DIRECT TAXES NOTIFICATIONS Section 10(23A) of the Income-tax Act, 1961 Exemptions Professional The Central Government approved the Indian National Group of the International Association for Bridge and Structural Engineering, IDA Building, Jamnagar House, Shahjahan Road, New Delhi-110 011" for the purpose of the section 10(23A) of the Income-tax Act for the Assessment Years 2013-14 to 2015-16 provided: (i) the assessee shall apply its income, or accumulate the income for application, in accordance with the provisions of the said clause (23A), solely to the objects for which it is established; (ii) the assessee shall not be eligible for exemption under the said clause (23A) in respect of income chargeable under the head "Income from House Property" or any income received for rendering any speci ed services or income by way of interest or dividends derived from its investment. Section 80C of the Income-tax Act, 1961 Section 80C(2)(viii) The Central Government speci ed the 'Sukanya Samriddhi Account' for the purposes of section 80C(2)(viii)of the Income-tax Act. This noti cation shall come into force with effect from the date of its publication in the Of cial Gazette. Section 90 of the Income-tax Act, The protocol amending the Agreement between the Government of the Republic of India and the Government of the Republic of South Africa for the avoidance of double taxation and the prevention of scal evasion with respect to taxes on income was signed in Pretoria in 2013. The date of entry into force of the said protocol is the 26th day of November 2014, being thirty days after the date of receipt of letter of noti cations of completion of the procedures required by the respective laws for bringing the protocol into force, in accordance with Article II of the said protocol. Therefore the Central Government notified that all the provisions of the said protocol shall be given effect to in the Union of ML-355 143
India with effect from the 26th day of November 2014. In reference to sections 92CB and 92D of the Income-tax Act, the CBDT made the Income-tax (2nd Amendment), Rules, 2015 which shall come into force from the date of their publication in the Official Gazette. In the Income-tax Rules, 1962 in Rule 10 D, after sub-rule (2), sub-rule (2A), and after Rule 10T, for the words "Safe Harbour Rules", the words Safe Harbour Rules for International Transactions" have been substituted; after rule 10TG, "Safe Harbour Rules for Speci ed Domestic Transactions" have been inserted. Rule 10TH for Definitions of "Appropriate Commission and Government Company have been now provided. Rule 10THA for "Eligible assessee" and rule 10THB "Eligible specified domestic transaction". Safe Harbour Rule as per 10THC and Procedure as per rule 10THD inserted. Further in Appendix II, after Form No. 3CEFA, "Form No. 3CEFB" being "Application for Opting for Safe Harbour in respect of Speci ed Domestic" has been inserted. The Central Government made the rules to amend the Commodities Transaction Tax Rules, 2013, to be called the Commodities Transaction Tax (First Amendment) Rules, 2015 which shall come into force on the date of their publication in the Official Gazette. In the Commodities Transaction Tax Rules, 2013, for rule 3, the rule regarding Agricultural Commodities has been substituted. The CBDT notified the Oil Palm Extension Project, Animal Feed Extension Project and Godrej Agrovet-Agricultural Inputs Extension Project ('GA-AIEP') of Godrej Agrovet Limited, Pirojshanagar, Eastern Express Highway, Vikroli (East), Mumbai-400079, as eligible for the purpose of Section 35CCC of the Income-tax Act. Conditions subject to which agricultural extension project titled 'Animal Feeds Extension Project' have been noti ed thereunder. The CBDT clarified that it shall withdraw the approval if the approved entity (i) has ceased its activities; or (ii) its activities are not genuine; or (iii) its activities are not being carried out in accordance with all or any of the relevant provisions of the Act or Rules; or (iv) its activities are not being carried out in accordance with all or any of the conditions subject to which the noti cation is being issued. The organization Academy of Scientific and Innovative Research (AcSIR), New Delhi (PAN - AAALA1352P) has been approved by the Central Government for the purpose of clause (ii) of subsection (1) of section 35 of the Income-tax Act for the assessment year 2015-2016 and onwards in the category of "University College and other Institution", engaged in research activities subject to the speci ed conditions. 144 The Chamber's Journal
The Central Government further clarified that it shall withdraw the approval if the approved organization (a) fails to maintain separate books of accounts as referred to in sub-paragraph (iii) of paragraph 1; or (b) fails to furnish its audit report as referred to in sub-paragraph (iii) of paragraph 1; or (c) fails to furnish its statement of the donations received and sums applied for scienti c research as referred to in sub-paragraph (iv) of paragraph 1; or (d) ceases to carry on its research activities or its research activities are not found to be genuine; or (e) ceases to conform to and comply with the provisions of above clause. CIRCULARS Section 234A of the Income-tax Interest under section 234A of the Income-tax Act is charged in case of default in furnishing return of income by an assessee. The interest is charged at the specified rate on the amount of tax payable on the total income, as reduced by the amount of advance tax, TDS/TCS, any relief of tax allowed under section 90 and section 90A, any deduction allowed under section 91 and any tax credit allowed in accordance with the provisions of section 115JAA and section 115JD of the Act. Since self-assessment tax is not mentioned as a component of tax to be reduced from the amount on which interest under section 234A of the Act is chargeable, interest is being charged on the amount of self-assessment tax paid by the assessee even before the due date of ling of return. It has been held by the Hon'ble Supreme Court in the case of that the interest under section 234A of the Act on default in furnishing return of income shall be payable only on the amount of tax that has not been deposited before the due date of ling of the income-tax return for the relevant assessment year. Accordingly, the present practice of charging interest under section 234A of the Act on self-assessment tax paid before the due date of ling return was reviewed by CBDT. The Board decided that no interest under section 234A of the Act is chargeable on the amount of self-assessment tax paid by the assessee before the due date of ling of return of income. Section 40(a)(i) of the Income-tax Section 40(a)(i) of the Act stipulates that in computing the income chargeable under the head "Pro ts or gains of business or profession", any interest, royalty, fees for technical services or other sum chargeable under this Act either payable in India to a non-resident (not being a company)/a foreign company or payable outside India shall not be allowed as a deduction, if there has been a failure in deduction or in payment of tax deducted in respect of such amounts under Chapter XVII-B of the Act. Disallowance regarding 'other sum chargeable' under section 40(a)(i) is triggered when the deductor fails to withhold tax as per provisions of section 195 of the Act. Doubts have been raised about the interpretation of the term 'other sum chargeable' i.e. whether this term refers to the whole sum being remitted or only the portion representing the sum chargeable to income-tax under relevant provisions of the Act. Central Board of Direct taxes had already issued Instruction No. 02/2014, dated 26-2-2014 (F.No. 500/33/2013-FTD-I) regarding deduction of tax at source. this instruction, Board has clarified that in cases where tax is not deducted at source under section 195 of the ML-357
Act, the Assessing Officer shall determine the appropriate portion of the sum chargeable to tax, as mentioned in sub-section (1) of section 195, to ascertain the tax-liability on which the deductor shall be deemed to be an assessee in default under section 201 of the Act. It has been further clari ed that such appropriate portion of the said sum will depend on the facts and circumstances of each case taking into account the nature of remittances, income component therein or any other fact relevant to determine such appropriate proportion. As disallowance of amount under section 40(a) (i) of the Act in case of a deductor is interlinked with the sum chargeable under the Act as mentioned in section 195 of the Act for the purposes of tax deduction at source, the Central Board of Direct Taxes, clarified that for the purpose of making disallowance of 'other sum chargeable' under section 40(a)(i) of the Act, the appropriate portion of the sum which is chargeable to tax under the Act shall form the basis of such disallowance and shall be the same as determined by the Assessing Of cer having jurisdiction for the purpose of sub-section (1) of section 195 of the Act as per Instruction No. 2/2014, dated 26-2-2014 of CBDT. Further, where determination of 'other sum chargeable' has been made under sub-sections (2), (3) or (7) of section 195 of the Act, such a determination will form the basis for disallowance, if any, under section 40(a)(i) of the Act. INSTRUCTIONS Section 92C of the Income-tax Act, The CBDT drew attention to the decision of the High Court of Bombay in the case of wherein the Court has held,, that the premium on share issue was on account of a capital account transaction and does not give rise to income and, hence, not liable to transfer pricing adjustment. The Board has now accepted the decision of the High Court of Bombay. All the ITAT, DRPs and CsIT (Appeals) were directed that the in the judgment must be adhered to in all cases where this issue is involved PRESS RELEASES Income Tax Department had initiated investigation into issuance of cheques by companies which are acting as entry operators to convert illegal cash into legitimate money. Recently in Kolkata, this investigation led to detection of substantial unaccounted income. In these cases, the unaccounted income was sought to be converted into legitimate money with the help of non-genuine companies which were acting as entry operators. An enquiry was initiated in Delhi into issuance of cheques by companies which were alleged to be non-genuine and entry operators. The companies and their Directors could not be traced at the addresses given to Banks and Ministry of Corporate Affairs. Examination of the accounts of these companies revealed that they have issued accommodation entries to several persons and entities for substantial amounts. It was also found that sources for such entries were not genuine. To carry forward 146 The Chamber's Journal
the investigation process, notices were issued to about 50 persons and entities including two political parties. These notices seek information about the identity of the contributors and other relevant details which are necessary to complete the process of investigation. Section 276C of the Income-tax Act, of tax evasion During 2014-15 the ITD conducted searches in 414 groups and seized undisclosed assets of ` 582 crore. Undisclosed income of ` 6,769 crore has been admitted by the taxpayers during such searches. The undisclosed income detected as a result of further enquiries is however much more. Besides, 1174 surveys conducted upto November, 2014 led to detection of undisclosed income of ` 4673 crore. Focus of investigation in the Income-tax Department had so far been on civil consequences i.e., revenue augmentation. In its crusade against black money and with a view to have credible deterrence against generation of black money, the Government has shifted the focus to successfully prosecute the offenders in shortest possible time. Wilful attempt to evade tax is a serious offence punishable under Section 276C of the Income Tax Act, 1961 with imprisonment up to 7 years and fine. During the current year 628 prosecution complaints have been filed up to December, 2014. 56 of such prosecution complaints relate to offences concerning undisclosed foreign income. (Press Release, dated 12-2-2015) FORM IV THE CHAMBER'S JOURNAL 1. Place of Publication : The Chamber of Tax Consultants, 3, Rewa Chambers, Ground Floor, 31, New Marine Lines, Mumbai 400 020. 2. Periodicity of its Publication : Monthly 3. Printer's Name & Nationality : Shri Kishor D. Vanjara, Indian, 4. Publisher's Name & Nationality : Shri Kishor D. Vanjara, Indian, 5. Editor's Name & Nationality : Shri Kishor D. Vanjara, Indian, 6. Names and Addresses of individuals : The Chamber of Tax Consultants who own the newspaper and 3, Rewa Chambers, Ground Floor, partners or shareholders holding 31, New Marine Lines, more than one per cent of the capital Mumbai - 400 020. I, Kishor D. Vanjara hereby, declare that the particulars given above are true to the best of my knowledge and belief. Date : 9-3-2015 KISHOR D. VANJARA Signature of the Publisher ML-359 147