CA P D RUNGTA: May 2013

Wednesday, May 8, 2013

Intimation U/s 245 of the IT Act.

Dear Professional Colleagues,

One of my client has received an Intimation U/s 245 of the IT Act'1961 with regard to processing of of IT Return for the AY 12-13 wherein the amount refundable for the said AY has been adjusted with the demand for earlier years.

We have filed the rectification petition U/s 154 of the IT Act for the earlier years and hv got the rectified order u/s 154 from the local jurisdictional AO and as such there was a refund for earlier years which was duly processed.

Now, with regard to the refund for the AY 12-13, do we need to write to CPC Bangalore for processing the refund stating that the earlier demand has been vacated.

Further in the IT portal the outstanding demand for the earlier year is still showing even though the same has been vacated by the local office. Plz advice as to how to get the refund and the demand vacated.

Thanks & Regards,
P K Agarwal.

Reply:1
Refund was a problem and will continue as long we claim refund.

CPC is sending the reminders for processing done by them and tax paid by assessee , while calling them they say please ignore if you have paid as we have not received the updated data from Banks.

Earlier situation was they never used to get the paid challans and now they do not get datas

In the letter it is written Rectification will be done by AO but while you go to them they say they do not know anything and contact CPC as they have adjusted the same .

While you put up the case with Grievance cell they act like Post office and while contact them they say we can persue the case individually as we have so many cases, whoi has created so many, it is the Finance ministry which has done this and we at practice and/or as assessee have to suffer like that.

That was in past and will continue--------

bhuwania surendra
Reply:2
Exactly same case happened with me and visiting the local ITO was of no use.

Please guide ..

Thanks & Regards
Sanjiv Agarwal
Mail: sanjivvicky@hotmail.com
Mob: +91 90077 06720
Reply:3

Sir,

Pls meet the local ITO and tell him / her the problem (your client is facing) as he is the person who can help you and vacate the demand from the website and informed CPC-Banglore accordingly. As understood from different cases, without the intervention of local ITO, the problems can not be resolved.

Regards,
Sanjay Kumar Jain

urgent query

XYZ Pvt Ltd has 4 directors. A land has been purchased by these four
directors jointly. They want to introduce it as an asset in the Company.
Can they do so? What formalities are required for the same?

Regards,
CA Neha Kedia
Reply:1
Issue shares to them against the land for consideration other than cash

ramaswami.kalidas

Conversion of Private limited Company to LLP

Dear Friends,

LLP Act allows only individuals and body corporates to be partner of LLP. A private limited company is having HUF shareholders also. How can such company be converted into LLP.

CA Jinesh Jain
Reply:1
Dear CA Jineshji

Jai Jinendra

As a cardinal principal of law we have to abide bvy the principals of law enunciated which we propose to follow.

Under the circumstances, pl transfer the shares from HUF to other eligible persons and then get the pvt ltd. co.into LLP.

Regards
CMA & CS S K JAIN
Reply:2
Dear Jainji,

Jai Jinendra.

Thank you for responding to the query. I had raised this issue for discussion in the forum since I had come accross advise by some members to their clients that HUF can become partners in LLP and/or gift by HUF to its members are covered under the definition of relative under section 56.

I would take the discussion a step further for the benefit of all.

The book value of the shares of the Pvt. Ltd. Co. is Rs. 500/- against the face value of Rs. 10/-. If such shares are transferred to other eligible person, huge income tax liability on Long Term Capital Gains arise. Even if the shares are transferred to the karta or other coparcners of the HUF, to my mind the transaction is covered under section 56 (1) (vii). In this respect, I would like to mention that the sub clause (ii) inserted in the above section (for definition of relatives in case of HUF) w.e.f. 1.6.2010 covers only if the receiptant is HUF from its members and not vice versa.

Though recently, the Rajkot Bench in the case of Vineetkumar Raghavjibhai Bhalodia vs ITO, Rajkot Ward 5(4) vide its order dated 17.05.2011 has decided in favour of the assessee by surmising that HUF is a group of relatives and gift by HUF to the member is covered under the definition of relative for the purpose of section 56(2)(v).

However, the revenue has preferred an appeal against the above order and the appeal has been admitted by Hon'ble Gujrat High Court on 23.10.2012. The decision is still pending.

CA Jinesh Jain
Reply:3
Dear CA Jineshji
Jai Jinendra

I discussed the law under the LLP Act and what the LLP Act required you to do. In case of any other difficulty in relation to any other law the LLP Act does not take care unless the LLP Act is modified.

We have to take care of all the aspects of law andnot only the LLP law and accordingly one has to take a concerted decision for best implementation of the law in our action.

I thank you for theinformation pro0vided in realation to the Income Tax Act which will be a knowledge for the undersigned.

Regards
CMA & CS S K JAIN
(0)9830492422

Query Regarding Service Tax-Urgent

Query Regarding Service Tax-Urgent
Dear Member
A company hires the Sumo for the daily pick & drop facilities for the
employee (from home of the employee to place or work and vice versa). The
party from whom the car is hired is an individual entity & not registered
under service tax as the annual turnover is below the basic exemption limit.

My query is whether reverse mechanism is applicable to company & if yes what
is the percentage on which tax is to be paid

Again the company hires truck/three wheeler van etc for the purpose of
transportation of the goods from the one gowdown to another. Such
facilities is taken from the individual operators who are not registered
with Service tax. Is reverse mechanism is apply in this case. If yes what is
the percentage on which tax is to be paid.

An urgent reply is required together with related circulars/references.
With Regards
Ganesh

Reply:1
Dear Mr. Khemka,

This is with reference to the query raised in the trailing mail.

In regard to Sumo being used for daily pick & drop facilities for the
employees, kindly note that Entry No. 7 of Notification no. 30/2012-ST dated
20-06-2012 provides that in case of renting or hiring of motor vehicle by
individual, HUF, Proprietary Firm or Partnership Firm (incl. AOP), Service
Tax will be payable by the recipient of Service provided recipient of
service is a business entity registered as body corporate. The Service
Recipient would be liable to pay Service Tax on 40% of the value of Total
Service Consideration [without considering abatement, if any, availed by the
Service Provider] paid to the Service Provider.

In respect to hiring of truck for the purpose of transportation of the goods
from the one godown to another, please note that the liability to pay
Service Tax is on Consignor/ Consignee paying freight, if the same is a
factory, registered excise dealer, body corporate, partnership firm or AOP
[after availing the abatement of 75% available as per Entry No. 7 of
Notification no. 26/2012-ST dated 20-06-2012]. Further, please note that the
liability of Service Tax as a Service Recipient crops up only if the Goods
Transport Agency issues a consignment note or an equivalent document.

The payment of freight made directly to Truck Owners &/or Operators, who do
not issue any Consignment Note, would not be leviable to Service Tax. While
presenting the budget in the Financial Year 2004 on 08-07-2004, the Hon'ble
Union Minister of Finance specifically clarified on the floor of the
Parliament that the Government did not have any intention in subjecting the
'individual truck owners' to Service Tax. Hence, it is an undisputed fact
that the intention of the Central Government was to levy service tax only on
'Goods Transport Agency', which is in the business of booking cargo and
issuing the consignment note in the normal course of their business and not
'individual truck owners'. Further, there are a plethora of judgments,
wherein it has been clearly held that services provided by individual truck
owners are not liable to Service tax under the category of 'Goods Transport
Agency'. Recently, the Hon'ble Delhi Tribunal in the case of Bazpur
Co-operative Sugar Factory Ltd. vs. CCE 2012 (27) S.T.R. 517 (Tri.-Del.) had
also upheld the same view. Hence, the irrefutable legal position stands that
there is no levy of service tax on services rendered by 'individual truck
owners &/or operators'.
Hope the above clarifies your queries. In case you require any further
clarification &/or information, please let me know.

Thanks & Regards,

CA Vikram Khaitan
Director- ARV Advisory Services (P) Ltd.
------------------------------------------------------------
D: +91-33- 2213 7625 / 3022 4196; M: +91-98315 86568
Email: vikram@arvsolutions.co.in /
info@arvsolutions.co.in

Reply:2
Dear Mr. Ganesh Khemka,

As this service falls under rent a cab service so reverse charge @ 40% will be applicable and the company has to pay the service tax as service recipient.

There will be no reverse charge on hires truck/three wheeler van etc in your case as it doesnot falls under GTA service.

In case you need any further clarification, please let me know.

Thanks & Regards
CA Sumit Kr Agarwal
9903979735
Reply:3
Dear Ganesh,

In reference to the captioned query, kindly find below my views to the same.

On the transportation of employees the Company shall be liable for Service
tax on reverse charge basis @ 40% of the taxable value.

On the transportation of goods, since the company is not availing any GT
agency (GTA) services, no service tax liability on the same on reverse
charge mechanism.

Requesting senior / learned members to clarify if my point of view is
incorrect.

Thanks and Regards,
CA Deepak Agarwal.

Reply:4
In case of service of renting of motor vehicle designed to carry passenger for service to be taxable the service provider must be IND/ HUF/ Firm/AOP and the service recipient must be body corporate. Service tax is payable on 40% of the value of service. If the service provider avails abatement then the service receiver has to pay 100% tax. If the service provider do not avail abatement then service provider has to pay tax of 60% and service receiver 40%. Even if the service provider is SSP the service recipient has to discharge his liability.

shashi chirania

Uploading of TAX AUDIT REPORT FOR AY 2013-2014

Dear Sir,

Please let me know whether the TAX AUDIT REPORT U/S 44AB for AY 2013-2014 is to be filled
manually or uploaded online on the Income Tax E filing site.

Regards

Radhe Shyam Agarwal
Advocate
2nd Upper Floor, Opp. D.G.M.S
Zila Parishad, Hirapur
Dhanbad, Jharkhand 826001
Mob: 9431187698

Comment:1
CBDT has vide Notification No.NOTIFICATION NO. 34/2013, DATED 1-5-2013 provided that where
an assessee is required to furnish a report of audit under sections 44AB, 92E or 115JB of the Act, he
shall furnish the same electronically. Online filing of following audit reports shall be mandatory in
following cases:
(a) Tax Audit report under Sec. 44AB in respect of books of account;
(b) Audit report under Sec. 92E in respect of international transaction; or
(c) Audit report under Sec. 115JB in respect of MAT computation.

Thanks
Ravi Dakliya

Comment:2
This is likely to get changed and no notifications received till date. The process would be as follows
a)      Assesse in their Login Adds their Auditor as his ‘CA’ in their login
b)      Auditors would have to register themselves as CA
c)      There are utilities given to Generate XML for 3CA/3CB & 3CD
d)      Auditors in their login have to upload the Tax Audit report to ITD along with their DSC by way of an XML
Trust this process is clear.
Regards
Venugopal.G

Comment:3
Dear Sir

This means the uploading is to be done by Assessee and not by Chartered Accountant.

CA ATUL MEHTAA.P.MEHTA & ASSOCIATES39, Chakraberia Road (South)Kolkata - 700 025Mobile : 9830027784Office  : +91+33+24741584

Query:Issue of cheque in sufficient to fund

Dear all,
One of my client, a private limited company, has issued a cheque dated
28/01/2013 for purchase of a property. But till date(i.e.9th April) the
party has not issued the cheque.
On the date of issue the cheque, the client is having sufficient fund but
towards the year end, the fund used for separate purpose & on 31st march,
2013, bank balance shows negative figure(taking into consideration the
pending cheque amount).
The agreement has been prepared & the cheque amount mentioned there.
The question is whether the client can show negative bank balance as on
31/03/2013 ?
What recourse can be taken in this case ?

Thanks & regards,
CA Umes Kejriwal
9836431715/9051016948
Reply1
There is no problem in showing the negative balance in bank Account. If you
are so wary of the situation append a note explaining the same and the
reason for difference with the actual balance as per bank statement.

PIYUSH CHIRANIA
PIYUSH CHIRANIA & ASSOCIATES
Reply2
Bank balance can never be negative unless there is OD sanction by the bank.
Further, Notes cannot substitute Accounts.
JNGupta
9331022920
Reply3
Bank balance can be negetive even without a sanctioned limit. The credit
balance should be shown on teh current liabilities as Book OD. There is
absolutely no problem with that.

DP Ghatak, Durgapur
9434474982

Reply4
I am of the opinion that it would be a 'Current Liability' and not a
negative balance in the 'cash and bank balances'. However it is clearly
unsecured, the creditors have moved from one group to another.
Venu &Vinay

Reply5
Bank Balance as per Client's Bank Book can be negative without a sanctioned limit and may be subject to
BRS. This is simply a Book Overdraft and there is no problem with it. This is based on practical situation .

CA. A.K.De

Doubt in House Property

I have a house, which is in a city other than my place of posting and is
rented out at Rs 5000 p.m. . The housing loan is Rs 25 Lacs in my name and
EMI is Rs 25000 p.m.

How do i claim income tax benefit under the head 'Loss on Income from House
Property'
ca.amitsinghi@gmail.com

ACES ACCEPTS REJECTED ST 3 RETURNS_SKKA_IDT ALERT_08/2013 DATED 08/05/2013

Dear All,
We are pleased to share with you the following tax alert:
CBEC has accepted the Service Tax returns for the period July-September,
2012, which were rejected by system on the sole ground that these returns
were filed for the period prior to the dates of registration of the
assessees, as valid returns. These returns have been reprocessed in ACES and
the status of these returns is being shown in the systems as 'filed'. These
assessees, need not file the returns again for the same period and they can
view the status of their returns in ACES under 'View XML Status' option.
However, if the returns were rejected for any other reason, the assessees
are required to take corrective action as per the reasons of rejection.

This is as per the information portrayed in the aces website
(www.aces.gov.in).

We hope you find this alert, both timely and useful.
Thanks & Regards,
CA Ankit Kanodia|Partner - Tax & Regulatory

S.K.Kanodia & Associates|Chartered Accountants

39A, Jorapukur Square Lane, Room # 202,

Kolkata- 700006, WB, INDIA.

T | 098315 43580

E | ankit@skkassociates.com

W| www.skkassociates.com

Query:CENVAT Credit on Generator Set

Can CENVAT credit be enjoyed on duty paid on purchase of generator set for
use in Cinema Hall for movie exhibition.

--
*Priyanka Lath.*

Query: Tax Liability of salaried employee.

Query: Tax Liability of salaried employee.

Dear Professional Colleague,

One of my client is an employee of Consulate General of Japan based in
kolkata and is drawing a hefty package.

The employer is neither deducting TDS from the salary nor is issuing Form
16 nor is he issuing any monthly payslip. He is just issuing a certificate
at the year end mentioning the total amount paid during the FY and the
amount contributed towards PF. The monthly salary is credited to the Bank
A/c of d employee.

Now we need to file the IT return for the FY 13-14 wherein he is not in
a position to claim deduction/exemption as there is no breakup of Salary
Structure.

Plz advice as to how we sud do the tax computation and whether we can
formulate our own salary structure and claim deduction of Allowances accordingly.
Thanks & Regards,
P K Agarwal.
Reply:1
Dear Mr P K Agarwal,
With regard to your below mentioned Query, I would like to advise you that,
rather than formulating your own Salary Structure, kindly look into his
terms of appointment. There would certainly be an appointment letter be
issued by the Organisation wherein the structure would have been mentioned.
If further evidence from the same could not be arrived at, than you can
also look into other evidence as in what other employees are doing for the
purpose of filing their returns.
Regards
Dipendar Daga

CA P D RUNGTA