Income Tax Refund cheques deliver on new address provided by J&K taxpayers

Income Tax Department for processing income tax refund given a option to the taxpayers residing in the state of Jammu & Kashmir, to provide new address for delivery of refund cheques,

The recent floods in Jammu & Kashmir which claimed more than 280 lives and destroyed property worth thousands of crores and State had never witnessed such type of disaster before. As per the initial assessment reports on the damages to the private property, a total of 353864 structures have been damaged. “83044 pucca houses have been fully damaged and 96089 partially. Similarly, 21162 kachha houses were fully damaged and 54264 partially damaged besides 99305 huts, cowsheds, were also damaged.

Due to this natural disaster, person who resides there & affected by flood relocate themselves and Income tax department come forward to help them by giving option to provide new address for delivery of income tax refund cheques.

Refer below circular dated 15/10/2014 Continue reading

No TDS on award & interest thereon w.r.t. motor accident claims cases

No TDS shall be deducted on claim amount and interest on the deposits, made under the orders of the court in motor accident claims cases.

Circular 8/2011 issued on 14-10-2011 stated that when litigant is directed by the court that a specified amount be deposited in the bank directly or through the court w.r.t motor accident claims. The bank shall in accordance with the provisions of the Act, deduct TDS on the interest accruing on the above mentioned deposit(s) as per existing procedure and at the rates in force. The certificate of deduction of tax shall be issued by the bank in the name of ‘the depositor’.

In nutshell, above circular directed banks to deduct TDS on deposits made in banks w.r.t motor accident claims. Continue reading

HC rules in favor of Vodafone in Transfer Pricing case.

Bombay High Court ruled in favor of Vodafone in transfer pricing dispute of Rs.3200 crore regarding under-priced valuation of shares. There are atleast 20 other companies that are facing the same disputes and the ruling of Bombay High Court in favor of Vodafone gives relaxation to these 20 companies to the some extent.

Vodafone India (Subsidiary) issued the right share at share premium to its UK based Parent Company ( Vodafone Group Plc) and method for the valuation of share was duly approved by RBI. However tax department disputed on valuation at which Vodafone India had issued shares to its UK based parent company, the tax department used a methodology called discounted tax flow to arrive at a higher value per share. Department has accused Vodafone India for violating transfer pricing regulations by claiming that the value of right share had been under-priced which is meant the Parent company ( Vodafone Group Plc) paid less to get a higher stake in Vodafone India and the same is liable to tax.

Now the question arises whether the issuance of shares gives rise to income under transfer pricing regulation? Continue reading

Oracle saves dividend tax (CDT) of Rs 142 crores

Oracle Financial Services succeed in saving dividend tax of Rs 142 crores by distributing the dividend before October 1.

As per Section 115-O of income tax act, the company is require to pay tax on dividend at the effective tax rate of 16.995% (15% tax + 10% surcharge + 3% education cess).

According to the Budget presented by finance minister Arun Jaitely, it is proposed that dividend distribution tax will be levied on gross amount instead of amount paid net of taxes and this will lead to increase in Dividend tax by 2.47%.

The above method to calculate the dividend distribution tax will comes into effect from 1st October, 2014. Continue reading

On transfer of technical manpower upto 50%, deduction u/s 10A/AA cannot be denied.

Mere transfer or redeployment of existing technical manpower to the extent of “50% of total technical manpower actually deployed in new unit” from an existing unit to a new SEZ unit in the first year of commencement of business will not construed as splitting up or reconstruction of an existing business. Hence deduction under section 10A or 10AA of the act cannot be denied.

Earlier, CBDT had issued circular no. 12/2014 dated 18th July, 2014 to clarify that mere transfer or re-deployment of existing technical manpower from an existing unit to a new SEZ unit in the first year of commencement of business will not be construed as splitting up or reconstruction of an existing business, provided the number of technical manpower so transferred does not exceed 20 percent of the total technical manpower actually engaged in developing software at any point in the given year in the new unit.
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