Month: September 2017

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What are the provisions of surcharge for Individuals, HUF, AOP, BOI, AJP

Surcharge

—The amount of income-tax computed in accordance with the preceding provisions of this Paragraph,[Paragraph A of Part I of The First Schedule]

—or the provisions of section 111A or section 112, shall,

—in the case of every individual or Hindu undivided family or association of persons or body of individuals, whether incorporated or not, or every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Income-tax Act,

—having a total income exceeding one crore rupees, be increased by a surcharge for the purposes of the Union calculated at the rate of fifteen per cent. of such income-tax:

Marginal Relief

—Provided that in the case of persons mentioned in this Paragraph, having total income exceeding one crore rupees,

—the total amount payable as income-tax and surcharge on such income shall not exceed

—the total amount payable as income-tax on a total income of one crore rupees

—by more than the amount of income that exceeds one crore rupees.

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What tax rate is applicable to Individual,HUF, AOP, BOI, AJP for AY 2017-18

As per Item I of Paragraph A of Part I of THE FIRST SCHEUDULE

In the case of every

individual other than the individual referred to in items (II) and (III) of this Paragraph or

Hindu undivided family or

association of persons or body of individuals, whether incorporated or not, or

every artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2 of the Income-tax Act,

 not being a case to which any other Paragraph of this Part applies

Slab Tax rates
Up to Rs. 250000 NIL
Above 250000 but not exceeding 500000 10%
Above 500000 but not exceeding 1000000 Rs. 25000 +20% of Amount exceeding Rs. 500000
Above Rs. 1000000 Rs. 125000 +30% of Amount exceeding Rs. 1000000

Individuals covered by Item II of Paragraph A of Part I of The First Shedule

Every individual, being a resident in India, who is of the age of sixty years or more but less than eighty years at any time during the previous year

exemption limit starts from Rs. 3 lacs

Individuals covered by Item III of Paragraph A of Part I of The First Shedule

Every individual, being a resident in India, who is of the age of eighty years or more at any time during the previous year

Exemption Limit shall commence from Rs. 5 lacs

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How shall Income Tax be charged for AY 2017-18

As per Section 2(1) of Finance Act 2017,

 

  •  Subject to the provisions of sub-sections (2) and (3),
  • for the assessment year commencing on the 1st day of April, 2017,
  •  income-tax shall be charged at the rates specified in Part I of the First Schedule and
  • such tax shall be increased by a surcharge, for purposes of the Union, calculated in each case in the manner provided therein.

 

 

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Who is Assessing Officer ?

As per section 2(7A) of Income Tax Act, Assessing Officer” means

  • the Assistant Commissioner or
  • Deputy Commissioner or
  • Assistant Director or
  • Deputy Director  or
  • the Income-tax Officer

who is vested with the relevant jurisdiction by virtue of directions or orders issued under sub-section (1) or sub-section (2) of section 120 or any other provision of this Act,

 

and the Additional Commissioner or Additional Director or Joint Commissioner or Joint Director who is directed under clause (b) of sub-section (4) of that section to exercise or perform all or any of the powers and functions conferred on, or assigned to, an Assessing Officer under this Act

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Where Whole amount of sale consideration was taxed by the Assessing Officer as capital gains without giving assessee any benefit with regard to cost of acquisition or cost of construction because the assesse could not prove the expenditure.

Held by ITAT that  It can be nobody’s case that the assessee had acquired the property without paying any cost. Some value for cost of acquisition has to be given to the assessee. Even in cases of properties acquired through gifts, etc. the cost of acquisition as incurred by the previous owner is given to the assessee.

Nand lal Popli [2016] 71 taxmann.com 246 (Chandigarh – Trib.)]

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Under Section 44AD, 8% of Income is presumed to be Income of the assesse. Hence automatically 92% shall be presumed to be expenditure of the assesse.[ITAT Chandigarh in Nand lal Popli]

Under Section 44AD, 8% of Income is presumed to be Income of the assesse. Hence automatically 92% shall be presumed to be expenditure of the assesse. Now, if assesse through his cash flow is not able to prove expenditure of 92%, but is able to substantiate much lesser expenditure, whether AO can invoke section 69C saying that source of balance expenditure [92%- Actual Expenditure] is not satisfactorily explained especially when section 44AD does not over ride section 69C. Continue reading “Under Section 44AD, 8% of Income is presumed to be Income of the assesse. Hence automatically 92% shall be presumed to be expenditure of the assesse.[ITAT Chandigarh in Nand lal Popli]”

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CBDT clarifies the issue whether a person born on 1st April can be said to have completed 60/80 years of age on 31st March and there fore whether such person is entitled to higher exemption limit of Rs. 3,00,000/5,00,000 respectively.

CBDT considered Supreme Court Judgment in Prabhu Dayal Sesma on general rules to be followed for calculating age of a person. As per Court for a person  born on certain day , day shall start from 12’O clock midnight and there fore the person attains specified age on his anniversary at  12’O clock of preceeding day.

Continue reading “CBDT clarifies the issue whether a person born on 1st April can be said to have completed 60/80 years of age on 31st March and there fore whether such person is entitled to higher exemption limit of Rs. 3,00,000/5,00,000 respectively.”

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Assessee who was reflecting income under head Income from House property and therefore could not claim maintenance charges of Rs. 3.20 crore allowed to change the head of Income by filing revised computation of Income before AO by ITAT Mumbai in Peepul Tree Properties (P.) Ltd. [2016] 71 taxmann.com 332 (Mumbai – Trib.) MAY 20, 2016

ITAT in para 5.4 of the Judgement said that:

“……..there is no dispute on the proposition that tax liability of assessee has to be determined strictly in accordance with law. But a claim can be allowed to assessee which is valid as per law and made by the assessee in accordance with law and in a complete and rightful manner. In case the assessee wants its income to be assessed under different head as per the provisions of law, then, the minimum duty expected from the assessee is to at least file a revised computation sheet of income offering the income in proper heads and making appropriate claims against each and every head separately. This exercise is not expected to be done by the AO on behalf of the assessee. But nonetheless, with a view to meet the ends of justice and in view of these peculiar facts and circumstances of the case, we find it appropriate to give an opportunity to the assessee to file revise computation sheet of income before the AO making out its claim in an appropriate and complete manner………..”

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Prepayment charges and processing fee are allowable under section 24(b) as Interest from Income under head “Income from House property”[Peepul Tree Properties Mum Trib]

Definition of Interest u/s 2(28A) includes any service fee or other charge in respect of moneys borrowed or debt incurred or in respect of any credit facility which has not been utilized.

Hence both the prepayment charges and processing fee are allowable under section 24(b) as Interest from Income under head “Income from House property”

ITAT Mumbai followed :

  1. Pentagram Properties Pvt. Ltd. DCIT (ITA No.3713/M/2010) dated 12th August 2011
  2. Windermere Properties (P) Ltd. DCIT (34 taxmann.com)
  3. CIT Gujarat Guardian Ltd. (177 Taxman 434, Delhi)

Peepul Tree Properties (P.) Ltd. [2016] 71 taxmann.com 332 (Mumbai – Trib.) MAY  20, 2016