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Wednesday, September 2, 2015

MAT not applicable on FIIs/FPIs prior to 01.04.2015

The Ministry of Finance issued a declaration on MAT tax on the basis of report of Special Committee.  Government proposes to clarify that MAT provisions will not be applicable to FIIs/FPIs not having a place of business/ permanent establishment in India, for the period prior to 01.04.2015. Full Clarification is as under.

Government accepts the Recommendation of the Justice A.P. Shah Committee to clarify the Inapplicability of MAT toFIIs/FPIs and has decided that an appropriate Amendment to the Income-Tax Act will be carried out;

Final Report of the Justice A.P. Shah Committee on Direct Tax Matters Constituted with the Initial Mandate to Examine the Matter Relating to Levy of MAT on FIIs/FPIs for the Period Prior to 01.04.2015 Released

A Committee on Direct Tax matters chaired by Justice A.P. Shah was constituted with the initial mandate to examine the matter relating to levy of MAT on FIIs/FPIs for the period prior to 01.04.2015. The Committee has submitted its final report on applicability of MAT on FIIs/FPIs for the period prior to 01.04.2015 to the Government on 25.08.2015.

The Committee has recommended that section 115JB of the Income-tax Act may be amended to clarify the inapplicability of MAT provisions to FIIs/FPIs. Alternatively, the Committee has suggested that a Circular may be issued clarifying the inapplicability of MAT provisions to FIIs/FPIs.

The Government has accepted the recommendation of the Committee to clarify the inapplicability of MAT to FIIs/FPIs and has decided that an appropriate amendment to the Income-tax Act will be carried out. Through the amendment the Government proposes to clarify that MAT provisions will not be applicable to FIIs/FPIs not having a place of business/ permanent establishment in India, for the period prior to 01.04.2015. Pending such amendment, CBDT will convey to the field formations the decision of the Government to accept the recommendation.

The Report of the Committee is available on the website of the Finance Ministry and the Income-tax Department at www.finmin.nic.in and www.incometaxindia.gov.in

Last date of filing form DP-1 in Delhi has extended to 30.09.2015

Delhi VAT department has extended last date of filing form DP-1 to 30 September 2015. The Government of Delhi issued a notification no. 625 dated 31.8.2015 regarding this extension of filing form DP-1. Full notification is as under.

In partial modification of Notification No,F,3(352)/PolicyNAT/2013/346-357 dated 30/06/2015 regarding submission of Information online in Form DP-1,I, Vijay Kumar, Commissioner, Value Added Tax, Government of National Capital Territory of Deihl, In exercise of the powers conferred on me by sub-sedlonrl) read with sub-section (2) and (3) of section 70 and sub-section (2) of section 59 of Delhi Value Added Tax Act, 2004, notify that the Form DP-1 shall be submitted online by all the dealers latest by 30/09/2015,

Rest of the contents of the above said Notifications shall remain the same

Tuesday, September 1, 2015

Full day RTGS/NEFT on working Saturday upto 07:45 PM

The Reserve bank of India made some changes in RTGS/NEFT timings as there will be bank's off on second and fourth Saturday from 1 September 2015. So RTGS/NEFT will be on full day on working Saturday. RBI issued a note no. 02/2015-16 dated 1 September 2015 about new timings of RTGS/NEFT. Full note is as under.

A reference is invited to the Reserve Bank of India press release number 2015-2016/528 dated August 28, 2015 on “Bank Holiday on Second & Fourth Saturdays from September 1; RBI to offer its Support Services to Banks on Working Saturdays”.

2. Accordingly, RTGS will not be operated on second and fourth Saturdays but would operate for full day on working Saturdays. Processing of future value dated transactions with value date falling on second and fourth Saturdays will not be undertaken under RTGS.

3. The RTGS time window with effect from September 1, 2015 will be as under:
Sr. No.Time EventRegular days including Saturdays, except Second and Fourth Saturdays of the Month
1.Open for Business08:00 hours
2.Initial Cut-off (Customer transactions)16:30 hours
3.Final Cut-off (Inter-bank transactions)19:45 hours
4.IDL Reversal19:45 hours - 20:00 hours
5.End of Day20:00 hours
4. This circular is issued under Section 10 (2) of Payment & Settlement Systems Act, 2007.

CBDT extends last date of filing income tax return to 7-9-2015 for Gujarat taxpayers

Central board of direct taxes extended last date of filing return of income from 31 August 2015 to 7 September 2015 for the people of Gujarat. CBDT issued an order under section 119 of income tax act dated 31 August 2015 regarding this extension. Full order is as under.

Order under Section 119 of the Income-tax Act. 1961  
On consideration of reports of dislocation of general life caused due to recent disturbances in the State of Gujarat, the Central Board of Direct Taxes, in exercise of powers conferred under section 119 of the Income-tax Act, 1961, hereby extends the `due-date' for filing Returns of Income from 31st August, 2015 to 7th September, 2015, in cases of Income-tax assessees in the State of Gujarat, who are liable to file their Income tax returns by 31st August, 2015 

Monday, August 31, 2015

CBDT criteria on selecting cases for scrutiny financial year 2015-16

Central board of direct taxes revealed criteria for selecting cases for scrutiny for the financial year 2015-16. CBDT issued an instruction no. 8/2015 dated 31 August 2015 regarding cases for scrutiny. Full instruction is as follows.

Subject: Compulsory manual selection of cases for scrutiny during the Financial Year 2015-2016-regd:-

1. In super session of earlier Instructions on the above subject, the Board hereby lays down the following procedure and criteria for manual selection of returns/cases for scrutiny during the financial-year 2015-2016:-

a) Cases involving addition in an earlier assessment year in excess of Rs. 10 lakhs on a substantial and recurring question of law or fact which is either confirmed in appeal or is pending before an appellate authority.

b) Cases involving addition in an earlier assessment year on the issue of transfer pricing in excess
of Rs. 10 crore or more on a substantial and recurring question of law or fact which is either
confirmed in appeal or is pending before an appellate authority.

c) All assessments pertaining to Survey under section 133A of the Income-tax Act, 1961 ('Act')
excluding those cases where books of accounts, documents etc. were not impounded and returned income (excluding any disclosure made during the Survey) is not less than returned income of preceding assessment year. However, where assessee retracts the disclosure made during the Survey, such cases will not be covered by this exclusion.

d) Assessments in search and seizure cases to be made under section(s) 158B, 158BC, 158BD,
153A & 153C read with section 143(3) of the Act and also for the returns filed for the assessment year relevant to the previous year in which authorization for search and seizure was executed u/s 132 or 132A of the Act.

e) Returns filed in response to notice under section 148 of the Act.

f) Cases where registration u/s 12M of the IT Act has not been granted or has been cancelled by the CIT/DIT concerned, yet the assessee has been found to be claiming tax-exemption under section 11 of the Act. However, where such orders of the CIT/DIT have been reversed/set-aside in appellate proceedings, those cases will not be selected under this clause.

g) Cases where the approval already granted u/s 1O(23C)/35(1)(ii)/35(1)(iii)/10(46) of the Act has been withdrawn by the Competent Authority, yet the assessee has been found claiming tax-exemption/benefit under the aforesaid provisions.

h) Cases in respect of which specific and verifiable information pointing out tax-evasion is given by Government Departments/Authorities. The Assessing Officer shall record reasons and take prior approval from jurisdictional Pro CCIT/CCIT/Pr. DGIT/DGIT concerned before selecting such a case for scrutiny.

2. Computer Aided Scrutiny Selection (CASS): Cases are also being selected under CASS on the basis of broad based selection filters. List of such cases shall be separately intimated in due course by the Pr.DGIT(Systems) to the jurisdictional authorities concerned.

3. It is reiterated that the targets for completion of scrutiny assessments and strategy of framing quality assessments as contained in Central Action Plan document for Financial-Year 2015-2016 have to be complied with and it must be ensured that all scrutiny assessment orders including the cases selected under the manual criterion are completed through the AST system software only. Further, in order to ensure the quality of assessments being framed, Pro CCsIT/CCsIT/Pr.
DsGIT/DsGIT should evolve a suitable monitoring mechanism and by 30th April, 2016, such authorities shall send a report to the respective Zonal Member with a copy to Member (IT) containing details of at least 50 quality assessment orders from their respective charges. In this regard, IT Authorities concerned must ensure that cases selected for publication in 'Let us Share' are picked up
only from the quality assessments as reported.

4. These instructions may be brought to the notice of all concerned.

5. Hindi version to follow. 

Wednesday, August 19, 2015

CBDT clarification on approval and claim of exemption u/s 10(23C)(vi)

CBDT issued a circular no. 14/2015 dated 17 August 2015 clarifying on certain issues related to grant of approval and claim of exemption u/s 10(23C)(vi) of the Income-tax Act, 1961.Full circular is as under.

Sub: Clarification on certain issues related to grant of approval and claim of exemption u/s 10(23C)(vi) of the Income-tax Act, 1961.

Sub-clause (vi) of clause (23C) of Sec 10 of the Income-tax Act, 1961 (`Act') prescribes that income of any university or other educational institutions, existing solely for educational purposes and not for purposes of profit, shall be exempt from tax if such entities are approved by the prescribed authorities. Such approval is not required in cases of university or educational institutions wholly or substantially financied by he Goverment [sub-clause (iiiab)] or if their aggregate annual receipts do not exceed Rs. 1 crore [sub-clause (iiiad) r.w. rule 2BC]. Thus, while granting approval to entities covered under sub-clause (vi), the prescribed authority has to ensure that the applicant institution must exist "solely for educational purposes and not for purposes of profit". There are several Provisos to clause (23C) of section 10 and prescribe, inter alia, various monitoring conditions subject to fulfillment of which only, the exemption can be availed.

These monitoring conditions include mode and manner of application of funds, maintenance and audit of books of accounts in certain situations etc. Some other Provisos prescribe the manner of making application u/s 10(23C)(vi) and the circumstances when an approval granted earlier can be withdrawn.

Representations have been received seeking clarification on certain issues related to operation of section 10(23C)(vi). These have been examined by the Board and following clarifications are made —
1. Scope of enquiry while granting apprital-
1.1 Clarification has been sought on the scope of enquiry that can be made by the prescribed authority while granting approval u, s 10(23C)(vi), i.e., whether it would be sufficient for the prescribed authority to consider the nature, existence for non-profit purposes and genuineness of the applicant institution or the conditions prescribed under various Provisos are also required to be considered at the stage of granting approval.

1.2 In this connection, attention is drawn to the decision of Hon'ble Supreme Court in case of American Hotel and Lodging Association Educational Institute vs. CBDT [301 ITR 86](2008) in which it has been held that at the time of granting approval u/s 10(23C)(vi), the prescribed authority is to be satisfied that the institution existed during the relevant year solely for educational purposes and not for profit. Once the prescribed authority is satisfied about fulfillment of this criteria i.e. the threshold pre-condition of actual existence of an educational institution under section 10(23C)(vi), it would not be justifiable, in denying approval on other grounds, especially where the compliance depends on events that have not taken place on the date on which the application for grant of approval has been made.

1.3 However, the prescribed authority is eligible to grant approval u/s 10(23C)(vi), subject to such terms and conditions as deemed necessary including those falling within the framework of various Provisos to the said clause of section 10. It has also been clarified in the said judgment that the compliance of prescribed conditions can be gauged while monitoring the case and in case of any breach thereof, the approval can be withdrawn. It is, therefore, clarified that the principle laid down by the Apex Court in American Hotels case (supra) must be followed while considering the applications filed seeking approval for exemption u/s 10(23 C)(vi).

2. Necessity for registration nits 12AA while seeking approval /claiming exemption u/s 10(23C)(vi)
2.1 Section 10(23C)(vi) does not prescribe any stipulation which makes registration u/s 12AA a mandatory pre or post condition. In fact, provisions of section 11 and 10(23C) are two parallel regimes and operate independently in their respective realms although some of the compliance criteria may be common to both. Hence obtaining prior registration before granting approval u/s 10(23 C) cannot be insisted upon.

2.2 However, in case of a trust or an institution having obtained registration u/s 12AA as well as approval u/s 10(23C)(vi), if registration is withdrawn at some point of time due to certain adverse findings, the withdrawal of approval u/s 10(23C)(vi) shall not be automatic but will depend upon whether these adverse findings also impact the conditions necessary to keep approval u/s 10(23C)(vi) alive.

3. Generation of surplus out of gross receipts 
A doubt has been raised whether generation of surplus out of gross receipts would necessarily 'breach' the threshold condition that the educational institution should exist `solely for educational purpose and not for the purpose of profit'. Perusal of prescribed provisions clearly reveal that mere generation of surplus cannot be a basis for rejection of application u/s 10(23C)(vi) on the ground that it amounts to an activity of the nature of profit making. In fact, the third Proviso to tile said clause clearly provides that accumulation of income is permissible subject to the manner prescribed therein provided such accumulation is to be applied "wholly and exclusively to the objects for which it is established". Hence, it is clarified that mere generation of surplus by educational institution from year to year cannot be a basis for rejection of application u/s 10(23 C)(vi) if it is used for educational purposes unless the accumulation is contrary to the manner prescribed under law.

4. Collection of amounts under different heads of fee from students-
It has been brought to the notice that collection of small amounts from students by way of application fee, examination fee, fee for issuing transfer certificate, subscription fee for library etc. is being treated by some Assessing Officers as profit making activity resulting in denial of exemption u/s 10(23C)(vi). Collection of small and reasonable amounts under different heads of fee, which are essentially in the nature of fee connected with imparting education and do not violate any Central or Stat-z,. regulation does not, in general, represent a profit making activity. Hence, there is no justification for treating the charging of small amounts under different heads of fee as Profit making activity unless the amount in the nature of 'capitation fee is charged directly or indirectly.

5. Impact of extraordinary powers of the Managing Trustees to appoint remove or nominate other trustees.

5.1 Doubt has been expressed whetaer pcwers to the Managing Trustees to appoint or remove other trustees and also to nominate their successor affect the nature of charitable activity of the trust and whether in such an eventually exemption can be denied.

5.2 There is no provision under the Act which calls for denial of exemption merely on account of appointment or removal of trustees. Although answer to such a situation would normally depend on the factual implication of such arrangement, the same should generally not be a ground for denying exemption unless the nature of activities of the trust or institution get changed or modified or no longer remain to exist 'solely for educational purpose and not for purposes of profit'. Hence denial of exemption would not be justifiable only on the ground of induction of new trustees or removal of existing ones.

6. Field authorities are advised to keep the above position in mind while dealing with the matters of approval /exemption u/s 10(23C)(vi). Similar principles would also apply to cases covered u/s 10(23C)(via) of the Act.


(Deepslikha Sharma) Director to the Government of India 

Income tax new rule 126 to determine stay of foreign ship crew members

In exercise of the powers conferred by Explanation 2 to clause (1) of section 6 read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:—

1. (1) These rules may be called the Income-tax (Twelfth Amendment) Rules, 2015.
(2) They shall come into force with retrospective effect from the 1st day of April, 2015.

2. In the Income-tax Rules, 1962, in Part XV, after rule 125, the following rule shall be inserted, namely:—

'126. Computation of period of stay in India in certain cases.—(1) For the purposes of clause (1) of section 6, in case of an individual, being a citizen of India and a member of the crew of a ship, the period or periods of stay in India shall, in respect of an eligible voyage, not include the period computed in accordance with sub-rule (2).

(2) The period referred to in sub-rule (1) shall be the period beginning on the date entered into the Continuous Discharge Certificate in respect of joining the ship by the said individual for the eligible voyage and ending on the date entered into the Continuous Discharge Certificate in respect of signing off by that individual from the ship in respect of such voyage.

Explanation: For the purposes of this rule,—

(a) "Continuous Discharge Certificate" shall have the meaning assigned to it in the Merchant Shipping (Continuous Discharge Certificate-cum-Seafarer's Identity Document) Rules, 2001 made under the Merchant Shipping Act, 1958 (44 of 1958);

(b) "eligible voyage" shall mean a voyage undertaken by a ship engaged in the carriage of passengers or freight in international traffic where—

(i) for the voyage having originated from any port in India, has as its destination any port outside India; and
(ii) for the voyage having originated from any port outside India, has as its destination any port in India.'.