Asset

Any item of economic value owned by an individual or corporation, especially that which could be converted to cash. Examples are cash, securities, accounts receivable, inventory, office equipment, real estate, a car, and other property. On a balance sheet, assets are equal to the sum of liabilities, common stock, preferred stock, and retained earnings. From an accounting perspective, assets are divided into the following categories: current assets (cash and other liquid items), long-term assets (real estate, plant, equipment), prepaid and deferred assets (expenditures for future costs such as insurance, rent, interest), and intangible assets (trademarks, patents, copyrights, goodwill).

Annuity

A contract sold by an insurance company designed to provide payments to the holder at specified intervals, usually after retirement. The holder is taxed only when they start taking distributions or if they withdraw funds from the account. All annuities are tax-deferred, meaning that the earnings from investments in these accounts grow tax-deferred until withdrawal. Annuity earnings are also tax-deferred so they cannot be withdrawn without penalty until a certain specified age. Fixed annuities guarantee a certain payment amount, while variable annuities do not, but do have the potential for greater returns. Both are relatively safe, low-yielding investments. An annuity has a death benefit equivalent to the higher of the current value of the annuity or the amount the buyer has paid into it. If the owner dies during the accumulation phase, his or her heirs will receive the accumulated amount in the annuity. This money is subject to ordinary income taxes in addition to estate taxes. More generally, a series of payments of set size and frequency, often to a retired person.

Derivative

A financial instrument whose characteristics and value depend upon the characteristics and value of an underlying asset, typically a commodity, bond, equity or currency. Examples of derivatives include futures and options. Advanced investors sometimes purchase or sell derivatives to manage the risk associated with the underlying security, to protect against fluctuations in value, or to profit from periods of inactivity or decline. These techniques can be quite complicated and quite risky.

ITAT devises formula for claiming lease equalization charges – gap of annual lease charges and depreciation as per Income-tax Act

INFRASTRUCTURE LEASING & FINANCIAL SERVICES LTD V. DY.CIT (Mumbai - Trib.)

While allowing deduction on account of lease equalization charges, only difference between annual lease charge of leased assets and depreciation allowed on said leased asset under the Income-tax Act (the I-T Act) should be taken into consideration

The Tribunal held as under:

1. The concept of lease equalization charge could also be followed for the purpose of computing the total income under the I-T Act. However, the same has to be done with proper care and caution, otherwise it might result in absurdity and give misleading result;
2. In the instant case the relevant transactions were treated as finance lease transaction and, the depreciation allowed as per the rates prescribed in the I-T Act could be more than the depreciation claimed by the assessee at the rate prescribed under the Companies Act;
3. For example, the assessee might be entitled to claim depreciation at 100 per cent on the leased assets in the first year itself under the I-T Act whereas in the books of account, it might have claimed depreciation on the said leased assets under the Companies Act at the rate of 10 per cent;
4. In such a case if the annual leasing charge was equivalent to 30 per cent of the value of leased assets, the assessee would debit its profit and loss account by lease equalization charges to the extent of 20 per cent of the value of asset as per the guidance note issued by the ICAI;
5. If the lease equalization charges so debited were to be allowed as deduction while computing the total income of the assessee under the I-T Act in addition to 100 per cent depreciation already allowed, the assessee would get the deduction of 120 per cent of the value of asset in the first year itself and the very purpose of adopting the concept of lease equalization would be defeated. This would result in absurdity and give misleading results;
6. It was, therefore, necessary that while allowing deduction on account of lease equalization charges for the purpose of computing total income under the I-T Act, the difference between the annual lease charge of the leased assets and depreciation allowed on the said leased asset under the I-T Act should be taken into consideration. 

Market Opportunity

A potentially favorable condition in which a business can capitalize on a changing trend or an increasing demand for a product by a demographic group that has yet to be recognized by its competitors. For a market opportunity to exist, a company must be able to identify who its potential customers are, the specific needs that need to be met, the size of the market, and its capacity to capture market share.

Advance Ruling binding on both revenue and assessee; CBEC’s circular holding otherwise is invalid

GRAS IMPEX (P.) LTD. V. COMMISSIONER OF COMMERCIAL TAXES (Karnataka)

Advance ruling is binding on Department as well as assessee; CBEC's clarification holding contrary view and issued in later point of time, cannot annul advance ruling pronounced in favour of assessee

In the instant case the advance ruling was pronounced in assessee's favour, which was not challenged and became final. Later, on clarification being sought by some other person from CBEC, it issued a Circular holding a view contrary to order of Authority for Advance Ruling. The Department argued that view expressed in CBEC's Circular was applicable to the assessee.

The High court held in favour of assessee with following observation:

1. In the instant case, the assessee himself had not sought any clarification from CBEC. A clarification sought for by some other person couldn’t bind the assessee for whom advance ruling was binding;
2. CBEC's clarification, issued in later point of time, did not and could not have annulled advance ruling in view of provisions of section 96D(2) read with section 96E.

Overhead

The ongoing administrative expenses of a business which cannot be attributed to any specific business activity, but are still necessary for the business to function. Examples include rent, utilities, and insurance.