Exemption u/s. 54 in respect of more than one residential flat acquired by the assessee under a joint development agreement with builder

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CIT v. Smt. K. G. Rukminiamma (2011) 331 ITR 211 (Kar.)

The assessee, being the owner of a property, entered into a joint development agreement with a builder to develop the property. Under the agreement, the builder constructed eight residential flats and handed over four residential flats to the assessee. The entire cost of construction and other expenses were borne by the builder.

The issue under consideration is whether capital gains exemption under section 54 can be claimed in respect of the four residential flats treating them as “a residential house”. In the present case, the Revenue contended that the benefit of deduction under section 54 could be availed only in respect of one residential flat and in respect of the remaining three residential flats, the assessee was not entitled to deduction under section 54.

The Karnataka High Court, applying the decision in Anand Basappa (2009) 309 ITR 329 (Kar.) to the present case, held that all the four flats are situated in the same residential building and hence, will constitute “a residential house” for the purpose of section 54. Therefore, the assessee would be entitled to deduction under section 54 in respect of all four flats.

If agreement was on principal-to-principal basis, payments made by the assessee to the distributor cannot be treated as commission liable for TDS U/s. 194H

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CIT v. Jai Drinks (P.) Ltd. (Delhi HC) -In the insantt case, it was held that sInce the agreement between the assessee and the distributor clearly stated that the agreement was on principal-to-principal basis, payments made by the assessee to the distributor were incentives and discounts and were not to be treated as commission liable for deduction of tax at source under section 194H of the Act.

Allowability of bad debts under section 36(1)(vii)

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ACIT vs Ashima Dyecot Pvt. Ltd. (ITAT Ahmedabad) – After the amendment of section 36(1)(vii) of the Income-tax Act, 1961, with effect from April 1, 1989, in order to obtain a deduction in relation to bad debts, it is not necessary for the assessee to establish that the debt, in fact, has become irrecoverable: it is enough if the bad debt is written off as irrecoverable in the accounts of the assessee.

Highlights of Revised Public Provident Fund (PPF) Scheme w.e.f 01.12.2011

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Interest 8.6% w.e.f 01.12.2011 (subject to change as per GOI/RBI directives) to be applied annually.

(1) This Scheme may be called the Public Provident Fund (Amendment) Scheme, 2011

(2) It shall come into force on the 1^st day of December 2011

(3) The Public Provident Fund scheme is a statutory scheme of the Central Government framed under the provisions of the Public Provident Fund Act, 1968.

(4) The account can be opened in any branch of the State Bank of India or its Associates (except offices managed by single officer/clerk) or in any Head Post Office or any selection grade sub post office or in any of the nationalised banks.
(5) An individual can open a Public Provident Fund Account in his own name. He can also open an additional account on behalf of a minor of whom he is guardian. He can subscribe any amount in multiples of Rs. 5/- of not less than Rs.500/- and not more than Rs.1,00,000/- in a year in each of his account. A year for the purpose of the Scheme means a financial year (1st April to 31st March). The deposits in excess of Rs. 1,00,000 made during a year will not carry any interest and will not be eligible for rebate.
(6) Those having General Provident Fund or Employees’ Provident Fund Account can also open a Public Provident Fund Account.
(7) An individual can open only one account in his/her name either in Post office or in Bank. If two accounts are opened by the subscriber in his/her name by mistake, the second account will be treated as irregular and will not carry interest.

(8) The subscriptions can be deposited in lumpsum or in convenient installment of not more than 12 installments.

(9) It is not necessary to deposit subscription in every month of the year. The amount of subscription can also be varied to suit the convenience of the subscriber.
(10) The account can be transferred at the request of the subscriber from one office of SBI or its Associates to Head Post Office or vice versa.
(11) The account can be closed after completion of 15 full financial years or the expiry of 15 years from the close of the financial year in which the initial subscription was made. This is, of course, optional and the subscriber can continue the account even after the period of 15 years for any number of further blocks of 5 years by exercising an option in form ‘H’.
(12) A subscriber can take a loan from the fund in case of need. The first loan can be taken in the third year of opening the account i.e., if the account is opened during the year 1997-98, the first loan can be taken during the year 1999-2000. The amount of loan will be restricted to 25% of the balance including interest for the year 1997-98 in the account as on 31.3.1998.
(13) A subscriber can make one withdrawal during any one year. The first withdrawal can be made at any time after the expiry of 5 full financial years from the end of the year in which the initial subscription was made (i.e. from the 7th year onwards). The amount of withdrawal will be limited to 50% of the balance at credit at the end of the 4th year immediately preceding the year in which the amount is withdrawn or at the end of the preceding year whichever is lower. For example, if the account is opened in 1993-94 and first withdrawal is made during 1999-2000 the amount of withdrawal will be limited to 50% of the balance as on 31.03.1996 or 31.03.1999 whichever is lower, less the amount of loan if any drawn and which remains to be re-paid. The amount of withdrawal is not repayable. The balance as on 31.03.1996 or 31.03.1999 will include interest upto year 1995-1996 or 1998-1999 as case may be.
(14) A subscriber may nominate one or more persons to receive the amount standing to his credit in the event of his death. No nomination can, however, be made in respect of an account opened on behalf of the minor. In the event of death of the subscriber, the amount standing to his credit can be repaid to his nominee or legal heir, as the case may be, even before the expiry of 15 years.
(15) Subscriptions to Public Provident Fund qualify for deduction from the taxable income of the subscriber for Income Tax purpose like contributions to Provident Fund, Life Insurance, etc.
(16) The interest credited to the fund is totally exempt from Income Tax.
(17) The amount standing to the credit of the subscriber in the fund is totally exempt from Wealth Tax.
(18) The Account Office (including office of SBI and its Associates) can condone default in payment of subscriptions in the PPF account by charging the prescribed fee along with arrears of subscriptions.
(19) The PPF account is not transferable from one person to another. In the case of death of the subscriber the nominee cannot continue the account of deceased subscriber.
(20) The PPF account cannot be opened in the joint names. Further such account cannot be opened in the name of artificial / judicial persons.
(21) The balance in the PPF account is not subject to attachment under an order or decree of court in respect of any debt or other liability (other than Income Tax / Estate duty liability of the subscriber).

(22) If the subscriber dies and there is no nomination at the time of death, the balance in the account, if it is upto one lakh, will be paid by the Accounts Office to the legal heirs of the deceased on receipt of application in Form G supported with necessary documents without the production of succession certificate. If the balance is more than one lakh, the production of Succession certificate will be necessary.

(23) The account in which subscriptions are discontinued for any reason, will be treated as discontinued account and cannot be closed before maturity. The account will be closed only after maturity and it will continue to earn interest till it is closed after maturity. The facility of loan or withdrawal will not be allowed from such an account. The account can be regularized by remitting a penalty of Rs.50/- per Financial Year and Rs.500/- per Financial Year (minimum remittance for a Financial Year). The penalty amount should be credited to Government of India / Reserve Bank of India.

(24) When the account is sought to be withdrawn from the minor’s account, the guardian should give the following certificate on application for withdrawal.

” Certified that the amount sought to be withdrawn is required for the use of ………………………… Who is alive and is still a minor.”

(25) If the account is opened in the name of the minor and the minor attains majority before the maturity of the account, the ex-minor will himself continue the account thereafter. He will submit a revised application form for opening the account to the Accounts Office. His signature on the application form will be attested by the guardian who opened the account of the minor or by a respectable person known to the Branch.

(26) The ceiling on deposits as provided for by Central Government from time to time, which is Rs.1,00,000/- in a financial year at present, is per Individual.

(27) Income Tax Deduction U/s. 80C is available on investment in PPF .

No addition can be made U/s. 68 if Assessee furnished Acknoledgement of Income Tax Returns of persons who advanced money

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ACIT Vs. M/s Kiran Pal Singh (ITAT Delhi)- In this case also before the Assessing Officer, the assessee had stated that all the partners are assessed to income tax and they have also furnished the acknowledgement of the returns filed by all the partners. Therefore, if the Assessing Officer had any doubt about the credit worthiness of the partners, he could have verified either from their individual income tax files or could have asked those partners to explain the source of credit. In view of the above, respectfully following the above decision of the Hon’ble Apex Court in the case of Orissa Corporation P.Ltd., we uphold the order of the learned CIT(A) and dismiss the appeal filed by the Revenue

Valuation of Interest free/ concessional loan to employee – SBI Interest rate on 01.04.2011 for computing Perquisite Value

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Interest free or concessional loans- Rule 3(7)(i) – It is common practice, particularly in financial institutions, to provide interest free or concessional loans to employees or any member of his household. The value of perquisite arising from such loans would be the excess of interest payable at prescribed interest rate over interest, if any, actually paid by the employee or any member of his household. The prescribed interest rate would now be the rate charged per annum by the State Bank of India as on the 1st day of the relevant financial year in respect of loans of same type and for the same purpose advanced by it to the general public. Perquisite value would be calculated on the basis of the maximum outstanding monthly balance method. For valuing perquisites under this rule, any other method of calculation and adjustment otherwise adopted by the employer shall not be relevant.

However, small loans up to Rs. 20,000/- in the aggregate are exempt. Loans for medical treatment specified in Rule 3A are also exempt, provided the amount of loan for medical reimbursement is not reimbursed under any medical insurance scheme. Where any medical insurance reimbursement is received, the perquisite value at the prescribed rate shall be charged from the date of reimbursement on the amount reimbursed, but not repaid against the outstanding loan taken specifically for this purpose.

Calculation of Value of Interest Free Loan

Any loan given free of interest or concessional interest shall be a taxable perquisite and calculated as follows:

• Interest calculated at the rate charged by State Bank of India as on 1st day of previous year on loan for the same purpose. This is to be calculated on maximum outstanding monthly balance.

• Less actual interest paid by employee.

Exceptions

• Loan upto Rs. 20,000.

• Loan for medical purposes for prescribed diseases

Steps to calculate value of Perquisite

Step 1 : Calculate maximum outstanding monthly balance at the end of every month

Step 2 : Find out rate of interest charged by SBI as on 1st April of previous year in case of similar loan

Step 3 : Calculate interest on amount as per Step 1 @ Rate as per Step 2 for each month

Step 4 : Total of interest for the year as per Step 3

Step 5 : Less : Interest charged from employee

Step 6 : Balance amount is the value of perquisite in respect of interest free / concessional loan

State Bank of India: Interest Rates on 1^st April, 2011 For the purpose of computing perquisite valuation

Interest rates as on 1^st April, 2011 on various loans in Personal Segment advances are as under –

1. Home Loans
Loan amount	Upto Rs.30 lacs	Above Rs. 30 lacs to Rs. 75 lac		Above Rs.75 lac to Rs.5 Cr.	Above 5 cr.
Interest rate during 1st year	8.75% .	8.75% .		10%	10.25%
Interest rate during 2nd & 3 rd year	9.50%.	9.50%		10%	10.25%
Interest rate from 4th year onwards	9.75%	10.00%		10%	10.25%
2. Car Loans
Loan amount	Below Rs.5 lacs		Rs.5 lacs and above
Interest rate during 1st year	9.25% p.a.		9.25% p.a.
Interest rate during 2nd & 3 rd year	10.25% p.a.		10.25% p.a.
Interest rate for 4th & 5th year	11.25%		11.00%
Interest rate for 6th & 7th year	11.25%		11.00%
Used Cars
Up to 3 years	15.50 %
Above 3 years and upto 7 years	15.75 %
3. Two wheeler
Upto 3 years	16.50%
4. Education loans
SBI Student Loans*	upto Rs.4 Lac – 12.00%Loans above Rs.4 Lac and upto 7.50 lacs – 13.50%Loans above Rs.7.5. Lac- 12.5%
5. Personal loans
Xpress credit (Demand Loan)	13.25% TO 15.25%
Xpress credit (Overdraft)	No Overdraft
SBI Saral	16.75%
6. Loans against NSCs/KVPs/RBI Relief Bonds/Surrender value of SBI Life/LIC/SBI Magnums etc.
Upto 3 years	12.75%
More than 3 years and upto 6 years	12.75%
7. Loans against Gold Oranaments	Upto Rs.1 lac:12.50%Above Rs.1 lac:13%

* 0.50% additional concession for girl students w.e.f. 02.03.2009

Retrospective amendment no basis to reopen beyond 4 years – HC Disapproves AO’s Practice to Delay Passing Objection Orders

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Doshion Ltd. Vs. ITo (Ahmedabad HC) – Having thus heard learned counsel for the parties and having perused the documents on record, it clearly emerges that the assessment previously framed after scrutiny is sought to be reopened beyond the period of 4 years from the end of relevant assessment year. In the reasons recorded, the Assessing Officer has not suggested that such income escaped assessment for the failure on the part of the assessee to disclose truly and fully all material facts. In fact the sole ground on which such scrutiny assessment is sought to be reopened beyond 4 years is that by virtue of Explanation to Section 80IA added with retrospective effect from 1.4.2000, income derived from the works contract would not qualify for deduction under Section 80IA of the Act. Firstly,we are of the opinion that by virtue of such retrospective amendment assessment previously framed after scrutiny could not have been reopened beyond the period of 4 years without any thing on record to suggest that the income chargeable to tax had escaped assessment for the failure on the part of the assessee to fully and truly disclose all material facts. We may notice that the Explanation in question, which was introduced in the year 2009 but with retrospective effect from 1.4.2000 reads as under:-

“ Explanation- For the removal of doubts, it is hereby declared that nothing contained in this section shall apply in relation to a business referred to in sub-section (4) which is in the nature of a works contract awarded by any person (including the Central or State Government) and executed by the undertaking or enterprise referred to in sub-section (1).”
It may be that in a given case on account of such Explanation, the assessee may be disentitled to claim deduction under Section 80IA of the Act. However, this is not the same thing to suggest that assessment previously framed that too after scrutiny could be reopened beyond the period of 4 years without any failure on the part of the assessee to disclose truly and fully all material facts.

Objections raised by the assessee against the notice for reopening remained pending with the Assessing Officer for nearly 6 months. Sometime in the middle of December, 2011 the Assessing Officer disposed of such objections and, thereafter proceeded to pass the final order of assessment in less than two weeks. Had this been an isolated case of such nature, we would have passed it off as one-off instance. However, such tendency to delay disposing of the objections and, thereafter at the fag end of final time limit, to frame the assessment, is noticed in more cases than one. We cannot approve of such tendency. This we are sure was not the intention of the Apex Court when the decision in the case of GKN Driveshafts (India) Ltd. vs. Income-Tax Officer and others reported in [2003]259 ITR 19 was rendered. We are sure this would be brought to the notice of the Assessing Officers by the Department so that such instances do not recur in future. Petition is disposed of accordingly.

Apply online for re-sending of CPC-Intimation u/s 143(1)/154 and income Tax Refund

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The process of request for re-sending of CC-Intimation u/s 143(1)/154 and refund is now available in ‘Services’ option. The Assessee who filed there income tax return online can now request online for resend of there intimation under section 143(1) and section 154 of the Income tax Act, 1961. Assessee can also place request for re-issue of income tax Refund.

New Guidelines for preferential allotment by unlisted public companies

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On 14 December 2011 the Ministry of Corporate Affairs (MCA) has issued Unlisted Public Companies (Preferential Allotment) Amendment Rules, 2011 (Amendment Rules) which is effective from the date of publication in Official Gazette. The Amendment Rules provide for amendment of Unlisted Public Companies (Preferential Allotment) Rules, 2003 (2003 Rules). The Amendment Rules does not replace the 2003 Rules but makes few significant additions.

Key Highlights of Preferential Allotment Amendment Rules 2011:

• Definition of ‘Preferential Allotment’: It is amended to specifically include allotment of convertible instrument including hybrid instruments convertible into shares.2003 Rules definition included issue of shares to promoter and relatives in public issue, which will not be included post amendment.
• Special Resolution: Requirement of special resolution is made specifically applicable to issue of convertible instrument including hybrid instruments convertible into shares.Under 2003 Rules such requirement was applicable only to issue of shares.
• The offer for preferential allotment cannot be made to more than 49 persons.
• Any offer or invitation not in compliance with provisions of Section 81 (1A) read with section 67(3) of the Companies Act, 1956 (the Act) would be treated as public offer and provisions of the SCRA, 1956 and SEBI Act, 1992 will need to be complied with.
• The money payable on subscription should be paid only by way of cheque or DD or other banking channels but not by cash.
• Allotment of securities should be completed within 60 days from the receipt of application money. If not so allotted, the company should repay application money within 15 days thereafter, failing which it should be repaid along with an interest @ 12percent p.a.
• The application money should be kept in a separate bank account and should not be utilized prior to allotment.
• Company offering securities can not release any public advertisements or utilise any media, marketing or distribution channels or agents to inform the public at large about the offer.
• Details of proposed allottees should be included in the Special Resolution.• Allotment of securities should be completed within 60 days from the receipt of application money. If not so allotted, the company should repay application money within 15 days thereafter, failing which it should be repaid along with an interest @ 12percent p.a.
• The application money should be kept in a separate bank account and should not be utilized prior to allotment.
• Company offering securities can not release any public advertisements or utilise any media, marketing or distribution channels or agents to inform the public at large about the offer.
• Details of proposed allottees should be included in the Special Resolution.

Sebi cut the timeline for completion of buy back of shares by listed companies to 34-44 days

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Sebi has reduced the timeline for completion of buy back of shares by companies to 34-44 days. Earlier, the buyback process could take anywhere between 63 and 114 days. These changes form a part of amendments made by the regulator in the Sebi (Buy back of Securities) Regulations, 1998. They have come into effect from January 3.

“The timeline for various activities involved in the buyback process have been revised, which shall result in substantial reduction of time taken for completion of buyback,” the market regulator said while announcing the changes. The regulator has also effected changes in buyback through tender offer. The decision could help the government in getting closer to its ambitious disinvestment target of Rs 40,000 crore for the current financial year.

The government has fixed a mammoth Rs 40,000 crore disinvestment target for the fiscal, but till date it has only managed to raise Rs 1,145 crore by selling its shares in the Power Finance Corporation. The state-owned companies had to put their public issues on hold in view of volatile stock markets.

But with time running out to meet the target, the government has been exploring other routes, including the buyback mode, to raise funds through disinvestment. Under the buyback mode, the government can raise money by selling its equity in the company to the PSU itself.

The Department of Disinvestment (DoD) has sought Cabinet approval to use the buyback mode for disinvestment. The government, however, could not take any decision due to inter-ministerial differences and the reluctance of PSUs to part with cash.

The DoD had also pointed out to the SEBI that the buyback norms are not in line with the principle of equitable treatment to shareholders in the acceptance of shares through tender offer. According to the earlier norms, in case of buyback the company is required to accept the shares tendered by the shareholders in proportion to the shares tendered by the shareholder and not in proportion to the shares held. However, this has been modified.

SEBI has also made changes in the record date and requirement of public notice and public announcement norms in the buyback regulations.

Income Tax Settlement Commission – Frequently Asked Questions

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1. What is meant by Settlement in respect of tax disputes? How is it different from the appellate process?

Settlement of disputes relating to Income Tax and Wealth Tax is based on the objective of dispute resolution Alternate. It is in the nature of mediation or arbitration. The Settlement orders passed by the Income Tax Settlement Commission are final and conclusive in nature.
The application for settlement can be made only during the pendency of the assessment proceedings, whereas an appeal can be filed only after conclusion of assessment proceedings, against an order of assessment. For approaching the settlement commission, an applicant is required to disclose income which he has not disclosed before the Income Tax Department and also to pay applicable tax and interest on it before filing the application. No such conditions are needed for filing an appeal.
An application for settlement is statutorily required to be disposed of within 18 months failing which the same is abated to the concern Income Tax Authority. There is no statutory time limit for disposal of an appeal.
2. What is the Scope of Settlement made by Income Tax Settlement Commission?
The Income Tax Settlement Commission conclusively decides the amount of tax and interest to be paid by the applicant in respect of tax disputes relating to the assessment years for which an applicant has approach the Commission. It also has powers to grant immunity from levy of penalty or institution of proceeding for prosecution under the Income Tax Act, 1961. However, no such immunity is available where the proceedings for prosecution were initiated before filing of settlement application. An immunity granted by the Commission is liable to be withdrawn where the Commission subsequently finds that the application had concealed material facts or given false evidence during the settlement proceedings.
The order of settlement passed by the Settlement Commission provides for the terms of settlement including any demand by way of tax, penalty or interest and also provides for the manner in which such demand is to be paid. Such an order shall also address other matters to make the settlement effective. The final settlement order of the Settlement Commission is applicable for the case of the particular applicant only and its ratio is not applicable for other cases and for proceedings before other authorities.
3. Is the Income Tax Settlement Commission part of the Income Tax Department?
No. the Income Tax Settlement Commission is an independent quasi-judicial authority. It is an attached office of the Department of Revenue, only for its administrative matters.
4. At what Stage of tax disputes can I approach Settlement Commission?
An applicant can approach the Income Tax Settlement Commission in respect of a particular assessment year only if no assessment order is passed by the concerned income tax authority and the statutory time-limit for passing of assessment order for that year has not lapsed. The proceedings are considered to be pending from the first day of the assessment year and it is not needed that a return of income is filed or a notice for scrutiny is issued before failing of application.
5. How do I become eligible for approaching Settlement Commission? Am I supposed to pay any tax beforehand?
The First condition that you need to satisfy for approaching the settlement Commission is that you have to disclose an additional amount of income tax before the Commission which is at least Rupees ten lakhs. This does not include the amount of interest chargeable on such tax. For cases involving Search and seizure assessment proceedings, the additional amount of income tax to be disclosed is at least Rupees fifty lakhs. You are also required to pay the entire amount of additional tax and interest before filling the Settlement application and attach the evidence of payment.
The Second essential condition is that you should not have made another settlement application, after 1st June 2007, which has been allowed to be proceeded with.
The Third essential condition is that no assessment order should have been passed by the concerned income tax authority for the assessment year for which you are approaching the Commission and the statutory time-limit for passing of assessment order for that year has not lapsed. An assessment order is considered to be passed on the date it is served on the Tax Payer.
There are other procedural requirements such as payment of prescribed fees and informing the concerned Assessing officer on the same date till the prescribed Form no.34 BA.
6. How do I file application for Settlement?
Settlement application is to be filed only in the prescribed Form No.34-B notified under the Income Tax Rules, 1962, which is to be signed by the applicant himself. The application can be made personally or by post. The applicant or his authorized representative can make application in person. Application can also be sent by registered post addressed to the Secretary of the concerned Bench of the income tax Settlement Commission.
The application should be accompanied by the proof of payment of additional Tax and interest under section 234B and 234C on it. The interest on the additional tax is chargeable till the date of admission of the application.
The application has to be accompanied by a copy of Challans of payment of tax which have to be attested by the applicant.
The application is also to be accompanied by the evidence of payment of the prescribed fee.At present the Amountof the fee is Fixed at Rs. 500/-.
7. When can a Settlement application be rejected? What are the Consequences of rejection?
An application can be rejected by the Commission during the course of proceedings under section 245D (1) within 14 days of filling of the Settlement application. If the application is not rejected by the Commission within 14 days, it is deemed to have been admitted by it.
The Commission can reject the application, if the applicant does not satisfy the 3 essential condition mentioned in answer no. 5 above. Further, an application not accompanied by the proof of payment of full amount of additional tax and interest and the prescribed fee of Rs. 500/- is also liable to be rejected. A copy of the application is to be sent to the concerned income tax Authority on the date of application, failing which it may be rejected.
An applicant whose application has been rejected under section 245D (1) can still file another application for settlement.
8. Can I withdraw Settlement application after filing it?
No, an applicant cannot withdraw the application after filling before the Settlement Commission.
9. Who can file Settlement application on my behalf?
(i) You can make application by registered post addressed to the Secretary of the concerned bench of the settlement commission. However in case of a postal application, the date of receipt in the Commission shall be treated as date of application.
(ii) On your behalf, an authorized representative can also make application in person. An “authorised representative” means a person authorised by you in writing to appear on your behalf, being:

• A person related to you in any manner, or a person regularly employed by you; or
• Any officer of a Scheduled Bank with which you maintain a current account or have other regular dealings; or
• any legal practitioner who is entitled to practice in any civil court in India; or
• an accountant within the meaning of the Chartered Accountants Act, 1949 (38 of 1949), and includes, in relation to any State, any person who by virtue of the provisions of sub-section (2) of section 226 of the Companies Act, 1956 (1 of 1956), is entitled to be appointed to act as an auditor of companies registered in that State.
• Any person who has passed any accountancy examination recognised in this behalf by the Board, or
• any person who has acquired such educational qualifications as prescribed by the Board.

10. How long does the admission process take?

The application filed by you is considered admitted and allowed to be proceeded with if it is not rejected by the Commission within 14 days under section 245D (1). After this, the Commission calls for the report of the Commissioner of Income Tax under section 245D (2B). The Commission may treat an application as valid by passing an order under Section 245D(2C), If the report of the Commissioner is not received within the period of 30 days from the day the letter from the Commission is received by him, or on the basis of its satisfaction on the basis of the report of the Commissioner. The order of the Commission is to be passed within 15 days of the expiry of the period of 30 days given to the Commissioner for submitting the report.
The Commission is required to give an opportunity before rejecting the application under section 245D (1) or before treating the application as invalid under Section 245D (2C).
11. How does the Settlement process operate? How long does it take?
Once a Settlement application has been held as valid, the Commission shares the confidential part of the application with the Commissioner of Income Tax and calls for his reports within 45 days under rule 9. A copy of this report is shared with the applicant to allow him to give rejoinder. The Commission takes into account both and provides opportunity to both sides, i.e. the Income Tax Department and the applicant by fixing hearings on different dates. The Commission is required to pass the final Settlement order under section 245 D (4) within 18 months on the application.
12. What happens if the Settlement Commission is not able to pass Settlement application within 18 months?
If the Settlement Commission is not able to pass Settlement application within 18 months, the case gets abated to the concerned income tax Authority.
13. How do I calculate additional Tax for filling the Settlement application?
This will depend upon whether the settlement application relates to only one previous year or more and whether any return of income for the relevant previous year(s) has been filed or not.

• Where the income disclosed in the application relates to only one previous year and if the applicant has not furnished a return in respect of the total income of that year, then, tax shall be calculated on the income disclosed in the application as if such income were the total income;
• Where the income disclosed in the application relates to only one previous year and if the applicant has furnished a return in respect of the total income of that year, tax shall be calculated on the aggregate of the total income returned and the income disclosed in the application as if such aggregate were the total income. This shall be reduced by the amount of tax calculated on the total income returned for that year. The balance shall be the additional amount of tax.
• Where the income disclosed in the application relates to more than one previous year, the additional amount of income-tax payable in respect of the income disclosed for each of the years shall first be calculated in the manner given in (i) and (ii) above.

14. How do I calculate the interest amount on the additional tax?

For calculating interest under section 234B & 234C of the Income Tax Act, 1961, calculate additional tax as explained in answer no. 13 above. Check up whether you were liable to pay advance tax under section 208 or not. If you were liable, calculate interest for default in payment of advance tax under section 234B and for deferment of advance tax under section 234C, for each assessment year included in the settlement application, separately.

(1) The interest for default in payment of advance tax under section 234B is to be calculated at the rate of 1% of the amount of additional tax for every month or part of a month included in a period starting from the 1st day of the April of the assessment year and ending with the date of filing settlement application.

(2) For calculating the interest for deferment in payment of advance tax under section 234C, you have to work out the shortage in payment of advance tax as per the prescribed schedule.

(i) In case of a company, during a financial year, advance tax is to be paid in the following manner:

On or before 15th June	:	15% of advance tax for the year.
Between 15th June and 15th September	:	45% of advance tax for the year.
Between 15th September and 15th December	:	75% of advance tax for the year.
Between 15th December and 15th March	:	100% of advance tax for the year.

(ii) In case of all tax payers other than a company, during a financial year, advance tax is to be paid in the following manner:

On or before 15th September	:	30% of advance tax for the year.
Between 15th September and 15th December	:	60% of advance tax for the year.
Between 15th December and 15th March	:	100% of advance tax for the year.

For calculating the interest under section 234C for each year included in the settlement application, calculate the shortfall in payment of advance tax against the additional tax calculated as explained in answer 13 above for each scheduled date above. Calculate 1% of the shortfall, wherever occurring, for a period of 3 months.
For the exact manner of calculation of interest, please refer sections 234B & 234C.
15. Once I file a settlement application, do I need to comply with the directions of the Income Tax Department for the relevant assessment years? Does the jurisdiction of Income Tax Department continue over me or not?
Once you file an application before the settlement Commission, your jurisdiction for the purpose of Income Tax Act and the Wealth Tax Act, gets shifted to the Income Tax Settlement Commission for the assessment proceedings for which you have filed settlement application. However, sometimes Income Tax Settlement Commission authorises the Commissioner of Income Tax to carry out specific investigation to assist the Income Tax Settlement Commission in the matter. You may however like to verify whether the Commissioner has been authorised by the Income Tax Settlement Commission or not.

Procedure to Reset Password of efiling of Income Tax Return

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If you have forgotten your password for the Login ID that you had created for efiling of Income tax return and to view Tds Credited ( 26AS) in your account. There is a control that you can create only single account with one PAN No. So if you want to activate your account, the only option is to reset the password

First of all if you remember the answer of security question that you had provided during the registration, then you can easily reset password by just clicking the link Forgot password, answering the security question along with the new password that you want to create and your password will be reseted within 24 hours.

The real problem arises when you don’t even remember the answer of the security question that you had given during registration of your account.So, to reset your password what you have to do is to write a mail to ask@incometaxindia.gov.in with all your details that are mentioned below:-

Name of the Assessee:-

Father’s name of the Assessee:-

Date of birth:-

Address:-

Contact Number:-

PAN No:-

As per the norms of Income tax department your password will be resetted within 24-48 hours.

But if you dont receive any mail that your password has been reseted or about some more details of yours within 48 hours, then you will have to call to 0124 2438000, and speak to the customer care executive and brief him about the mail that you had done, and that the 48 hours have already elapsed but there was no any respnse for reseting the password from their side, after this you will be provided with the default password by the executive that will be activated in 2-3 working days. After you login with the default password, you must create a new password.

If you already Filed E-Return- If you have already e-filed your Return, then you can use the e-filing ack number to reset the password after clicking ‘forgot password. ‘The system itself will ask you to give e-filing acknowledgement number.

This article might be helpful in my view, Please give your Comment if it is helpful to you in any way

Know Your Income Tax Refund Status online

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The Centralised Processing Centre of the Income Tax Department here has processed over 26 lakh e-filed returns in Forms 1-4 for the assessment year 2009-10. It has determined refunds in over five lakh cases. A release said refunds are being sent through State Bank of India. The status of these refunds can be checked at CPC’s call centre (080-43456700) or at www.tin-nsdl.com.

The department has been informed by the bank that a large number of refund cheques in respect of paper returns for 2008-09 have been returned by the postal authorities owing to change in address or for other similar reasons. Many refunds in ECS mode have not been successfully credited to taxpayers accounts because of incomplete/incorrect MICR and bank account details. Details of these returned intimations are available at www.incometax bangalore-.org. In respect of paper returns of salary ranges of Bangalore for 2008-09 processed at the CPC, taxpayers may contact the PRO, Income-tax Department at Ground Floor, Central Revenue Buildings, Queen’s Road, Bangalore.

They may collect the returned intimation and update their details of address/bank accounts/MICR code by writing to CPC, Bangalore at CPC, Post Bag No. 1, Bangalore–560100. In case of updated bank account/MICR code, taxpayers should enclose a copy of a cancelled cheque while giving the details, the release added.

REFUND STATUS

The ‘Refund Banker Scheme,’ which commenced from 24th Jan 2007, is now operational for Non-corporate taxpayers assessed in Delhi, Mumbai, Kolkata, Chennai, Bangalore, Bhubaneswar, Ahmedabad, Hyderabad, Pune, Patna, Cochin, Trivandrum, Chandigarh, Allahabad, and Kanpur.

In the ‘Refund Banker Scheme’ the refunds generated on processing of Income tax Returns by the Assessing officers/ CPC-Bangalore are transmitted to State Bank of India, CMP branch, Mumbai (Refund Banker) on the next day of processing for further distribution to taxpayers.

Refunds are being sent in following two modes:

1. RTGS / NECS: To enable credit of refund directly to the bank account, Taxpayer’s Bank A/c (at least 10 digits), MICR code of bank branch and correct communication address is mandatory.
2. Paper Cheque: Bank Account No, Correct address is mandatory.

Taxpayers can view status of refund 10 days after their refund has been sent by the Assessing Officer to the Refund Banker – by entering ‘PAN’ and ‘Assessment Year’ below.

Other Refunds

Status of ‘paid’ refund, being paid other than through ‘Refund Banker,’ can also be viewed at www.tin-nsdl.com by entering the ‘PAN’ and ‘Assessment Year’ .

‘Refund paid’ status is also being reflected in the ‘Tax Credit Statements’ in Form 26AS.

14A applicable even for the period when Rule 8 was applicable

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Remi Sales And Engineering Ltd. Vs. Addl. CIT (ITAT Mumbai) - Even prior to Assessment Year 2008-09, when Rule 8D was not applicable, the Assessing Officer has to enforce the provisions of sub section (1) of section 14A. For that purpose, the Assessing Officer is duty bound to determine the expenditure which has been incurred in relation to income which does not form part of the total income under the Act. The Assessing Officer must adopt a reasonable basis or method consistent with al l the relevant facts and circumstances after furnishing a reasonable opportunity to the assessee to place all germane material on the record

Tax and other benefits from taking Home loan in Joint Names

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One of the most attractive benefits of taking a home loan is that they help you save tax, while you prepare to invest in a fixed asset. Acquiring a home loan makes you eligible for tax rebates under Section 80C and Section 24 of the incone tax regulations.
Highlights

• Tax benefits get divided among co-applicants in case of a joint loan
• The division takes place in the same proportion in which the asset is owned by each co-applicant
• Each co-applicant can claim a maximum tax rebateof up to Rs. 1 lakh for principal repayment and Rs. 1.5 lakh for interest payment

• The very first condition is the house property has to be bought by the individuals jointly, and this should be in their joint names.
• The share of each holder should be clearly mentioned so that there is absolute clarity on the percentage ownership of each co-owner.

Tax benefits of Home Loan- Overall there are two types of tax benefits that are available on the repayment of a housing loan.

1. Interest paid on the loan is eligible for a deduction up to Rs. 1.5 lakh per annum from the taxable income of the individual under Sec 24 when the property is self-occupied or it is one ownership property lying vacant.
2. The return of the capital of the loan along with the interest up to Rs. 1 lakh is included in the benefit under Sec 80C.

The planning in the entire issue has to be done in such a manner that all the joint holders are able to take the tax benefit and no part of the total repayment goes waste.
Advantage for joint home loan takers-
Tax benefit
Joint holders can claim the maximum tax benefits individually. This means each holder can get a tax rebate of Rs. 1 lakh for principal repayment under Sec 80C and Rs. 1.5 lakh for interest payment under Sec 24.
The tax benefits are applied according to the proportion of the loan taken by everyone involved in the joint loan. For e.g. if the ratio of ownership is 70%:30% then the loan amount of 50 L will be split as 35 L and 15 L respectively and interest/principal applicable to the respective amounts will be taken into account for each individual taking the loan. For claiming your tax, it is best to procure a home sharing agreement, detailing the ownership proportion in a stamp paper, as legal proof for ownership.
To get the best out of the tax savings, it is good to let the partner with the higher pay make a higher contribution towards the home loan resulting in a better tax benefit collectively. In the case of an earning couple, this would make most sense as other expenses can be manged with the income of the person making a lesser share towards the loan. This would help you optimize the benefits from the tax exemption on principal and interest repaid.

Increased Loan Amount Eligibility

If more than one person takes a home loan then income of all the co-owners will be considered by the lenders. This can help increase the size of the loan. In this case, the bank combines the incomes of both the applicants, and thus, can sanction a proportionately higher loan amount. Buying a house jointly facilitates a larger loan as income of all the co-owners would be considered by the lenders.
Additional benefits:

• In many states, a lower property registration fee is levied in case the property is owned by women either individually or jointly.
• If husband and wife jointly own a property reduces the succession issues.

So taking a joint home loan has the significant twin benefit of increasing your loan eligibility and maximizing your tax rebate. There is one rule banks insist on when you apply for a joint home loan, which is that all co-owners of the property should also be co-applicants but the reverse need not be true.
Under Construction house- Another aspect that needs to be remembered is if you are buying a house under construction that you can claim tax benefits only after the construction of the house is completed.
Joint structure- The term ‘joint benefit’ in a housing loan refers to a situation where more than one person takes and repays a home loan. Here, the co-applicants are family members, which include husband and wife or father and son or father and daughter or mother and son or mother and daughter as the case may be. In such a situation, tax benefits have to be divided between all co-applicants and hence known as joint benefits.
Joint account – The repayment of a joint loan has to be made from a joint account owned by the co-applicants. Each of them needs to contribute his/her share to the account. But there are times when this is not possible and in case the payment is being made from just one person’s account then there has to be a method whereby the other individual is contributing his/her share. This will ensure that the benefits are also available in an adequate manner and that there are conditions that are being fulfilled in the process.
Considering New Direct Tax Code- New borrowers need to keep an eye out for developments in the housing loan sector. While planning any housing loan benefit, they have to keep in mind the conditions mentioned in the New Direct Tax Code. This code, coming into effect from April 2011, eliminates the benefit of a housing loan. This means that if the code is passed in its present format, both the benefits on interest payment as well as capital repayment will not be available to co-applicants.
Disadvantage of a home loan in joint names
1. If you buy another house in future then as per Income Tax Act if a person has more than one house in his name, one of them will be treated as self-occupied, and another will be treated as let-out – even if it is not actually let out on rent. You would need to pay income tax on the rent received if this second house is actually rented out. But if it is not rented out, it is deemed as rented out, and you would have to pay income tax on an amount that you would have received as rent as per prevailing market rates.
2. You have to pay wealth tax on one of your house. As per Wealth tax Act only one house is exempt from Wealth Tax. You have to pay tax on one of the house of your choice but you can deduct loan amount against the house for which you taken loan while calculating taxable wealth.
When one should take Home Loan in Joint names:- Take the home loan in joint names

• If You need a higher loan amount then your eligibility in Individual capacity
• The income tax savings by opting for a joint loan is significantly higher than a single-name loan

When one should not take Home Loan in Joint names -

• You have enough loan eligibility as single applicant
• The income tax savings by opting for a joint loan is not significantly higher than a single-name loan
• You plan to purchase another house in near future

Deduction under section 80E for Interest on education Loan taken for self and relatives

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Have you taken an education loan to support higher studies of yourself or of your spouse, Children or for the student of whom you are legal guardian and you are not aware of the tax benefits that you are entitled to. Then here is a guide that will assist you to know tax benefits on education loans. These benefits help you to reduce the overall cost of your education loan.

The deduction under section 80E is available to an individual if following conditions are satisfied:

1. Deduction available only to Individual not to HUF or other type of Assessee.

2. Deduction amount: – The amount of interest paid is eligible for deduction and moreover there is no cap on the amount to be deducted. You can deduct the entire interest amount from your taxable income. However there is no benefit available on the repayment of principal amount of the loan.

3. Deduction available if Interest is been paid during the previous year and was paid out of income chargeable to tax which means if repayment is made from income not chargeable to tax than deduction will not available.