use Digital Signature with care for availing services of TRACES

Centralized Processing Cell (TDS) has observed that Online Corrections have been submitted by deductors on TRACES website by using Digital Signature Certificate. However, there was no Registered Digital Signature Certificates (DSC) was available in his profile on TRACES website.

Immediate Attention:

• The Centralized Processing Cell (TDS) has provisioned for use of Digital Signature Certificate (DSC) on its web-portal TRACES for availing various services offered by the portal. As per Section 204 read with Section 200 of the Income Tax Act, 1961 and other relevant provisions for deduction of tax ‘Authorized Person’ is referred to as ‘Person Responsible’.
• TRACES has provided facility for Admin to facilitate authorized Sub-users to carry out activities on TRACES and submit to the Admin user. The Admin user has the rights to approve the activities using the DSC.
• For availing above services, only the DSC of the ‘Person Responsible’, as appearing in the ‘Profile’ of the Deductor on TRACES, should be used.

However, the system log of Centralized Processing Cell (TDS) evidences that:

• The PAN of the Authorized Person was changed to a PAN belonging to a person other than the Authorized Person
• The DSC of such person has been used to submit Online Corrections and
• After completing the transaction, the PAN has later been reverted back to that of the Person Responsible, which does not have a DSC.
• Digital Signature means authentication of any TDS electronic record. It keeps record of the person who is availing the facility. Use of Digital Signature should be made with due caution. Sharing of DSC by any person would also be liable for consequences. In accordance with the Information Technology Act, 2000, every subscriber is require to retain control of the private key corresponding to the public key listed in his Digital Signature Certificate to prevent its disclosure.

It is therefore, advised to refrain from using the Digital Signature of any person other than the Authorized Person appointed by the deductor, for carrying out any activity on TRACES.

No TDS on payments to Corporations whose income is exempt

Circular No. 07/2015

F. No. 275/50/2006 IT (B)

Government of India

Ministry of Finance

Department of Revenue

 Central Board of Direct Taxes

 North Block, New Delhi

April 23, 2015

Subject: Requirement of tax deduction at source in case of corporations whose income is exempt under section 10 (26BBB) of the Income-tax Act, 1961- Exemption thereof.

1.The Central Board of Direct Taxes (the Board) had earlier issued Circular No. 4/2002 dated 16.07.2002 which laid down that in case of such entities, whose income is unconditionally exempt under section 10 of the Income-tax Act (the Act) and who are statutorily not required to file return of income as per section 139 of the Act, there would be no requirement for tax deduction at source (TDS) from the payments made to them since their income is anyway exempt under the Act.

 2. Section 10(26BBB) came into existence after the issue of the said Circular dated 16.07.2002. The said section was inserted in the Income-tax Act vide Finance Act, 2003 (w.e.f. 01.04.2004) unconditionally exempting any income of a corporation established by a Central, State or Provincial Act for the welfare and economic upliftment of ex-servicemen being the citizens of India.

The corporations covered under section 10(26BBB) are also statutorily not required to file return of income as per section 139 of the Act. References have been received in the Board requesting for extension of the aforesaid exemption from TDS granted vide Circular No.4/2002 to the corporations covered under section 10(26BBB) as well.

3. The matter has been examined by the Board. It has now been decided that since the corporations covered under section 10(26BBB) satisfy the two conditions of Circular No.4/2002 i.e. unconditional exemption of income under section 10 and no statutory liability to file return of income under section 139, any corporation whose income is exempt under section 10 (26BBB) of the Act will also be entitled to the benefit of the said Circular. Hence there would be no requirement for tax deduction at source from the payments made to such corporations since their income is anyway exempt under the Act.

 4. Hindi version shall follow.

(Sandeep Singh)

Under Secretary to the Government of India

Delay in filing e-TDS return due to default in Department Software wont attract penalty

Delay in filing e-TDS return due to technical default in software of department won't attract penalty on assessee

[2015] 56 taxmann.com 311 (Cuttack - Trib.)

IN THE ITAT CUTTACK BENCH

State Bank of India

v.

Joint Commissioner of Income-tax (TDS), Bhubaneswar

Section 272A of the Income-tax Act, 1961 - Penalty - For failure to answer question, sign statements etc. (Delay in filing statements) - Assessment years 2010-11 and 2011-12 - Assessee filed quarterly e-TDS statements in Form Nos. 24Q and 26Q for different quarters for relevant financial years - Assessing Officer taking a view that there was no reasonable explanation for delay in filing 24Q/26Q statements, imposed penalty under section 272A(2)(k) - It was noted that computer generated number for acknowledging receipt of such statements was not in hands of assessee insofar as generation of that number could not occur till such time PANs and information available on AS-26 were tallied by computer system itself - It was also undisputed that relevant software was only available to franchisees outsourced by department or NSDL being apex Nodal Agency - Whether on facts, delay in filing statements being beyond control of assessee, impugned penalty order deserved to be set aside - Held, yes [Para 7] [In favour of assessee]

Guest charge received by club from its members Not Taxable

Since principal of mutuality would apply to transaction with member; guest charge received by assessee club from its members would not be liable to tax

[2015] 56 taxmann.com 281 (Gujarat) HIGH COURT OF GUJARAT Junagadh Gymkhana

v. Income-tax officer

Section 4 of the Income-tax Act, 1961 - Mutual concern - Assessable as (Club) - Assessee-club received 'guest charge' from its members and utilized it for benefit and development of club members - Whether since principal of mutuality would apply to transaction with member; guest charge received by assessee club from its members would not be liable to tax - Held, yes 

Consequences of TDS defaults under Income Tax

Consequences of TDS defaults under Income Tax Act 1961

Introduction: TDS/TCS compliances is one of the major compliance under Income Tax Act, 1961 and has a wide scope of its applicability to the business organizations. Small businesses are not much aware of the overall implications of non compliances of the TDS/ TCS provisions and ends up in paying the higher penal charges due to not following the deadlines. My article is focused on the consequences of failure to comply with these provisions in time bound manner. The following points I am putting forward for your consideration which I feel to be significant.

1.     Late deduction and / or deposit of TDS.

2.     Late return filing.

3.     Furnishing incorrect information.

4.     Late download of TDS certificate from TRACES website.

The detailed discussion follows:

No TDS on additional payment due to Forex fluctuation

No TDS on additional payment made due to Forex fluctuation if tax was deducted at the time of credit of payment

[2015] 56 taxmann.com 238 (Delhi - Trib.)

IN THE ITAT DELHI BENCH 'I'

Honda Motorcycle & Scooters India (P.) Ltd.

v.

Assistant Commissioner of Income-tax, Circle -2, Gurgaon

Provisions of section 195 provide that once tax is deducted at source at the time of credit of payment, there can be no question of deduction of tax at source on full or in part at the time of payment. Once tax was deducted at the first stage when the amount of income was credited to the account of payee, which was done by converting foreign currency into TT buying rate on that particular date, then the assessee could not be called upon to deduct tax at source on the additional liability arising due to foreign exchange fluctuation

No denial of sec. 54F

No denial of sec. 54F relief on pretext of two houses when assessee had gifted one of them orally under Muslim law

No denial of section 54F relief on pretext of two houses when assessee had gifted one of them orally under Muslim law [2015] 56 taxmann.com 269 (Bangalore - Trib.) IN THE ITAT BANGALORE BENCH 'B' Smt. Sajida Begum v. Income-tax Officer, Ward 15 (2), Bangalore