. . Income-tax – Page 4 – Tax Questions and Answers

Category: Income-tax

  • Tax on distributed income to share holders- Buy back of shares

    Section 115QA(1) starts with non-obstante clause. Therefore for buyback of shares, section 50CA or section 56(2)(x) will not apply. Section 115QA provides for levy of tax @ 20% on the difference between amount paid by the company for purchase of shares from its shareholders and the amount paid for subscription of the shares. The tax would be payable by the company on the distributed income. In the hands of shareholders the same shall be exempt under section 10(34A) of the Act, Rule 40BB of the Income tax Rules, 1962 provides for determination of fair market value of the shares of unlised company. So, the company will have to pay tax on the fair market value of shares as determined under the said rule.

  • Book profit -Agricultural income of Company

    From the fact, it is apparent that querist is a company and therefore no Alternate Minimum Tax (AMT) would be applicable. For the companies Minimum Alternate Tax (MAT) would be applicable u/s. 115JB of the Act. So while calculating “book profit” under Explanation 1 to section 115JB(1), the agricultural income falling u/s. 10(1) to be excluded as per Explanation (ii)

  • Book profit – AO has no jurisdiction to change book profit

    The assessee has changed method depreciation from SLM to WDV and shortfall (deficiency) is charged to profit and loss account as per accounting standard. Thus prepared accounts is per schedule VI of the Companies Act, 1956 (i.e. schedule III of the Companies Act, 2013) and certified by the authorities under the Companies Act. Therefore the Assessing Officer has no jurisdiction to go behind the “book profit” shown in P & L account except to the extent of prescribed adjustment mentioned under section 115JB of the Income tax Act, 1961. As per the Supreme Court in Apollo Tyres Ltd. v. CIT [255 ITR 273], while interpreting similar provision under section 115J of the Act.

  • Book profit – Deemed income – Tax credit – Availment of MAT credit u/s. 115JAA.

    CIT v. Tulsyan NEC Ltd. [330 ITR 227], the Supreme Court held that the fact that the amount of credit to be allowed or to be set off is not frozen and is ambulatory does not take away / destroy the right of the assessee to the amount of tax credit.

  • Tax on income referred in section 68, or section 69 or section 69B or section 69C or section 69D-Applicability of Section 115BBE

  • Tax on income referred in section 68, or section 69 or section 69B or section 69C or section 69D-Applicability of S. 115BBE

    It would mean such income would be taxed on standalone basis, so as to be taxable even in the hands of the person, whose aggregate income including such income falling under the provisions falls below taxable limit. Therefore, irrespective of the “head” under which it is assessable such income would be taxed at flat rate of 60%.

  • Housing projects – Deductions.

    Deduction in respect of profits and gains from housing projects under section 80-IBA of the Income-tax Act, 1961 has been inserted by the Finance Act, 2016, with effective from April 1, 2017 i.e. from assessment year 2017-18.

  • Life insurance premium -Taxability of LIC Policy

    Section 80C provides that an assessee, being an Individual or HUF shall be allowed a deduction from gross total income of an amount not exceeding Rs. 1,50,000/- in respect of amount paid or deposited in the previous year in the specified savings listed in section 80C(2) of the Act. One of amount for which a policy holder is entitled for deduction is amount deposited to effect or to keep in force an insurance on the life of the policy holder. However, as per section 80C(3A) only premium paid on insurance policy which is not in excess of 10% of the actual capital sum assured, is allowable for deduction.

  • Unexplained investments -Excess stock found – Whether taxable

    As per the Bombay High Court in Ramanlal Kacharulal Tejmal [146 ITR 368] excess stock found represents investment of the assessee in property and therefore same can be assessed under section 69 of the Act.

  • Cash credits – Share application money – Violation of principles of Natural Justice

    Assessment is not valid, as it violates the principles of natural justice. The Supreme Court in R. B. Shreeram Durga Prasad v. Settlement Commission [176 ITR 169] has held that the order made in violation of principles of natural justice is void and nullify.