Management & Administrative Procedure_NC.pdf

Corporate Tax Planning
Unit-V:
Tax Management and Administrative Procedures
E-commerce Transaction and Liability in Special Cases;
Tonnage Taxation, TDS; Advance Payment of Tax with
reference to Corporate Assessee; TCS; Administrative
Procedure; Assessment- Procedures and Types of Assessment;
Procedure; Assessment- Procedures and Types of Assessment;
Return on Income; Statement of Financial Transaction (SFT).
E-Filing: Appeal and Revision; Penalties.
Prepared By
Mr. Dayanada Huded M.Com NET, KSET
Teaching Assistant,
Rani Channamma University, P. G. Centre, Jamkhandi
E-Mail: dayanandch65@gmail.com
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Mr. Dayananda Huded

E-Commerce Transactions and Special Cases
• Today e-commerce has become an integral part of everyday life.
Accessibility to E-commerce platforms is not a privilege but rather a
necessity for most people, particularly in the urban areas.
• Electronic contracts are governed by the basic principles elucidated in the
Indian Contract Act, 1872, which mandates that a valid contract should
have been entered with a free consent and for a lawful consideration
between two adults.
• Investments in the E-Commerce Space in India Foreign direct investment
• Investments in the E-Commerce Space in India Foreign direct investment
(“FDI”) in India is regulated under the Foreign Exchange Management
Act 1999 (“FEMA”). The Department of Industrial Policy and Promotion
(“DIPP”), Ministry of Commerce and Industry, Government of India
makes policy pronouncements on FDI through Press Notes and Press
Releases which are notified by the Reserve Bank of India (“RBI”) as
amendments to Foreign Exchange Management Regulations, 2000
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Mr. Dayananda Huded

FDI Rules and Regulations for E-Commerce
• FDI rules and regulations for E-commerce 100% FDI is allowed under the
automatic route (i.e. no FIPB approval is required) in companies engaged
in B2B e-commerce.
• No FDI is allowed in companies which engage in single brand retail
trading by means of e-commerce.
• No FDI is allowed in companies which engage in multi brand retail
trading by means of e-commerce.
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Mr. Dayananda Huded

Tonnage Taxation
• Tonnage Tax is a way for qualifying shipping companies to calculate their
shipping related profits for Corporation Tax (CT) purposes. The shipping related
profits are calculated based on the tonnage of the ships used in the company's
shipping trade.
• A tonnage tax is a taxation mechanism that can be applied to shipping
companies instead of ordinary corporate taxation. The tax is determined by
the net tonnage of the entire fleet of vessels under operation or use by a company.
It is on the basis of this variable that taxation is applied.
shipping related profits for Corporation Tax (CT) purposes. The shipping related
profits are calculated based on the tonnage of the ships used in the company’s
shipping trade.
• What is a qualifying shipping company?
• A qualifying shipping company must:
• pay CT
• operate qualifying ships
• carry on the strategic and commercial management of the qualifying ships.
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Mr. Dayananda Huded

TDS
• The concept of TDS was introduced with an aim to collect tax from the
very source of income. As per this concept, a person (deductor) who is
liable to make payment of specified nature to any other person (deductee)
shall deduct tax at source and remit the same into the account of the
Central Government. The deductee from whose income tax has been
deducted at source would be entitled to get credit of the amount so
deducted on the basis of Form 26AS or TDS certificate issued by the
deductor.
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Mr. Dayananda Huded
TDS %
Section 193: Interest on securities
a) any debentures or securities for money issued by or on behalf of any local authority or a corporation established by a
Central, State or Provincial Act;
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b) any debentures issued by a company where such debentures are listed on a recognised stock exchange in accordance
with the Securities Contracts (Regulation) Act, 1956 (42 of 1956) and any rules made thereunder;
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Section 194: Dividend 10
Section 194A: Income by way of interest other than "Interest on securities" 10
Section 194B: Income by way of winnings from lotteries, crossword puzzles, card games and other games of any sort 30
Section 194BB: Income by way of winnings from horse races 30

TCS
• Tax collection at source (TCS) is an extra amount collected as tax by a
seller of specified goods from the buyer at the time of sale over and
above the sale amount and is remitted to the government account.
• Any seller with a turnover of more than Rs 10 crore is supposed to
collect tax, when a payment of more than Rs 50 lakh from one buyer is
received during the financial year. TCS is collected at the time of
receipt of the amount.
• To understand this tax let us explain the process with the help of an
• To understand this tax let us explain the process with the help of an
example. If a buyer is purchasing a car that costs Rs 10.01 lakhs
then an amount of Rs 10,010 would be payable as TCS.
• Besides sale of goods, every person who enters into an agreement of
lease, license or contract for parking lot, toll plaza or mining or
quarrying will collect an amount @ 2% from such parties as TCS.
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Mr. Dayananda Huded

Advance Payment of Tax with Reference to Corporate Assessee
• As per section 208 of the Income Tax Act 1961, every person whose estimated
tax liability for the year is more than or equal to `10,000 is liable to pay advance
tax. Those who are excluded from paying advance tax are senior citizens who are
above the age of 60, not having any income from business or profession.
• By paying tax in advance, taxpayers do not have to worry about money shortage
or tax payments at the last moment. It speeds up the tax collection process. It
increases government funds as the government can earn an interest on the
collected amount.
• The advance tax is to be paid in the following three installments on the following
dates:
• For Non-Corporate Assessee:
• For Non-Corporate Assessee:
– On or before 15 September – not less than 30% of the tax payable for the year.
– On or before 15 December – not less than 60% of the tax payable for the year.
– On or before 15 March – not less than 100% of the tax payable for the year.
• For Corporate Assessee:
– On or before 15 June – not less than 15% of the tax payable for the year.
– On or before 15 September – not less than 45% of the tax payable for the year
– On or before 15 December – not less than 75% of the tax payable for the year
– On or before 15 March – not less than 100% of the tax payable for the year.
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Mr. Dayananda Huded

Administrative Procedure
• The Administrative Procedure Act (APA) governs the process by which
federal agencies develop and issue regulations. It includes requirements for
publishing notices of proposed and final rulemaking in the Federal Register,
and provides opportunities for the public to comment on notices of proposed
rulemaking.
• The concept of Advance Ruling : ‘Advance Ruling' means written opinion or
authoritative decision by an Authority empowered to render it with regard to
the tax consequences of a transaction or proposed transaction or an
assessment in regard thereto.
assessment in regard thereto.
• The composition of the Authority : The Authority consists of a Chairman and
two Members. The Chairman is a retired Judge of the Supreme Court. One of
the Members is to be appointed from the Indian Revenue Service from
amongst officers who are eligible to be appointed as Member of the CBDT.
• The functions of Authority : The Chairman and two Members of the
Authority function as a collective body in disposing of the applications
before them.
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Mr. Dayananda Huded

• The powers of the Authority:-
• a. Section 245U deals with the powers of the Authority. Sub-section(1)
provides that for the purpose of exercising its powers, the Authority shall
have all the powers of a civil court under the Code of Civil Procedure,
1908(5 of 1908) as stipulated in section 131 of the Act.
• b. Section 245R empowers the Authority to frame rules to regulate its own
procedure in all matters arising out of the exercise of its powers under the
Act. In accordance with the powers vested in the Authority vide this section,
the Authority for Advance Rulings (Procedure) Rules, 1996 have been
the Authority for Advance Rulings (Procedure) Rules, 1996 have been
promulgated and the same have been notified in the Gazette of India on 18th
of September, 1996. These rules of procedure have been referred to in this
chapter, wherever appropriate.
• The secretariat of the Authority
• Procedure of application for advance ruling
• Procedure on receipt of application
• Hearing when necessary
• Role of the Commissioner of Income Tax
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Mr. Dayananda Huded

Assessment Procedure
• Assessment under section 143(1)
• This is a preliminary assessment and is referred to as summary assessment without calling
the assessee (i.e., taxpayer). Scope of assessment under section 143(1)
• Assessment under section 143(1) is like preliminary checking of the return of income. At
this stage no detailed scrutiny of the return of income is carried out. At this stage, the total
income or loss is computed after making the following adjustments (if any), namely:-
• i. any arithmetical error in the return; or
• Ii. an incorrect claim (*), if such incorrect claim is apparent from any information in the
return;
• Iii. disallowance of loss claimed, if return of the previous year for which set-off of loss is
claimed was furnished beyond the due date specified under section 139(1); or
• Iv. disallowance of expenditure indicated in the audit report but not taken into account in
computing the total income in the return; or
• V. disallowance of deduction claimed u/s 10AA, 80IA to 80-IE, if the return is furnished
beyond the due date specified under section 139(1); or
• Vi. addition of income appearing in Form 26AS or Form 16A or Form 16 which has not
been included in computing the total income in the return. However, no such adjustment
shall be made in relation to a return furnished for the assessment year 2018-19 and
thereafter.
• However, no such adjustment shall be made unless an intimation is given to the assessee
of such adjustment either in writing or in electronic mode.
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Mr. Dayananda Huded

Procedure for Assesssement
• Procedure of assessment under section 143(1) After correcting
arithmetical error or incorrect claim (if any) as discussed above,
the tax and interest and fee*, if any, shall be computed on the
basis of the adjusted income.
• Any sum payable by or refund due to the taxpayer shall be
intimated to him.
• An intimation shall be prepared or generated and sent to the
taxpayer specifying the sum determined to be payable by, or the
amount of refund due to the taxpayer.
amount of refund due to the taxpayer.
• An intimation shall also be sent to the taxpayer in a case where
the loss declared in the return of income by the taxpayer is
adjusted but no tax or interest is payable by or no refund is due
to him.
• The acknowledgement of the return of income shall be deemed
to be the intimation in a case where no sum is payable by or
refundable to the assessee or where no adjustment is made to the
returned income.
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Mr. Dayananda Huded

Types of Assessment
• (1) Self-assessment – u/s 140A
• As the name suggests this is the type of income tax assessment
where the assessee personally calculates the tax themselves, usually
accompanied by payment of the amount they believe is due. After
taking TDS and subtracting advance tax paid, tax payable is
required to be given under Section 139, Section 142, Section 148,
or Section 153A.
• (2) Summary Assessment u/s 143(1)
• The assessment under Section 143(1) is similar to the initial review
of Income tax returns online. The taxpayer receives an intimation
u/s 143(1) from the IRS. The department will send you a
comparative income tax calculator. The overall income or loss
incurred is computed in the income tax assessment.
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Mr. Dayananda Huded

• (3) Scrutiny Assessment u/s 143(3)
• Scrutiny assessment is the assessment of a return filed by an assesse by providing
an opportunity for the assessee to support the declared income and expenses, as
well as claims of deductions, losses, exemptions, and so on, in the return using
proof. The committee manages it using a single work plan. The committee
undertakes specific work, as well as forming informal panels (for in-depth
activities) or working groups.
• (4) Best Judgment Assessment u/s 144
• The term ‘best judgment assessment’ refers to the assessing officer’s opinion or
calculation of the assessee’s income in the context of income tax law. In the
situation of best judgment assessment, the evaluating officer will make the
decision based on the best reasoning. The assessee will not be dishonest in their
assessment, nor will they be hostile to the officer.
• (5) Protective Assessment
• This is a type of assessment that focuses on those that are made to ‘protect’ the
revenue’s interests. The income tax legislation, however, has no provision for the
imposition of income tax on anyone other than the person to whom it is due. It is
open to the authorities to undertake a protective or alternative assessment if it is
unclear who among a few probable persons is actually liable to pay the tax.
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Mr. Dayananda Huded

• (6) Re-Assessment (or) Income Escaping Assessment u/s 147
• If the assessing officer has reason to think that income liable to tax has escaped
assessment for any assessment year, they will conduct an income escaping
assessment under Section 147. Moreover, it gives them the authority to reassess
or re-compute income, turnover, and other figures that have escaped their
notice. The goal of conducting an assessment under Section 147 is to bring any
income that escaped assessment in the original assessment into the tax net.
• (7) Assessment in Case of Search u/s 153A
• The assessing officer will do the following in this type of income tax assessment:
• Giving such a person notice requires furnishing it within the time frame
• Giving such a person notice requires furnishing it within the time frame
mentioned in the notice. Clause (b) referred to the income return for each of the
six assessment years, which is confirmed in the prescribed format. Setting forth
such other particulars as may be prescribed, and the provisions of this Act shall
apply as if such return were a return required to be furnished under Section 139,
to the extent possible;
• The assessor re-assesses the total income of the six assessment years immediately
preceding the assessment year relevant to the previous year in which such search
or requisition is made.
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Mr. Dayananda Huded

Return on Income
• Income Tax Return (ITR) is a form which a person is supposed to
submit to the Income Tax Department of India. It contains information
about the person's income and the taxes to be paid on it during the
year.
• Return of income is filed in order to inform the government regarding
the taxes paid and information regarding income. There are three types
of returns which are filed for the purpose of income tax- Original
Return, Revised Return and Belated Return.
Return, Revised Return and Belated Return.
• This record is collated and submitted to respective authorities in the
needed format known as income tax return file. Therefore, income tax
is the amount that you (the taxpayers) pay and the income tax
return is the yearly record of the same.
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Mr. Dayananda Huded

Statement of Financial Transactions
• To keep a watch on high value transactions undertaken by the taxpayer,
the Income-tax Law has framed the concept of statement of financial
transaction or reportable account.
• With the help of the statement the tax authorities will collect information
on certain prescribed high value transactions undertaken by a person
during the year.
• Statement of financial transaction or reportable account is to be filed by
certain prescribed entities, and in such statement they are required to
certain prescribed entities, and in such statement they are required to
furnish the details of specified financial transactions or any reportable
account registered/recorded/maintained by them during the year.
• Thus, on the basis of the information provided by certain prescribed
entities in statement of financial transaction or reportable account, the
Income-tax Department keeps a track of specified financial transactions
carried on by a person during the year.
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Mr. Dayananda Huded

Persons required to file statement of financial transaction or reportable account
• Following persons shall be required to furnish statement of financial transactions
or reportable accounts registered or recorded or maintained by them during a
financial year to the prescribed authority:
• (a) an assessee;
• (b) the prescribed person in the case of an office of Government;
• (c) a local authority or other public body or association;
• (d) the Registrar or Sub-Registrar appointed under section 6 of the Registration
Act, 1908 (16 of 1908);
• (e) the registering authority empowered to register motor vehicles under Chapter
IV of the Motor Vehicles Act, 1988 (59 of 1988);
• (f) the Post Master General as referred to in clause (j) of section 2 of the Indian
Post Office Act, 1898 (6 of 1898);
• (g) the Collector referred to in clause (g) of section 3 of the Right to Fair
Compensation and Transparency in Land Acquisition, Rehabilitation and
Resettlement Act, 2013 (30 of 2013);
• (h) the recognised stock exchange referred to in clause (f) of section 2 of the
Securities Contracts (Regulation) Act, 1956 (42 of 1956);
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Mr. Dayananda Huded

E-Filling
• The process of electronically filling income tax return through the internet
is known as e-filling.
• Assessee with a cumulative income of Rs. 5 Lakhs and above.
Individual/HUF resident with assets located outside India. An assessee as
to provide returns under section 139 (4B) (ITR 7).
Steps of E-Filling
• STEP 1: Go to the Income Tax e-Filing
• STEP 1: Go to the Income Tax e-Filing
portal, https://www.incometax.gov.in/iec/foportal/
• Step 2: Login to e-Filing portal by entering user ID (PAN), Password,
Captcha code and click 'Login'.
• Step 3: Click on the 'e-File' menu and click 'Income Tax Return' link.
• Step 4:
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Mr. Dayananda Huded

• Step 5: Click on 'Continue'
• Step 6: Read the Instructions carefully and Fill all the applicable and mandatory fields of
the Online ITR Form
• Step 7: Choose the appropriate Verification option in the 'Taxes Paid and Verification' tab.
Choose any one of the following option to verify the Income Tax Return:
• Step 8: I would like to e-Verify
• Step 9: I would like to e-Verify later within 120 days from date of filing.
• Step 10: I don't want to e-Verify and would like to send signed ITR-V through normal or
speed post to "Centralized Processing Center, Income Tax Department, Bengaluru - 560
speed post to "Centralized Processing Center, Income Tax Department, Bengaluru - 560
500" within 120 days from date of filing.
• Step 11: Click on 'Preview and Submit' button, Verify all the data entered in the ITR.
• Step 12: 'Submit' the ITR.
• Step 13; On Choosing 'I would like to e-Verify' option, e-Verification can be done through
any of the following methods by entering the EVC/OTP when asked for
• Step 14: The EVC/OTP should be entered within 60 seconds else, the Income Tax Return
(ITR) will be auto-submitted. The submitted ITR should be verified later by using 'My
Account > e-Verify Return' option or by sending signed ITR-V to CPC.
• Step 15: To view the uploaded ITRs
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Mr. Dayananda Huded

Appeal and Revision
• A tax payer aggrieved by various actions of Assessing Officer can appeal before
Commissioner of Income Tax (Appeals). Further appeal can be preferred before
the Income Tax Appellate Tribunal. On substantial question of law, further appeal can be
filed before the High Court and even to the Supreme Court.
• Appeal refers to a request made to a superior court, to review the decision given by a
subordinate court.
• Revision refers to the act of revising, i.e. re-examining and amending, with a view to
correct a decision and make it just and fair.
• Revision of an Income Tax order is performed when a taxpayer feels that an income
tax assessment order forwarded by the assessing officer was unjust or unreasonable.
tax assessment order forwarded by the assessing officer was unjust or unreasonable.
Income Tax orders can also be revised in a manner which causes enhancement of the
taxpayer's tax liability.
• First appeal against the order of the Assessing Officer shall, except in certain cases(
Refusing to grant registration u/s 12AA and approval u/s 80G ), lie with the commissioner
(Appeals) u/s 246A. 2)
• Revision : Alternativly, if the appeal is not preferred, or if could not be filed within the
time limit allowed, the assesse can apply u/s 264 to the Commissioner of Income Tax for
revision of the order of the Assessing Officer. This is known as revision in favour of the
assessee.
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Mr. Dayananda Huded

Penalties
• a punishment, or the usual punishment, for doing something that is
against a law: The law carries a penalty of up to three years in prison.
They asked for the maximum penalty for hoax calls to be increased to one
year.
• In cases wherein the taxpayer tries to conceal the original earnings or
income, the penalty is between 100% and 300% of the tax evaded, as
per Section 271(C). Section 44AB mandates a taxpayer to get the account
audited or furnish a report of audit.
audited or furnish a report of audit.
• An assessee who commits an offence under the provisions of The Income
Tax Act, 1961 shall be subject to penalty. The penalty is an additional
amount levied and is different from the tax payable. Penalty is levied
based on the law at the time of the offence being committed and not as it
stands in the financial year for which the assessment is being made. The
list of penalties levied under the Income Tax Act, 1961 are:
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Sl.
No.
Section & Description Penalty
1 Section 158BFA- Determination of
undisclosed income for the block period,
when a search is initiated under section 132
or books of account, other documents or any
assets are requisitioned under section 132A
in the case of any person
Minimum-100% of the tax leviable in
respect of the undisclosed income
Maximum-300% of the tax leviable in
respect of the undisclosed income.
The above penalty shall be levied only on
the income determined by the ITO in excess
of the ITR furnished by the assessee u/s
158BC and appeal is not filed against such
assessment.
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Mr. Dayananda Huded
assessment.
2
Section 221(1)- Default in making payment
of taxes
Amount as directed by the assessing officer.
However, the amount of penalty cannot
exceed the amount of tax in arrears.
3 Section 234E- Failure to file return in
respect of TDS/TCS within the time
prescribed as given under section
200(3)/206C(3)
Rs.200 for every day of default

Sl.
No.
4
Section 234F- Default in
furnishing of return under section
139(1) within the time prescribed
Rs.5,000 if return is furnished before 31st December
of the assessment year.
Rs. 10,000 in any other case
Note: if the income does not exceed Rs.5 Lakhs then
the penalty shall not exceed Rs.1,000
5 Section 270A-Penalty for under-
reporting of income
Penalty for under-reporting on
account of misreporting of income
50% of the amount of tax payable on under-reported
income.
200% of the amount of tax payable on under-reported
income
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Mr. Dayananda Huded
6 Section 271(1)(b)-Failure to
furnish returns and comply with
notices
Note: Applicable up to AY 2016-
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Rs.10,000 for every failure
7 Section 271(1)(c)-Concealment of
the particulars of his income/fringe
benefits or furnished inaccurate
particulars of such income/fringe
benefits
Note: Applicable up to AY 2016-
17
Minimum:100% of tax sought to be evaded.
Maximum: 300% of tax sought to be evaded

Sl.
No.
8 Section 271(1((4)- Distribution of profits by a
registered firm not in accordance with the
partnership deed and thereby partner returned
his income below the real amount
Note: Applicable up to AY 2016-17
Maximum-150% of the tax avoided
9 Section 271A-Failure to keep, maintain or retain
the books of account, documents as required
under Section 44AA
Rs.25,000
10 Section 271AA(2)- Failure to furnish
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Mr. Dayananda Huded
10 Section 271AA(2)- Failure to furnish
information and document to the authority
prescribed as required under Section 92D(4)
Rs.5,00,000
11 Section 271BA-Failure to furnish a report from
an accountant to be furnished by persons
entering into an international transaction or
specified domestic transaction under Section
92E
Rs.1,00,000
Etc.

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Mr. Dayananda Huded
soprotection.com

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