Refund of TDS collected illegally can be treated as your Income for Income Tax purposes

Any kind of income earned by the assessee attracts income tax at the point of earining such income and tax law is not concerned how such income is expended. The Act makes an obligation to pay tax on all incomes received. The Income Tax Act, 1961, considers income earned legally as well as tainted income alike.

The assessee was engaged in tax consultancy and audit work. During the search conducted at the residential premises and office of the assessee certain incriminating documents were seized. From the documents seized it was revealed that the assessee had been claiming and receiving income-tax refund by filing bogus TDS certificates with returns of income prepared by him even in the names of non existing persons. The assessing officer treats the deposits, being TDS certificates encashed by the assessee during the previous year, as professional income during the p.y. The Commissioner(Appeals) reduced the income on account of the refunds received by him and held it taxable under residuary head instead of Professional. The Tribunal held that the amount of refunds received by the assessee by fruadulent means could not be assessed as income of the assessee.

The High Court held that when the Tribunal found that the assessee had indulged in fabricating TDS certificates and got refunds from the Department it should not have come to the conclusion that such income was not taxable.

This decision was taken by Madras High court in CIT V/s K. Thangamani (2009) 309 ITR 015 (Mad.)

Rights and Liabilities of Buyer and Seller

The Transfer of property Act,Section 55 deals with the Rights and Liabilities of Buyer and Seller.

The Buyer's Rights and Liabilities is divides into two :

1. Before of completion of Sale and

2. After completion

Buyer's Rights :

1. Before of completion of Sale :

a. A charge on the property for the purchase of money properly paid by him in anticipation of the delivery.This charge is converse of the seller's charge for unpaid price.

b. Interest on such purchase money.

c. The money and costs awarded to him in a suit for specific performance of the contract or to obtain a decree for its recession.

2. After Completion :

After Completion i.e., where ownership haS passed to him.

a. The buyer is entitled to the benefits of any improvement or increase in value of the property.

b. Rents and profits thereof.

Buyer's Liabilities :

1. Before Completion of Sale :

The buyer is bound :

a. To disclose to the seller any fact as to the nature or extent of the seller's interest in the property which the seller is not aware.This duty is like the seller's duty to disclose material defects in the property.

b. To pay or tender the purchase money to the seller or to such person as he directs.

2. After Completion of Sale :

a.To bear any loss arising from destruction,injury or decrease in value of the property.

b. To pay public charge and rents which may become payable in respect of the property.

Seller's Rights :

1. Before Completion of Sale :

The seller is entitled to rents and profits till the ownership passes to the buyer.If the buyer takes possession before completion of the sale,the seller has a right to claim interest on the unpaid purchase money from the date of possession.

2. After Completion of Sale :

The seller is entitled to a charge upon the property in the hands of.

a. The buyer or

b. Any transferee without consideration or

c. Any transferee with notice of non-payment,for the amount of the unpaid purchase-money.

1. Before Completion of Sale :

a.To produce to the buyer on his request for examination all documents relating to the property.The buyer must inspect the title deeds in his own interest,as otherwise,he may be fixed with constructive notice of matters which he could have discovered the title.

b. To the best of information,all relevant questions put to him.

c. On payment or tender of the price,to execute a proper conveyance of the property.

d. Between the date of the contract of sale and the delivery of the property,to take proper care of the proeprty.

e. To pay compensation to the buyer if there is any loss or damages to the property.

f. To pay all public charges and rent accrued due in respect of the property,up to the date of the sale.Public charges means Government Revenue,Municipal Taxes, etc.

2. After Completion of Sale :

a. To give to the buyer or such person as he directs such possession of property as its nature admits.Actual possession is not possible in the case of incorporeal rights such as a right to fishery,etc..

b. Where the whole of the purchase money has been paid to the seller he is also bound to deliver to the buyer all documents of tilte.The cost of obtaining the deeds should be borne by the seller.

Benefits Of Saving TAX

BENEFITS

*Upto one lakh you can get exemption for the income tax on investing in ELSS funds.

*There will not be any tax on the dividends you get from these funds.

*The three year lock-in-period gives you good long term profits.

*The investment is a solution for the increasing inflation.

DISADVANTAGES

*There will not be any guarantee on the returns.

*Some times, you may get negative returns.

*Can not come out of the funds immediately whenever money is required, due to the lock-in-period.

Save Tax

It’s the month of March and most people would’ve just started thinking about investing for tax savings. Investing, however, is not an annual one-time transaction. It is a process and tax planning is only a part of it. Planning may not make your tax liability zero, but it can certainly reduce your overall liability.



There many provisions to save taxes and Section 80C of the Income Tax Act is very popular amongst the tax savers where a deduction of up to Rs. 1 lakh from the taxable income can be availed of, if invested in certain approved products.

PPFs are popular option since investors find the 8% tax-free return attractive. However, this comes at a cost of 15-year tenure and relative liquidity – one can avail loan from PPF account subject certain conditions. PPFs can be ideal investment if you are looking to build a corpus for long term needs like retirement or your children’s education. Let us look at the power of compounding here. If a 30-year-old invests Rs.70,000/- p.a for 15 years and leaves the money for his retirement, he will observe that he has a corpus in excess of Rs.75 Lakhs at the time of retirement. It should be noted that the returns are assured but not fixed. This is because the rate of return is subject to revision i.e. it can be revised upwards or downwards thereby impacting the returns.

Service Tax

It is a form of indirect tax imposed on special services called taxable services. Service tax cannot be leived.



Objective:

Tax Rate in India

* 14th may 2003 - 5% to 8%

* From 10 sept 2004 - 10%

* 2006 - 7% to 12%

* 24th feb 2009 - 10%

* It was first brought in july 1994

Payment of Service Tax:

Rules:

* ST is payable on the value of taxable services charged.

* The due date for payment of ST is on or before 25th of the month immediately following the quarter when the value of taxable service is rendered.

Service in India taxable for service providers:

* Service provided to non-resident

* Service of insurance agents

* Service of agents of mutual funds

* Firms located in India reveiving sponsorship services

VAT: Value Added Tax

Introduction:

VAT or goods and service tax (GST) is a consumption tax (CT) leived on any value that is added to a product.

Meaning:

* It is a consumption tax because it is taken ultimately by the final consumer

* VAT is a general consumption tax assessed on the value added to goods and services

* It is not a charge on companies. It is charged as a % of price

* To avoid cascading effece which can have a snowballing effect on companies

Necessity of VAT in India:

* Eliminates cascading effect of TAX

* Encourages proper maintainence of accounts books

* Evasion of TAX is minimised

* Prices gets neutralised

* Increased revenue

Modes or Criteria for Valuation

Specific duty - The length volume thickness, density the rate of excise duty. Any duty(ie) on the measurable parameters. It is based on measurable parameters it is clarity. Applicable to the goods/ value of goods

Tariff value - It becomes valuation of goods under excise duty. The value fix by the excise authorities and is fixed.

Compound levy - Excise duty is leived in lumpsum in other option. It is leived on some other fixed sum. The manufacturers can directly opt for this scheme. This mode is optional because this is more beneficiary for the government. The only benefit for the manufacturers is that they can pay the amount as optional and is leived of the calculations and he need to pay after.

MRP with abutement - The maximum range/limit of retail proce is the maximum price beyond which the retailer cannot sell it. The buyer can negotiate this. The seller can sell the product till what the product can be bargained.

Conditions for availing this MRP scheme :

* The goods should be covered under standards of weights and measurements acts.

* The MRP should be accompanied by the range of abatement.

Assesable value with reference to transaction value - The transaction value becomes the basis for the excise duty.

Conditions for availing this scheme:

* The buyer should not be related to the manufacturer

* The price should not be the sole criterian for exchange

* At the time of every removal seperate excise duty should be lieved

* Goods should be transported from the manufacturer to the producer/ to the buyer at the place and time of removal