Messages

Dear Sir,

I am not clear. It has always been the law (even pre 56(2)) that the income on asset transferred to wife as gift is to be clubbed in the hands of the husband. The gift itself was not taxable.

U/s 56 (2), the existing law as to non-taxability in wife's hands is continued while the clubbing provision also continues. So what is the grievance / point?

Sir,

Gifts from husband to wife is exempt u/s 56(2). It includes both cash and kind such as immovable property. Now , When a husband gifts the property to his wife, income tax is not levied in the hands of the receiver for this transaction.
But Section 64, Taxes the income that is derived out of such property as it is without adequate purchase consideration.

Now the question is
1)When a person transfer the property, he also transfers the income from such property, in such cases Can  64 still have any bearing with recent amendment?.
2) Can clubbing provision over rule the benefit of other section?.

sathya

[Therefore, the levy of interest under section 201(1A) cannot, at any rate, be construed as penalty.]

Honble Karnataka High Court in the matter of CIT v. Oriental Insurance Co Ltd [2009] 183 TAXMAN 186 {KAR} has held that

Section 201(1A) is a provision to levy interest for delayed remittance of the TDS. It is the practice of the revenue that for belated

payment of tax for any reasonable cause, the assessee is liable to pay interest at the rate of 12 per cent per annum. Similarly, 

for refunds, the revenue pays interest to the assessee. Therefore, the levy of interest under section 201(1A) cannot, at any rate, 

be construed as penalty.

Hence, it will be of immense use to rely on this case regarding the allowance of the Interest on late payment of TDS.

Thanks

Dear Sir,

Are you suggesting that because interest is not "penalty, it can be claimed as a deduction? However, this cannot be because the liability to pay advance tax and interest thereon is a personal obligation and not a business liability. There is no provision in the Act or under general principles which sanction a deduction of interest on advance tax.

Dear Shri Goel,

Thank you very much for your expert analysis of the subject. I have the feeling after reading your piece that Honda Siel may not be the last word on the subject.

I read the judgement of Deva Metal Powders referred to by you. The SC there has emphasized that the judgement relied upon by the AO to make the rectification was not directly on the point but he was seeking to apply the "inference" of the judgement.

In Honda Siel, the judgement which the ITAT omitted to refer was directly on the point and therefore the SC said there was a mistake apparnt from the record.

I am confused whether this has a bearing on the matter. i.e. if it is a direct decision on the point then there is a 'mistake' apparant from the record otherwise not.

At least as things stand today, would I be justified in arguing before the ITAT that Ramesh Electric should not be followed in view of Honda Siel or do you see a problem in this?

Many thanks for your expert guidance.

[Honda Siel Power Products vs. CIT]

Dear All,

I want to draw attention to the judgement of the Bombay High Court in Ramesh Electric 213 ITR 497 where it was held that the ITAT's failure to condier an argument does not amount to a mistake apparant from the record for purposes of s. 254(2) of the IT ACt, 1961.

However, in Honda Siel Power Products vs. CIT (Supreme Court) {Pl. see SC section of this site}, the SC has held that the ITAT's failure to refer to a decision cited was a mistake apparant from the record. The following observations are worth noting:

"The purpose behind enactment of section 254(2) is based on the fundamental principle that no party appearing before the Tribunal, be it an assessee or the Department, should suffer on account of any mistake committed by the Tribunal. This fundamental principle has nothing to do with the inherent powers of the Tribunal.....

When prejudice results from an order attributable to the Tribunal's mistake, error or omission, then it is the duty of the Tribunal to set it right. Atonement to the wronged party by the court or Tribunal for the wrong committed by it has nothing to do with the concept of inherent power to review. In the present case, the Tribunal was justified in exercising its powers under section 254(2) when it was pointed out to the Tribunal that the judgment of the coordinate bench was placed before the Tribunal when the original order came to be passed but it had committed a mistake in not considering the material which was already on record."


IMHO, these observations are very wide and render the judgement in Ramesh Electric bad-in-law.

Do you agree?

Excellent!! ;D