Hi All

Pls resolve my query and mail it to nitinkapoorca@gmail.com

My Query is that if a Company A situated in India is providing services to Company B in USA(New York)using the software manufactured by Company B. In a sense the company A in India is a debtor as well as creditor for Company B and vice Versa.

Now Company A in India has to pay withhoding Tax on payments made to Company B and since it is provising services it also recieves payments from Company B. The payments recieved in INDIA are much more than payments made to Company B.

QUERRY: Is there a possibility to knock off the payments receivable and payable between the companies to lessen the burden of withholding Tax???

Pls Reply

Letter of Credit(LC)is opened by the buyer in favour of the supplier for supply of goods, which ensures the payment to the supplier at the end of the period of LC.Since the money is not immediately received, the supplier discounts LC with bank and realise the money. The supplier pays LC discounting charges.

As per the terms agreed, the buyer reimburses the LC discounting charges to the supplier.

Queries:
1. The LC discounting charges reimbursed by the buyer is in the nature of interest. Is it correct?
Please clear the facts in terms of Circular: No. 65 [F. No. 275/97-ITJ], dated 2-9-1971
2. If it is correct, is it subject to TDS?
3. The buyer in his books of account does not show the Suppliers account in creditors but shows the LC account under acceptance creditors since the LC is opened in favour of the supplier? Is it correct?

With regard to claiming Deduction in respect of medical insurance premia under Section 80-D of the I.T Act, the Section provides, inter alia, that premium should be paid by any mode other than cash. Such condition of making payments by any mode other than cash is not prescribed for other purposes such as Deduction under Sec 80-C for LIC Premia etc. I would like to know what could be the intention in prescribing other than cash mode of payment. Is it to curb black money, if so, why similar condition is not prescribed in all Sections allowing Deductions.

In some book, author has given an opinion that disallowances u/s. 40(a)(ia)is applicable only on the amount (expnses) payable at the end of the year.
I would like to invite comments of seniors on this interpratation of the Jodhpur based author.

What should be the basis of calculating turnover while calculating 8% as profit U/s 44AD? Can it be cash basis ? The ITO claims that when books of account are not maintained, the assessee can not claim that he follows cash basis.On the contrary the ITO is compelling the assessee to follow Mercantile basis on the basis of TDS certificates available with the assessee.Can anybody throw more light on this?Moreover section 44AD does not override section 145.

what is the tax implication of intraday trading done by a person once or twice in every week.i.e neither he is comming under as a invester nor comming under as a trader.

XYZ co ltd. has two subsidiary co's viz. ABC ltd and PQR ltd.

The books of accounts of two subsidiary are maintained at H.O.

Basically the transactions of two subsidiary are entered by the employee on the payroll of XYZ ltd.This means that there are no employees on the payroll of two subsidiary's.

what would be treatment as per IT ?
The question definately crack in our mind that without employee how the transactions been entered.

As an auditor what should be our opinion in such cases ?

CASE: My client has invested a sum of Rs. 24 lakhs in LIC’s MARKET PLUS PENSION POLICY in the Current Year 2007-2008 and out of that Rs. 24 lakhs, he is eligible to get maximum income-tax relief only on Rs. 1 lakh under section 80CCC.

QUERIES: If the above pension policy is surrendered wholly after the lockin period of three years, what will be the income-tax implication?

i) Whether the entire amount received on surrender is subject to tax? Or the surplus amount over the investment is only taxable?

ii) If the investment amount (subject to maximum of Rs.1 lakh) is not at all used to claim deduction under section 80CCC at the time of investment year, what will be the income-tax implication at the time of surrender wholly?
(Section 80CCC reveals that the surrender amount will be subject to income-tax liability only if the deduction is claimed and allowed).

Hi,

My query is, a man is living in Mumbai & has taken a loan for his flat. He is paying interest & gets a Deduction u/s.24B for interest on house property. Now in the same year if he is transferred, for employment purpose in Delhi & has taken a room on rent in Delhi for which the company is paying him House Rent allowance. For Assessment Year 2008-09 can he claim the deduction u/s. 24B and House Rent allowance u/s.10(13A)

We have hired the services of a Packaged Tour Operator for organising our Dealers meet in Bangkok. Tour Operator offered us price of Rs 27775 - per person for expenses and Rs 500/- per person as his service charge. After completion of tour he raised the bill as follow

1. One bill for his service charges @ Rs 500/ - per person
2. One bill for tour arrangement @ Rs 27775 / - per person. He has not provided any supporting documents for claiming expenses reimbursement i.e. Airlines bill, Hotel bill, transport arrangement bills etc.

Please advise us whether we should deduct TDS on first bill only or on both the bills ? Does providing only detail of expenses without any supporting documents makes any difference ?
Further whether TDS will be deducted u/s 194 C or any other section ?