Professional Documents
Culture Documents
TAX RATES
1.1 RATES OF TAX
No change in the rate of personal income-tax and the rate of tax for companies in respect of income
earned in the financial year 2015-16, assessable in the assessment year 2016-17.
1.2 SURCHARGE
Type of Person
Total Income
% of Surcharge
on
total tax
12%
Domestic Company
7%
12%
2%
5%
Foreign Company
115TA
Rate
of
tax
15%
Effective
rate of
tax
17.304%
20%
23.072%
25%
28.84%
30%
34.608%
5%
5.768%
Nil
Nil
25%
28.84
30%
Particulars
Tax on distributed income of domestic
companies by way of dividend
Tax on distributed income of domestic
company for buyback of shares
Tax on distributed income of mutual funds
34.608%
Note The dividend and income referred to in section 115-O and 115R, respectively,
have to be first grossed up by applying the rates of tax mentioned in column (3) above.
Thereafter, the effective rates of tax under section 115-O and 115R mentioned in
column (4) above have to be applied on gross dividend/income to compute the
additional income-tax payable by domestic companies and mutual funds, respectively,
under section 115-O and 115R.
2. DEFINITIONS
2.1 CHARITABLE PURPOSE: SECTION 2(15)
The definition of charitable purpose includes yoga as a specific category of activity in the definition
of charitable purpose
The advancement of any other object of general public utility shall not be a charitable purpose, if it
involves the carrying on of any activity in the nature of trade, commerce or business, or any
activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or
any other consideration, irrespective of the nature of use or application, or retention, of the
income from such activity, unless, i.
Such activity is undertaken in the course of actual carrying out of such advancement of any
other object of general public utility; and
ii.
The aggregate receipts from such activity or activities, during the previous year, do not exceed
20% of the total receipts, of the trust or institution undertaking such activity or activities, for
the previous year.
Question: Gross receipt of a trust having its main object as Advancement of General Public Utility is
Rs. 20,00,000 during the PY 2015-16. It includes receipt of Rs. 200,000 from an activity in the nature of
trade which is undertaken in the course of actual carrying out of its main object. It satisfies all other
conditions as undertaken in the course of actual carrying out of its main object. It satisfies all other
conditions as prescribed by the Income tax act for tax exemption. Will the trust be denied the tax
exemption? Comment.
1. What would be your answer if the receipt from an activity in the nature of trade is Rs. 500,000?
2. What would be your answer if the main object of the trust is Relief of the Poor?
Sub clause (xviii) has been inserted, assistance in form a subsidy or grant or cash incentive or
duty drawback or waiver or concession or reimbursement will be taxable as income. It will
be taxable as income regardless of the fact whether such subsidy or grant is received from
central government or state government or any authority or body or agency. Further it will be
taxable whether it is received in cash or kind.
3. RESIDENTIAL STATUS
3.1 RESIDENTIAL STATUS: SECTION 6(1)
In the case of an individual, being a citizen of India and a member of the crew of a foreign bound
ship leaving India, he would be considered as resident in India if his stay in India is 182 days or
more.
Earlier an individual, being a citizen of India, who leaves India in any previous year as a member
of the crew of an Indian ship was covered under the provision.
With a view to providing a uniform method of computation of period of stay in India for the
purposes of determination of resident status in the case of an India seafarer, whether working on
an Indian-ship or foreign-ship, it is proposed to provide an enabling power to CBDT to prescribe
the same in the rules.
With retrospective effect from 1st April, 2015
Question:
In the previous year 2015-16, Mr. Krishnan, Indian citizen is vessel manager in Blue Ocean Transits Ltd.
which operates freight voyage from Cochin port India) to Colombo port (Srilanka) on regular basis. It
does not involve in transit of Passengers.
Mr. Krishnan, being a crew member of ship, provides you the following information about his voyage
during the FY 2015-16:
(a) Date entered into the continuous discharge certificate (for joining the ship) 3.8.2015
(b) Date entered into the continuous discharge certificate (signing off) 31.12.2015
(c) On 1.1.2016, he reached his native place of cochin and resigned his job.
Is he a resident or not for the AY 2016-17?
4.2 INTEREST PAID BY INDIAN PE TO ITS FOREIGN HEAD OFFICE BANK: SECTION 9(1)(V)
If the following two conditions are satisfied, the permanent establishment in India shall be deemed
to be a person separate and independent of the non-resident person of which it is a permanent
establishment:
a) The assessee is a non-resident and engaged in the business of banking
b) Interest is payable by the permanent establishment in India of such non-resident to the head
office or any permanent establishment or any other part of such non-resident outside India.
In the case of a non-resident being a person engaged in the business of banking, any interest
payable by the permanent establishment in India of such non-resident to the head office or any
permanent establishment or any another part of such non-resident outside India shall be deemed
to accrue in India and shall be chargeable to tax in addition to any income attributable to the
permanent establishment in India.
Accordingly, the PE in India shall be obligated to deduct tax at source on any interest payable to
either the head office or any other branch or PE, etc. of the non-resident outside India.
from India;
l. the fund is neither engaged in any activity which constitutes a business connection in India nor
has any person acting on its behalf whose activities constitute a business connection in India
other than the activities undertaken by the eligible fund manager on its behalf;
m. the remuneration paid by the fund to an eligible fund manager in respect of fund management
activity undertaken by him on its behalf is not less than the arms length price of the said activity.
Meaning of Eligible Fund Manager:- Any person who is engaged in the activity of fund management
and fulfils the following conditions, namely:a. the person is not an employee of the eligible investment fund or a connected person of the
fund;
b. the person is registered as a fund manager or an investment advisor in accordance with the
specified regulations;
c. the person is acting in the ordinary course of his business as a fund manager;
d. the person along with his connected persons shall not be entitled, directly or indirectly, to more
than twenty per cent of the profits accruing or arising to the eligible investment fund from the
transactions carried out by the fund through the fund manager.
Every eligible investment fund shall, in respect of its activities in a financial year, furnish within
ninety days from the end of the financial year, a statement in the prescribed form, to the prescribed
income-tax authority containing information relating to the fulfilment of the conditions specified
in this section and also provide such other relevant information or documents as may be
prescribed. However, nothing contained in section 9A shall have any effect on the scope of total
income or determination of total income in the case of the eligible fund manager
5. EXEMPTIONS
5.1 SECTION 10(11A)
Payment from an account opened in accordance with the Sukanya Samriddhi Account Rules, 2014
made under the Government Savings Bank Act, 1873, shall not be included in the total income of
the assessee.
Sukanya Samriddhi Account scheme is declared as EEE (exempt-exempt-exempt) method of
taxation.
1. The investments made in the Scheme will be eligible for deduction under section 80C of
the Act.,
2. The interest accruing on deposits in such account
will be exempt from income tax., and
3. The withdrawal from the said scheme in accordance with the rules of the said scheme will be
exempt from tax by introduction of new clause (11A) under section 10 of the Income Tax Act,
1961
With effect from A. Y. 2015-16
by any donor) and Clean Ganga Fund (donations made by domestic donors). [National Fund for
Control of Drug Abuse w.e.f. A.Y. 2016-17 and other two funds w.e.f. A.Y. 2015-16].
Income by way of contributions received from specified persons, any recognised stock
exchange and any clearing member contributing to the core GSF
income by way of penalties imposed by the recognised clearing corporation and credited to
the Core SGF
Income from investment made by the fund.
6. ASSESSMENT OF TRUST
6.1 INCOME FROM PROPERTY HELD FOR RELIGIOUS AND CHARITABLE PURPOSE
(SECTION 11)
For claiming exemption under section 11, the assesse must submits Form 10 to Assessing officer in
this regard stating the purpose and period for which income has to be accumulated.
With effect from Assessment Year 2016-171. From No. 10 shall be filed before the due date of filing return of income specified under section
139(1) for the fund or institution.
2. In case Form No. 10 is not submitted before
this date, then the benefit of accumulation would not be available and such income would
be taxable at the applicable
3. Is required to be furnished on or before the due date of filing return of income specified
under section 139 (1) for the fund or institution.
7. PGBP
7.1 ADDITIONAL DEPRECIATION WHEN ASSET IS PUT TO USE FOR LESS THAN 180
DAYS: SECTION 32 (1) (IIA)
If the asset is put to use for less than 180 days in the year of acquisition, then additional
depreciation would be 10% of the cost of acquisition in the first year and the balance 10% would
be available in the immediately succeeding previous year.
With effect from 1st April, 2016
A
B
C
D
E
Notes-
7.5%
7.5%
Nil
Nil
15%
17.5%
17.5%
Nil
Nil
35%
15%
15%
15%
Nil
15%
15%
15%
15%
Nil
15%
15%
15%
15%
15%
15%
Additional
Depreciation
Additional
Depreciation
Plant
Normal
Depreciation
Normal
Depreciation
Plant
17.5%
17.5%
35%
35%
Nil
Nil
Nil
Nil
15%
Nil
Nil
Nil
Nil
15%
Nil
1. Normal depreciation will be available on the basis of written down value of the block of assets on
the last date of the previous year.
2. Additional depreciation will be available on the basis of actual cost of the assets.
3. Investment allowance will be available on the basis of actual cost of the assets. However, it will be
subject to minimum alternate tax.
4. If the above undertaking id set-up by a concern other than a company, investment allowance under
section 32AC will not be available. One can claim investment allowance under section 32AD.
Section 32AD in the case of non-corporate assessee will not be subject to alternate minimum tax.
Question:
XYZ Ltd., a manufacturing concern, furnishes the following particulars:
Particulars
Rs.
1
Opening WDV of plant and machinery as on 1.4.2015
30,00,000
2
New plant and machinery purchased and put to use on 8.6.2015
20,00,000
3
New plant and machinery acquired and out to use on 15.12.2015
8,00,000
4
Computer acquired and installed in the office premises on 2.1.2016
3,00,000
Compute the amount of depreciation and additional depreciation as per the Income Tax Act 1961 for the
AY 2016-17.
Question:
X Ltd., set up a manufacturing unit in notified backward area in the state of Telangana on 1.6.2015. it
invested Rs. 30 crore in new plant and machinery on 1.6.2015. Further, it invested Rs. 25 crore in the plant
and machinery on 1.11.2015, out of which Rs. 5 crore was second hand plant and machinery. Compute the
depreciation allowable under section 32. Is X Ltd. entitled for any other benefit in respect of such
investment? If so, what is the benefit available?
Would your answer change where such manufacturing unit is set up by a firm, say X & Co., instead of X
Ltd.?
7.3 SECTION 35
In order to have a better and meaningful monitoring mechanism for weighted deduction allowed
under section 35(2AB) the following amendments have been made with effect from the AY 2016171. Deduction under section 35(2AB) shall be allowed only if the company enters into an agreement
with the prescribed authority for co-operation in such research and development facility and
fulfills prescribed conditions with regard to maintenance and audit of accounts and also
furnish prescribed reports.
2. Reference to the Principal Chief Commissioner has been inserted in the section 35(2AA) and
section 35(2AB) so that the report referred to therein may be sent to the principal Chief
Commissioner and Chief Commissioner having jurisdiction over the company claiming the
weighted deduction under the said section.
With effect from 1st April, 2016
7.4 SECTION 36
The following amendments have been made to section 36 with effect from the assessment year 201617
(i) Interest on capital borrowed to finance acquisition of an asset Proviso to section 36(1)(iii) is
applicable if the following conditions are satisfieda. Capital is borrowed for acquiring an asset and interest is paid (or payable) in respect of the
borrowed capital;
b. the capital is borrowed for acquisition of the asset for the purpose of extension of an
existing business or profession; and
c. In the books of account, the interest liability may (may not be) capitalized.
If the above conditions are satisfied, then interest liability for the period commencing from the
date of borrowing till the date on which such asset is first put to use, shall not be allowed as
deduction under section 36(1)(iii) (it may be capitalised to claim depreciation and investment
allowance). The above rule is applicable on in the case of extension of an existing business. It is not
applicable in the case of a new business or in the case of an existing business where there is no
extension.
Amendment:
Interest on capital borrowed to finance asset acquisition in such cases is allowable as deduction,
even if the interest liability pertains to the period before the asset is first put to use. To avoid this
current mischief, the words for extension of existing business or profession have been omitted in
the said proviso. After the amendment, the said proviso will be applicable even in the case of a new
business or in the case of an existing business when there is no extension.
(ii) Bad Debts:
Bad debts are allowed as deduction in the year in which such debts are written off in the books of
account of the assessee. This rule is applicable if such debt has been taken into account in
computing the income of the assessee of the current year or earlier year. If such debt becomes
irrecoverable on the basis of Income Computation and Disclosure Standards ((ICDS), notified under
section 145(2)) without recording the same in the accounts, deduction is not available under the
existing provisions of section 36.
Amendment:
Second proviso has been inserted in section 36(1)(vii). It provides that if a debt becomes
irrecoverable on the basis of ICDS without recording the same in the accounts, it shall be allowed
as deduction in the previous year in which such debt becomes irrecoverable and it shall be deemed
that such debt has been written off as irrecoverable in the accounts for the purpose of section
36(1)(iii).
(iii)
8. CAPITAL GAINS
8.1 TRANSACTION NOT REGARDED AS TRANSFER: SECTION 47
Clause (viab) and (vicc) Capital gains shall be exempt in respect of transfer of share of a foreign
company (deriving value of assets substantially from assets situated in India) on account of
amalgamation or demerger of foreign companies.
Clause (xviii) provides that capital gains shall not apply to any transfer by a unit holder of a capital
asset, being a unit or units, held by him in the consolidating scheme of a mutual fund, if the
transfer is made in consideration of the allotment to him of any unit or units in the consolidated
scheme of the mutual fund under the process of consolidation of the schemes of mutual fund in
accordance with the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 made
under the Securities and Exchange Board of India Act, 1992.
(With effect from 1st April, 2016)
Question:
Mr. X acquired the following units:
(i) Reliance Top Bank Equity Fund 3,000 units @ ^ 10 per unit acquired on 01-02-2015
(ii) Reliance FMCG Equity Fund 1,000 units @ ^ 20 per unit acquired on 01-01-2014.
(iii) Reliance Blue Chip Equity Fund 2,000 units @ ^ 30 per unit acquired on 01-01-2015.
Now, Reliance Top bank Equity Fund and Reliance FMCG Equity Fund merges with Reliance Blue Chip
Equity fund on 30-06-2015 and Mr. X is allotted 2,800 units of Reliance Blue Chip Equity Fund in lieu of
3,000 units of Reliance Top Bank Equity Fund. He is also allotted 800 units of Reliance Blue Chip Equity
Fund in lieu of 1,000 units of Reliance FMCG Equity Fund.
He sells 5,800 units of Reliance Blue Chip Equity Oriented Fund on 04-01-2016 for^ 50 each.
Answer:
No Capital Gain in hands of Mr. X as per amendment made by Finance Act, 2015 in section 47 on
merger of schemes of mutual funds. Section 47(xviii) is introduced by Finance Act, 2015 exempt Capital
Gains in hands of Mr. X on:
Exchange of units of Reliance Top Bank Equity Fund with units of Reliance Blue Chip Equity
Fund in scheme of consolidation.
Exchange of units of Reliance FMCG Equity Fund with units of Reliance Blue Chip Equity fund in
the scheme of consolidation.
Capital Gain of 2800 units of Reliance Blue Chip Equity Fund (Allotted in Lieu of Reliance Top Bank
Equity Fund)
Period of holding
Sales Price
Less: Cost of Acquisition
Short term capital gain
:
:
:
01.02.2015 to 3.1.2016
50 X 2800
10 X 3000
(short term)
Rs. 1,40,000
Rs. 30,000
Rs. 1,10,000
These shall be taxable under section 111A @ 15% if STT is paid on sale of units.
Capital gain of 800 units of Reliance blue chip equity fund (allotted in lieu of reliance FMCG equity
fund)
Period of holding
:
01.01.2014 to 3.1.2016
(long term)
Sales Price
:
50 X 800
Rs. 40,000
Less: Cost of Acquisition
:
20 X 1000
Rs. 20,000
Long term capital gain
Rs. 20,000
Capital gains are exempt under section 10(38) assuming STT is paid on sale of units.
Capital Gain on 2000 units of Blue Chip Fund
Period of holding
:
01.01.2015 to 3.1.2016
(long term)
Sales Price
:
50 X 2000
Rs. 1,00,000
Less: Cost of Acquisition
:
30 X 2000
Rs. 60,000
Long term capital gain
Rs. 40,000
Capital Gain exempt under section 10(38) assuming STT is paid on sale
(iii) Any transfer of a capital asset, being a government security carrying a periodic payment of interest,
made outside India through an intermediary dealing in settlement of securities, by a non-resident to
another non-resident.
(iv) Any transfer in a scheme of amalgamation of a capital asset, being a share of a foreign company,
referred to in Explanation 5 to clause (i) of sub-section (1) of section 9, which derives, directly or
indirectly its value substantially from the share or shares of an Indian company, held by the
amalgamating foreign company to the amalgamated foreign company, if
a. At least 25% of the shareholders of the amalgamating foreign company continues to remain
shareholders of the amalgamated foreign company; and
b. Such transfer does not attract tax on capital gains in the country in which the amalgamating
company is incorporated.
(Added by Finance Act 2015)
(v) Any transfer in a demerger, of a capital asset being a share of a foreign company referred to in
Explanation 5 to clause (i) of sub section (1) of section 9, which derives directly or indirectly its value
substantially from the share or shares of an Indian company, held by the demerged foreign company to
the resulting foreign company, if
a. The shareholders holding not less than in value of the shares of the demerged foreign
company, continue to remain shareholders of the resulting foreign company; and
b. Such transfer does not attract tax on capital gains in the country in which the demerged foreign
company is incorporated.
Provided that the provisions of sections 391 to 394 of the companies Act, 1956 shall not apply in case
of demergers referred to in this clause;
(Added by Finance Act, 2015)
The cost of acquisition of units of consolidated scheme shall be the cost of units in the consolidating
scheme.
Period of holding of the units of the consolidated scheme shall include the period for which the
units in consolidating schemes were held by the assesse.
Question:
A non-resident acquired 10,000 GDRs of Infosys on 1.1.2013 @ Rs. 2000 per GDR. On 30.6.2015, he
made a request for conversion of GDRs into shares (request for redemption) and on that date the
share of Infosys was listed at Bombay Stock Exchange @ Rs. 3600 per share. The non-resident receives
shareof Infosys on 5.7.215 when it is listed on BSE at Rs. 2690 per share. The shares of Infosys were
sold by non-resident on BSE on 31.12.2015 at Rs. 3000 per share and STT is paid on the sale of share.
Answer:
Assessment year 2016-17
Capital gains on conversions of GDRs into shares
Period of holding
:
1.1.2013-29.6.2015
listed on stock exchange of India)
Sales price
:
2600 X 10000
Less: Cost of acquisition
:
Short term capital gain
These short term capital gains shall be taxable at normal rates and section 111A shall not be applicable
since STT is not paid on conversion of GDR into shares.
Capital gains on shares of infosys
Period of holding
:
Sales price
:
Less: Cost of acquisition
:
Short term capital gain
30.6.2015-30.12.2015
2600 X 10000
(short term)
Rs. 3,00,00,000
Rs. 2,60,00,000
Rs. 40,00,000
Short term capital gains shall be taxable @ 15% under section 111A.
9. DEDUCTIONS
9.1 DEDUCTION IN RESPECT OF LIFE INSURANCE ETC.: SECTION 80C
Sum paid or deposited during the year in the Sukanya Samriddhi Account Scheme as a
subscription in the name of any girl child of the individual or in the name of any girl child for
whom such individual is the legal guardian, would be eligible for deduction under section 80C, if
the scheme so specifies.
With retrospective effect from 1st April, 2015
Question:
The following are the particulars of investments and payments made by Mr. A, employed with ABC
Ltd., during the previous year 2015-16:
- Deposited Rs. 1,20,000 in public provident fund
- Paid life insurance premium of ` 15,000 on the policy taken on 1.5.2012 to insure his life (Sum
assured Rs. 1,20,000).
- Deposited ` 30,000 in a five-year term deposit with bank.
- Contributed ` 1,80,000, being 15% of his salary, to the NPS of the Central Government.
A matching contribution was made by ABC Ltd.
(i) Compute the deduction available to Mr. A under Chapter VI-A for A.Y.2016-17.
(ii) Would your answer be different, if Mr. A contributed Rs. 1,20,000 (being, 10% of his
salary) towards NPS of the Central Government?
Situation 1
27,50,000
27,50,000
Situation 2
27,50,000
27,50,000
Situation 3
27,50,000
27,50,000
25,000
25,000
25,000
30,000
30,000
80,000
80,000
26,15,000
26,95,000
26,45,000
2015-16
Clean
Resident
2015-16
Ganga Fund
2016-17
Tax benefit under the said section shall be available to a person deriving profits from manufacture of
goods in a factory and paying wages to new regular workmen. The eligibility threshold of
minimum 100 workmen is reduce to 50.
Question:
Mr. A has commenced the operations of manufacture of goods in a factory on 1.4.2015. He
employed 125 new workmen during the P.Y.2015-16, which included
(i)
15 casual workmen;
(ii)
(iii)
(iv)
(v)
Compute the deduction, if any, available to Mr. A for A.Y.2016-17, if wages @ Rs. 5,000 per
month is paid to each workman and the profits and gains derived from manufacture of goods
Increase in the limit of deduction u/s 80U of the Income-tax Act in case of a person with disability,
from Rs. 50,000 to Rs. 75,000. It is also proposed to increase the limit of deduction from Rs. 1 lakh
to Rs. 1.25 lakh in case of severe disability.
With effect from 1st April, 2016
The amount of expenditure relatable to, income, being share of the assessee in the
income of an association of persons or body of individuals, on which no income-tax is
payable in accordance with the provisions of section 86; or
(Added by Finance Act, 2015)
The amount of expenditure relatable to income accruing or arising to a foreign company, from
(a) the capital gains arising on transactions in securities; or
(b) the interest, royalty or fees for technical services chargeable to tax at the rates
given in section 115A,
if the income-tax payable thereon in accordance with the provisions of this Act, is less than 18.5%; or
(Added by Finance Act, 2015)
Question:
Cost of shares of SPV in hands of shareholder being company
(acquired on 1.1.2011)
Shares of SPV transferred to Business Trust and Business trust
Allot 120 lakh unit of face value of Rs. 10 each
(market value of unit is Rs 11 per unit)
Units are sold by shareholder being Company on stock
Exchange on 31.3.2016 at Rs. 20 per unit
Question:
The following are the particulars of income of three investment funds for P.Y.2015-16:
Particular
s
Business Income
Capital Gains
Income from other sources
B
C
Rs. in lakh
2
(2)
16
14
(6)
4
4
8
Compute the total income of the investment funds and unit-holders for
A.Y.2016-17, assuming that:
(i) each investment fund has 20 unit holders each having one unit; and
(ii) income from investment in the investment fund is the only income of the
unit- holder.
If Investment Fund C has the following income components for A.Y.2017-18, what
would be the total income of the fund for that year?
Business Income Rs. 2 lakh
Capital Gains Rs. 9 lakh
Income from other source Rs. 8 lakh
Question:
A business trust, registered under SEBI (Real Estate Investment Trusts)
Regulations, 2014, gives particulars of its income for the P.Y.2014-15:
(1) Interest income from Beta Ltd. Rs. 4
crore;
(2) Dividend income from Beta Ltd. Rs. 2
crore;
(3) Short-term capital gains on sale of listed shares of Beta Ltd. Rs. 1.5
crore;
(4) Short-term capital gains on sale of developmental properties Rs.
1 crore
(5) Interest received from investments in unlisted debentures of real estate
companies
Rs. 10 lakh;
(6) Rental income from directly owned real estate assets Rs. 2.50
crore
Beta Ltd. is an Indian company in which the business trust holds controlling interest.
The business trust holds 70% of the shareholding of Beta Ltd.
Discuss the tax consequences of the above income earned by the business trust in
the hands of the business trust and the unit holders, assuming that the business
trust has distributed Rs. 10 crore to the unit holders in the P.Y.2015-16.
explains that out of the cash seized of Rs. 170 lakhs, cash of Rs. 50 lakhs is accounted cash. The
Assessing Officer releases cash of Rs. 15 lakhs (Rs. 50 lakhs minus Rs. 35 lakhs) by 31st October 2015.
The Assessing officer under section 153A determines the tax, interest and penalty to be Rs.
1,30,00,000. The assessment under section 153A is completed on 3.3.2017. the assessing officer sells
jewelry of Rs. 50,00,000 on 10.3.2017. The balance cash and jewelry is refunded to the assessee on
29.3.2017. Now as per the provisions of section 132B(4), the central government shall pay interest to
the assessee @ 0.5% per month on the following amount:
Add:
Less:
Less:
1,70,00,000
50,00,000
15,00,000
1,65,00,000
=
=
17 months
Rs. 3,40,000
and that Assessing Officer shall proceed against each such other person and issue such other
person notice and assess or reassess income of such other person in accordance with the
provisions of section 153A, if the Assessing Officer is satisfied that the books of accounts or
documents or assets seized have a bearing on the determination of the total income of such
other person for the relevant assessment year or years referred to section 153A(1).
(Amended by Finance Act, 2015 w.e.f. 1-6-2015)
Provided that in case of such other person, the reference to the date of initiation of the search
under section 132 in the second proviso to section 1S3A(1) shall be construed as reference to the
date of receiving the books of account or documents or assets seized by the Assessing Officer
having jurisdiction over such other person.
Provided further that the Central Government may by rules made by it and published in the
Official Gazette, specify the class or classes of cases in respect of such other person, in which
the Assessing Officer shall not be required to issue notice for assessing or reassessing the total
income for six assessment years immediately preceding the assessment year relevant to the
previous year in which search is conducted except in cases where any assessment or
reassessment has abated.
(Proviso added by Finance Act, 2012)
Where the Assessing Officer is satisfied that,
(a) any money, bullion, jewellery or other valuable article or thing, seized or requisitioned,
belongs to; or
(b) any books of account or documents, seized or requisitioned, pertains or pertain to,
or any information contained therein, relates to
a person other than the person referred to in section 153A, then, the books of account or
documents or assets, seized or requisitioned, shall be handed over to the Assessing Officer having
jurisdiction over such other person and that Assessing Officer shall proceed against each such other
person.
With effect from 1st June, 2015
14. TDS
14.1 TAX DEDUCTION FROM SALARY: SECTION 192
Section 192 has been amended with effect from June 1, 2015. Amended provisions provide that
the person responsible for paying salary shall obtain from the recipients evidence or proof or
particulars of the prescribed claim (including claim for set-off of house property loss) under the
provisions of the Act in the prescribed form and manner.
Question:
X Ltd is a fertilizer manufacturing company located in Telangana. During the financial year 2015-16, it
makes the following payments to transport contractors who are in the business of plying goods
carriages1. Rs. 6,20,000 to A Ltd on May 1, 2015 (A Ltd owns 25 goods carriages during the financial
year 2015-16).
2. Rs. 11,70,000 to B & Co., a partnership firm of B,C and D, on December 1, 2015 (B & Co.
owns 9 goods carriages on April 1, 2015 and it purchases 5 goods carriages on November 1,
2015). Partner B owns 40 goods carriages in his sole proprietary capacity.
3. Rs. 5,90,000 to C on June 15, 2015. C is not in the business of plying of goods carriages up
to April 10, 2015. Business of carriage of goods is newly started on April 11, 2015 by
purchasing 50 goods carriages.
4. Rs. 8,45,000 to D Ltd on January 1, 2016. D Ltd is in the business of carriage of goods
and
passengers. On April 1, 2015, it owns 11 goods carriages. It transfers 2 old goods carriages on
November 10, 2015 and purchases 5 new goods carriages on November 12, 2015. Besides, it
owns 17 air-conditioned buses.
Besides, X Ltd pays Rs. 2,30,000 to E Ltd on January 10, 2016. The payment pertains
to transportation of employees of X Ltd in the city of Hyderabad. E Ltd does not own more
than 10 buses during the financial year 2015-16.
X Ltd has PAN of A Ltd, B & Co, C, D Ltd and these persons have submitted relevant declaration
about the ownership of goods carriages/buses for the purpose of non0deduction of tax under
section 194C. Point for consideration is whether tax is deductible under section 194C.
Question:
Examine the TDS implications under section 194A in the cases mentioned hereunder
(i)
On 1.10.2015, Mr. Harish made a six-month fixed deposit of Rs. 10 lakh@9% p.a. with ABC
Co-operative Bank. The fixed deposit matures on 31.3.2016.
(ii)
On 1.6.2015, Mr. Ganesh made three nine month fixed deposits of Rs. 1 lakh each
carrying interest@9% with Dwarka Branch, Janakpuri Branch and Rohini Branches of XYZ
Bank, a bank which has adopted CBS. The fixed deposits mature on 28.2.2016.
(iii) On 1.4.2015, Mr. Rajesh started a 1 year recurring deposit of Rs. 20,000 per month@8%
p.a. with PQR Bank. The recurring deposit matures on 31.3.2016.
payable under section 234E at the time of processing of TDS statements. Therefore, the above
provision has been amended with effect from June 1, 2015 so as to enable computation of fee
payable under section 234E at the time of processing of TDS statement under section 200A.
OTHER THEORY
1. Settlement Commission
An assessee becomes eligible to approach Settlement Commission only for the assessment
year for which notice under Sec- 148 has been issued.
A proceeding for assessment or reassessment or recomputation under sec 147 shall be deemed
to have commenced- From the date on which a notice under section 148 is issued for any assessment year;
- From the date of issuance of such notice, for any other AYs for which a notice under sec 148 has
not been issued but could have been issued on such date, if the return of income has been
furnished u/s 139 or in response to Sec- 142.
3. Section 245-O
With effect from April 1, 2015, a person shall be qualified for appointment as law Member from
the Indian Legal Service, if he is an Additional Secretary to the Government of India or if he is
qualified to be an Additional Secretary to the Government of India.
4. Order passed under section 10(23C) (vi)/ (via) made appealable before ITAT:
Section 253
An assessee aggrieved by the order passed by the prescribed authority under sub-clause (vi) or
sub-clause (via) of clause (23C) of section 10 may prefer an appeal to the Appellate Tribunal.
5. Raising of the income-limit in the case that may be decided by single member
bench of ITAT: Section 255
A single member Bench may dispose of a case where the total income as computed by the
Assessing Officer does not exceed Rs. 15,00,000. (previously it was Rs. 5,00,000)
With effect from 1st June, 2015
7. Mode of taking or accepting certain loans, deposits and specified sums and
mode of repayment of loans or deposits and specified advances: Section 269SS
and 269T
In order to curb generation of black money by way of dealings in cash in immovable property
transactions, sections 269SS and 269T have been amended with effect from June 1, 2015. After the
amendment, no person shall accept from any person any loan or deposit or any sum of money,
whether as advance or otherwise, in relation to transfer of an immovable property otherwise than
by an account-payee cheque/draft or by electronic clearing system through a bank account, if the
amount of such loan or deposit or such specified sum is Rs.20,000 or more.
Likewise, no person shall repay any loan or deposit made with it or any specified advance received by
it, otherwise than by an account-payee cheque/draft or by clearing system through a bank
account, if the amount or aggregate amount of loans or deposits or specified advances is Rs. 20,000 or
more.
Question:
Situations
Mr. A takes loan of Rs. 19000 in cash from Mr. B
Mr. A takes loan of Rs. 20000 in cash from Mr. B
Violation
Section 269SS not attracted
Section 269SS attracted. Mr. A has to pay
penalty of Rs. 20000
Mr. A on 1.1.2016 takes a loan of Rs. 15000 in cash Section 269SS not attracted
from Mr. B and a loan of Rs. 19000 in cash from Mr. C
Mr. A on 1.1.2016 takes a loan of Rs. 15000 in cash Section 269SS not attracted
from Mr. B. Mr. A repays loan of Rs. 15000 in cash on
10.1.2016. Mr. A again takes a loan of Rs. 19000 in cash
from Mr. B on 1.2.2016
Mr. A on 1.1.2016 takes a loan of Rs. 15000 in cash Section 269SS attracted. Mr. A has to pay
from Mr. B. Mr. A on 10.1.2016 takes a cash deposit of penalty of Rs. 31000
Rs. 16000 from Mr. B
Mr. A on 1.1.2016 agrees to transfer his immovable Section 269SS attracted. Mr. A has to pay
property to Mr. B for Rs. 1 crore. Mr. A receives penalty of Rs. 10,00,000
Question:
Mr. A has taken a cash loan from B of Rs. 20000 and repaid the same in cash. Section 269SS and 269T are
attracted. Penalty of Rs. 40000 shall be levied.
Question:
Mr. X took the advance of Rs. 15,00,000 in cash from Mr. Y on 1.1.2015 against the flat situated at
Dwarka. However, the deal could not have materialized and later on Mr. X refunded the money to Mr. Y.
Case 1: Repayment is made in cash on 25.5.2015
Case 2: Repayment is made in cash on 1.8.2015
Answer:
Case 1: Section 269T is not attracted since the amendment is applicable from 1.6.2015. Even section
269SS is not attracted since advance was received before 1.6.2015.
Case 2: Section 269T attracted and Mr. X has to pay penalty of Rs. 15,00,000. Section 269SS is not
attracted since advance was received before 1.6.2015.
Question:
Situations
Mr. A has received a loan of Rs. 100,000 on
1.1.2016 from Mr. B by account payee cheque. Mr.
A repays in cash on 20.1.2016 the loan to Mr. B of
Rs. 10000
Mr. A agrees to sell his property to Mr. B and
receives Rs. 10,00,000 in cash as advance money
on 1.6.2015. The sale agreement is cancelled and
Mr. A refunds Rs. 10,00,000 is cash to Mr. B on
31.3.2016
A house property is registered in the name of Mr. A
and Mrs. A jointly. Both agree to sell property to
Mr. B on 1.1.2016 and receives advance of Rs.
15000 each in cash. Now agreement to sell is
cancelled and Mr. A returns Rs. 15000 by cash and
Mrs. A return Rs. 15000 by cheque
Violation
Section 269T is attracted and Mr. A has to pay
penalty of Rs. 10000
PENALTIES
1. Amount of Tax sought to be evaded for the purposes of concealment penalty
under Section 271(1)(c)
Under the existing provision contained in section 271(1)(c) penalty for concealment of income
or furnishing inaccurate particulars of income is levied on the amount of tax sought to be
evaded, which has been defined, inter alia, as the difference between the tax due on the
income assessed and the tax which would have been chargeable had such total income been
reduced by the amount of concealed income.
New definition of tax sought to be evaded- To make the above calculations, tax sought to be
evaded shall be determined in accordance with the following formulaTax sought to be evaded= (A-B)+(C-D)
A = Amount of tax on the total income assessed as per the provisions other than the provisions
contained in section 115JB or section 115JC (hereinafter referred to as general provisions)
B = Amount of tax that would have been chargeable had the total income assessed as per the
general provisions been reduced by the amount of income in respect of which particulars have
been concealed or inaccurate particulars have been furnished
C = Amount of tax on the total income assessed as per the provisions contained in section 115JB or
section 115JC
D = Amount of tax that would have been chargeable had the total income assessed as per the
provisions contained in section 115JB or section 115JC been reduced by the amount of income in
respect of which particulars have been concealed or inaccurate particulars have been furnished.
Question: The following information is noted from the records of X Ltd. for the assessment year
2016-17
General
Provisions
Income/book profit as per return of income
Add: Addition on estimate basis (not representing concealed
income)
Add: Amount of concealed income (as per assessment order)
MAT
.
6,00,000
50,000
40,000
14,00,000
Nil
Nil
6,90,000
14,00,000
R
s
2,13,210
.
2,00,850
2,66,770
2,66,770
12,360
6. Section 272A
Section 272A has been amended with effect from June 1, 2015 on the following lines
1. If any person fails to deliver (or cause to be delivered) a statement within the time as may be
prescribed under section 200(2A) or section 206C(3A), then such person shall pay, by way of
penalty, a sum of Rs. 100 for every day such default.
2. The above penalty shall not exceed the amount of tax deductible or tax collectible, as the
case may be.
7. Section 288
In section 288 of the Income-tax Act, with effect from the 1st day of June, 2015,
Certain Chartered Accountants not to give reports/certificates
The following Chartered Accountants will not be eligible to furnish audit reports and certificates
under different provisions of the Income-tax Act. However, these persons can attend incometax proceeding before income-tax authorities and ITAT as authorised representative on behalf
of the assessee.
(i) after sub-section (2), for the Explanation, the following Explanation shall be substituted, namely:
Explanation.In this section, accountant means a chartered accountant as defined in clause (b)
of sub-section (1) of section 2 of the Chartered Accountants Act, 1949 who holds a valid certificate
of practice under sub-section (1) of section 6 of that Act, but does not include [except for the
purposes of representing the assessee under sub-section (1)]
a) in case of an assessee, being a company, the person who is not eligible for appointment as an
auditor of the said company in accordance with the provisions of sub-section (3) of section 141
of the Companies Act, 2013; or
b) in any other case,
i. the assessee himself or in case of the assessee, being a firm or association of persons or
Hindu undivided family, any partner of the firm, or member of the association or the family;
ii. in case of the assessee, being a trust or institution, any person referred to in clauses (a), (b),
(c) and (cc) of sub-section (3) of section 13;
iii. in case of any person other than persons referred to in sub-clauses (i) and (ii), the person
who is competent to verify the return under section 139 in accordance with the provisions
of section 140;
iv. an individual who, or his relative or partner
is holding any security of, or interest in, the assessee: Provided that the relative may hold
security or interest in the assessee of the face value not exceeding one hundred thousand
rupees;
is indebted to the assessee: Provided that the relative may be indebted to the assessee for
an amount not exceeding one hundred thousand rupees;
has given a guarantee or provided any security in connection with the indebtedness of any
third person to the assessee: Provided that the relative may give guarantee or provide any
security in connection with the indebtedness of any third person to the assessee for an
amount not exceeding one hundred thousand rupees;
v.
vi.
vii.
a person who, whether directly or indirectly, has business relationship with the assessee of
such nature as may be prescribed;
a person who has been convicted by a court of an offence involving fraud and a period of
ten years has not elapsed from the date of such conviction.
an individual who, or his relative or partner
has given a guarantee or provided any security in connection with the indebtedness
of any third person to the assessee:
Provided that the relative may give guarantee or provide any security in connection
with the indebtedness of any third person to the assessee for an amount not
exceeding one hundred thousand rupees;
viii.
ix.
a person who, whether directly or indirectly, has business relationship with the assessee of
such nature as may be prescribed;
a person who has been convicted by a court of an offence involving fraud and a period of
ten
years
has
not
elapsed
from
the
date
of
such
conviction.
(ii) in sub-section (4), for the portion beginning with brackets, letter and words (c) who has become an
insolvent, and ending with the words, brackets and letter in the case of a person referred to in
sub-clause (c), the following shall be substituted, namely: (c) who has become an insolvent; or
(d) who has been convicted by a court for an offence involving fraud, shall be qualified to represent
an assessee under sub-section (1), for all times in the case of a person referred to in clause (a), for
such time as the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or
Commissioner may by order determine in the case of a person referred to in clause (b), for the
period during which the insolvency continues in the case of a person referred to in clause (c), and
for a period of ten years from the date of conviction in the case of person referred to in clause (d).
(iii) after sub-section (7), the following Explanation shall be inserted, namely: Explanation.For the
purposes of this section, relative in relation to an individual, means
(a)spouse of the individual;
(b) brother or sister of the individual;
(c)
(d)
(e)
(f)
(g)
Question:
X is a chartered Accountant practicing in Mumbai. On June 5, 2015 he holds appointment as a
statutory auditor of 21 companies. On June6, 2015, he wants to sign and upload following
reports/certificates1. Tax audit report in form 3CA and 3CD pertaining to A Ltd for the assessment year 2015-16.
(professional fees Rs. 180000)
2. Report in Form 3CEA under section 50B(3) relating to computation of capital gain in the case of
slump sale made by B& co( a partnership firm) during the previous year 2014-15. (Professional
fees Rs. 30000)
3. Audit report section 80-IA(7) for C ltd for the assessment 2015-16 (professional fees Rs.
5000)
4. Tax audit under section 44AB for D( D is a sole proprietor having turnover of Rs. 5.5
Crores)for the assessment year 2015-16 (professional fees Rs.105000).
Solution:
X holds appointment as a statutory auditor of more than 20 companies on June 6, 2015. He will to
vacate the office of the statutory auditor of more than 20 companies on June 6, 2015. He will have
to vacate the office of the statutory auditor of one of the companies. Till he vacates the office of
the statutory auditor of one of the companies, he cannot sign and upload any report/certificate
pertaining to a company. However, there is no such limitation for report/certificate pertaining to
a person other than company. Consequently, X is not competent to sign and upload audit reports
pertaining to A ltd and C Ltd on June 6, 2015. Slump sale report for B & co and tax audit report of
D can be signed and uploaded on June 6, 2015.