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Controversies In Assessment: Income-tax Dept Publication

The Income-tax department has released a publication titled “A Step Ahead – A compilation on contentious issues in assessments”. The publication is authored by top-notch senior IRS officers who have a good grasp on the theoretical and practical aspects of making an assessment. It identifies 19 important provisions in the Act which are the subject matter of most additions and disallowances and explains them thoroughly. The provisions of the Act have been explained in a simple and easy to understand manner and a reference has been made to the prevailing controversies and most of the latest important judgements. The book uses an objective approach and advises Assessing Officers on the facts that they have to focus on in order to make a sustainable assessment.

The publication provides invaluable guidance to the department officials as well to the tax professionals and taxpayers. It will also provide to be a valuable referencer of all the important judgements on the point.


6 comments on “Controversies In Assessment: Income-tax Dept Publication
  1. CA R S KALRA says:

    A very good attempt made by the Income Tax Deptt.Gujraat

  2. S K Agrawal says:

    At the outset I clarify that I am a STPI owner and am presently trying to defend my case with the Department by establishing that I am entitled to ten years of 100% Tax Holiday. And that is the intention of my reaction

    I refer to Exemption Under Special Provisions – Sections 10A/10AA/10B on page 13 By Ld. Sri S K Gupta.

    As per the explanation provided, sub-sections 10A(1A), 10A(1B) and 10A(1C), are all encompassing and effect all Units which enjoy Tax holiday under Sec10A.

    I am confused. Is that really so? A plain reading of these three sub-section means they are meant only for Units located in Special Economic Zone. Further this understanding of mine gets strengthened by Para 18 of EXPLANATORY NOTES ON THE PROVISIONS OF THE FINANCE ACT, 2003, CIRCULAR NO.7/2003, the 5th September, 2003. This para reads:

    18. Reinvestment allowance for units in Special Economic Zones.

    18.1 Under the existing provision contained in section 10A, a deduction is allowed on the export profits of an undertaking set up in a free trade zone, software Technology Park, electronic hardware Technology Park or a special economic zone, which is engaged in the manufacture or production of articles or things or computer software. The deduction is available to an undertaking for a period of ten consecutive assessment years. No deduction is allowable to any undertaking beyond the assessment year 2009-10. However, for a unit set up in Special Economic Zone, the deduction is equivalent to one hundred per cent of export profits for five years and thereafter, fifty per cent of profits for next two years and is available even beyond the assessment year 2009-10.

    18.2 With a view to promoting the development of Special Economic Zones, the existing sub-section (1A) of Section 10A has been substituted so as to provide for a further deduction for three consecutive years beyond the existing period eligible for deduction, which shall be equal to 50% of the profits, as are credited to a reserve account to be utilized for the purposes of the business. A new sub-section(1B) has also been inserted to provide that the reserve account is to be utilized for the acquiring a new machinery or plant which is put to use before the expiry of a period of three years. It has also been provided that until the acquisition of a new machinery or plant, the said reserve may be utilized for the purposes of the business of the undertaking other than for distribution by way of dividends or profits or for remittance outside India as profits or for the creation of any asset outside India.

    18.3 These amendments will take effect from 1st April, 2004 and will, accordingly, apply in relation to the assessment year 2004-2005 and subsequent years.

    18.4 Further, the reference of sub-section (1A) in subsection (4) and the reference of “this section” instead of “sub-section (1) in sub-section (5) of section 10A have also been inserted. The amendments are consequential in nature and will take effect retrospectively from 1st April, 2003 and will, accordingly, apply in relation to the assessment year 2003-2004 and subsequent years.

    As per the explanation for Sec 10A provided in this publication, a STPI Unit established after AY 03-04 or thereafter is entitled to only seven years of exemption. No exemption for last three years because for obvious reasons that a STPI Unit will not create a “Special Economic Zone Reinvestment Allowance Reserve Account”.

    I wonder if the intention of legislature was to cut back on the Tax Holiday by introducing these three sub-sections OR promote SEZ. If it was to cut back, then why did the legislature extended 10A benefit twice in blocks of one year each.

    I shall be thankful if any body points out where am I going wrong.

  3. vishnu patel says:

    It is really very valuable and hope that the Dept. officers may follow it with open mind and judiciously.

  4. Avineesh says:

    Seems spell check was not done aptly? First page, see the spellings of Chief?? Hope the rest is OK…

    Issued by :
    The Cheif Commissioner of Income-tax
    Aayakar Bhavan
    Ahmedabad-380 009.

  5. NILANGSHU SEN says:

    Most handy ready reference compilation on the subject….Thanks to the creator and uploader

  6. jitesh sonee says:

    A valuable compilation and a nice effort.

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