CBDT removes Cyprus from list of Notified Jurisdictional Area with Retrospective effect from Nov 2013

In a big relief to investors and Indian companies, the Central Board of Direct Taxes (CBDT) yesterday clarified that, it has removed Cyprus from the list of ‘notified jurisdictional area’ with retrospective effect from November 1, 2013. “For removal of doubts, it is hereby clarified that Notification No. g6/2013 has been rescinded with effect from the date of issue of the said notification, thereby, removing Cyprus as a notified jurisdictional area with retrospective effect from 01.11.2013”, the Circular stated. The CBDT had classified the island nation as a notified jurisdictional area (NJA) by way of Notification 86/2013 on grounds that Cyprus was not providing information requested by tax authorities under the taxation treaty. Following the notification, all payments made to Cyprus attracted a 30 per cent withholding tax and Indian entities receiving money from there were required to disclose the source of funds. The said Notification No. 86/2013 was subsequently rescinded vide Notification No. 114 dated 14.12.2016 and Notification No. 119 dated 16.12.2016 with effect from the date of issue of the notification. In some cases a view has been taken by the Income-tax authorities that the rescission of Notification No. 86/2013 was not with retrospective effect from November 1, 2013, the CBDT circular also stated. Recently Finance Ministry has notified revised Agreement between India and Cyprus for the Avoidance of Double Taxation and the Prevention of Fiscal evasion (DTAA) with respect to taxes on income, along with its Protocol. The revised DTAA will enable source based taxation of capital gains on shares, except in respect of investments made prior to 1st April, 2017. In addition, the DTAA will also bring into effect updated provisions as per international standards and in accordance with the consistent position of India.

Linking Aadhaar with PAN

Linking Aadhaar with PAN.
As you are all aware linking of Aadhaar number with PAN is made mandatory for filing of Income Tax Returns now.
Many people are facing difficulty in this regard.As the name appearing on Aadhaar card did not match exactly as appearing on PAN card I also faced difficulty in linking. The best solution is to modify your name on the Aadhaar Crad.
The following procedure on my laptop and successfully changed the name on the Aadhaar card and linked the Aadhaar number and PAN successfully and without any difficulty.
You will be able to generate my eAadhar card.
Every thing was done from home , not visiting any Aadhaar centre. Please note that this is possible only if your mobile number is recorded on your Aadhaar card.
The Procedure/ Steps I followed are as under. You may also try.
1] Take a xerox copy of your PAN card on a full white sheet of paper.
2]Self attest it with your signature.
3]Write your name and Aadhaar number on the Xerox copy.
4]Scan the Xerox sheet.
5]Open the UIDAI website.
6]Enter Aadhaar Number.
7]Enter the OTP you receive n proceed.
8]Select the option change/update Aadhaar Details.
9] Change /modify your name as appearing on PAN.
10]Upload the scanned Xerox copy.
Normally within a day or two the change /modification is effected.
Once the change is effected you can easily link Aadhaar number and PAN.
A new card is issued .It may take a few more days.
If you are in a hurry you you can download eAadhar card .
If you visit UIDAI website only 3-4 steps are needed. Enter Aadhaar number,name as modified, pincode etc.
You get OTP. Enter the OTP. Then Download the eAadhaar.

[2017] 79 taxmann 459 (Ahmedabad - Trib.), Burt Hill Design (Pvt.) Ltd. vs. DDIT(International taxation)

[2017] 79 taxmann 459 (Ahmedabad - Trib.), Burt Hill Design (Pvt.) Ltd. vs. DDIT(International taxation)

IT/ILT : Where payment made by assessee-company in pursuance to secondment agreement with US-company consist of income which was chargeable, and had been charged, to tax in India under head 'income from salaries', assessee could not be said to have any tax withholding obligations under section 195

FACTS

• The assessee, engaged in the business of providing information technology enabled services, is subsidiary of Burt Hill Inc USA. During the relevant period, under a secondment agreement with the assessee, BH Inc had placed certain employees at the disposal, and control, of the assessee.

• The income tax authorities during the course of survey proceedings found that the assessee has made remittances to BH Inc, in respect of reimbursement of payroll costs, without any deductions on account of tax withholdings.

• It was explained by the assessee that these are reimbursements plain and simple, and that these payments did not involve any profit element taxable in the hands of BH Inc. It was also explained the payments were in the nature of salaries, and that the assessee had duly discharged his tax withholding obligations from these salaries to the extent the recipients were taxable in India. The details of tax payment by the seconded employees were also furnished.

• The Assessing Officer was of view that since employees were of BH Inc, the payment was infact in the nature of payment for services rendered by these employees. The Assessing Officer proceeded to hold that the work done by these employees of BH Inc has resulted in creation of a service PE and that the entire amount so paid to BH Inc, being attributable to the PE, is taxable on gross basis, in the absence of details of expenditure of pe, @ 40%. Accordingly, demands under section 201 r.w.s. 195 were raised.

HELD

• the payment made to Burt Hill Co Inc USA consists of income which is chargeable, and has been charged, to tax in India under the head 'income from salaries'. Whether the seconded employees continue to be in employment of the foreign entities or not is wholly irrelevant for this purpose. What is relevant is that the income embedded in the payments in question is taxable in India under the head 'Salaries', and if that be so, there are no tax withholding obligations under section 195. The income embedded in the impugned payments being in the nature of income chargeable to tax under the head 'income from salaries', the assessee cannot be said to have any tax withholding obligations under section 195 and therefore, impugned tax withholding demands, under section 201 r.w.s 195, are wholly devoid of any legally sustainable merits.

Leave Travel Concession / Leave Fare Concession provided to Nationalized Bank Employees for Travelling Abroad is subject to TDS: ITAT Bengaluru

April 13, 2017 | By : by : Tax Scan Team In Syndicate Bank v. ACIT (TDS), the Income Tax Appellate Tribunal (ITAT), Bengaluru bench held that the Leave Travel Concession (LTC) and Leave Fare Concession provided to the employees of nationalized banks are not covered under section 10(5) of the Income Tax Act in cases where foreign destination is involved and the Bank should deduct TDS on reimbursement of expenditure incurred by the bank. The assessee, a nationalized Bank provided Leave Travel Concession (LTC) and Leave Fare Concession to its employees. On verification of the TDS compliance by the assessee-bank, the assessing officer found that the assessee had not deducted tax from source for the amount paid to employees for travel outside India and therefore, treated the assessee-bank, an assessee-in-default u/s 201(1) r/w 201(1A). the Officer was of the view that the assessee-Bank had erroneously allowed LFC exemption under section 10(5) of the Income Tax Act to its employees since the travels also included a leg outside India and travel by long circuitous route which was not in accordance with the provisions of Section 10(5) of the Income Tax Act read with Rule 2B of Income Tax Rules. The first appellate authority sustained the impugned order and found that the assessee intentionally not paid TDS on reimbursement incurred on LTC/LFC. On appeal, the assessee contended that on perusal of section 10(5) r/w Rule 2B, it is clear that the exemption is not limited to travel only within India and is applicable to a case involving foreign leg in the tour and therefore, there is nothing wrong in granting exemption under section 10(5) to its employees at the time of deduction of tax at source. Rebutting the above arguments, the Revenue contended that as per section 10(5), reimbursement of travel concession or assistance to an employee was exempt which was incurred for travel of the individual employee or his family members to any place in India. It is the contention of the Department that nowhere in this clause, it has been stated that even if the employee travels to foreign countries, exemption would be limited to the expenditure incurred to the last destination in India. Rejecting the appeal filed by the assessee-Bank, the division bench said that the AO had rightly treated the assessee-bank as an assessee-in-default.“In the present case, the employees of the assessee-Bank have travelled outside India and raised claims of their expenditure incurred and there is no dispute that the assessee-Bank may not be aware with the plan of travel of its employees initially, however, at the time of settlement of LTC/LFC bills, the employees should have placed comprehensive details before the assessee-Bank as to where they have travelled/visited and raised the claims, that means to say, the assessee-Bank was well aware of the fact that its employees have travelled in foreign countries too by availing LTC/LFC for which they were not entitled for exemption u/s. 10(5) of the Act. Such being the scenario, the assessee-Bank cannot now plead that it was under the bona-fide belief that the amounts claimed were exempt u/s. 10(5) of the Income Tax Act.” Recently, the Jaipur bench of the ITAT, while hearing an appeal filed by the State Bank of India, had delivered a similar view. In that case, the bench said that Rule 2B of the Income Tax Rules is very clear in intent that that the said provisions are applicable in connection with proceeding on leave to any place in India and the appellant has in fact bent the interpretation of the said provisions in such a way which goes totally against the intent and spirit of these provisions.

Unique Pin code 560500

A *unique PINCODE 560500* has been allotted to Centralized Processing Centre (CPC), Income Tax Department located in Bengaluru by the Department of Post. Taxpayers can henceforth address their mails to “Centralized Processing Center, Income Tax Department, Bengaluru 560500” for the purpose of submission of ITR-V forms and other documents which require physical mode of transmission.

www.incometaxindia.gov.in

Jurisdiction of Re-Assessment Proceedings can be Questioned at any Stage

In Teena Gupta v. CIT, a division bench of the Allahabad High Court ruled that the jurisdiction of re-assessment proceedings under the Income Tax Act can always be raised at any stage. A Notice dated 11.05.2000 was issued against the assessee without specifying the assessment year.Following the same, a notice under Section 142(1) of the Act dt. 13.6.2000 was issued in respect of assessment proceedings for the assessment year 1997-98. In the meanwhile, the order confirming the notice dt 11.05.2000 was passed ex-parte against the assessee. The assessee questioned the validity of the notice on ground of non-disclosure of the assessment year. On second appeal, the Tribunal rejected the claim of the assessee by holding that the assessee has not raised this ground during the pre-assessment stage.  Further, relying on the pre-assessment notice dated 13.06.2000, the Tribunal upheld the validity of the re-assessment.Aggrieved by the order of the ITAT, the assessee approached the High Court for relief. A bench comprising of Justices Bahrati Sapru and Saumitra Dayal singh allowed the appeal and said that it is settled law that the reassessment notice is a jurisdictional notice and it is equally settled law that ground of lack of jurisdiction may be raised at a subsequent stage as well. “In the instant case the reassessment order was admittedly an exparte order and, therefore, there was no occasion for the assessee to have conceded to the reassessment proceedings.” Relying on the decision in Smt Prabha Rani Agarwal Vs. Income Tax Officer and another, the bench held that the issue of validity of reassessment proceedings is a jurisdictional issue which goes to the root of the matter. “The Tribunal ought to have examined the ground no.3 raised in the assessee’s appeal on its merit without being prejudiced by the facts that the reassessment order has been passed on the ex-parte basis in which the proceedings the assessee has not objected to the initiation of the reassessment.”

Income Tax Dept asks Companies to Furnish Reports on issuing Bonds, Debentures, Shares etc by 31st May

Recently, in an advisory issued to Companies, the Income Tax Department required them to furnish SFT in respect of certain specified transactions. The Companies/ Institutions issuing bonds or debentures, on receipt from any person for acquiring anybody or debentures for Rs. Ten lakh or more shall give report to the Department. In case of a Company issuing shares, sale of shares worth ten lakh or more must be reported. This is applicable to share application money also. In case of a listed Company purchasing its own shares under section 68 of the Companies Act are directed to furnish reports on buy back of shares from any person for an amount of Rs ten lakh or more. Respective heads of the Companies are required to furnish the statement online in respect of the above transactions in Form 61A on or before 31st AY 2017. It is said that “the transactions listed above are in addition to other transactions specified in Rule 114E which may be reportable by eligible companies.”