Re: UPDATES FROM TAX GURU (in this message: 18 new items)

On Mon, Jan 4, 2010 at 9:36 AM, LEGAL & FINANCIAL UPDATES FROM TAX GURU <info@taxguru.in> wrote:

UPDATES FROM TAX GURU (in this message: 18 new items)

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• Property in Maharashtra just got more expensive as government increased market value of real estate by 10-20 per cent in its Ready Reckoner 2010
• Change of method of accounting of overdue charges from mercantile basis to cash system does not create any income
• Expenditure incurred on modification and renovation of a building before commencement of business is neither allowable under section 30(a)(ii) nor section 37.
• Validity of agreement for assignment of liabilities and assets by an assessee
• AO not justified in adjustment to a international transaction whose arm's length character is accepted by Transfer Pricing Officer (TPO)
• Foreign company having Permanent Establishment in India cannot be taxed at the rate applicable to domestic company
• Income from transfer of leased premises is taxable as 'Capital Gains' under the Income-tax Act
• Business of providing services in connection with the prospecting for or extraction or production of mineral oil governed by Section 44BB
• Assessing Officer can examine the entries in respect of writing off of bad debt or part thereof by assessee
• Set off of long term capital loss with indexation against long term capital gains without indexation is allowable
• Interest u/s 220(2) of the Income Tax Act is chargeable with reference to due date reckoned from original notice of demand
• Applicability of rule of limitation in respect of appeal filed after an inordinate delay without reasonable cause
• Section 41(1) of Income Tax Act, 1961 applies only to trading liability not to other types of liabilities
• If refund is legitimately due to assessee, mere delay should not defeat claim for refund
• There is no provision for adjustment for short payment of service tax of earlier period against excess payment of service tax in subsequent period
• For a debt to be classified as bad, assessee has only to write it off as irrecoverable in its accounts.
• A Brief on Complications under Section 397/398 of Companies Act, 1956 – Indian Company Law
• Under "block of assets" even a closed unit is eligible for depreciation

Property in Maharashtra just got more expensive as government increased market value of real estate by 10-20 per cent in its Ready Reckoner 2010 Posted: 03 Jan 2010 06:36 PM PST The ready reckoner is a guide for the market price of residential and commercial properties, based on which stamp duty and registration fee for their sale and purchase are calculated. Under the revised rates, a land owner would have to pay more... [[ This is a content summary only. Visit my website www.taxguru.in for full article ]]

Change of method of accounting of overdue charges from mercantile basis to cash system does not create any income Posted: 03 Jan 2010 06:06 PM PST In the instant case, learned counsel for the Revenue is not in a position to demonstrate or satisfy us that due to the change of accounting method adopted by the respondent/assessee , which is permissible in law as per the ratio laid down in (i) CIT... [[ This is a content summary only. Visit my website www.taxguru.in for full article ]]

Expenditure incurred on modification and renovation of a building before commencement of business is neither allowable under section 30(a)(ii) nor section 37. Posted: 03 Jan 2010 06:05 PM PST Hon'ble Madras High court in the case of A.Y.S. Paisutha Nadar v. CIT [1962] 46 ITR 1041 (Mad.) had held that section 10(2)(xv) of the Indian income-tax Act, 1922 [section 30(a)(ii) of 1961 Act.] relating to expenditure laid out or expended wholly... [[ This is a content summary only. Visit my website www.taxguru.in for full article ]]

Validity of agreement for assignment of liabilities and assets by an assessee Posted: 03 Jan 2010 05:54 PM PST However, in view of the fact that the agreement has been accepted as genuine in the hands of one of the parties and economic consequences have also occurred because the assignee has made the payment to the Government, the transaction is necessarily... [[ This is a content summary only. Visit my website www.taxguru.in for full article ]]

AO not justified in adjustment to a international transaction whose arm's length character is accepted by Transfer Pricing Officer (TPO) Posted: 03 Jan 2010 05:52 PM PST The Delhi bench of the Income-tax Appellate Tribunal (the Tribunal), in the case of Oracle India (P) Ltd. V. ACIT (2009-TIOL-540-ITAT-DEL) (the taxpayer) held that section 40A(2) of the Income-tax Act, 1961 (the Act) overrides the provisions... [[ This is a content summary only. Visit my website www.taxguru.in for full article ]]

Foreign company having Permanent Establishment in India cannot be taxed at the rate applicable to domestic company Posted: 03 Jan 2010 05:32 PM PST Mumbai bench of the Income-tax Appellate Tribunal (the Tribunal) in the case of JCIT v. State Bank of Mauritius Ltd. (2009-TIOL-712-ITAT-MUM) has held that the foreign company having Permanent Establishment (PE) in India cannot be taxed at the rate... [[ This is a content summary only. Visit my website www.taxguru.in for full article ]]

Income from transfer of leased premises is taxable as 'Capital Gains' under the Income-tax Act Posted: 03 Jan 2010 05:19 PM PST Recently, the Mumbai bench of Income-tax Appellate Tribunal (the Tribunal) in the case of ACIT v. United Motors (I) Ltd. (2009-TIOL-693-ITAT-MUM) has held that income from transfer of a leased premises without transferring its own business amounts... [[ This is a content summary only. Visit my website www.taxguru.in for full article ]]

Business of providing services in connection with the prospecting for or extraction or production of mineral oil governed by Section 44BB Posted: 03 Jan 2010 06:32 AM PST The profits derived from business of providing services in connection with the prospecting for or extraction or production of mineral oil are squarely and exclusively governed by Section 44BB, irrespective of the nature of services, provided the... [[ This is a content summary only. Visit my website www.taxguru.in for full article ]]

Assessing Officer can examine the entries in respect of writing off of bad debt or part thereof by assessee Posted: 03 Jan 2010 06:19 AM PST provision of Section 143 (2) of Income Act viz-aviz section 36(1)(vii) of the Income Tax Act, 1961 read with section 36(1) both would be harmonized to give purposeful meaning to both the statutory provisions, as one extends benefit to the... [[ This is a content summary only. Visit my website www.taxguru.in for full article ]]

Set off of long term capital loss with indexation against long term capital gains without indexation is allowable Posted: 03 Jan 2010 06:16 AM PST Section 70(3) of the Act postulates that for any assessment year where there is a loss in respect of long term capital asset, the asscssee shall be entitled to have the amount of such loss set off against the income, if any fas arrived at under a... [[ This is a content summary only. Visit my website www.taxguru.in for full article ]]

Interest u/s 220(2) of the Income Tax Act is chargeable with reference to due date reckoned from original notice of demand Posted: 03 Jan 2010 06:04 AM PST If there is default on the part of the assessee to comply with the original demand notice, the provisions of the Taxation Laws (Continuation & Validation of Recovery Proceedings) Act, 1964 shall apply. [[ This is a content summary only. Visit my website www.taxguru.in for full article ]]

Applicability of rule of limitation in respect of appeal filed after an inordinate delay without reasonable cause Posted: 03 Jan 2010 05:57 AM PST Coming to the general proposition regarding condonation of delay, the learned counsel relied on a number of cases, which have already been summarized. In the case of Shakuntala Devi (supra), the Hon'ble Supreme Court held that liberal construction... [[ This is a content summary only. Visit my website www.taxguru.in for full article ]]

Section 41(1) of Income Tax Act, 1961 applies only to trading liability not to other types of liabilities Posted: 03 Jan 2010 05:46 AM PST Where the assessee received some amount as a liability, which was not claimed as deduction or expenses in any of the years, and the same was written off as compensation/ damages for relinquishment of right to sue in court of law, the provisions of... [[ This is a content summary only. Visit my website www.taxguru.in for full article ]]

If refund is legitimately due to assessee, mere delay should not defeat claim for refund Posted: 03 Jan 2010 05:41 AM PST There is no presumption that delay is occasioned deliberately, or on account of culpable negligence, or on account of malafides. A litigant does not stand to benefit by resorting to delay. In fact he runs a serious risk. The approach of the... [[ This is a content summary only. Visit my website www.taxguru.in for full article ]]

There is no provision for adjustment for short payment of service tax of earlier period against excess payment of service tax in subsequent period Posted: 03 Jan 2010 05:39 AM PST Learned Chartered Accountant submits that the excess amount paid in the subsequent period may be treated as mere deposit which can be adjusted against the earlier short payment and it may be paid alongwith interest. I am unable to accept the... [[ This is a content summary only. Visit my website www.taxguru.in for full article ]]

For a debt to be classified as bad, assessee has only to write it off as irrecoverable in its accounts. Posted: 03 Jan 2010 05:37 AM PST There is no requirement that the income in respect of which bad debts is written off has to be recognized as income in earlier previous year and not in the year in which bad debt is written off. [[ This is a content summary only. Visit my website www.taxguru.in for full article ]]

A Brief on Complications under Section 397/398 of Companies Act, 1956 – Indian Company Law Posted: 03 Jan 2010 05:03 AM PST an effective enforcement of provisions like 397/398 of the Act and the protection of rights of all shareholders without any scope for misuse or abuse is very important for the growth of industry or the corporate world. It is true that we have good... [[ This is a content summary only. Visit my website www.taxguru.in for full article ]]

Under "block of assets" even a closed unit is eligible for depreciation Posted: 03 Jan 2010 04:58 AM PST The assessee had two divisions, one at Dombivili and the other at Surat. The division at Surat was closed since two/three years. The assessee claimed depreciation on the assets of the said Surat division which was rejected by the AO and the CIT (A)... [[ This is a content summary only. Visit my website www.taxguru.in for full article ]]

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