Extended period of 6 years not available for reassessment unless Assessing Officer gets info to show escaped income above 1 lakh

BBC World News Ltd. v.Assistant Director of Income-tax [2014] 42 taxmann.com 456 (Delhi)

Extended time-limit of 6 years under section 149(1)(b) requires data for prima facie computation of income escaping assessment.

The High Court held as under:

• Extended time-limit of 6 years under section 149(1)(b)to initiate proceedings to bring to tax income escaping assessment cannot be availed by AO without getting hold of data which prima faciesupports computation of  quantum of income escaping assessment above one lakh rupee; 
• The Assessing Officers may be handicapped in such cases but there are sufficient provisions in the Act to get hold of the said data before proceedings are initiated or reasons are recorded;
• The Assessing Officer must obtain such data for relevant assessment year and cannot even use data of subsequent or other assessment years as figures for every year will alter or change.

Tax Benefits of Charity

Charity in simple terms is voluntarily giving any kind of help to those who are in need of it. This assistance that is offered to those who need it can be in monetary or non-monetary forms.

Charity is done for philanthropic or social reasons. It is always a good practice to share the privileges that the Creator has bestowed upon us with the underprivileged. According to the Indian Mythology by doing charitable deeds you make your way easy towards the door of heaven.

However, there is one thing that gets attached to the Charity that you do that is donations. Charitable Donation is referred to as gift or advance made in the form of land, cash, service or clothing and security towards a non-profit organization by an individual or a business firm.

While you donate keeping in heart a good cause there is a good chance for you to get certain deductions on your taxable income depending upon the institution you opt for making your donations. It is noteworthy that donations up to 10 percent of your total income would earn you deduction.

Tax Benefits of Charity in India:

Section 80G – All of you whether you are an individual, an NRI or a member of HUF and you are making donations that are eligible can earn a deduction up to 50% or 100% on your taxable income. However, the percent of deduction you get eligible for would depend upon the charitable institution which you are contributing to.

It is important for you to pay out your donation from exempted or taxable income. You should also remember that whatever donation you pay needs to be in cash or through cheque. Anything given in kind as a donation would not make you eligible for claiming deduction.

If you have made donations to political parties and foreign trusts keeping in mind that you will earn deduction then you are sadly mistaken. However, if you make donations in aid for development of games or sponsorship of sports that falls under u/s 10(23) or to Indian Olympic Association then your company qualifies for gaining a deduction on the taxable income. 

• 100 percent Deduction on Donations – If you give your donations to any of the following funds you will earn 100 percent deduction without any qualifying limit on the donations you make. These funds are: 
• Approved university or educational institution of national eminence
• Donations made to Zila Saksharta Samitis. 
• National Defence Fund 
• The Chief Minister’s Earthquake Relief Fund, Maharashtra 
• Prime Minister’s National Relief Fund 
• Prime Minister’s Armenia Earthquake Relief Fund 
• The Army Central Welfare Fund or the Indian Naval Benevolent Fund or The Air Force Central Welfare Fund 
• The National Foundation for Communal Harmony 
• The National Blood Transfusion Council or a State Blood Transfusion Council. 
• The Africa (Public Contribution - India) Fund 

• 50 percent Deduction on Donations- The following funds are those that will provide you with 50 percent of deductions on the donations you make without any qualifying limit. These are:                            
• Indira Gandhi Memorial Trust
• Prime Minister’s Drought Relief Fund
• The Rajiv Gandhi Foundation
• Jawaharlal Nehru Memorial Fund
• National Child’s Fund 

• If you make donations for promoting family planning to a local authority or government or you donate towards the Indian Olympic Association then you would qualify for 100 percent deduction subject to 10 percent of adjusted gross total income. 

• If the amount you donate to local authority or government is for any other purpose than family planning then you qualify for 50 percent deduction subject to 10 percent adjusted gross total income. 

• While you make donations to NGOs you earn tax deductions. It happens so because these NGOs are government approved and they run for a social cause. The NGOs registered under section 12A or section 10(23) c) and meeting certain other conditions are also exempted from paying tax. 

• Section 35AC – If you make contributions towards certain pre-approved projects that fall under this section; you can claim 100 percent deduction on the donations you make. 

• Section 35CCB – This section caters to NGOs who are involved in working towards aforestration and conservation of natural resources. If you make any donation for this purpose you qualify for claming 100 percent deduction. 

• While you donate for a social cause it is important for you to get the receipt of your donation in order to claim a tax deduction. The receipt should bear you name, the name of the trust, the amount donated and also the registration number of the trust as per Section 80G. 

• If you are a salaried person and have contributed your bit towards the charitable fund from your salary and if the donation receipt bears the name of the company, even then you are subject to a deduction under Section 80G and are entitled to claim the same. 

Prior making your donations make sure that the charitable institution you are contributing to is a registered one. As they say whatever goes around comes back, thus a small contribution made by you for a good cause not only shows your sharing spirit but can end you earning tax deduction thus lowering your taxable income.

You may also take a step forward to contribute your bit towards the society by giving away the surplus food, clothes, toys, books etc that are no more useful for you. Who knows you may become the reason for lighting up someone’s face. After all there is nothing more satisfying than spreading smiles.

Circular No. 04

As per Circular No. 04/2014 F. No. 225/198/2013-ITA. II, dated 10th February 2014, the Central Board of Direct Taxes (CBDT) has extended the due date for filing ITR-V Form for assessment years 2009-10, 2010-11 and 2011-12 till 31.03.2014 for returns e-filed with refund claims. In such cases, CBDT has also relaxed the time frame of issuing the intimation u/s 143(1) of the Act and has directed that such returns shall be processed within a period of six months from end of the month in which ITR-V is received

Futures

A standardized, transferable, exchange-traded contract that requires delivery of a commodity, bond, currency, or stock index, at a specified price, on a specified future date. Unlike options, futures convey an obligation to buy. The risk to the holder is unlimited, and because the payoff pattern is symmetrical, the risk to the seller is unlimited as well. Dollars lost and gained by each party on a futures contract are equal and opposite. In other words, futures trading is a zero-sum game. Futures contracts are forward contracts, meaning they represent a pledge to make a certain transaction at a future date. The exchange of assets occurs on the date specified in the contract. Futures are distinguished from generic forward contracts in that they contain standardized terms, trade on a formal exchange, are regulated by overseeing agencies, and are guaranteed by clearinghouses. Also, in order to insure that payment will occur, futures have a margin requirement that must be settled daily. Finally, by making an offsetting trade, taking delivery of goods, or arranging for an exchange of goods, futures contracts can be closed. Hedgers often trade futures for the purpose of keeping price risk in check, also called futures contract.

Consideration

Something of value, such as money or personal services, given by one party to another in exchange for an act or promise.

Earnings Before Interest and Taxes (EBIT)

Earnings Before Interest and Taxes. A measure of a company's earning power from ongoing operations, equal to earnings before deduction of interest payments and income taxes. EBIT excludes income and expenditure from unusual, non-recurring or discontinued activities. In the case of a company with minimal depreciation and amortization activities, EBIT is watched closely by creditors, since it represents the amount of cash that such a company will be able to use to pay off creditors, also called operating profit.

Conglomerate

A corporation consisting of several companies in different businesses. Such a structure allows for diversification of business risks, but the lack of focus can make managing the diverse businesses more difficult.