to him except sufficient cause

46

Revision u/s 264 is possible if the assessee has not filed an appeal to CIT(A) on any issue and i) The time period for filing an appeal to CIT(A) has expired or ii) where the time for filing appeal to CIT(A) has not expired,the assessee has waived his right to appeal to CIT(A)

47

An order by CIT u/s 264 dcelines to interfere shall not be deemed to be an order prejudicial to the assessee

48 imp New ground,deduction can claim at the time of 264 even i t is not claimed before A.O. or Return 49 imp An order shall be passed by CIT within 1 year from the end of F/Y in which such application made by assessee otherwise it shall be deemed that the reliefs claimed by assessee in the application u/s 264 have been allowed

50

No appeal is possible against the order of 264 by assessee or department even the application is totally rejected but order u/s264 can be challenged in H.C. through a WRIT and thereafter in S.C. through a SLP

51 imp If there is error in order of 264 the 154 is possible 52

A.O passed the order u/s 143(3) or orher sec. in direction of DRP then appeal can move to ITAT but not CIT(A)

S SEC.

ABOUT REQUIREMENT

OTHER NOTES ASSESSEE IN DEFAULT

1 220 Any amount, otherwise than by advance tax, in a notice 156 shall be paid within 30 days of the service of notice otherwise assessee shall be deemed in default and liable to pay simple intt at 1% for every month or part of a month from the day immediately following the end of the period till the day on which amount is paid note: where A.O. believe that it will be deterimental to revenue then he may reduces the time period of 30 days 2

Where as result of an appeal,revision,set-comm the amount on thich interest was paid/payable u/s 220 is reduced, the intt shall be reduced accordingly

3

The CCIT /CIT may reduce or waive the amount of interest paid/payable by an assessee if he is satisfied that i) payment of such amount has caused or would cause genuine hardship to the assessee ii) default in the payment of the amount was due to circumstances beyond the control of the assessee iii) the assessee has co-operated in inquiry

4

A.O has power to extend the time for payment or allow payment by installments,subjects to such conditions

5

If,in a case where payment by installments is allowed as per point no. 4, the assessee commits defaults in paying any one of installments within time fixed , assessee shall be deemed to be in default as to whole of the amount

6

point no 7 on pg. 159 imp.

7

"CASES" which can be refered to ITSC- Any proceedings for * assessment of any previous year which is ** PENDING before

SETTLEMENT COMMISSION an A.O. on the date on which an application is made to ITSC *assessment means proceesings u/s 143(3)/144/153A **case becomes pending if SCN is issued in case of 143(3),144. and in case of 153A the notice issued for six previous year and P/Y in which search is conducted the date shall first day of the A/Y note: in case of 153A it is mandatory to go with six year to ITSC

8

ITSC has power to grant immunity from penalties and prosecutions

9

No appeal is possible against the order of ITSC by department or Assessee

10 imp In following cases assessee shall not allow to make application before the ITSC a) Assessement/Reassessment proceedings u/s 147 b) Proceedings for making fresh assessment where original assessment was set aside or cancelled by 254,263,264 11

Application for settlement of cases An assessee may at any stage of a case relating to him, make an application to the ITSC containing a) a full and true disclosure of his income which has not been disclosed before A.O. b) a manner in which such income has been derived c) the additional amount of tax payable on such incocome is Provided that- no such application shall be made unlessi) In case of 6 A/Y plus 1 A/Y (u/s 153A), the additional amount of tax payable on the income disclosed in the appliation exceeds Rs. 5000000 (exl intt) ia) In case of 6 A/Y plus 1 A/Y (u/s 153C), the additional amount of tax payable on the income disclosed in the appliation exceeds Rs. 1000000 (exl intt)

ii) in any other case, the additional amount of tax payable on the income disclosed in the application exceeds Rs. 1000000 (exl intt) iii) Pay such tax,intt on this disclosed amount as considered as filing return to A.O. and attech the proof of payment alongwith the application note: intt 243A,B,C shall computed 12

Calculation of additional amount of income tax The income disclosed in the application add: Returned Income Total Income Tax on Toatal Income less: Tax in returned Income Additional Amount of Tax

13

Assessee also intimate, on the date on which he make application to ITSC , to A.O.

14

An application made shall not be allowed to be withdrawn by the applicant

15

On receipt of application,ITSC shall,within seven days, issue a notice to applicant requiring him to explain as to why application proceeded

16

The ITSC shall within a period of 14 days from the end of when the application is made , by an order in writing reject/allow the application to be proceeded

note: where no order has been passed within period of 14 days by then application shall be deemed to have been allowed to be proceeded

note: the order of rejection passed by ITSC is final so no appeal is possible except - writ in H.C. and thereafter SLP in S.C. 17

the copy of order of acceptance or rejection shall be sent to the applicant and to the CIT

18

ITSC shall, in respect of an application which is allowed to be proceeded , within 30 days from the date on which the application was made, call for a report from the CIT

19

CIT shall furnish the report within a period of 30 days of the receipts of aforsaid communication from ITSC note: where the aforsaid report is not furnished within allowed time then the case shall be further proceeds without report where a report of CIT called has been furnished within the specified time therein, the ITSC may,On the basis of the report and within a period of 15 days of the receipts of the report , by an order in writing, declare the application in question as invalid, and shall send the copy of such order to the applicant and the CIT note: an application shall not be declared invalid unless an opportunity has been given to the applicant of being heard

20

If ITSC is opinion that any further enquiry or investigation in the matter is necessary, it may direct to CIT to make enquiry and furnish the report within a period of 90 days of the receipt of communication from the ITSC note: where the aforsaid report is not furnished within allowed time then the case shall be further proceeds without report

21

The ITSC shall pass the order within 18 months from the end of the month in which application was made

22

ITSC shall have all powers are vested in an ITA , so ITSC can initiate penalty and prosecution proceedings,levy penalty and levy intt 234A,B,C

23

ITSC, if it is satisfied that:i) any person who made the application has co-operated with it in proceedings before it and ii) has made a full and true disclosure of his incomes subject to conditions as it may think fit to impose,grant immunitya) prosecution for any offence under income tax act,wealth tax act, b) imposition of penalty under income tax act

24

ITSC cannot grant any immunity from penalties & prosecution where proceedings for prosecution for any such offence have been instituted before the receipt of application

25

An immunity granted by ITSC shall be withdrawn by ITSC if:i) the assessee fails to pay the sum specified in the order of ITSC within the specified time ii) the assessee fails to comply with the conditions subject to which immunity was granted iii) if it is found that the assessee has concealed any particular material of has given false evidence to ITSC

26

Content of order of ITSC- pg no. 169

27

If Settlement becomes void, the income tax proceedings which was abate,shall be deemed to have been revived and A.O. can complete such proceedings at any time before the expiry of 2 years from the end of the F/Y in which the settlement become void

28

If Settlement order still is valid then A.O. cannot re-open but A.O. can make investigation and if found any fraud then A.O. shall inform to ITSC then ITSC can cancle the order after it A.O. shall complete such proceedings before aforsaid time

29

Where a person has made an application and if such application has been allowed to be proceeded ,such person shall not be subsequently entitled to make an application even after order declared void

30

Only one order shall be passed by ITSC for various A/Y for which application is made

31

The ITSC shall not re-open the completed proceedings

32

Provisional Attachment:- where during the pendency of any proceedings before ITSC, it is of opinion that for the purpose of protecting the revenue, it is necessary to attach provisionally the property of the applicant. note: the provisional attachment shall cease to have effect after the expiry of a period of 6 months from the date of order of provisional attachment. However, the ITSC may,for reasons to be recorded in writing , extend the aforesaid period

33 imp Abatement of proceeding before ITSC- pg. 172

PENALTY NOT TO BE IMPOSED IN CERTAIN CASES 1

Penalty other than 271(1)(C) shall not be imposable on the assessee if he proves that there was reasonable cause, while there can be no reasonable cause for concealment of income

2

Penalty can be levied by-

(i) A.O. in u/s 143(3)/144/147/153A, (ii) CIT(A) in u/s 250, (iii) CIT in u/s 263 3 4

Penalty proceedings must be initiated before levying any penalty . Penalty proceedings are initiated by issuing a SCN A.O. must be initiated penalty proceedings u/s 271(1)(C) before completion of assessement, and CIT(A) must be initiated penalty proceedings u/s 271(1)(C) before passing order u/s 250, and CIT must be initiated penalty proceedings u/s 271(1)(C) before passing order u/s 263

5

A.O. can levy penalty for concealment on the additions made by him not on the additions made by the CIT(A) . Similarly vice - versa

6

There will be no penalty for concealment of income on additions made on a Question of Law

7

Penalty other than 271(1)(C) can be levied by initiating penalty proceedings(by issuing SCN) and such peoceedings can be initiated at ANY TIME

8 imp Penalty Order and Assessement Order are distinct order . Similary, penalty proceedings and assessment proceedings are distinct proceedings 9

Penalty is levied by passing a penalty order

10

Penalty will not levied Addition/Disallowances made by ITAT

11

If A.O. disallows expenditure of u/s 14A(exp. on exempt income), this will not mean that the assessee has concealed income/exp.

12

INTANGIBLE ADDITIONS - Sometimes the A.O. makes additions for purely technical reasons eg. Application of a presumptive rate of G.P . these additions are commonly referred as "INTANGIBLE ADDITIONS". Penalty for concealment of income cannot be levied on intangible additions. Intangible additions represents the real income of assessee and can be used in subsequent assessment years for explaining the unexplained investments, unexplained cash credits and unexplained assets Intangible additions so used in explaining the unexplained investments etc. shall be deemed as concealed income and penalty u/s 271(1)(C) shall levied and further provides that in such a case penalty proceedings can be initiated even after the completion of assessment. and even after 6 A/Y year because A.O. is not opening case , he is imposing only penalty. Penalty shall be assable as the income of that year in which intangible addition made - if intangible additions is made then penalty u/s 271(1)© will not imposed but this additions shall not increase capital. Therefore if assessee wants to take this additions in books than penalty u/s 271(1)© shall be charged

14

In case of concealment income these are requiredi) tax, ii) interest u/s 234A,B,C, iii) penalty u/s 271(1)©

15

A debatable issue would not amount to concealment of income

16

NEW LAW OF PENALTY FOR CONCEALMENT OF INCOME IN CASE OF SEARCH & SEIZURE

271AAB "SPECIFIED DATE"- means the previous year-

- the due date of furnishing of ROI u/s 139(1) or date on which period specified in the notice issued u/s 153A for furnishing of ROI as case may be

"SPECIFIED PREVIOUS YEAR" means the P/Yi) which has ended before date of search, but the date of furnishing the ROI u/s 139 for that year has not expired before the date of search and assessee has not furnished the ROI before the date of search ii) in which search was conducted "UNDISCLOSED INCOME" meansi) any income of specified previous year represented, either wholly or partly, by any money, bullion, jewellery or other valuable article or thing or any entry in the books or other documents or transactions found in course of search u/s 132, which has a) not been recorded on or before the date of search in the books or other documents maintained in normal course relating to such P/Y b) otherwise not been disclosed to the CIT before the date of search ii) any income of the specified p/y represented, by any entry in respect of an expense recorded in books or other documents maintained in the normal course relating to specified p/y which is found to be false and would not have been found to be so had the search not been conducted A.O. may direct that, in case where search has been initiated on or after 01/07/2012,assessee shall pay by way of penalty, in addition to tax a) a sum computed at the rate of 10% of the undisclosed income of the specified p/y, if such assesseei) in course of search, in a statement u/s 132(4), admits the undisclosed income and specifies manner in which such income has been derived; ii) substantiates the manner in which the undisclosed incoome was derived; and iii) on or before specified date- pays tax,intt., in respect of undisclosed income and furnishes ROI for specified p/y declaring such undisclosed income

b) a sum computed at the rate of 20% of the undisclosed income of the specified p/y, if such assesseei) in course of search, in a statement u/s 132(4),does not admits the undisclosed income in the manner given in clause (a) above; and ii) on or before the specified date- declares such income iht ROI furnished for the specified p/y and pays tax,intt in respect of undisclosed income c) if not follow the case a) or b) then minimum 30% or maximum 90% of the undisclosed income of the specified p/y

note:- No penalty u/s 271(1)© shall be imposed upon assessee in respect of undisclosed income note: if it is proved that the income does not belong to specified p/y then u/s 271(1)© shall be applicable note : if in any other case other than specified p/y penalty u/s 271(i)© shall impossed noteNo order imposing a penalty shall be made- a) by ITO exceeds 10,000, b) by a/c,d/c exceeds 20,000 except with prior apporval of j/c

273A POWER TO REDUCE OR WAIVE PENALTY IN CERTAIN CASES

17

273A(1) CIT may reduce or waive the penalty imposed or imposable u/s 271(1)© by own motion or on an application made by assessee

note - CIT can excerise this power when- see pg. 17 point 3 note - no order said above shall be made by CIT without approval of CCIT or D.G. if amount of penalty is exceeds Rs. 5,00,000 for one a/y or more a/y

note - the benefit of said above shall be received only once in assessee's life note - if assessee has already paid penalty then CIT will refund it to assessee note - the benefit of said above shall not received in case of raid note - after a favourable order u/s 273A(1), no further relief is possible u/s 273A(1)/273A(4)

273A(4) CIT may reduce or waive any penalty, on an application made by assessee, and after recording his reasons for doing so, if CIT is satisfied that-

a) this is genuine hardship to the assessee, having regards to the circumstances of the case and b) the assessee has cooperated in any enquiry relating to assessment or any proceeding for the recovery of any amount due from him note - the benefit of said above shall not received in case of raid note - if penalty is waived and after assessee's financial status is boon then such penalty will not demanded by deptt. note - no order said above shall be made by CIT without approval of CCIT or D.G. if amount of penalty is exceeds Rs. 1,00,000 for one penalty or more

note - Genuine Hardships should exist at the time at which the application is made by assessee and should also exist at the time of passing of an order note - after a favourable order u/s 273A(4), relief can be obtained u/s 273A(1)/273A(4)

note- order of 273A is final order and no appeal is possible against such order but file writ in H.C. and SLP in S.C note- order of 273A should be a speaking order otherwise it will invalid imp there is no time limit for making an application u/s 273A. There is no time limit for passinig an order u/s 273A CIT can excerise 273A even if assessee has challenged the penalty order in any appeal note - if conditions referred to in 273A are satisfied then the CIT is duty bound to grant the relief in 273A note - the prosecution proceedings shall be dropped for an a/y in respect of which penalty u/s 271(1)© has been reduced or waived in 273A CIT u/s 273A cannot waive or reduce interest u/s 234A,B,C note:- see comparision between u/s 273A(1) and 273A(4) on pg. 19 18

Change of incumbent of an office- see pg. 28

129 19 275

Time Limits for passing the PENALTY ORDER for PENALTY FOR CONCEALMENT OF INCOME - see pg. 29 note: it is only maximum period for impossing penalty u/s 271(1)©, while penalty shall imposs immediately by passing penalty order without waiting appeal/revision order and when the appeal order will received by A.O. then A.O. shall cancel, reduce, enhance, imposs penalty by passing order u/s 275(1A) note: the said order u/s 272(1A) shall be passed within 6 months from the end of the month in which order u/s 250/254/260A/262 is received by CIT or order u/s 263/264 is passed by CIT

20

sec. 276CC see page 35

ADVANCE TAX 1

Advance Tax shall be calculated by estimating the current year income and then applying the tax rates in force note: at the time of computation of advance tax agriculture income also include

2 3

Computation see on page 115 Advance Tax is not payable byAn individual and resident in india and who does not have any PGBP income and is of age of 60 years or more at any time during the P/Y

4

For the computing the tax liability of advance tax of the assessee:- TDS or TCS is not deducted/collected from tax libility of the assessee if tax deductor has not deduct TDS/TCS on the income paid/received to the assessee

5

Due date of advance tax- pg. 130

6

Any amount paid by way of advance tax on or before 31st march shall also be treated as advance tax paid during the F/Y

7

210 If an assessment has already been made on assessee for any p/y, and A.O. is of the opinion that such person is liable to pay advance tax, then A.O. may at any time during the F/Y but not later then the last day of febuary, by an order in writing require such person to pay advance tax and also specify the amount of advance tax and the instalments in which such advance tax is to be paid

The A.O. shall compute the advance tax by taking:(i) the total assessed income of the latest P/Y for which assessment has been made or (ii) the income declared in the ROI of any sbsequent p/y (p/y sebsequent to the p/y in which assessment is made) whichever is higher, and apply the tax rates applicable in the current F/Y note: if after making the above order, a ROI is furnished or an assessment is made, in respect of a later P/Y, then A.O. may amend his order (before last day of febuary for current year) on the basis of the above income if income is increase comparision to past income. Such sum shall be payable at the approptiate percentages on or before the due dates specified in sec. 211 falling after the date of amended order note: if an order or and amended order has been made on the assessee requiring him to pay advance tax and as per the estimation of assessee, the advance tax payable is more than the amount specified in order, then he may pay more amount

note:- If income is assessed in the year of before or same year shall not considered even income has been incereased because the amended order can be passed only on the basis of a LATER YEAR note: the said order is final order so no appeal is possible against this order note: if assessee does not comply with the order, then he shall be treated as an assessee in default so accordingly provision shall applicable

note: the order of 210 can be made only if an assessement has been made on the assessee otherwise not applicable note:- see pg 139 note:- see pg 143 note:- see pg 149 note : there are some cases when intt u/s 234A, 234B, 234C may waive or reduce by CCIT/Director General see pg. 141 note: intt on refund shall be granted from the 1st april to refund date (note exclude the delay in filing ROI by assessee)

S.N. SEC.

ABOUT REQUIREMENT

1 2012 In computing toatal income of the p/y , any income of the prasar bharati shall be exempt from tax 10(23BBH) 2 2012 In computing total income of the p/y, any income received in india in Indian currency by a foreign company on 10(48) a/c of sale of crude oil to any person in India shall be exempt from tax Provided thati) aggreement/ approval with C.G. ii) national interest iii) the foreign company is not engaged in any activity, other than receipt of such income, in india

3

In computing the total income of the p/y of any person, any income falling within the following clauses shall not be included :

10(26AAA) in case of an individual, being a Sikkimese, any income which accrues or arises to him-

a) from any source in the State of Sikkim; or b) by way of dividend or interest on securities provided- that these shall not apply to a Sikkimese woman who, on or after the 01/04/2008, marries an individual who is not a Sikkimese

4

In computing the total income of the p/y of any person, any income falling within the following clauses shall not be included :

10(26AAB) Any income of an agricultural produce market committee or board constituted under law for the purpose of regulating the marketing of agricultural produce

5

Any allowance or perquisite, as may be notified by the C.G., paid to the Chairman or a retired chairman or any other member or

10(26AAB) retired member of the union public service commission, shall not be included in the total income

6

Definition of manufacture pg. 190

7

pg. 191

S.N. SEC. 1

REQUIREMENT

193 TDS ON INTEREST ON SECURITIES (paid to resident only)

RATE

Exem-amoun

10%

-

EXCEPTION It is paid to resident individual, HUF on debentures of public co. by account payee cheque and the aggregate amount does not exceeds Rs 5000/- during the f/y

or Where security is in demat form and is listed on stock exchange in india any amount of interest all assessee or Interest payable on any security of C.G. or S.G. any resident assessee and any amount or Interest payable to insurance co. in respect of any securities owned by it or in which it has full benceficial interest

2

194 TDS ON DIVIDENDS (paid to resident only)

No TDS is required on divident u/s 2(22)(a)/(b)/(c)/(d) TDS is required only on 2(22){e)

10%

3 194A

TDS ON INTEREST OTHER THAN "INTEREST ON SECURITIES"

4 194B

TDS ON WINNINGS FROM LOTTERY OR CROSSWORD

As per book on pg no. 11

30%

10000 Note- at the time of payment

30%

5000

PUZZLE OR CARD GAME AND OTHER GAMES (Resident and Non-Resident both) 5 194BB TDS ON WINNINGS FROM HORSE RACE (Resident and Non-Resident both) 6 194C

Note- at the time of payment

30000 Note- at the time of payment or credit whether transfer in suspense a/c 75000 i)- if individual or HUF - 1% ii)- if other - 2%

TDS ON PAYMENT TO CONTRACTORS (paid to resident only)

note:- i) on the invoice value excluding the value of material, if such value is mentioned separately in invoice ii) on the invoice value, if such value is not mentioned separately in invoice note:- individual & HUF cannot deduct TDS if it is in personal nature Note:- no deduction of TDS to the account of a contractor during the course of business of plying hiring of leasing goods carriages, on furnishing PAN

Note:- no TDS is required to be deducted in case of transport operator if he furnishes his PAN

10%

20000

TDS ON PAYMENT TO NON-RESIDENT SPORTSMEN OR SPORTS ASSOCIATIONS

20%

-

TDS ON COMMISSION ETC. ON SALE OF LOTTERY TICKETS

10%

1000

7 194D

TDS ON INSURANCE COMMISSION (paid to resident only)

8 194E 9 194G

(Resident and Non-Resident both)

10 194H

TDS ON COMMISSION OR BROKERAGE (paid to resident only)

10%

5000

Note:- commission to employees and employee directors will form part of salary income so on this case sec 192 shall applicable

Note:- transactions relating to securities are not covered in this sec. see pg. 21 note:- imp. case see book pg 21

11 194I

TDS ON RENT

180000 note:- in case of co-owner in property, the limit of 180000 will be applicable to each co-owner separately

(paid to resident only) 2% in case of P&M 10% in case of others

imp on pg 23 point no. 3 note:- No TDS required on Non-refundable deposit made by Tenant because it is not advance rent note:- No TDS required on Security deposit because it is not advance rent but when it is adjucted with rent TDS is required

note:- Rentals include municipal tax, ground rent. So TDS required if borne by the tenant on pg 25 see point no. 11,12,13,15 12 194J

TDS ON FEES FOR PROFESSIONAL OR TECHNICAL SERVICES

10%

30000 SEE AMENDMEND PANDING

(paid to resident only) - Fee for professional, technical services, royalty - any remuneration of fees or commission to a director of co.

- non compete fees 13 194LA PAYMENT OF COMPENSATION ON ACQUISITION OF CERTAIN IMMOVABLE PROPERTY (paid to resident only) 10% 200000 compensation, enh. Compensation on compulsory acquisition,under any law

other than agricultural land

14 194LB INTEREST FROM INFRASTRUCTURE DEBT FUND (paid to N.R only) 15

195 TDS ON OTHER SUMS (paid to N.R only)

16 194LC INCOME BY WAY OF INTEREST FROM INDIAN CO. 17

5%

SEE AMENDMEND PANDING

SEE AMENDMEND PANDING

196 NO TDS IS DEDUCTIBLE ON INTEREST OR OTHER SUMS PAYABLE TO GOVT.,BANK

18

NO TDS SHALL BE DEDUCTED ON LONG TERM CAPITAL GAINS EXEMPT U/S 10(38)

19

TCS

see book on pg. 51

S. SEC.

PARTICULARS TAXATION OF NON-RESIDENTS AND FOREIGN COMPANIES

1 115BB Tax on winnings from lotteries, crossword puzzles, all races, card games and other games, gambling or betting

then I.Tax is payablea) @ 30% on above said itmes b) Normal rate on other balance income note:- no deduction of any expenditure except- where certain percentage of lottery income is payable to Govt or the agency or agent is deductible note:- TDS shall deductible on income from winning after reduced such commission

2

115BBA

where the total income of an assesseea) being a sportsman who is not a citizen of india and is a N.R., includes any income by way ofi) participation in india in any game (games other than 115BB) ii) advertisement iii) contribution of articles relating to any game or sport in inda

b) being a N.R. sports association or institution, amount paid in relation to any game or sport played in india c) being a entertainer, who is not a citizen of india and is a N.R. includes any income from his performance in india Tax Rate -: in all above cases- @20%, and on other balance income @ normal rate

note: No expenditure shall allowable from income of a),b),c) Income of N.R. shall be deemed to accrue or arise in india if service is used in INDIA

3

note:- It is not relevent that where service is redered/provided So, Royalty and technical services paid to a N.R./foreign company for acquiring know-how shall be taxable in India if know-how is utilized in india

4 115A TAX ON INTEREST IN CASE OF N.R. & FOREIGN COMPANIES note:- loan/investment given in foreign currency I) Interest received by N.R. & F.C. from Govt. or an Indian concern ,- @20% of such income ii) Interest received from an infrastructure debt - @5% of such income iii) Interest received from the specified co. under a loan agreement or by way of issue of L.T. infrastructure bondas approved by C.G. to extent to which such interest does not exceed the amount of intt calculated at the rate approved by C.G. - @5% of such income

5 115A TAX ON ROYALTY AND TECHNICAL SERVICES FEE IN CASE OF N.R. & FOREIGN COMPANIES a) received from Govt. in pursuance of an agreement made by the N.R./F.C. with the Govt.

OR

b) received from Indian Concern in pursuance of an agreement made by the N.R./F.C. with the Indian Concern and the agreement is approved by C.G.

note:- no approval of C.G. in case of b) if agreement relates to a matter included in the industrial policy

Tax Rate:- If Services is received in pursuance of an agreement made on or before 31st may 1997 @ 30% - If Services is received in pursuance of an agreement made after 31st may 1997 but upto 31st may 2005 @ 20% - If Services is received in pursuance of an agreement made after 31st may 2005 @ 10% imp

6

44DA

note:- see defination and amendmends in royalty with explanation- book

TAX ON ROYALTY AND TECHNICAL SERVICES FEE IN CASE OF N.R. & FOREIGN COMPANIES a) received from Govt. in pursuance of an agreement made by the N.R./F.C. with the Govt.

OR

b) received from Indian Concern in pursuance of an agreement made by the N.R./F.C. with the Indian Concern and the agreement is approved by C.G.

note:- in a) & b) in both cases after 31/03/2003 if before then 115A shall apply note:- no approval of C.G. in case of b) if agreement relates to a matter included in the industrial policy

where such N.R. or a F.C. Carries on business in india throung A PERMANENT ESTABLISHMENT situated in india, OR A FIXED PLACE for performance in india Then the income shall be computed under head "PGBP" and all other provision of act shall apply provided - No expenditure shall allowed which is not wholly and exclusively incurred for the business of such PE or fixed place in india

or towards reimbursement of actual expenses by PE to H.O. in relation to exp. Of P.E./Fixed place

7

115AB

TAX ON LONG TERM CAPITAL GAINS ARISING FROM TRANSFER OF UNITS PURCHASED IN FOREIGN CURRENCY @ 10% OF L.T.C.G.

NOTE:- NO INDEXATION AVAILABLE

NOTE:- If STT is applicable on units then exempt LTCG u/s 10(38)

8

115AC

imp

- TAX ON INTEREST INCOME FROM BONDS OR GDR PURCHASED IN FOREIGN CURRENCY @10% - TAX ON L.T.C.G FROM BONDS OR GDR PURCHASED IN FOREIGN CURRENCY @10% OF L.T.C.G. NOTE:- If such Bond or GDR transfer by N.R to other N.R. outside india then capital gain shall exempt u/s 47

Common Point - FOR ALL ABOVE SECTION

Except:- 44DA

i) other balance income shall be taxable as normal rate ii) It is not required to furnished return u/s 139 if no any other income and TDS is deducted except in case of Royalty

iii) deduction of chapter VI A shall not allowed from specified income except in case of royalty and know-how iv) B/F losses shall set-off while U/D shall not set-off v) No expenditure shall allowed because it is already tax at ceoncesional rate v) TDS rate shall as specified tax rate in each cases vi) No requirement of Books, Audit etc.

TAXATION OF N.R.I 9

N.R.I. means:- an individual being a citizen of india or a person of indian origin who is not a resident Specified Asset:- means any of the following assets- note:- investment in foreign courency i) Shares in an indian company ii) debentures issued by a Public Limited Indian Co. iii) Deposits in a Public Limited Indian Co. iv) Any security of the C.G. v) Any other asset which the C.G. may notify Computation of Tax :a) INVESTMENT INCOME:- @ 20% b) L.T.C.G:- @10% , NOTE:- first proviso of sec. 48 applicable, indextation not available, VIA not available c) Balance other income- nomal tax rate, and normal provisions shall applicable, VIA available Exemption :NRI derives LTCG and within 6 months from the date of transfer , invests the net consideration in specified assets then -

- LTCG x Cost of new asseet Net consideration

shall no taxable Exemption from filling ROI:- if total income is only above said income and TDS deducted Exemption:- chapter to apply even if NRI become resident- see pg no.205

OTHER PROVISION 10

10(38)

Any Income received in india in indian currency by a foreign co. on a/c of sale of crude oil to any person in india shall be exempt from tax

provided that i) receipt of such income in india by foreign co . is pursuant to an agreement by C.G. or approved by C.G., ii) and foreign co . is not engaged in any activity, other than receipt of such income

11

115JG

CONVERSION OF AN INDIAN BRANCH OF FOREIGN COMPANY INTO SUBSIDIARY INDIAN COMPANY - where a F.C. is engaged in the business of banking in india through its branch situate in india and - such branch is converted into a indian subsidiary company with scheme of RBI notified by C.G. THEN- the capital gain arising from such conversion shall exempt in the year in which such conversion take place - the B/F loss and U/D and MAT credit of branch shall be allowed to be C/F by indian subsidiary company NOTE :- If any condition notified by RBI, C.G. is fails to comply then- such benefit, exemption or relief shall be wrongly allowed; - the A.O. may recompute the total income of the assessee for the said previous year by 154 and 4 years for the purpose of making 154 shall be count from the end of the year in which such failure

DTAA 1

Bilateral Relief:- Countries are entering into DTAA with each othe r( sec. 90 and 91A) Unilateral Relief:- When there is no agreement between two countries, country of the residence itself provide relief( sec. 91 )

2

90 AGREEMENT WITH FOREIGN COUNTRIES OR SPECIFIED TERRITORIES 1 The C.G. may enter into an agreement with the Govt. of any country outside india in following matters a)- for the granting of relief in respect ofsame income is to be taxed in both countries then DTAA shall provide that "tax paid in one country shall be allowed credit from tax payable other country" b)- DTAA provide that certain incomes shall be taxable in one country and not taxable other country c)- for exchange of information for the prevention of evasion or avoidance of income tax in that country or investigation of cases of such evasion or avoidance d) for the recovery of income tax in that country ANALYSIS :- DTAA will apply "if they are beneficial to the assessee" . If the Income Tax Act is more beneficial to the assessee, then the income tax act shall apply The effect of DTAA is thati) Income is taxed in only one country

or

ii) If income is being taxed in both the countries, then the tax paid in one country is allowed as credit from the tax payable in the other country

note:- An assessee, not being a resident in india , who want to take relief u/s 90 shall obtained a certificate from that country Govt. regarding resident imp

note:- If the rates of DTAA are applicable then, such rates shall not be increased by surcharge and education cess note:- if Govt of india defined the term not mentioned in DTAA by a notification then this term deemed to effective from the date of aggreement

3 90A

ADOPTION BY C.G. OF AGREEMENTS BETWEEN SPECIFIED ASSOCIATIONS FOR DOUBLE TAXATION RELIEF Any specified association in india may enter into an agreement with any specified association in the specified territory outside india THEN provision of sec. 90A are exactly same as sec.90 Explanationa) Specified Association- see pg no.234 b) Specified territory- ssee pg. no. 234

4

91

COUNTRIES WITH WHICH NO AGREEMENT EXISTS If there is a country with which India does not have a DTAA, and the assessee in respect of income arising outsideIndia , pays income tax in foreign country and also in India, then he shall be entitled to deduct the lower of the following i) Tax on such doubly taxed income at the rates applicable in indiatax on total income in india X such doubly taxed income total income in india ii) Tax on such doubly taxed income at the rates applicable ini foreign countrytax paid in foreign country X such doubly taxed income total income assessed in foreign counrty note: see example on pg. 235 imp

TAXATION OF VARIOUS ENTITIES 1 44C TAXATION OF BRANCHES OF FOREIGN COMPANIES- HEAD OFFICE EXPENDITURE A) The income of Brances of foreign co. in india shall be computed as normal provision B) Head office expenditure shall be allowed to the following extent i) Amount equal to 5% of ADJUSTED TOTAL INCOME; OR ii) The amount of so much of expenditure in the nature of head office exp. Attributable to such branch which ever is less Note:- ADJUSTED TOTAL INCOME means total income WITHOUT giving effect to - i) B/F dep., ii) B/F Loss, iii) VI-A note:- in a case where adjusted total income is in loss then- 5% AVERAGE ADJUSTED TOTAL INCOME

DEDUCTION IN RESPECT OF INCOME OF CO-OPERATIVE SOCIETIES

2 80P

A) 100% deduction is allowed 1) Profit attributable to certain specified activities see on pg. 159 but general rules is that- any activity for its member or agriculture

2) Profits of certain primary co-operative societies see on pg. 160

3) Income from investment with other co-operative societies by way of Interest, dividend 4) Income from letting of "godowns or warehouse" B) General deduction to Co-operative societies for income other than above 1) to 4) i) where such so-operative society is a consumers' co-operative society- 100000 ii) in any other case- 50000

LIQUIDATION OF COMPANIES

3 Every person-

a) who is the liquidator of any company which is bound up, whether under the orders of a court or otherwise OR b) who has been appointed the receiver of any assets of a company - within 30 days after he has become such liquidator, give notice of appointment to the A.O. of company - then A.O. shall after making such inquiries as he may deem fit , notify to the liquidators within 3 months from the date on which he receives notice of the appointment , about tax liabilities

note: untill the notice of A.O. is not received by liquidator, i) he cannot sale any asset without prior approval of CCIT,CIT ii) he cannot sale any asset untill the amount nitified in notice of A.O. is set-aside If liquidator is failes to give notice to A.O. of his appointment OR the condition in i) & ii) then- he shall be personally liable for the payment of the tax which the company would be liable to pay note: where there are more liquidators then all liquidators shall be jointly and severally liable

HINDU-UNDIVIDED FAMILY

4

i) HUF does not arise from a contract. HUF is a creation of law ii) HUF consist of Father, sons and daughter. Wife is not the part of HUF while karta can give his share to his wife iii) if partition of HUF is made by court, the courts will always award equal partition. However, the family may mutually effect partition in any ratio iv) HUF cannot make any gift of HUF property to co-parcener and non coparceners . If any gifts made it shall void then income and property shall include in hand of HUF

v) the provisions of coumputing income of HUF are the same for normal assessee vi) C.G. is exempt on distribution of assets on partition of HUF imp Partition of HUF takes place on the date on which the properties are actually physically divided or ment to divided in case of non physically partisiable asset

imp Remuneration paid by HUF to karta or any member of HUF shall be allowed if- paid under a valid and bona fide agreement - in the interest of business of HUF - reasonable and not excessive

note If A.O. has satisfied that distribution of asset has been made then he shall pass order allowing partition of HUF, otherwise he shall pass order to refuse partition of HUF

note If HUF is partitioned then the member shall be liable for tax liability

SPECIAL PROVISION FOR TAXATION OF FILM PRODUCER & FILM DISTRIBUTOR

5 1

Deduction in respect of Expenditure on Production of Feature Films in case of Film Producer i) Cost of Production-: in relation to a feature film, means all expenditure incurred on the production of film BUT EXCEPTa) exp. on positive prints of the film; and b) exp. on advertisement of the film after it is certified note:- exp. a) & b) above are allowable as revenue expenditure in the year of release of film ii) where film is certified for release in any p/y and in that p/y film producer sells all rights of exhibition of the film, then the entire cost of production of film shall be allowed as a deduction in that p/y (irrespective of date of release of films) iii) where film is certified for release in any p/y and in that p/y film producer a) himself exhibits the film on a commercial basis in all or some areas;

OR

b) sells the rights of exhibition of the film in respect of some of the areas; OR c) himself exhibits the film on a commercial basis in certains areas and sell the rights of exhibition of the film in other areas AND the film is released for exhibition on a commercial basis at least 90 days before the end of such p/y, the entire cost of production of the film shall be allowed as deduction in that p/y IF film is not released for exhibition on a commercial basis at least 90 days before the end of that p/y then - which is lower allowed - Cost of production - Amount realised by exhibiting the film and sale of rights of exhibition and balance cost shall be allowed as deduction in next f/y

2

Deduction in respect of Expenditure on Acquisition of Distribution Rights of Feature Films in case of Film Distributor i) Cost of Acquisition-: in relation to a feature film, means the amount paid by film distributor to film producer for getting the exhibition rights of the films. ii) same as for film producer " only replace the cost of production by cost of acquisition iii) same as for film producer " only replace the cost of production by cost of acquisition

TAXATION OF AOP/BOI

6

i) The income of AOP/BOI is computed as per normal provision but some specific provision are as followingsii)- Sec. 40(ba) - any payment of INTEREST, SALARY, BONUS, COMMISSION OR REMUNERATION made by AOP/BOI to any of its member shall be disallowed Point to be noted:- Rent paid by AOP/BOI to its members, is allowed subjects to sec. 40A(2) - the difference of interest shall be disallowed in case where AOP/BOI is paying intt. and also receiving intt from same member - where individual is member in a AOP/BOI on behalf or benefit of any other person then the INTEREST paid to him by AOP/BOI otherwise than as member in a representative capacity , shall not be disallowed - where individual is member in a AOP/BOI otherwise than as member in a representative capacity then INTEREST paid to him by AOP/BOI , shall not be disallowed if such interest is received by him on behalf or benefit of any other person

TAXATION OF FIRMS

5

I)- Every person who was a partner of a firm and the legal representativ during the p/y(even one day), shall be Jointly and Severally liable along with the firm for any tax liability II)- Every person who was a partner of a firm and the legal representativAt THE TIME OF DISCONTINUED , shall be Jointly and Severally liable along with the firm for any tax liability a) If payment of salary, bonus, commission or remuneration, to a only working partner and in case of remuneration if authorized by deed

b) the payment of interest shall not exceed of 12% p.a C) the remuneration should not exceed- see pg 15 d) calculation of book profit - see pg. 15 e) remuneration/interest should no be retrospective f) representative capacity treatment same as in AOP/BOI g) the firm shall not c/f and set-off the loss of retired/lossed partner Note:- In I.T. same tax treatment for LLP as PF in all manner and all case

TAXATION OF POLITICAL PARTIES

6 13A

i) "Income from House Property, Capital Gain, Income from other sources" are exempt from tax ii) any income by way of voluntary contributions receive by a political party is exempt provided that- keeps and maintains books - in respect of such voluntary contribution in exceess of Rs. 20000, keeps maintain records, name, address of donner - account should be audited note:- if such pary do not summit report u/s 29c(3) then then no exemption available

TAXATION OF ELECTORAL TRUST

7

Any voluntary contributions received by an electoral trust are Exempt in the p/y in which received Provided that:a) such electorcal trust distributes to any political party, 95% of the "aggregate donation" b) such electorcal trust functions in accordance with the rules of C.G. otherwise it shall be deemed as income of that f/y in which was received in hand of such trust Note: Any person who make donation to such trust, shall be entitied to deduction u/s 80GGB,80GGC Note: The income in other head shall be taxable Note: if such trust invests the donation received in bank and other places, then the interest from such investment is not exempt Note: Aggregate donation means:- current year plus 5% of last year

ALTERNATE MINIMUM TAX

8

Where Regular Income Tax Payable for a p/y by a person, other than a company, is less than the AMT payable for such p/y then the Adjusted Total Income shall be deemed to be the Total Income of that person for such p/y and shall be taxable @ 18.50% +E.cess

- Adjusted Total Income :- total income meansTotal Income as Computed under normal provisions of I.T. Act

XXX

ADD: Deduction u/s 80-IA to 80RRB except sec 80P

XXX

ADD: Deduction u/s 10AA (deduction of profit of SEZ units)

XXX

Adjusted Total Income

XXX

NOTE:- AMT is not payable by: Individual, HUF, AOP/BOI, AJP, and adjusted total income of such person does not exceed Rs. 20 Lacs Note:- Every person on whome this sec. applies shall obtain a report, by C.A. certifying that the adjusted total income and AMT is computed accordance provisions and furnish such report on or before the due date of ROI Note:- Utiliztion of MAT CREDIT in folling way - The AMT CREDIT of an a/y to be allowed if AMT paid is excess over the regular income tax - No Interest shall be payable on above - The AMT CREDIT shall be C/F since 10 A/Y from the a/y for which AMT credit is available - Any A/Y in which regular income tax exceeds the AMT, then AMT CRDIT shall allowed to be set-off to the exten of such excess note: in case of AMT, it is adviseable to assessee that he should claim deduction u/s 35AD instead of 80IA to 80IE Note:- Deduction u/s 80C to 80GGC and 80U are not to be added back i.e. these are allowed as deduction in AMT

TAXATION OF CHARITABLE/ RELIGIOUS TRUSTS AND INSTITUTIONS

9

SECTION 11:- Following income shall not be included in the total income of the previous year a) Income derived from PROPERTY held under trust wholly for charitable or religious purposes provided that:- to the extent to which such income is applied to such purposes in India ( note: 15% of such income is allowed as deduction on adhoc basis) ( note:- voluntary contributions other than corpus donation is included in (a)

b) Income in form of voluntary contributions made with a specific direction that they shall form part of corpus of trust/institution Note:- Applied see on pg. 123 Note:- in the p/y, if applied to charitable or religious purposes in india falls short of 85% of the income derived during that yeari) for reason that income has not been received fully or partly

or

ii) for any other reason THEN on application of assessee before time of ROI, these amount shall be considered in the year in which received or the further next year

note:- taxable income is treat as IFOS and tax rate as individuals

Sec. 11(2):- Exemption If income accumulated for specific purposes -: where 85% of income is not applied for charitable or religious purposes in during the p/y but it is accumulated or set apart (wholly/partly) THEN this income shall not included in total income of the p/y , if following conditions are satisfied-:a) such person specifies, by notice to A.O. about this accoumulated income and period of investment, which shall not exceed 5 years but utilization within 6 years b) this accoumulated income is invested in specified modes note: i) the purpose of accumulation shall not be to contribution to other tust etc. if it is happened then this shall be treated as income in the year ini which it is utilized for this unspecified purposes ii) if this accoumulate income is not utilized within specified year or in the year immediately following the expiry thereof, then it shall be taxed Sec. 11(1A):- Capital Gains deemed to be applied for Charitable/Religious purposes - see on pg 125 Note: The excees application of income can be used in subsequent unlimited year Note:- The PGBP income of said trust is exempt if this is derive by objective of trust if seprate accounts are maintained Sec. 11(1A):- Property held under trust includes business undertaking-: if a business is incidential to the attainment of main object of trust and seprate accounts are maintained for such business then income from such business is eligible for exemption u/s 11 MODE OF INVESTMENT OF TRUST MONEY for purposes of sec.11(2)- see pg 129 "not to be learn" Note:- sec 11 is not to apply in certain cases- see pg. 132 Sec. 13(3):- Meaning of specified persons- see pg. 132 SPECIFIED PERSON -treatment panding sec. 13(3), 13(2),13(6),12(2) imp If the receipts from commercial activities exceeds Rs 25 lacs, trust ceases to be a charitable trust, then exemption u/s 11 & 12 shall not be available without cancellatuin of registration. If in next year the commercial receipts is not exceeds Rs 25 lacs then trust shall get exemption u/s 11 & 12

ANONYMOUS DONATION means :- any voluntary contribution, does not maintain a record of identity Treatment of "anonymous donation" if received for the purposes of -: - If wholly Charitable trust - to be taxed @ 30% and deduction of i) 5% of total donation(all types), ii) Rs 1,00,000 whichever is more, shall be allowed - If wholly Religious trust - to be taxed as sec 11 & 12 - If wholly Religious & Charitable Purposes trust - to be taxed as sec 11 & 12 but if specific direction that such donation is for charitable purpose then taxable

note:- where corpus donation is received without identity then it shall be deemed anonymous donation

SPECIAL PROVISIONS FOR VENTURE CAPITAL COMPAN OR FUND

10

Venture Capital Company or Venture Capital Fund provides funds in form of loans to, or subscription to shares or certain unlisted companies (venture capital undertakings)

This sec. provides exemption in respect of- an income of a venture capital compnay or venture capital funds from investments in a venture capital undertaking note:- the investment in VCU can be in form of loans or shares . note:- the C.G. and Interest arising from such investments shall be exempt in hands of venture capital co. or venture capital fund

Principal of Matuality/Mutual Concerns - see on pg. 45

11 12

115BBD

TAX ON DIVIDEND RECEIVED FROM FOREIGN COMPAN Following conditions must be fulfilled for this sec. - Benefit of this sec. is available only to the Indian Company - Indian Company must hold at least 26% in nominal value of the equity shares capital of the FOREIGN COMPANY - Dividend received u/s 2(22)e) shall not be covered - No other exp. Shall be claimed by Indian Company in respect of this dividend Then Tax Rate:- 15% on such dividend income and balance other income shall be taxed as per normal provision, after surcharges and E/cess on total income

13

10(44)

NEW PENSION SCHEME (Only ofr Individual) In case of salaried employee:- maximum of 10% of HIS SALARY in the p/y In case of self employed:- maximum of 10% of the GTI in the p/y Note: NPS is optional and NPS Trust has been set up to manage the assets and funds

A) Tax Treatment in Hand of AIndividual:- Contribution made to NPS are excluded from total income

- The accrual income on this Investment is also exempt - Receipts from NPS shall be taxed in the year of receipt by individual or his nominee imp note:- such received income shall not be taxable in the p/y if such amount is used for purchasing an annuity plan in the same p/y B) Tax Treatment in Hand of NPS Trust:- Income received by NPS Trust is not liable to Dividend Distribution Tax - STT is also exempt on purchase/sales of securtiy - TDS shall not be deducted on income received by NPS Trust

DIVIDEND STRIPPING

14 see book

BONUS STRIPPING

15 see book

BONUS STRIPPING

16 see book

ZERO COUPON BOND

17 see book

DEEP DISCOUNT BOND

18 see book

AMALGAMATION AND ITS TAX IMPLEGATIONS

19 Condition of Amalgamation :-

i) All the property and Liabilities of the amalgamating company immediately before the amalgamations becomes the property of the amalgamated company ii) Shareholders holding not less than 75% in value of shares in amalgamating co.(other than shares held by amagamating co. in amalgamated co.) become shareholdrs of amalgamating co.

Taxation of Shareholders :- there will be no transfer and hence no capital gains when a shareholder in this scheme transfer the shares, if following conditions are satisfyi) transfer is made in consideration of allotment of shares in the amalgamated co. (except where the sharehoder of amalgamating co. itself is amalgamated co.) ii) the amalgamated co. is an Indian co.

Taxation of Amalgamating Company :- As per sec. 47 there will be no capital gains on transfer of capital asset to amagamated co., if amalgamated co. is an Indian co. - There will be no capital gain on transfer of shares held in an Indian co. in this scheme by amalgamating foreign co. if these condition satisfy-

i) At least 25% of the shareholders of amalgamating foreign co. continue to remain shareholders of amalgamated foreign co. And ii) Such transfer does not attract tax on C.G. in the country

Taxation of Amalgamated Company :COA & POH- cost/period of previous owner note:- if bad debts of the amalgamating co. are recovered by tha amalgamated co., then NO TAX TREATMENT. Because It is not write off by amalgamated co.

sec 72A on pg. 186 20

Demerger - panding

pany