Business Income

Why service tax not collected can not be disallowed u/s 43B ?

August 28, 2010 By taxworry 2 Comments

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Excerpt: There is a fundamental difference between Sales tax and Service tax. In case of Sales tax , the seller is responsible to deposit the sales tax even if he has not collected that from the customer but in case of service tax the liability of service provider arises only when he has received the value of taxable service from the customer. Section 68 read with Rule 6 of Service Tax Rules show that service provider becomes liable to make the payment of service tax by the 5th of the month immediately following the calendar month in which the payments are received towards the…

Filed Under: Business Income, Case Laws Discussion Tagged With: acit, customer section, ITR, liability, Ltd, payment, profit and loss accounts, sum, taxable service, tv serials

Can an assessee claim full allowance of deferred revenue expenditure ?

July 19, 2010 By taxworry Leave a Comment

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Excerpt: The nature of expenditure such as advertisement or exhibition, sales promotion or fixed deposit etc. is such that, although the benefit arising there from may extend over several accounting periods, the same cannot be clearly and definitively assigned over time since the same is intangible in nature. The concept of deferred revenue expenditure is essentially an accounting concept and alien to the Act. Deferred revenue expenditure denotes expenditure for which a payment has been made or a liability incurred, which is essentially revenue in nature but which for various reasons like quantum and period of expected future benefit etc, is written-off…

Filed Under: Business Income Tagged With: accounting practice, Act, asset, basic principle, benefit, expenditure, income tax act, matching principle, promotion, revenue expenditure

Is Advance Tax provisions applicable for MAT payment u/s 115JB also?

July 15, 2010 By taxworry Leave a Comment

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Excerpt: At present Minimum Alternate Tax is paid as per section 115JB of the I T Act. In simple terms , section 115JB provides that in the case of a company, the income-tax, payable on the total income as computed under I.T. Act in respect of any year is less than fifteen per cent of its book profit, such book profit shall be deemed to be the total income of the company and the tax payable by the said company on such total income shall be the amount of income-tax at the rate of fifteen per cent. Previously provisions were in section 115J and 115JA . The issue…

Filed Under: Business Income, Company Tagged With: book profit, Finance, finance act, income tax act, income tax act 1961, issue, payment, profit, tax, tax provisions

Is keyman insurance on partners of firm allowable as expenditure?

July 12, 2010 By taxworry Leave a Comment

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Excerpt: Any expenditure incurred wholly and exclusively for the business is alloowable expenditure u/s 37 of the I.T.Act. The premium paid on insurance policy on any employee life is also allowable expenditure. The insurance company sells Keyman insurance policy which basically means as per Explanation to section 10(10D) as under “Keyman Insurance Policy” means a life insurance policy taken by a person on the life of another person who is or was the employee of the first mentioned person or is or was connected in any manner whatsoever with the business of the first mentioned person.” The issue which came up recently before…

Filed Under: Business Income, Case Laws Discussion Tagged With: appellate tribunal, direct taxes, expenditure, insurance, insurance premium, keyman, life insurance policy, partnership firm, person, premium

Can carried forward business loss or depreciation be adjusted with income under any head?

July 5, 2010 By taxworry Leave a Comment

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Excerpt: The law of set off of carried forward business loss and depreciation are different. While section 72 of the I T Act provides that unadjusted loss of a year which is carried forward up to 8 subsequent years can be set off with business income only and not with any other head income. It means that the while current year business loss can be adjusted with income from other head except salary , the carried forward business loss can be adjusted with business income of a year only. Carried forward depreciation loss The rule regarding carried forward depreciaton loss is entirely different than carried…

Filed Under: Business Income Tagged With: Business, Business Income, business loss, Chapter, income tax act, indefinite period, law, loss, Section, section 32

Why you need not fill Form 10DB for share transaction?

June 13, 2010 By taxworry Leave a Comment

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Excerpt: Form 10 DB was a declaration as proof of securities transaction payments on the purchase or sale of shares and units. Filing of form 10DB was a must for claiming deduction u/s 88E . From Asst year 2009-10 (FY 2008-09 ) provision of deduction on account of securities tax transaction has been abolished by instertion of a clause in that section . Please read the section below 88E. (1) Where the total income of an assessee in a previous year includes any income, chargeable under the head “Profits and gains of business or profession”, arising from taxable securities transactions, he shall…

Filed Under: Business Income, Shares Business Tagged With: business expense, evidence, payment, Section, securities transactions, STT, transaction, transaction form, transaction tax

Can carried forward business losses be adjusted against any income other than business?

May 18, 2010 By taxworry 1 Comment

No, as per section 72 (2) of the I T Act .While the current year business loss can be adjusted with any other head of income , same is not true for the carried forward business loss . When the business loss is to be carried forward to the subsequent year, it can be adjusted only against business income.It does not matter if the business income may be from the same business in which the loss was incurred, or may be other business. Readers were earlier told that the order of adjustment of losses should also be maintained.

Filed Under: Business Income Tagged With: Business, Business Income, business loss, business readers, I T Act, Income, loss, Losses, Section, year

What is the order in which carried forward losses are adjusted with income?

May 18, 2010 By taxworry 1 Comment

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Excerpt: Section 72(2) of the I T Act provides order in which lossses can be adjusted. It is provided that the business loss should be set off before setting off unabsorbed deprecation and so on. It is also provided that carried forward business loss will be set off against business head only after the current year’s deprecation, current capital expenditure on scientific research and expenditure on family planning have been claimed.The order set off will be as under : First : Current year depreciation [Section 32(1)]; Then : Current year capital expenditure on scientific research and current year expenditure on family…

Filed Under: Business Income Tagged With: Business, business head, business loss, current capital, deprecation, expenditure, I T Act, Section, section 32, Unabsorbed, year

Are provisions on account of warranty claims allowable under I T Act?

May 14, 2010 By taxworry Leave a Comment

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Excerpt: YES, as per Supreme Court. Provisions are generally not allowable under I.T. Act as these are not actual expenditure. However, Supreme Court , based on the facts and circumstances of the case in Rotork Controls India P. Ltd v. Commissioner of Income-tax [2009] 314 ITR 62 (SC) held that the provision is allowable as expenditure u/s 37 of the I T Act. Facts of the case The assessee was manufacturere of valve actuators. It provided a standard warranty whereby in the event of any actuator or part thereof becoming defective within 12 months from the date of commissioning or 18 months from the…

Filed Under: Business Income, Case Laws Discussion Tagged With: accrued liability, assessee, case, contingent liability, court, excess provision, I T Act, I.T. Act, India, liability, molasses, provision, S. L. P, valve actuators

Should the individual account be closed in order to claim bad debt under I T Act?

May 12, 2010 By taxworry Leave a Comment

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Excerpt: Two questions arise for determination before Supreme Court in Vijaya Bank Ltd vs CIT . the manner in which actual write off takes place under the Accounting principles. whether it is imperative for the assessee-Bank to close the individual account of each debtor in it’s Books or a mere reduction in the “Loans and Advances Account” or Debtors to the extent of the provision for bad and doubtful debt is sufficient? How actual write off takes place ? Supreme Court quoted its own decision in Southern Technologies Limited vs. Joint Commissioner of Income Tax, reported in [2010] 320 ITR 577, for answering the question…

Filed Under: Business Income, Case Laws Discussion Tagged With: account, accounting principle, accounting principles, April, assessee, bad debts, debt, H. Dhanjibhai, jwala, provision, Read, vijaya bank

India Income Tax Made Simple

Why service tax not collected can not be disallowed u/s 43B ?

Can an assessee claim full allowance of deferred revenue expenditure ?

Is Advance Tax provisions applicable for MAT payment u/s 115JB also?

Is keyman insurance on partners of firm allowable as expenditure?

Can carried forward business loss or depreciation be adjusted with income under any head?

Why you need not fill Form 10DB for share transaction?

Can carried forward business losses be adjusted against any income other than business?

What is the order in which carried forward losses are adjusted with income?

Are provisions on account of warranty claims allowable under I T Act?

Should the individual account be closed in order to claim bad debt under I T Act?

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