Significant Circulars issued by CBDT applicable for CA Final Nov 2016
Circular No - 18/2015
Date - 2/11/15
Subject- Whether in the case of banks, expenses relatable to investment in non-SLR securities need to be disallowed under section 57(i), by considering interest on non-SLR securities as “Income from other sources".
Clarification by CBDT- In CIT v. Nawanshahar Central Cooperative Bank Ltd. [2007]160 Taxman 48, the Supreme Court held that investments made by a banking concern are part of the business of
banking. Therefore, the income arising from such investments is attributable to the business of banking falling under the head "Profits and Gains of Business and Profession
Even though the above mentioned decision was in the context of co-operative societies/Banks claiming deduction under section 80P(2)(a)(i), the principle is equally applicable to all banks/commercial banks, to which Banking Regulation Act, 1949 applies.
Circular No - 21/2015
Date- 10/12/2015
Subject - Revision of monetary limits for filing of appeals by the Department before the ITAT and High Courts and SLP before Supreme Court
Clarification by CBDT - Appeals/SLP shall not be filed in cases where tax effect does not exceed the monetary limits given hereunder –
`10 lakhs, in case of appeal before ITAT;
`20 lakhs, in case of appeal before High Court; and
`25 lakhs, in case of appeal before Supreme Court.
Further, appeal should not be filed merely because the tax effect in a case exceeds the monetary limits prescribed above. Filing of appeal in such cases is to be decided on merits of the case. The above limits would apply equally to cross objections under section 253(4) and references to High Court under sections 256(1)and (2).
Circular No - 22/2015
Date - 17/12/15
Subject - Allowability of employers contribution to welfare funds of employees remitted after due date under the relevant Act but before the due date of fi ling of return under section 139(1).
Clarification by CBDT- If the assessee deposits any sum payable by it by way of tax, duty, cess or fee by whatever name called under any law for the time being in force, or any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of employees, on or before the ‘due date’ applicable in his case for furnishing the return of income under section 139(1), no disallowance can be made under section 43B.This clarification is based on Supreme Court decision in CIT v. Alom Extrusions Ltd. (2009) 185 Taxman 416.
It is further clarifi ed that this Circular does not apply to claim of deduction relating to employee’s contribution to welfare funds which are governed by section 36(1)(va) of the Income-tax Act,
1961.
Circular No - 18/2015
Date - 2/11/15
Subject- Whether in the case of banks, expenses relatable to investment in non-SLR securities need to be disallowed under section 57(i), by considering interest on non-SLR securities as “Income from other sources".
Clarification by CBDT- In CIT v. Nawanshahar Central Cooperative Bank Ltd. [2007]160 Taxman 48, the Supreme Court held that investments made by a banking concern are part of the business of
banking. Therefore, the income arising from such investments is attributable to the business of banking falling under the head "Profits and Gains of Business and Profession
Even though the above mentioned decision was in the context of co-operative societies/Banks claiming deduction under section 80P(2)(a)(i), the principle is equally applicable to all banks/commercial banks, to which Banking Regulation Act, 1949 applies.
Circular No - 21/2015
Date- 10/12/2015
Subject - Revision of monetary limits for filing of appeals by the Department before the ITAT and High Courts and SLP before Supreme Court
Clarification by CBDT - Appeals/SLP shall not be filed in cases where tax effect does not exceed the monetary limits given hereunder –
`10 lakhs, in case of appeal before ITAT;
`20 lakhs, in case of appeal before High Court; and
`25 lakhs, in case of appeal before Supreme Court.
Further, appeal should not be filed merely because the tax effect in a case exceeds the monetary limits prescribed above. Filing of appeal in such cases is to be decided on merits of the case. The above limits would apply equally to cross objections under section 253(4) and references to High Court under sections 256(1)and (2).
Circular No - 22/2015
Date - 17/12/15
Subject - Allowability of employers contribution to welfare funds of employees remitted after due date under the relevant Act but before the due date of fi ling of return under section 139(1).
Clarification by CBDT- If the assessee deposits any sum payable by it by way of tax, duty, cess or fee by whatever name called under any law for the time being in force, or any sum payable by the assessee as an employer by way of contribution to any provident fund or superannuation fund or gratuity fund or any other fund for the welfare of employees, on or before the ‘due date’ applicable in his case for furnishing the return of income under section 139(1), no disallowance can be made under section 43B.This clarification is based on Supreme Court decision in CIT v. Alom Extrusions Ltd. (2009) 185 Taxman 416.
It is further clarifi ed that this Circular does not apply to claim of deduction relating to employee’s contribution to welfare funds which are governed by section 36(1)(va) of the Income-tax Act,
1961.
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