Sec. 234E; HC upholds constitutional validity; Fee charged for late filing of TDS return isn't a tax

The fee sought to be levied under section 234E is not a tax that is sought to be levied on the deductor. The provisions of section 234E is not onerous on the ground that the section does not empower the AO to condone the delay in late filing of the TDS return, or that no appeal is provided for from an arbitrary order passed under section 234E

Facts :

a) Petitioner, a practicing Chartered Accountant, challenged the constitutional validity of section 234E. Section 234E seeks to levy a fee of Rs.200/- per day (subject to certain other conditions) inter-alia on a person who deducts Tax at Source and then fails to deliver or cause to be delivered the TDS return to the authorities within the prescribed period.

b) He argued that legislature had categorically termed the levy under section 234E of the Act as a "fee", it necessarily could be levied only in the event the Government was providing any service. In the absence thereof, the said section seeks to collect tax in the guise of a fee. This, according to the learned counsel, was impermissible either in common law or under the taxing statute, and encroached on the rights of life and liberty of the citizens.

c) He further submitted that the provisions of section 234E were extremely onerous as the AO was not vested with any power to condone the delay in filing the TDS return and there was also no provision of appeal against order of AO.

The High Court upheld the constitutional validity of Section 234E and made following observations:

1) There is an obligation on the Income Tax Department to process the income tax returns within the specified period. Department cannot accurately process the return until information of TDS is furnished by the deductor within the prescribed time.

2) If the income tax returns having refund claims were not processed in a timely manner, it would result in delay in issuing refunds or raising of infructuous demands. Late payment of refund also affects the government financially as the Government has to pay interest for delay in granting the refunds.

3) The Legislature took note of the fact that a substantial number of deductors were not furnishing their TDS returns within the prescribed time frame which was absolutely essential. This led to an additional work burden upon the Department due to the fault of the deductor by not furnishing the TDS returns in time. It was in this backdrop, and to compensate for the additional work burdened upon the Department, that a fee was sought to be levied under section 234E. Thus, section 234E is not punitive in nature but a fee which is a fixed charge for the extra service which the Department has to provide due to the late filing of the TDS statements.

4) A right of appeal is not a matter of right but is a creature of the statute, and if the Legislature deems it fit not to provide a remedy of appeal, so be it. Even in such a scenario it was not as if the aggrieved party was left remediless. Such aggrieved person could always approach this Court in its extra ordinary equitable jurisdiction under Article 226 / 227 of the Constitution of India, as the case may be. Therefore, we do not agree with the argument of the Petitioners that simply because no remedy of appeal was provided for, the provisions of section 234E were onerous. - Rashmikant Kundalia v. Union of India (2015) 54 taxmann.com 200 (Bombay)

Full text link 1:

http://itatonline.org/archives/wp-content/uploads/Rashmikant_Kundalia_234E.pdf

Full text link 2:

https://drive.google.com/file/d/0B-0hzoMM8_XZNjhoUGhmYk90bEk/view?usp=sharing

CBDT Extension for Due date of ITR for 44AB / Tax Audit Cases A.Y 2014-15

CBDT Order / Notification to give effect awaited.


1) Bombay HC ask CBDT to Consider Extension of ITR due Date to 30-Nov-2014

2) Madras HC suggests CBDT to extend due date of ITR to 30-Nov-2014

3) Gujarat HC : Appeal Disposed off in favour of Petitioner and High Court Instructed CBDT to extend due date to File Income Tax Return in Tax Audit Cases for A.Y. 2014-15  to 30.11.2014 but allowed to levy Interest U/s. 234A of the Income Tax Act,1961.

Bombay HC ask CBDT to Consider Extension of ITR due Date to 30.11.2014 - See more at: http://taxguru.in/#sthash.L9KuajJr.dpuf

Bombay HC ask CBDT to Consider Extension of ITR due Date to 30.11.2014 - See more at: http://taxguru.in/#sthash.L9KuajJr.dpuf

Cost Inflation Index 2014-15 is 1024

FY	Index	% inflation increase
2014-15	1024	9.05%
2013-14	939	10.21%
2012-13	852	8.54%
2011-12	785	10.41%
2010-11	711	12.50%
2009-10	632	8.59%
2008-09	582	5.63%
2007-08	551	6.17%
2006-07	519	4.43%
2005-06	497	3.54%
2004-05	480	3.67%
2003-04	463	3.58%
2002-03	447	4.93%
2001-02	426	4.93%
2000-01	406	4.37%
1999-00	389	10.83%
1998-99	351	6.04%
1997-98	331	8.52%
1996-97	305	8.54%
1995-96	281	8.49%
1994-95	259	6.15%
1993-94	244	9.42%
1992-93	223	12.06%
1991-92	199	9.34%
1990-91	182	5.81%
1989-90	172	6.83%
1988-89	161	7.33%
1987-88	150	7.14%
1986-87	140	5.26%
1985-86	133	6.40%
1984-85	125	7.76%
1983-84	116	6.42%
1982-83	109	9.00%
1981-82	100

 

CBDT Instructions On S. 143(1) Intimations And S. 154 Rectifications

The CBDT has issued Instruction No. 03/2013 dated 05.07.2013 with regard to the the directive issued by the Delhi High Court in Court on Its Own Motion vs. UOI 352 ITR 273 on the procedure to be followed on the receipt and disposal of rectification applications filed u/s 154 of the Act. The CBDT has set out a detailed procedure on where applications should be received, the maintenance of registers and their disposal.

The CBDT has also issued Instruction No. 04/2013 dated 05.07.2013 with regard to the directive issued by the Delhi High Court in Court on Its Own Motion vs. UOI 352 ITR 273 that the demand should not be enforced in cases where no intimation u/s 143(1) was sent by the field authorities in respect of returns which were processed prior to 31.03.2010.

Date of Payment of Final Installment of Advance Tax Extended from 15th March to 18th March 2014

Ministry of Finance14-March, 2014 17:21 IST

Date of Payment of Final Installment of Advance Tax Extended from 15th March to 18th March 2014

The Final Installment of Advance tax for Financial Year 2013-14 is required to be paid on or before 15th March, 2014 by the tax payers who are liable to pay advance tax. These taxpayers can make payments in the designated branches of the authorized banks, electronically or physically, as per law. The banks are open for half day on 15th March, 2014, being a Saturday. Accordingly, to facilitate payment of this installment of Advance tax for the Financial Year 2013-14, the Central Board of Direct taxes (CBDT) has issued an order to extend the time limit to make such payments of Advance Tax, from 15th March, 2014 to 18th March, 2014. Taxpayers, therefore, can now pay their advance tax installment by Tuesday, 18th March, 2014 without entailing any consequential interest for deferment.

*****


DSM/KA
(Release ID :104607)

Common Errors Found While Processing ITR 4, 5 and 6 for AY 2009-10

1. Schedule Profit and Loss is filled with a claim for depreciation but depreciation details are either not added back in Schedule BP or details of depreciation in plant and machinery and other assets are not filled by the assessee in Schedule DPM, DOA and Schedule DEP, leading to disallowance of depreciation.

2. Assessees declaring deemed income under section 44AD, 44AF, etc., are filling up Schedule P & L account but not entering all relevant details in Schedule BP such as Items A4, A33, depreciation, Schedule DPM/DEP etc in the return, leading to addition to deemed income.

3. Schedule OI is filled with details of disallowances or amounts added back to income due to the provisions like 40A, 40(a), 43(1), 36 but they are not entered in Schedule BP in arriving at the income from Business and Profession leading to additions to income mentioned in Schedule BP during processing.

4. Schedule CFL is not being filled by assessee who is claiming adjustment of Brought Forward Loss Adjustments. The assessee has to fill the schedule CFL and give the breakup of the losses claimed for set off which alone will be considered for Schedule BFLA. Direct entries in Schedule BFLA will not be entertained, thus leading to demand due to disallowance of claim for adjustment of brought forward loss.

5. Schedule VI A details are not filled correctly. The assessee is filling only the Total deductions under Chapter VI A without giving break up of deductions claimed. Also while claiming deductions in Chapter VI A the respective schedules like 80IA, 80IB, 80IC, 80G, etc. are not filled, leading to disallowances of deductions claimed under Chapter VIA.

6. In ITR 5 in many returns the assessee has not selected Status (such as Cooperative Society, Firm, etc) in the General Information Portion of ITR 5 leading to taxation at higher rate or disallowance on specific deductions like 80P, etc.

7. In ITR 6 many assessees are opting for ‘No’ in section in General Information relating to ‘If a Domestic Company’. When ‘N’ is selected the tax rate applicable to Foreign Companies will be charged, leading to higher taxation.

8. The payment details in Schedule IT and Schedule FBT are misconstrued by the assessee. The assessees have claimed Income Tax payments in Schedule FBT and FBT payments in Schedule IT leading mismatch and disallowance on credit for tax payments.

9. Schedule MAT is not being entered by many assessees even though they are falling within the ambit of the provisions of MAT.

10. In Schedule CG, there are additions to Total income on account income from STCG due to incomplete filling of the Schedule CG, incorrect apportionment of Total STCG as determined in Item 6 between Items 7 and 8 and incorrect or incomplete filling up of the correct code and corresponding value of STCG under section 111A in Schedule SI- Income chargeable to Income tax at special rates. Mistakes in LTCG are due to incomplete filling of the Schedule- CG and incorrect or incomplete filling up of the correct code and corresponding values of LTCG in Schedule SI- Income chargeable to Income tax at special rates.

Due date of filing extended to 15 th Ocober 2010

F.No. 225/72/2010-ITA.II

Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes

Dated : September 27, 2010


Order under Section 119 of the Income Tax Act, 1961


On consideration of the reports of disturbance of general life caused due to floods and heavy rains, 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 of filing of returns of income for the Assessment Year 2010-11 from 30.09.2010 to 15th October 2010. Accordingly the due date for Tax Audit report u/s. 44AB of the Income Tax Act is also extended to 15th October, 2010.


(Ajay Goyal)
Director (ITA. II)





Source Link :
https://incometaxindiaefiling.gov.in/portal/downloads10-11/itr/extends%20the%20due%20date.jpg

DSC Error

It is observed that Corporate users are registering the DSC and immediately trying to upload the I-T Return. This will throw up an Error like "Your DSC is not registered". Therefore, it is requested that whenever the new DSC is being registered or DSC is being updated, the user should first log out and then login again for the registration or updation to take effect, and then only upload the I-T return.

PAN based DSC for Non-residents relaxed

Requirement of encrypted PAN on DSC for non-resident signatories of foreign companies has been relaxed. The signatory may register with a non-PAN based DSC from the CCA, India and use the same DSC while uploading the return.

This facility is available ONLY for all foreign companies under the jurisdiction of respective International Taxation wards or circles of the Income Tax Department.

Foreign companies still facing any difficulty may send a email to efiling@incometaxindia.gov.in or efiling.administrator@incometaxindia.gov.in giving their name, PAN and jurisdiction.

Income Tax Ombudsman

Income Tax Ombudsman

Source Link : http://www.incometaxindiapr.gov.in/incometaxindiacr/ombudsman.pdf

Download Link Direct : https://docs.google.com/fileview?id=0B-0hzoMM8_XZNzRjZjU3ZDYtMTRiZC00OWZmLThiZmQtOTAwY2E4MTYwNzQz&hl=en


.

Revised Guidance Note on Tax Audit u/Sec. 44AB of IT Act, 1961

Attention of members is invited towards the changes in the Guidance Note on tax Audit under section 44AB of the Income-tax Act, 1961 approved subsequent to the publication of the Supplementary Guidance Note, issued by the erstwhile Fiscal Laws Committee, as a part of the publication “Guidance Note on Audit of Fringe Benefits under the Income-tax Act, 1961” in 2006.

The Fifth Edition of the Guidance Note on Tax Audit under section 44AB of the Income-tax Act, 1961 incorporating the law as amended by the Finance Act, 2005 was published in September, 2005.

Subsequently, a supplementary Guidance Note has been published on the amendments made by the notification No. 208/2006 dated 10th August, 2006 issued by the Central Board of Direct Taxes in Form No. 3CD.

Subsequent to the publishing of the above Supplementary Guidance Note, the Finance Act, 2007 has made amendments in section 40A(3). New Rule 6DD was inserted in the Income-tax Rules by notification No. 208/2007 dated 27.6.2007 w.e.f. A.Y. 2008-09.

The Council thereupon approved some more changes subsequent to the publication of the Supplementary Guidance Note. These may be taken into consideration while reading in the Guidance Note on Tax Audit [2005 Edition] and the Supplementary Guidance note on Tax Audit [2006 Edition published along with the Guidance Note on Audit of Fringe Benefits under the Income-tax Act, 1961].

For convenience of members the clauses wherein there have been changes are listed hereunder and the full text which forms part of the Guidance to members is available at http://220.227.161.86/20408announ11236a.pdf. Please note that some changes approved relating to fringe benefits have not been given here since they are no longer relevant.

1. Clause No. 12(a) and (b) of Form 3CD Para No. 23 of the Guidance Note[2005 Edition]
2. Clause 17(h) of Form 3CD Para 35 of the Guidance Note (Subsequent changes have been made in section 40A(3) by the Finance Act, 2008 and Finance (No. 2) Act, 2009 and also in Rule 6DD.These changes may have an effect on the computation of the amount to be reported but no further guidelines in this regard is considered necessary)
3. Clause 17(l) of Form 3CD
4. Clause 17A in Form 3CD – Amount inadmissible under section 23 of the Micro, Small and Medium Enterprises Development Act, 2006.
5. Select issues in accounting for state level VAT. (These do not represent the views of the Council but are based on the original draft prepared by Indore Branch of the CIRC of the Institute.)

Download Link :
https://docs.google.com/fileview?id=0B-0hzoMM8_XZYjE2NWQ3MzYtZWIyOC00YjYyLThkOGQtMzQ1OTNmMDI1N2Vj&hl=en

DSC and E-filing related

1) E-filing of Returns - An Overview of the Process of e-Filing of Returns
Link : https://docs.google.com/present/edit?id=0Ae0hzoMM8_XZZGRkNTM5eHRfMTBmaHhxM21jcA&hl=en

2) Changed DSC Procedure
Link : https://docs.google.com/fileview?id=0B-0hzoMM8_XZZjE4ODFiMDMtNTBlNC00ZDI3LWJkMTktNjM4MTU3YmQ2MzM4&hl=en

3) Help / Guidance for USB Token
Link : https://docs.google.com/fileview?id=0B-0hzoMM8_XZMTc0YTY2MDEtZGQ0My00NDA4LTlmODgtNWY5MmU1Y2Q2OWYw&hl=en

HUF - Efiling - Date of Creation : Ancestral

For HUFs:


Date of creation of HUF shall be
01-01-0001
where the date of creation is not available / HUF date is ancestral.

The same can be used for e-filing of IT Returns as well of updation of PAN.

Tax Free Railway Bonds

NOTIFICATION NO. 72/2010, Dated: September 8, 2010

In exercise of the powers conferred by item (h) of sub-clause (iv) of clause (15) of Section 10 of the Income Tax Act, 1961 (43 of 1961), the Central Government hereby authorizes the Indian Railway Finance Corporation (IRFC) to issue, during Financial Year 2010-11, tax free secured, redeemable, non-convertible Railway Bonds of Rs. 1,000 each in case of public issue and Rs.1,00,000 each in other cases, aggregating to an amount of three thousand and eighty crore rupees only, carrying an interest rate in the range of 6% to 7.25% per annum, depending upon the size and tenor of a tranche:

Provided that the benefit under the said item shall be admissible only if the holder of such bonds registers his or her name and the holding with the said Corporation.

F.No.178/126/2009-ITA-1
(Raman Chopra)
Director (ITA-1)

Notification Download: https://docs.google.com/fileview?id=0B-0hzoMM8_XZMjQ3MmI3NDUtNWNlZi00MTlhLWI2NzctMWU4YTNiZDIzNmQ2&hl=en

Source Link :
http://law.incometaxindia.gov.in/DIT/File_opener.aspx?page=NOTF&schT=&csId=5857d9b4-0293-4146-a99b-8a28b50b200a&NtN=&yr=ALL&sec=&sch=&title=Taxmann

All payments made abroad not within ambit of withholding tax, rules SC

NEW DELHI: The Supreme Court on Thursday rejected the income-tax department’s contention that companies based in India were liable to deduct tax when they make any payment overseas, offering relief to domestic firms and multinational companies based here that would have had to cough up huge amounts as tax on payments made to overseas suppliers.

The apex court rejected the sweeping interpretation of law on withholding tax, or tax deducted from overseas payments. The judgement clears the air on the contentious issue and removes uncertainties faced by companies that have overseas dealing.

Taxation experts and companies welcomed the ruling. “The ruling settles the issue of withholding tax on payments made to non-residents,” said Kaushik Mukherjee, partner at consulting firm PwC.

For GE, Samsung Electronics, Hewlett-Packard, Sonata Software and other firms, which had approached the Supreme Court against a Karnataka High Court decision, the issue is far from over. They will have to approach the high court to decide whether they will have to pay tax on payments made for shrink-wrapped software.

“Had the high court order been upheld, Sonata would have had to pay more than `200 crore to the income-tax department immediately,” said B Ramaswamy, president and managing director, Sonata Software.

Sonata had made a financial disclosure for a contingent liability of Rs 252 crore. “The company’s auditors would now take a call on how to treat it under the accounting standards,” said N Venkatraman, head of strategic finance at Sonata.

The Karnataka High Court ruling had allowed the tax authorities to take a larger interpretation of a provision that any import from a non-resident is an income to the seller, hence the buyer needs to deduct tax. If the buyer does not want to withhold tax, he has to get an approval from a revenue officer, instead of an auditor at present.

In this particular issue the goods concerned were software and buyers of software, the concerned companies, assuming that tax was not to be withheld in India on the payments made to the supplies of software, made the payment without deducting the tax.

However, the tax authorities treated the payments as “royalty” which is taxable here since those software packages had “copyrights”. The income tax department also declared that those who have not withheld taxes were “assessee in default” and hence liable to pay interest, penalty.

Samsung India was among the first batch of companies which had appealed against the I-T department’s decision. The company even got relief from the Income-Tax Appellate Tribunal. But, the Karnataka HC reversed the ITAT judgement and accepted the contention of tax authorities opening a pandora’s box with regard to taxation of overseas payments.

“The judgement has large ramifications not only on the applicability of withholding tax on payments towards packaged software but on cross-border payment towards goods or services,” said Mukesh Butani, partner, BMR Legal.

The Thursday’s judgement given by a bench comprising chief justice of India, justice S H Kapadia, and justice K S Radhakrisnan, has made it clear that withholding tax has to be deducted only if the non-resident’s income was chargeable to tax in India.

Senior advocates including Fali S Nariman, Harish Salve, Atul Chitale and S Ganesh represented the companies while additional solicitor general V Tankha appeared for the income-tax department. Interestingly, the new Direct Taxes Code bill, that seeks to replace the present income tax act, has a provision in line with today’s apex court’s decision.

Source Link : http://economictimes.indiatimes.com/news/economy/finance/All-payments-made-abroad-not-within-ambit-of-withholding-tax-rules-SC/articleshow/6527496.cms

Judgement Download Link : https://docs.google.com/fileview?id=0B-0hzoMM8_XZZjM2YzY3ZTgtOGU2NS00YTdmLThkZGQtZmQ5Yzc2Y2MxOTg0&hl=en

Time limit for filing ITR-V for AY 2009-10 extended

PRESS RELEASE dated 1-9-2010


The Central Board of Direct Taxes (CBDT) has decided to extend the time limit for filing ITR-V forms relating to income-tax returns for A.Y. 2009-10 filed electronically (without digital signature) on or after 1st April 2009. These ITR-V forms can now be filed up to 31st December 2010 or within a period of 120 days of uploading of the electronic return data, whichever is later.

2. The relaxation has been made since there are still returns relating to A.Y. 2009-10 for which the ITR-V forms have not been received at the Centralised Processing Centre (CPC), Bengaluru or have been received after 31st March 2010 or have been filed with the Assessing Officers.

These taxpayers are being given a final opportunity to send ITR-V forms to the CPC by the dates mentioned in para 1 above.

3. The ITR-V forms should be sent by ordinary post or speed post to
Post Bag No.1,
Electronic City Post Office,
Bengaluru – 560100
(Karnataka).
*****

Source Link :
https://incometaxindiaefiling.gov.in/portal/downloads/Press%20Release%20.pdf

Removal of ELSS from 80C in DTC Unfortunate

For many retail investors, ELSS funds are the first step in starting to invest in mutual funds. Unfortunately, the new Direct Tax Code has closed off this gateway to equities.


Removal of ELSS from 80C Unfortunate

For savers and investors, who were living in dread of new Direct Tax Code (DTC) completely transforming their tax-planning approach, the new law must come as a relief. There are two main reasons for this. One, generally, the basic structure and the approach to taxation is very much the same. And two, specifically, long-term capital gains on equity and equity-backed mutual funds remain untaxed.

The retention of the zero-tax rate on long-term equity gains is probably the fundamental difference between the DTC as it was proposed originally and the shape it has finally taken. However, on a relative basis, long-term capital gains are now more attractive by a smaller margin than earlier. Since short-term gains are now taxed effectively at half the rate of the income tax slab the investor is in, they can be no more than 15 per cent and potentially as low as 5 per cent. The basic bias of the tax laws for shorter-term gains remains intact.

For mutual fund investors, there are two big changes. One, the tax saving funds — the so-called equity-linked savings schemes (ELLS) — funds will be history after the act comes into force. What used to be the section 80C deductions are now applicable to much smaller range of investments. This is unfortunate — ELSS funds were important in being tax-saving investment, which brings the benefits of equity returns. ELSS funds also have another benefit. For many retail investors, they tend to be gateway products in which the investor gets the first taste of equity investing and mutual funds. The tax-savings attract people to these funds and the three year lock-in generally ensures that investors get good returns. This experience converts many of these investors to investing in equity mutual funds. Under the DTC, 80C-type benefits are limited only to term insurance, Provident Fund (PF), Public Provident Fund (PPF) and the New Pension System (NPS). Of these, only th e NPS offers some equity exposur -- only up to 50 per cent and with a lock-in to retirement age.

The other change is the imposition of tax on dividends distributed by mutual funds. In theory, this has been imposed on unit-linked insurance plans (ULIPs) as well but that’s just a characteristically fake attempt to show that the government is treating mutual funds and ULIPs similarly. In reality, ULIPs don’t actually pay dividends so this measure hits only mutual fund investors. Worse, this tax will be a disproportionately harder hit on older investors, who rely on mutual funds to provide regular income. Amongst fund companies, I would expect it to be a disproportionately harder hit on someone like UTI Mutual Fund, which has historically been stronger among this class of investors. For investors who understand the mechanics of fund dividend, it would be a better strategy now to derive regular income from redemptions rather than dividends. As long as they avoid short-term capital gains tax by not redeeming within one year of investing, they will find it better to simply redeem a regular income. Fund companies already offer a facility for this called systematic withdrawal plan (SWP).

Incidentally, the new tax code has added art and paintings to the list of assets which qualify as investments. These will now be available for a reduction of capital gains tax by becoming eligible for indexation of acquisition cost. Given the impossibility of nailing down an unambiguous valuation for all but a handful of art, I fully expect this to become a handy loophole for creating capital losses and gains by the art-owning classes. One can also look forward to a recurrence of the plague of art funds that were floated 2006 and 2007.

-- DhirendraKumar
-- Value Research

Change in DSC Registration Procedure

Change in procedure for registration of Digital Signature Certificate (effective from 17/08/2010) and FAQs

Direct Download Link :
https://docs.google.com/leaf?id=0B-0hzoMM8_XZZmUwMzIzYzQtODYzMS00OTU1LWI2ZTYtMzk3N2Q1OWM4ZGYx&sort=name&layout=list&num=50

Source Link :
https://incometaxindiaefiling.gov.in/portal/downloads10-11/itr/Procedure%20for%20Registration%20of%20Digital%20Signature%20and%20Upload%20of%20Income%20Tax%20Returns%20using%20Digital%20Signature.pdf

Selection of cases for Scrutiny Financial Year 2010-11

1. Selection of cases for scrutiny during the financial year 2010-11 will be done primarily through CASS this year. Manual Selection for scrutiny this year will be limited only to a few cases listed below

2. List of cases selected during each month in accordance with selection criteria mentioned below shall be submitted by the Assessing officers to their respective Range heads by the 15th of the following month and also displayed on the notice Board of their offices .

3. These guidelines are meant only for the use of officers of the Income Tax Department. These are not to be disclosed even if a request is made under Right to Information Act, In view of the decision of the Central Information Commission in the case of Shri Kamal Vs Director (ITAII),CBDT(order no CIC/AT/2007/00617 dated 21.02.2008)
a) Value of International transaction as defined in 92B exceeds 15 Crore.

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

c) Cases involving addition in an earlier assessment year on the issue of transfer pricing in excess of Rs 10 Lakh or more.

d) Assessment in survey cases for the financial year in which survey was carried out. This criteria will not apply if all of the following conditions are fulfilled:
i.There are no impounded books or documents.
ii.There is no retraction of disclosure, if any, made during the survey.
iii.Declared income, excluding any disclosure made during the survey, is not less than the declared income of the preceding year.

e) Assessment in search & Seizure cases to be made under section 158B, 158BC, 158BD, 153A,153C & 143(3) of the IT Act.

f) Assessment Initiated under section 147/148 of the IT Act.

g) Assessing officer may select any return for scrutiny after recording he reason and obtaining approval of the CCIT/DGIT. The cases under this category should be selected if, there are compelling reasons and the case is not selected through CASS. These cases should be watched by CCIT/CIT in respect of the quality of assessment.

(F.NO.225/93/2009/ITA.II)

Issue of Certificate of lower collection of income tax at source u/s 206C(9) - regarding

Central Board of Direct Taxes has issued an Instruction on Issue of Certificate of Lower Collection of Income Tax at Source u/s 206C(9) - regarding. The same is reproduced below for your ready reference.


INSTRUCTION NO. 04/2010,
Dated: July 21, 2010

Issue of Certificate of lower collection of income tax at source u/s 206C(9) - regarding.

I am directed to state that instruction No.8/2006 dated 13.10.2006 was issued by the Board making it mandatory to get prior administrative approval of Additional Commissioner of Income Tax/Joint Commissioner of Income Tax before issue of any certificate of lower deduction of tax at source u/s 197 of the Income Tax Act, 1961. Further, instruction No.7/2009 dated 23.12.2009 was issued communicating prior administrative approval of the Commissioner of Income Tax (TDS) in the cases where the cumulative amount of tax foregone by non-deduction/lesser rate of deduction of tax arising out of certificate u/s 197 during the financial year for a particular assessee exceeds Rupees Fifty lakh in major stations and Rupees Ten lakh for other stations.

2. For effective monitoring and control of tax foregone through certificate of lower tax collection at source (TCS), I am directed to communicate that for issue of certificate of lower collection for tax at source u/s 206C(9), prior administrative approval of Additional Commissioner of Income Tax/Joint Commissioner of Income Tax shall be obtained in each case. Further, prior administrative approval of Commissioner of Income Tax (TDS) shall be taken where cumulative amount of tax foregone by lesser rate of tax collection at source during the financial year for a particular buyer or licensee or lessee; as the case may be; exceeds Rupees Fifty lakh in Delhi, Mumbai Chennai, Kolkata, Bangaluru, Hyderabad, Ahmedabad and Pune Stations and Rupees Ten lakh for other stations. Once the Addl. CIT/JCIT or the CIT(TDS), as the case may be, gives administrative approval of the above, a copy of it has to be endorsed to the jurisdictional CIT also.

3. In relation to TCS matters of a buyer or licensee or lessee falling within the jurisdiction of Directorate of Income Tax (International Taxation), the powers indicated above shall be vested in the officers concerned i.e. Range Additional DIT/JDIT (International Taxation) or Director of Income Tax (International Taxation), as the case may be.

4. “Tax foregone” in case of a buyer or licensee or lessee; as the case may be; should ordinarily mean difference between taxes computed at the relevant rate of collection stipulated and the tax computed on the basis of rate at which the certificate u/s 206C(9) is sought to be issued.

5. The content of this instruction may be brought to the notice of all officers working in your charge for strict compliance.

6. Hindi version will follow.

F.No.275/23/2007-IT(B)

(Ajay Kumar)
Director (Budget)