Waiver of Interest u/s 234, 234B, 234C - where tax is paid voluntarily

Waiver of Interest u/s 234, 234B, 234C - where tax is paid voluntarily

8:20 PM Add Comment
*V. Akilandeswari Versus The Chief Commissioner of Income Tax *
Interest u/s 234, 234B, 234C - waiver of interest where tax is paid
voluntarily - it is seen in the present case that the petitioner has paid
the tax voluntarily and has also pleaded a good and sufficient reason for
the non payment of tax on time. The fact of the death of petitioner's father
who was looking after the business, and as well as the petitioner's mother
and guardian was an house wife unfamiliar with such transactions, is not
denied by the respondent. On the contrary, he has given some logical
interpretation for overruling the claim made by the petitioner. - Held that.
The claim made by the petitioner is bona fide and genuine and the respondent
has not exercised his discretion in terms of law interest levied under
Sections 234A, 234B and 234C is set aside and it is declared that the
petitioner need not pay any interest for those two assessment years - At the
same time, if any excess amount had been paid, she is also not entitled to
seek refund of the same.
Section 80-IB(10) deduction on percentage completion method

Section 80-IB(10) deduction on percentage completion method

8:18 PM Add Comment
Section 80-IB(10) deduction on percentage completion method
*

*Instruction No. 4/2009, dated 30-6-2009*

Under sub-section (10) of section 80-IB an undertaking developing and
building housing projects is allowed a deduction of 100% of its profits
derived from such projects if it commenced the project on or after 1.10.1998
and completes the construction within four years from the financial year in
which the housing project is approved by the local authority.

2. Clarifications have been sought by various CCsIT on the issue whether the
deduction u/s 80-IB(10) would be available on a year to year basis where an
assessee is showing profit on partial completion or if it would be available
only in the year of completion of the project u/s 80-IB(10).

3. The above issue has been considered by the Board and it is clarified as
under:-

(a) *The deduction can be claimed on a year to year basis where the assessee
is showing profit from partial completion of the project in every year.*

(b) *In case it is late, found that the condition of completing the project
within the specified time limit of 4 years as started in section 80-IB(10)
has not been satisfied, the deduction granted to the assessee in the earlier
years is should be withdrawn.
*

4. The above Instruction will override earlier clarififcation on this issue
contained in Member(R)’s D.O. letter No. 58/Misc./2008/CIT(IT&CT) dated
29.04.2008 and Member (IT)’s D.O. letter No. 279/Misc./46/08-ITJ dated
2.5.2008.

5. This may kindly be brought to the notice to the notice of the all
Assessing Officers in your charge.
Budget 2009 Highlights

Budget 2009 Highlights

8:15 PM Add Comment
Corporate tax unchanged.

v Personal income tax exemption limit for senior citizens raised by Rs
15,000 and for others the exemption limit raise by Rs 10,000.

v 10 per cent surcharge on Personal Income tax removed.

v Fringe Benefit Tax and Commodity Transaction Tax abolished.

v GST to come into effect from April 01, 2010.

v Donations to electoral trusts shall be allowed as a 100 per cent
deduction.

v Minimum Alternate Tax (MAT) on book profits increased to 15 per cent
from 10 per cent. Carryforward of MAT credit is extended from 7 to 10
years.

v Direct Tax code to be released in 45 days along with discussion paper.

v Income tax incentives on education loans expanded to cover vocational
studies after schooling.

v Deduction u/s 80DD (increases to Rs.1 Lakh from existing Rs.75000/-
(Deduction in respect of maintenance, including medical treatment, of a
dependent who is a person with severe disability)

v Relief to Trust by not taxing anonymous donations received to the
extent of 5 per cent of their total income or a sum of Rs.1 lakh, whichever
is higher.

v All small businesses with a turnover upto Rs.40 lakh will have the
option to declare their income from business at the rate of 8 per cent of
their turnover and simultaneously enjoy exemption from the compliance burden
of maintaining books of accounts. As a procedural simplification they will
be allow to pay their entire tax liability from business at the time of
filing their return by exempting them from paying advance tax. This new
scheme will come into effect from the financial year 2010-11.
Taxation of LLP & Changes related to partnerships

Taxation of LLP & Changes related to partnerships

8:12 PM Add Comment
As per Finance bill taxation of LLP will be same as Partnership as the
definition of firm includes LLP Sec 2(23)(i).

Further limit for remuneration for working partners has also been changed to

"(a) on the first Rs.3,00,000 of the Rs.1,50,000 or at the rate of 90 per
cent. of
book-profit or in case of a loss the book-profit, whichever is more;
(b) on the balance of the book-profit at the rate of 60 per cent.".
Waiver of penalty in certain cases for non-filing of return   within prescribed time

Waiver of penalty in certain cases for non-filing of return within prescribed time

8:11 PM Add Comment
Date: 4th July, 2009*

* *

*No. VAT/ AMD-1009/IA/ ADM-06
Trade Cir. 21T of 2009 *

* *

*Sub : Waiver of penalty in certain cases for non-filing of return
within prescribed time.*

*Ref.* : 1. The Budget Speech delivered by Hon'ble Finance Minister
on 4th June 2009.

*2. Trade Circular No.3 T of 2009 dated 23rd January, 2009.*

*3. Trade Circular No.4 T of 2009 dated 23rd January, 2009.*

* *

*Gentlemen/Sir/ Madam,*

* *

*Hon'ble* Finance Minister in his Budget Speech delivered on 4th June 2009
has made an announcement regarding the waiver of penalty for non-filing of
the
returns within prescribed time to the certain dealers who have enrolled at
the Sales
Tax Departments web-site: in order to avail various e-services. The relevant
part of
the Budget speech is reproduced as under:-

* *

*2) Para 4:- "............ ..... I am glad to inform the
Hon'blemembers that Maharashtra is the first State to get tax returns
in large
numbers electronically
from all dealers. The dealers, the trade associations and tax practitioners
have
greatly contributed to this and deserve to be congratulated. In the backdrop
of
their valuable cooperation, I hereby declare that the dealers who having
enrolled
themselves for e-services on the department's web-site, file all their
returns for all
the periods from 1st April 2005 to 30th June 2009 on or before 31st July
2'009
electronically, shall not be liable for penalty for delay in filing of
returns. However,
this will not be applicable to cases where penalty has been already paid."*

* *

*3) You are well aware that scheme of filing returns electronically
wasimplemented in a phased manner. It is now mandatory for every
dealer to file
returns electronically.*

* *

*4) In view of the announcement made by the Hon'ble Finance Minister in his
Budget Speech, it is decided that,-*

*(a) if the dealers who have not filed one or more returns for the periods
starting on or after 1st April 2005 and ending on 30th June 2009, file all
such pending returns electronically along with the due payment
with interest on or before 31" July 2009 then penalty for late filing of
returns will not be levied. *

* *

*(b) in the cases where for the period starting on or after 1st April 2005
and ending on 30th June 2009, if penalty is imposed and recovered, then
dealer will not be entitled for the refund of such amount.*

* *

*(c) In case where the penalty has been already levied for non filing of
returns but the same has not been paid by the dealer, it will not be
recovered if the dealer files all his pending returns electronically with
payment of tax and interest up to 31st July 2009.*

*(d) Where the penalty is already levied and the dealer has filed an appeal
against the said penalty order, then the said penalty or part of the
penalty outstanding shall not be recovered if the dealer files all his
returns upto 31st July 2009 along with payment of tax with interest. The
dealer must however, withdraw the appeal, against such order unconditionally
before availing this benefit. The part payment made in appeal shall not be
refunded.*

* *

*5) It is hereby clarified that the dealers who have already filed returns
for the period starting on or after 1" April 2005 and ending on 30th June
2O09 shall not again be required to file such returns electronically. But it
may please be noted that if required they will have to produce the proof of
filing these returns.*

* *

*6) Needless to state that the dealers who do not file the pending returns
for
the aforesaid periods on or before 31st July 2009, shall be liable for
penalty as per
the provisions of sub-section (8) of section 29 and also recovery of such
penalty
amount. In other words penalty amount will not be waived if dealer fails to
file
the pending returns electronically on or before 31" July 2009.*

* *

*7) This circular cannot be made use of for legal interpretation of
provisions of
law as it is clarificatory in nature. If any member of the trade has any
doubt, he
may refer the matter to this office for further clarification. *

* *

*8) You are requested to bring the contents of this circular to the notice
of the
members of your association.*

*
Yours faithfully,*

* *

* *

*(Sanjay Bhatia)*

*Commissioner of Sales Tax *

*Maharashtra State, Mumbai.*
check status of efiling Ack

check status of efiling Ack

8:04 PM Add Comment
Now You can check status of efiling Ack. receipt received by Central
Processing Centre -Bangalore or Not.

For that,

1. Login to the e-iling site with your pan and password.

2. Go to the "My Account " tab

3. In drop down menu under My account Tab click " e- filing processing
status"

4. In next screen fill you ITR-V acknowledgment Number and Select your
assessment year.

5. You will get status of your return/ITR-V processing status in next
screen.

Further, Income tax department clarified that copy of ITR-V sent by them
to CPC Bangalore will be scanned after stamping receipt number and date
of receipt and the same shall be made available to taxpayers on request
through email shortly.
SMS BASED SERVICE FOR CHALLAN STATUS

SMS BASED SERVICE FOR CHALLAN STATUS

7:59 PM Add Comment
Tax Information Network (TIN) hosted by National Securities Depository
Limited (NSDL) on behalf of Income Tax Department (ITD) gives you a facility
to verify whether the banks have correctly uploaded the details of your tax
deposit to ITD through SMS.

*SMS based verification *

The procedure for availing this facility is as under:

1. Send an SMS to *575758* with a message containing the word
*CSI*followed by a space and CIN provided by the respective Bank at
the time of
making the Direct tax payment and the amount.

2. Challan Identification Number (CIN) consists of BSR Code of Collecting
Branch (seven digit), Challan Tender Date (DDMMYYYY) and Challan Serial No
(length less than or equal to 5 digit).

3. The amount is an optional field. If you provide the amount in the SMS
you would get the confirmation whether the amount uploaded by bank matches
with the amount paid by you.

4. Each of BSR code, Tender date, the challan serial number and amount
should be separated by commas

*For e.g., if the tax payer input “CSI 0510001,11032009,5,5000” where
in **“0510001”
is the BSR code of the collecting branch, *
*“11032009” is the Challan tender date, *
*“5” is the Challan serial number and *
*“5000” is the amount paid by the taxpayer*.

The tax payer will get the information against which TAN/PAN the payment has
been accounted with the confirmation whether amount entered is matched or
not.

*(This is an illustrative CIN, actual CIN should be provided in the SMS). *

There will be special charges for these SMS. These charges may vary from one
mobile service-provider to another. The charge structure can be obtained
from the concerned service-provider.

* *

*Online Challan Status Inquiry*

You can also get the status of your CIN from
www.tin-nsdl.com
under the section Challan Status Inquiry.
CIT vs. Grasim Industries (Bombay High Court)

CIT vs. Grasim Industries (Bombay High Court)

7:59 PM Add Comment
U/s 260A, High Court has no power to condone delay

S. 260A permits the filing of an appeal to the High Court within 120
days. In CIT vs. Velingkar Brothers 289 ITR 382 (Bom) (FB), The Full
Bench held that the Court had power to condone delay u/s 260A. However,
in Hongo India 236 E.L.T. 417 and Chaudharana Steels 238 E.L.T. 705,
the Supreme Court held in the context of sections 35H & 35G of the
Excise Act, that in the absence of specific powers, the High Court has
no power to condone delay. On the question whether the said judgement
of the Supreme Court would apply to s. 260A as well, HELD:
S. 35 G of the Excise Act is pari materia with s. 260 A of the I. T.
Act. S. 260 A (7) as well as s. 35 G (9) of the Excise Act provide that
the provisions of the Code of Civil Procedure, 1908 relating to appeals
to the High Court shall as far as may be, apply to the appeals filed
under the respective provisions. No such provision is to be found in
Section 35 H of the Excise Act. Therefore, the argument advanced by the
Counsel for the revenue that s. 35 G and s. 35 H of the Excise Act are
materially different cannot be said to be wholly without substance.
However, once the Apex Court has held that the High Court has no power
to condone delay in filing Appeal under s. 35 G of the Excise Act, we
have no option but to hold that this Court has no power to condone
delay under s. 260 A because s. 260 A is pari materia with s. 35 G of
the Excise Act. As the appeals were delayed, they had to be dismissed.

Note: The Finance Bill, 2009 has proposed to amend ss. 35G & 35H of the
Excise Act to supercede the said judgements of the Supreme Court.
However, no amendment has been proposed to s. 260A so far.
XBRL (eXtensible Business Reporting Language)

XBRL (eXtensible Business Reporting Language)

7:54 PM Add Comment
XBRL (eXtensible Business Reporting Language) is a novel way of electronic communication of business and financial data which is revolutionizing business reporting around the world and is immense utility to the capital markets and the
investing community. It provides major benefits in the preparation,
analysis and communication of business information.

XBRL is a cutting-edge technology standard that enables faster and more
cost-efficient electronic exchange of information.The idea behind XBRL
is simple. Instead of treating financial information as a block of
text, essentially, the XBRL technology allows electronic tagging of
each individual item of data so that computers can work on the
information using a set of rules.

The electronic tags that are applied are standardized and are contained in taxonomies which are essentially the dictionaries used by XBRL that define the specific tags for individual items of data. The tags are applied using a tagging tool that retrieves the tags from the standards taxonomies and applies them
to whatever format the financial statements are created in, such as
Microsoft Word or Excel.Seeing the rising importance of XBRL as an
effective means of communicating financial information and the plethora
of benefits it has to offer, the Institute of Chartered Accountants of
India (ICAI), the apex accounting body of the country, constituted the
XBRL Group in the year 2007 for undertaking the development and
promotion of XBRL in India.

The Institute is spearheading the XBRL initiative in the country and is the provisional jurisdiction of XBRL in India. In its endeavor of providing best to its members the Institute has recently launched XBRL India website in the International
Conference held at Agra from July 3-5, 2009.

The website was launched by CA. Uttam Prakash Agarwal, President, ICAI in the presence of CA. Mohandas Pai, Infosys Technologies and Ms. Liv Watson, XBRL
International, Vice Chair. T

The URL of XBRL India website is

XBRL India

The ICAI, India jurisdiction has developed the taxonomy
for general purpose financial statements for commercial and industrial
sector. The exposure draft of the taxonomy has already been issued and
it will be sent for accreditation by XBRL, International shortly.
Taxonomy for banks is under preparation and exposure draft is expected
to be issued shortly
loss on purchase and sale of units of mutual fund cannot be treated as loss from speculation business

loss on purchase and sale of units of mutual fund cannot be treated as loss from speculation business

7:53 PM Add Comment
Units of mutual fund cannot be equated with shares of a company; hence,
loss on purchase and sale of units of mutual fund cannot be treated as
loss from speculation business.

ITAT, DELHI BENCH ‘D’, DELHI

Multiplex Trading & Industrial Co. Ltd.

v.

ITO

ITA No. : 863 (Del) of 2006

June 5, 2009

This is the relevant extract of the case

8. We have heard both the parties and gone through the material
available on records. The assessee is engaged in rendering Business &
Management Consultancy and Marketing Services to its various clients
against payment of professional fees. The assessee invested Rs
2,00,00,000/- in 14,38,848.929 units of Sun F &C fund. The dividend of
Rs.43,16,546.70 received on 22.02.2001 was also reinvested in
4,09,151.252 units of the said fund as per the scheme of reinvestment
plan. The investment of Rs 2,00,00,000/- in units of Sun F & C Fund and
investment of dividend of Rs 43,16,546.70 in units of the said fund had
taken place on the same day. The assessee sold 18,
48,000.181(14,38,848.929 +4,09,151.252 ) units on 23.02.2001 for Rs
1,94,77,922.88. In fact no loss was suffered by the assessee in this
transaction. However, from point view of taxation, the dividend of Rs
43,16,546.70 was became capital in the hands of the assessee. The total
investment made by the assessee in units of the said Fund was at Rs
2,43,16,546.70 against which) the assessee received net sale
consideration after meeting expenses al Rsl.lM.77.922.KK. This resulted
in loss of Rs.48,38,623.88. The assessee as discussed alone earned
profits from share trading activities at Rs.48,65,115/-. Thus during
the year under consideration the assessee had earned loss in trading in
units of mutual funds and profits from trading in shares. The assessee
had treated these two activities as two separate activities reflecting
short term capital loss under trading in units of mutual fund and
profits from trading in shares, As per clause 6 of Memorandum of
Association, the assessee is permitted "to carry on business of shore
brokers, sub-brokers, underwriters, and sub-under-underwrirers. " There
is no other clause in Memorandum of Association permitting the assessee
to deal in shares and units of mutual funds as business activity.
However the fact remains that the assessee was engaged in trading of
shares during the year under consideration.

9.1 Now question arises as to whether the purchase and sale of units
can be treated as business carried on by the assessee? The
expression "business" is not defined under income Tax Act, 1961. As per
the decision of Hon'ble Supreme Court in Mazagaon Dock Ltd. v. CIT
[1958] 34 ITR 368, the word 'business' is one of wide import and in
fiscal statutes it must be construed in a broad rather than a
restricted sense. In bellow mentioned cases the Hon'ble Courts have
discussed the circumstances under which a person could said to have
carried out business activities:

i. In Sole Trustee, Loka Shikshana Trust v. CIT 11975] 101 ITR 234 (SC)
Hon'ble Apex court has held that there must be a course of dealings
with continuity. The expression 'business', though extensively used in
taxing statutes, is a word of indefinite import. In taxing statutes it
is used in the sense of an occupation or profession which occupies the
time, attention and labour of a person, normally with the object of
making profit. To regard an activity as business there must be course
of dealings either actually contained or contemplated to be contained
with a profit motive, and not for sport or pleasure. Whether a person
carried on business in a particular commodity must depend upon the
volume, frequency, continuity and regularity of transactions of
purchase and sale in a class of goods and the transaction must
ordinarily be entered into with a profit motive.

ii. In P. Krishna Menon v. C1T [ 19.S9] 35 [ IK 4S (SC) has held that
motive to produce income is not necessary. It is well-established that
il is not the motive of the person doing an act which decides whether
the act done by him is carrying on of a business, profession or
vocation. If any business, profession or vocation, in fact produces an
income that is taxable as income from business, irrespective of the
fact that business was not carried on with any motive of producing any
income.

iii. Hon'ble Patna High Court in Eclat Construction (P.) Ltd. v. C1T
[1988] 172 ITR U (Pat.) has held that the expression 'business' in
ordinary parlance means any trading activity accompanied by regularity
of transactions intended for the purpose of making profit. In general,
a single transaction is not taken as business.

9.2 From above mentioned decisions it is clear that for considering a
transaction as business there must be trading activities accompanied by
regularity of transactions intended for the purpose of making profit.
In the case before us the assessee purchased units' of Sun F & C Value
Fund with a motive of reinvestment the amount of dividend receivable
into units of the said fund. Thus intension of assessee at time
purchase of original units of Sun F & C Value Fund was to hold them as
investments. The units were not purchased as stock in trade. It is
immaterial that subsequently assessee thought to sell them at profit
earned by way of tax free dividend income. The assessee had borrowed Rs
2,00,00.000/- from the bank for this purposes. The assessee itself had
treated the investment of dividend income as capital investment for the
purposes of determination of the short term capital loss. Hon'ble
Calcutta High Court in the case of Bikhamchand Bagri v. CIT [1962] 44
ITR 746 (Cal) held that normally shares in joint stock companies
acquired and held by a trader in shares are the stock-in-trade of his
business. His business is to buy with a view to sell at a profit.
Nonetheless the trader may, if he likes, acquire and hold the shares
for investment and not for purposes of trade. But his intention to
retain them and enjoy their dividends and not to circulate and part
with them in course of business must be distinctly shown. The Court
further observed that if the family treated the profits and losses
arising from the sales of those shares as capital accretion or capital
diminution and not as business profits or business losses arising from
sales of stock-in-trade their conduct was relevant material to show
that the shares were not stock-in-trade. Seen in the light of
observations of Hon'ble Calcutta High Court the units were acquired by
the assessee as investments and assesses had taken dividend income as
further investment in units of the l-'und for the purposes of
compilation of short term capital loss. The receipt of dividend and its
reinvestment in units of the said Fund shows that the assessee held the
units as investments and not as stock in trade and hence the loss
suffered on sale such investments will he assessable as capital loss.
Hence the assessing officer was justified in accepting the loss from
units as short term capital loss. The purchase and sale of units do not
fall in speculative transactions within the meaning of section 43(5) of
the Act as ; the assessee had taken and given the actual delivery of
units. The assessee itself in the profit and loss account treated the
loss as short term capital loss. Therefore, the assessing officer was
justified in treating the loss on purchase and sale of units as short
term capital loss. We, therefore, set aside the order of CIT(A) holding
that purchase and sale of units of mutual fund constituted business
activity and restore tire order of assessing officer.

9.3 Now we will decide the nature of transactions involved in purchase
and sale of shares. The assessing officer has given a finding that the
assessee had taken the deliveries of shares traded. The assessee had
not given the copy of DEMAT account so as to prove the actual
deliveries of the shares. In the absence of any such material to show
the actual deliveries of the shares traded, the logical conclusion is
that assessee was trading in shares without effecting actual deliveries
of the shares. Section 43(5) of Income Tax Act,1961 defines the
term "speculative transaction " and at the relevant time it stood as
under:-

"(5) "speculative transaction " means a transaction in which a contract
for the purchase or sale of any commodity, including stocks and shares,
is periodically or ultimately settled otherwise than by the actual
delivery or transfer of the commodity or scrips:

Provided that for the purposes of this clause—

(a) a contract in respect of raw materials or merchandise entered into
by a person in the course of his manufacturing or merchanting business
to guard against loss through future price fluctuations in respect of
his contracts for actual delivery of goods manufactured by him or
merchandise sold by him; or

(b) a contract in respect of stocks ami shares entered into by a dealer
or investor therein to guard against loss in his holdings of stocks and
shares through price fluctuations; or

(c) a contract entered into by a member of a forward market or a stock
exchange in the course of any transaction in the nature of jobbing or
arbitrage to guard against loss which may arise in the ordinary course
of his business as such member: or

(d) an eligible transaction in respect of trading in derivatives
referred to in clause (act of section 2 of the Securities Contracts
(Regulation) Act, 1956 f-f? of J 956) carried out in a recognised stock
exchange:"

shall not be deemed to be a speculative transact ion;

The language employed in section 43(5) is plain and dear. A speculative
transaction as contemplated by section 43(5) should fulfill four
essential conditions namely (i) the contract should be for purchase or
sale; (ii) the purchase or sale should be of any commodity, including
stocks and shares; (iii) periodical or ultimate settlement of the
contract; and (iv) settlement to be otherwise than by the actual
delivery or transfer. The section covers only those transactions or
contracts which are periodically or ultimately settled otherwise than
by the actual delivery or transfer. The assessee's case does not fall
under any of the exceptions contained in the proviso to section 43(5)
of the Act. It has been held by Hon'ble Delhi High Court in the case of
M.R. Ohawan v. CIT [1979] 119 ITR 412 (Delhi) that 'speculation' in
common parlance connotes an intention to speculate, gamble, take a
chance or risk. The Act however provides a very simple and objective
test for determining whether a transaction is a speculative transaction
or not. Under this definition, all that has to be found out is whether
the contract was periodically or ultimately settled by actual delivery,
transfer or otherwise. If the goods or commodities in respect of which
the contracts were entered into were actually taken delivery of
pursuant to the contract, it would not be a speculative transaction,
even though the commodity or scrip may be a highly speculative one by
its very nature and even though at the time when the contracts were
entered into the parties might have had no idea of taking delivery at
all. On the other hand, if the contract is settled otherwise than by
actual delivery, then it will be a speculative transaction
notwithstanding that the nature of the commodity was not one lending
itself to possibilities of speculation or that the intention of the
parties at the time of entering into the contract might have been to
take actual delivery but this intention could not be effectuated for
one reason or the other. On examination of the facts of the case before
lis in the light of decision of Hon'ble Jurisdictional High Court of
Delhi we find (hat the settlement of contracts in respect of shares
traded during the period May 2000 to March 2001 has been made otherwise
than by the actual delivery or transfer. Hence, the transactions of
purchase and sale of shares are in nature speculative in nature within
the meaning of section 43(5) of the Act.

9.4 There is another aspect of the matter. The assessee's main business
consists of providing consultancy services to its clients. The receipts
from consultancy business for the year under consideration as per
profit and loss account are at Rs 2,12*01,307/-. As per the objects of
Memorandum of Association the assessee is not permitted to trade in
shares. The Memorandum of Association only authorizes it to engage in
business of stock broker for which membership of a stock exchange is
necessary. Admittedly the assessee is not in business of a stock
broker. Though the memorandum of association does not authorize the
assessee to carry on business of share trading but fact remains that
the assessee was engaged in share trading activities. As many as 200
transactions of purchase and sale of shares of different companies were
concluded in the year under consideration. Be it, as it may. We have to
see the applicability of the Explanation to section 73 of the Act to
the share trading activities carried on by the assessee As per
Explanation to Section 73, where any part of business of the company an
assessee whose gross total income is not consisted mainly of income
which is chargeable under the heads "Interest on securities", "Income
from house property", "Capital gains" and "Income from other sources",
or a company the principal business of which is the business of banking
or the granting of loans and advances, consists of the purchase and
sale of shares of other companies, such company shall, for the purposes
of section 73, be deemed to be carrying on a speculation business to
the extent to which the business consists of the purchase and sale of
such shares. The provisions of Explanation to section 73 do not
distinguish between the transaction of trading in shares on actual
delivery or without delivery basis. Admittedly the assessee does not
fall under any of the exceptions provided in the Explanation and hence,
the purchase and sale of shares traded during the year under
consideration is also in nature of speculation business within the
meaning of proviso to section 73 of II Act, 1961.

9.5 Another contention of Sh. Veil Jain, the AK of the assessee is that
both the transactions i.e. trading in shares and units of mutual funds
have to be treated on same footings. We are unable accept this
proposition o\' the Id AR of the assessee on the ground that units of
mutual fund cannot be equated to shares of a company for the purposes
of Explanation to section 73 of the Act. A Mutual Fund is not a company
within the provisions of Companies Act. Therefore the units of mutual
fund cannot be treated as shares. Hon'ble Supreme Court in the case of
Apollo Tyres Ltd. r. Commissioner of Income-tax [2002] 122 Taxman 562
had an occasion to examine the question "whether the business of buying
and selling of units of Unit Trust of India by the assessee-company
amounts to a speculation business or not, for the purpose of allowing
set off as to the loss suffered by the company in such a business ?"
Hon'ble Supreme Court answering the question in negative held as under:

"8. The last point for our consideration is: whether buying and selling
of units by the assessee company can be treated as a speculative
business? For this purpose, the revenue argues that the units purchased
by the assessee-company from the UTI are shares, therefore, as per
Explanation to section 73 of the Act, the said business of purchasing
and selling of shares will have to be treated as a business of
speculation. The revenue in support of this argument relies on section
32(3) of the UTI Act which reads as follows:

"(3) Subject to the foregoing sub-sections, for the purposes of the
Income-tax Act, 1961,—

(a) any distribution of income received by a unit holder from the Trust
shall be deemed to be his income by way of dividends; and

(b) the Trust shall be deemed to be a company."

9. Relying on the above provision of the UTI Act, the revenue contends
that if the UTI is a company and income from its units is dividend,
then ipso facto the units will have to be shares, therefore, the
business of purchase and sale of units conducted by the
assessee-company will have to be deemed to be a business in shares
which business, according to the revenue, attracts Explanation to
section 73. On this basis, it is contended that the business of
purchase and sale of units by the assessee-company amounts to a
business of speculation. Both the Tribunal and the High Court have
considered this argument as also the effect of section 32(3) of the I
77 Act and have come to the conclusion that the provision of the said
Act is limited for the purpose of assessment of dividend income under
the Act and Jar deduction of tax at source. They have held that the
legal fiction created by section 32(3) of the UTI Act cannot be carried
any further. We have examined the provisions of the UTI Act and we are
of the opinion that even though the said section creates a fiction to
make the UTI as a deemed company and distribution of income received by
the unit holder as a deemed dividend, by virtue of these deemed
provisions, it cannot be said that it also makes the unit of the UTI a
deemed share. In our opinion, a deeming provision of this nature, as
found in section 32(3) should be applied for the purpose for which the
said deeming provision is specifically enacted, which in the present
case is confined only to deeming the UTI as a company and deeming the
income from the units as a dividend. If as a matter of fact, the
Legislature had contemplated making the unit as also a deemed share,
then it would have stated so. In the absence of any such specific
deeming in regard to the units as shares, it would be erroneous to
extend the provisions of section 32(3) of the UTI Act to the units of
UTI for the purpose of holding that the unit is a share. For these
reasons, we are in agreement with the finding of the High Court on this
point also. "

From the decision of Hon'ble Supreme Court it is clear that units of
mutual fund cannot be equated with shares of a company. Hence income
from short term capital loss on purchase and sale of units of Sun F & C
Value Fund cannot be treated as loss from speculation business. Further
under section 73(1) of the Act, any loss computed in respect of a
speculative business carried on by the assessee, shall not be set off
except against profits and gains, if any, of another speculation
business. Therefore the income from speculation business earned by the
assessee cannot be set off against the short term capital loss from
purchase and sale of units of the said Fund. Accordingly we do not find
any infirmity in the order of C1T(A) upholding the assessment order for
not allowing the set off of income from speculation business against
short term capital loss from units of Sun F & C Value Fund.
Levy of Penalty u/s 271(1)(c) of IT Act

Levy of Penalty u/s 271(1)(c) of IT Act

7:51 PM Add Comment
The tax laws in this country are so complicated that even a person
specializing in this field, including tax administrators, may not
understand the law in the correct perspective or a particular provision
may go unnoticed because of the number of amendments made to the tax
enactments from year to year; therefore, it would be a travesty of
truth and justice to hold that an assessee ought to have known the
correct law and comply therewith, even though he was not aware of the
provisions. ITAT, MUMBAI BENCHES ‘E’: MUMBAISunilchandra Vohra
v.ACITITA No. 4963/Mum/2006June 23, 2009

RELEVANT EXTRACTS:

** ** ** ** ** ** ** ** ** ** ** **

12. We have heard the rival submissions and perused the record. It is
not in dispute that the liability to pay tax under section 2(22)(e) of
the Act arose for the first time in the assessee’s case. He, being an
Engineer by profession, claimed that he was not conversant with the
provisions of the I.T. Act and hence he was not conversant with the
provisions of the I.T. Act and hence he was filing the return by taking
the assistance of C. A. from year to year. But, at no stage, the
accountant, who was professionally qualified, brought to the notice of
the assessee the possibility of applicability of the provisions of
section 2(22)(e) of the Act. The tax authorities have not disputed, in
principle, about the incorrect guidance by the C.A. They were of the
opinion that the assessee ought to have informed the Assessing Officer
voluntarily ignoring the fact that as per the procedure prescribed
under law the burden is not cast upon the assessee to annexe the copy
of the books of account along with return of income. It is also not the
case of the Revenue that the return of income and the annexure thereto
are not as per the requirements of the provisions. Merely because loan
was cleared within the year and thus do not find place in the Balance
sheet, one cannot jump to the conclusion that the assessee withheld the
information till an enquiry was made during the course of assessment
proceedings.

13. The tax laws in this country are so complex and complicated that
even a person specializing in this field, including tax administrators,
may not understand the law in the correct perspective or a particular
provision may go unnoticed because of the number of amendments made to
the tax enactments from year to year. Under these circumstances, it
would be a travesty of truth and justice to hold that an assessee ought
to have known the correct law and comply therewith, even though he was
not aware of the provisions. In the case of Kaushal Diwan vs. ITO 3 ITD
432, the learned Accountant Member observed, on an analogous situation,
that the tax provisions are so complex that even he was not aware of
the provision in question till the matter was placed before the Bench.
Similar view was taken in the case of WTO v. S.P. Jai Kumar 3 ITD 221
(Mad.). The Bench observed that the plea of ignorance of law can be
treated as a proper explanation. Such explanation can be said to have
been substantiated when it is shown that (a) he was assisted by a
professional C.A. who has not brought to his notice the applicability
of provisions of section 2(22)(4) of the Act and (b) by making a
statement that this is the first year in which these provisions came to
be applied in assessee’s case. It could thus be seen that the assessee
tendered an explanation which was substantiated and thus the burden is
cast upon the Revenue to prove that the explanation is false so as to
invoke Explanation 1 to section 271(1)(c) of the Act. Except merely
stating that the assessee ought to have furnished the loan particulars
voluntarily, along with the return of income, no other reason was
assigned by the tax authorities to dispute the bona fides of the
explanation. Under the peculiar facts and circumstances and in the
light of decisions cited by the learned counsel for the assessee, we
are of the view that the explanation of the assessee is bona fide and
hence the case falls outside the ambit of Explanation 1 to section 271
(1)(c) of the Act. In other words, no case was made out by the tax
authorities to levy penalty under section 271(1)(c) of the Act. We,
therefore, set aside, the orders of the tax authorities and cancel the
penalty levied by the Assessing Officer.
E-Filing of ITR - password in acknowledgement

E-Filing of ITR - password in acknowledgement

7:46 PM Add Comment
By now, many of you would have filed several tax returns of your clients or
your own companies or even your own returns. It has been brought to our
notice that this year, whenever an ITR form is filed electronically without
the digital signature, the system shows that the ITR-V has been e-mailed to
the e-mail ID registered with the Income-tax Department’s web site.
Thereafter, when the ITR-V is tried to be opened, the system asks for a
password. This was creating problems as the password that is generally used
by the tax payer to log onto the e-filing site does not work while opening
the ITR-V.

Recently, the Income-tax Department has put up the following clarification
on its website. This would help all of you in opening the ITR-V in case of
returns filed electronically.

*Information on how to open your ITRV/ITR ACK*

*Dear TaxPayer,*

Please note that you will receive your ITRV/ITR ACK PDF file in a zip
format, the ITRV/ITR ACK PDF document is password protected
to ensure it is accessed by the appropriate user. The password is a
combination of the
***pan **(in lower case)** **and the date of birth in the
format ddmmyyyy.*

For example, 1) if the pan is AAAAA0000A and the date of
birth is 10-Jan-2008,
then the password will be aaaaa0000a10012008

Please note that you will need Adobe Acrobat reader 8.0 or forward to open the
password protected PDF file. If you do not have Adobe Acrobat Reader, please
visit the following link to download it:

Click Here

In case you are unable to open
the document,

please contact Efiling Income Tax Administrator providing the document along with pan number and assessment year.

*Income Tax Department*
Scope for rectification of a defective return under section 139(9) of   IT Act, 1961

Scope for rectification of a defective return under section 139(9) of IT Act, 1961

7:42 PM Add Comment
The return of income, if not signed by signatory as contemplated by
section 140, would be mistake, defect or omission; but, by virtue of
section 139(9) that defect can be cured.

HIGH COURT OF BOMBAY
Prime Securities Ltd.v.Varinder Mehta, ACIT
(Inv.)Writ Petition No. 112 of 1993April 27, 2009

RELEVANT EXTRACTS:

** ** ** ** ** ** ** ** ** ** ** **

In our opinion, once Section 140 of the Act mandates that the return has to be signed in the case of a company by the Managing Director and where Managing Director
is not available by any Director thereof, it is not possible to hold
that the signing of the return by the Company Secretary is merely an
irregularity. When the law provides for a particular thing to be done
in particular manner, it must be so done. Apart from that the language
used in Section 140 is "Shall be signed and verified".

In our opinion, therefore, the principles as laid down by the Supreme Court in Sri
Keshab Chandra Mandal (Supra) will have to be applied. Such a defect,
therefore, will not amount to a mere irregularity and the return filed
on 1.12.1991 will have to be treated as defective.8 Having so held, we
may now consider the second contention based on Section 139(9) of the
Act. Section 139(9) reads as under:"139(9).

Where the [Assessing] Officer considers that the return of income furnished by the assessee is defective, he may intimate the defect to the assessee and give him
an opportunity to rectify the defect within a period of fifteen days
from the date of such intimation or within such further period which,
on an application made in this behalf, the Assessing Officer may, in
his discretion, allow; and if the defectis not rectified within the
said period of fifteen days or, as the case may be, the further period
so allowed, then, notwithstanding anything contained in any other
provision of this Act, the return shall be treated as an invalid return
and the provisions of this Act shall apply as if the assessee had
failed to furnish the return:
Perusal of this subsection indicates that a duty is cast on the Assessing Officer when he considers the return of income to be defective to intimate the defect to the assessee and to give an opportunity to rectify the defect within a period of 15 days
from the date of such intimation or within such further period which,
on an application made in this behalf, the Assessing Officer may
allow.

In the instant case, if it is held that the notice of 9.10.1992
is the notice as contemplated by Section 139(9) then in that event,
petitioner within 15 days had removed the defect by filing the same
return but with the signature of the director. A similar issue had come
up for consideration before the learned Division Bench of the Kerala
High Court in Commissioner of Income tax v. Masoneilan(India) Ltd.
(2000) Vol.242 I.T.R. 569. In that case also, the assessee was a public
limited company. Return was signed by a person not named under Section
140 of the Act in relation to the "company". Notice was issued under
Section 154 of the Act to the assessee stating that the return was
nonest and all proceedings were being initiated on the basis that
return were void ab initio. T

he issue before the learned Division Bench of the Kerala High Court was, whether Section 292B of the Act applied to the facts of the case. The learned Division Bench held that once the defect was cured, question of rectification would not arise. In our opinion, therefore, considering the duty cast on the Assessing Officer,
the communication of 9.10.92 must be read as an intimation to the
petitioner pursuant to which the defect was remedied on 15.10.1992. We
have earlier held that not signing the return by the proper person
results in the return being defective. Can then the defect in the
return be cured by virtue of Section 139(9).

In our opinion, the answer is in the affirmative. Failure to sign by a proper person is a defect. The expression defect will have to be understood as it is naturally
understood. Even if the defect has the effect of treating the return as
non est, the legislature still has provided for curing such defects. If
the defect is cured then the return becomes a valid return. Petition on
that count will have to be allowed.10 The last submission is the
consequence flowing from the provisions of Section 292B.

It was introduced by Taxation Laws (Amendment) Act, 1975, with effect from
1.10.1975 and reads as under:“292B. No return of income, assessment,
notice, summons or other proceeding, furnished or made or issued or
taken or purported to have been furnished or made or issued or taken in
pursuance of any of the provisions of this Act shall be invalid or
shall be deemed to be invalid merely by reason of any mistake, defect
or omission in such return of income, assessment, notice, summons or
other proceeding if such return of income, assessment, notice, summons
or other proceeding is in substance and effect in conformity with or
according to the intent and purpose of this Act.”

A bare reading of this provision, makes it clear that a return of income shall not be treated as invalid merely by reason of any mistake, defect or omission
in such return of income, if such return of income is in substance and
effect in conformity with or according to the intent and purpose of
this Act. The return of income, therefore, if not signed by signatory
as contemplated by Section 140 would be mistake, defect or omission.
Question is whether in spite of the defect, the return was in substance
and effect in conformity with or according to the intent and purpose of
this Act. Submissions on behalf of the respondents is that by virtue of
fresh shares issued by the petitioner, petitioner ceasedto be a holding
company of Great Eastern Shipping Company Ltd. and consequently,
benefit of Section 47 of the Income tax Act was not available. The
assessment year was 1991 92.

The previous year would be 1990 91. Admittedly, when the petitioner filed the return, it was a 100% subsidiary of Great Eastern Shipping Company Ltd. and upto March, 1992. Return had been filed on 31.12.1991. The return had been substituted on
15.10.1992 by which date the petitioner had ceased to be a 100%
subsidiary of the company. It is in that context, we will have to
examine the later part of Section 292B. We may gainfully refer to the
judgment of the Supreme Court in Commissioner of Income tax v.
Hindustan Electro Graphites Ltd. (2000) Vol.243 I.T.R. 48, which
approved the judgment of the Calcutta High Court in Modern Fibotex
India Ltd. And another v. Deputy Commissioner of Income tax and others
(1995) Vol.212 I.T.R. 496.

The issue before the Calcutta High Court was the validity of intimation under Section143(1)(a) and the constitutionality of sections 143 (1) (a) and 143(1A) of the Income Tax Act. The Company in its return for the assessment year 1989 90
discloses business loss on the ground that cash compensatory support
was not taxable and that even if cash compensatory support was treated
as taxable , the company would still have suffered a loss in the year.
Subsequent to the company submitting its return, the Finance Act, 1990,
was enacted and Section 28 of the Act were amended with effect from
April 1, 1967, making cash compensatory support taxable.

The Income tax officer issued notice under Section 143(2) of the Act to the company
for the assessment year 1989 90. After notice under 143(1)(a),
additional tax was levied and a demand was raised. Company in that
event filed revised return and on September 7, 1990, filed an
application under Section 154 of the Act against the intimation under
Section 143(1)(a) of the Act. A learned Single Judge of the Calcutta
High Court was pleased to observe that the date for judging the
question of adjustment must be the actual date of the return in the
light of the law then prevailing.

The Court held to hold otherwise would manifestly shock one's sense of justice that an act, correct at the time of doing it, should become incorrect by some new enactment. In the case before the Supreme Court, assessee had filed return for the
assessment year 1989 90 in December, 1989. It received cash assistance
from Government of India in respect of exports, which it had not
included as income. Consequent to Section 28 being given retrospective
effect from 1.4.1967, the Cash compensatory assistance was made
chargeable as business income.

Question was whether the return filed by the assessee was correct. The Court held there that where the return is valid, the law applicable would be law as it stood on the date of filing of the return.11. In the instant case, when the petitioner filed
its return for the previous year 1990 91 the petitioner was a fully
owned subsidiary of Great Eastern Shipping Company Ltd. The petitioner
ceased to be fully owned subsidiary only after March, 1992. The defect
in signature was removed on 15.10.1992 but in respect of the same
assessment year 1991 92.

In our opinion, the subsequent event can not result in holding that the return as originally filed was not in substance and effect in conformity with or according to the intent or purpose of the Act on the date the return was filed. The test to be
applied is whether on the date the original return was filed was the
return in conformity with or according to the purpose of the Act. On
the date the return was filed the petitioner was admittedly a wholly
owned subsidiary of Great Eastern Shipping.

It is true that the return was invalid as originally filed because of a defect in the person signing the returns. But by virtue of Section 139(9) that defect could
be cured and was infact cured. Though the defect was cured on 15.10.92
it would relate back to 31.12.1991 the date of original filing of the
return. Once the return is valid and in conformity with the intended
purpose of the act, in our opinion, therefore, on this count also, the
petition will have to be allowed.

** ** ** ** ** ** ** ** ** ** ** **
LLP - Taxation

LLP - Taxation

7:38 PM Add Comment
LLP is a new corporate form that enables professional expertise and
entrepreneurial initiative to combine, organize and operate in an
innovative and efficient manner. In India, this need has long been
recognised for businesses which may require a framework that provides
flexibility suited to requirements of service, knowledge and technology
based enterprises. Services sector is playing a major role in the
national economy and there is a growing diversity in the range of
services being offered. The services sector also finds this form very
useful.
2. Government had introduced the Limited Liability Partnership Bill,
2006 in the Rajya Sabha on 15th December, 2006. It was later referred
to the Department Related Parliamentary Standing Committee on Finance
for examination and report. The Committee submitted its recommendations
in its report to both Houses of Parliament on 27th November, 2007.
Keeping in view the recommendations made by the Standing Committee and
other relevant inputs, the Government had finalized the LLP Bill, 2008.
Based on such report the Ministry of Corporate Affairs revised the LLP
Bill and the revised LLP Bill, 2008 was introduced in the Rajya Sabha
on 21st October, 2008. This was passed by the Rajya Sabha on 24th
October, 2008. The Bill was passed by Lok Sabha on 12th December, 2008.
The President gave assent to this Bill on 7th January, 2009. 3. The
rules in respect of registration and operational aspects under the LLP
Act, 2008 viz. LLP Rules, 2009, were issued on 1st April, 2009. The
rules in respect of conversion of a partnership firm, a private company
and an unlisted public company into LLPs were made effective w.e.f.
31st May, 2009. The Government has also launched a website namely,
www.llp.gov.in on 1st April, 2009 for operationalization of various
processes provided under the LLP Rules, 2009. The rules under LLP Act,
2008 in respect of winding up and dissolution of LLPs are also under
preparation and would be prescribed shortly. Taxation of LLPs 4. Since
the taxation related matters in India are provided under Tax Laws, the
taxation of LLPs was not provided in the LLP Act. The Finance Bill,
2009 has made provisions in this regard, pursuant to which the taxation
scheme of LLPs has been proposed to be introduced in the Income Tax
Act. It has been proposed to tax LLPs on the lines similar to general
partnerships under Indian Partnership Act, 1932, i.e. taxation in the
hands of the entity and exemption from tax in the hands of its
partners. The Finance Bill, 2009 has accorded a “limited liability
partnership” and a general partnership the same tax treatment.
Consequent changes in the Income-tax Act, 1961 like (i) the word
‘partner’ to include within its meaning a partner of a limited
liability partnership, (ii) the word ‘firm’ to include within its
meaning a limited liability partnership and (iii) the word
‘partnership’ to include within its meaning a limited liability
partnership as these terms have been defined in the Limited Liability
Partnership Act, 2008 have also been proposed in the Finance Bill,
2009. 5. It has also been proposed in the Finance Bill, 2009 that the
designated partner shall sign the income tax return of an LLP, or,
where, for any unavoidable reason such designated partner is not able
to sign the return or where there is no designated partner as such, any
partner shall sign the return. The Finance Bill has also proposed that
in case of liquidation of an LLP, every partner will be jointly and
severally liable for payment of tax unless he proves that non-recovery
cannot be attributed to any gross neglect, misfeasance or breach of
duty on his part. 6. The Bill further provides that as an LLP and a
general partnership is being treated as equivalent (except for recovery
purposes) in the Income-tax Act, the conversion from a general
partnership firm to an LLP will have no tax implications if the rights
and obligations of the partners remain the same after conversion and if
there is no transfer of any asset or liability after conversion. The
Finance Bill, 2009 also provides that if there is a violation of these
conditions, the provisions of section 45 of Income-tax Act shall apply.
The Finance Bill, 2009 has further proposed to make the amendments
effective from the 1st day of April 2010 i.e. assessment year 2010-11.
Ministry of Corporate Affairs, Government of India New Delhi, Asadha
19,1931, July 10, 2009

Sources:Press Information Bureau
New Tax Code by Aug 20

New Tax Code by Aug 20

7:37 PM Add Comment
The Lok Sabha was informed, on Friday that the new direct tax code will
be released for public discussion by August 20. The new code will be
released along with a discussion paper, the Minister of State for
Finance, Mr S. S. Palanimanickam, said in a written reply in the Lok
Sabha.
On July 6, the Finance Minister, Mr Pranab Mukherjee, had in his
Budget speech for 2009-10, promised to pursue structural changes in
direct taxes by releasing the new direct tax code within 45 days.
Income-tax (Ninth Amendment) Rules, 2007

Income-tax (Ninth Amendment) Rules, 2007

7:35 PM Add Comment
NOTIFICATION No. 238/2007, dated 30-8-2007



In exercise of the powers conferred by section 295 read with sub-section (3) of section 200 and proviso to sub-section (3) of section 206C of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-

1. (1) These rules may be called the Income-tax (Ninth Amendment) Rules, 2007.

(2) They shall come into force with effect from the 1st day of September, 2007.

2. In the Income-tax Rules, 1962, -

(1) in the rule 31A, in sub-rule (1), for the first proviso, the following proviso shall be substituted namely:-

‘Provided that where,-

(a) the deductor is an office of Government: or

(b) the deductor is a company; or

(c) the deductor is a person required to get his accounts audited under section 44AB in the immediately preceding financial year; or

(d) the number of deductees’ records in a quarterly statement for any quarter of the immediately preceding financial year is equal to or more than fifty,

the person responsible for deducting tax at source, and the principal officer in the case of a company shall deliver or cause to be delivered such quarterly statements on computer media (3.5” 1.44 MB floppy diskette or CD-ROM of 650 MB capacity):”;

(2) in rule 31AA, in sub-rule (1), for the first proviso, the following proviso shall be substituted namely:-

‘Provided that where,-

(a) the collector is an office of Government: or

(b) the collector is a company; or

(c) the collector is a person required to get his accounts audited under section 44AB in the immediately preceding financial year; or

(d) the number of collectees’ records in a quarterly statement for any quarter of the immediately preceding financial year is equal to or more than fifty,

the person responsible for deducting tax at source, and the principal officer in the case of a company shall deliver or cause to be delivered such quarterly statements on computer media (3.5” 1.44 MB floppy diskette or CD-ROM of 650 MB capacity):”;

[F. No. 142/26/2007-TPL]
Modified India income tax slabs "2009 2010"

Modified India income tax slabs "2009 2010"

7:31 PM Add Comment
Modified India income tax slabs "2009 2010" per budget 2009

A detailed table for your ready reference in calculating your income tax based on the latest income tax slabs.

This table is based on the latest income tax slabs
income tax rates for 2009-2010.

For individual tax payers, there is
no tax for income below Rs 1.6 lakhs
b.. For women tax payers, no tax for income below Rs 1.9 lakhs
c.. For senior citizens, there is no tax for income below Rs 2.40 lakhs.

Men
Income tax slab (in Rs.) Tax
0 to 1,60,000 No tax
1,60,001 to 3,00,000 10%
3,00,001 to 5,00,000 20%
Above 5,00,000 30% I

women
0 to 1,90,000 No tax
1,90,001 to 3,00,000 10%
3,00,001 to 5,00,000 20%
Above 5,00,000 30%

Senior citizen
0 to 2,40,000 No tax
2,40,001 to 3,00,000 10%
3,00,001 to 5,00,000 20%
Above 5,00,000 30%

The surcharge on the tax for income above Rs 10 lakh is removed.
compulsory to   quote Unique Transaction Number (UTN) From January 2010

compulsory to quote Unique Transaction Number (UTN) From January 2010

7:29 PM Add Comment
Lok Sabha The Government has decided to make it compulsory to
quote Unique Transaction Number (UTN) in the Income-tax return forms to
be filed by all the assessees to whom such number has been allocated by
the Income-tax Department. Since the UTN has not been communicated to
the taxpayers, therefore, the requirement of quoting UTN in Income-tax
return form for assessment year 2009-10 has been kept in abeyance.
Unique Transaction Number would be allotted against each transaction in
which tax has been deducted or collected at source. It is proposed to
make it compulsory to quote this Number in the Income-tax return forms
so as to ensure prompt verification and granting of tax credits to the
tax payers. This system of allotting Unique Transaction Number is
expected to become operational by 1st January, 2010. This information
was given by Minister of State for Finance, Shri S.S. Palanimanickam in
written reply to a question raised in Lok Sabha today.
BSC/BY/GN-276/09
Sale & Lease back transactions are not a “sham”

Sale & Lease back transactions are not a “sham”

7:29 PM Add Comment
The assessee, a State Electricity Board, sold energy saving devices on
which 100% depreciation was permitted and took the same assets on lease
and claimed a deduction for the lease rent. The claim was disallowed by
the AO & CIT (A) on the ground that the transactions were a “sham”
though this was reversed by the Tribunal. On appeal by the department,
HELD, dismissing the appeal:

(i) The fact that the machinery was an integral part of the boilers and
continued with the assessee even after the sale is irrelevant because
the assessee received the sale consideration and paid the lease rental.
The mere reduction of tax liability is not conclusive of an arrangement
being a “sham” or a “device”.

(2) The principle that an assessee is entitled to arrange his affairs
to reduce tax liability, without violating the law has been approved by
the Supreme Court in A. Raman 67 ITR 11 and Azadi Bachao Andolan 263
ITR 706 and the contrary observations in McDowell 154 ITR 148 are not
the ratio of that judgement.

(3) The words “device” or “sham” cannot be used to defeat the effect of
a legal situation.
Lok Sabha has passed the Finance Bill for 2009-10

Lok Sabha has passed the Finance Bill for 2009-10

7:18 PM Add Comment
The Lok Sabha has passed the Finance Bill for 2009-10 by a voice vote
on Monday, Finance Minister Pranab Mukherjee has said that economic
recovery has begun and India would achieve 8-9 pc economic growth by
the end of 2010.

Finance Minister Pranab Mukherjee has announced few changes which are
as under

1.Service tax on new services proposed in his Budget would come into
effect from 1st September 2009 a notification for this effect would be
notified by CBEC.

2.Repairs and maintanace of Roads to be exempted from the levy under
repairs and maintenance of roads services, with immediate effect.

3.The benefit of deductions in respect of interest paid on education
loan for higher education to legal guardian of the student under
Section 80E of the IT Act.

4.Extended the sunset clause for tax holidays for industrial parks by
another two years up to March 2011, in a bid to provide stimulus to
infrastructure sector in the wake of economic slowdown.

5.Eligible deductions for assessees with severe disability will be
raised from Rs 75,000 to Rs 1 lakh for purposes of Income Tax.

6.one percent interest subsidy would be available to individuals for
loans up to Rs 10 lakhs for houses that do not cost more than Rs 20
lakhs.
Deal with fake Chartered   Accountants

Deal with fake Chartered Accountants

7:12 PM Add Comment
The Government has said that it is aware that several
unqualified persons are using false registration numbers and issuing fake
certificates by pretending to be Chartered Accountants. Ninety four
cases of fake certificates since April, 2006 have come to the notice of the
Institute of Chartered Accountants of India. These include issue of false
certificates with fake name, registration number (membership number) address
etc.

The details are given below :

Description

01.04.2006 to 31.03.2007

01.04.2007 to 31.03.2008

01.04.2008 to 31.03.2009

01.04.2009 to 22.07.2009

Total

Cases under investigation with the Police

6

8

4

1

19

Cases under examination with the ICAI to enable to be referred to the Police

15

19

31

10

75

Total

21

27

35

11

94

Giving this information in the Lok Sabha in a written reply
Shri Salman Khurshid, Minister for Corporate Affairs, said that ICAI is
empowered under Chartered Accountants Act, 1949 to deal with such issues.
Recognizing the fact that such instances are on the increase, section 26 of
the said Act was amended in 2006, by the Chartered Accountants (Amendment)
Act, 2006, whereby the offence has been made punishable on the first
conviction with a fine of not less than Rs.5,000/- but which may extend to
Rs.1 lakh and in the event of second or subsequent conviction, with
imprisonment for a term, which may extend to one year or with fine not less
than Rs.10,000/- but which may extend to Rs.2 lakhs or with both.
Basis for Charging Interest - RBI on Bank Interest

Basis for Charging Interest - RBI on Bank Interest

7:12 PM Add Comment
14:12 IST
Lok Sabha

According to the Reserve Bank of India (RBI) guidelines, banks are
required to charge interest rate on loans at monthly rest with effect
from April 1, 2002. Charging of interest on loans at monthly rests is,
however, not applicable to agricultural advances where, for the
convenience of borrower, interest rests are linked to crop seasons or
harvesting/marketing season. In the case of savings & term deposits,
Banks are required to pay interest at quarterly or longer rests. In the
case of savings deposits, at present, interest is calculated on minimum
balance to the credit of the deposit account during the period from the
10th to the last day of each calendar month and credited to the account
only when it is Rs.1/-or more.

On a review and in view of computerization in commercial bank branches,
it is proposed that payment of interest on savings bank accounts by
Scheduled Commercial Banks (SCBs) would be calculated on a daily
product basis with effect from April 1, 2010.

This information was given by Minister of State for Finance, Shri Namo
Narain Meena in written reply to a question raised in Lok Sabha today.

BSC/BY/GN-285/09
CBDT withdrawn tax exemption and lower tax rates to foreign firms setting up consortia with domestic companies for engineering, procurement and constr

CBDT withdrawn tax exemption and lower tax rates to foreign firms setting up consortia with domestic companies for engineering, procurement and constr

7:07 PM Add Comment
The government has withdrawn tax benefits enjoyed by consortia of foreign and Indian engineering firms undertaking infrastructure projects, in a move that may hit the sector plagued by severe capacity deficit. The Central Board of Direct Taxes (CBDT) has withdrawn a 20-year-old instruction that provided tax exemption and lower tax rates to foreign firms setting up consortia with domestic companies for engineering, procurement and construction (EPC) contracts in power, oil & gas, roads and other infrastructure sectors.

Under this instruction, an EPC contract is broken up and taxed separately for different portions despite the presence of a consortium. For example, equipment supply by a foreign partner in such contracts is usually tax-free while erection and commissioning face a lower tax rate of 10%.

But now, authorities will tax the income of a consortium as a single unit, at the rate of 42%, the applicable rate for such entities called `association of persons’ in tax parlance. A domestic company as a single entity has to pay tax at the rate of 30%.

The move will increase the cost of implementation of several projects besides discouraging foreign participation in the crucial infrastructure space, say experts.

“We are still in a nation-building mode and there is lack of capacity in the infrastructure sector, so we need to incentivise infrastructure companies. This move puts foreign infrastructure players at a disadvantage as they will have to bear additional tax burden,” said Mr Vinayak Chatterjee, chairman, Feedback Ventures.

While all future contracts will now have to bear the new policy in mind, projects already bid may not be spared either, say tax experts. “Since CBDT has clarified that the withdrawal of the beneficial instruction will not prejudice the tax department’s plea in any appeal, reference or petition, it is likely that past cases may be looked into,” said Sandeep Ladda, associate director (tax and regulatory services) of consultancy firm PwC.

“The instruction was intended for the power sector. But now all other sectors are also taking advantage, leading to a loss of revenue for the exchequer,” said a finance ministry official, requesting anonymity. “There have been instances when a consortium has been created only to take advantage of the instruction.
Institute of Rural Management, Anand, Gujarat, approved by the Central Government U/s. 35(1) (iii) as research institutions

Institute of Rural Management, Anand, Gujarat, approved by the Central Government U/s. 35(1) (iii) as research institutions

7:07 PM Add Comment
Section 35(1)(iii) of the Income-tax Act, 1961 – Scientific research expenditure – Approved social science or statistical research or associations or institutions

Notification No. 60/2009, dated 31-7-2009


It is hereby notified for general information that the organization Institute of Rural Management, Anand, Gujarat has been approved by the Central Government for the purpose of clause (iii) of sub-section (1) of section 35 of the Income-tax Act, 1961 (said Act), read with rules 5C and 5E of the Income-tax Rules, 1962 (said Rules) from assessment year 2008-09 onwards in the category of ‘other institution’ partly engaged in research activities subject to the following conditions, namely :–

(i) The sums paid to the approved organization shall be utilized for research in social sciences;

(ii) The approved organization shall carry out research in social science or statistical research through its faculty members or its enrolled students;

(iii) The approved organization shall maintain separate books of account in respect of the sums received by it for scientific research, reflect therein the amounts used for carrying out research, get such books audited by an accountant as defined in the explanation to sub-section (2) of section 288 of the said Act and furnish the report of such audit duly signed and verified by such accountant to the Commissioner of Income-tax or the Director of Income-tax having jurisdiction over the case, by the due date of furnishing the return of income under sub-section (1) of section 139 of the said Act;

(iv) The approved organization shall maintain a separate statement of donations received and amounts applied for research in social sciences and a copy of such statement duly certified by the auditor shall accompany the report of audit referred to above.

2. The Central Government shall withdraw the approval if the approved organization:-

(a) fails to maintain separate books of account referred to in sub-paragraph (iii) of paragraph 1; or

(b) fails to furnish its audit report referred to in sub-paragraph (iii) of paragraph 1; or

(c) fails to furnish its statement of the donations received and sums applied for research in social sciences or statistical research referred to in sub-paragraph (iv) of paragraph 1; or

(d) ceases to carry on its research activities or its research activities are not found to be genuine; or

(e) ceases to conform to and comply with the provisions of clause (iii) of sub-section (1) of section 35 of the said Act, read with rules 5C and 5E of the said rules.
The Eye Research Foundation, Chennai, approved by the Central Government U/s. 35(1)(iii) as research institutions

The Eye Research Foundation, Chennai, approved by the Central Government U/s. 35(1)(iii) as research institutions

7:06 PM Add Comment
Section 35(1)(ii) of the Income-tax Act, 1961 – Scientific research expenditure – Approved scientific research associations/institutions

NOTIFICATION NO. 57/2009, Dated 9-7-2009

It is hereby notified for general information that the organization Eye Research Centre, Chennai has been approved by the Central Government for the purpose of clause (ii) of sub-section (1) of section 35 of the Income-tax Act, 1961 (said Act) read with rules 5C and 5E of the Income-tax Rules, 1962 (said Rules), with effect from 1-4-2009 in the category of ‘other Institution’, partly engaged in research activities subject to the following conditions, namely:-

(i) The sums paid to the approved organization shall be utilized for scientific research;

(ii) The approved organization shall carry out scientific research through its faculty members or its enrolled students;

(iii) The approved organization shall maintain separate books of account in respect of the sums received by it for scientific research, reflect therein the amounts used for carrying out research, get such books audited by an accountant as defined in the explanation to sub-section (2) of section 288 of the said Act and furnish the report of such audit duly signed and verified by such accountant to the Commissioner of Income-tax or the Director of Income-tax having jurisdiction over the case, by the due date of furnishing the return of income under sub-section (1) of section 139 of the said Act;

(iv) To approved organization shall maintain a separate statement of donations received and amounts applied for scientific research and a copy of such statement duly certified by the auditor shall accompany the report of audit referred to above.


The Central Government shall withdraw the approval if the approved organization:-

(a) fails to maintain separate books of accounts referred to in sub-paragraph (iii) of paragraph 1; or

(b) fails to furnish its audit report referred to in sub-paragraph (iii) of paragraph 1; or

(c) fails to furnish its statement of the donations received and sums applied for scientific research referred to in sub-paragraph (iv) of paragraph 1; or

(d) ceases to carry on its research activities or its research activities are not found to be genuine; or

(e) ceases to conform to and comply with the provisions of clause (ii) of sub-section (1) of section 35 of the said Act read with rules 5C and 5E of the said Rules.
Slab of Auditors fees for inspection of Mutual Funds for the year 2008-09

Slab of Auditors fees for inspection of Mutual Funds for the year 2008-09

7:04 PM Add Comment
Board’s right to inspect and investigation
The Board may appoint one or more persons as inspecting officer to undertake the inspection of the books of accounts, records, documents and infrastructure, systems and procedures or to investigate the affairs of a mutual fund, the trustees and asset management company for any of the following purposes, namely:
» To ensure that the books of accounts are being maintained by the mutual fund, the trustees and asset management company in the manner specified in these regulations;
» To ascertain whether the provisions of the Act and these regulations are being complied with by the mutual fund, the trustees and asset management company;
» To ascertain whether the systems, procedures and safeguards followed by the mutual fund are adequate;
» To ascertain whether the provisions of the Act or any rules or regulations made thereunder have been violated;
» To investigate into the complaints received from the investors or any other person on any matter having a bearing on the activities of the mutual funds, trustees and asset management company;
» To suo-motu ensure that the affairs of the mutual fund, trustees or asset management company are being conducted in a manner which are in the interest of the investors or the securities market.

Notice before inspection and investigation.
» Before ordering an inspection or investigation under regulation 61 the Board shall give not less than ten days notice to the mutual fund, asset management company or trustees as the case may be.
» Notwithstanding anything contained in sub-regulation (1), where the Board is satisfied that in the interest of the investors no such notice should be given, it may, by an order in writing direct that such inspection or investigation be taken up without such notice.
» During the course of inspection or investigation, the mutual fund, trustees or asset management company against whom the inspection or investigation is being carried out shall be bound to discharge his obligations as provided in regulation 63.

Obligations on inspection and investigation
» It shall be the duty of the mutual fund, trustees or asset management company whose affairs are being inspected or investigated, and of every director, officer and employee thereof, to produce to the inspecting officer such books, accounts, records, and other documents in its custody or control and furnish him such statements and information relating to the activities as mutual funds, trustees or asset management company, as the inspecting officer may require, within such reasonable period as the inspecting officer may specify.
» The mutual fund, trustees or asset management company shall allow the inspecting officer to have a reasonable access to the premises occupied by it or by any other person on its behalf and also extend reasonable facility for examining any books, records, documents, and computer data in the possession of the mutual fund, trustees and asset management company or such other person and also provide copies of documents or other materials which in the opinion of the inspecting officer are relevant for the purpose of the inspection.
» The inspecting officer, in the course of inspection or investigation, shall be entitled to examine or record the statements of any director, officer, or employee of the mutual fund, trustees and asset management company.
» It shall be the duty of every director, officer, or employee of the mutual fund, asset management company or trustee to give to the inspecting officer all assistance in connection with the inspection or investigation, which the inspecting officer may reasonably require.

Submission of report to the Board
The inspecting officer shall, as soon as possible, on completion of the inspection or investigation submit a report to the Board: Provided that if directed to do so by the Board, he may submit interim reports.

Action on inspection or investigation report
The Board or the Chairman shall after consideration of inspection or investigation report take such action as the Board or chairman may deem fit and appropriate including action under the Securities and Exchange Board of India (Procedure for Holding Enquriy by Enquiry Officer and Imposing Penalty) Regulations, 2002.]

Appointment of Auditor
Without prejudice to the provisions of regulation 55, the Board shall have the power to appoint an auditor to inspect or investigate, as the case may be, into the books of accounts or the affairs of the mutual fund, trustee or asset management company:
Provided that the Auditor so appointed shall have the same powers of the inspecting officer as stated in Regulation 61 and the obligation of the mutual fund, asset management company, trustee, and their respective employees in regulation 63, shall be applicable to the investigation under this regulation.
Slab of Auditors fees for inspection of Mutual Funds for the year 2008-09

Slab of Auditors fees for inspection of Mutual Funds for the year 2008-09

7:04 PM Add Comment
Board’s right to inspect and investigation
The Board may appoint one or more persons as inspecting officer to undertake the inspection of the books of accounts, records, documents and infrastructure, systems and procedures or to investigate the affairs of a mutual fund, the trustees and asset management company for any of the following purposes, namely:
» To ensure that the books of accounts are being maintained by the mutual fund, the trustees and asset management company in the manner specified in these regulations;
» To ascertain whether the provisions of the Act and these regulations are being complied with by the mutual fund, the trustees and asset management company;
» To ascertain whether the systems, procedures and safeguards followed by the mutual fund are adequate;
» To ascertain whether the provisions of the Act or any rules or regulations made thereunder have been violated;
» To investigate into the complaints received from the investors or any other person on any matter having a bearing on the activities of the mutual funds, trustees and asset management company;
» To suo-motu ensure that the affairs of the mutual fund, trustees or asset management company are being conducted in a manner which are in the interest of the investors or the securities market.

Notice before inspection and investigation.
» Before ordering an inspection or investigation under regulation 61 the Board shall give not less than ten days notice to the mutual fund, asset management company or trustees as the case may be.
» Notwithstanding anything contained in sub-regulation (1), where the Board is satisfied that in the interest of the investors no such notice should be given, it may, by an order in writing direct that such inspection or investigation be taken up without such notice.
» During the course of inspection or investigation, the mutual fund, trustees or asset management company against whom the inspection or investigation is being carried out shall be bound to discharge his obligations as provided in regulation 63.

Obligations on inspection and investigation
» It shall be the duty of the mutual fund, trustees or asset management company whose affairs are being inspected or investigated, and of every director, officer and employee thereof, to produce to the inspecting officer such books, accounts, records, and other documents in its custody or control and furnish him such statements and information relating to the activities as mutual funds, trustees or asset management company, as the inspecting officer may require, within such reasonable period as the inspecting officer may specify.
» The mutual fund, trustees or asset management company shall allow the inspecting officer to have a reasonable access to the premises occupied by it or by any other person on its behalf and also extend reasonable facility for examining any books, records, documents, and computer data in the possession of the mutual fund, trustees and asset management company or such other person and also provide copies of documents or other materials which in the opinion of the inspecting officer are relevant for the purpose of the inspection.
» The inspecting officer, in the course of inspection or investigation, shall be entitled to examine or record the statements of any director, officer, or employee of the mutual fund, trustees and asset management company.
» It shall be the duty of every director, officer, or employee of the mutual fund, asset management company or trustee to give to the inspecting officer all assistance in connection with the inspection or investigation, which the inspecting officer may reasonably require.

Submission of report to the Board
The inspecting officer shall, as soon as possible, on completion of the inspection or investigation submit a report to the Board: Provided that if directed to do so by the Board, he may submit interim reports.

Action on inspection or investigation report
The Board or the Chairman shall after consideration of inspection or investigation report take such action as the Board or chairman may deem fit and appropriate including action under the Securities and Exchange Board of India (Procedure for Holding Enquriy by Enquiry Officer and Imposing Penalty) Regulations, 2002.]

Appointment of Auditor
Without prejudice to the provisions of regulation 55, the Board shall have the power to appoint an auditor to inspect or investigate, as the case may be, into the books of accounts or the affairs of the mutual fund, trustee or asset management company:
Provided that the Auditor so appointed shall have the same powers of the inspecting officer as stated in Regulation 61 and the obligation of the mutual fund, asset management company, trustee, and their respective employees in regulation 63, shall be applicable to the investigation under this regulation.
New Form 15CA & 15CB relating to remittance of payments to a non-resident or to a foreign company & CA Certificate

New Form 15CA & 15CB relating to remittance of payments to a non-resident or to a foreign company & CA Certificate

7:02 PM Add Comment
Currently, remittances to non-residents are allowed by banks if the person making the remittance furnishes an undertaking, accompanied by a certificate from a Chartered Accountant (“CA”) certifying the rate for withholding tax as per section 195 of the Act. The banks then forward the certificates to the Reserve Bank of India (“RBI”), which in-turn forwards it to the Income tax department.

Finance Act, 2008 inserted a new sub section (6) to section 195 effective from April 1, 2008, which requires the person responsible for making payment to a non-resident to furnish information relating to such payments in forms to be prescribed. The Central Board of Direct Taxes (“CBDT”) has now, by notification No 30/2009 dated March 25, 2009, prescribed a new rule 37BB in the Income Tax Rules, 1962 (“the rules”) prescribing Form 15CA and Form 15CB to be filed in relation to remittances to non-residents under section 195(6) of the Income Tax Act, 1961 (“the Act”). This new rule is effective from July 1, 2009 and shall apply to all remittances being made after July 1, 2009. The process that will have to be followed, before any remittance can be made, is as under—



Step 1 : Obtain a certificate from a Chartered Accountant in Form No 15CB


Step 2:Furnish the information in Form No15CA



Step 3:Electronically upload Form 15CA on the designated website


Step 4:Take Print out of Form 15CA and file a signed copy


Step 5:Remit money to the Non Resident


Please note that all the above steps have to be undertaken before remittance of money to the non-resident.

Notification no. 30/2009 is as below:-

In exercise of the powers conferred by section 295 read with sub-section (6) of section 195 of the Income-tax Act, 1961, the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:-

1. (1) These rules may be called the Income-tax (Seventh Amendment) Rules, 2009.

(2) They shall come into force with effect from 1st July, 2009.

2. In the Income-tax Rules, 1962, after rule 37BA, the following rule shall be inserted, namely:-


“Furnishing of information under sub-section (6) of section 195.

37BB. (1) The information under sub-section (6) of section 195 shall be furnished by the person responsible for making the payment to a non-resident, not being a company, or to a foreign company, after obtaining a certificate from an accountant as defined in the Explanation to section 288 of the Income-tax Act, 1961.

(2) The information to be furnished under sub-section (6) of section 195 shall be in Form No. 15CA and shall be verified in the manner indicated therein and the certificate from an accountant referred to in sub-rule (1) shall be obtained in Form No. 15CB.

(3) The information in Form No. 15CA shall be furnished electronically to the website designated by the Income-tax Department and thereafter signed printout of the said form shall be submitted prior to remitting the payment.

(4) The Director-General of Income-tax (Systems) shall specify the procedures, formats and standards for ensuring secure capture, transmission of data and shall also be responsible for the day-to-day administration in relation to furnishing the information in the manner specified.
Govt exempts taxable services provided to SEZ

Govt exempts taxable services provided to SEZ

4:04 PM Add Comment
Govt exempts taxable services provided to Special Economic Zone, and received by a developer or units of a Special Economic Zone

NOTIFICATION NO 9/2009-SERVICE TAX

Dated: March 3, 2009



In exercise of the powers conferred by sub-section (1) of section 93 of the Finance Act, 1994 (32 of 1994), and in supersession of the notification of the Government of India, Ministry of Finance ( Department of Revenue), No. 4/2004-ServiceTax, dated the 31st March, 2004, published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section ( i ) dated the 31st March, 2004, vide, G.S.R.248(E), dated the 31st March, 2004, except as respects things done or omitted to be done before such supersession, the Central Government, on being satisfied that it is necessary in the public interest so to do, hereby exempts the taxable services specified in clause (105) of section 65 of the said Finance Act, which are provided in relation to the authorised operations in a Special Economic Zone, and received by a developer or units of a Special Economic Zone, whether or not the said taxable services are provided inside the Special Economic Zone, from the whole of the service tax leviable thereon under section 66 of the said Finance Act:

Provided that

(a) the developer or units of Special Economic Zone shall get the list of services specified in clause (105) of section 65 of the said Finance Act as are required in relation to the authorised operations in the Special Economic Zone, approved from the Approval Committee (hereinafter referred to as the specified services);

(b) the developer or units of Special Economic Zone claiming the exemption actually uses the specified services in relation to the authorised operations in the Special Economic Zone;

(c) the exemption claimed by the developer or units of Special Economic Zone shall be provided by way of refund of service tax paid on the specified services used in relation to the authorised operations in the Special Economic Zone;

(d) the developer or units of Special Economic Zone claiming the exemption has actually paid the service tax on the specified services;

(e) no CENVAT credit of service tax paid on the specified services used in relation to the authorised operations in the Special Economic Zone has been taken under the CENVAT Credit Rules, 2004;

(f) exemption or refund of service tax paid on the specified services used in relation to the authorised operations in the Special Economic Zone shall not be claimed except under this notification.

2. The exemption contained in this notification shall be subject to the following conditions, namely:-

(a) the person liable to pay service tax under sub-section (1) or sub-section (2) of section 68 of the said Finance Act shall pay service tax as applicable on the specified services provided to the developer or units of Special Economic Zone and used in relation to the authorised operations in the Special Economic Zone, and such person shall not be eligible to claim exemption for the specified services:
Provided that where the developer or units of Special Economic Zone and the person liable to pay service tax under sub-section (2) of section 68 for the said services are the same person, then in such cases exemption for the specified services shall be claimed by that person;

(b) the developer or units of Special Economic Zone shall claim the exemption by filing a claim for refund of service tax paid on specified services;

(c) the developer or units of Special Economic Zone shall file the claim for refund to the jurisdictional Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be;

(d) the developer or units of Special Economic Zone who is not registered as an assessee under the Central Excise Act, 1944 (1 of 1944) or the rules made thereunder, or the said Finance Act or the rules made thereunder, shall, prior to filing a claim for refund of service tax under this notification, file a declaration in the Form annexed hereto with the respective jurisdictional Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be;

(e) the jurisdictional Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall, after due verification, allot a service tax code (STC) number to the developer or units of Special Economic Zone within seven days from the date of receipt of the said Form;

(f) the claim for refund shall be filed, within six months or such extended period as the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall permit, from the date of actual payment of service tax by such developer or unit to service provider;

(g) the refund claim shall be accompanied by the following documents, namely:-
(i) a copy of the list of specified services required in relation to the authorised operations in the Special Economic Zone, as approved by the Approval Committee;
(ii) documents for having paid service tax;
(iii) a declaration by the Special Economic Zone developer or unit, claiming such exemption, to the effect that such service is received by him in relation to authorised operation in Special Economic Zone.

(h) the Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be, shall, after satisfying himself that the said services have been actually used in relation to the authorised operations in the Special Economic Zone, refund the service tax paid on the specified services used in relation to the authorised operations in the Special Economic Zone;

(i) where any refund of service tax paid on specified services is erroneously refunded for any reasons whatsoever, such service tax refunded shall be recoverable under the provisions of the said Finance Act and the rules made thereunder, as if it is a recovery of service tax erroneously refunded.

3. The exemption contained in this notification shall apply only in respect of service tax paid on the specified services on or after the date of publication of this notification in the Official Gazette.

4. Words and expressions used in this notification and defined in the Special Economic Zones Act, 2005 (28 of 2005) or the rules made thereunder, shall apply, so far as may be, in relation to refund of service tax under this notification as they apply in relation to a Special Economic Zone.
Form

1. Name of the developer or unit of Special Economic Zone:

2. Address of the registered office or head office:

3. Permanent Account Number (PAN):

4. Details of Bank Account:
(a) Name of the Bank:
(b) Name of the Branch:
(c) Account Number:

5. (a) Constitution of developer or unit of Special Economic Zone [Proprietorship /Partnership /Registered Private Limited Company /Registered Public Limited Company /Others (specify)]

(b) Name, address, telephone number and Email ID of proprietor /partner /director

6. Description of authorized operations as approved by the Approval Committee:

S. No.
Description of goods
Classification in case of excisable goods

(1)
(2)
(3)






7. Description of taxable services received by the exporter for use in relation to the authorised operations in the Special Economic Zone:

S. No.
Description of taxable service
Classification under the Finance Act, 1994
Name, STC and address of service provider
Invoice number and date

(1)
(2)
(3)
(4)
(5)








8. Name, designation and address of the authorized signatory / signatories:

9. I / We hereby declare that-

(i) the information given in this application form is true, correct and complete in every respect and that I am authorized to sign on behalf of the developer or units of Special Economic Zone;

(ii) no CENVAT credit of service tax paid on the specified services used in relation to the authorised operations in the Special Economic Zone shall be taken under the CENVAT Credit Rules, 2004;

(iii) I / we shall maintain records pertaining to the specified services used in relation to the authorised operations in the Special Economic Zone and shall make available, at the declared premises, at all reasonable time, such records for inspection and examination by the Central Excise Officer authorised in writing by the jurisdictional Assistant Commissioner of Central Excise or the Deputy Commissioner of Central Excise, as the case may be.

(Signature of the applicant / authorized person with stamp)

Date:

Place:

[F.No.354/163/2006-TRU]





(Unmesh Sharad Wagh)
Under Secretary to the Government of India



in the said notification, in the Table, for serial number 21 and the entries relating thereto, the following shall be substituted :-

"21
(1) Chief Commissioner of Central Excise, Shillong
Dibrugarh


(2) Chief Commissioner of Central Excise, Kolkata
Shillong
Guwahati"


F. No. 275/100/2006-CX.8A

(Manpreet Arya)
Under Secretary to the Government of India

Note:-The principal Notification Number 18/2007-Service Tax, dated the 12th May, 2007 was published in the Gazette of India, Extraordinary, Part II, Section 3, Sub-section (i) vide number G.S.R. 353(E), dated the 12th May, 2007, and was amended vide notification number 46/2008- Service Tax, dated the 18th January, 2008 vide number G.S.R. 38(E) renumbered as 1/2008- Service Tax vide Corrigendum dated the 18th January, 2008 vide number G.S.R. 49(E) and vide notification number 25/2008- Service Tax, dated the 21st May, 2008 vide number G.S.R. 393 (E),