Dividend on shares held as stock is taxable as income from other sources

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HIGH COURT OF JUDICATURE AT ALLAHABAD

Income Tax Appeal No. 3 of 2003

Sangam Investments Limited

Versus

The Commissioner of Income Tax, Allahabad.

Dated: 03.09. 2014

Hon.Tarun Agarwala, J.
Hon. Dr. Satish Chandra, J.

it is immaterial whether the shares are held by the appellant as stock-in-trade. The dividend income derived from these shares is specifically chargeable under the head “Income from other sources”. Consequently, it is immaterial whether the appellant is a dealer or a trader and caries on business of purchase and sale of shares. We find that the Tribunal after relying upon the decisions of the Bombay High Court in Commissioner of Income-Tax, Bombay City-II Vs. D.G.Goenka, 1981 ITR (129), 260 and of the Gujarat High Court in additional Commissioner of Income-Tax Vs. Laxmi Agents P.Ltd.,1980 ITR (125), 227 had rightly come to the conclusion that the dividend income arrived at by the appellant was chargeable under the head “Income from other sources”. 

Provision of No Bail for offences Under Companies Act, 2013 Removed

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Relevant Extract from Unedited Speech of Minister of Corporate Affar Shri Arun Jaitley given in Lok Sabha on 17.12.2014 I would request any hon. Member, if he has a copy, to pick up section 212(6) of this Act. I am referring to an extraneous fact when in 2004 the UPA came to power, there was a law which the NDA had enacted called the Prevention of Terrorism Act (POTA). The UPA’s main criticism of POTA was that some of the provisions are very repressive and so they repealed POTA. When they repealed the anti-terrorism law, they incorporated most of the provisions under the Unlawful Activities Prevention Act. But one provision the UPA said that they would not agree to put in the Unlawful Activities Prevention Act was regarding a harsh bail provision. The POTA said that any person arrested for terrorism will not get bail till either the Public Prosecutor consents to the bail or the court gives a finding that the person is innocent on the face of it. Now finding of innocence is not possible till the trial is held. So, the UPA’s own case was that this is not a provision we can agree with and, therefore, they removed that provision from the anti-terrorism law. Having removed it from there, they brought in the POTA bail provision under Section 212 (6) of the Companies Act, which says: “Notwithstanding anything contained in the Code of Criminal Procedure… .the following offences which attract the punishment for fraud as provided in….to a person accused of those offences…no person shall be released on bail unless the prosecutor has been given notice where the prosecutor opposes it, the court is satisfied that reasonable grounds for believing that the person is not guilty of the offences.” Verbatim, full stop for full stop, comma for comma, they incorporated the POTA provision into the bail provision of this Act. Now this language exists in the narcotics law. When we invite the rest of the world to come to India, form a company, do business and invest in India, are we trying to say that in case you commit any of these offences you will never get bail or you will indefinitely never get bail? Therefore, most companies said that it is safer for them to switch over to a limited liability partnership than continue to do business. Now, if you look at the other provisions of the Act, all offences under grievous laws relating to terrorism, narcotics, sedition, prevention of corruption etc., they say that ordinary courts will not try these cases and there will be special courts. So, all offences against a company will go to a Special Court. The ordinary Magistrate’s jurisdiction is taken away. Are we trying to induce investors to come and invest in India or are we trying to scare them away from the country? We have, therefore, brought in an amendment that extremely harsh offences will be before a Special Court and the rest will be before the normal courts of the land. If a man wants to wind up a company, there has to be a provision in law. The case relating to winding up these days normally goes to a single judge of the High Court as one judge in every High Court is a company law judge. If somebody says that there is a commercial insolvency or any other reasoning or the company itself wants to be wound up, it goes to a single judge, there is a procedure to be followed and it gets wound up. This Bill says that simple company matters and other matters go to a single judge, appeals go to a Division Bench and some extraordinary matters also go to a Division Bench. A company to be wound up has to go to a full Bench of three judges. What is the rationale? That is why I said either some of the provisions are oppressive or some of the provisions like having one judge or two judges or three judges could have even come by an oversight. Now, let me give you another oversight provision. There are offences companies commit. If there is a company which does not follow the procedure and starts collecting deposits, it is a punishable offence. In the Act, we forgot to make it an offence. So it is the case of an oversight. If I run through each of these 14, the first two, requirement of capital and seal, the international standard practice now in corporate laws across the world is that you have done away with these requirements. So, here it has been brought at parity with international laws. The next provision, section 76 says, we forgot to provide for an offence where somebody collects deposits in violation of law. We did not make it an offence under the Companies Act; so it has been made an offence. 

Inclusion of Cost of insurance in Assessable Value for Excise Duty

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Commissioner of Central Excise, Belapur Vs. Kapoor Glass (I) Pvt. Ltd. [2014 (12)

TMI 491 – CESTAT MUMBAI]

Kapoor Glass (I) Pvt. Ltd. (the Assessee) cleared the goods from the factory to their customers and recovered cost of insurance from them. In the lorry receipts, the freight was on “to pay basis” and the buyer of the goods were shown as the consignee. The Revenue alleged that since the Assessee has collected the insurance amount from the customers, the place of delivery should be deemed to be the customer’s premises and therefore, duty demand was raised on the cost of insurance recovered from the customers. However, the Commissioner (Appeals) relying upon the Judgment of the Apex Court in the case of Escorts JCB Ltd Vs. CCE, Delhi-II [2002 (146) ELT 31 (SC)]held that duty demand on the cost of insurance incurred by the Assessee is not admissible, in as much as the goods have been delivered at the Assessee’s factory gate. Being aggrieved the Revenue filed an appeal before the Hon’ble CESTAT, Mumbai. The Hon’ble CESTAT, Mumbai after observing that the Department was unable to prove that the factory gate is not the place of removal, held that when the lorry receipts under which the goods were consigned indicate that the consignee is the buyer and the freight is on “to pay basis”, duty demand on the cost of insurance incurred by the Assessee is not admissible, in as much as the goods have been delivered at the Assessee’s factory gate.

Various situations and Surcharge /Cess applicable on TDS/TCS

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Payment to		payment	Surcharge	Cess
Resident	Non-corporate	salary(up to 1 crore)	No	yes(3%)
	Non-corporate	salary(> I crore)	yes (10%)	yes (3%)
	Non-corporate	other than salary	No	No
	Corporate	other than salary	No	No
Non-Resident	Non-corporate	salary(up to 1 crore)	No	yes (3%)
	Non-corporate	salary(> I crore)	Yes (10 %)	yes (3%)
	Non-corporate	other than salary up to 1 Crore	No	yes (3%)
	Corporate	other than salary (> 1 Crore to 10 crore)	yes(2%)	yes (3%)
	Corporate	other than salary > 10 Crore	yes(5%)	yes (3%)

Assessee must be allowed TDS credit based on TDS certificate even if same is not reflected in 26AS

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In our view, though Form 26AS (r/w r.3 1AB and ss. 203AA and 206C(5)) represents a part of a wholesome procedure designed by the Revenue for accounting of TDS (and TCS), the burden of proving as to why the said Form (Statement) does not reflect the details of the entire tax deducted at source for and on behalf of a deductee cannot be placed on an assessee-deductee. The assessee, by furnishing the TDS certificate/s bearing the full details of the tax deducted at source, credit for which is being claimed, has in our view discharged the primary onus on it toward claiming credit in its respect. He, accordingly, cannot be burdened any further in the matter. The Revenue is fully entitled to conduct proper verification in the matter and satisfy itself with regard to the veracity of the assessee’s claim/s, but cannot deny the assessee credit in respect of TDS without specifying any infirmity in its claim/s. Form 26AS is a statement generated at the end of the Revenue, and the assessee cannot be in any manner held responsible for any discrepancy therein or for the non-matching of TDS reflected therein with the assessee’ s claim/s. Where so, no doubt a matter of concern, is one which is to be investigated and pursued by the Revenue, which is suitably armed by law therefor. The plea that the deductor may have specified a wrong TAN, so that the TDS may stand reflected in the account of another deductee, is no reason or ground for not allowing credit for the TDS in the hands of the proper deductee. The onus for the purpose lies squarely at the door of the Revenue. In our considered view, therefore, firstly, no infirmity attends the impugned order in-as-much as we subscribe to and endorse the directions by the ld. CIT(A) in the matter, i.e., in principle. However, as explained here-in-above, the Revenue is obliged to grant the assessee credit for the TDS of which he is able to satisfactorily prove to the A.O. the factum of deduction of tax at source and its deposit to the credit of the central government, subject of-course to the conditions of sections 198 and 199. The A.O. is accordingly directed to allow the assessee credit for the impugned shortfall, subject to the said verification/s and condition/s. We decide accordingly.

Source- LSG Sky Chef (India) (P.) Ltd. Vs. DCIT (ITAT Mumbai), ITA No. 4828 (MUM.) of 2012, Date of Order: 27.03.2012

MCA extends efiling date from 14th April to 28th April 2014

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Ministry of Corporate Affairs (MCA) has issued Public Notice No. MCA21/28/2014-eGov dated 11th April, 2014 informing stakeholders that the all E-Forms will be available for upload with effect from 28th April, 2014 instead of 14th April, 2014 as notified earlier on 28th March, 2014.

Tax return e-filers to send ITRV by speedpost

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If you are filing online your Income Taxreturn, the paper copy of the ‘ITRV’ should only be sent through “speed post” to the Central Processing Centre (CPC) of the department in Bengaluru.

ITR-V or ‘Income Tax Return Verification’ form is issued as an acknowledgementto returns filed online.

MCA notifies dates from which Various new Forms to come into effect

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General Circular no 6/2014, Date: – 28/03/2014

Sub: – Roll out plan of various forms under the Companies Act, 2013 and continuance of forms under the provisions of Companies Act, 1956

I am directed to inform that this Ministry has notified 183 additional sections in addition to 99 sections earlier notified under the provisions of Companies Act, 20 13. In this regard a Notification related to commencement of Companies Act, 2013 has been issued on 25/03/2014 which is available on the website of the Ministry.

2. In order to facilitate the completion of notified sections this Ministry has planned a staggered roll out of various forms. It has been decided to waive fees for all event based filing whose due date falls between 01/04/2014 to 30/04/2014. For the same, a separate Circular is being issued by the Policy Cell of this Ministry.

3. From 01/04/2014 to 14/04/2014 except existing e-forms mentioned in Table “A” no other e-forms will be available for filing. Other Front office portal services will continue. From 01/04/2014 to 13/04/2014 the period will be used for clearing pending e-forms already filed under the provisions of Companies Act, 1956.

Trusts to give notice for accumulation of Income (From 10) electronically from A.Y. 2014-15

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Relevant Extract of Revised Rule 12 of Income Tax Rules 1962

(1) ...

      (2) ...

 [Provided that where an assessee is required to furnish a report of audit specified under sub-clause (iv), (v), (vi) or (via) of clause (23C) of section 10, section 10A, clause (b) of sub-section (1) of section 12A, section 44AB, section 80-IA, section 80-IB, section 80-IC, section 80-ID, section 80JJAA, section 80LA, section 92E or section 115JB or to give a notice under clause (a) of sub-section (2) of section 11 of the Act, he shall furnish the same electronically.]

All Partnership Firms to file ITR 5 Form Electronically w.e.f. A.Y. 2014-15

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Extract of Revised Rule 12 is as follows :-

(3) The return of income referred to in sub-rule (1) may be furnished in any of the following manners, namely:—

(i)           furnishing the return in a paper form;

(ii)          furnishing the return electronically under digital signature;

(iii)         transmitting the data in the return electronically and thereafter submitting the verification of the return in Form ITR-V;

(iv)         furnishing a bar-coded return in a paper form:

Provided that—

 (aaa)      a firm required to furnish the return in Form ITR-5 or an individual or Hindu Undivided Family (HUF) required to furnish the return in Form ITR-4 and to whom provisions of section 44AB are applicable, shall furnish the return for assessment year 2011-12 and subsequent assessment years in the manner specified in clause (ii);

 (aab) ………….

(aac) a person required to furnish the return in Form ITR-5, other than a firm to which clause (aaa) is applicable, shall furnish the return for the assessment year 2014-15 and subsequent assessment years in the manner specified in clause (ii) or clause (iii);

CBDT Notifies SAHAJ (ITR-1), ITR-2, SUGAM (ITR-4S) , ITR-V FOR a.y. 2014-15

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NOTIFICATION NO. 24/2014, Dated: April 1, 2014

S.O.997(E). - In exercise of the powers conferred by section 295 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 (4th Amendment) Rules, 2014.

    (2) They shall come into force with effect from the 1st day of April, 2014.

2. In the Income-tax Rules, 1962 (hereinafter referred to as the said rules), in rule 12,

    (a) in sub-rule (1), for the figures “2013″, the figures “2014″ shall be substituted;

    (b) in sub-rule(2), in the proviso after the words and figures “section 115JB” the words “or to give a notice under clause (a) of sub-section (2) of section 11″ shall be inserted;

    (c) in sub-rule (3), in the first proviso,-

(A) after clause (aab), the following clause shall be inserted, namely:-

    “(aac) a person required to furnish the return in Form ITR-5, other than a firm to which clause (aaa) is applicable, shall furnish the return for the assessment year 2014-15 and subsequent assessment years in the manner specified in clause (ii) or clause (iii);”;

(B) for clause (b), the following clause shall be substituted, namely:-

        “(b) a person required to furnish the return in Form ITR-7 shall furnish the return for assessment year 2014-15 and subsequent assessment years,-

    (A) in case it is furnished under sub-section (4B) of section 139, in the manner specified in clause (ii);

    (B) in other cases, in the manner specified in clause (i) or clause (ii) or clause (iii):”;

    (d) in sub-rule (4), after the words, “report of audit”, the words “or notice” shall be inserted;

        (e) in sub-rule (5), for the figures “2012″, the figures “2013″ shall be substituted.

3. In the said rules, in Appendix-II, for “Forms SAHAJ (ITR-1), ITR-2, SUGAM (ITR-4S) and ITR-V” the “Forms SAHAJ (ITR-1), ITR-2, SUGAM (ITR-4S) and ITR-V” shall be respectively substituted as follows:-

Forms SAHAJ (ITR-1), ITR-2, SUGAM (ITR-4S) and ITR-V

CA 2013 – Notification of significant sections & all schedules wef 01.04.2014

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183 sections and 13 sub-sections of the already notified sections and all the Schedules of the Companies Act 2013 have been notified by MCA on 26^th March, 2014 and made applicable from 01.04.2014.

The Ministry of Corporate Affairs has started implementation of the Companies Act 2013, in a phased manner. In the process, MCA has notified vide notification dated 26.03.2014,  183 sections of Companies Act,2013 which are effective from 1st April 2014. MCA has earlier notified 98 Section of the Companies Act, 2013 vide its notification dated 12^th September 2013. MCA has also notified vide its Notification dated 27 Feb 2014 Section 135 of the Companies Act,2013 alongwith Schedule VII of the Companies Act and Rules related to Corporate Social Responsibility (CSR) to come into effect from 01.04.2014.

In addition to that 183 sections and 13 sub-sections of the already notified sections and rest of the schedules of the Companies Act, 2013 have been notified by the Ministry of Corporate Affairs (MCA) on 26^th March, 2014 and are made applicable from 1^st April, 2014.

Further, we would like to mention here that under Chapter IX (Accounts of Companies), Section 130 (Re-opening of Accounts on Court’s or Tribunal’s order), Section 131 (Voluntary Revision of financial statements or Board’s Report) and Section 132 (Constitution of NFRA) have not been notified till date. Also Section 245 (Class Action Suits) has not been notified now by MCA.

With Notification dated 26.03.2014 MCA has till dated notified 282 section of the Companies Act out of total 470 Acts of the Companies Act, 2013.

Schedule for Withdrawal of Currency Notes in Circulation issued prior to 2005

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The Reserve Bank of India (RBI) has announced the decision to withdraw from circulation all currency notes printedprior to 2005. It is a standard international practice to withdraw old series of banknotes from time to time. The reason for withdrawal of banknotesprinted prior to 2005 is to remove them from the market as they have fewersecurity features compared to banknotes printed after 2005. It is expected that this will preventcounterfeiting of banknotes. The RBI has already been withdrawing these notes from the market in aroutine manner through banks. In RBI’s view, the volume of the banknotes printed prior to 2005 today, still in circulation, is not significant enough to impact general public in a large way.

The schedule of withdrawal announced by RBI is as under:

i) All older series of banknotes issued prior to 2005 would be acceptable for all kinds of monetary transactions only till March 31, 2014.

ii) Thereafter the public will be required to approach bank branches which would provide them exchange facilities on a ongoing basis.

iii) From July 1, 2014 onwards, members of public can exchange any number of these old series notes from the bank branches where they have their account. However, non-customers would have to furnish proof of their identity and residence to the Bank to exchange more than 10 pieces of Rs. 500.00 and Rs. 1000.00 notes.

iv) These notes will continue to be legal tender and, therefore, no end date has been specified for the exercise.

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

CBDT identifies Income Tax Return non-filers

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Government of India, Ministry of Finance, Department of Revenue, Central Board of Direct Taxes

Dated 21^st February, 2014

PRESS RELEASE

The Income Tax Department had initiated a business intelligence project in February, 2013 to identify PAN holders who have not filed Income TaxReturn and about whom specific information is available in Annual Information Return (AIR), Central Information Branch (CIB) data and TDS/TCS Returns. In the first round of data matching, 12.19 lakh non-filers were identified. Letters have been sent in these cases by the Compliance Management Cell and Assessing officers seeking the response of the taxpayer. The results of this initiative is very encouraging and 5,36,220 returns have been received from the target segment. Self assessment tax of Rs.1017.87 Cr. and advance tax of Rs. 898.22 Cr. has also been paid by the target segment.

The Income Tax Department has now conducted the second round of data matching which has identified additional 21.75 lakh potential non-filers. The Department has sent letters to the 50,000potential non filers in the first batch. The information relating to the 21.75 lakh new non filers has been made available on the ‘Compliance Module’ on the e-filing portal of the Income TaxDepartment. The information will be shown only to the specific PAN holder when the PAN holder logs into e-filing portal at https://incometaxindiaefiling.gov.in. The PAN holder will be able to submit the response electronically and keep a printout of the submitted response for record purposes.

While the Government urges all tax payers to disclose their true income and pay appropriate taxes, the Tax Department would continue to pursue the non filers vigorously till all the high potential non filers are covered.

Parking spaces cannot be sold by the builder

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IN THE SUPREME COURT OF INDIA

CIVIL APPELLATE JURISDICTION

CIVIL APPEAL NO. 2544 OF 2010

Nahalchand Laloochand Pvt. Ltd. 

Versus

Panchali Co-operative Housing Society Ltd.

CIVIL APPEAL NO. 2545 OF 2010

CIVIL APPEAL NO. 2546 OF 2010

CIVIL APPEAL NO. 2547 OF 2010

CIVIL APPEAL NO. 2548 OF 2010

CIVIL APPEAL NO. 2449 OF 2010

CIVIL APPEAL NO. 2456 OF 2010

Date : August 31, 2010

The Supreme Court has upheld thatorder of the Bombay High Court and held that parking spaces cannot be sold by the builder. They are a part of the common areas and the cost of that land has to be charged to all the flat-owners in proportion to their carpet area. (Nahalchand Laloochand P.Ltd. vs Panchali Co-operative Housing Society Ltd. – JT 2010 (9) SC 414: 2010 AIR SCW 5549).

In para. 34 of the aforesaid judgementthe Hon’ble Supreme Court held that:

“34. We have now come to the last question namely– what are the rights of a promoter vis-a-vis society (of flat purchasers) in respect of stilt parking space/s. It was argued that the right of the promoter to dispose of the stilt parking space is a matter falling within the domain of the promoter’s contractual, legal and fundamental right and such right is not affected. This argument is founded on the premise, firstly, that stilt parking space is a `flat’ by itself within the meaning of Section 2(a-1) and in the alternative that it is not part of `common areas’. But we have already held that `stilt parking space’ is not covered by the term `garage’ much less a `flat’ and that it is part of `common areas’. As a necessary corollary to theanswers given by us to question nos. (i) to (iii), it must be held that stilt parking space/s being part of `common areas’ of the building developed by the promoter, the only right that the promoter has, is to charge the cost thereof in proportion to the carpet area of the flat from each flat purchaser. Such stilt parking space being neither `flat’ under Section 2(a-1) nor `garage’ within the meaning ofthat provision is not sellable at all.”

Electronic filing of annexure-less return of net wealth

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Enabling provisions for facilitating electronic filing of annexure-less return of net wealth

1 Section 14 of the Wealth-tax Actprovides for furnishing of return of net wealth as on the valuation date in the prescribed form and verified in the prescribed manner setting forth particulars of the net wealth and such other particulars as may be prescribed. Currently, certain documents, reports are required to be furnished along with the return of net wealth under the provisions of Wealth-tax Act read with the provisions of Wealth-tax Rules.

2 Sections 139C and 139D of the Income-tax Act contain provisions for facilitating filing of annexure-less return of income in electronic form by certain class of income-tax assesses. In order to facilitate electronic filing of annexure-less return of net wealth, new sections 14A and 14B have been inserted vide Finance Act,2013 in the Wealth-tax Act on similar lines.

3 Consequently, the provisions of section 46 of the Wealth-tax Act which provide for rule making powers of the Board have also been amended.

4.  Applicability: - These amendments take effect from 1st June, 2013.