You must be aware that there is no transaction tax on the notified agriculture commodities trading by virtue of sub-section 7 of section 116 of under CHAPTER VII OF FINANCE ACT, 2013 . CBDT has notified a new Rule 3 of the Commodities Transaction Tax (First Amendment) Rules, 2015 by which the total list of agriculture commodities have now been extended to 61 (sixty one) items. Previously , only 23 items were notified as agriculture commodities .While the notification will certainly give relief to traders from imposition of CTT on those derivatives, it is advised that the brokers and traders in commodities derivative give attention to the computation of total income, because now the trades in additional 38 items will be speculative in nature u/s 43(5) of the Income Tax Act .

Many times , the property -whether land or building – are not free of encumbrance or are leased or under control of tenants. In certain cases , the property is given on mortgage . In such , cases , if the owner or title holder desires to sell , the property is not easily sold , because buyer desire to acquire the property free of any kinds of legal or physical bindings. So , when such a property , finally sold , the interest of the tenant or leasee or mortgagee are taken due care of . They are paid and made part of agreement . So, an agreement may be reached in a manner that

Owner gets  X amount

Tenant/Lessee/Mortgagee gets Y amount.

Total consideration : X + Y

Section 40(a)(i) of the Income Tax Act provides for disallowance of sums paid or payable to non residents on which TDS was either not deducted under section 195  or after deduction , TDS was not deposited. Now the provision contains words ” other sums” which has been interpreted as full sum . For example, if a person outside India , is paid , say a sum of Rs 1 lakh which includes Rs 50,000 for parts and 50,000 as technical fee. Say the Indian payer has not deducted the tax on Rs 1,00,000 .

Readers must be recollecting the content of the article Are You Charged With Illegal Interest u/s 234A ? wherein it was pointed out that every tax payer should check the intimation and assessment order to check if the CPC or the assessing officer has charged the interest u/s 234A even in those cases where the total tax was paid before due date for  filing of tax return , but the actual return was filed late.

It was pointed out that Hon’ble Supreme Court held in case of Supreme Court  CIT v. Dr. Prannoy Roy and Another, 19 DTR 102 (SC)  upheld the Delhi High Court’s decision in the same case that interest u/s 234A would be payable only in a case where tax has not been deposited prior to the due date of filing of the income-tax return

CBDT Issues Circular on Interest u/s 234A

CBDT has now issued circular stating that present practice of charging interest u/s 234A should be stopped in view of Supreme Court order in Dr. Prannaoy Roy case. Read the circular below:


What Now ?

This circular is partial . Because the Board has accepted a wrong practice , it must instruct the assessing officers to  return all tax in form of interest u/s 234A from all such cases.

The need to post the article on taxation issues related to investment in pension fund unit scheme of various insurance companies came out of a paid question by a reader about his tax liability in case of surrender of pension fund units before maturity. I realized that many people are confused that units of the pension funds held by more than one year will give them tax free capital gains  . That is not true despite the fact that the pension funds maybe employing the money mostly in equity shares .