SEC 50C NOT APPLICABLE ON LEASEHOLD LAND & BUILDING

SEC 50C NOT APPLICABLE ON LEASEHOLD LAND & BUILDING

One of the relevant ingredients for invoking S.50 C is that there is a payment of stamp duty in respect of transfer of capital assets being land or building or both.


Payment of stamp duty is required only when transfer of capital asset is registered under theRegistration Act. If payment of stamp duty for the purpose of the transfer is not required, then there is no occasion to look into other conditions as mentioned in S.50 C . Therefore, in those cases of transfer where agreement or sale deed is not registered and stamp duty is not paid, or capital gain is simply charged by deeming certain transactions as transfer as per other provisions of the act or some transactions of transfer are not registered or are not legally required to be registered under the Registration Act, S.50′C’ cannot be put into operation.

The above view has been adopted in following judgments :  

1. ACIT Vs. Shrikishan Dass, ITA No. 915/ Del/ 2012, Date of pronouncement: 07.06.2013, ITAT – Delhi Bench 
   
   
2. Carlton Hotels (P) Ltd. Vs ACIT, 35 SOT 26(lucknow) ,122 TTJ 515

Disclaimer: The above post is only for sharing information between friends & professional colleagues. Professional consultancy must be sought before entering into any transaction related with above post.

SERVICE TAX ON CHARITABLE TRUST

Applicability of Service tax is described as answers to questions as follows:

1) Whether CHARITABLE TRUST (CT) are liable to pay ST?

     Yes. Refer to charging section i.e. Section 66B which reads as follow:

     ’66B. There shall be levied a tax …. provided ….. by one person to another…….

 What is a “person”?

‘Person’ has been defined in Section 65 B. It includes following entities:

  ♦  an individual

  ♦  a Hindu undivided family

  ♦  a company

  ♦  a society

  ♦  a limited liability partnership

  ♦  a firm

  ♦  an association or body of individuals, whether incorporated or not

  ♦  Government

  ♦  a local authority, or

As can be seen, the term “person” is wide and includes Association of Persons whether incorporated or not.

2) Does it mean that CT will have to pay ST on services provided by it?

Yes. Since section 66D containing Negative List (NL) is not having any specific reference to services provided by CT. Hence, services provided by CT are taxable.

3) Whether CT will have to pay ST on all the types of services provided by it?

No. For the purpose of determining tax liability, one will have to refer to Notification No. 25/2012 where under various types of services have been declared exempt.

Clause No. 4 of Notification No. 25/2012 provides as follow:

Services by an entity registered under section 12AA of the Income tax Act, 1961(43 of 1961) by way of charitable activities;

As can be seen from above, exemption granted has two important conditions to be complied with viz. (i) CT should have been registered under section 12AA of Income Tax Act (AGA Khan Fondation is registered u/s 12AA of IT Act)  and (ii) the activities carried on should be charitable activities. Thus, all the activities carried on by the CT per se are not exempt. Exemption granted is restrictive.

4) What are “charitable activities”?

Clause 2(k) of Notification No. 25 / 2012 defines it as follow:

(k)  “charitable activities” means activities relating to -

 (i)  public health by way of -

(a)  care or counseling of (i) terminally ill persons or persons with severe physical or mental disability, (ii) persons afflicted with HIV or AIDS, or (iii) persons addicted to a dependence-forming substance such as narcotics drugs or alcohol; or

(b)  public awareness of preventive health, family planning or prevention of HIV infection;

(ii) advancement of religion or spirituality;

(iii)  advancement of educational programmes or skill development relating to,-

(a)  abandoned, orphaned or homeless children;

(b)  physically or mentally abused and traumatized persons;

(c)  prisoners; or

(d)  persons over the age of 65 years residing in a rural area;

(iv)  preservation of environment including watershed, forests and wildlife; or

(v)  advancement of any other object of general public utility up to a value of,-

(a)  eighteen lakh and seventy five thousand rupees for the year 2012-13 subject to the condition that total value of such activities had not exceeded twenty five lakhs rupees during 2011-12;

(b) twenty five lakh rupees in any other financial year subject to the condition that total value of such activities had not exceeded twenty five lakhs rupees during the preceding financial year;

Disclaimer: The above discussion is made for services excluding services which were not falling under Sec.66D (Negative list) & services which were not exempt under Mega exemption no. 25/2012.

NON DEDUCTION OF TAX AT SOURCE

NON DEDUCTION OF TAX AT SOURCE

As an Accounts Manager are you worried about disallowance of expenses on account of Non-deduction of Tax at source??

Finance Act 2012 has provide some relief from penal consequences of non deduction of tax at source.

Prior to Finance Act, 2012

Any payment on which TDS is liable to deducted as per provisions section 192 to 196C of Income Tax Act,1961 and where TDS has not been deducted by assessee , will be disallowed under section 40(a)(ia) by Assessing officer at the time of assessment.

Further for non deduction of TDS assesse will be deemed to be assessee in default u/s 201(1) and will be liable for payment of interest u/s 201(1A) from the date on which tax was deductible to the date on which tax is actually paid and penalty as well u/s 221 of Income tax Act, 1961

After Finance Act, 2012

The above provisions have been amended vide Finance Act, 2012, amended provision(s) are as follows:

a) Sec 40(a)(ia) : Disallowance under section 40(a)(ia) will not be attracted if ;

b) Sec 201(1) :   Assessee will not be deemed as assessee-in-default and will  be liable for interest  from the date on which such tax was deductible to the date of furnishing of return of income by such payee if;

following conditions are satisfied:

i)    payment is made to resident only,

ii)   the resident recipient has furnished his return of income u/s 139,

iii)  the resident recipient has taken into account such payment as income in return of income,

iv)  the resident recipient has paid the tax due on the income declared in such return, and

v)   the payer furnishes a certificate to this effect from a chartered accountant in prescribed form.

TDS ON PURCHASE OF SOFTWARE

TDS ON PURCHASE OF SOFTWARE

Finance Act 2012 has amended the definition of “royalty”. The amendment in section section 9 (1) (vi) now defines ‘royalty’ as any ‘right for use’ or ‘right to use’, a computer software (including granting of a license), irrespective of the medium through which such right is transferred. Hence purchase of software though dealer also would comes under the ambit of above definition.

Since section 194J provides for deduction of tax at source on payment made for royalty payment the payments towards purchase of computer (technically right to use computer software) will be liable to tax deduction at source under section 194J @ 10%

However sale of computer software involves a channel i.e. from developer to distributor  to dealer to end-user. To avoid tax deduction at several levels, CBDT issued the Notification 21/2012 dated July 1, 2012

As per the said notification, the tax deduction at source (‘TDS’) will not apply on acquisition of software from another person, being a resident,

• if the software is acquired in a subsequent transfer and
• the transferor has transferred the software without modification and
• TDS has been deducted under section 194J or 195 of the Income tax Act, 1961 (‘the Act’) on payment of previous transfer of software

Amended  situation of TDS on Software purchase

Based on above description, the following check-list will be helpful in deciding about deductibility of tax on software purchase

Payments towards Standard Software i.e. without modification	Whether to deduct tax	Reason
Payment below  Rs. 30,000	No	Section 194J provides for no deduction in case payment is below Rs. 30,000
Payment to a non-resident Indian	Yes	Tax is deductible in all cases and no exemption under Notification 21/2012 is available
Payment above Rs. 30,000 to resident where no declaration under Notification 21/2012 is given by the transferor	Yes	Declaration is mandatory under Notification 21/2012
Payment above Rs. 30,000 to resident where declaration under Notification 21/2012 is given by the transferor	No	Declaration is mandatory under Notification 21/2012

TDS ON PARKING CHARGES

TDS ON CAR PARKING CHARGES:

Hi frnds,

From such a long period i was looking for clarification on the above mentioned issue " Whether TDS to be deducted for Car parking charges u/s 194C or 194I"

During statutory audit of various clients i have observed generally TDS is not deducted on  parking charges referring the case [DCIT vs JAPAN AIRLINES (2005)] but the facts of these case are not general parking charges and i have always doubted that CAR parking charges comes under the ambit of 194C because in some cases Parking owners commits to provide car parking space however the space is not fixed or definite, in such cases TDS is to be deducted u/s 194C using citation [M/S Mahendra Shipping ltd. vs ITO (HC)]

Hence according to me where there is definite and particular space for CAR parking TDS to be deducted u/s 194I referring case [DCIT vs JAPAN AIRLINES (2005)] and where there is no definite and particular space for car parking and parking owner only commits to provide space for car parking TDS to be deducted u/s 194C referring case [M/S Mahendra Shipping ltd. vs ITO (HC)]

Thanks for reading frnds..

Kindly update this blog with other useful information as well..