||In case of Income from Profession Cash system is followed. However income from Other Sources (interest on FD etc.) is declared up to 31-3-2016 (A.Y. 2016-17) following mercantile system.
Assessee desires to follow cash system since 1-4-2016 (A.Y. 2017-18) even in respect of Income from Other Sources.
Assessee is liable to get his accounts audited u/s. 44AB r.w.s. 44ADA of the Act.
It appears that the change in method of accounting is necessitated for bringing uniformity in respect of two heads of Income and as such must be held to be bona fide.
In Form No. 3CD what type of disclosure should be made ? In A. Y. 2017-18 if no interest income is actually received. Income to be offered to tax would be ` NIL. Is it correct?
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||CA. H. N. Motiwalla
||145, 44AB r.w.s. 44ADA
||Method of Accounting vis-a-vis ICDS – 2016
The Finance Act, 1995 amended section 145 of the Income-tax Act, 1961 with effect from assessment year 1997-98 to provide that income chargeable under the heads “Profits and Gains of Business or Profession” or “Income from Other Sources” must be computed in accordance with either cash or mercantile system of accounting regularly employed by the assessee. The hybrid system of accounting viz mixture of cash and mercantile is not permitted from assessment year 1997-98 and own wards. However, assessee may adopt mercantile system of accounting for business and cash system of accounting for income from other sources.
You should ask authority under which law or rule or circular it is confidential, when you are seeking details about your own assessment records.
CIT v. Bhavani Shankar Vyas [311 ITR 8] the Uttarakhand High Court held that, section 142A was inserted in the Income-tax Act, 1961 by the Finance Act of 2004, with retrospective effect from November 15, 1972. Under section 142A of the Act, full power has been given to the Assessing Officer to call for a report from Valuation Officer. A perusal of section 144 read with sections 145, 142A and 131(1)(d) make it clear that it is not mandatory for the Assessing Officer to reject the books of account first before making reference under section 131(1)(d) of the Act or calling for a report of the valuer under section 142A
If a charitable trust give donation to a hospital for a particular patient, then, the hospital would issue receipt for the said amount with its PANo.. In such case, it is not necessary for the trust to produce a copy of the PAN card or Aadhaar card of the patient.
From the facts it is clear that purchaser has deducted tax on PAN of Individual and paid to the Government. Therefore, seller should request the purchaser to revise his TDS return by quoting correct PAN of HUF. So in Form 26AS the TDS amount would reflect in the name of HUF.
The Supreme Court in GE India Technology Centre Pvt. Ltd. [327 ITR 456] has held as under:
“The most important expression in section 195(1) of the Income-tax Act, 1961 dealing with deduction of tax at source consists of the words “chargeable under the provisions of the Act”. A person paying interest on any other sum to a non-resident is not liable to deduct tax if such sum is not chargeable to tax under the Act. Section 195 contemplates not merely amounts, the whole of which are pure income payments; it also covers composite payments which have an element of income imbedded or incorporated in them. The obligation to deduct tax at source is, however, limited to appropriate proportion of income chargeable under the Act forming part of the gross sum of money payable to the non-resident. It is for this reason that the CBDT has clarified in Circular No. 728 dated October 31,1995, that the tax deductor can take into consideration the effect of the DTAA in respect of payments of royalties and technical fees while deducting tax at source.
The expression “chargeable under the provisions of the Act” in section 195(1) shows that the remittance has got to be a trading receipt, the whole or part of which is liable to tax in India. If tax is not so assessable, there is no question of tax at source being deducted”.
Thus, it is clear that if income is not chargeable to tax in India in the hands of payee, then, no tax is required to be deducted. Therefore, payee need not obtain PAN under section 206AA of the Act.
The aforesaid view gets support from the judgment of Karnataka High Court in Smt. A. Kowsalya Bai & Others [346 ITR 156]. Wherein, it has been held that it is not necessary for such persons whose income is below the taxable limit to obtain permanent account number. Section 139A and section 206AA are made inapplicable to such persons.
ITR, details of all bank accounts held in India at any time during the previous year (excluding dormant accounts) are to be given, wherein details in respect of cash deposited during November 9, 2016 to December 31, 2016 of aggregate cash deposits during the period Rs. 2/- lakh or more is required to be given.
Any non-resident having income chargeable to tax claiming refund and not having his bank account in India may at his option furnish the details of one foreign bank account, so that, the Department may credit his refund in that account. Therefore, column of 14(c) in Form No. 2 provides that “non-residents, who are claiming income tax refund and not having bank account in India may, at their option furnish the details of one foreign bank account”.
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)