Feb 28, 2015

Income tax rates for FY 2015-16 changes on 28 February budget day

10:30 PM 0
Income tax rates for FY 2015-16 changes on 28 February budget day
Finance Minister Mr. Arun Jaitley presented the Annual Budget in Lok Sabha on 28 February 2015. He proposed some changes in income tax rates for financial year 2015-16 analysis year 2016-17. However there is no change in basic exemption rate for individual as well as for companies.

However there are some changes too. A surcharge of 12% is levied on income exceeding Rs. 1 crore. For companies, surcharge of 7% will be charged on income above Rs. 1 crore and 12% surcharge on income above Rs. 10 crores.

For Foreign companies 2% surcharge on income above Rs. 1 crore and 5% surcharge on income above 10 crores.

 Other benefits to tax payers are as follows.
1- Limit of deduction of health insurance premium increased from `15000 to ` 25000, for senior citizens limit increased from `20000 to `30000.

2- Senior citizens above the age of 80 years, who are not covered by health insurance, to be allowed deduction of ` 30000 towards medical expenditures.

3- Deduction limit of ` 60000 with respect to specified decease of serious nature enhanced to ` 80000 in case of senior citizen.

4- Additional deduction of `25000 allowed for differently abled persons. ¾ Limit on deduction on account of contribution to a pension fund and the new pension scheme increased from ` 1 lakh to `1.5 lakh. 

5- Additional deduction of ` 50000 for contribution to the new pension scheme u/s 80CCD. 

6- Payments to the beneficiaries including interest payment on deposit in Sukanya Samriddhi scheme to be fully exempt. 

7- Service-tax exemption on Varishtha Bima Yojana.

8- Concession to individual tax-payers despite inadequate fiscal space. ¾ Lot to look forward to as fiscal capacity improves. 

9- Conversion of existing excise duty on petrol and diesel to the extent of ` 4 per litre into Road Cess to fund investment.

10- Service Tax exemption extended to certain pre cold storage services in relation to fruits and vegetables so as to incentivise value addition in crucial sector. 

11- Negative List under service-tax is being slightly pruned to widen the tax base.

12- Yoga to be included within the ambit of charitable purpose under Section 2(15) of the Income-tax Act. 

13- To mitigate the problem being faced by many genuine charitable institutions, it is proposed to modify the ceiling on receipts from activities in the nature of trade, commerce or business to 20% of the total receipts from the existing ceiling of ` 25 lakh.13 

14- Most provisions of Direct Taxes Code have already been included in the Income-tax Act, therefore, no great merit in going ahead with the Direct Taxes Code as it exists today.

15- Direct tax proposals to result in revenue loss of ` 8315 crore, whereas the proposals in indirect taxes are expected to yield ` 23383 crore. Thus, the net impact of all tax proposals would be revenue gain of `15068 crore.

Income tax slabs for FY 2015-16 relevant to analysis year 2016-17 are as follows.

For Individual (Male or Female) and H.U.F.
Slabs
Income tax rates
Income upto Rs. 250000
Nil
Income Above250000 to 500000
10%
Income Above 500000 to 1000000
20%
Income more than 1000000
30%
- There is an additional exemption under section 87A to the assessee whose income comes in 250001 to 500000, the exemption is on tax amount maximum of 2000 Rupees.
- Surcharge of 12% is applicable on income abvove Rs. 1 crore.
 - Education cess @3% will be charged on tax amount.

For Senior sitizen above 60 years but less than 80 years 
Slabs
Income tax rates
Income upto 300000
NIL
Income Above300000 to 500000
10%
Income Above 500000 to 1000000
20%
Income more than 1000000
30%
- There is an additional exemption under section 87A to the assessee whose income comes in 250001 to 500000, the exemption is on tax amount maximum of 2000 Rupees.
- Surcharge of 12% is applicable on income abvove Rs. 1 crore.
 - Education cess @3% will be charged on tax amount.

 For Senior citizen above 80 years 

Slabs
Income tax rates
Income upto 500000
NIL
Income Above 500000 to 1000000
20%
Income more than 1000000
30%

- Surcharge of 12% is applicable on income abvove Rs. 1 crore.
 - Education cess @3% will be charged on tax amount.

Custom notification after budget 28 February 2015

6:06 PM 0
Custom notification after budget 28 February 2015
Government release custom notifications after budget presented by Finance Minister Mr. Arun Jaitley. The notification no. 6/2015, 7/2015, 8/2015, 9/2015, 10/2015, 11/2015 and 27/2015 issued after budget by department of revenue, Government of India.  The notification details are as follows.

G.S.R. (E).- In exercise of the powers conferred by section 103 of the Finance (No.2) Act, 1998 (21 of 1998), read with sub-section (1) of section 25 of the Customs Act, 1962 (52 of 1962), the Central Government, being satisfied that it is necessary in the public interest so to do, hereby exempts motor spirit commonly known as petrol, falling under heading 2710 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), when imported into India, from so much of the additional duty of 
customs leviable thereon under section 103 read with the Second Schedule to the said Finance (No.2)Act, 1998, as is in excess of the amount calculated at the rate of rupees six per litre. 

Download all notification of custom after budget 


Feb 27, 2015

Service tax and central excise audit norms

6:10 PM 0
Service tax and central excise audit norms
Central excise department issued a circular no. 995/2015 dated 27 February 2015 regarding audit norms must follow by audit commissioner for central excise and service tax. Full circular is as under.

Central Excise and Service Tax Audit norms to be followed by the Audit Commissionerates–reg

1.   Audit Commissionerates have been created with an objective to improve the functional efficiency of audit in the field formations.  An effective taxpayer audit plays a key role in improving compliance and augmenting tax revenues.  It is one of the important compliance verification tools available to the tax administration to verify the correctness of the taxes self-assessed and reported in the tax returns besides complying with other legal obligations.

2. In the past, norms / guidelines were issued by the Board for conduct of audit by the Commissionerates. The existing norms / guidelines for selection of units for audit are based on a single criterion, namely, the threshold limit of taxes paid in the previous Financial Year.  Taxpayers are categorizedinto mandatory and non-mandatory units based on taxes paid and the units are required to be audited as per the frequency norms stipulated for each category.    The criteria adopted do not take into account the risk factors and the resources available for undertaking audit.  The uniform norms and frequency prescribed for conducting audits across the Commissionerates also do not factor in crucial inputs such as the assessee base, availabilityof manpower and the risk indicators for selection of units for conducting audit.  The audit coverage in Service Tax has been below the satisfactory levels on account of huge taxpayer base and limited availability of manpower in major cities such as Mumbai, Delhi, Bengaluru, etc. 

3.  In the background of creation of exclusive Commissionerates to deal with audit and having regard to the difficulties faced, and also the experience gained with regard to audit coverage in the past, it has been decided to revise the existing norms for conduct of audit and issue fresh norms / guidelines taking into account the availability of manpower in the Audit Commissionerate. The new norms move away from the concept of mandatory and non-mandatory audits and do not prescribe any frequency for conducting audits. The new norms introduce risk based selection of assessees for audit based on identified/quantified risk parameters and also introduce jurisdictional specific criteria (as opposed to uniform norm across the country) for segmenting the taxpayer into large, medium & small categories.

4. In this regard, the following guidelines are issued in supersession of the earlier guidelines:

Annual plan for Audit Coverage:

5.0  The Audit Commissionerate would release an Annual plan by 31stMay, indicating the names of Assessees that are proposed to be audited during the course of the year (period between 1st July to 30th June of the next year) and the month in which the Audit officers would visit the units for verification of records. The Audit coverage (i.e. numbers of units selected for Audit in a year) may be calibrated with the manpower availability in a Commissionerate. The working strength of officers in Audit Commissionerate would be taken as the basis for calibration.

5.1  In order to ensure adequate coverage, the Assessees/Taxpayersshall be grouped in three categories namely Large, Medium and Small units.Given the past experience in detection of non-compliance and recovery of duty through Audits, it is suggested that Auditgroups may be deployed to coverLarge, Medium and Small units as follows:
a)             40 % of manpower to Large units
b)            25 % of manpower to Medium units
c)             15 % of manpower to  Small units
d)            20 % of manpower for planning, coordination and follow up.

5.2   The composition of AuditGroupsto cover Large, Medium and Small units may be done as follows:
a)    2 – 3 Superintendents and 3 – 5 Inspectors for the conduct of audit of Large assessees / taxpayers.

b)   1 – 2 Superintendent and 2 – 3 Inspectors for conduct of audit of Medium assessees / taxpayers.

c)    1 Superintendent and 1 - 2 Inspectors for Small assessees / taxpayers.
Assistant / Deputy Commissioners may lead the Audit Groups in select cases.
5.3          The indicative duration for conduct of audit that is inclusive of desk review, preparation and approval of Audit plan, actual Audit and preparation of Audit report wherever necessary, for each category would be as under:

a)    Large assessees / taxpayers – 6 to 8 working days
b)   Medium assessees / taxpayers – 4 to 6 working days.
c)    Small assessees / taxpayers – 2 to 4 working days

5.4  Given that there are around 249 working days in a year, the number of Audits that can be approximately conducted in a year are as follows:

a)   31 Large units (calculated at 8 days per unit) by one Audit party
b)   42 Medium units (calculated at 6 days per unit) by one Audit party and
c)    62 Small units (calculated at 4 days per Audit) by one Audit party

5.5  The aforementioned number of Audits could be then multiplied by the number of Audit teams prepared for each category to arrive at the total number of Audits that can be conducted by each Commissionerate during the year.

5.6  The manner of deployment of officers as mentioned above and calculation of number of units that can be audited during the year are illustrated below:

 i.   Suppose the working strength of an Audit Commissionerate is 60 Superintendents and 80 Inspectors.The deployment of officers would be: 24 Superintendents and 32 Inspectors for large units, 15 Superintendents and 20 Inspectors for medium units and 9 Superintendents and 12 Inspectors for small units and 12 Superintendents and 16 Inspectors in Headquarters.  To the extent possible, the manpower distribution amongst the Circles within an Audit Commisssionerate should be proportional to the large, medium and small Assessee base in the Circle. In other words, the 24 Superintendents and 32 Inspectors designated for large Assessees would be divided amongst the Circles proportional to the number of large Assessees under each Circle.The deployment has to be done in similar manner for medium and small units.

   ii.   Using the manpower as above, there would be around 10teams for large units, 12 teams for Medium units and 6 teams for Small units in the Commissionerate. The total number of units that could be audited in a year thus works out to around 310 large units, 504 medium units and 372 small units i.e. 1186 units in all.  The Commissioners could exercise necessary reallocation of officers to Medium units, if the audit of Large units is completed. Thus, each Commissionerate can carry out the calculations based on the working strength.

5.7  The criteria for categorizing an assessee / taxpayer as large, medium or small would be(a) annual value of clearances and total duty paid in case of Central Excise and/or(b) value of services rendered and services received (which are dutiable on reverse charge basis)and total duty paid in the case of Servce Tax. The threshold limits of value of clearances / value of services for categorizing the units into large, medium and small would be dependent upon (i) the available manpower in the Audit Commissionerate and (ii) the Assessee base, turnover and duty paid by each Assessee in the jurisdiction of the Audit Commissionerate. It may be noted that threshold limits may vary from one Audit Commissionerate to another Audit Commissionerate in view of varying number of Assessees and quantum of value of clearances / services and duty paid in case of each Assessee. The Audit Commissionerateswould obtainthe requisite data from EDW / ACES / EASIEST for categorization of Assessees into large / medium / small within their Commissionerate. The categorization would be done based on the methodology prescribed by the Directorate General of Audit.The methodology for categorization would be communicated to the Audit Commissionerates by Directorate General of Audit during the month of March / Aprilevery year.

5.8  The Audit Commissionerates shall consult zonal units of Directorate General of Audit while finalizing the Annual plan ofAudit coverage with the available manpower at the beginning of the financial year. The scheduling can be reviewed half yearly for necessary adjustments, if any.The Directorate General of Audit will also periodically review and revise, wherever necessary, the criteria for categorizing the units into large, medium and small within each Zone / Commisionerate, manpower deployment in each category, composition of audit team and number of days required for audit in each category. The review / revision would be done in consultation with the Audit Commissionerates so as to ensure that Audit coverage by officers is made optimal.

5.9   The Chief Commissioner may allow temporary reallocation / diversion of officers amongst the Audit Commissionerates to ensure adequate Audit coverage of all categories of Assessees / Taxpayers falling under the jurisdiction of the zone.

Selection methodology:

6.0  The selection of Assessees would be done based on the risk evaluation method prescribed by the Directorate General of Audit. The risk evaluation method would be separately communicated to the Audit Comissionerates during the month of March / April every year. The risk assessment function will be jointly handled by National Risk Managers (NRM) situated in the Directorate General of Audit and Local Risk Managers (LRM) heading the Risk Management section of Audit Commissionerates.The Risk Management section of Audit Commissionerate would ensure availability of Assessee / Taxpayer wise data for a period of last three years,which would facilitate risk assessment and preparation of the list of assessees that would be audited in the current year.

6.1  The Audit Commissionerates could also select few units at random or based on local risk perception in each category of large, medium and small tax payers. The results of Audit and the feedback from random selection would help in evaluating parameters used for selection process.

6.2  The Audit Commissionerates after preparing the annual plan ofAudit coverage as indicated above, would also prepare a list of units where risk can be mitigated through detailed scrutiny of returns and convey the details to the Executive Commissioners for taking necessary action. The selection of such units can be carried out at zonal level so that the Audit and detailed scrutiny complement each other. The list of such units and reason for selection should be shared with the Directorate General of Audit.

6.3  The above norms would become operative from 1st July 2015. Directorate General of Audit will review the efficacy of the above parameters as well as frequency of audits in consultation with Audit Commissionerates.

Theme based coordinated Audits

7.0   Theme based coordinated Audits at all India level would be conducted by concerned Audit Commissionerates in a synchronized manner. The theme would be selected by the Directorate General of Audit based on systematic and methodical risk analysis of internal taxpayer data (from ACES and EDW), economic indicators, third party information from tax and other regulatory authorities and other relevant sources of data. Directorate General of Audit would also consult trade, industry and service providers from time to time, wherever necessary. The theme would be intimated well in advance, say four to six months, to the field formations. Detailed questionnaires would be prepared as guidance to the Audit parties. The dates for such Audits would be fixed in advance, say sometime in December every year, so that they can be blocked by the Commissionerates. The number of such Audits will be one or at best two in a year. The selection of theme / issue, coordination and dissemination would be done by DG(Audit) in consultation with the field formations.

7.1   The theme based coordinated Auditswould also be carried out at the Zonal level. The theme for the Audit, which could be a sensitive commodity or a service, would be selected at the zonal level and simultaneous and coordinated Audit would be carried out within the zone. The number of such Audits will again be one or two in a year. The theme for the Audit would be selected based on analysis of data provided by ACES, EDW and relevant third party information identified from time to time. The Chief Commissioner may involve the zonal units of Directorate General of Audit in selection of theme, planning and execution of theme based Audit.

Audit of Multi Locational Units

8. In case of multi-locational units and multi-locational Service Providers, as prescribed in the Central Excise Audit Manual and Service Tax Audit Manual respectively, the zonal units of the Directorate General of Audit will continue to coordinate the audit of multi-locational manufacturing units and multi-locational service providers.  In case of mulit-locational units located with one zone under different Audit Commissionerates, the coordination will be carried out at the zonal level by one of the Audit Commissionerates.  For this purpose, wherever there are more than one Audit Commissionerate in a zone, the Principal Chief Commissioner / Chief Commissioner may designate one of the Audit Commissionerate for undertaking such coordination and for identifying units based on common PAN for the purposes of integrated Audit.

Accredited status for deferring frequency of Audit

9.There can be a segment of Assessees, who could be given “accredited” status, similar to the one given in Customs, based on their proven track record of compliance with tax laws and procedures. Such identified assessees need not be subjected to Audit in every cycle. It has been decided that the frequency or periodicity of audit in their case would not be less than 3 years.  The procedure and criteria for accreditation are under examination and would be communicated separately.

Audit of LTUs

10.  In case of LTUs, 80% of the manpower may be used forconducting audits and 20% of the manpower may be used for headquarters functions. The Audit Group would comprise 2-4 Superintendents and 3-6 Inspectors. The indicative duration for conduct of audit that is inclusive of desk review, preparation and approval of Audit plan, actual audit and preparation of Audit report is 8 to 10 working days. Based on the recommended duration, the number of units that could be audited in a year would be 25 LTUs (calculated at 10 days per Audit) by one Audit group. The Audit groups from LTU Audit Commissionerate’s Circles would conduct the audit of LTUs and wherever additional manpower assistance is required the same can be sought from other LTUs or the jurisdictional Central Excise/Service Tax Audit Commissionerate. Further, audit of the LTU should be conducted in a coordinated manner i.e., the audit of Head Office and group units should be conducted simultaneously. For this purpose, the audit dates should be decided in consultation with the LTU. The total number and selection of individual assessees for audit would be done as per the risk evaluation method recommended by the Directorate General of Audit.

Removal of difficulty

11. Past guidelines and instructions on the subject stand modified to the extent they are in conflict with these guidelines. Difficulties faced, if any in the implementation of above instructions may be brought to the notice of the Board and Directorate General of Audit at an early date. The Principal Chief Commissioners and Chief Commissioners are authorized to issue appropriate instructions, to be valid for temporary periods, to remove any difficulty in conduct of audits which are important from the perspective of augmentation of revenue.

Feb 26, 2015

Overdraft facility in PMJDY accounts

3:08 PM 2
Overdraft facility in PMJDY accounts
Reserve Bank of India issued a note allowing overdraft facility in Pradan Mantri Jan Dhan Yojna accounts. PMJDY account is the new beginning in banking sector in which you can open an account with bank having zero balance. Full note is as under.

Priority Sector Lending- Targets and Classification –Overdraft in PMJDY accounts

Please refer to our Master Circular RPCD.CO.Plan.BC 10/04.09.01/2014-15 dated July 01, 2014 on Priority Sector Lending- Targets and Classification.

2. It has been decided that overdrafts extended by banks upto ` 5,000/- in Pradhan Mantri Jan-Dhan Yojana (PMJDY) accounts will be eligible for classification under priority sector advances (‘others’ category) as also weaker sections, provided the borrowers household annual income does not exceed ` 60,000/- for rural areas and ` 1,20,000/- for non-rural areas.

3. The above instructions come into effect from the date of this circular. 

Feb 23, 2015

Judicial interpretation on late fees on TDS statement filing u/s 234E

2:40 PM 0
Section 234E of the Income-tax Act, 1961 inserted by the Finance Act, 2012 provides for levy of a fee of Rs. 200/- for each day's delay in filing the statement of Tax Deducted at Source (TDS) or Tax Collected at Source (TCS). The provision for Levy of Late filing fee was introduced to improve Filing Compliance and to avoid subsequent inconvenience to the taxpayers due to inordinate delays in availability of tax credits in their 26AS Statements. 

This assumes further significance in view of the decision of the Hon'ble High Court of Bombay, dated February 6 2015, upholding the validity of the Levy for Late Filing u/s 234E. The court has observed the following in its decision in the case of Rashmikant Kundalia vs. UOI: 

Immediate Attention:
The late filing of TDS returns by the deductor causes inconvenience to everyone and s. 234E levies a fee to regularize the said late filing.
The fee is not in the guise of a tax nor is it onerous.
The levy is constitutionally valid.


CPC (TDS), in its endeavor to strengthen TDS Compliance, is reaching out to you to reiterate the essence of timely filing of Quarterly TDS Statements. Section 200(3) of the Income Tax Act, 1961 read with Rule 31A of the Income Tax Rules, 1962, prescribes the following due dates for filing of TDS Statements:


Where the TDS Statements are not filed within the due date, CPC (TDS) sends Intimations u/s 200A of the Act that includes Levy under section 234E. Your attention is hereby drawn towards the provisions of section 234E of the Act (Levy for Late filing of TDS Statement), which reads as follows:

Without prejudice to the provisions of the Act, where a person fails to deliver or cause to be delivered a statement within the time prescribed in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C, he shall be liable to pay, by way of fee, a sum of two hundred rupees for every day during which the failure continues.

The amount of fee referred to in sub-section (1) shall not exceed the amount of tax deductible or collectible, as the case may be.

The amount of fee referred to in sub-section (1) shall be paid before delivering or causing to be delivered a statement in accordance with sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C.

The provisions of this section shall apply to a statement referred to in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C which is to be delivered or caused to be delivered for tax deducted at source or tax collected at source, as the case may be, on or after the 1st day of July, 2012.

Action to be taken in case of Levy intimated u/s 234E:
Please download the Justification Report from our portal TRACES to view your latest outstanding demand. Please click here for assistance on downloading the Justification Report.
Use Challan ITNS 281 to pay the Levy with your relevant Banker, if there are no challans available for consumption.

Please use the Online Corrections facility on TRACES to submit corrections, to payoff the demand. To avail the facility, please Login to TRACES and navigate to Defaults tab to locate Request for Correction from the drop-down list. You can refer to our e-tutorials for necessary help.
Alternatively, you may also download the Conso File from our portal provided there are no Short Payment Defaults.

Prepare a Correction Statement using the latest Return Preparation Utility (RPU) and File Validation Utility (FVU).

Submit the Correction Statement at TIN Facilitation Centre.
For any assistance, you can write to ContactUs@tdscpc.gov.in or call our toll-free number 1800 103 0344.

CPC (TDS) is committed to provide best possible services to you.

Feb 21, 2015

TRACES follow up for payment of outstanding Late Filing Fee u/s 234E

11:30 PM 0
As per the records of CPC (TDS), there is an outstanding default of Rs. 0.00 on account of Late filing fee Levy u/s 234E, for the TANs associated with your PAN. The TAN-wise summary of the default is attached for your reference.

Section 234E of the Income-tax Act, 1961 inserted by the Finance Act, 2012 provides for levy of a fee of Rs. 200/- for each day's delay in filing the statement of Tax Deducted at Source (TDS) or Tax Collected at Source (TCS). The provision for Levy of Late filing fee was introduced to improve Filing Compliance and to avoid subsequent inconvenience to the taxpayers due to inordinate delays in availability of tax credits in their 26AS Statements. 

This assumes further significance in view of the decision of the Hon'ble High Court of Bombay, dated February 6 2015, upholding the validity of the Levy for Late Filing u/s 234E. The court has observed the following in its decision in the case of Rashmikant Kundalia vs. UOI:

Immediate Attention:
The late filing of TDS returns by the deductor causes inconvenience to everyone and s. 234E levies a fee to regularize the said late filing.
The fee is not in the guise of a tax nor is it onerous.
The levy is constitutionally valid.


CPC (TDS), in its endeavor to strengthen TDS Compliance, is reaching out to you to reiterate the essence of timely filing of Quarterly TDS Statements. Section 200(3) of the Income Tax Act, 1961 read with Rule 31A of the Income Tax Rules, 1962, prescribes the following due dates for filing of TDS Statements:

Where the TDS Statements are not filed within the due date, CPC (TDS) sends Intimations u/s 200A of the Act that includes Levy under section 234E. Your attention is hereby drawn towards the provisions of section 234E of the Act (Levy for Late filing of TDS Statement), which reads as follows:

Without prejudice to the provisions of the Act, where a person fails to deliver or cause to be delivered a statement within the time prescribed in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C, he shall be liable to pay, by way of fee, a sum of two hundred rupees for every day during which the failure continues.

The amount of fee referred to in sub-section (1) shall not exceed the amount of tax deductible or collectible, as the case may be.

The amount of fee referred to in sub-section (1) shall be paid before delivering or causing to be delivered a statement in accordance with sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C.

The provisions of this section shall apply to a statement referred to in sub-section (3) of section 200 or the proviso to sub-section (3) of section 206C which is to be delivered or caused to be delivered for tax deducted at source or tax collected at source, as the case may be, on or after the 1st day of July, 2012.

Action to be taken by the TANs associated with your PAN, in case of levy intimated u/s 234E :
Please download the Justification Report from our portal TRACES to view your latest outstanding demand. Please click here for assistance on downloading the Justification Report.
Use Challan ITNS 281 to pay the Levy with your relevant Banker, if there are no challans available for consumption.

Please use the Online Corrections facility on TRACES to submit corrections, to payoff the demand. To avail the facility, please Login to TRACES and navigate to Defaults tab to locate Request for Correction from the drop-down list. You can refer to our e-tutorials for necessary help.

Alternatively, you may also download the Conso File from our portal provided there are no Short Payment Defaults.

Prepare a Correction Statement using the latest Return Preparation Utility (RPU) and File Validation Utility (FVU).

Submit the Correction Statement at TIN Facilitation Centre

Feb 20, 2015

TRACES advice on TDS defaults and no statement filed as yet

4:29 PM 0
TRACES advice on TDS defaults and no statement filed as yet
As per the records of the Centralized Processing Cell (TDS), there exist outstanding Defaults in "all six preceding Quarters" with respect to the TDS Statements filed by you, relevant to the Financial Years 2013-14 and 2014-15. 

Please note that you have "not filed" any Correction Statements as of December 31, 2014 for closure of the TDS Defaults. 

Immediate Attention:
CPC(TDS) facilitates downloading of TDS Certificates (Forms 16/16A) in accordance with section 203 of the Income Tax Act, 1961 read with Rule 31(1) of the Income Tax Rules, 1962 for issuance of the same to the deductees. The deductor duly verifies to the effect that the amount due has been deducted and deposited to the credit of the Government and the information provided in the said certificate is true, correct and complete.

However, as per the records of CPC(TDS), it is observed that the amount of tax deposited / remitted mentioned by you in the TDS Statements is not correct due to insufficient or unmatched challans (owing to possible data entry errors).

To take care of the above and to facilitate non-intrusive TDS Compliance, Online Correction facility has been made available at TRACES for closure of Short Payment defaults due to challan errors. CPC (TDS) processes such statements within 24 hours of submission of such corrections.
In view of the above, Short Payment Defaults ought to be closed at the earliest , failing which you may not be able to submit requests to download TDS Certificates from the web portal TRACES


Consequences of failure to pay the demand:
As per the provisions of section 220 of the Act, Any amount, specified as payable in a notice of demand shall be paid within thirty days of the service of the notice.

If the amount specified in any notice of demand is not paid within the period limited under sub-section (1), the assessee shall be liable to pay simple interest at one per cent for every month or part of a month comprised in the period commencing from the day immediately following the end of the period mentioned in sub-section (1) and ending with the day on which the amount is paid.

If any person fails to deduct or pay the whole or any part of the tax, then, such person shall be liable to pay, by way of penalty, a sum equal to the amount of tax which such person failed to deduct or pay under Section 271C of the Act.

Failure to pay tax to the credit of Central Government is punishable with fine as per the provisions of section 276B/ 276BB.

Section 278A of the Act prescribes for punishment for second and subsequent offences, if any person has been convicted of an offence under section 276B.

Actions to be taken:
Use Challan ITNS 281 to pay the above demand with your relevant Banker, if there are no challans available for consumption

Please download the Justification Report from our portal TRACES to view your latest outstanding demand. Please click here for assistance on downloading the Justification Report.

Please use the Online Corrections facility on TRACES to submit corrections, to payoff/ close the demand.

To avail the facility, please Login to TRACES and navigate to Defaults tab to locate Request for Correction from the drop-down list. You can refer to our e-tutorials for necessary help.

In case of Short Payment Defaults due to Unmatched Challans, please use Tag Unmatched Challan facility using Online Corrections.

In case of Short Payment Defaults due to Insufficient Challans, please use Move Deductee facility using Online Corrections.

Alternatively, you may also download the Conso File from our portal provided there are no Short Payment Defaults.

Prepare a Correction Statement using the latest Return Preparation Utility (RPU) and File Validation Utility (FVU).

Submit the Correction Statement at TIN Facilitation Centre.
For any assistance, you can write to ContactUs@tdscpc.gov.in or call our toll-free number 1800 103 0344.

CPC (TDS) is committed to provide best possible services to you.

Sub-contractor is not entitled of presumptive tax benefit u/s 44BB

4:23 PM 0
Sub-contractor is not entitled of presumptive tax benefit u/s 44BB
The basic condition to be satisfied for applicability of section 44BB is that the plant or machinery(which term includes ship) supplied or rented on hire by the assessee-non-resident should be used in the prospecting for or extraction or production of minerals oils or where equipment has been supplied, such equipment should have been used for the purposes of prospecting for or extraction or production of mineral oils. There is nothing in the said provision so as to disentitle a sub-contractor from invoking the said provision. If the legislatures intention as contended by the Revenue was to restrict the benefit of sec. 44BB only to the main contractor or ONGC, then the words after 'the assessee engaged in the business of 'supplying plant and machinery on hire' or 'providing services or facilities' ought to have been omitted. Hence, where the provision does not create any discrimination between the person who actually does the activity of prospecting for or extraction or production, and the person who supplies the plants and machinery, the narrow interpretation of the provision is thus not permitted.

Feb 19, 2015

TRACES advice on TDS statement filed but Form 16A not yet downloaded

6:24 PM 0
TRACES advice on TDS statement filed but Form 16A not yet downloaded
As per the records of Centralized Processing Cell (TDS), TDS Statements have been filed by you for different quarter(s) for the above period, however, TDS Certificates (Form 16A) have not been downloaded for all of the referenced quarters, from the TRACES portal. 

Please refer to the following provisions of the Income Tax Act, 1961 in this regard:

Downloading of TDS Certificates from TRACES made mandatory:
In this regard, your attention is invited to the CBDT circulars 04/2013 dated 17.04.2013, No. 03/2011 dated 13.05.2011 and No. 01/2012 dated 09.04.2012 on the Issuance of certificate for Tax Deducted at Source in Form 16/16A as per IT Rules 1962. It is now mandatory for all deductors to issue TDS certificates after generating and downloading the same from "TDS Reconciliation Analysis and Correction Enabling System" or http://www.tdscpc.gov.inin (herein after called TRACES Portal).

TDS Certificates downloaded only from TRACES hold valid:
In view of above circulars, it may kindly be noted that the TDS Certificates downloaded only from TRACES Portal will be valid. Certificates issued in any other form or manner will not comply to the requirements referred in the Income-tax Act 1961 read with relevant Rules and Circulars issued in this behalf from time to time. Due Date for downloading and Penalty for non-compliance:

Please be advised that under the provisions of section 203 of the Income Tax Act, 1961 read with rule 31A, Certificate of tax deducted at source is to be furnished within fifteen (15) days from the due date for furnishing the statement of tax deducted at source. Failure to comply with the provisions of the Act will attract penalty under the provisions of section 272A of the Act, a sum of one hundred rupees for every day during which the failure continues.

Taking cognizance of the above information, you are requested to download TDS Certificates at the earliest to avoid above implications and any further action by the Field TDS Officers.

Assistance for downloading TDS Certificates from TRACES :
You can logon to our portal http://www.tdscpc.gov.in and refer to our e-Tutorial to download TDS Certificates.For any assistance, you can write to ContactUs@tdscpc.gov.in or call our toll-free number 1800 103 0344.

CPC (TDS) is committed to provide best possible services to you.

TRACES advice of closure of late payment interest defaults in TDS statements

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TRACES advice of closure of late payment interest defaults in TDS statements
Closure of Late Payment Interest defaults in Quarterly TDS Statements

Please refer the subject mentioned above.


As per the records of Centralized Processing Cell (TDS) as on 02/02/2015 starting from F.Y. 2007 outstanding Late Payment Interest for various TANs belonging to you are provided below.

FIN_YEAR
TAN
TAN NAME
Late payment interest








Financial year wise details of the above are available online to you on TRACES (www.tdscpc.gov.in) under aggregated TAN compliance (www.tdscpc.gov.in/app/tap/supertanreq.xhtml) report.

You are requested to instruct the abovementioned deductors associated with you to pay the Late Payment interest amount and file the TDS correction statement accordingly by 20/02/2015.

This information is being provided to you as would be helpful for you in complying with the provisions of section 40(a)(ia) of Income Tax Act, 1961 and to ensure that correct information is disclosed in paragraph 27A/B of Tax Audit Report(Form 3CD) u/s 44AB of the Income Tax Act.


Actions to be taken by the TAN holders associated with you:
Download quarter-wise Justification Report from our portal TRACES for the details of Late Payment Interest default.

Please use Challan ITNS 281 for payment of the above, Download the Consolidated File from our portal and submit correction statements.

Online Correction facility provided by TRACES can also be used for closing the above defaults by suitably tagging the challans.

For any ,you can write to corporate_connect@tdscpc.gov.in or call our toll-free number 0120-4816103.

Feb 17, 2015

CBDT clarification on amount not deductible u/s 40(a)(i) of income tax

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CBDT clarification on amount not deductible u/s 40(a)(i) of income tax
CBDT issued a circular no. 3 dated 12 February 2015 clarifying amount not deductible under section 40(a)(i) of income tax act. Full clarification is as under.


Subject: - Clarification regarding 'Amounts not deductible under sub-clause of clause (a) of section 40 of Income-tax Act, 1961 (`Act') -regarding. 

Section 40(a)(i) of the A4 stipulates that in computing the i the head "Profits or gains of buiness or profession", any interest, services or other sum chargeable under this Act either payable in (not being a company)/a foreign company or payable outside India a deduction, if there has been a failure in deduction or in payment of tax deducted in respect of such amounts under Chapter XVII-B of the Act. 

2. Disallowance regarding `Other sum chargeable' under section 40(a)(i) is triggered  when the deductor fails to withhold tax as per provisions of section 195 of the act. Doubts  have been raised about the interpretation of the term 'other sum chargeable' i.e whether this term refers to the whole sum being remitted or only the portion representing the sum chargeable to income tax under relevant   provisions of the Act. 


3- Central Board of Direct 'Faxes has already issued Instruction No. 02/2014  dated  26.02.2014 (F.No. 500/33/2013-FTD-I) regarding deduction of tax section (1) of section 195 read with section 201 of the Act relating to payments made to non-residents in cases where no application is filed by the deductor for determining the  sum so chargeable under sub-section (2) of section 195 of the Act. Vide this instruction Board has clarified that in cases where tax is not deducted at source under section 195 of the Act, the Assessing Officer shall determine the appropriate portion of the sum chargeable  to tax, as mentioned in sub-section (1) of section 195, to ascertain the tax liability on which the deductor shall be deemed to be an assessee in default under section 201 of the act. It  has been further clarified that such appropriate portion of the said sum will depend on the  facts and circumstances of each case taking into account the nature of remittances income component therein or any other fact, relevant to determine such appropriate proportion.

 4. As disallowance of amount under section 40(a)(i) of the Act in case of a deductor is  interlinked with the sum chargeable under the Act as mentioned in section 195 of the act  for the purposes of tax deduction at Source, the Central Board of Direct Taxes, in exercise of powers conferred under section 119 of the Act, hereby clarifies that for the purpose of  making disallowance of 'other sum chargeable' under section 40(a)(i) of the act, the  appropriate portion of the sum which is chargeable to tax under the act shall form the basis  of such disallowance and shall be the same as determined by the Assessing Officer having  jurisdiction for the purpose of sub-section (1) of section 195 of the act as per instruction No. 2/2014 dated 26.02.2014 of CBDT. Further, where determination of 'other sum chargeable' has been made under sub-sections (2), (3) or (7) of section 195 of the act, such  a determination will form the basis for disallowance, if any, under section 40(a)(i) of the Act. 

5. This may be brought to the notice of all concerned. 

6. Hindi version to follow.

Feb 10, 2015

CBDT takes quick action on black money seek info of 600 cases

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CBDT takes quick action on black money seek info of 600 cases
CBDT issued a press release dated 9 February 2015 as quick action in investigating cases of black money stashed abroad and seek further information of 600 cases. Full press release is as under.

PRESS RELEASE
 Information about HSBC foreign bank accounts was received from the French authorities in respect of 628 Indian persons/entities. Out of the said 628 persons, 200 were either non-residents or non- traceable, leaving 428 cases of residents which were found actionable. For these 428 actionable cases the net amount of peak balance was about Rs.4500 crore.

 The Government has taken expeditious action in these cases as per law. Up-to 31st December 2014, assessments were completed in 128 cases, involving more than 350 assessments. In the remaining cases assessment proceedings are at advance stage. Undisclosed income of about Rs.3150 crore was brought to tax on account of deposits made in unreported foreign bank accounts.

 Out of the above-mentioned 128 cases in which assessments were completed, concealment penalty proceedings u/s 271(1)(c) have been initiated in almost all the cases.

 About 60 prosecutions have so far been launched for wilful attempt to evade taxes [S/276C(1)] and failure to furnish accounts and documents etc [S/276D]. Show Cause Notices before launching prosecutions have been issued in a large number of other cases wherein further action is underway.

 Today’s media reports carry news item about foreign bank accounts held by 1195 Indians. Top hundred names have been published in a newspaper. Some of these names already figure in the earlier list available with the Government. Necessary investigation as per the provisions of law will be taken up in all the new cases, expeditiously.

 Income Tax Department is already in touch with the whistle blower who apparently brought out the names of persons holding undisclosed bank accounts in HSBC, Switzerland. He has been requested to share information available with himin regard to undisclosed bank accounts of Indians in HSBC, Switzerland and other destinations. His response is awaited.

 During last 6 months, the Government has taken vigorous and pro-active measures to expedite investigations in the cases of Indians holding undisclosed foreign accounts/assets abroad. Useful contacts have been established with foreign governments who might have some further information in this regard. Based upon credible information of undisclosed foreign bank accounts, fresh references for obtaining further information in more than 600 cases have been made to foreign
jurisdictions, under available treaties/agreements. The same are being pursued. 

Feb 8, 2015

Safe harbour rules for specified domestic transaction and form 3cefb

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Safe harbour rules for specified domestic transaction and form 3cefb
CBDT issued a notification no. 11/2015 dated 4 February 2015 regarding safe harbour rules for specified domestic transaction and also notified a new form 3cefb. Full notification and new form 3cefb is as under.

 S.O.350 (E)In exercise of the powers conferred by sections 92CB and 92D 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 toamend the Income-tax Rules, 1962, namely:-

1. (1) These rules may be called the Income-tax (2 nd Amendment), Rules, 2015.

(2) They shall come into force from the date of their publication in the Official Gazette.

2. In the Income-tax Rules, 1962, --

(A) in Part-II, in sub-part D relating to special cases,--

 (1) in rule 10 D,--

(a) after sub-rule (2), the following sub-rule shall be inserted, namely:-

“(2A) Nothing contained in sub-rule (1), in so far as it relates to an eligible specified domestic transaction referred to in rule 10 THB , shall apply in a case of an eligible assessee referred to in
rule 10 THA and, the said eligible assessee, shall keep and maintain the following information and documents, namely:-

(i) a description of the ownership structure of the assessee enterprise with details of shares or other
ownership interest held therein by other enterprises;

(ii) a broad description of the business of the assessee and the industry in which the assessee operates, and of the business of the associated enterprises with whom the assessee has transacted;

(iii) the nature and terms (including prices) of specified domestic transactions entered into with each associated enterprise and the quantum and the value of each such transaction or class of such transaction;

 (iv) a record of proceedings if any before the regulatory commission and orders of such commission relating to the specified domestic transaction;

(v) a record of the actual working carried out for determining the transfer price of the specified domestic transaction;

(vi) the assumptions, policies and price negotiations, if any, which have critically affected the determination of the transfer price;

(vii) any other information, data or document, including information or data relating to the associated enterprise,which may be relevant for determination of the transfer price.”;

(b)in sub-rule (3), for the word, brackets and figure “sub-rule (1) ”, the word, brackets, figures and letter “sub-rules (1) and (2A)” shall be substituted;

(c) in sub-rule (4) and in the proviso to sub-rule (4), for the words,brackets and figures “sub-rules (1) and (2)”,wherever they occur, the words , brackets, figures and letter “sub-rules (1), (2) and (2A)” shall be substituted;

(d)in sub-rule (5), for the words, brackets and figures “sub-rules (1) and (2)”, the words, brackets, figures and letter “sub-rules (1), (2) and (2A)” shall be substituted;

(2) afterrule 10 T, in the heading, for the words “Safe Harbour Rules”, the words “ Safe Harbour Rules for International Transactions” shall be substituted;

(3) after rule 10TG, the following rules shall be inserted, namely:-

‘“Safe Harbour Rules for Specified Domestic Transactions” 

10TH. Definitions.- For the purposes of this rule and rules 10THA to 10THD,-

(a) "Appropriate Commission” shall have the same meaning as assigned to it in sub-section (4) of section 2 of the Electricity Act, 2003 (36 of 2003);

(b) “Government company”shall have the same meaning as assigned to it in subsection (45) of section 2 of the Companies Act,2013 (18 of 2013);

10THA. Eligible assessee.– The ‘eligible assessee’ means a person who has exercised a valid option for application of safe harbour rules in 3 accordance with the provisions of rule 10 THC, and is a Government company engaged in the business of generation, transmission or distribution of electricity.

10THB. Eligible specified domestic transaction.–The “Eligible specified domestic transaction” means a specified domestic transaction undertaken by an eligible asseessee and which comprises of :-

(i) supply of electricity by a generating company; or
(ii) transmission of electricity; or
(iii) wheeling of electricity.

Safe Harbour
10THC.(1)Where an eligible assessee has entered into an eligible specified domestic transaction in any previous year relevant to an assessment year and the option exercised by the said assessee is treated to be validly exercised under rule 10THD, the transfer price declared by the assessee in respect of such transaction for that assessment year shall be accepted by the income tax authorities, if it is in accordance with the circumstances as specified in sub-rule (2).

(2) The circumstances referred to in sub-rule (1) in respect of the eligible specified domestic transaction specified in column (2) of the Table below shall be as specified in the corresponding entry in column (3) of the said Table.


SNo
Eligible specified domestic Transaction
Circumstances
1
Supply of electricity, transmission of electricity, wheeling of electricity referred to in item (i), (ii) or (iii) of rule THB,as the case may be.
The tariff in respect of supply of electricity, transmission of electricity, wheeling of electricity, as the case may be, is determined by the Appropriate Commission in accordance with the provisions of the Electricity Act, 2003 (36 of 2003).
 (3) No comparability adjustment and allowance under the second proviso to sub-section (2) of section 92C shall be made to the transfer price declared by the eligible assessee and accepted under sub-rule (1).

(4) The provisions of sections 92D and 92E in respect of a specified domestic transaction shall apply irrespective of the fact that the assessee exercises his option for safe harbour in respect of such transaction.

Procedure.
10 THD.(1) For the purposes of exercise of the option for safe harbour, the assessee shall furnish a Form 3CEFB, complete in all respects, to the Assessing Officer on or before the due date specified in Explanation 2 to subsection (1) of section 139 for furnishing the return of income for the relevant
assessment year :

Provided that the return of income for the relevant assessment year is furnished by the assessee on or before the date of furnishing of Form 3CEFB:

Provided further that in respect of eligible specified domestic transactions undertaken during the previous year relevant to the assessment year beginning on the 1st day of April, 2013 or beginning on the 1st day of April, 2014, Form 3CEFB can be furnished by the assessee on or before the 31st
day of March, 2015.

(2) On receipt of Form 3CEFB, the Assessing Officer shall verify whether-

 (i) theassessee exercising the option is an eligible assessee; and
 (ii) the transaction in respect of which the option is exercised is an eligible specified domestic transaction,
before the option for safe harbour by the assessee is treated to be validly exercised.

(3) Where the Assessing officer doubts the valid exercise of the option for the safe harbour by an assessee, he may require the assessee, by notice in writing, to furnish such information or documents or other evidence as he may consider necessary, and the assessee shall furnish the same within the timespecified in such notice.

(4) Where-
(a) theassessee does not furnish the information or documents or other evidence required by the Assessing Officer; or

(b) the Assessing Officer finds that the assessee is not an eligible assessee; or

(c) the Assessing Officer finds that the specified domestic transaction in respect of which the option referred to in sub-rule (1) has been exercised is not an eligible specified domestic transaction; or

(d) the tariff is not in accordance with the circumstances specified in sub-rule (2) of rule 10 THC,
the Assessing Officer shall, by order in writing, declare the option exercised by the assessee under sub-rule (1) to be invalid and cause a copy of the said order to be served on the assessee:

 Provided that no order declaring the option exercised by the assessee to be invalid shall be passed without giving an opportunity of being heard to the assessee.

(5) If the assessee objects to the order of the Assessing Officer under subrule (4) declaring the option to be invalid, he may file his objections with the Principal Commissioner or the Commissioner or the Principal Director or the Director, as the case may be, to whom the Assessing Officer is subordinate,
within fifteen days of receipt of the order of the Assessing Officer.

(6) On receipt of the objection referred to in sub-rule (5), the Principal Commissioner or the Commissioner or the Principal Director or the Director, as the case may be, shall after providing an opportunity of being heard to the assessee, pass appropriate orders in respect of the validity or otherwise of the option exercised by the assessee and cause a copy of the said order to be served on the assessee and the Assessing Officer.

(7) For the purposes of this rule,-
(i) no order under sub-rule(4) shall be made by an Assessing Officer after expiry of a period of three months from the end of the month in which Form 3CEFB is received by him;

 (ii) the order under sub-rule (6) shall be passed by the Principal Commissioner or Commissioner or Principal Director or Director, as the case may be, within a period of two months from the end
of the month in which the objection filed by the assessee under sub-rule(5) is received by him.

(8) If the Assessing Officer or the Principal Commissioner or the Commissioner or the Principal Director or the Director, as the case may be, does not pass an orderwithin the time specified in sub-rule (7), then the option for safe harbour exercised by the assessee shall be treated as valid.’;

(B) in Appendix II, after Form No. 3CEFA, the following Form shall be inserted, namely:-

Download Form 3CEFB
Tags-form 3cefb,download form 3cefb,form 3cefb download

Feb 7, 2015

Early redemption of Inflation Indexed National Saving Securities

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Early redemption of Inflation Indexed National Saving Securities
Reserve bank of India issued a note allowing early redemption of Inflation Indexed National Saving Securities dated 6 February 2015.Full note is as under.

Please refer to our circular DGBA.CDD.No.2589/13.01.999/2014-2015 dated December 11, 2014 regarding early repayment/ redemption of Inflation Indexed National Savings Securities-Cumulative (IINSS-C), 2013. In terms of Para 15(ii) of the circular, an investor can seek early repayment/premature redemption,

(i) after one year of holding if he/she is a senior citizen (over 65 years of age)

(ii) after 3 years of holding in all other cases,

subject to deduction of penalty at the rate of 50% of the last coupon payable. The early redemption is allowed only on coupon date.

2. In this regard, keeping in view the problems being faced by the investors and the Agency banks, it has been decided that repayment/early redemption of IINSS-C may be kept open till the next coupon date and the premature repayment/early redemption requests can be entertained by the Agency banks on any day after the coupon date, subject to the penalty of 50% of last coupon. However, no interest would be paid for the period between the coupon date and the date of the repayment.

Registration of sale deed only is not a revenue proof under section 145

3:20 PM 0
Registration of sale deed only is not a revenue proof under section 145
Recognition of the revenue from sale of plots by assessee only when the registration of the sale deed has been done by the assessee in favour of the buyer is not a recognized method of recognizing the revenue under AS-7. This method is neither project completion method nor percentage of completion method. The method adopted by the Assessee, therefore, cannot be regarded to comply with the ingredients as laid down u/s 145 of the Income Tax Act. Sec. 145 of the Income Tax Act makes it mandatory on the part of the Assessee to follow either cash or mercantile system of accounting regularly. Recognizing the revenue when the sale deed has been registered by the Assessee in favour of the buyer cannot be regarded to be either cash or mercantile system of accounting

Facts

• Assessee had completed the development work of the plot as on 31.3.2009 and in respect of the plots he has received around 70-80% of the sale proceeds but still the Assessee had not shown the sale proceeds in the profit and loss account.

• Since the development had already been completed, therefore, the AO re-computed the profit relating to these projects completed crediting the sale proceeds to the profit and loss account.

• The Assessee contended that he was showing sales when the registration of the sale deed was carried out. The assessee contended that he was following project completion method according to AS-7

• The Assessee went in appeal before the CIT(A).

• CIT(A) took the view as if the AO has changed the method from project completion method to percentage completion method and deleted additions and allowed assessee's appeal

• Hence, the instant appeal by Department against CIT (A)'s order

Held

• The Assessee contended before CIT(A) and CIT(A) has also agreed that the Assessee was following the project completion method but Assessee has not recognized the revenue on the basis of the project completion method.

• It is an undisputed fact that the development work on the plots has been completed. Registration of the sale deed represents only the transfer of the title in favour of the buyer from the Assessee.

• The Assessee was not following percentage of completion method. Under the percentage of completion method revenue is recognized in the profit and loss account in the accounting period to the extent the work is completed. In case the revenue has to be recognized on the basis of receipt of payment from the plot-holders, that will also not be regarded to be percentage of completion method.

• It is not a case where the AO has rejected the accounts of the Assessee on the ground that it had not followed AS-7 for recognition of revenue on the basis of percentage of completion method.

• The method as has been followed by the Assessee, in our opinion, is neither project completion method nor percentage of completion method.

• Percentage of completion method is not linked with the consideration received by the Assessee from the intended buyer.

• Assessee has recognized the revenue only when the registration of the sale deed has been done by the Assessee in favour of the buyer. Under AS-7 this is not a recognized method of recognizing the revenue. This method is neither project completion method nor percentage of completion method.

• The method adopted by the Assessee, therefore, cannot be regarded to comply with the ingredients as laid down u/s 145 of the Income Tax Act.

• Sec. 145 of the Income Tax Act makes it mandatory on the part of the Assessee to follow either cash or mercantile system of accounting regularly.

• Recognizing the revenue when the sale deed has been registered by the Assessee in favour of the buyer cannot be regarded to be either cash or mercantile system of accounting.

• CIT(A)'s order set aside and order of the AO restored. Department's appeal allowed in the result