Opinion Of Eminent Legal Luminaries On Controversial Issues

When Capital Gain Arises On Transfer Of Tenancy Right?

QUERY: Which of the following is the date of transfer of tenancy rights –

(a) date of agreement entered into by the assessee with landlord whereby he agrees to surrender tenancy in lieu of new flat to be allotted to him on ownership (for which tenant will pay construction cost to landlord @ Rs. 1,500 per sq. ft);

(b) date on which the tenant moves into an alternative accommodation so as to enable the landlord to demolish the building and construct new building;

(c) date on which the new building is constructed and occupancy certificate obtained;

(d) date on which the tenant pays the construction cost to the landlord. The agreement provides that if the tenant does not pay construction cost to the landlord within 30 days of being called upon to pay so, he shall continue to be the tenant in the new premises and shall pay rent at a certain agreed rate which is nominally more than the rent which was being paid by the tenant. Also, what is full consideration due to the assessee on transfer of tenancy. The tenant is not eligible to claim exemption u/s. 54F since he already owns 2 houses.
ANSWER: Click here to read the full answer of the expert
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As tenancy rights are surrendered only when tenant pays for construction cost to landlord. For the reason that the agreement provides that if the tenant does not pay construction cost to the landlord within 30 days of

Posted in Income-tax

Whether U/s. 44AD The Limit Is Qua Assessee Or Qua Business?

QUERY: For the purpose of section 44AD, is the limit to be decided qua assessee or qua business?
ANSWER: Click here to read the full answer of the expert
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Qua both. The scheme is applicable to “an eligible assessee engaged in eligible business” The salient features of the new presumptive taxation scheme are as under:

a) The scheme is applicable to individuals, HUFs and partnership firms excluding limited liability partnership firms. It is also not be applicable to an assessee who is availing deduction under sections 10A,

Posted in Income-tax

Under Which Form ROI Be Filed In Case Of Presumptive Taxation?

QUERY: ‘A’ runs TV repair shop. His gross receipt are Rs. 1,80,000/- and net income is Rs. 1,35,000/- more than 8% of the gross receipts. So section 44AD of the Act is applicable to him. Can he file ITR 4-S, for the assessment year 2011-12?
ANSWER: Click here to read the full answer of the expert
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Yes, he can file ITR 4-S, as section 44AD is applicable to him. Tax audit requirement would not apply in respect of business covered

Posted in Income-tax

How To Calculate Turnover For S. 44AD?

QUERY: ‘X’ is engaged in business of sale of liquor. His turnover is 40 lakhs during the financial year 2010-11. The turnover is inclusive of sales tax. Now for the purpose of section 44AD of the Income-tax Act, 1961 whether total turnover or gross receipt will include sales tax? Will it make any difference, if sales tax is credited separately.
ANSWER: Click here to read the full answer of the expert
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Section 44AD, would be applicable for the assessment year 2011-12 if total turnover or gross receipt of ‘X’ does not exceed Rs. 60/- lakhs. For sake of consistency, ‘X’ should follow the same accounting policy from year to year.

Posted in Company Law, Income-tax

Whether Advocate Is Liable For TDS On Interest Payment?

QUERY: Mr. X a practicing Advocate who is subject to Tax Audit u/s. 44AB for the year ending March 31, 2008 having the following transactions during the financial year 2009-10

1. Constructed a house for self occupation & he is making payment to contractor Rs. 10,00,000/-.

2. Making payment to Architect for designing his house Rs. 1,00,000/-.

3. Borrowed funds from friends Rs. 10,00,000/- on which he wants to pay the interest.

Examine the applicability of TDS.
ANSWER: Click here to read the full answer of the expert
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1. Section 194(C) provides that no individual or HUF shall be liable to TDS on the sum credited or paid to the account of the contractor where such sum is credited or paid exclusively for personal purpose of such individual or any member of HUF.

Posted in Income-tax

Whether Radiology And Pathology Operated By Doctor Is Business Or Profession?

QUERY: Radiology & pathological laboratory run by a physician (M.D./ M.B.B.S. not specialized in radiology or Bio-chemistry) will be considered as profession or business for limits of tax audit?
ANSWER: Click here to read the full answer of the expert
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S. 2(13) of the Income-tax Act, 1961 defines ‘business’ which includes any trade, commerce or manufacture or any adventure or concern in the nature of trade, commerce or manufacture. The word ‘business’ is one of wide import and it means activity carried on continuously and systematically by a person by the application of his labour or skill with a view to earning an income.

Posted in Income-tax

What Is The Limit Of Turnover For Stamp Vendor U/s. 44AB?

QUERY: The Government of Maharashtra have appointed authorised Stamp Vendor to sell stamp papers and other stamps at fixed rate of commission and he purchases stamp papers from stamp office after deducting his commission amount from value of Stamp paper. The total stamp paper purchased during the year exceeds Rs. 60 lakhs in F.Y. 2011-12 but commission amount is approximately Rs. 2 lakhs. Whether provision of section 44AB is attracted?
ANSWER: Click here to read the full answer of the expert
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Section 44AB reads as “every person carrying on business shall, if his total sales, turnover or gross receipts, as the case may be, in business exceed or exceeds sixty lakh rupees in any previous year”.

Thus, the section refers only to credit side of Profit & Loss account

Posted in Income-tax

How TO Calculate Limit Of Turnover In A Person Is Carrying Out Business And Profession?

QUERY: Mr. P is Professional Engineer and has following source of income:

• Share of profit from engineering partnership firm Rs. 15,00,000/-

• Remuneration from the said firm Rs. 9,00,000/-

• Share of profit from proprietary concern Rs. 13,00,000/-

Whether Mr. P is required to get his accounts audited u/s. 44AB?
ANSWER: Click here to read the full answer of the expert
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No, as Mr. P’s gross receipts from the profession are less than Rs. 25/- lakhs. As per Guidance Note on Tax Audit under section 44AB of the Income-tax Act, 1961 issued by

Posted in Income-tax

How To Calculate Limit Of Turnover In Case Of F & O Transactions Or Speculative Transactions?

QUERY: A is having salary of about Rs. 30 lakhs. He has also done F & O transactions in shares. As per guidance note on tax audit of ICAI total of favourable and unfavourable differences shall be taken as turnover in F & O transaction. For A.Y. 2013-14 favourable difference is 80 lakhs and unfavourable difference is Rs. 10 lakhs, hence, A has paid income tax on Rs. 70 lakhs. Whether A is required to maintain books of account and get tax audit or can A claim that he does not maintain books of account, and offer business income @ 8% of Rs. 70 lakhs as per section 44AD?
ANSWER: Click here to read the full answer of the expert
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The Guidance Note on Tax Audit under section 44AB of the Income-tax Act, 1961 states that in case of Derivatives, Futurer and options the difference between total favourable and unfavorable is to be considered as turnover for the purpose of deciding the limit under section 44AB of the Act.

Posted in Income-tax

Which Value To Be Taken For Transfer Of Assets Other Than Capital Assets U/s. 43CA – Date of Agreement – Date Of Registration?

QUERY: S. 43CA : Date of Agreement - Transfer of assets other than capital assets

(a) Mr. A purchased flat in March 2008 (Consideration Value as agreed being Rs. 95 lakhs). On receipt of token amount by cheque, the Developer issued allotment letter to Mr. A in March 2008 i.e. before the provision of sec. 43CA were introduced. Allotment letter clearly specifies the consideration value which is same as the Agreement value, the milestones on the basis of which installments are due. The same is signed by the Developer as also countersigned by the customer. The consideration value then was greater than the Ready Reckoner Value (being 90 lakhs as on March, 2008).

(b) However the Agreement for the same was executed in April 2013 and registered in May, 2013 i.e. after the introduction of section 43CA, which is applicable from A.Y. 2014-15. The agreement value was less than the Ready Reckoner Value (Reckoner value being 125 lakhs as on April/May, 2013)

(c) All the payments throughout the transaction of sale of flat, have been received by cheque.

Can the allotment letter issued as on March 2008 be considered as the date of agreement fixing the value of consideration, for the purpose of Clause (3) of section 43CA?
ANSWER: Click here to read the full answer of the expert
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Yes, sub-section (3) of section 43CA reads as under:

“Where the date of agreement fixing the value of consideration for transfer of the asset and the date of registration of such transfer of asset are not the same, the value referred to in sub-section (1) may be taken

Posted in Income-tax
Credit: Several of the queries and answers are reproduced with permission from the AIFTP Journal. We thank AIFTP for generously allowing us to host their research material.
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