TDS – no deduction in certain cases – specified payments u/s. 197A (1F) (212 Taxman (st.) 12)

The Central Government vide Notification No. 56/2012 dated 31/12/2012 notifies that no deduction of tax under chapter XVII of the Income-tax Act shall be made on the payments of the nature specified below, in case such payment is made by person to a bank listed in the second schedule to the Reserve Bank of India Act, excluding of Foreign Bank. This notification came into effect from 1/1/2013. i. Bank guarantee commission; ii. Cash management service charges; iii. Depository charges on maintenance of DEMAT accounts; iv. Charges for warehousing services for commodities; v. Underwriting service charges; vi. Clearing charges (MICR charges); vii. Credit card or debit card commission for transaction between the merchant establishment and acquirer bank.

Search & Seizure - Assessment of preceding years in search cases during election period. (212 Taxman (st.) 11)

The Central Government, vide Finance Act, 2012 inserted new rule 112F specifying the class of cases in which AO shall not be required to issue notice for assessing or reassessing the total income for 6 assessment years. The aforesaid amendment was introduced with a view to reduce infructuous and unnecessary proceedings under the Income-Tax Act, 1961 in cases where a search is conducted u/s. 132 or requisition made u/s. 132A and cash or other assets are seized during the election period, generally on a single warrant, and no evidence is available, or investigation required, for any assessment year other than the assessment year relevant to the previous year in which search is conducted or requisition is made. The Central Government vide Circular No. 10/2012 dated 31/12/2012 clarifies that in such cases, the officer investigating the case, with the approval of the Director General of Income-Tax shall certify that – i. the search is conducted under section 132 or the requisition is made under section 132A of the Act in the territorial area of an assembly or parliamentary constituency in respect of which a notification has been issued under section 30, read with section 56 of the Representation of the People Act, 1951; or ii. The assets seized or requisitioned are connected in any manner to the ongoing election process is an assembly or parliamentary constituency; and iii. No evidence is available or investigation is required for any assessment year other than the assessment year relevant to the previous year in which search is conducted or requisition is made. The certificate of the investigating officer is requiring to be communicated to the Commissioner of the Income Tax and the Assessing Officer having jurisdiction over the case of such person.

SECTION 90 OF THE INCOME-TAX ACT, 1961 – DOUBLE TAXATION AGREEMENT – AGREEMENT FOR EXCHANGE OF INFORMATION FOR TAX PURPOSES WITH FOREIGN JURISDICTIONS – GUIDELINES FOR INBOUND AND OUTBOUND REQUESTS {212 TAXMANN 33(ST.)}

Instruction No 1 of 2013 [F. No. 500/90/2007-FTD-1] dated 17/1/2013 India has entered into a number of Double Taxation Avoidance Agreements (DTAAs) and Tax Information Exchange Agreements (TIEAs) and has also joined the Multilateral Convention on Mutual Administrative Assistance in Tax Matters and SAARC Limited Multilateral Agreement. These agreements contain the legal framework for receiving and providing information for tax purposes available with the other countries/jurisdictions, which tax authorities of a country cannot access using their own powers, as the information lies outside the territorial jurisdiction of the country. The Income Tax Authorities entrusted with administration of the Income-tax Act, 1961, may make requests for information in conformity with the relevant provisions of the DTAAs/TIEAs/Multilateral Agreements, if they are of the view that information received from a foreign jurisdiction would be helpful in assessment and determination of income, collection and recovery of taxes, investigation of tax matters or prosecution in relation to tax matters. The detailed guidelines for making such requests have been provided in above notification.

SECTION 10A READ WITH SECTIONS 10AA & 10B OF INCOME-TAX ACT, 1961 – CLARIFICATION ON ISSUES RELATING TO EXPORT OF COMPUTER SOFTWARE {212 TAXMANN 23 (ST.)}

Circular No.1/2013 (F No. 178/84/2012-ITA.I) dated 17/1/2013 The Indian software industry has been the beneficiary of direct tax incentives under the provisions like sections 10A, 10AA & 10B in respect of profits derived from the export of computer software. These provisions prescribe incentives to “units” or “undertakings”, established under different schemes, which are/were deriving profits from export of computer software subject to fulfilling the prescribed conditions. The software companies had represented to CBDT that there were several issues arising from the above mentioned provisions that are giving rise to disputes between them and the Income Tax authorities, leading to denial of tax benefits and consequent litigation and therefore require clarification. In the above notification, the Board has examined various issues highlighted by software industry and issued clarifications.