Category: Income Tax

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Where assessee hospital had sold old medical equipments, under buyback arrangement, to its vendors against purchase of new machinery, such sale could not be categorized as ‘scrap sale’; therefore, no TDS was to be deducted under section 206C

The word ‘scrap’ itself in ordinary parlance presupposes manufacture, processing or industrial activity.

In running a medical hospital question of generation of scrap is inconceivable. Therefore provisions of s.206C of the Act, ‘Prima Facie’ are not applicable to the assessee.

 

Dr. Balabhai Nanavati Hospital[2017] 86 taxmann.com 107 (Mumbai – Trib.) SEPTEMBER  8, 2017

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TDS for Maintenance Contracts for technical equipments is covered by S.194C and not 194J

Dr. Balabhai Nanavati Hospital[2017] 86 taxmann.com 107 (Mumbai – Trib.) SEPTEMBER  8, 2017

AMC was necessary to keep medical equipments and other hospital equipments in good working condition and this process was normally carried out by skilled mechanics and not any qualified technician. Through these AMCs, the assessee was carrying out routine normal maintenance which was covered by the provisions of section 195C and these were not technical services covered under section 194J.

 

As per Q. No. 29 of CBDT Circular No 7 dated 8-8-1995, Routine, normal maintenance contracts which includes supply o spares will be covered tinder Section 194C. However, where technical services are rendered, the provision of Section 1 94J will apply in regard to the deduction at source.

 

Held in  Ultra Entertainment Solutions Ltd  where in the election was regarding the nature of payments made by the assessee to another person ,  who was engaged by the assessee is to carry out all operations connected with the selling of online lottery tickets on behalf of the assesse, that tax is deductible u/s 194J

 

ITAT, Ahmedabad in the case of Gujarat State Electricity Corporation Ltd. vs. ITO, 3 SOT 468 (Ahd), wherein it was held that the payments made by the assessee company to Gujarat Electricity Board for entire operation and maintenance 6r’Power plant under a comprehensive contract could not be treated as payment “fees for professional services as contemplated in section 194J but were covered by section 194C of the Act”.

 

 

Decision dated 30.09.2011 in ITA Nos. 3059 to 3061 & 3081/Ahd./2009 of Ahmedabad Tribunal in the case of Nuclear Power Corporation Ltd, it has been held that repairs and annual maintenance of computers do not involve services of technical nature so as to be assessable as “fees for technical services” u/s 9(1)(vii) of the Act and hence the assessee was required to deduct TDS under Section 194C of the Act and not under Section 194J of the Act.

 

 

Hon’ble Madras High Court in the case of Skycell Communications Ltd. 251 ITR 53 (where it was held that the installation and operation of sophisticated equipments with a view to earn income by allowing customers to avail of the benefit of the user of such equipment does not result in the provision of technical service to the customer for a fee)

 

Similar decisions by the Bench of Mumbai Tribunal in the case of Dy. CIT v. Asian Heart Institute & Research Centre (P.) Ltd. [2017] 82 taxmann.com 250

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Unscrupulous elements conducting unauthorized/illegal searches: PRESS RELEASE, DATED 22-9-2017

The tax payers is well within his rights to seek & inspect the warrant of authorisation, confirm the identities of authorized Income Tax Authorities mentioned on the warrant. The assessee can seek the telephone numbers of immediate supervisory officers of the search/survey party for the purpose of verification of genuineness.

In case, any doubts still persists then the Income Tax Department can be contacted on the following number 9013850099 for the specified purpose of confirmation of identities of officers/officials working in the Delhi region.

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1.25 CRORES “new return filers” targeted to be added during 2017-18 as per CBDT letter dated 27-09-2017

 

A ‘new return filer’ for this purpose is defined as a person who has not filed return in the previous three Financial Years (2014-15 to 2016-17) but has filed return in the current financial year.

Region wise targets are as under:

:

Region Target for new return filers for FY 2017-18 Region Target for new return filers for FY 2017-18
JAIPUR 580261
AHMEDABAD 941123 KANPUR 616725
BANGALORE 876846 KOCHI 362156
BHOPAL 620925 KOLKATA 697685
BHUBHNESWAR 234850 LUCKNOW 620651
CHANDIGARH 1041948 MUMBAI 740741
CHENNAI 1047702 NAGPUR 211922
DELHI 727367 PATNA 502132
GUWAHATI 254948 PUNE 1182532
HYDERABAD 1239486 Total 12500000
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in cases where on receiving the intimation u/s 143(1l)(a)(vi) of the Act, the concerned assessee has already filed a revised return, such returns shall be treated as valid and handled accordingly

As per section 143(1)(a)  while processing return the total income or loss shall be computed after making the adjustments for

  • any arithmetical error in the return or [S.143(1)(a)(i)]
  • an incorrect claim, if such incorrect claim is apparent from any information in the return. [S.143(1)(a)(ii)] As per Explanation to 143(1) an incorrect claim apparent from any information in the return” shall mean a claim, on the basis of an entry, in the return
  1. of an item, which is inconsistent with another entry of the same or some other item in such return
  2. in respect of which the information required to be furnished under this Act to substantiate such entry has not been so furnished;
  3. in respect of a deduction, where such deduction exceeds specified statutory limit which may have been expressed as monetary amount or percentage or ratio or fraction

 

 

WEf AY 2017-18 Now adjustment u/s 143(1)(a) in return of income can also be made for

  1. disallowance of loss claimed, if return of the previous year for which set off of loss is claimed was furnished beyond the due date specified under sub-section (1) of section 139 [S.143(1)(a)(iii)]
  2. disallowance of expenditure indicated in the audit report but not taken into account in computing the total income in the return[S.143(1)(a)(iv)]
  3. disallowance of deduction claimed under sections 10AA, 80-IA, 80-IAB, 80-IB, 80-IC,80-ID or section 80-IE, if the return is furnished beyond the due date specified under sub-section (1) of section 139 [S.143(1)(a)(v)]
  4. addition of income appearing in Form 26AS or Form 16A or Form 16 which has not been included in computing the total income in the return [S.143(1)(a)(vi)]

 

Intimation of Adjustment to Assessee:

Provided that no such adjustments shall be made unless an intimation is given to the assessee of such adjustments either in writing or in electronic mode:

 

Response of the assessee to be awaited for 30 days

 

Provided further that the response received from the assessee, if any, shall be considered before making any adjustment, and in a case where no response is received within thirty days of the issue of such intimation, such adjustments shall be made

As per Above Instructions No. 9/2017, In returns filed in ITR-1 Form, information about a particular head/item of income is only on net basis and thus, complete data/information may not be available therein which may enable comparison with the data/information as contained in the three Forms [F.16,16A and 26AS]  in a meaningful manner. Therefore, in exercise of its powers under section 119 of the Act, the Board hereby directs that provision of section 143(1)(a)(vi) of the Act would not be invoked to issue intimation proposing adjustment to the income/loss so filed in ITR-1 Form in such situations.

 

  • However, where any head/item of income has been altogether omitted to be included in the return of income filed in ITR-1 while the three Forms contain specific detail in this regard pertaining to that item/head of income, section 143(1)(a)(vi) of the Act shall continue to apply.

 

  • Further, for purpose of section 143(1)(a)(vi) of the Act, only the three Forms specified therein would be taken into consideration

 

  • The pending intimations proposing adjustments under section 143(1)(a)(vi) wherein the taxpayer has tendered an explanation without revising the return or has not tendered any response till now shall be dealt with in accordance with the above direction.

 

In cases where on receiving the intimation u/s 143(1l)(a)(vi) of the Act, the concerned assessee has already filed a revised return, such returns shall be treated as valid and handled accordingly

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INTEREST ON MONEY BORROWED FOR HOUSE PROPERTY IS TO BE ALLOWED ONLY IN RESPECT OF FIRST OR SECOND LOAN AND NOT FOR ANY SUBSEQUENT LOAN

SATYA CO. LTD [1986] 19 ITD 596 (CAL.)

 

The words ‘such capital’ used in section 24( 1)(vi) definitely refers to the borrowed capital and as such the section confines the benefit to the borrowed capital, i.e., original loan only. The language is not capable of being extended to any second or subsequent loan. No doubt, that the aforesaid Board’s circular refers to the second loan to which the provision of the section was extended by this Board’s circular. But it could not be extended to subsequent loans as contended by the assessees. Therefore, the Commissioner (Appeals) was incorrect in holding that the test laid down in section 24(1)(vi) was that the loan should have been taken to acquire the property and it did not say whether it was the first loan or second loan or subsequent loans.