Monday, July 21, 2014

Why To (TAX) Worry ? / Or Why Not To ?? - New Series (for Time Pass)

$ ........Don Quixote (Novel) « Thomas Jefferson’s Monticello 
Commonwealth Games Village flats soon to be auctioned 
< In the presentation, DDA proposed that the auction could either be held by the urban development ministry or the authority. DDA had sold 74 apartments in the first public auction in 2012 and 96 flats were allotted to central government departments.

Subsequently, the UD ministry took over the authority to dispose of the flats. No more flats have been auctioned since, though DDA has chosen to designate 45 of these as the authority’s staff quarters and has given Delhi government 60 flats. >
Subject to factual matrix:
Is there any tax implication/ planning one can think of; wprt the Flats/Apartments Act, also sec 54, etc., as amended ?
Entering of agreement to sell amounts to Purchase U/s. 54 as it creates rights in favour of buyer – SC

When the tax bill is unreasonable

Watch out Here comes the tax collector Ron and Joe /
Whether a company pays it and goes to court, or seeks a stay on the demand would depend on the specifics of a situation
One of the catch-22 situations that corporate India faces when a huge tax demand visits them... »
<> Going by one's limited know of things, but as a novice, before the introduction of later novelties like MAT, be it a business or professional firm , if professionally managed, was known, almost on a day-to-day basis, to keep a watch on the 'bottom line' first, to take a conscious decision on the 'top line' and the several ones in-between. As regards any other concerned, e.g . taxman, same way as a shareholder, used to have his eyes glued mainly to the bottom line ; and as such, used to be least bothered as to how those are reflected or disclosed in the Balance Sheet. Again , going by the same limited knowledge, may be outdated now, with such changes as MAT, the old practice could have changed.
Be that as it is inevitable, if one is not mistaken, there used be a confusion on, - had a demand notice been served, litigable or not, as to whether or not it should be, in the books and final accounts, disclosed necessarily as a liability certain, not as a 'provision' for a 'contingent liability' ; and only in the event of, and depending on the final outcome, treatment and manner of disclosure need to accordingly require a revision. 
Incidentally, the intriguing part , as may have been noted by a layperson with a pinch of salt, is the bottom line- claiming, that "the views are personal". It is unclear why the need to specifically saying so; as , could after all, it be any different even otherwise.

CIT vs. M/s Nayan Builders and Developers (Bombay High Court)

< Comm.  Posted


Buying more than one home? Fork out capital gains tax

< Looking to sell your ramshackle ancestral home to buy a couple of apartments? Be prepared to shell out a hefty sum in capital gains tax, as the Budget has capped tax breaks available to such property buyers.
This has been done through a seemingly innocuous tweak in the language of Sections 54 and 54F of the Income-Tax Act.
Until this Budget, anyone selling buildings, land or other long-term assets and using the money to purchase a residential house within three years of the sale was not required to pay capital gains tax (20 per cent) on the sale proceeds.
But the Finance Minister has now tweaked this section to specify that only “one residential house in India” would be eligible for the tax break, instead of “a residential house”.>

 <> The write-up is noted to have not highlighted /laid stress that the subject amendment is two-pronged; in that, as per the amended provision, the 'new asset' (residential house),must be, unlike before, situated IN INDIA. This aspect, it appears, has been over sighted also by the RBI in announcing its liberalizing the extant rules ; a  recent  report says,-   "Buying immovable property abroad now more easy". The bitter medication prescribed via the subject amendments,which denies the tax exemption thus far available, if perceived closely, in effect, also retroactively ! If remembered right, this view point has been shared in detail  in an earlier issue of BL.

    Just another gamble Fiscal targets in the Budget NATA789/SHUTTERSTOCK.COM
  • Further, both the write-up and some readers' comments, if have been rightly understood, appear to create an impression that the condition of 'one' home is to inure for life time of a tax payer. To put it differently, a taxpayer,  having claimed the exemption for transfer of a home in any one year, is precluded from claiming such exemption on transfer of another home, not only in the year in which such a claim  finally qualifies for the exemption and fructifies or materializes, but also in any later year. If so, to put it in the least offensive manner, any such reading and understanding can only be decried to fly in the face of not only the general scheme of the related provisions, but also run counter to all known rules of construing / interpreting any enactment. Pithily stated, in one's considered view, and firm conviction, on a simple and straight forward reading of the amended provision, the effect of the  amendment is that, for and from the assessment year 2015-16, claim for tax exemption in respect of more than one transaction of transfer (of more than house) will not be allowed, even though,  in the same one relevant previous year, being the year in which the condition for exemption comes to be fulfilled, hence actually fructifies and finally qualifies for the exemption. It may so happen that, in a given previous year, there is more than one exemption claim comes to fruition. Need to be kept in mind that,such a thing may happen for reasons far beyond rather outside of the taxpayer's control. That is because the event of 'purchase' or 'construction', in the sense of its 'completion' being the implicit, if not the explicit requirement of the scheme of the law, is mostly in the hands of the other party, being promoter/seller minding to  co-operate to the last detail as agreed and ensures that the /construction' is completed in all respects,or the sale is lawfully concluded on the agreed date/point in time.   
  • The proposition involving a quandary will be better appreciated   if  it is kept in focus that as per the law, the condition for exemption  is required to be fulfilled not necessarily in the same year in which the transaction giving rise to capital gains arises , but comes to be allowed if the condition happens to be fulfilled in the immediately preceding year or within 2/3 succeeding years.

       (Above pending to be 'edited')



    <><>  Contd. (to dilate):
    Both the write-up and some of the readers' comments, it appears, have grossly overlooked, as indicated, the not-so-obvious 'retroactive' effect; so much so, the vital but hidden implication of the subject amendments adversely impacting the 'roll over tax exemption' has been unwittingly ignored. In brief, such an adverse effect, though obviously unintended, might come to be experienced, in given cases. That is,  in which, - albeit the transfer of ‘original asset’ was made in a year ending on or before the cut off date of 31-03-2014, - in the year ending 31-03-2015 (or even after), for reasons often far beyond taxpayer’s control, the ‘completion’ of ‘purchase’ or ‘construction’, as envisaged, could happen in respect of more than one ‘home’ ( - 'new asset).  In the result, tax exemption will be denied in respect of other than one.
    If not still made clear, sorry ! ;  recommend to do own study.

    1.  Is the Finance Minister being realistic in projecting substantial increases in tax revenues despite many tax giveaways in the Budget? His optimism is misplaced
                          One of the features of several Union Budgets over the past decade and more has been the tendency... »

<> Tentative / impromptu reaction: Most of the 'pet ' terms, often  repetitively chosen, by  self-professed or -projected mundane writers on 'economy' simplistically  clothe ostensible  pretentious  'ideologies', palpably over-sighting the ground realities, from a purely common sense viewpoint.
Specimen, for a random sampling:
' tax buoyancy'; 'tax sops'; 'concessions'; OR
"....that is only because he slashed spending, in almost ALL MAJOR AREAS that AFFECTED THE WELFARE OF THE PEOPLE and the DEVELOPMENT OF THE COUNTRY ..."
 so on so forth.
These are facets requiring to be gone into the very root, for an analysis in properly focused flash light,  not of a night lamp.
As a great renowned visionary said to the effect,, the underlying philosophy or outlook  come across invariably is nothing else than the ordinary mortal's attitude who advocates, - don't ever tax me, or my kith and kin; may be, try that man behind the tree (who. probably, was not in hiding , but in the process of answering nature's call)
Worthwhile look for worldly wisdom; to begin with, read one must, at least once in life time what great truly enlightened thinkers had to say or write- sample: Nani A Palkhivala's   published article way back in 1972 ruminating, remorsefully, - "If I were the Finance Minister".
CBDT Instruction 5/2014 : No Appeal to Tribunal if Tax Affect is Below Rs 4 Lakh
CBDT instruction 5/2014 has been issued to reduce the litigation between...
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  • Swaminathan Venkataraman
  • Swaminathan Venkataraman Not-so-obvious but an obvious moral of the welcome News: Don't ever get involved in a tax dispute; even if you cannot avoid, at least try and see to it that the quantum is no more than the generous threshold of 4 lacs. But mind to inquire and ascertain whether it is meant to be inclusive of / as loaded with impending penalty, interest and on -interest, at the point in time for Rev., to go to ITAT . Any other possible, by-way-of abundant caution, doubt ?! Sorry, for allowing imagination to run riot or driving anyone to go crazy !!

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