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He can also show the manually issued TDS certificate and request the AO to keep the demand, if any, in abeyance as per sec. 205 of IT ACt. Further, if your client case is refund one, please file a grievance petition or approach the ombudsman in this regard.

you mean to say that to escape from interest u/s 234C?. If that is your query, then your client has to pay the whole amount of tax payable  in the remaining instalments i.e. 30% in Sep, 60% in Dec and 100% in March then your client will not be liable for any interest  as per the amendment brought in the finance act 1996 in the proviso to sec. 234C

your query is, if  Mr X gives the land in question for development as gift to his son and the son in turn offers  the same for development, then the one of the solutions to the query is share of the son received from the builder is exempted from capital gains tax as per the Karnataka High Court decision 331 ITR 211. With regard to the second query, the cost of the super structure received by the land owner is the sale consideration to be considered for computing the capital gains. Since this value is highly arbitary, in the finance Act, 2012 an amendment has been brought that in such type of situations, the market value of the land foregone by the land owner should be considered as sale consideration.

Apart from the case laws cited above, the issue was decided against you in the following decisions.  202 taxman 531, 43 ITCL(I) 85, 23 DTR 140, 47 sot 180, 106 ITD 388, 122 ITD 388 and finally 89 ITD 73. The only case law in your favour is 331 ITR 211 wherein it was held that the person is eligible for deduction u/s 54/54F in respect of all the flats received. I hope you will go through the decisions cited above and take a decision as to how to proceed further. But dont forget that these days IT people will not leave any case till a decision is given by Apex Court. Even if Apex Court  decides the issue in favour of public at large,  there is every possibility that a retrospective amendment will be brought into the statute by the law makers. Ergo, you are advised to estimate cost of litigation and risk involved before finalising the issue.

Best of luck.......................

TDS is required to be deducted only when the income of deductee is taxable in India as per Apex Courrt decision reported in GE capital (327 ITR 456), it can safely be concluded that TDS is not required on the payment made provided the payment is not covered in DTAA.

An A.O. after conducting a survey u/s 133A in a case of builder, referred the stock in trade i.e. constuction cost  to valuation cell with a doubt that expenditure incurred may be more than what has been recorded in books of accounts. The Valuation Officer is behind the builder asking to produce vouchers for the expenditure incurred. Now, can the builder request the A.O. under what section the reference is made because, as per the provisions of the Act, only sec. 142A empowers the AO to refer the case to valuation cell. However, fortunately/unfortunately sec. 69C is not mentioned in sec. 142A which means that the law makers didnot envisage that this type of  situation will also arise wherein the stock in trade is to be referred to valuation cell and therefore, they didnot include sec. 69C in sec. 142A. The consequent of which is that this type of  cases cannot be referred to valuation cell asking to estimate the value of stock in trade.  Under the above mentioned circumstances, the builder came across a case of Delhi High Court reported in 319 ITR 276 wherein it was categorically held that there is no provision in IT Act to refer the case of a builder to valuation cell. When this is brought to the notice of AO, he says that in any case, if excess valuation, if any,  estimated by the Valuation Officer  will be added u/s 69, 69B if not under 69C and directed the builder to cooperate with the valuation officer. Under these circumstances, what is the remedy available to the builder except filing a writ.

Besides, documents you have produced earlier, if u can get a confirmation from the purchaser also that the actual consideration is Rs. 30 lakhs but not 10 lakhs as mentioned in the sale deed, there is every possibility that u can win the case. Otherwise, it is becoming difficult to convince the government authorities.

But Rajastan High court held in a different way in the decision reported in 295 ITR 314. Since this is the only high Court decision so far on this it should be followed as per the decision reported in 113 ITR 589 and 118 ITD 293.

As per the decison of sepcial bench reported in 292 ITR 1(AT), the deduction will not available in the given circumstances.  But as per the Karnataka High court decision reported in 331 ITR 211 the person is eligible for deduction u/s 54. Now it is left to you to go ahead.......................

I can understand the feelings. But this is the world we are living in and we have to go with it. Your expression really make me laugh.........................we cant do any thing except remain as a silent spectators.............

In my opinion, the employer can ask the employee to show the challan evidencing the amount paid to the department equalent to the amount supposed to be deducted for not only for that month but also next two months. Please see sec. 191 which says that if TDS is not deducted by deductor and the said tax is not paid by the deductee also, then only the deductor can be treated as an assessee in default. Once the employer demands for challan which evidencing that equalent amount has been deposited by employee, then it can be treated that amount has been paid by the assessee direct. Therefore, the question of treating employer doesnot arise. Further, it is well settled that interest u/s 201(1A) can be levied only till the date of payment of such tax either by deductor or by the deductee. Since the employer is demanding to show challan evidencing payment for next two months also, there is no question charging any interest u/s 201(1A). If the request of the employee is taken on paper requesting not to deduct tax and it will definitely serve the purpose of penalty u/s 271C. Nobody can levy any penalty when there is no revenue loss at all. As  expressed in the question, since TDS from department side is not stabilised and proper credit is not allowed in the assessments of the deductee by one reason or the other, the above method can safely be followed if the employer is ready to face various questions raised by the IT authorities.

It appears that reply that the transfer of goodwill is a capital receipt may be correct. However, that the statement that it is not taxable is not correct. the Case law is not applicable to the present situations. Because after the case laws sec. 55(2)(a) has been amended wherein it is enacted that the cost of acquisition for the self generated good will should be considered as "Nil" the explanatory memorandum for the finance act,1994 is as under -   

Capital gain on  transfer of assets where there is no cost of acquisition

33.1 By virtue of the provisions of section 45 of the Income-tax Act, capital gains arising on transfer of a capital asset is subjected to income-tax. Section 48 lays down the method of computing capital gains. The cost of acquisition and expenditure relating to the transfer are deducted from the full value of consideration to arrive at capital gains. Section 2(14) defines "capital asset" to include all kinds of property except a few specified ones.

Finance Act, 1994

33.2 In a number of cases, the courts have decided that in case of self-generated assets like goodwill or where the cost of assets to an  assessee (not covered by situations mentioned in section 49) is nil, no tax on capital gains consequent to transfer of such assets could be charged. They have interpreted that only if an asset did cost something to the  assessee in terms of money that the provisions relating to the levy of tax on any capital gains under section 45(1) read with section 48(ii) would apply. A transaction to which these provisions cannot be applied has been held to be one never intended by section 45(1) to be the subject of the charge. The courts have further interpreted that the intent of levying capital gains tax goes to the nature and character of the asset, that it is an asset which possesses the inherent quality of being available on expenditure of money to a person seeking to acquire it. The courts have held that none of the provisions pertaining to the head "Capital gains" suggests that "capital assets" include an asset in the acquisition of which no cost at all can be conceived. The leading case propounding this interpretation is  CIT v. B.C. Srinivasa Setty [1981] 128  ITR  294 (SC).


Therefore, the transfer of goodwill is now taxable.

Please see the following circular issued in this regard in the year 1943 wherein depreciation can be allowed in hire purchase transactions. Circular No. 9 [R. Dis. No. 27(4)-IT/43], dt. 23-3-1943

The following instructions are issued for dealing with cases in which an asset is being acquired under on what is known as hire-purchase agreement :

1. In every case of payment purporting to be for hire-purchase, production of the agreement under which the payment is made should be insisted on.

2. Where the effect of an agreement is that the ownership of the subject is at once transferred to the lessee (e.g., where the lessor obtains a right to sue for arrear instalments but no right to recovery of the asset), the transaction should be regarded as one of purchase by instalments and no deduction in respect of 'hire' should be made. Depreciation should be allowed to the lessee on the entire purchase price as per the agreement.

3. Where the terms of the agreement provide that the equipment shall eventually become the property of the hirer or confer on the hirer an option to purchase the equipment, the transaction should be regarded as one of hire purchase. In such cases the periodical payments made by the hirer should for tax purposes be regarded as made up of :

(a) Consideration for hire, to be allowed as a deduction in the assessment, and

(b) payment on account of purchase to be treated as capital outlay, depreciation being allowed to the lessee on the initial value (i.e., the amount for which the hired subject would have been sold for cash at the date of agreement).

The allowance to be made in respect of hire should be the difference between the aggregate amount of the periodical payments under the agreement and the initial value (as described above), the amount of this allowance being spread evenly over the term of the agreement. If, however, the agreement was terminated either by the outright purchase of equipment or of its return to the owner, the deduction should cease as from the date of the termination.

An assessee claiming this deduction should be asked to furnish a certificate, from the vendor or other satisfactory evidence, of the initial value (as described above). Where no certificate or satisfactory evidence is forthcoming, the initial value should be arrived at by computing the present value of the amount payable under the agreement at an appropriate rate per centum; in doubtful cases the facts should be reported to the Board.
These principles are once again reiterated in the case law reported in 53 DTR 102 also

The situation is very typical. But the answer is  "No".

please see the bangalore Tribunal decision referred in 33DTR 514 or 129 TTJ 680 wherein it was held that AS-7 was not notified for the purpose of incometax as such assessee can follow project completion method also.