LEGAL & FINANCIAL UPDATES FROM TAX GURU

Tax treatment of Gratuity under the Income Tax Act, 1961

Sandeep Kanoi — Sun, 08 Nov 2009 10:18:05 +0000

Gratuity’ is a retirement benefit. Gratuity Act, 1972 act envisages in providing retirement benefit to the workman who have rendered long and unblemished service to the employer. Gratuity is a reward for long and meritorious service. Earlier, it was...

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Restrictions on outbound remittance of royalties and lumpsum fee for transfer of technology to be relaxed

Sandeep Kanoi — Sun, 08 Nov 2009 02:45:05 +0000

Under the existing regulatory norms, remittances made by Indian residents to a foreign collaborator are permissible without any prior regulatory approvals to the extent of a lumpsum fee of USD 2 million and royalty payment of 5% on domestic sales...

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Even under Rule 8D of S. 14A, disallowance can be made only if there is actual nexus between tax-free income and expenditure

Sandeep Kanoi — Sun, 08 Nov 2009 02:38:25 +0000

The assessee earned dividend income on shares which was exempt from tax. The AO took the view that the investment in shares was made out of borrowed funds on which interest expenditure was incurred and consequently made a disallowance u/s 14A. This...

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Applicability of indirect taxes on packaged software

Sandeep Kanoi — Sat, 07 Nov 2009 09:18:36 +0000

The undersigned is directed to state that 'Packaged Software' is a type of IT software which caters to the needs of a variety of users and is capable of being used for variety of hardwares. IT software is fully exempt from basic customs duty being...

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Exempts goods falling within Chapter 69 and heading numbers 94.01, 94.02 and 94.03 from 1.9.1987 to 28.2.1989

Sandeep Kanoi — Sat, 07 Nov 2009 09:07:13 +0000

Whereas the Central Government is satisfied that according to a practice that was generally prevalent regarding levy of duty of excise (including non-levy thereof) under section 3 of the Central Excise Act, 1944 (1 of 1944), the duty of excise on...

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Registration u/s 80G(5) of IT Act, 1961 can not be denied on the ground that charitable trust imparting education for fees

Sandeep Kanoi — Sat, 07 Nov 2009 02:13:26 +0000

When the assessee-society was granted registration under section 12AA, it is a testimony to the fact that the society is established for charitable purposes as defined in section 2(15); the same will be charitable purposes irrespective of the fact...

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Carry forward of MAT credit for how many years if there is contradiction between statutory provisions and circular issued

Sandeep Kanoi — Sat, 07 Nov 2009 01:55:16 +0000

There is no ambiguity in the language of sub-section (3) of section 115JAA; the carry forward is available for a total of six (1+5) years; the period of `five assessment years', mentioned in sub-paragraph (2) of the paragraph 45.4 of the CBDT...

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Provisions of section 40 cannot be invoked where the income is to be computed under section 42 of the Act

Sandeep Kanoi — Sat, 07 Nov 2009 01:43:34 +0000

The fact that even Capital expenditure is allowable as deduction under section 42 itself shows that it overrides the provisions of section 37 of the Act. Thus, the scheme of the Act makes it clear that the provisions of section 42 would prevail over...

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Applicability of MAT on amount withdrawn from revaluation reserve and credited to P&L account

Sandeep Kanoi — Sat, 07 Nov 2009 01:37:36 +0000

Prior to insertion of the proviso to clause (i) of the Explanation of section 115JB the assessee was entitled to reduce the sum from revaluation reserve while computing book profit under section 115JB; however, after the insertion of the proviso to...

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Applicability of TDS in case of Third Party Administrator (TPA) providing health insurance claim services.

Sandeep Kanoi — Sat, 07 Nov 2009 01:20:02 +0000

Having regard to the agreement entered into inter se between the hospital and the TPA for payment of money to the hospital, it cannot be said that the TPA, who is the authority or the person to pay the amount to the hospital, is not required to...

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RBI Circular on Combating Financing of Terrorism – Unlawful Activities (Prevention) Act, 1967 – Obligation of banks

Sandeep Kanoi — Sat, 07 Nov 2009 00:52:48 +0000

In paragraph 5 (b) of the above circular,it has been advised to RRBs that as and when lists of individuals and entities, approved by Security Council Committee established pursuant to various United Nations' Security Council Resolutions (UNSCRs),...

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New Online Facility from Central Board of Excise & Customs – Professional Opportunity for Members

Sandeep Kanoi — Sat, 07 Nov 2009 00:39:53 +0000

This new service is a new centralised web based software application of CBEC which provides us an online electronic interface with the department. ACES aims to reduce paperwork, visits to the department and transaction costs while increasing...

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Scrapping the Apex Court decision on Scrap

Sandeep Kanoi — Fri, 06 Nov 2009 09:17:22 +0000

The Central Excise duty is leviable on the process of “manufacture”. Any process that brings a new article into existence with different name, character and use is known as manufacturing activity. For levying duty on any article it must satisfy 2...

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Leviability of service tax on Tour operator service in connection with Haj & Umrah pilgrimage

Sandeep Kanoi — Fri, 06 Nov 2009 05:10:48 +0000

The amount charged to the pilgrims in India undertaking Haj and Umrah pilgrimage, is for services provided by the Government of Saudi Arabia and the tour takes place outside India. As perRule 3 (1) (ii) of the Export of Services Rules, 2005,...

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MAT applicable on capital gains included in book even if same is not liable to be taxed

Sandeep Kanoi — Fri, 06 Nov 2009 03:38:23 +0000

The long term capital gain included in the net profit prepared under the Companies Act is not deductible from the net profit for the purpose of computing book profit u/s115JB; merely because the long term capital gain is not liable to be taxed under...

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