| QUERY: | As per Schedule II of the Companies Act, 2013 the useful life of Plant and Machinery and in generation of power is 40 years, but as per the company, useful life is much less. What the company should do? |
| ANSWER: | Click here to read the full answer of the expert |
| EXPERT: | CA. H. N. Motiwalla |
| SECTION(S): | Schedule II of the Companies Act |
| GENRE: | Company Law |
| CATCH WORDS: | depreciation, plant and machinery, useful life |
| QUERY: | Whether it is necessary to provide (Corporate Social Responsibility) CSR expenses in the books of account on accrual basis, considering AS–29 “Provisions, Contingent Liabilities and Contingent Assets”? |
| ANSWER: | Click here to read the full answer of the expert |
| EXPERT: | CA. H. N. Motiwalla |
| SECTION(S): | Section 128 of the Companies Act |
| GENRE: | Company Law |
| CATCH WORDS: | Accrual, Corporate Social Responsibility, Disclosure of Accounting Policies |
Section 128 of the Companies Act, 2013 mandates every company to maintain its books of account on accrual basis. As per AS-1 “Disclosure of Accounting Policies” in accrual basis cost and revenue are accrued that is recognised as they are incurred or earned and recorded in the financial statements of the periods to which they relate
| QUERY: | (a) As we are charitable organisation / trust involved in education related activities. We are paying service tax on the fees collected from students. However, no Cenvat on input services is available while making payment of service tax as the head of organisation is of strong opinion that it will invite unnecessary audit queries and attention from the service tax department. The Cenvat credit for F.Y. 2012-13 works out to around Rs. 20,00,000/-. Section 13 of the Income- tax Act, 1961 provides for protection of property of the Trust and hence not claiming Cenvat of Rs. 20,00,000/- is a violation of the section? (b) In charitable organisation, the trustees have given full authority to Director General and consequently Director General is also very vigilant in sanctioning any payments. Out of abandon caution and moral, ethical responsibility, Director General would like that payment made to him or his relative should be approved by the trustees. Whether his contention is right? (c) A charitable trust involved in medical related facilities have received part income tax refund from department and that also without interest. The head of the organization is not in favour of writing a letter asking for part refund as well as interest on refund fearing any harassment from Income-tax Department. Whether such stand would invite section 13 of the Income tax Act, 1961? |
| ANSWER: | Click here to read the full answer of the expert |
| EXPERT: | CA. H. N. Motiwalla |
| SECTION(S): | 11, 13, 2(15) |
| GENRE: | Taxation (Domestic) |
| CATCH WORDS: | charitable purpose, withdrawal of exemption |
In view of the above, if CENVAT credit of Rs. 20/- lakhs or part of the income tax refund or interest on the said refund not claimed by the Trust, the trustee/s would be liable under section 36A of the Bombay Public Trust Act, 1950 for not protecting the property of the trust. However, the trust can not lose the exemption under section 3 of the Act as the amount is receivable from the Government
| QUERY: | Clause 3 of Finance Bill 2015 proposes amendment to section 2(15) of Income-tax Act, 1961 wherein certain proposals are being incorporated to restrict the activities of Charitable Trusts rendering any service in relation to any trade, commerce or business for a cess or fee or any other consideration. What is the impact of such proposal? |
| ANSWER: | Click here to read the full answer of the expert |
| EXPERT: | CA. H. N. Motiwalla |
| SECTION(S): | 2(15) |
| GENRE: | Taxation (Domestic) |
| CATCH WORDS: | charitable purpose |
The advancement of any other object of general public utility shall not be a charitable purpose, if it involves the carrying on any activity in the nature of trade, commerce or business, or any activity of rendering any service in relation to any trade, commerce or business, for a cess or fee or any other consideration, irrespective of the nature of use or application, or retention, of the income from such activity
| QUERY: | The assessee is a partnership firm carrying on medical profession. At present it is carrying on Gynic Branch only for the last several years. It decided to set up 200 bedded multi-specialty hospital and accordingly started the project in May, 2012 under the same partnership firm as a separate unit in order to avail under section 35AD @ 150% of eligible capital expenditure: (a) Whether this unit can claim deduction under this section though the place of business and the nature of services will be different? No old machinery etc. will be transferred to new building/unit. (b) Whether the income of both the units owned by the firm will be consolidated for the purpose of applicability of section 115JC or separate treatment? (c) Can there be any difficulty to claim deduction under section 35AD in case if old unit (Gynic) is also shifted to new Hospital? The new unit may start operation by April-May, 2015. |
| ANSWER: | Click here to read the full answer of the expert |
| EXPERT: | CA. H. N. Motiwalla |
| SECTION(S): | 115JC, 35AD |
| GENRE: | Taxation (Domestic) |
| CATCH WORDS: | deduction u/s 35AD, new unit, partnership firm |
Yes, the partnership firm can claim deduction under section 35AD @ 150% on capital expenditure incurred for setting up and operating hospital anywhere in India with more than 100 beds for patients
| QUERY: | What is the Law laid down by Hon. Supreme Court in respect of impartible estate of HUF property? |
| ANSWER: | Click here to read the full answer of the expert |
| EXPERT: | CA. H. N. Motiwalla |
| SECTION(S): | Section 6 of the Hindu Succession Act 1956 |
| GENRE: | Hindu Law |
| CATCH WORDS: | Hindu Law, HUF, impartible estate |
an estate, which is impartible by custom, cannot be said to be the separate or exclusive property of the holder of the estate. If the holder has got the estate as an ancestral estate and he is succeeded to it by primogeniture, it will be part of the joint estate of the undivided Hindu family
| QUERY: | ‘P’ had to sold her property in order to finance her daughter’s medical expenses. The agreement for sale was entered for Rs. 50/- lakh. She received only Rs. 35/- lakh due to dispute with the buyer. No possession of the property was given. She does not have money to invest in order to claim exemption u/s. 54. The AO passed the order levying tax on Rs. 50/- lakh. Whether AO is right? |
| ANSWER: | Click here to read the full answer of the expert |
| EXPERT: | CA. H. N. Motiwalla |
| SECTION(S): | 2(47), 45, 54 |
| GENRE: | Taxation (Domestic) |
| CATCH WORDS: | capital gains, transfer |
In this case transfer is not complete, because of property has not been given and therefore there is no question of investing in another house to claim exemption under section 54
| QUERY: | ‘A’ has purchased a plot in March, 2010 for Rs. 10/- lakh and spent Rs. 5/- lakh for construction during F.Y. 2011-12, and Rs. 5/- lakh during the F. Y. 2012-13. He sold the entire house in December, 2014 for Rs. 50 /- lakh Whether it is long-term or short-term gain? |
| ANSWER: | Click here to read the full answer of the expert |
| EXPERT: | CA. H. N. Motiwalla |
| SECTION(S): | 2(29A), 2(42A) |
| GENRE: | Taxation (Domestic) |
| CATCH WORDS: | capital gains, long-term capital gains, short-term capital gains |
Section 2(29A) defines “Long term capital asset” which means a capital asset which is not a short term capital asset. Section 2 (42A) defines “Short term capital asset” which means a capital asset held by an assessee for not more than thirty six months, other than listed shares. In that case, a period of not more than the twelve months to be considered for short term capital asset
| QUERY: | The assessee sold residential house and planned to construct a new house for claiming exemption u/s. 54. The assessee expired in April, 2014. Can legal heir who has to file Return of Income can claim benefit u/s. 54 of the Act, and how? |
| ANSWER: | Click here to read the full answer of the expert |
| EXPERT: | CA. H. N. Motiwalla |
| SECTION(S): | 54 |
| GENRE: | Taxation (Domestic) |
| CATCH WORDS: | capital gains, exemption, residential house |
Thus, it is clear from the above judgments that legal heir steps in the shoes of deceased and entitled for deduction under section 54 of the Act.
| QUERY: | A demand has been raised on ‘X’ for the short credit in 26AS in respect of TDS deducted by the deductor but not paid to the Government. Whether ‘X’ is liable to pay the demand. |
| ANSWER: | Click here to read the full answer of the expert |
| EXPERT: | CA. H. N. Motiwalla |
| SECTION(S): | 205, 26AS |
| GENRE: | Taxation (Domestic) |
| CATCH WORDS: | Recovery, TDS Default |
Complete machinery is provided under the Act for recovery of TDS from the person who has deducted such tax at source and the Revenue was barred from recovery of the amount from the person from whose income tax has been deducted at source