06 March 2009
Please send me details of Amendment for A/Y 09-10 of income tax and service tax for applicable for jun 09 exam. Also u can send amendment of other law for PCE .My email address nilu_nirupam@yahoo.co.in
06 March 2009
DIRECT TAX PROPOSALS Rates of Income Tax for A.Y. 2009-2010 A. Rates for individuals / HUFs General Assessee Women resident Basic exemption Rs.1, 50,000/- Basic exemption Rs.1, 80,000/- Tax Rate Tax Rate Between 1, 50,001/- and 3, 00,000/- 10% Between 1, 80,001/- and 3, 00,000/- 10% Between 3, 00,001/- and 5, 00,000/- 20% Between 3, 00,001/- and 5, 00,000/- 20% Above 5, 00,000/- 30% above 5, 00,000/- 30% Senior Citizen – Resident Basic exemption Rs.2, 25,000/- Tax Rate Between 2, 25,001/- and 3, 00,000/- 10% Between 3, 00,001/- and 5, 00,000/- 20% Above 5, 00,000/- 30% There is no change in rate of Surcharge. Where income exceeds Rs.10 lakhs, surcharge is applicable @ 10% which is subject to marginal relief. B. Co-operative Societies The rates of income-tax for assessment year 2009-2010 are the same as were applicable to assessment year 2008-2009. No surcharge shall be levied. C. Firms The rate of income tax for assessment year 2009-2010 is the same as were applicable to assessment year 2008-2009. A surcharge shall be levied at the rate of ten percent in respect of firms having total income exceeding Rs. One Crore. Marginal relief will be available. Surcharge shall be levied at the existing rates on tax on fringe benefits irrespective of amount of fringe benefit. D. Local authorities The rates of income tax for assessment year 2009-2010 are the same as were applicable to assessment year 2008-2009. No surcharge shall be levied. E.Companies The rates of income tax for the assessment year 2009-2010 are the same as were applicable to assessment year 2008-2009. A surcharge shall be levied at 10% in the case of domestic companies having total income exceeding Rs. One Crore and at 2½% in the case of Companies other than domestic Companies having total income exceeding Rs. One Crore. Marginal relief will be available. F. Rates of Fringe Benefit Tax The rates of fringe benefit tax for Assessment Year 2009-2010 are the same as for assessment year 2008-2009. The fringebenefit tax shall be increased by surcharge as follows:- In case of AOP / BOI 10% of such tax when fringe benefit exceeds Rs. tenlakhs. In case of Firm / Domestic Co. 10% of such tax Co. other than Domestic Co. 2 ½ % of such tax Education Cess shall continue to be levied at 2% of income tax and surcharge in all cases. In addition to that, Secondary andHigh Education Cess will be levied at 1% on income tax and Surcharge in all cases. Definition of the term Agricultural income – Sec.2 (1A) The definition of the term agricultural income has been expanded by incorporation of Explanation 3 u/s. 2(1A) to include any income derived from saplings or seedlings grown in a nursery. The amendment will take effect from 01-04-2009 (A.Y. 2009-2010) onwards. Charitable Purpose Sec. 2 (15) According to existing provisions, ‘Charitable purpose’ includes advancement of any other object of general public utility. It is proposed to amend Sec. 2(15) to provide that carrying of any activity in the nature of trade, commerce or business or rendering of service of such nature for a consideration will not be advancement of any other object of general public utility and consequently such activity will not be for Charitable purpose. The amendment will take effect from 01-04-2009 (A.Y. 2009-2010) onwards. Income Not Forming Part of Total Income Sec. 10 (26AAA) It is proposed to include new Sub Sec. (26AAA) u/s. 10 to provide that any income accruing or arising to a Sikkimese individual from any source in the State of Sikkim or by way of dividend or interest on Securities will be exempt from tax. A Sikkimese woman who marries a non-Sikkimese individual on or after 01-04-2008 will not be entitled to this benefit. The term ‘Sikkimese’ is defined in the Explanation under the sub-section. The amendment will take retrospective effect from 01-04-1990(A.Y. 1990-91) onwards. Income Not Forming Part of Total Income Sec.10 (43) New clause (43) is proposed to be introduced u/s. 10 to exempt from tax any amount received by an individual as loan in a transaction involving transfer of Capital Asset in a scheme of reverse mortgage to be notified by Central Government. The amendment will take effect from 01-04-2009 (A.Y. 2009-2010) onwards. Expenditure on Scientific Research Sec.35 (1) According to existing provisions, weighted deduction is provided equal to 1¼ of an amount paid to Scientific Research Association, University, College or other institution to be used for scientific research. Under proposed new clause (iia) u/s. 35(1) any sum paid to an Indian Company which has as its main object scientific research and development and which is approved by the prescribed authority will also be eligible for same weighted deduction. The amendment will take effect from 01-04-2009 (A.Y.2009-10) onwards. Amortisation of Preliminary Expenses Sec. 35D According to the existing provisions, expenditure incurred by an Indian Company after commencement of its business for the extension of industrial undertaking or for setting up a new industrial unit will be eligible for deduction at the rate of one-fifth of the expenditure for each of the 5 successive years. It is proposed to liberalise the provision by providing that the benefit will be admissible to any undertaking or any unit and not restricted to only industrial undertaking or only industrial unit. The amendment will take effect from 01-04-2009 (A.Y. 2009-2010) onwards. Securities Transaction Tax Sec. 36(1) According to existing provisions any sum paid on account of Securities Transaction Tax is not admissible deduction u/s. 40(a) (ib). It is proposed to amend Sec. 36(1) by incorporating clause (xv) to provide that security transaction tax paid in the course of business is admissible deduction if the income arising from such Securities transaction is included in the income from business. Consequential amendment is proposed to delete the existing Sec. 40(a)(ib). The amendment will take effect from 01-04-2009 (A.Y. 2009-2010) onwards. Commodities Transaction Tax – Sec. 36(1) (xvi) It is proposed to provide for deduction for Commodities Transaction Tax paid by assessee in the course of his business if income arising from such taxable Commodities transaction is included in his income from business. The amendment will take effect from 01-04-2009 (A.Y. 2009-2010) onwards. Payments otherwise than by A/c Payee Cheques Sec. 40-A(3) Courts have interpreted the existing provisions to mean that in the case of payments made otherwise than by A/c Payee cheques only where each payment exceeded Rs.20,000/- it is disallowable u/s. 40-A(3). It is proposed to amend the Section 40-A(3) to mean that wherever aggregate of such payments made in a day exceeded Rs.20,000/- the same will be disallowable.Similar aggregation is proposed for payments made in a day where liability is incurred in a year and payments are made in subsequent year. The amendment will take effect from 01-04-2009 (A.Y. 2009-2010) onwards. Actual cost of asset – Sec.43 (6) It is proposed to insert new Explanation 6 under Section 43(6) to provide for adjustments to the actual cost of assets in the case of assessee who is not required to compute his total income for any assessment year. The amendment will take retrospective effect from 01-04-2003 (A.Y. 2003-2004) onwards. Transactions not regarded as transfer - Sec.47 (xa) & 47 (xvi) It is proposed that following transactions will not be regarded as transfer for the purpose of Capital Gains. - Transfer by way of conversion of bonds of Indian Company issued under notified Scheme [ Sec. 47 (xa) ] - Transfer of capital asset in a transaction of reverse mortgage under Scheme notified by the Central Government. [ Sec. 47 (xvi) ] Cost with reference to certain modes of acquisitions – Sec.49 (2A). It is proposed that in the case of shares / debentures of company becoming property of assessee by way of conversion of bonds or debentures, debenture certificates etc., or under the proposed reverse mortgage Scheme the cost of acquisition shall be deemed to be that part of cost of debenture, debenture stock, bond or deposit certificate in relation to which such asset is acquired by the assessee.
Deduction in respect of LIC Premia PPF Contribution, etc. – Sec.80-C According to existing provisions, contribution made by an individual or HUF towards LIC Premia, PPF, etc. is eligible for deduction upto Rs.1 Lakh u/s. 80C. It is proposed that the following contributions will also be eligible for such deduction. - Senior Citizen Savings Scheme - Post Office Five Year Time Deposit Any amount withdrawn before expiry of 5 years (excluding interest thereon offered for taxation) will be deemed to be the income of the year when it was withdrawn. Medical Insurance – Sec. 80-D The quantum of deduction is increased from the existing amount of Rs.10,000/- to Rs.15,000/- in the case of individual and HUF. In case the premia is paid to keep in force an insurance on the health of Senior Citizen the admissible deduction is increased from Rs. 15,000 to Rs.20,000/- The existing condition of ‘dependent’ with respect to parents is being dispensed with. This deduction shall be in addition to the existing deduction available to the individual assessee on medical insurance for himself, his spouse and dependent children.Further, it is proposed that if either of the individual assessee’s parents, who has been medically insured, is a senior citizen, the deduction would be allowed up to twenty thousand rupees. For example, an individual assessee pays (through any mode other than cash) during the previous year medical insurance premia as under:- (i) Rs 12,000/- to keep in force an insurance policy on his health and on the health of his wife and dependent children; (ii) Rs 17,000/- to keep in force an insurance policy on the health of his parents. Under the proposed new provisions he will be allowed a deduction of Rs 27,000/- (Rs. 12,000/- + Rs. 15,000/-) if neither of his parents is a senior citizen. However, if any of his parents is a senior citizen, he will be allowed a deduction of Rs 29,000/- (Rs.12,000/- + Rs.17,000/-). Whether the parents are dependent or not, is not a consideration for deciding the deduction under the proposed new section. Further, in the above example, if cost of insurance on the health of the parents is Rs 30,000/-, out of which Rs 17,000/- is paid (by any non-cash mode) by the son and Rs 13,000/- by the father ( who is a senior citizen), out of their respective taxable income, the son will get a deduction of Rs 17,000/- ( in addition to the deduction of Rs 12,000/- for the medical insurance on self and family) and the father will get a deduction of Rs 13,000/-. This amendment will take effect from the 1st day of April, 2009 and will accordingly apply in relation to assessment year 2009-10 and subsequent assessment years. Profit from Industrial Undertaking - Sec 80 I B (9) According to existing provisions, deduction of 100% of the profit is admissible to an industrial undertaking which begins on or after 01-04-1997 in commercial production or on or after 01-04-1998 refining of mineral oil for a period of 7 years. It proposed that no deduction will be admissible if the refining is begun on or after 01-04-2009. Operating & Maintaining Hospitals - Sec 80 I B (11-c) New clause 11-c is proposed to be introduced v/s 80 I B to provide 100% exemption to the profit of hospitals which starts functioning on 01-04-2008 & ending on 31-03-2013 in non-excluded areas. The Hospitals should have minimum 100 beds for patients & should function under the byelaws of local authority. Hotels – Convention centers - Sec 80 I D According to existing provisions, 100% profits of hotels / convention centers located in specified areas is exempt from tax if they start functioning any time from 01-04-07 & ending on 31-03-2010. It is proposed to extend the benefit to a hotel located in specified district having World Heritage Site which starts functioning any time from 01-04-2008 & ending on 31-03-2013. Rebate for securities Transaction Tax - Sec 88 E According to existing provisions, in the case of an assessee whose income includes income arising from taxable securities taxation & is entitled to deduction from the income tax on such income an amount equal to the Securities transaction tax. The above deduction is proposed to be withdrawn from assessment year beginning on 01-04-2009. Fringe Benefit Tax – Sec 115 WB According to Existing Provisions, the expression “specified security”, inter alia, includes employees’ stock option. It is proposed to amend this to include securities offered under an employees’ stock option plan or scheme, where the employees’stock option has been granted. This amendment will take effect from 1st April, 2008 (Ay 2008-09) onwards According to existing provisions, if the employee incurred any expense on entertainment, hospitality, conference, sales promotion (including publicity), etc. Fringe Benefit would arise. It is proposed to amend clause (B) to provide that any expenditure on or payment through non-transferable pre-paid electronic meal card usable only at eating joints or outlets and which fulfils such other conditions as may be prescribed, shall be excluded from the hospitality expenditure for calculation of fringe benefit tax. It is proposed to enlarge the scope of the exclusion in this Explanation to clause E by providing that the expenditure incurred or payment made to :- (i) provide crèche facility for the children of the employee; or (ii) Sponsor a sportsman, being an employee; or (iii) organise sports events for employees, shall also be not considered as expenditure on employees’ welfare for calculation of fringe benefit tax. Further, clause (K) of the said sub-section provides for expenditure on maintenance of any accommodation in the nature of guest house, other than accommodation used for training purposes, as fringe benefit. It is proposed to omit this clause so as not to subject this expenditure to fringe benefit tax. These amendments will take effect from 1st April, 2009 (Ay 2009-10). Value of Fringe Benefits - Sec 115 WC Under clause (c) of subsection (1) of section 115WC, it is provided that the value of fringe benefit relating to expenditure referred to in clauses (A) to (K) of sub-section (2) of section 115WB shall be twenty per cent. of the expenses. Similarly, under clause (d) of the said sub-section, it is provided that the value of fringe benefit referred to in clauses (L) to (P) of sub-section (2) of section 115WB shall be fifty per cent. of the expenses. The fringe benefit for the purposes of expenses on festival celebrations mentioned in clause (L) of sub-section (2) of section 115WB, is accordingly valued at fifty per cent. It is proposed to amend both clauses (c) and (d) of sub-section (1) of section 115WC so as to provide that only 20 per cent. of the expenditure on festival celebrations shall be deemed to be the value of fringe benefit and not 50 per cent. as under the existing provisions. This amendment will take effect from 1st April, 2009[Ay 2009-2010] Return of fringe benefits – Sec 115 WD The due date for filing return of fringe benefits in the case of a company or a person (other than a company) whose accounts are required to be audited under this Act or under any other law for the time being in force, is 31st October of the assessment year.It is proposed to amend the said clause (a) so as to provide that the due date for filing return of fringe benefits shall be 30th September of the assessment year. This amendment will take effect from 1st April, 2008[Ay 2008-09]. Assessment of fringe benefits – Sec 115 WE It is proposed to provide that where a return has been made under section 115WD, such return shall be processed in the following manner, namely:- (a) the value of fringe benefits shall be computed after making the following adjustments, namely:– (i) any arithmetical error in the return; or (ii) an incorrect claim, if such incorrect claim is apparent from any information in the return; (b) the tax and interest, if any, shall be computed on the basis of the value of fringe benefits computed under clause (c) the sum payable by, or the amount of refund due to, the assessee shall be determined after adjustment of the tax and interest, if any, computed under clause (b) by any advance tax paid, any tax paid on self-assessment and any amount paid otherwise by way of tax or interest; (d) an intimation shall be prepared or generated and sent to the assessee specifying the sum determined to be payable by, or the amount of refund due to, the assessee under clause (c); and (e) the amount of refund due to the assessee in pursuance of the determination under clause (c) shall be granted to the assessee: It is further proposed that no intimation under this sub-section shall be sent after the expiry of one year from the end of the financial year in which the return is made. It is also clarified that the acknowledgment of the return shall be deemed to be the intimation in a case where no sum is payable by, or refundable to, the assessee under clause (c), and where no adjustment has been made under clause (a). It is also proposed to insert new sub-sections (1A), (1B) and (1C) to the said section. Sub-section (1A) provides that for the purpose of processing of returns under sub-section (1), the Board may make a Scheme for centralized processing of returns with a view to expeditiously determining the tax payable by, or refund due to, the assessee as required under that sub-section adaptations as may be specified in that notification so, however, that no direction shall be issued after 31st March, 2009. These amendments will take effect from 1st April, 2008[Ay 2008-09] Deemed payment of tax by the employee – Sec 115 WKB It is to provide that where an employer has paid any fringe benefit tax with respect to allotment or transfer of specified security or sweat equity shares, referred to in clause (d) of sub-section (1) of section 115WB, and has recovered such tax subsequently from the employee, it shall be deemed that the fringe benefit tax so recovered is the tax paid by such employee in relation to the value of the fringe benefit provided to him only to the extent to which the amount thereof relates to the value of the fringe benefits provided to such employee, as determined under clause (ba) of sub-section (1) of section 115WC. Sub-section (2) of the new section seeks to provide that notwithstanding anything contained in any other provision of this Act, where the fringe benefit tax recovered from the employee is deemed to be the tax paid by such employee under sub-section (1), such employee shall not be entitled, under this Act, to claim any refund out of such payment of tax or any credit of such payment of tax against tax liability on other income or against any other tax liability. This amendment will take effect from 1st April, 2008[Ay 2008-09] subsequent assessment years. Return of Income - Sec 139(1) According to existing provision the due date of filing of the return of income in the case of company, non-corporate assesses whose accounts are required to be audited and working partners of firms whose accounts are required to be audited is 31st October of the assessment year. It is proposed to amend the due date in the above cases to 30th September of the assessment year. The amendment will take effect form 01-04-08(AY 08-09). Defective return of Income - Sec 139(9) According to existing provisions return will be deemed as defective if not accompanied by proof of tax claimed to have deducted or collected at source before 01-04-08. It is proposed to delete reference to the date to bring the provisions regarding tax collected / deducted at par with proof payment of advance tax. The amendment will take effect form 01-04-08(AY 08-09). Enquiry before Assessment – Sec 142 According to existing provisions, assessing officer is vested with the power to call for special audit report of an assessee due to complexity of the account within specified time and that he may extend the time on an application from the assessee. It is proposed to amend the section to provide that the assessing officer can extend the time `SUO MOTU` also. The amendment will take effect form 01-04-08 (AY 08-09). Assessment Procedure Sec 143 It is proposed to substitute section 143(1) to provide that where a return has been made under section 139, or in response to a notice under sub-section (1) of section 142, such return shall be processed in the following manner, (a) the total income or loss shall be computed after making adjustments, for (i) any arithmetical error in the return; or (ii) an incorrect claim, apparent from any information in the return; (b) the tax and interest, if any, shall be computed on the basis of the total income; (c) the sum payable by, or the amount of refund due to, the assessee shall be determined after adjustment of the tax and interest, by any tax deducted collected at source, any advance tax self-assessment and any amount paid otherwise by way of tax or interest; (d) an intimation shall be sent to the assessee specifying the sum determined to be payable by, or the amount of refund due (e) the amount of refund due to the assessee shall be granted to the assessee: It is further proposed to provide that an intimation shall also be sent to the assessee in a case where the loss declared in the return by the assessee is reduced but no tax or interest is payable by, or no refund is due to, him: No intimation under this sub-section shall be sent after the expiry of one year from the end of the financial year in which the return was made. The acknowledgment of the return shall be deemed to be the intimation in a case where no sum is payable by, or refundable to, the assessee under clause (c), and where no adjustment has been made under clause (a).Further, it is proposed to amend said section so as to substitute the proviso to clause (ii) of sub-section (2) thereof to provide that no notice under clause (ii) shall be served on the assessee after the expiry of six months from the end of the financial year in which the return is furnished. These amendments will take effect from 1st April, 2008[AY 2008-09]. Income Escaping Assessment - Sec 147 According to the existing provisions, if the assessing officer has reason to believe that any income chargeable to tax has escaped assessment, subject to sections 148 and 153 he may assess or reassess the said income. It is now proposed to provide that he may assess or reassess such income other than the income involving matters which are subject matters of appeal, reference or revision which is chargeable to tax and has escaped assessment. The amendment will take effect from 01-04-08 (A Y 08-09) Sanction for issue of Notice for Reassessment - Sec 151 Under the existing provisions, there should be requirement of satisfaction on the part of Chief Commissioner, Commissioner or Joint Commissioner on the reasons recorded by assessing officer that it is a fit case for issue of such notice. It is proposed to insert an Explanation u/s 151(2) to declare that the Joint Commissioner, Commissioner or the Chief Commissioner as the case may be being satisfied on the reasons recorded by the assessing officer about the fitness of the case for issue of notice u/s 148 need not issue the notice himself. The amendment will take retrospective effect from 01-10-98 Tax on short term Capital Gains - Sec 111-A According to existing provisions, tax at 10% is chargeable on short term capital gains arising from transfer of shares & units. It is proposed to increase the existing rate of 10% to 15% w.e.f. 01-04-09.
Capital Gains of FII – Sec 115 AD Consequent to amendment of Sec 111A, the tax on income from short-term Capital Gains arising to FII is increased from existing rate of 10% to 15% w.e.f. 01-04-09. Minimum Alternate Tax – Sec 115 JB It is proposed that for the purpose of book profit, the net profit as per P&L A/c should be increased by the amount of deferred tax and the provisions therefore. It is also proposed that income tax referred to in the section includes tax on distributed dividend u/s 115-O and tax on distributed income u/s 115 R. The income tax will also include interest, surcharge, education cess and secondary & higher education cess. The amendment takes retrospective effect from 01-04-01 (A.Y. 2001 -02). Tax on distributed Dividend – Sec 115O According to the existing provisions Indian companies are liable to pay additional tax at 15% on dividend distributed and that it is proposed to reduce from such dividend, any dividend received from its Subsidiary Co. if subsidiary Co. had paid the tax under 115O and if the assessee Co. itself is not a Subsidiary Co. Time limit for completion of abated cases from Settlement Commission - Section 153 It is proposed to amend Section 153 of the Income tax Act so as to allow a minimum time period of one year to the Income tax authority before whom the case was pending when the application was filed with the Settlement Commission. This time limit is applicable retrospectively with effect form 1st of June 2007. It shall be deemed that this revised time limit will apply to cases where settlement proceedings have abated from 1st of June 2007 and thereafter. Assessments/Reassessments consequent to Search Proceedings - Sections 153A, 153B, 153C & 153D Amendments proposed in the revised scheme of assessments / reassessments consequent to search proceedings are designed to provide missing links causing ambiguities in giving effect to these provisions. The revised scheme in short, provided for automatic reopening of completed assessments of the years falling within a period of six assessment years preceding the assessment year relevant to the year in which search took place. The revised scheme in Section 153A also provided for abatement of proceeding for any year within these six years that may be pending on the date of initiation of search as such proceedings become fructuous in by reason of the requirement of completion of assessments of all the six years in accordance with the provisions of the revised scheme. The existing provisions were silent as to the fate of assessment / reassessment made under the revised provisions and of abatement of existing proceedings in the event of proceedings initiated u/s. 153A being annulled in appeal or any other proceeding. The proposal seeks to provide the answer by proposing to enact that – (i) The assessments, if already completed under section 153A will automatically get annulled after the proceedings u/ s. 153A are themselves annulled. (ii) The assessment relating to the year for which proceedings were pending on the date of initiation of search and which got abated as a result of proceedings under section 153A will also, therefore, get annulled and consequently the proceedings which were pending on the date of initiation of search will get revived. (iii) When proceedings are so revived they will be required to be completed i.e. assessment in pursuance of such proceedings will be required to be made within the normal period prescribed u/s. 153 or Section 153B(1) or within one year from the end of the month in which abated proceedings are revived, whichever falls later. The proposed provisions also provide for the situation when the order of annulment of proceedings u/s 153A is set aside. In such a situation:- (i) If the assessment of all or any of the six years in question was completed (which got annulled with the annulment of proceedings u/s. 153A) the same will get revived. (ii) If any assessment was not completed when the proceedings u/s. 153A got annulled, the same can now be made within the extended time. (iii) The extended time for the purpose will be reckoned by excluding from the normal time the period from the date of the order annulling the proceedings u/s. 153A to the date of the receipt of the order by the CIT setting aside the order of annulment. (iv) The proceedings pending on the date of initiation of search which got abated and which were revived with the order of annulment will again be abated. If assessment order was made on revival of proceedings, it will get annulled. To illustrate, suppose, in the case of an assessee, a search proceeding under section 132 is initiated on 10th April, 2007. The last of authorization related to this search is also issued during the financial year 2007-08. As on the date of the search, assessment for assessment year 2005-06 was pending. In the given situation,- • in accordance with the provision of second proviso to renumbered sub-section (1) of section 153A, the assessment for assessment year 2005-06 shall abate; • assessment or reassessment with respect to each of the six assessment year, i.e., from assessment year 2002-03 to assessment year 2007-08 shall be required to be made under first proviso to renumbered sub-section (1) of section 153A; and • the time limit for completion of these assessments shall be 31.12.2009 under clause (a) of sub-section (1) of section 153B. Let us assume that the proceeding under section 153A is annulled in an appeal or legal proceeding by an order dated 3rd August, 2007 which is received by the Commissioner on 29th August, 2007. In such a situation,- • the assessment with respect to any of the six assessment year (from assessment year 2002-03 to assessment year 2007- 08), if already completed under first proviso to renumbered sub-section (1) of section 153A, shall automatically become annulled due to this order; • no order of assessment or reassessment with respect to any of the six assessment year (from assessment year 2002-03 to assessment year 2007-08) can be made under first proviso to renumbered sub-section (1) of section 153A as the proceeding under section 153A has been annulled; • the proceeding for assessment year 2005-06 which has been abated under second proviso to renumbered sub-section (1) of section 153A, shall revive under new sub-section (2); and • the order in respect of this assessment can be made at any time before 31st December, 2007 (normal time limit under section 153) or 31st August, 2008 [new time limit under sub-section (4) of section 153], whichever is later. Let us now assume that this order of annulment has been set aside and such order has been received by the Commissioner on 3rd February, 2008. In such a situation,- • the assessment with respect to any of the six assessment year (from assessment year 2002-03 to assessment year 2007- 08), if already completed under first proviso to renumbered sub-section (1) of section 153A, shall automatically get revived as the proceeding under section 153A has got revived; • order of assessment or reassessment with respect to any of the six assessment year (from assessment year 2002-03 to assessment year 2007-08), if not already made, can now be made under first proviso to renumbered sub-section (1) of section 153A as the proceeding under section 153A has got revived; • the time limit for making such order of assessment or reassessment, which was 31st December, 2009 under clause (a) of sub-section (1) of section 153B, shall get extended by a period starting from 3rd August, 2007 and ending on 3rd February, 2008 (i.e., six months) under the provision of new clause (vii) in Explanation occurring after sub-section (1) of section 153B; and • the proceeding for assessment year 2005-06 which had got revived under new sub-section (2) of section 153A will again get abated due to the provision of its proviso. If assessment order has already been made with respect to this assessment proceeding, that assessment order will get annulled automatically. These amendments will take effect retrospectively from 1st June, 2003. Notice of demand - Sec 156 The proposed amendment seeks to provide that an intimation u/s 143(1) of any sum determined as payable under this section will be deemed to be a notice of demand issued under Section 156. Consequentially all the provisions of section 156 will be applicable to the intimation u/s 143(1). Recovery proceedings can be initiated as in case of order u/s 156 on the basis of the intimation issued. The amendment is proposed to be made effective from 1st April 2008. Assessee in default -Section 191 The proposed amendment is by way of substitution of the existing explanation to the section by the new explanation. The new explanation, like the earlier one provides that the person responsible for deducting tax at source in accordance with the provisions of the Act will be deemed to be assessee in default when he fails to deduct or after deducting fails to pay the whole or any part of the tax and the payee assessee also fails to pay tax directly. The explanation makes this provision applicable also to the employer who chooses to pay tax on non-monetary perquisites allowed to the employee which he is permitted to do u/s 192(1A). The amendment which is basically clarificatory in nature is proposed to be made effective from 1st June 2003, the date when the substituted explanation came into effect. TDS on Interest on Securities - Sec 193 The amendment seeks to exempt from the requirement of TDS u/s 193 any interest payable to a resident on any security issued by a company where such security is in dematerialised from and is listed on a recognised stock exchange in India. The amendment is proposed to facilitate development of the corporate bond market for improving the availability of finances for infrastructure development. The amendment is proposed to be made effective from 1st June 2008. TDS on payment to contractors / Sub Contractors - Sec 194C The existing Section 194C requiring deduction of tax at source from any sum paid or credited to a resident Contractor for carrying out any work in pursuance of a contract between him and the Government, local authorities, statutory corporations, companies, cooperative societies, Statutory housing authorities, registered societies, trusts, universities, firms and individuals/ HUFs who are subject to provisions of Sec 44AB. The list of payers does not include Association of Persons (AOP) or Body of Individuals (BOI). The amendment seeks to include these entities in the list of payers who are subject to the obligation to deduct tax at source in respect of payment to contractor. The amendment is particularly aimed at covering payments made by Special Purpose Vehicles(SPV) which are structured as JVs or consortiums assessable as AOP or BOI. The amendment is proposed to be made effective from 1st June 2008. TDS from other Sums - Section 195 The existing provisions obligates any person responsible for paying any interest or any other sum chargeable to tax (except salary) to a non-resident or to a foreign company to deduct tax at source out of such payments. The proposed amendment seeks to impose an obligation on the deductor to furnish the information relating to such payment as may be prescribed by the board. The object appears to be to introduce e-filing of the information which is presently furnished manually by way of undertaking accompanied by a certificate from the chartered accountant for remitting the amount to the nonresident payee. The amendment is proposed to be made effective from 1st April 2008. Credit for tax deducted at source - Sec 199 The proposed amendment seeks to substitute the existing Section 199 with the object of providing certain amount of flexibility in the system of allowing credit to the assesses for TDS/TCS in view of technological and business process changes. The new Provision provides :– (i) that any deduction made for tax at source and paid to the government shall be treated as payment of tax on behalf of the person from whose income the deduction was made or of the owner of the security or of the depositor or of the owner of the property or of the unit holder or of the shareholder, as the case may be. As a sequel to the scheme for dematerialisation of TDS/TCS certificate, the new provision omits that part of the provision which deals with credit to be given on production of certificates u/s 203. (ii) the provision covers the tax paid by the employer on the non-monetary perquisites allowed to the employees and provides that the tax paid shall be treated as paid on behalf of the person in respect of whose income such payment of tax has been made. (iii) in order to provide flexibility to the system of giving credit, the provision authorises the board to make such rules as may be necessary for the purpose of giving credit and also to prescribe the assessment year for which such credit may be given. The amendment is proposed to be made effective from 1st April 2008. Consequences of failure to deduct tax at source - Sec 201 The proposed amendment seeks to clarify that a person required to deduct tax at source but failing to deduct will be deemed to be assessee in default. It covers the employer paying tax on perquisites to the employees in terms of Section 192(1A) who can also be deemed assessee in default. The provision is proposed to be made applicable retrospectively from 1st June 2002. Certificate of Tax Deducted - Section 203 The amendment seeks to extend the date of coming into operation of the scheme for dematerialization of Tax Deducted at Source / Tax collected at source which, under the existing provisions is 01/04/2008. For the reasons that the National level information technology infrastructure of the Income-tax Department is not yet operational, the commencement of the scheme is proposed to be extended to 01/04/2010. The scheme, when operational, will do away with the requirement of furnishing the certificates for tax deducted. Collection at Source - Section 206-C The proposed amendment is similar in substance to the amendment in Section 199 and 203 and is aimed at providing certain degree of flexibility in the system of giving credit of tax deducted at source. Consequent to the formulation of the scheme for dematerialization of tax deducted at source/tax collected at source there will be no requirement for furnishing the tax collection certificate. The provision seeks to enable the CBDT to make such rules as may be necessary for the purpose of giving credit to a person and also to provide for the assessment year in which such credit may be given. The provision also seeks to extend the date of commencement of the scheme from 01/04/2008 to 01/04/2010. Orders of Appellate Tribunal - Section 254 By the amendment made through Finance Act 2007, Appellate Tribunal is empowered to grant stay in any proceeding relating to appeal filed before it. The stay can be granted for a period of 180 days within which the Appellate Tribunal is required to dispose of the appeal. In case the tribunal can not dispose of the appeal within the period of stay it, in appropriate cases, is empowered to extend the stay on the satisfaction that the delay in disposal of appeal was not attributable to the assessee. The extension can be for such a period that the total period of original and subsequent stay does not exceed 365 days. In case the appeal is not disposed of within the extended period also, the stay order stands vacated after the expiry of the extended period of stay. The proposed amendment seeks to clarify that in case the appeal is not disposed of within the extended period, which cannot go beyond 365 days, the stay will stand vacated, even if the delay in disposing of the appeal is not attributable to the assessee. The appellant will not be able to plead that non-disposal cannot be attributed to any default on his part. The provision is proposed to be made effective from the 1st day of October 2008. Filing of appeal or application for reference by Income tax authority - Section 268A The CBDT has been issuing instructions from time to time directing the Departmental officers not to file appeal if the tax effect is less than the monetary limit prescribed by it. Where the appeal is not filed in pursuance of such directions, the question arises as to whether the disputed issue involved in the case is taken as decided so as to deny the authorities the right to challenge the correctness in some other case or in the same case in subsequent year. The Supreme Court in M/s. Berger Paints India Ltd. Vs. CIT Calcutta held that if the revenue has not challenged the correctness of the law laid down by the High Court and has accepted it in the case of one assessee, then it is not open to the revenue to challenge the correctness in the case of other assessees without just cause. Following this decision Department’s appeals are being dismissed by Judicial authorities on the ground that the disputed issue was not agitated in the case of the same or any other assessee. Section 268A is proposed to be inserted to provide enabling power to the Board to issue orders, instructions or directions to other Income-tax authorities fixing such monetary limits as it may deem fit. Such fixing of limit is for the purpose of regulating the filing of appeals or applications for reference and non-filing of appeal in pursuance of such directions shall not preclude the authorities from filing an appeal or application for reference on the same issue in case of the same assessee in any other assessment or in the case of any other assessee. It is also provided that non-filing of appeal will not amount to acquiescence in the decision on the disputed issue and the assessee shall not be able to take this plea in any other appeal in the same case or in any different case. The appellate tribunal or the court hearing such appeal or reference shall have regard to the directions of the CBDT ad the circumstances under which such appeal was filed or not filed in respect of any case. The amendment is proposed to be made effective retrospectively from 01-04-1999. Penalty - Sec 271 The proposed amendment seeks to set at rest the controversy as to whether the Assessing officer is required to record his satisfaction before issue of penalty notice under section 271(1) of the I.T. Act. In view of conflicting judicial opinions on the subject, the amendment makes it clear that where any amount is added or disallowed in computing the total income or loss of an assessee in any order of assessment or re-assessment and such order contains a direction for initiation of penalty proceedings, such an order of assessment or reassessment shall be deemed to constitute satisfaction of the assessing officer for initiation of penalty proceedings u/s 271(1). Similar amendment has been proposed under the wealth tax Act. The amendment is proposed to be made effective retrospectively form 1st April 1989. Power of CIT to grant immunity from Penalty – Sec 273 AA Under the existing provisions of Section 245H of the Act, the Settlement Commission is empowered to grant immunity from prosecution for any offence under the Income tax Act or under the Wealth Tax Act subject to such conditions as it may think fit to impose. The Commissioner also has power to grant immunity, wholly or in part from imposition of any penalty under these Acts. Under the revised scheme of settlement introduced by Finance Act 2007, the cases admitted by the Commission before 01-06-2007 will abate if the order u/s. 245D(4) has not been passed within the specified time i.e. 31st March 2008. The proposed insertion of Section 273 AA empowers the Commissioners of Income tax in whose jurisdiction such cases will go back to grant immunity from penalty subject to following – • The application for the immunity must be made by the assessee (person whose case has been abated under section 245HA) to the Commissioner of Income-tax. • If penalty was levied before or during the pendency of settlement proceedings, then the assessee can approach the commissioner for immunity at any time. • If no penalty was levied till the time of abatement of proceedings before Settlement Commission, then the assessee must make an application for immunity before the imposition of penalty by the Income tax authority. • Immunity can be granted by the Commissioner on his satisfaction. • The satisfaction is required to be that the assessee has cooperated in the proceedings after abatement and has made a full and true disclosure of his income and the manner in which such income has been derived. • Immunity can be subject to such conditions as the Commissioner may think proper to impose. • The immunity granted shall stand withdrawn, if such assessee fails to comply with any condition subject to which the immunity was granted. • The immunity granted may be withdrawn by the Commissioner, if he is satisfied that the assessee had, in the course of proceedings, after abatement, concealed any particulars from the Income-tax authority or had given false evidence. The inserted provision is proposed to be made effective from 01-04-2008
Power of CIT to grant immunity from prosecution - Sec 278 AB Under the existing provisions of Section 245H of the Act, the Settlement Commission is empowered to grant immunity from prosecution for any offence under the Income tax Act or under the Wealth Tax Act subject to such conditions as it may think fit to impose. Under the revised scheme of settlement introduced by Finance Act 2007, the cases admitted by the Commission before 01-06-2007 will abate if the order u/s. 245D(4) has not been passed within the specified time i.e. 31st March 2008. The proposed insertion of Section 278 AB empowers the Commissioners of Income tax in whose jurisdiction such cases will go back to grant immunity from prosecution subject to following – • The application for the immunity must be made by the assessee (person whose case has been abated under section 245HA) to the Commissioner of Income-tax before institution of the prosecution proceedings after abatement. • If prosecution proceedings were instituted before or during the pendency of settlement proceedings, then the assessee can approach the commissioner for immunity any time. However if the assessee has received any notice etc. from the Income tax authority for institution of prosecution, then he must apply to the commissioner for immunity, before actual institution of prosecution. • Immunity can be granted by the Commissioner on his satisfaction. • The satisfaction is required to be that the assessee has cooperated in the proceedings after abatement and has made a full and true disclosure of his income and the manner in which such income has been derived. • Where application for settlement under section 245C had been made before the 1st day of June, 2007, the Commissioner can also grant immunity from prosecution for any offence under this Act or under the Indian Penal Code or under any other Central Act. • Immunity can be subject to such conditions as the Commissioner may think fit to impose. • The immunity granted shall stand withdrawn, if such assessee fails to comply with any condition subject to which the immunity was granted. • The immunity granted may be withdrawn by the Commissioner, if he is satisfied that the assessee had, in the course of proceedings, after abatement, concealed any particulars from the Income-tax authority or had given false evidence. The inserted provision is proposed to be made effective from 01-04-2008. Authentication of notices and other documents - Sec 282 A With emphasis on providing quality taxpayer’s service the department has embarked on centralized processing of returns and centralized issuance of notices using information technology. Successful implementation of such schemes requires dispensing with the signatures of the officer and the use of common seal. The proposed insertion of Section 282A in the I.T.Act provides that where any notice or other document is required to be issued, served or given, it shall be deemed to have been authenticated if the name and office of a designated Income tax authority is printed, stamped or otherwise written thereon. For this purpose a designated Income tax authority shall mean any Income tax authority authorized by the Board for this purpose. The amendment is proposed to be made effective from 1st June 2008 Notice deemed to be valid in certain circumstances - Sec 292 BB The proposed insertion of Section 292BB seeks to validate notices which are required to be served by a specified date but which, though issued in time are actually received by the assessee beyond the specified date. Such notices are generally held invalid even when the assessee has attended the proceedings in response to such notices. The proposed provision provides that where an assessee has appeared in any proceeding or co-operated in any enquiry related to an assessment or reassessment, it shall be deemed that any notice which is required to be served upon him has been duly served in time in accordance with the relevant provisions of the Act. The assessee shall be precluded from taking any objection that the notice was not served in time or not served on him in a proper manner. The amendment is proposed to be made effective from 1st April, 2008 Presumption as to assets, books of accounts etc. - Section 292 C The existing Section 292 C provides a rebuttable presumption with respect to books of accounts, documents, money, bullion, jewellery or other valuable articles or things found in the possession or control of any person during search action us. 132. The proposed amendment seeks to extend this presumption also to book of accounts, documents etc. found in the possession or control during the survey operations. The amendment is proposed to be made effective from 1st June 2002. The presumption is proposed to be extended also to books of accounts, documents or assets which have been delivered to the Requisitioning Officer in accordance with the provisions of Section 132A. Similar amendment has been made in Section 42D of the Wealth Tax Act. The amendment is proposed to be made effective from 1st October 1975.
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