TDS credit cannot be claim unless income not shown in ITR

No TDS credit can be claimed in returns if the corresponding income, on which TDS was deducted, not shown in returns. Further such TDS amount shall be treated as deemed to be income received by invoking section 198.

In ANDHRA PRADESH HIGH COURT, Sri Y. Rathiesh Versus The Commissioner of Income Tax-I

Assessee gave loan to the two companies. The 1st company was just showing the accumulated interest, in its account books without making actual payment to assessee. further, the 1st company deducted tax at source (TDS) on the amount of interest payable and issued TDS credit certificates, in relation thereto. whereas the second one was paying interest regularly.

In the returns filed by him, the appellant was adopting a hybrid system. While in respect of his transaction with the 1st company, he adopted cash system and with regards to the transaction with the 2nd company, he adopted the mercantile system. The result was that he did not pay the tax on the interest payable to him by the 1st company, even while he enjoyed the entire benefit of TDS credit made in that behalf. Continue reading

leave encashment claimed in arbitrary manner not allowable

The liability towards leave encashment is allowed even though they may not be in a position to give the accurate details. However, leave encashment claimed in an arbitrary manner without there being any supportive material shall not be allowable to assessee.

In the decision reported in [2000] 245 ITR 428 Bharat Earth Movers v. Commissioner of Income-tax, the Apex Court has crystallised the law, which reads as follows:
“The law is settled : if a business ( leave encashment ) liability has definitely arisen in the accounting year, the deduction should be allowed although the liability may have to be quantified and discharged at a future date. What should be certain is the incurring of the liability. It should also be capable of being estimated with reasonable certainty though the actual quantification may not be possible. If these requirements are satisfied the liability is not a contingent one. The liability is in presentiment though it will be discharged at a future date. It does not make any difference if the future date on which the liability shall have to be discharged is not certain.” Continue reading

Redemption fine in lieu of detention of goods is allowable expenditure

Assessee paying redemption fine under section 125 of custom act, 1962 in lieu of detention of goods under section 111 by custom authority is allowable expenditure under section 37 of income tax act, 1961.

In the Delhi High Court, Commissioner of Income Tax- Delhi Versus M/s. Vikas Chemicals:-

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Double deduction of interest on housing loan

Assessee claim double deduction of Interest on Housing Loan to acquire house property u/s 24(b) and simultaneously HRA exemption on rent paid (if he resides in property other than acquired). Further upon sale of said property, interest already claimed as deduction u/s 24(b) can be added to cost of property for the purpose of computing capital gain.

An assessee can claim deduction of Interest on Housing loan taken to acquire a house property u/s 24(b) of the Income Tax Act. Section 10(13A) allows an assessee to claim HRA exemption in respect of rent paid for residential accommodation occupied by him. Further, where expenditure was incurred by way of interest on loan taken to acquire a house property, same shall be allowed to be added to cost for the purpose of computing capital gains upon sale of the said property.

The question under consideration is whether an assessee can claim all the aforementioned benefits together. Or to be more precise, does availment of one the benefit, precludes assessee from claiming other benefits. Continue reading

Sales tax incentive not eligible for 80IB benefit.

Sales tax incentive/refund is in the nature of duty draw back and the Supreme Court decision in the case of Liberty India Vs. CIT squarely applies to the sales tax incentives and the same is not eligible for section 80 I/IA/IB benefit.

ACIT Vs M/s. Shaiv Distilleries (P) Ltd, ITA No. 179/PNJ/2014, ITAT Panaji.

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