scientific research, the weighted deduction to the

 extent of two time of the amount spent will be

 allowed as against existing one and one half time of

 amount spent.

Hotel

•    A person will be allowed to claim deduction of

expenditure of capital nature incurred on a  new

hotel of two star and above category. 

•    The expenditure will be allowed in the year in which

hotel  commence the operation and entire capital

expenditure incurred prior to commencement of

hotel will be eligible  for deduction.

•    However the assessee will not be able to claim any

other deduction in any  other assessment year.

Capital gain on conversion to LLP

•    It is proposed that  conversion of private limited or

public   unlisted   company  to    limited  liability

partnership will not result into transfer  and capital

gain  on such conversion  will not attract tax.

•    However this clause is non starter since condition

attached with such exemption is rigorous  i.e. sales

of company in preceding three year should not

exceed 60 lacs, partners can not withdraw any

money out of balance of accumulated profit

standing in the accounts on the day of  conversion,

partners can not receive any consideration / benefit

directly or indirectly from LLP after conversion   

during the existence of LLP etc.,

Tax Audit

•    It is proposed to increase the threshold limit for the

requirement of Tax Audit.

•    Now Professionals are required to get the tax audit

done if gross receipts exceeds Rs. 15. 00 Lacs and

other business entity requires to get the tax audit

done if turnover exceeds Rs. 60 Lacs.

•    However penalty  for non compliance of tax audit

provision will attract  maximum penalty of Rs. 1.50

Lacs in place of existing penalty of Rs. 1.00 lacs. 

Housing Project

•    Deduction for housing project approved after

1  April 2005 will be allowed    in case project gets^st

completed within five year from the end of financial

year in which first approval was granted after

1/4/2005 .

•    However  commercial area is now restricted to 3%

of total built up area in place of existing 5% of built

up area or 5000 Sq. ft which ever is higher is

specified for claim of deduction u/s 80IB (10) of the

Act.

Valuation of Property

•    Now department can refer the valuation of property

for determination of value of gift in case of transfer

of property without consideration or inadequate

consideration to valuation officer during the course

of scrutiny assessment proceeding.

Regards,

CA Pramod Jain