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Let us look at some of the ridiculous provisions as interpreted by tax authorities:

    * A taxpayer is expected to accurately estimate his income for the year and pay taxes in advance even on unanticipated income which may arise towards the end of the year- else he has to pay interest thereon. Tax authorities interpret advance tax provisions as requiring even a new company set up towards the end of the year to pay advance tax even before it comes into existence!

    * A person required to deduct tax at source on behalf of the Government by provision of law, is supposed to obtain and mention the permanent account number (PAN) of each person to whom he is making payments subject to TDS, even though he has no statutory powers to force such person to disclose his PAN.

    * Taxpayers are expected to anticipate retrospective amendments many years in advance, such as the recent one relating to provision for diminution in value of assets for computing book profits under MAT, and compute their income on that basis. Else, they are liable to pay not only taxes due to such amendments, but also interest for non-payment of such taxes earlier.

    * Every year, each tax deductor is supposed to be aware of the daily actions of the President of India and ensure that the amended rates are applied from the very day that the President of India gives his/her assent to the Finance Bill !

    * Every foreign company or non-resident paying any amount of taxable income to an Indian resident (other than professional fees to lawyers or CAs) is expected to deduct tax at source from such payment, and for that purpose obtain a PAN, a TAN, file TDS returns, etc., even though such foreign company/non-resident may have no office or agent or any presence in India and therefore not even be aware of such provisions. Failure to comply could result in payment of interest, penalty or prosecution of the foreign company! All this on account of having the misfortune of having had stray or even one-time transactions with an Indian resident!

Some of the additions made by the recent budget to this list are:

    * Every individual or HUF buying an immovable property or shares and securities or a work of art should be a valuation expert and know in advance what the accurate `fair market value' of such property is on the date of purchase (even though such value may be a mere estimate), should ensure that he buys the property or asset only at that price, and in case he is getting it at a lower price, he should either insist on paying the higher price or may have to pay tax on the discount that he is getting!

    * An individual or HUF agreeing to purchase an immovable property which is under construction, is expected to anticipate at the time of booking, the `fair market value' of the immovable property which would be prevalent when the purchase is completed, and ensure that the property purchase price is fixed only at that amount. If the fair market value is higher when the property is completed and handed over, he may have to pay taxes on the difference between such value and his price determined at the time of booking.

    * Every business having a turnover of less than Rs.40 lakhs is expected to know in advance whether its turnover for the entire year would exceed Rs.40 lakhs or not. If it is fortunate in growing its business, and towards the end of the year its turnover exceeds Rs.40 lakhs, it would be liable for interest for nonpayment of advance tax in the first two instalments, which it did not pay based on its anticipation that it was covered under the presumptive scheme of S.44AD. Of course, it always has the choice of choosing to refuse to do additional business so that its turnover does not cross Rs.40 lakhs!

    * All small business, such as tuitions, hair-cutting saloons, commission agents, traders in derivatives or shares, etc., should ensure that their profit from such transactions is at least 8% or be willing to pay taxes on 8% of the turnover/receipts, or else bear the cost of a compulsory audit!

    * Developers of large residential projects need to ration out the flats that they sell to companies. If any company approaches them to acquire a large number of flats for staff quarters, even in such difficult times for the real estate industry, the developers have to choose between refusal to sell more than one flat to the company, and the tax holiday u/s.80-IB.

There are many more such provisions, which are not listed here for want of space. One hopes that such ridiculous provisions would not find a place in the new Direct Taxes Code. However, going by experience in the recent past, it is more likely that more irrational provisions will be added to the existing ones! I would love to be proved wrong in this forecast!

Gautam Nayak

We need so many reforms in legal education in India and also in the whole legal system. Our Prime Minister Dr. Manmohan Singh has given a great speech in the recent past telling the truth about legal education and also legal profession. The Bar Associations give so much importance to Senior and privileged advocates and these privileged legal practitioners and Senior Advocates should discharge their basic responsibility with the sole intention of guiding the young generation lawyers and towards bringing the needed reforms in the system. Nobody wants Senior Advocates in legal profession to devote their whole time on tutoring the young lawyers, but, they can certainly spend few hours in a month and can take part in academic activity. But, unfortunately, academics have taken a back seat in legal profession and it is certainly not good for the legal profession and also society. Even when I was a student of law, I used to attend many seminars conducted by the Bar Associations and the trend is going backward now and academic activity conducted by the Bar Associations is really dismal now as I feel. The situation in developed countries is really good when it comes to concentrating on imparting quality education, research and development.

I have had a personal experience and also I have seen many of my colleagues lacking the guidance in profession and as such they waste their valuable time and loose hope. I have seen many of such instances. It is to be promoted by the Senior Advocates in legal profession that hardworking never fails at the Bar and by nature, an young lawyer should recognize the fact that it will definitely take few years to develop his/her own practice and to get recognized. There can be exceptions always. I have seen some young lawyers doing extremely well though they were not educated in prestigious schools and though they are not from rich background. I have seen many talented young lawyers leaving profession and joining law firms and companies. When these talented young lawyers leave profession, then, it really hurts me as it will have a direct impact on the standards in legal profession and the quality of justice. It is true that prestigious law schools or national schools are doing well in India, but, we should recognize the fact that the legal profession consists vast majority of lawyers who graduated from government and ordinary colleges in India. While some choose to join Law College having a negative opinion about the profession, they are many who join law thinking that they can be a big and noted lawyer like Sri Ramjathmalani, Sri Arun Jailtly and Kapil Cibal. These truly interested students and professionals needs encouragement and guidance in legal profession which is loosing its dignity.

As standards in legal profession have gone down drastically and as the students of national law schools prefer to join noted lawyers, law firms and corporate houses, there is a considerable demand for talented law students when they join the Chambers of some advocates initially. Young lawyers need to be encouraged and in India this encouragement is really lacking. Only few senior advocates follow the needed ethics and I have a great respect for Aravind P.Datar, Senior Advocate, Dr.Manish Arora of Universal Publishing Company (Pvt) Ltd, Delhi and Advocate of Supreme Court, for inspiring the law students and contributing substantially for the betterment of legal profession in India.

We have certain illogical assumptions in India and I have read a paper statement recently wherein a Bench of Supreme Court has commented while a young lawyer represented a case without preparation that "everybody wants to become Nani Palkiwala instantly". I have also read the paper statement that the Hon'ble Judge has also went on explaining his experience and stressing the importance of practicing in Trial Courts for few years. There is an assumption in legal profession that one has to wait for so many years to flourish in legal profession and I disagree with that illogical notion. I have seen few young lawyers arguing matters before the First Bench of Madras High Court doing extremely well and even better than many Senior Advocates and its my opinion. If this illogical assumption is settled, then, the profession looses talented people and it's an irreparable damage to the legal profession, legal system and also to the society finally. It is true that experience matters, but, this experience will not come by spending so many years in legal profession. Experience comes as to how a legal practitioner works hard and experiences the things not seen. This has no relevance to the time one spends in legal profession. In my experience in legal profession, I have never discouraged a legal professional and guided few to a great extent to come-up in profession.

I would like to share my experience with few of my colleagues and especially law students as to what all the things a law student should remember while entering into profession. My guidance note to the younger generation lawyers and students is based on certain assumptions and as such the `guidance note' is followed by `assumptions'.

Assumptions:

   1. That a student is graduated form a Government Law College.
   2. That a student has opted to join the chambers of an independent legal practitioner initially.
   3. That a student has no legacy in profession and not privileged in terms of financial stability and family background.

Things to be known by a new entrant of legal profession:

1. He/she should understand the fact that he has to spend lot of time in office and courts and the section of the court while he works under some professional initially.

2. He/she should know that he may be asked to go and appear before many courts where the procedure and the practice may entirely differ.

3. He/she should understand that his senior may not be able to solve all his doubts instantly.

4. He/she should know that he should be patient to know the things and he will learn the things in the course.

5. He/she should not believe the baseless assumption that he has to wait for many years to learn the things.

6. He/she must believe that knowledgeable is recognized in legal profession though there can be certain setbacks and though the recognition may not be appropriate.

7. He/she should know the importance of English language and one should master in legal drafting and presentation skills.

8. He/she should believe that they may not be able to know all the rules and the regulations and it is enough if one knows the law in the chosen field and basic principles of law.

9. He/she should know that they should know the basics about computers and it will definitely be an added advantage if one is good in typing and it is really very important in profession.

10. He/she should understand that they may feel scared to represent a matter before Court initially, but, with practice and repetitive representations everything will be alright.

11. He/she should believe in ability and should focus on the needed ability to start his/her own independent practice.

12. He/she should have a curiosity to know all the things and practice in legal profession and he/she should be able experience the needed things in legal profession very soon as otherwise, he may be forced to think about alternatives.

13. He/she should have courage to represent the matter forcefully and without bothering about the remarks by the Senior Advocates and the Judicial Officers at times. Courage is very important quality to become a successful legal professional.

14. He/she should have hope and believe that nothing is impossible and he may soon be able to appear against Senior Advocates and even in Supreme Court of India. It is very much possible with hard-work and needed ability.

15. He/she should know that the style of representation before a court depends upon style and attitude of the judicial officer and as such one should study the mindset of the judicial officer before representing a case and it is part of advocacy.

16. He/she should know that communication and maintaining relations with public, friends and professionals is very important to start an independent practice.

17. He/she should know the fact that one can not be a successful practitioner overnight and it will take time.

18. He/she should know that every client will look at experience and the track record. As such, initial days would be difficult for a young and independent practitioner and everyone has to cross that stage.

19. He/she should master as to how the clients are to be handled and should make the clients to believe him.

20. He/she should not be discouraged by the clients with never ending litigant mind and the clients who try to trouble the young lawyers taking advantage of lack of standing in profession.

21. He/she may have to face some difficulties initially when they start their own practice, but, one can flourish in profession if he never loses hope and understands the fact that one needs wait some time or few years to flourish in profession.

Note: the views expressed are my personal and I know that the subject chosen is inclusive in nature.

Author:

V.DURGA RAO, Advocate, Madras High Court.

Email: vdrao_attorney@yahoo.co.in

Though the press release is not available, its contents are available in Notification No.S.O.2146(E) dated December 22, 2006, published in Income Tax Reports (2007) 288 ITR (St.) 6 to the same effect, relaxing the time limit for all investments in bonds "to be issued by the Rural Electrification Corporation Limited, a company formed and registered under the Companies Act, 1956 (1 of 1956), during the period from December 26, 2006 to March 31, 2007 (both days inclusive), as long-term specified asset" for the purposes of the said section (Sec. 54EC) subject to the further condition that it should not exceed Rs. 50 lakh. It may be seen from the above notification that investments made between December 26, 2006, and March 31, 2007, are specifically covered. The notification itself is good enough for the reader as he had deposited the same on January 24, 2007, falling between these dates though the deposit was beyond six months generally permitted by the statute. The press release explaining the notification is to the same effect but was apparently never officially released which explains its present non-availability. But the notification has an independent legal value more than any circular/ press release.

There was resistance to the power of the Board to limit the benefit to Rs. 50 lakh along with extension of time limit for deposit so that both these matters were made part of the statute by amendment to Sec. 54EC by the Finance Act, 2007, by inserting a proviso to Sec. 54EC(1) for purposes of limit of Rs. 50 lakh and by insertion of Explanation (b) and (ba) making it clear that there is a distinction between investments made during financial year 2006-07 under Explanation (b) and from April 1, 2007, under Explanation (ba) so that what was the subject matter of notification issued and press release/ circular not officially released became part of the statute. There was no other purpose in bringing these amendments.

These developments may be explained to the assessing officer since the very purpose of notification and amendments to law was to remove the hardship caused by non-availability of the bonds.

The Mininster of Corporate affairs
New Delhi

Dear Sir

Let me give a brief of www.mca.gov.in efiling portal and problems faced by us

The companies are required to file their annual returns every year in Oct via Efiling mode (compulsory) but mca website has become very slow due to high traffic congestion. Since the website is very slow at times due to techanical limitations of TCS handling the MCA site and same is also acknowledged by MCA officials when same is discussed with them in MCA delhi office. Due to this congestion the companies are unable to file returns in time and pay penal additional fees for no fault of theirs.

Now we represent as under and seek the intervention of the highest office to address our grievence

1. the MCA website  is very slow
   
2. not able to take required load
   
3. gets jam at 9.00 am morning and will not be able to log in till 10pm night
   
4. this is continously hapenning from past one week.
   
5. the prefill facility is not working. we can not fillup the form and keep it ready for uploading in odd hours. the form can only be filled up when it gets response from MCA site. which is hardly there.
   
5. why should a client suffer because of MCA technical fault.
   
6. when government has given time till 30 days why this opportunity is denied to clients because of insufficient infrastructure on website.
   
7. The Limit of 2.5KB for Form 23AC is ridiculous and should be removed to make compliance easy
   
8. The MCA should have taken adequate steps to increase the bandwith to make it commensurate to take annual e-filing load

1. Please specify the services for which Stamp Duty can be paid through MCA21 system?

Stamp Duty payable on Filing of e-form 1 (including MOA & AOA), 5 and 44 can be paid through MCA21 system.

2. Am I required to fill the details of stamp duty in eform manually?

No, when user selects option to pay stamp duty through MCA21 system, the system itself prefills relevant details in the eform. In case user opts to pay stamp duty in physical manner, details of the same shall have to be provided in the eForm by the user.

3. Can I pay Stamp Duty in electronic manner with respect to all States / UTs?

    * List of States/ Union Territories in which eStamp duty payment on Form 1, MoA, AoA, Form 5 and Form 44 is available on line through MCA portal:

1.Andaman & Nicobar Islands
2.Andhra Pradesh
3.Arunachal Pradesh
4.Assam
5.Bihar*
6.Chhattisgarh
7.Delhi
8.Jharkhand
9.Gujarat
10.Haryana
11.Karnataka     12.Madhya Pradesh
13.Maharashtra
14.Manipur
15.Meghalaya
16.Orissa
17.Punjab*
18.Rajasthan
19.Tamil Nadu
20.Uttar Pradesh
21.Uttarakhand
22.West Bengal
* eStamp payment services for these states will be available w.e.f. 20-09-2009

    * List of States/ Union Territories in which eStamp duty payment is not available on line through MCA portal1. Chandigarh
      2. Dadra and Nagar Haveli
      3. Daman and Diu
      4. Goa
      5. Himachal Pradesh
      6. Jammu and Kashmir
      7. Kerala
      8. Lakshadweep
      9. Mizoram
      10. Nagaland
      11. Puducherry
      12. Tripura

    * State where provisions of Companies Act, 1956 are not extended1. Sikkim

Stamp duty applicable to other states/UTs is to be paid in physical form, as per current process.

4. Whether payment of stamp duty through MCA21 system is Mandatory?

Payment of stamp duty through MCA21 system is OPTIONAL till 31.12.2009. User may pay stamp duty either through MCA21 system or in the same manner as was prevailing till now. But w.e.f. 1st January, 2010, stamp duty shall have to be paid only through electronic mode for the states which have agreed for e-stamping. Please refer notification SO S.O. 2276 (E) issued by Ministry of Corporate Affairs in this regard.

5.What are the modes of payment of stamp duty through MCA21 system?

There are two modes, stamp duty can be paid through MCA21 system either off-line or on -line.

6. Whether Challan of MCA21 service fee shall include details of stamp duty also in case of off line mode?

There shall be separate SRN / challan for stamp duty, in addition to SRN / challan for MCA21 services.

7. What shall be the validity of challan for payment of stamp duty?

Validity of challan for payment of stamp duty shall be the same as that of the challan for MCA21 service fees.

8. In whose favour should I draw the check / DD to pay the stamp duty in case an offline challan has been generated?

An Information note has been provided on the challan of stamp duty regarding payment of stamp duty. Please refer to the same.

9. What is the procedure to pay for the challan generated for stamp duty?

Challan generated for stamp duty is to be paid in the same manner as challan for MCA21 services fees is deposited in an authorized bank.

10. Is it necessary to pay both the challans (i.e. challans for stamp duty and for MCA21 service fees) simultaneously?

Then in May 2008, she sold a flat for Rs 30 lakh that she had acquired for Rs 10 lakh in June 1991. She paid the balance amount mortgage that she took from the bank for acquisition of the property for which she availed the home loan. Kindly clarify:
Is she entitled to the deductions stated above?
Can my daughter claim any IT deduction from her assessment for Rs 2 lakh paid back towards the loan?
What is the tax for capital gains? How can tax on capital gains arising from sale of plot be saved?
-- J.K. Kalsi

A. Your queries are replied hereunder:
Your understanding with regard to availability of deduction under section 24 of the Income-tax Act 1961 (the Act) to the extent of Rs 1.5 lakh towards the interest paid and under section 80C of the Act with regard to the repayment of principal amount to the extent of Rs 1 lakh are absolutely correct.

Your daughter cannot claim any deduction in respect of Rs 2 lakh paid towards the home loan as co-applicant.

The long-term capital gain is subject to tax for assessment year 2010-11 @ 20 per cent plus education cess @ 3 per cent thereon. However, tax so payable can be saved if the capital gain is invested in purchase or construction of a residential house. The purchase will have to be effected within two years of the date of sale and the construction within three years of the date of sale. The capital gains tax can also be saved if the capital gain is invested in the acquisition of infrastructure bonds issued by the Rural Electrification Corporation Limited within six months of the date of sale.

For CGT exemption-House must be in name of assessee

Q. I purchased a plot to build a residential house in Gurgaon. I could not construct the house due to non-availability of a bank loan -- I am over 65. I intend to sell the plot and buy a flat in Gurgaon in the name of my son, who would be able to get a loan from his employer at a very reasonable rate of interest. Will the capital gain arising on the sale of the plot of land be exempt in case the flat is purchased in my son's name?
-- A.K. Sahai

A. In accordance with provisions of section 54F of the Income-tax Act, the net consideration from the sale of a long-term capital asset (capital asset held for more than three years) is required to be utilised by the assessee for the acquisition of a residential house within a period of one year before or two year after the date on which the transfer took place or for the construction of a residential within a period of three years of the date of the transfer.

The net consideration for the purposes of the section means, the full value of consideration received or accruing as a result of transfer of the capital as reduced by any expenditure incurred wholly and exclusively in connection with such transfer. The essential requirement of this section is that the acquisition or the construction of the residential house has to be in the name of the assessee.

In view of the above legal position, in case the flat is purchased in the name of your son, the capital gain arising on the sale of plot would be chargeable to income tax. In case the plot has been held for a period of more than three years, the capital gains would be treated as a long term capital gain and tax would be payable for assessment year 2010-11 (financial year ended 31st march 2010) @ 20% and 3% education cess thereon. In case the plot has been held for a period of less than three years, the capital gain would be treated as a short-term capital gain and would be taxable at the normal slab rate alongwith your other income, if any.

NRIs can remit $1 mn a fiscal by selling assets

Q. My husband and I are NRIs and live in the US. My husband changed his nationality from Indian to American but I am still an Indian national. I bought land in Gurgaon in 2000.

We sold our house in America in 2001 and with that money I built a house on the Gurgaon plot in 2002. Now, I want to sell the Gurgaon house and bring the money back to the US to buy a house there.

Can I bring all the money out of this sale to USA? Do I have to pay income tax on this sale of the house in India?
-- Neha

A. Your queries are replied hereunder:
According to paragraph 5.1 of Master Circular dated July 1, 2009, relating to remittance facilities for Non-resident Indian/Persons of Indian Origin/Foreign Nationals issued by the Forex Department of the Reserve Bank of India, a Non Resident Indian or a person of Indian origin can remit an amount upto USD one million per financial year out of sale proceeds of assets for all bonafide purposes, subject to the satisfaction of the authorised dealer bank and on production of an undertaking by the remitter and certificate by a chartered accountant in the formats specified by the Central Board of Direct Taxes vide Circular No. 10/2002 dated October 9, 2002.

Further, as per paragraph 5.2 of the said Circular, Non-Resident Indian/Persons of Indian Origin may remit sale proceeds of immovable property purchased out of Rupee funds in accordance with the guidelines in paragraph 5.1 without any lock in period.

Repatriation of sale proceeds of residential property purchased by Non-Resident Indian/Persons of Indian Origin is permitted to the extent of the amount paid for acquisition of immovable property in foreign exchange received through banking channels. The facility is restricted to not more than two such properties. The balance amount can be credited to the NRO account and can be remitted under USD one million facility.

The capital gain arising on the sale of a house in India shall be subjected to capital gains tax. On the basis of the facts in the query, it seems that the house property was held by you for more than three years and, therefore, capital gains tax would be chargeable @ 20 per cent plus education cess of 3 per cent thereon. The tax will be computed by deducting the indexed cost of the house property from the sale proceeds of the house.

Buying a plot in Punjab You can stand witness

Q. My mother wants to purchase a plot in Punjab. In the state, the first witness is the lambardar; can I stand as the second witness?
-- Ashutosh

A. The sale deed in favour of your mother in respect of a property being purchased by her will be executed by the seller. At the time of registration of such a sale deed, both the seller and the purchaser have to be present before the sub-registrar. The signatures of the purchaser can be attested by anyone provided his identity is proved to the satisfaction of the sub-registrar. In my opinion, there should not be any difficulty in your being witness as to the attestation of signatures of your mother while effecting the registration of the sale deed in her favour.

My wife deposited the DD in her bank account. For tax purposes, will the interest income belong to her or me?

Ans On the basis of facts given in the query, it seems that the property was acquired from funds provided by you, as your wife did not have any source of income. It is, therefore, presumed that for all intent and purposes you were the owner of the property and there was no gift involved in the transaction. The reply to your query is based on the said presumption.

The cost inflation index for 2005-06 being 497 and that of 2008-09 being Rs 582, the indexed cost would work out at Rs 21,07,847. The capital gain on the said basis would work out at Rs 10,92,153. The cost inflation index for 2008-09 has been taken as index for 2009-10 is yet to be notified. The tax thereon for assessment year 2009-10 would be leviable @ 20 per cent plus education cess of 3 per cent thereon.

The interest earned on the amount of deposit of Rs 16 lakh in your wife's account would also be taxable in your hands as the said amount of Rs 16 lakh belongs to you.

Source http://qna.indiatimes.com/General/Why_our_Avation_industry_is_in_deep_trouble%3F.html

Ans 2 Indian aviation industry has been under pressure ever since oil prices started spiraling upwards in 2006-07. With intense competition in the market, they were not able to increase the prices of their tickets. They were thus forced to suffer losses, and raise fuel surcharge to reduce them. This had detrimental impact on the number of passengers. Many people switched back to the railways and other means. This started worsening the situation for airline players. the situation went from bad to worse with the onset of the global slowdown, which is still not yet over.

With India showing relatively better signs of a quicker economic recovery, coupled with low oil prices, seemed bringing back better times for the carriers, but upwards curve of oil prices has come as dampener once again. ATF price have hiked by close to 12 percent, and consequently, Kingfisher and Jet Airways have decided to raise fuel surcharge. Air India is supposed to follow. Passenger load factor of planes are not as desired, and is quite unimpressive for the largest player Air India. Situation is grim, and the Indian aviation minister Prafulla Patel did ask the airline companies to change their business models to adjust to the new environment.

 However, there is one insider who does not feel all hell have broken loose on the aviation sector. The man is the chief executive officer of SpiceJet Sanjay Aggarwal. He has been quoted saying in a media report that typically aviation sector globally grows at 1.2 to 1.8 times that of GDP. It mans aviation sector should grow at anything around 13 percent. But it was growing at 25-30 percent, something Aggarwal says was unable to sustain in the long run.

Aggarwal says the industry should continue growing at 13-14 percent, and when industry grows at this rate, low cost carriers like SpiceJet would grow at 16-17 percent.

He has been quoted saying: "The sky is definitely not falling."

Sky should not be falling, but aviation sector seems definitely not in good shape. Salaries of the staff of Air India have been delayed to ensure the carrier has funds in its kitty to sustain its daily operations. Jet Airways is planning to shelve some employees and raise some resources through leasing off its aircraft. Almost all players (perhaps except Air India) has postponed plans for taking the delivery of new aircraft. Kingfisher is desperately looking to raise new resources, and is lobbying hard to allow foreign carriers to buy stakes in the Indian ones.

Perhaps the cue should be taken from what the Minister said about revamping of business  models. Paramount Airways, for instance, remained healthy despite toughest of times. Probably, SpiceJet CEO is already working on new business models. This is, in a way, visible the way the carrier has increased its market share from 8 percent in 2007  to over 12 percent in 2008. Perhaps this gives him confidence even in this hour of crisis. Aviationplayers must realize they need their flights at maximum capacity to make a profit. At the moment this is not happening. They need to strike a balance of ensuring people come in more numbers. The day they get it, it will be the "business model" they should adopt.  

1. The circular relating to TDS states that credit for TDS will be given only based on TDS returns of the deductors. Now we all know that there are innumerable errors while recording PAN numbers especially by banks.I have an assessee who is very old and has TDS certificates by various banks for approx 40,000 whereas as per NSDL this person has credit of only 14,000. Why should this senior citizen be penalised for mistakes of the banks? Which principle of natural justice allows this rule? Whats the worth and sanctity of TDS certifcates in the hands of this person? Which section of the Income Tax Act empowers this gentleman to follow up with the banks to request them to rectify their TDS returns? Is it his duty? Why should he bear all this harrasment?

Instead of this, why can't the Income Tax department issue notices to deductors who issue TDS certificates without matching entries in their TDS returns?

2. The second circular wants all ITR V to be sent to bangalore . Why cant the local IT offices receive all the ITR Vs as usual and send them wherever they want? Why should the assessees be required to bear additional postage cost time ? What will be the status of ITR Vs lost in transit?

We are certainly not opposing any new change for the sake of it. But any decision should facilitiate common good and not only the
babus.Lets use this platform to register our voice. Do you all agree?

We care for you.

by junk_1208@yahoo.com

Ans Since you are Indian citizen and you did not stay for more than 181 days in a year , you saved yourself from being treated as Resident. If that would have been the case, all income of yours whether earned in India or USA would have been taxable in India. However, since you are Non Resident as per Income tax Act, your income is taxable in India if

   1. Any income is received in India
   2. Any income is deemed to be received in India
   3. Any income which accrues or arises in India
   4. Any Income which is deemed to accrue or arise in India[section 9(1)(vi)]

Since you are paid salary by USA based company and received your salary in USA , conditions 1,2,3 above are not satisfied.

As far as the last condition is concerned, there is specific provision for salary under section 9(1)(ii) which states that salary is deemed to accrue or arise in India "if it is earned in India." There is an explanation which declares that " income of the nature referred to in this clause payable for service rendered in India shall be regarded as income earned in India .This is a grey area and only judicial interpretation can clear the ambiguities . Plain reading of the Act shows that for the service rendered by you in India fro which you received salary should be treated as income earned in India and therefore even if you are non resident , same is taxable in India.So, prima facie' , your salary seems to taxable under I T Act.

The saving Grace!
However, there is Double Taxation Avoidance Agreement between India and USA which contains Article 16 related to dependent personal services which states that except in following condition the salaries ,wages or remuneration is taxable in the State where the employment is exercised . The conditions are given sub clause 2 of article 16 which is reproduced below :

    2. Notwithstanding the provisions of paragraph 1, remuneration derived by a resident of a Contracting State in respect of an employment exercised in the other Contracting State shall be taxable only in the first-mentioned State, if :
    (a) the recipient is present in the other State for a period or periods not exceeding in the aggregate 183 days in the relevant taxable year ;
    (b) the remuneration is paid by, or on behalf of, an employer who is not a resident of the other State ; and
    (c) the remuneration is not borne by a permanent establishment or a fixed base or a trade or business which the employer has in the other State"

I find from the facts narrated by you , conditions 2(a) and 2(b) is definitely satisfied as you were not in India for more than 180 days in any one financial year and remuneration is paid by your employer which is not a resident of India. The third condition , you will have to check ,if your salary was borne by the permanent establishment (subsidiary) of your company in India . If Indian office of your company did not bear the salary paid to you , then DTAA protects you from being taxed in India. You should also be aware that it is legally settled that DTAA supersede I.T Act . For more on this read this article.

Ans Relax. First of all , check out if you have really agricultural land which is not defined as capital asset. Under I T Act , capital gains are chargeable to tax . However, capital gains arises only on sale or transfer of capital asset. The definition of capital asset is given in section 2(14) of the I T Act. It excludes "Agriculture land " provided the land is question fulfills certain conditions . The definition of capital asset is given below;

    2(14) capital asset means property of any kind held by an assessee, whether or not connected with his business or profession, but does not include

    (i)...............

    (ii)....................

    (iii) agricultural land in India, not being land situate

    (a) in any area which is comprised within the jurisdiction of a municipality (whether known as a municipality, municipal corporation, notified area committee, town area committee, town committee, or by any other name) or a cantonment board and which has a population of not less than ten thousand according to the last preceding census of which the relevant figures have been published before the first day of the previous year ; or

    (b) in any area within such distance, not being more than eight kilometres, from the local limits of any municipality or cantonment board referred to in item (a), as the Central Government may, having regard to the extent of, and scope for, urbanisation of that area and other relevant considerations, specify in this behalf by notification in the Official Gazette"

What the aforesaid conditions says in plain words is that an agricultural land is not a capital asset under Income Tax Act , if agricultural land is

   1. situated in a municipality or cantonment area having population below 10 thousand or
   2. situated beyond 8 Kms from municipality or cantonment area.

So, if you find that your agricultural land is satisfying the aforesaid conditions , sale of such land is totally TAX FREE.