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Discussion / Rampant Corruption in ITAT
« Last post by nsingh on February 05, 2016, 04:59:28 pm »
Recently Hon'ble Nagpur Bench of Bombay High Court in the case of one Chadhry has made severe remarks vis-a-vis corruption in Income Tax Department. And has gone to the extent of saying that people should not pay taxes. I want to draw the attention of Hon'ble President of ITAT towards the corruption in ITAT Delhi.

One Lady Bench Clark of ITAT Delhi is asking money frequently from the advocates frequently without any fear, I have received so many complaints against her from many persons. Her name is Sushilla working as Bench Clark in D Bench. My humble prayer to the Hon'ble President of the ITAT that she may be transferred to some rural place in India or She may be removed from the benches immediately otherwise I am going to take necessary legal action against her, I have enough evidence against her. Thanks   
Discussion / Depreciation
« Last post by Myitat on February 05, 2016, 02:42:49 am »
Dear all
Plz give your views on the issue that when an asset forms part of a block of assets.
An asset is purchased but not put to use during the previous year of its purchase then whether its actual cost be taken as "actual cost of assets falling in the block of assets acquired during the previous year" u/s 43(6)

Take an example
Opening WDV Rs. 13000 with X asset in block
Actual cost of Y asset acquired but not put to use even for a single day Rs. 6000
Money payable on sale of X asset Rs. 20000
Now whether to consider cost of 'unused' asset in wdv u/s 43(6)?

Discussion / Reopening- Substitution of Valuation method.
« Last post by rajul5234 on January 19, 2016, 02:41:02 pm »
Gujarat high court. SCA 14902 / 2015 . Zaveri and Co. Pvt. Ltd. Dt. 11/1/16

Held, Reopening for substitution of method of valuing Forex loss  which is already processed in original assessment is not valid,
Discussion / Interpretation of s. 132B
« Last post by rajul5234 on January 19, 2016, 02:38:16 pm »
Nadim Dilipbhai Panjvani. SCA 13374 / 2015 Dt. 11/1/16.

Court interpreted s.132B , more particularly mandate embedded in proviso and scope of retention of seized asset.

R K Patel
Discussion / Jurisdiction u/s 263. Writ at Notice stage.
« Last post by rajul5234 on December 24, 2015, 02:40:38 pm »
Gujarat high court. SCA 3434 / 2015. JMC Projects (I) Ltd.
Held, Revision is not meant for better writing of an issue considered in assessment order upon which tax is aleady realised. Better footing and better application of legal principles by CIT does not accord jurisdiction u/s 263.
Notice quashed at the threshhold.

R. K. Patel
Discussion / Reopening-Persistance by Audit
« Last post by rajul5234 on December 11, 2015, 12:17:54 am »
SCA 3275 / 2014. Dt. 20/10/15. Axis bank.

Gujarat high court held that if original case record shows that assessment is reopened only due to persistence of audit department, reopening is not maintainable.

R. K. Patel
Discussion / sec. 40(a)(ia)- paid/payable controversy
« Last post by satyanveshi on December 09, 2015, 10:45:16 pm »
From a plain reading of the provisions of sec. 40(a)(ia), it is understood that it deals with two situations....

i) the persons who have not deducted TDS during the financial year;
ii) persons who have deducted TDS, but the deducted TDS has not been paid to the government's kitty within the stipulated time limit;

For first category of persons, the dis-allowance will attract invariably for the year under consideration and the said expenditure will be allowed only during the subsequent  financial years whenever the relevant TDS is deducted and paid ( emphasis supplied to the words deducted and paid) to the governments account as per the first proviso. 

For the second category of persons if the deducted TDS is paid before the due date of filing of return of income u/s 139(1), no disallowance during the year under consideration and if the deducted TDS is not paid as mentioned above, then only the relevant expenditure will be disallowed for the year and will be allowed for the year in which the deducted TDS is paid to the government's account.

As per my understanding and experience as of now, if TDS is not deducted during the financial year and was deducted during the April month of the subsequent F.Y and paid to the government account during the same month (ie. April) then also, disallowance will be attracted for current year and the disallowed expenditure will be allowed in subsequent F.Y. This is not a new innovation, even Singhania in his book law and practice has stated the same.  Further, in the cases where second proviso is attracted, during the current financial year dis-allowance will be attracted and the said dis-allowance will be made good during the next financial year because, the non deducted TDS would be  deemed to have been deducted and paid to the governments account only when the deductee has paid the taxes and filed the return of income. In this case also, date of deduction is next financial year when the deductee would be filing his return of income and therefore the case falls under first category but not under second category.

From a Harmonious reading of the section as well as provisos, it is abundantly clear that in order to get the expenditure allowed, the TDS which was not deducted earlier should be deducted ( emphasis supplied to the word deducted) subsequently and should be paid to the governments account.

Once the entire amount of the expenditure is already paid to the deductee, how can the TDS amount be deducted from that expenditure again. if at all it is required by law that it should be paid, then the same can be paid only from the personal coffers of the deductor. But nowhere it is specified  that if the amount is paid ( even from the amounts belonged to the assessee) by any means then the relevant expenditure will be allowed. The provisos clearly says that non deducted TDS should be deducted and paid to the government account in order to get the allowance of the expenditure.

Therefore, some incometax AOs may argue that since the amounts subsequently paid is not from the deducted funds ( entire expenditure amounts have already been paid to the deductee) and what is paid now is the personal amount of the assessee and therefore, the requirement of law is not fulfilled and accordingly,  he is unable to  allow the said expenditure. If this argument is taken by any incometax AO, is there any remedy to counter the said argument. If we accept this argument, the relevant expenditure will never be allowed because, the TDS can never be deducted from the paid amount. This is not the intention of the legislature. Therefore, it is just impossible to pay the deducted funds again as stated by the law in the cases where the amounts have already been paid to the deductees.     

Therefore, what is envisaged by the section framers is that it is applicable only to the cases where the amounts are still outstanding and payable to the deductees. If the amount is payable, then the amount can be deducted subsequently and balance amount can be paid to the deductees and the deducted amount can be paid to the government in the form of TDS.

Further, as per my understanding, sec. 40(a)(ia) is introduced only to prevent the persons not to reduce the profit just before filing of return of income by claiming some bogus(?) expenditures. If the amount of expenditure is paid during the financial year it cannot be bogus expenditure by any stretch of imagination because if the intention of the deductor is to claim the bogus expenditure he will plan in such way that he will deduct TDS also and the balance amount will only be paid to the recipient. Whereas in the cases where entries are made just before filing return of income, he will show that the expenditures are still payable and accordingly try to reduce the profits ( only this type of entries can be made in the books of accounts subsequently and he cannot manipulate the books with paid amounts that too through banking channel). In order to prevent such cases, this sec has been introduced so that the such expenses will be allowed only when TDS is deducted and paid to the governments kitty.

Thus, the section is applicable only to the cases where expenditures are payable and not applicable to the cases where expenses were already paid during the current financial year itself. This is my understanding of law... if anybody contradicts and come with a logical reasoning I have no objection to change my opinion. I hope all our fraternity will roam on this issue and come out with different opinions so that a solution can be found to a long persisting problem(?).

Discussion / Reopening-No specific query
« Last post by rajul5234 on December 03, 2015, 10:19:05 pm »
SCA 12129 / 2014. Dt. 2/11/15. Aavkar Infrastructure
Gujarat high court held,
If overall scrutiny is visible in original assessment proceedings(s.80IB(10)), it cannot be said there is no opinion on an  issue from angle of a particular provision(s.45(2)) even within 4 years from the end of relevant year.

Discussion / Reopening-s.143(1),-Inflation of profits
« Last post by rajul5234 on November 27, 2015, 12:32:11 pm »
SCA 12303 / 2014. Dt. 4/11/15. M/s.Aavkaar infrastructure company.

Gujarat high court held that A.O. has to record a finding in the reason for reopening that there is understatement of investment for inflation of profit for availing higher exemption/deduction and he cannot merely fall back on DVO report.

R K Patel
Discussion / Reopening-s.143(1) & s. 147
« Last post by rajul5234 on November 20, 2015, 11:52:05 pm »
Gujarat high court. SCA 12873 / 2014. Dt. 13/10/15. Varshaben Sanatbhai Patel

Held, Formation of belief based on material should be reflected from the  reasons recorded to assume valid jurisdiction u/s 147 / 148.
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