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Dear friends,

One assessee failed to claim investment allowance in the return for A.Y. 2016-17 though he was eligible for it. Now what he should do? I could think of following options:

(1) The time limit for revised return is over. However, he can take the remedy of filing revised return alongwith condonation of delay u/s 119 of the Income Tax Act.

(2) He can apply u/s 264 to CIT for revision of intimation u/s 143(1). However, i feel that there will be technical hurdles here as the assessee has failed to claim the investment allowance in the return of income.

What is the better alternative? Is there any other alternative available? The case of the assessee for A.y. 2016-17 has not been selected for scrutiny.

Please share your valuable views.

Friends,

I have certain queries for the learned members on this forum to ponder upon. I have already been given divergent views on this and hence I thought it would be gainful to post these queries on this forum.

(1) Is residential apartment owners association an AOP or a housing society? The tax slab in both the cases will be different. I understand that an AOP can be formed only with an intent of commercial activities whereas apartment owners association is not run with any commercial intent.

(2) Will it make any difference if such apartment owner association is registered or not registered?

(3) It is undisputed that the income earned from members will be exempt on the ground of mutuality principle and income earned from non-member will be taxable as held by Supreme Court in case of Bangalore Race Club. If such apartment owners association has FD interest income of Rs. 2,00,000/- from nationalized banks, will be taxable or basic exemption limit of Rs. 2,50,000/- available to AOP will be available?

(4) is there any direct judgments of court and tribunals available on this? if yes, please provide me relevant citation.

Thank you in advance to all learned members.

any views from the learned friends?

Dear Pawanji, with due respect, let me counter your argument by stating that even if all assessees pay taxes regularly, the situation is not going to be changed because department has no barometer to differentiate between a real tax payer and a tax evador. Another point is do you think all income tax officials pay proper taxxes on their income? so where is the difference? So one side correction is not going to solve the problem. Well, i think we all have been fixed in a vicious circle where it is difficult to conclude whether tax mechanism is so dull and emotionless on account of large scale tax evasion or tax evasion is there on account of such kind of tax mechanism. Kindly note that tax system in our country is a two way matter and not a one way trafic. So correction should also be two way.

But it is true that frivolous orders and appeals by the department frustrate the assessees at large becasue department has nothing to lose in lititgation whereas the assessees have to bear tension and cost even if they win. So unless, the courts and tribunals come with such serious decisions putting a break on frivolous litigations, there will be gross injustice to the assessees and this situation holds good even if assessees are not paying tax properly.

In case of exemption under section 47(xiib) in case of conversion of company into LLP, there is a restriction that the resrves shall not be taken away directly or indirectly by partners for a period of 3 years after such conversion.


further, in case of such conversion, the company is treated to have been wound up in which case section 2(22)(c) comes into play which taxes distribution of accumulated profits as dividend and subject to dividend distribution tax.

My question is if in case of conversion, there is a lock in period for reserves, does section 2(22)(c) apply? in other words, should there be restriction on distribution of reserves even after payment of DDT?

Kindly share your views on this.

Thanks for prompt help. My confusion is regarding the concept the business connection. I feel that in case of purchase on principle to principle basis, there is no business connection and hence section 9 does not apply. Am i correct? is there any direct judicail pronouncement in this regard?

I have come across a very typical situation. A firm wants to import some material from Italy. Now, the italian seller is not providing the tax residency certificate and hence it is difficult to claim DTAA benefit. However, the transaction is that of purchase of goods on principal to principal basis and therefore i believe that the payment for import will not constitute any income of the non resident u/s 9 of the income Tax Act. Is my understanding correct? should i give 15CB certifcate on this basis without there being tax residency certificate? Kindly share your views. Thanks

very very interesting decision. the SC judgment of Kwality buiscuit was in the context of section 115J and not in context of 115JB. The difference between 115J and 115JB has been noted in several decisions in the context of interest u/s 234B & 234C. The view taken was that since 115JB specifically prescribes application of all other provisions of the Act, interest is chargeble. Similar decisions were there for section 115JA also. I thought the judgment of Rolta has put an end to the controversy but seems not. i also thought that the judgment of SC has always retrospective effect and time of rendering is not important. Let us have views of the expert members on this.

An assessee filed a letter before the A.O. to treat the return filed u/s 139(1) as return in response to notice u/s 148 and requested for copy of reasons. The A.O. denies the letter and insist for filng return of income. Is the A.O. correct? Can we have any material/decision in favour of the assessee?

You are very right. There are several issues in this matter:

Whether CBDT is right in issuing this instruction? This need to be tested through writ petition or PIL.

On one side the assessee has no chance of disposal of appeal and on other side, the department keeps on recovering the demand for budgetary targets. This also need to be brought to the notice of court. This violates principles of fairness.

One (a courageous person) may also file an RTI before CBDT to get the details of recovery made in such manner to be presented before the court. The effect thereof on the country's budget may also be analysed to be presented before the court.

The purpose for bringing this to the notice of court is that the court may direct the CBDT to set proper mechanism to see (1) either demand is stayed for the time during which the assessee's appeal can not be disposed off on account of such instruction or (2) enough number of appeallte authorities are placed to ensure prompt disposal of old appeals to clear backlog.

unless, court interfere with this issue, nothing is going to happen as people in Delhi are budgetcentric and figurescentric.

However, you deserve a special thanks for bringing this issue to this forum. This issue is of great importance for assessee at large throughout the country.

There is CBDT instruction No. 1936 F.No. 404/62/95-ITCC dated 21-03-1996 wherein CBDT instructed that payments of taxes made by the assesse should be first adjusted against the tax due and thereafter against interest u/s 220(2).

Is the instruction still valid? or there is any change in law thereafter?

Pawanji,

can you please elaborate the matter?

I referred to the provisions of section 220 but the A.O. says it only applies to intimations u/s 200A.

As per the A.O., CBDT instruction No. 1944 permits such double charging of interest.

Kindly advise

Can both interest u/s 201(1A) and 220(2) charge on the same amount for the same period in respect of order u/s 201(1)? My understanding is that interest u/s 201(1A) will run upto the order of 201(1) and thereafter interest u/s 220(2) will commence. However, the A.O. is not agreeing to this.

There is a direct provision in respect of intimation u/s 200A by virtue of section 220(2B) w.e.f. 1-7-2012.

is there any reference/circular/judgment in the context of order u/s 201? Please provide the same.

well, I respectfully disagree with Prashant. You can claim something as business loss when the same is not explicitely dealt with in any of sections of the Income Tax Act falling under the head income from business/profession. Otherwise, the conditions or restrictions prescribed for a particular allowance will become otiose as in the situation where the assesse fails to meet with the prescribed condition or restriction, he will alternatively claim the same under other nomenclature i.e. business loss as suggested by you. This can not be permitted. Wherever, a specific provision is made for any specific allowance, the said allowance will be governed under that provision only and once disallowed under that section, deduction can not be permitted under general head of deduction. This is my understanding in the matter. The other members may correct me if I am wrong.

Well, there is no explicit prohibition on furnishing copy of ordersheet. In fact, if an assesse wants to have proof of his appearance and having filed submissions, then he can surely demand copy of ordersheet and the A.O. is bound to give the same. Ordersheet is never any personal or inter-office document which can not be granted to the assesse. I have practically requested the same in several situations and also obtained the same. In any case, under RTI, you can always demand this.