Am I Liable To File Two Returns?

My husband who was a retired Central Government employee passed away last year. After his death in Nov-07, I have been getting the pension, being the sole nominee. For purposes of tax calculation and return filing for financial year 2007-08, will I and my late husband be treated as separate assessees. So my question is:

1. Will tax be calculated separately from Apr-07 to Nov-07 for my husband and for me separately from Dec-07 to Mar-08?
2. Or will the entire pension (for financial year 2007-08) be clubbed in my Income for 2007-08 and tax calculated on the same? Vidya Subramanian, Delhi

Yes, you and your deceased husband shall be assessed separately for financial year 2007-08. However , in both case , assessment will be done in your name only- for your income ,you are assessee and in case of your late husband , you shall be assessed under section 159 of the I T Act. as representative assessee . That means you will have to file two returns- one for you and another for your late husband.

In the instant case , pension received by from December 2007 is called family pension which is regarded as income from other sources. So ,

1. compute the pension from December 2007 to March 2008
2. Deduct the standard deduction of 1/3 or Rs 15,000 whichever is less.
3. The net amount of family pension is shown in your Return as income from other sources.

Your late husband's total income has to be computed in following manner

• Pension up to Nov'2007 xxxxxx
• Any other income xxxxxxx
• Gross Total Income xxxxxxxx
• Less
• Any savings for deduction xxxxxxx
• Total Income xxxxxxx

File the return for total income wherein the name of the assessee in the return will be shown as Vidya Subramanian ,Legal Heir of Late XXXXXX.

However, if you find that Gross Total Income is below RS 1,10,000 for Asst Year 2008-09 , you do not have to file the return at all . In case your husband was 65 years or above in the year of demise , you may skip filing return if the Gross Total Income of your late husband does not cross Rs 1,95,000.

Relevant Reading:

How To Comply With Income Tax Formalities In Case Of Deceased Person?

Read More...

Summary only...

How To File Return If Employer Does Not Issue TDS Certificate?

I had resigned from my company in Feb-2008 on a short notice.They did not receive my resignation and so I put it through e-mail for record.Now they are not issuing me Form-16 for filling returns from April 2007 to Feb 2008.Please help me out how to file returns in such case without form-16.How should I also include tax paid by another company for month of march 2008.I have just a salary slip for same. Sunil, Delhi

You will b happy to know that for filing return you do not need Form 16 as the return has been made annexure less. Read this story .Therefore, as far as filing of return is concerned, just fill up form ITR1 or ITR 2 and claim whatever tax is deducted form you .

Can you claim TDS credit without Form 16?

yes, because the TDS made by your employer will reflect automatically in assessing officer, s computer . Even you can check up the TDS made by your employer. Read How to Confirm If Your TDS was deposited by Deductor?

What to do with erring employer?

Send them a letter stating that you will be filing complaint with Commissoner (TDS) that they have not issued TDS certificate despite deducting tax . There is express provision of penalty for failure to issue certificate of deduction of tax .Read Non Issue of TDS Certificate Will Make Deductor Liable To Penalty

Read More...

Summary only...

Why Business or Capital Loss Can Not Be Carried Forward?

I have been called for scrutiny of AY 2006-07 returns by ITO Hyderabad. I had set off ST capital gains (shares)of the previous year 2005-06 with that of ST capital loss of AY 2002-03. ITO has raised an objection that since the returns of the AY 2002-03 were submitted late after the due date (i.e submitted on 05.08.02) of 31.07.02, I am not eligible for carry forward of the ST loss amount. Is that true that late submission of the returns by 5 days will carry the penalty of cancellation of carry forward amount? if so, what is the solution to get the eligibility to carry forward. J V Mohan

You are fortunate ! How? For that you will have to read till last.

The A.O's reasoning is correct as far as law is concerned. The A.O has raised an objection on the basis of provision u/s 139(3) which says that if someone wants to carry forward business loss or capital loss , he may file the return within due date . The section 139(3) is is under

(3) If any person who has sustained a loss in any previous year under the head "Profits and gains of business or profession" or under the head "Capital gains" and claims that the loss or any part thereof should be carried forward under sub-section (1) of section 72, or sub-section (2) of section 73, or sub-section (1) or sub-section (3) of section 74, or sub-section (3) of section 74A, he may furnish, within the time allowed under sub-section (1) , a return of loss in the prescribed form and verified in the prescribed manner and containing such other particulars as may be prescribed, and all the provisions of this Act shall apply as if it were a return under sub-section (1).

This section i.e 139(3) provides a chance for those who have losses to file return within time and the bar that if the loss return is not filed under section 139(3), such loss will not be carried forward is given in section 80 of the I T Act. The said section is is as under

80. Submission of return for losses.

Notwithstanding anything contained in this Chapter, no loss which has not been determined in pursuance of a return filed in accordance with the provisions of sub-section (3) of section 139, shall be carried forward and set off under sub-section (1) of section 72 or sub-section (2) of section 73 or sub-section (1) or sub-section (3) of section 74 or sub-section (3) of section 74A.

The net affect of these two provisions is that you must file return within time allowed u/s 139(1) of the I T Act if you want to carry forward losses under business or profession or capital head.

The Good News For You
In your case , the relevant assessment year is 2002-03 . You filed return on 5/8/2002 which was 5 days late from 31/7/2002 the usual date of filing return for individual. But CBDT had extended the due date of filing of return for Asst Yr 2002-03 till 9/8/2003 . This was done vide press release . Read below the news in Economic Times dated 30/7/2002 which is gives as under and you can see at this link

Read More...

Summary only...

What Can Be Consequences For Filing Late Return?

What are the penalties for filling late I.T. Return i.e. after 31 Oct. 07 in case of HUF firm with turnover of 4 crores. Raj Sharma

Actually , a person who has no tax liability as on the last day of an assessment year can file return up to 31st March of the assessment year concerned without any kind of penalty proceedings. As in your case, there is no penalty upto 31/3/2008 for filing return for Asst Yr 2007-08.But late filing of return may create following problems depending upon situation

• The interest u/s 234A @ 1 may be imposed if there remains tax outstanding at the time of processing u/s 143(1). The provision us/ 234A is as under
  

"234A. (1) Where the return of income for any assessment year under sub-section (1) or sub-section (4) of section 139, or in response to a notice under sub-section (1) of section 142, is furnished after the due date, or is not furnished, the assessee shall be liable to pay simple interest at the rate of one per cent for every month or part of a month comprised in the period commencing on the date immediately following the due date, and,

(a) where the return is furnished after the due date, ending on the date of furnishing of the return; or....."

• The unadjusted loss of the year if any which should have been carried forward may not be allowed to be carried forward as per section 139(3) read with section 80 of the I T Act.which is as under
  

"80. Notwithstanding anything contained in this Chapter, no loss which has not been determined in pursuance of a return filed in accordance with the provisions of sub-section (3) of section 139, shall be carried forward and set off ...............

Section 139(3) says " If any person who has sustained a loss in any previous year under the head Profits and gains of business or profession or under the head Capital gains and claims that the loss or any part thereof should be carried forward under sub-section (1) of section 72, or sub-section (2) of section 73, or sub- section (1) or sub-section (3) of section 74, or sub-section (3) of section 74A, he may furnish, within the time allowed under sub-section (1) , a return of loss in the prescribed form and verified in the prescribed manner and containing such other particulars as may be prescribed, and all the provisions of this Act shall apply as if it were a return under sub-section (1)."

Another Important Point

Since , your turnover is 4 crores , you will have get your accounts audited u/s 44AB of the I T Act. Remember, from assessment year 2007-08 , there is no provision for enclosing the tax audit report with the return , but still you must get your accounts audited and tax audited by 31/10/2007 , otherwise penalty @ .5 % of 4 Crores (2 lakhs) may be imposed on you u/s 271B of the I T Act. which says as under;

271B. If any person fails to get his accounts audited in respect of any previous year or years relevant to an assessment year or furnish a report of such audit as required under section 44AB, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum equal to one-half per cent of the total sales, turnover or gross receipts, as the case may be, in business, or of the gross receipts in profession, in such previous year or years or a sum of one hundred thousand rupees, whichever is less.

Penalty u/s 271F

The last date of filing a return is one year from the end of assessment year. This is called late filing of return . But A.O may initiate penalty proceeding u/s 271 F for filing return late after 31st March. The maximum penalty is Rs 5000. For example, you can file return up to 31/3/2009 for assessment year 2007-08 .But after 1/4/2008 , A.O may initiate proceeding u/s 271F for imposition of penalty of Rs 5000 for late filing of return.

Take your decision!

Read More...

Summary only...

Return Filing Date Extended!

The CBDT has extended the due date of filing of return for Asst Yr 2007-08. The extension is effective for electronic filing as well as manual. Date of filing FBT return as well as date for obtaining tax audit report are extended too. Read the press release

No. 402/92/2006-MC (46 of 2007)
Government of India/ Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
New Delhi, the 31 st October 2007
PRESS RELEASE

The Central Board of Direct taxes have extended the last date of filing of income tax /fringe benefit tax returns due by 31 st October 2007 as follows:-

For electronic returns (companies, and firms requiring tax audit u/s 44AB) to 15 th November 2007; and

For paper returns (other than those required to file electronic returns) to 2 nd November 2007.

It is further clarified that the dates for obtaining tax audit report under section 44AB of the Income Tax Act have also been extended accordingly.

Read More...

Summary only...

Is it compulsory to disclose exempted income in the income tax return?

Is it compulsory to disclose exempted income in the Indian income tax return? Can NRI ignore the direction given in the tax return to declare exempted incomes such as his foreign income? As there is no such specific provision in the Income Tax Act, and since no tax is sought to be avoided, non-disclosure of exempted income should not attract penalties/prosecutions. Right? Asked  By A Member on Linkedin.com

First of all , contrary to your belief , the Income Tax Act clearly provides u/s 139(6) that assessee shall  furnish details of exempt income if such details are prescribed in the form of return

139(6) The prescribed form of the returns referred to in sub-sections (1) and (3) of this section, and in clause (i) of sub-section (1) of section 142 shall, in such cases as may be prescribed, require the assessee to furnish the particulars of income exempt from tax, assets of the prescribed nature , value and belonging to him, his bank account and credit card held by him, expenditure exceeding the prescribed limits incurred by him under prescribed heads and such other outgoings as may be prescribed.

Why  should you  provide the information regarding exempt income?

1.  It is binding u/s 139(6) for assessee to declare exempt income if return form requires.
   
2.  Section 139(9) of the I T Act empowers A.O to treat the return as defective if all columns ,annexures are not duly filled in. Unnecessarily , one will be giving chance to an authority to question the return.
   
3. Income tax law is such complex that it is a matter of interpretation that one income which an assessee thinks as exempt , may be in the eyes of A.O be taxable. It might just be the case that the income is indeed is taxable under I T Act. If an assessee , under bona fide belief , did not show such income which he thought to be exempt from tax , which is he supposed ti show u/s 139(6), the A.O will not only charge tax on such income but may also initiate penalty and prosecution for concealment of income.
   

                For example take section 9 of the I T Act which is regarding "income deemed to accrue or arise in India" which is taxable even for non resident.Tomes have been written about this section  . Its common perception among non resident that once you become non resident ,income earned outside India  is not taxable in India. But that is not the case. Depending on the facts  and circumstances, income  becomes taxable.The court battle have been fought ,but many a judgment of court in favour of Revenue department.

Therefore, in my opinion it is better to reveal your exempt income.

Is there any relief to Non Resident from filing of return?

There is some relief to Non Resident Indians under section 115 C to 115I of I T Act. But relief is limited to long term capital gains on capital assets purchased in foreign exchange or any income derived by Non Resident from an asset purchased or subscribed in convertible foreign exchange . In those case ,if NRI wishes , he may even not file return of Income as given in section 115H  which is given under:

115G. It shall not be necessary for a non-resident Indian to furnish under sub-section (1) of section 139 a return of his income if

(a) his total income in respect of which he is assessable under this Act during the previous year consisted only of investment income or income by way of long-term capital gains or both; and

(b) the tax deductible at source under the provisions of Chapter XVII-B has been deducted from such income.

Read More...

Summary only...

When Can Your Return Be Declared Defective?

I have filed the return for the AY 2006-07 computing tax as per the provisions of 44AD as the gross receipts was less than 40 Lakhs. I have declared 8% income on the gross receipts as required by the said provision. Now, I have received a letter from the Assessing Officer stating that my return has been considered as a Defective Return as no enclosures formed part of the return. The AO requires me to file a reply having details of gross receipts, gross profits, net profit, list of debtors, list of creditors, cash and bank balance. Is it correct on part of the AO to treat my return as a Defective Return? Should i file the required documents as required by the letter? Mahaveer

The confusion regarding attaching the details as asked by the A.O has arisen out of common belief that in case profit is declared under section 44AD , one is not required to maintain regular books of account as prescribed under section 44 of the I T Act. That belief is correct. But A.O has not asked you maintain regular books of account. Actually he has invoked section 139(9) (f) of the I T Act . Section 139 is related to filing of accounts and section 139(9) is regarding the circumstances in which the return can be declared defective. You should give attention to to clauses of sub section 9 of section 139 of the I T Act. Clause (d) and clause (f). Both clauses are given below :

section 139(9)

(9) Where the Assessing Officer considers that the return of income furnished by the assessee is defective, he may intimate the defect to the assessee and give him an opportunity to rectify the defect within a period of fifteen days from the date of such intimation or within such further period which, on an application made in this behalf, the Assessing Officer may, in his discretion, allow; and if the defect is not rectified within the said period of fifteen days or, as the case may be, the further period so allowed, then, notwithstanding anything contained in any other provision of this Act, the return shall be treated as an invalid return and the provisions of this Act shall apply as if the assessee had failed to furnish the return........................

(a)..

(b)..

(c)...

(d) where regular books of account are maintained by the assessee, the return is accompanied by copies of

(i) manufacturing account, trading account, profit and loss account or, as the case may be, income and expenditure account or any other similar account and balance sheet;

(ii) in the case of a proprietary business or profession, the personal account of the proprietor; in the case of a firm, association of persons or body of individuals, personal accounts of the partners or members; and in the case of a partner or member of a firm, association of persons or body of individuals, also his personal account in the firm, association of persons or body of individuals;

(e)...............

(f)where regular books of account are not maintained by the assessee, the return is accompanied by a statement indicating the amounts of turnover or, as the case may be, gross receipts, gross profit, expenses and net profit of the business or profession and the basis on which such amounts have been computed, and also disclosing the amounts of total sundry debtors, sundry creditors, stock-in-trade and cash balance as at the end of the previous year.

Since , you have shown income under 44AD , section 44 of the I T Act gives you relief that you will not have to maintain REGULAR books of accounts. hence, you will not have to attach copies of many types of accounts as stated in 139(9)(d) .

But, still you need to abide by clause (e) of sub-section 139(9) of the I T Act which makes it necessary for all business person who DOES NOT maintain REGULAR books of account to attach A statement showing :

• Turnover
• Gross receipt
• Gross Profit
• Expense
• & Net profit
• list of sundry debtors
• sundry creditors
• stock-in trade
• Cash Balance

Therefore, you must reply to A.Os letter immediately giving the aforesaid details , otherwise he may pronounce your return as invalid . Invalid return means you will have to file another return either yourself or he may issue a notice u/s 148 of the I T Act. Then he can scrutinise your return. If you do not have these details instantly ready, write immediately a letter seeking one month time and then submit details.

Last Note

From assessment year 2007-08, this problem is not there as no paper is required to be attached with the return.

Read More...

Summary only...

How To File Return If You Are Abroad?

If I am outside country and cannot file return. Can I file return after coming to India? I am in UK till Dec 2007. Mahendra Rajgude

You have not stated the year for which you want to file the return.Anyway ,the general rule of time limitation for filing your return is that you can file return upto one year from the end of assessment year . Therefore, if you want to file return for Asst Yr 2007-08 (FY 2006-07 ) , you can file return upto 31/3/2009 albeit after 31/3/2008 there is risk of penalty of Rs 5000 u/s 271F.To know more on this , read this .

How to file from Abroad?

Secondly, even if you are outside India, you can file the return . Any person having power of attorney from you can sign the return on your behalf. There is express provision u/s 140 of the I T Act . Read it here :

Section 140.Return by whom to be signed.

The return under section 139 shall be signed and verified-

(a) in the case of an individual, -

(i) by the individual himself;

(ii) where he is absent from India, by the individual himself or by some person duly authorised by him in this behalf;

(iii) where he is mentally incapacitated from attending to his affairs, by his guardian or any other person competent to act on his behalf; and

(iv) where, for any other reason, it is not possible for the individual to sign the return, by any person duly authorised by him in this behalf:

Provided that in a case referred to in sub-clause (ii) or sub-clause (iv), the person signing the return holds a valid power of attorney from the individual to do so, which shall be attached to the return;

Therefore, if you wish , you can authorize your father or any relative or even your tax practitioner by a power of attorney to file return on your behalf.

Read More...

Summary only...

How To Get Info About A Taxpayer ?

My father expired in April 2007 while still in service. His income was taxed at source by his employer (a public sector unit). Few questions:1) I know he filed tax returns every year, but could not find any of his documents. Is there a way I can obtain his tax return filing records? (I have is PAN number/card.)2. Do I need to file taxes in his name since he did get his paycheck until April?Praveen Kallakuri

Since you are definite that your father was filing return of income ,I suggest three methods for getting the information about a taxpayers.The first informal method is that you go and meet the assessing officer and tell him your problem. Maybe he will make you available the required information.

the second method is a very clear provision in the I T Act regarding disclosing information about any assessee or any information collected in case of an assessee. Subsection of section 138 of the I T Act provides

(b) Where a person makes an application to the Chief Commissioner or Commissioner in the prescribed form for any information relating to any assessee received or obtained by any income-tax authority in the performance of his functions under this Act, the Chief Commissioner or Commissioner may, if he is satisfied that it is in the public interest so to do, furnish or cause to be furnished the information asked for and his decision in this behalf shall be final and shall not be called in question in any court of law.

Therefore , you can apply information u/s 138(2)for any information which any income tax authority had obtained. You apply for copies of returns filed by your father . The application has to be made before either commissioner of income tax or chief commissioner of income tax having jurisdiction over your late father. If you do not know , you ask his office collegue where other employees were filing the return and that way you will get the jurisdictional officer. The commissioner of the charge can be applied for u/s 138 of the I T Act.The application is to be made in prescribed form no 46 which can be obtained from here.

FORM NO. 46
[See rule 113]

Application for information under clause (b) of sub-section (1) of section 138 of the Income-tax Act,1961
To
The Chief Commissioner or Commissioner of Income-tax,
___________________
Sir,
I request you to furnish information relating to __________________ [here give name, status and complete address of the
assessee] in respect of the assessment year commencing on the 1st day of April, ___________ on the following points:
______________
2. The above information is required by me for the following reasons :
______________
Dated ____________

Signature of the applicant
(Name of the applicant)
(in capital letters)

Father's/Husband's name
Full address

Notes :
1. A separate application has to be made in respect of each assessee and in respect of each assessment year.
2. Regarding status, state whether the person about whom the information is required is an individual, firm, etc.

the third way ,these days ,is invoking your right to get any information regarding filing of return under Right to Information Act.For this , you will have to apply before the commissioner of income tax who are delegated to be public information officer.

Your second question whether you should file return of income for the period Fy 2006-07 , I would say yes. For knowing how , you should read this.

Read More...

Summary only...

How To Comply With Income Tax Formalities In Case Of Deceased Person?

In my company one of Director has expired on 27.03.07. He was earning income from salary, shares, interest. and he files return as individuals as well as HUF status.Now the query is: In case of Deceased Individuals/HUF how the balance Sheet/ Profit and Loss account and Computation to be prepared for both period i.e from 1.04.06 to 27.03.07 and 28.03.07 to 31.03.07?. Is there any provision act ?. In case if there is Capital gain/ loss is there in there how to compute and how to carry forward in case of loss? If there is will then how consider the taxable income in case of deceased person?How to complete income tax formalities? Vinay Desai

This unfortunate situation , as described in your case ,arises to many people that too suddenly. Somebody who was earning ,if suddenly expires in the middle of a year , in that case his /her family members are totally in loss how to comply with the income tax laws for income earned by the deceased person. Then , there are cases when the there is no partition of property between heirs and in some case , even some erupt battle for the division of the asset . In those situation , what to do ?Taking this opportunity , I am giving frequently asked question on this issu

1. Which sections of the I T Act are relevant?
2. Who should file the return of income?
3. In what status should the return of deceased person be filed.
4. Who are liable to pay tax in case of deceased person?

Which sections of the I T Act are important?
There are two express section -sec. 159 & sec. 168 -relevant for assessment of income of deceased given in the I T Act . Section 159 defines Legal Representative & whereas section 168 of the I T Act defines Executors.

Who should file the return of income?

Case 1 : All income which was earned during the life time of deceased person should be assessed in hand of legal representative(s) as per section 159 of the I T Act.Therefore , in such case , legal representative should file the return of the deceased person.For example , let us say, a father who was earning salary of Rs 10 lacs dies in the month of April2007 , then the return of income for the FY 2006-07 should be filed by his legal representatives as per section 159 of the I T Act.

Who is/are Legal Representatives?
Legal representative is defined u/s 2(29) of the I T Act as same having meaning assigned to it in clause (11) of section 2 of the Code of Civil Procedure 1908 which states

“means a person who in law represents the estate of a deceased person, and includes any person who inter meddles with the estate of the deceased and where a party sues or is sued in a representative character the person on whom the estate devolves on the death of the party so suing or sued;”

In practical terms , the heir himself if there is only one or if there is more than one heir , should first make an agreement among different heirs so that others assign one person as legal representative for the purpose of income tax matter. That person can sign the return of the deceased person and can appear before the assessing officer in case of any proceedings.

Case 2: The income which is subject matter of assessment was earned after the death of the assessee from the assets owned by deceased and which has not be distributed among heirs. In case , the deceased has left a will and has appointed an Executor , the executor shall be filing the return .In this case , provision u/s 168 of the I T Act is applicable.

What should be the name on the return?
The return should reflect the name of the Legal Representative or executor as under;

1. Sri XXXXXXX , L/H of Late ABCD in case of section 159 (case 1 above)
2. Sri XXXXXXX, Executor of the Estate of Late ABCD (case 2 above)

In what status should the return of deceased person be filed?

If there is one legal representative , he/she can file the return in individual capacity and in case there is more than one heirs , the return should be filed in status of association of person (AOP) or even body of individuals (BOI) as the case may be.

Who are liable to pay tax ?

If we read section 159(4) ,161 and 167 in case of legal representatives , it is clear that:

1. Legal representative are liable to pay tax to the extent of their personal liability.
2. If , they pay on behalf of other heirs, he has got a right to recover such amount from other heir. For this he can even deduct the amount from the share of other heir in whose behalf he had paid the tax.(section 167)

Similarly executor are responsible to pay tax but he is also having right to recover the tax from the person on whose behalf he , in capacity as , executor is paying tax.(section 169 & 162)

Your specific Case

In your referred case , all computation has to be done as the expired person would have done had he alive . There is no change in either accounts maintenance or computation of income for the purpose of tax.

1. If there is no income related to the period (March 2007) after his death, ignore it.
2. File the return by getting signed by legal representative(s) .Heirs should have an agreement regarding the heir who will represent before legal authority.They should also file a petition before Civil Court for succession certificate.
3. If more than one heir, file return in body of individuals or AOP.
4. If there is will , executor will sign the return.

Read More...

Summary only...

Who Should Not Worry About Filing Return By 31st July??

31st July is the due date for filing of return by individuals who are not subject to tax audit or who are not partners of a firm which is subject to tax audit.Therefor large numbers of taxpayers or assessee are those individuals for whom due date is 31st July. Every year there is is great rush to file return by 31st July. So, income tax department makes special arrangement to receive those returns on last two three days. This year also, income tax department kept the office open on Saturdays and Sunday (28 th & 29th of July ) to receive the returns.

It is common perception if the return is not filed within due date , the A.O will impose penalty or interest or do scrutiny. Therefore many people who can file even after 31st July i.e due date , without any repercussion ,rush to file return by 31st July. W

So,when can you file return even after 31st July without any repercussion ?

You can file return after 31st July if

1. All taxes have been paid by you as advance tax or deducted at source by 31st March.
2. You do not have any loss to carry forward. In case of late return , you will not be allowed to carry forward the loss.
3. You do not want to revise the return.

In all these cases, you can file return upto 31st March .

For example, if you are a salaried person and all tax has been deducted at source and no tax is outstanding as on 31st March 2007 for income (salary and other income ) earned during FY 2006-07 i.e Asst. Yr 2007-08 who are supposed to file return by 31/7/2007 , can file return upto 31/3/2008 without any interest or penalty. And , if they take risk of paying penalty of Rs 5000 for late filing , they can file return upto 31/3/2009!

Read More...

Summary only...

New Income Tax Returns In Excel Format !

The forms in excel format are available on bcasonline and a link is provided for download here.

• ITR-1 For Individuals having Income from Salary/ Pension/ family pension) & Interest, For PDF click here and For Excel format Click Here.
  
• ITR-2 For Individuals and HUFs not having Income from Business or Profession , click here and For Excel format Click Here.
• ITR-3 For Individuals/HUFs being partners in firms and not carrying out business or profession under any proprietorship click here. and For Excel format Click Here.
  
• ITR-4 For individuals & HUFs having income from a proprietary business or profession, click here. and For Excel format Click Here.
  
• ITR-5 For firms, AOPs and BOIs , Click here. and for Excel format Click Here.
  
• ITR-6 For Companies other than companies claiming exemption under section 11. Click here.
  
• ITR-7 For persons including companies required to furnish return under section 139(4A) or section 139(4B) or section 139(4C) or section 139(4D). For PDF click here. For Excel format Click Here.
  
• ITR-8 For Return for Fringe Benefits. for PDF click here. and for Excel Format Click Here.
  

Read More...

Summary only...

Is Royalty Received By An Author Professional or Other Sources Income?

Individual has received royalty from a Indian publisher on sale of text book written by the individual. Where he can show this income? as Income from Profession or Income from other sources? enrichme@rediffmail.com

Simple questions have no simple answers under I T Act. The royalty received can be income from profession as an author or it can be income from other sources. It all depends on the facts of the case. Under the I T Act, there is no clear cut provision so as to show the income under income from business . What is important to see:

1. Whether the income of royalty for the author of books is something is actually his main job or his livelihood is based on writing books or there is greater frequency of writing books and earning royalty? or ;
2. Whether the income of royalty is for a book or two and actually author has other profession or business or depends on other kind of services?

If the book was written not on regular interval or frequency of writing books are such that although some one has written books and getting royalty, but you can not say that the authorship is profession for that individual. As an example someone who is a very good lawyer , may write a book on law, and he may be involved in his actual profession of law . In that case , as an author , it can not be said that writing books is a profession for him.There can be other example of an editor of news paper who also writes books on fiction on regular interval. In that case, his income from royalty can certainly be put under income from profession as an author.

Therefore, in your case, if the book was one time twice phenomena , you can advise the individual to show the income as income from other sources .But if he regularly writes the book or articles or his livelihood is based on authorship of books, you can show the royalty as income from business or profession.

A Kolkata tribunal decision in case of ACIT vs Chittaranjan Dutta [48 ITD 428] made this distinction very clear. Facts of the case was that , Sri Dutta was a Barrister of Lincoln's Inn practising in the Calcutta High Court. He wrote a book on Company Law. In the year 1970 he entered into an agreement with M/s. Eastern Law House (ELH), Calcutta by which he granted permission to the publishers (i.e. ELH) to publish the book, subject to payment of royalty. The book itself came to be written later. The first edition was published in 1973 and the second edition in 1976. There was no further edition of the book brought out by ELH and the agreement with ELH was terminated on 21-2-1982 by a written agreement. Among the two questions decided by Tribunal was the one “Is the assessee a professional author, so that the receipts in question can be treated as professional income ?” Para 6 & 7 of the said order is reproduced below:

6. The fate of these appeals must largely depend upon the answers to two main questions : Is the assessee a professional author, so that the receipts in question can be treated as professional income ? Do the amounts received under the agreement represent amounts for the assignment of the copyright and the sale of the goodwill or is it a case of a mere licence to use both ?
7. The first question must, in our opinion, be answered in the
negative. It is not disputed that the assessee is a Barrister practising in the Calcutta High Court. It is no part of a Barrister's profession to write books. His profession is to appear before the Courts on being instructed by Solicitors. In his life so far the assessee has written only one book. The fact that the assessee was able to utilise the knowledge and expertise gained in practising law in writing the book on Company Law cannot automatically lead to the conclusion that writing of the book was part of the assessee's profession.

Read More...

Summary only...

How to Show Loss From House Property in New Income Tax Return Form?

1. I am Punjab Govt Employee and have availed housing loan from HDFC bank. In the new Income Tax Return Form No. " ITR 1 " , I cant find any space for getting rebate under section 24 for interest on housing loan. Kindly tell me where to fill this amount. tirath1960@yahoo.com
2. How to show interest on borrowed capital (Deduction u/s 24(b) in new Income Tax Return Form 2007-08 (ITR 1)? dileepkb@rediffmail.com

First of all , it should be understood that anyone who has income from house property or loss from house property, can not file return ITR-1 . The ITR -1 is only for persons having income from two source-Salary/Pension and Interest . In case , one has salary income and any income other than interest and business income i.e income/loss from house property or capital gains , he shall have only one Return i.e ITR-2.In my view most of the persons who are not doing business , shall have to file return of income in ITR -2 only because there may be very few persons who have only two sources of income i.e salary & interest.

However, if you see ITR-2 , you will find that Part B -T1 is regarding the Computation of Total Income .There you will find that it has been written that "write Nil if loss" from house property. This certainly creates confusion for ordinary persons who are used to file earlier Saral forms.See the picture below







The new Return Forms are prepared section wise .The loss of house property is adjusted under section 71 of the I T Act only from Gross Total Income . Therefore , the ITR-2 gives you first Gross Total income and then details of loss on house property, which comes from the payment of interest on borrowed loan for self occupied house , is to be given in Schedule CYLA of the ITRA 2 .Look below for an image










You fill the aforesaid column in ITR-2 and be taxworry free!

Read More...

Summary only...

Now File Return Without Any Single Paper Attached-yes Even Without TDS Certificates!

CBDT has notified new Returns for Assessment Year 2007-08 by substituting the Income Tax Rule 12 by notification on 14/5/2007 .The new Rule is effective from 14/5/2007. The biggest simplicity for these forms and ordinary people is that the new returns are annexure less. Meaning thereby that not even single paper is to be attached with these returns. Let us see what the Rule 12(2) says

(2) The return of income and return of fringe benefits required to be furnished in Form No.ITR-1 or Form No ITR-.2 or Form No. ITR-3 or Form No.ITR-4 or Form No.ITR-5 or Form No.ITR-6 or Form No.ITR-8 shall not be accompanied

1. by a statement showing the computation of the tax payable on the basis of the return, or
2. proof of the tax, if any, claimed to have been deducted or
3. collected at source or
4. the advance tax or
5. tax on self-assessment, if any, claimed to have been paid or
6. any document or
7. copy of any account or
8. Form or
9. report of audit required to be attached with the return of income or
10. the return of fringe benefits under any of the provisions of the Act."

1. 
   

As you can see , there is nothing to be attached with the Return . In fact , the guidance /instruction with the return is that if any document is attached, staffs receiving the return should detach it and return to the person submitting such return.