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    Taxing Question Simple Answer
    Taxing Question Simple Answer
    Taxing Question Simple Answer
    Ebook148 pages2 hours

    Taxing Question Simple Answer

    By Prashant Thakur

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    About this ebook

    Taxing Question , Simple Answer -Volume -1 is devoted to chartered accountants , lawyers , tax officers and tax practitioners to provide answers to most complex questions and difficult to find answers.

    The selected 25 tax questions are not easy to find answers and nothing is clear in the Income Tax Act . Supreme Court , High Courts have come to the rescue of everyone to provide answers.Following topics are dealt in the book:
    Section 6: Should Visit Days be Excluded For Determination of Residential Status if NRI Permanently Settles in India?
    Section 10(17):Are All Awards Given By Central Government Exempt From Income Tax?
    Section 11:Are All Charitable Trusts Prohibited from Carrying Business Activity?
    Section 15:Is Salary of NRI From Employers Abroad But Received in India in NRE A/c taxable?
    Section 15 :When Is Provident Fund Savings Taxable?
    Section 22: Under Which Head The Rental Income From Leasehold Property Taxed?
    Section 32: Can You Claim Depreciation Without Being Owner of Asset?
    Section 45: Whether Unutilized Amount In Capital Gains Account Scheme Received By Legal Heir Taxable?
    Section 45: Which Date-Booking or Possession or Registration -Is Important For Capital Gains Tax?
    Section 50: Can Exemption 54EC or 54F be claimed on Sale of Depreciable Asset?
    Section 54: Can One Get Exemption U/s 54F Even If Builder Does Not Complete House Within Three Years?
    Section 54: Is exemption of capital gains u/s 54 allowed even when new residential property is purchased in foreign country!
    Section 56 : Can a Private Limited Company Become Public Substantially Interested Company Without any IPO?
    Section 70: Can Short Term Capital Loss On Shares Taxable U/s 111A Be Adjusted With Short Term Loss On Land?
    Section 80: Can You Claim Carry Forward of Loss Despite Late Filing of Return?
    Section 127:Can A.O Transfer a Case to Another A.O Without any Transfer Order by CIT ?
    Section 139(5): Can Revised Return u/s. 139(5) be Filed Even During Scrutiny Proceedings?
    Section 154: Can A.O Pass Rectification Order u/s 154 Even After Time Limit?
    Section 148: When is Notice u/s 148 Considered Issued-at the Time of Signing by A.O or Entering in Issue Register by Clerk or Handing Over Notice to Postal Agent?
    Section 153A: Is issue of notice u./s 143(2) mandatory in case of assessment u/s 153A?
    Section 161:Can Private Trust Still Be Used For Tax Planning?
    Section 171: Is Order by an A.O Compulsory For Partition of HUF?
    Section 194A : Whether Hire Purchase EMI Payments liable to TDS u/s 194A?
    Section 263: Limitation Date for Invoking Sec. 263 is Counted from Assessment Order Date or Reassessment Order Date?
    Section 273A: Can Higher Authority Drop Penalty Proceeding Pending Before the A.O?

    LanguageEnglish
    PublisherPrashant Thakur
    Release dateOct 4, 2013
    ISBN9781301766383
    Taxing Question Simple Answer
    Author

    Prashant Thakur

    Prashant Kumar Thakur was born in Sitamadhi district of Bihar and was brought up in Dhanbad from where he completed graduation from P.K.Roy Memorial College.His ancestral place is Village Hansopur in Samastipur district.He started his career as a reporter with a regional English newspaper The New Republic , but quit the job after two years. In 1993, he joined Income Tax Department and took voluntary retirement from the department effective from 01/10/2013.He is visiting faculty to National Direct Tax Academy where he is being invited since 2008. The recent visit was on 8th to 10th July 2013 for taking up sessions on Taxation of Merger & De-merger cases and other topics for batch of newly promoted Assistant Commissioners of Income Tax.He has also been invited for taking up sessions in Direct Tax Regional Training Institute situated at Kolkata,Chennai, Banglore,Lucknow and Pune.He is passionate about tax laws , writes books ,desires to blog on it,fascinated about internet and mobile technology .He is living in Kolkata , India with his parents , his better half -Alka and two lovely kids-Nishant & Sonali.

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      Book preview

      Taxing Question Simple Answer - Prashant Thakur

      Taxing Question Simple Answer

      Vol-I

      by

      Prashant Kumar Thakur

      Smashwords Edition

      * * * * *

      Published by Prashant Kumar Thakur at Smashwords

      Taxing Question Simple Answer-Vol-1

      Copyright 2013 by Prashant Kumar Thakur

      Dedication

      There are times when one regrets of not meeting a person earlier in his life. I felt the same way about Sri Biswanath Jha, IRS. This book is dedicated to him.

      Table of Contents

      Section 6: Should Visit Days be Excluded For Determination of Residential Status if NRI Permanently Settles in India?

      Section 10(17):Are All Awards Given By Central Government Exempt From Income Tax?

      Section 11:Are All Charitable Trusts Prohibited from Carrying Business Activity?

      Section 15:Is Salary of NRI From Employers Abroad But Received in India in NRE A/c taxable?

      Section 15 :When Is Provident Fund Savings Taxable?

      Section 22: Under Which Head The Rental Income From Leasehold Property Taxed?

      Section 32: Can You Claim Depreciation Without Being Owner of Asset?

      Section 45: Whether Unutilized Amount In Capital Gains Account Scheme Received By Legal Heir Taxable?

      Section 45: Which Date-Booking or Possession or Registration -Is Important For Capital Gains Tax?

      Section 50: Can Exemption 54EC or 54F be claimed on Sale of Depreciable Asset?

      Section 54: Can One Get Exemption U/s 54F Even If Builder Does Not Complete House Within Three Years?

      Section 54: Is exemption of capital gains u/s 54 allowed even when new residential property is purchased in foreign country!

      Section 56 : Can a Private Limited Company Become Public Substantially Interested Company Without any IPO?

      Section 70: Can Short Term Capital Loss On Shares Taxable U/s 111A Be Adjusted With Short Term Loss On Land?

      Section 80: Can You Claim Carry Forward of Loss Despite Late Filing of Return?

      Section 127:Can A.O Transfer a Case to Another A.O Without any Transfer Order by CIT ?

      Section 139(5): Can Revised Return u/s. 139(5) be Filed Even During Scrutiny Proceedings?

      Section 154: Can A.O Pass Rectification Order u/s 154 Even After Time Limit?

      Section 148: When is Notice u/s 148 Considered Issued-at the Time of Signing by A.O or Entering in Issue Register by Clerk or Handing Over Notice to Postal Agent?

      Section 153A: Is issue of notice u./s 143(2) mandatory in case of assessment u/s 153A?

      Section 161:Can Private Trust Still Be Used For Tax Planning?

      Section 171: Is Order by an A.O Compulsory For Partition of HUF?

      Section 194A : Whether Hire Purchase EMI Payments liable to TDS u/s 194A?

      Section 263: Limitation Date for Invoking Sec. 263 is Counted from Assessment Order Date or Reassessment Order Date?

      Section 273A: Can Higher Authority Drop Penalty Proceeding Pending Before the A.O?

      Should Visit Days be Excluded For Determination of Residential Status if NRI Permanently Settles in India?

      Residential status of a person is the first criteria for determining whether an income is taxable in hand of a person under Income Tax Act (Act after this) .Section 5 defines total income and sub-section 2of section 5 provides meaning of total income for non-residents. Section 5(2) of the Income Tax Act is as under :

      5.(2) Subject to the provisions of this Act, the total income of any previous year of a person who is a non-resident includes all income from whatever source derived which—

      (a) is received or is deemed to be received in India in such year by or on behalf of such person ; or

      (b) accrues or arises or is deemed to accrue or arise to him in India during such year.

      Thus, while the global income of a resident is taxable under the Act, section 5(2) provides that in the case of non-residents following income only will be taxable under Income Tax Act

      (i) Income arising or accruing in India

      (ii) Income received or deemed to be received in India or

      (iii) Income deemed to accrue or arise in India

      Thus, residential status determination is very important aspect under the Act for it shows whether total income as per section 5(1) applicable or section 5(2) is applicable.

      Residency: Section 6(1) of the Income Tax Act

      Section 6 of the Income Tax Act provides rules for determination of residential status of a person. Sub-section 1 of section 6 decides how the residency of an Individual shall be determined For ready reference, section 6(1) of the Act applicable for determination of residency in case of Individual is given below

      6. Residence in India

      For the purposes of this Act,—

      (1) An individual is said to be resident in India in any previous year, if he—

      (a) is in India in that year for a period or periods amounting in all to one hundred and eighty-two days or more ; or

      (b) ...

      (c) having within the four years preceding that year been in India for a period or periods amounting in all to three hundred and sixty-five days or more, is in India for a period or periods amounting in all to sixty days or more in that year.

      [Explanation.—In the case of an individual,—

      (a) being a citizen of India, who leaves India in any previous year [as a member of the crew of an Indian ship as defined in clause (18) of section 3 of the Merchant Shipping Act, 1958 (44 of 1958), or] for the purposes of employment outside India, the provisions of sub-clause (c) shall apply in relation to that year as if for the words sixty days, occurring therein, the words one hundred and eighty-two days had been substituted ;

      (b) being a citizen of India, or a person of Indian origin within the meaning of Explanation to clause (e) of section 115C, who, being outside India, comes on a visit to India in any previous year, the provisions of sub-clause (c) shall apply in relation to that year as if for the words sixty days, occurring therein, the words one hundred and eighty-two days had been substituted.

      As can be seen from aforesaid provision u/s 6(1), the rule of residency provides that an Individual is resident in India if he satisfies any one of the following condition

      1. If he is in India for 183 days [Section 6(1)(a) of the Act]

      or

      2. He is in India 60 days in the year for which residential status is being determined and in preceding four years to that year , he is in India for 365 days in aggregate [Section6(1)(c) of the Act]

      Exception to the Rule of Stay in 60 Days Plus 365 Days !

      There are two exceptions to the rule of 60 days (plus 365 days in aggregate ).If a person satisfies any of the following conditions, one can stay upto 182 days instead of 60 days in the previous year for which residency is checked without being resident.

      (i) Indian resident leaves India during previous years for the purpose of employment outside India.

      (ii) Indian Citizen or Person of Indian Origin , being outside India, comes on a visit to India .

      Presently, we are concerned with the second exception i.e exception applicable in case of Indian citizen or PIO who comes on visit to India.

      What is the Meaning of Comes to a Visit

      The benefit of staying in India for higher number of days ( up to 182 days) without losing the status of Non Resident is provided to all Indian citizen or person of Indian origin who are basically Non Resident Indians or Indians who have settled outside India and visits India for meeting with their relatives on various occasions. After such visits, the NRI goes back to his country.

      Issue of Visit in Case of an Indian Resident Who Went Abroad Temporarily

      However, the issue is what happens when an Indian citizen /PIO comes for a visit and then in the same years comes back to India for settling down .Whether in such case of permanent settlement ,the person will get benefit of 182 days instead of 60 days. This type of situation can arise in case of Indian citizens who are employed in India and then sent abroad on deputation to some foreign projects.

      For example, let us consider a case of an Indian who was living in India and working in a company in India. Say he is deputed by his company abroad in a year, say FY 2010-11 and in FY 2011-12, if that Indian citizen comes back to India and stays in India for even 65 days, he will get the status of Resident because he fulfills the conditions of Section 6(1)(c) in the FY 2011-12 i.e. he stayed in India for more than 60 days and in four years previous to the FY 2011-12 , he was in India for 365 days.

      Thus it can be seen that Indian resident who has gone abroad on account of job and comes back permanently after a stint abroad cannot get the benefit of 182 days as he fulfills 365 days criteria.

      Karnataka High Court to the Rescue

      Fortunately , this issue came up before Karnataka High Court in case of DIT vs Manoj Kumar Reddy Nare [2011]245 CTR 350 (Kar) . The facts involved in the case that assessee was an employee of an IBM Global Services India Pvt Ltd. He was deputed to Chicago, USA with effect from 1st February 2004. He stayed in India for

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