Tax and other updates

REFUND CLAIM AND TIME FACTOR

The Mumbai Income-Tax Tribunal has held that in case of a refund claim that was returned by the authorities to the assessee with directions to submit additional information, the limitation period in relation to such a claim will be computed from the date on which the original claim was filed. In this case, the assessee, a telecom service provider who was selling recharge coupons for pre-paid services to its distributors, filed a refund claim. The claim filed was returned by the revenue authorities after three months, directing the assessee to submit evidence.

When the assessee resubmitted the claim providing the additional information, the department contended that the re-submitted application will be seen as a fresh refund claim and the relevant date of the claim would be date of the re-submitted application. The tribunal held that the refund claim resubmitted by the assessee was to be treated as being in continuation of the original claim. Hence, the resubmitted application could not be treated as a fresh claim and there was therefore no question of barring it on the ground of limitation.


TAX CAN BE LEVIED EVEN IF THE RETURNED INCOME IS A LOSS

The Supreme Court has overruled its own decision of last year in Virtual Soft Systems Ltd vs. Commissioner of Income Tax and ruled that penalty can be levied under Section 271 (1)(c) of the I-T Act even if the returned income is a loss.

In the latest judgment, involving Gold Coin Health Food Ltd, a larger bench stated that the amendment made by the Finance Act 2002 to the provision was clarificatory and not substantive and it was applicable retrospectively.

The Supreme Court said that the purpose of the provision was to penalize the assessee for
concealing income or furnishing inaccurate particulars. Therefore, whether the income returned was profit or loss did not matter.




Procedure for filing TDS returns with insufficient deductee PAN As per instructions issued by the Central Board of Direct Taxes (CBDT), it is mandatory for deductors to file TDS/TCS statements with a threshold limit of Permanent Account Number (PAN) of deductees. To facilitate deductors who face problem in filing TDS returns because of insufficiency of PAN of the deductees and also to accommodate the deductees who have intimated their PAN, the Income Tax Department (ITD) has specified the following procedure for filing TDS/TCS returns: • Deductors can file a return containing deductee records which meets the specified threshold limit of PAN quoting, i.e., a deductor can file a return containing deductee details who have provided valid PAN. It can subsequently file a correction return with details of remaining deductees. E.g. as below: o Suppose a challan payment of Rs.1,00,000/- has been made for non- salary TDS against 100 deductees each with TDS of Rs.1,000/-. Under the existing procedure the deductor will have to quote at least 85 PAN failing which his return will be rejected. o If there are only 50 deductees whose PAN is available and the deductor attempts to file a return with details of 100 deductees with PAN of only 50 deductees, the return will automatically be rejected at present. o However, if he files a return with challan amount of Rs. 1,00,000/- and with details of 50 deductees with PAN, with deductee total of Rs.50,000/-, the return will be accepted. It means the deductor can furnish the details relating to such deductees whose PANs are available. o The deductor can later file correction returns with other details of remaining deductees with the same challan details, i.e., the challan amount should be the amount deposited (in this case Rs. 1,00,000/-). o The return will be accepted so long as the TDS total of incremental deductees is less than or equal to the balance of Rs.50,000/-




If you don't attach annexures forget tax refunds for 2-3 yrs

The taxman is a tough nut to crack. DNA had on May 27 reported (Mr Chidambaram, look what your taxmen are up to) that the Income Tax office at the Bandra-Kurla Complex had been insisting on salaried individuals filing their returns for assessment year 2008-'09 (i.e. the last financial year, 2007-'08) to attach annexures like Form 16 (given by employers to salaried individuals), rent and dividend receipts, or advance tax challans. Two months later, the situation hasn't changed much. When we visited the Bandra Kurla complex office of the Income Tax department, again we found that the taxmen continue to insist on annexures while filing returns, though this time not for everybody. The clerk at the counter insisted on annexures such as form 16, tax deducted at source (TDS) certificates etc for individuals who had tax deducted at source of Rs5 lakh or more. Public relations officials of the Income Tax department in Bandra, however, maintain that individuals who claim a tax refund need to attach annexures else they would have to wait for two to three years to get their refunds. A public relations officer of the income tax department at Bandra who did not wish to be named says, "If people do not want to submit form 16 then they will need to wait for 2-3 years for the software to process the returns. For those who do not have any refunds we are not asking for the Form 16. But for those who have refunds, we need to verify the TDS mentioned in the returns. We are not able to process the returns otherwise." There has been no change in law since the annexure less Indian Income Tax Return (ITR) forms were introduced last year. The law does not require individuals to attach annexures like Form 16 (given by employers to salaried individuals), rent and dividend receipts, or advance tax challans while filing returns. This change was made last year, when the I-T department did away with the Saral form and replaced it with Indian Income Tax Return (ITR) forms, numbering from 1 to 8. Salaried individuals are largely expected to use either ITR 1 or ITR 2 to file their returns. In fact, the Central Board of Direct taxes issued a circular (no 6/2008) on July 18, 2008 to reiterate the same. The notification acknowledges that the practice of accepting annexures along with the income tax return form is still continuing. "It has come to the notice of the Board that in spite of the directions contained in the Instructions for filling the return forms, the practice of accepting returns, along with annexures is still continuing. This practice goes against the expressed policy of the government and is not in consonance with the legal provisions," the circular says. It instructs the chief commissioners of Income Tax to ensure that returns are annexure-less. "It is emphasised that they ensure strict compliance with the provisions of law. It may be reiterated that all annexures accompanying the income tax return forms should be detached and returned to the tax-payers by the receiving official."So even after this, why is the income tax department still insisting on annexures? "The database recognises only PAN and the companies are not submitting the PAN of all employees. As it's a single database there are multiple people with the same name and hence we need the PAN number. Last year companies on an average had not mentioned the PAN for 50% of their employees." The million dollar question now is, didn't the taxmen realise these difficulties would crop up when they issued the new annexure-less forms last year? "We have informed our higher officials, who will inform their seniors. We can't directly go to the finance ministry. It will take months for the problem to be notified to the ministry," the PRO said.


Online payment Without Net banking

Taxpayers may know by now — one can avoid the queues at bank counters by paying taxes online. Taxes can be paid from the comfort of one's home or office and even on the move.The National Depository Services Ltd has made available a service called e-payment of taxes through the website https:tin.tin.nsdl.cometaxIndex.html. The website helps one fill a challan for tax payment and then pay it online using a net banking account. The facility is currently available to account holders with 29 banks, which are listed on the website.But, taxpayers whose banks do not figure in this list need not worry. They can always use the net banking account of another person to make their tax payments.The move to allow this has been prompted by complaints from assessees both resident and foreign. As per a clarification issued by the Central Board of Direct Taxes (CBDT), "It has been pointed out by such foreign assessees that they do not have a presence in India and, therefore, are not able to meet the 'know your customer norms' of the banks. This has resulted in their inability to open bank accounts and make payment of taxes, through the electronic mode. Representations have also been received from the resident taxpayers highlighting difficulties in availing internet banking facilities of the authorised banks."The CBDT has decided that "an assessee can make electronic payment of taxes also from the account of any other person. However, the challan for making such payment must clearly indicate the Permanent Account Number (PAN) of the assessee on whose behalf the payment is made. It is not necessary for the assessee to make payment of taxes from his own account in an authorised bank." Taxpayers may also note that the authorities are considering introduction of alternative online payment modes such as credit cards and debit cards.As per the CBDT circular, "payment of tax electronically has been defined to mean payment of tax by way of — (i) internet banking facility of the authorised bank; or (ii) credit or debit cards."Card payments are not allowed yet, but could be before long.