2. Amendments made by Finance
Act,2012
For Sec.194 J-
Explanation to Section 9(1)(vi)- “Royalty”
• 2With retrospective effect from 01.04.1976.
• Explanation 4 introduced to include transfer of all
or any right for use or right to use a computer
software.
• Explanation 5 introduced to clarify that royalty
included consideration in respect of any right,
property or information whether or not the
possession or control is with the payer or is used
directly by the payer or the location is in India.
• Explanation 6 introduced to clarify that process
includes transmission by satellite, cable, optic fiber
or by any other similar technology.
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3. Amendments made by Finance
Act,2012
Section 201 : Consequences of failure to
deduct or pay And Section 40(a)(ia)
• W.e.f. 01.07.2012 deductor will not be held as an
assessee in default if:
i) the payee is a resident,
ii) payee has furnished his return of Income,
iii)payee has included such sum in computing Income in
his return,
iv)payee has paid the tax due on the Income,
v) certificate is obtained by the CA in the prescribed
form
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4. Amendments made by Finance
Act,2012
Section 201(1A): Interest payable by the payer
for not deducting tax
Interest is payable by the deductor (covered under
first proviso) from the date on which such tax was
deductible to the date of furnishing of return of
income by the payee.
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5. Amendments made by Finance Act,2012
Section 201(3)
Time limit for passing an order for holding a person to
be an assessee in default.
No order shall be made after the expiry of:-
a. Two years from the end of the financial year in
which the TDS statement is filed.
b. Six years from the end of the financial year in
which payment is made or credit is given.
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6. Amendments made by Finance
Act,2012
Section 234E : Levy of fee in case of delay in filing TDS
or TCS statement
• Rs.200 per day but not exceeding amount of TDS
• Before submitting TDS/TCS Statement
• w.e.f. 01.07.2012
Section 271H : Penalty for filing incorrect particulars or
failure to file TDS or TCS Statement in prescribed time
• Rs. 10,000 to Rs. 1 Lac
• No penalty if the deductor proves that tax, fee and
interest is paid
• No penalty if delay is not more than one year
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7. Circular No.01/2012 dt. 09/04/2012
All deductors shall issue TDS certificates
in Form No 16A to be downloaded from
the TIN website in respect of all sums
deducted on or after 01.04.2012.
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8. Section 40(a)(i)/(ia)
Amounts not deductible under the head
Profits and gains of business or Profession”
(ia)” any interest, commission or brokerage,
rent, royalty, fees for professional
services payable to a residents, or amounts
payable to a contractor…………. on which tax
is deductible at source under Chapter
XVII-B and such tax has not been deducted
or after deduction, has not been paid on or
before the due date specified in section
139(1).”
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9. Contd’
Whether can be applied from Assessment Year
2005-06 ?
Bharti Shipyard Ltd. vs Dy. CIT 132 ITD 53
(SB)(Mum)
CIT vs Virgin Creations (Cal.) (H.C.)
itatonline.org
Sanjay Kumar Pradhan vs ACIT 14 ITR 150
(Cuttack)(Trib.)
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10. Contd’
Section 40(a)(i)/(ia)
Expenditure paid during the Financial Year on
which tax is not deducted, whether disallowance
of expenditure is called for?
Merilyn Shipping & Transports P Ltd.
ITANo.477/Viz/2008 (Sp. Bench) Dt:22.03.2012
Stay granted by High court of Andhra Pradesh
Sarala Associates 35 SOT 148 (Mum)
Tubes Investment Ltd. 325 ITR 610 (Mad)
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11. Contd’
• Short deduction
Whether the amount to be:
a) Fully disallowed
b) Proportionately disallowed
c) No disallowance
Ref: S.K. Tekriwal (Kol.) 48 SOT 515
– Chandabhoy & Jassobhoy (Mum) ITAT
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12. Contd’
Genuine and bonafide belief that no tax is to be
deducted
ref: Kotak Securities Ltd. (Bom) ITNo.3111 of 2009
Provision for expense made, but payee not known.
ref: IDBI (Mum) 107 ITD 45
Expenses not debited to profit & loss account
ref: Umang Diaries (Delhi) 36 SOT 383
Pranik shipping & Services (Mum) 135 ITD 233
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13. Credit of t.d.S.
Rule for allowing credit for TDS for the purpose of section 199.
Rule 37BA inserted w. e. f. 01/04/2009 vide notification
No.28 dt. 16.03.2009.
Conditions:
On the basis of information of tax deducted furnished by
the deductor.
Information in Return of Income.
Credit will be allowed for the Assessment Year for which
such income is assessable.
Where Tax is deducted and paid to Central Government
and the income is assessable over a number of
years, credit for TDS shall be allowed across
those years in the same proportion in which the
income is assessable to tax
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14. Contd’
Ref. Sec. 198 :All sums deducted in
accordance with the provisions of this
chapter shall, for the purpose of
computing the income be deemed to be
income received.[Except Salary]
Ref. Sec. 205 : Where tax is deductible at
source under the provisions of this
chapter, the assessee shall not be called
upon to pay the tax to the extent………..
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15. Issues
Credit to be allowed in which year?
What if income is not assessable (e.g.
reduces pre-operative exps.) ?
Whether sec. 198 applies even if income
not recd?
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16. Issues on Reimbursement of
Expenses
Tax and duty
Security, Maintenance Charges, etc.
Other Expenses
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17. Section 194J
Fees for professional or technical services
Payment of transaction charges, VSAT charges,
etc. paid by Stock broker to Bombay Stock
Exchange and National Stock Exchange .
kotak Securities Ltd. 62 DTR 339 (Bom)
Bharti Cellular Ltd. 44 DTR 190(SC).
Skycell Communiciation Ltd. 251 ITR 53 (Mad)
Glaxo Smithkline 12 SOT 221 (Del)
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18. Section 194H
Commission or brokerage
Credit Card Payments
Mechanism of payment.
To approve the merchant establishment (ME)for
processing the credit card payments.
Acquiring bank (AB) pays ME the amount after
deduction.
No indemnity to AB in case of default
No payment made or amount credited by ME
Ref: Vah Magna Retail (P). Ltd.
ITA No.905/Hyd/2011 Dt.10/04/2012 18
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19. Section 194H
Commission or brokerage
Bank Guarantee Commission
Kotak Securities Limited ITA No.6657/Mum/11
dt: 03/02/2012
Distribution / Sale of SIM card and recharge coupons (prepaid).
Principal to principal or Principal to agent.
Vodafone Essar Cellular Ltd. 35 DTR 393 (Cochin)
Idea Cellular Ltd. 29 DTR 237 (2009) (Hyd)
Idea Cellular Ltd. 230 CTR 43 (2010) (Del)
Bharti Cellular Ltd. 294 ITR 283 (2007) (Kol)
Explanation is not wide enough to cover any payment received in
course of buying and selling of goods.
Ahemdabad Stamp Vendor 79 DTR 81 (SC)
257 ITR 202 (Guj.)
Kerala Stamp Vendor 150 Taxman 30 (Ker.)
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20. Section 194H: Commission or brokerage
Sale of goods at fixed margins and the activity is under the direct
supervision and control of the manufacturer.
Hindustan Coco Cola Beverages Pvt. Ltd. 98 TTJ I (Jp)
Contract of sales Vs. Contract of agency.
Title and property passes on to the buyer / distributor on the
delivery of goods.
Fosters India Pvt. Ltd. 117 TTJ 346 (2008) (Pune)
Target discounts and incentives to distributors and dealers.
National Panasonic India Pvt. Ltd. 94 TTJ 899 (2005) (Del
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21. Section 194I: Rent
Scope after amendment by Taxation laws (Amendment)
Act,
2006 w. e. f. 13.7.2006.
Whether following payments are covered:
• Cold Storage
• Car/Bus/Aircraft
• Ship
• C & F agent, Goods Stored in Warehouse
• Payment to Hotel
• Business Service Centre
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22. Section 194C
Payment to Contractors
Meaning of the words “any work”
Not restricted to works contract, therefore has wide import
and covers ‘any work’.Associated Cements Co. Ltd. vs. CIT 201
ITR 435(SC)
“Any work” does not mean professional services are also
included. CITC vs. CBDT 209 ITR 660 (Bom)
“Any work” has wider imports after the Supreme Courts
decision, however, it is not unqualifyingly wide to cover
“each and every work”. East India Hotels Ltd. vs. CBDT
223 CTR 133 (Bom)
“Work” is different from “service”. In work, the activity is
predominantly physical, it is tangible. In service, activity is
predominantly intellectual or at least mental. 22
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