I had filed form ITR 2 based on Form 16 for AY 2020-21. After that, I received intimation under 143 (1) (a) (ii) saying incorrect claim u/s 143 (1) (a)(ii)-"Exempt Allowance Sec 10(13A) is more than minimum of :a) 50% of (Basic + DA) orb) HRA .Hence amount exempt u/s 10(13A) is recomputed accordingly".
So, I replied to the intimation with the calculation. Then, I received demand notice under sec 154 saying that xxxxx amount need to be paid. So, I filed rectification request where I requested reprocessing of ITR. Again, I received demand notice. Request your help in this.
I have rent agreement and form 16 B where exemption under sec 10 (13 A) is captured.

I raised a housing loan for purchasing a Flat under a subvention plan and the possession of the flat was given in September 2020 and I paid the interest component of the loan (Pre-EMI) till February 2021 and started the EMI thereafter. Can I claim the rebate on Pre-EMI interest paid for filing my ITR?

Sir I have sold shares of the unlisted company which i have received as ESOP before 2020 how will it be taxed and under which section. If i use these proceeds to pay off my housing loan can i get relief from tax or by any other mode my tax be avoided or reduced.

I providing management consultancy services mainly to international clients through my LLP firm (or sometimes as a freelancer/independent consultant). Now, in order to provide my services, I often take support i.e. import "services" from companies (or sometimes independent contractors) based in the US and China.

My questions:

1) Do I need to deduct withholding tax for payments to entities in USA and China that does not have an establishment in India? If yes, at what rate?
2) Do I need to deduct withholding tax for payments to independent contractors in China (or any other country, say Indonesia, Philippines)? If yes, at what rate?

Appreciate your input!

Thanks,
Sumit

While filing itr 2 I'm getting errors select country code in capital gains on house property but I don't find any country code on this page

Dear Sir,

My personal Income tax return is filed U/s. 44AD as Contract Income. My net profit before tax is of Rs. 3 lacs for F.Y. 2020-21.

My query is what amount of Personal Drawings in Cash can I show in my books as I want to reduce my cash in hand balance. Is there any limit for showing personal drawings. I am not claiming it as an expense to reduce profit.

Please help me regarding this matter.

Regards,
Divyesh Jain

Query on Deemed Dividend

Facts of the case:

A closely held Private Limited Company, engaged in real estate business (money lending is not the business of the company) having Authorized Capital of Rs.1 crore and paid up capital of Rs.10 lacs has 4 shareholders namely Mr. A (40%), Mrs. B (5%) Mr. C 50%) and Mr. D (5%). The Share Premium reserve is Rs.50 lacs and surplus in Profit and loss Account as on 31.03.2020 is Rs.154 lacs. Thus, total reserves and surplus amounted to Rs.204 lacs. Net Profit during the year 2020-21 before remuneration to the directors is Rs.534 lacs.

Mrs. B is wife of A, MR C and Mr. D are brothers of A. Mr. A, Mr. C and Mr. D are directors of the company.

The board has authorized payment of remuneration to the director but the resolution is silent about quantum of remuneration, and it is mentioned that the remuneration may be fixed by Mr. C for Mr.A and Mr.D who are looking after all the day-to-day affairs of the company.

Mr. A and D have given unsecured loan to the company in FY 2019-20. Their opening balances in loan accounts are Rs.7 lacs and Rs. 5 lacs respectively.

During the FY 2020-21 on 15.04.2020 Mr. A gave another loan of Rs.10 lacs to the company out of his own capital.

Later Mr. A made several transactions in loan account as he brought in loan and withdrawn money from the company from time to time during the year. As on 31.03.2021 the loan account shows a credit balance of Rs.3 lacs, but the peak debit balance in the loan account during the year was Rs.146 lacs. The details of transactions with Key Management Person will be disclosed in Notes to Accounts, in which the quantum of loan taken and repaid shall be appearing.

Auditor’s view:

In this scenario the statutory auditor who is also the tax auditor opined that the provisions of section
2(22)(e) of the Income Tax Act, 1961 may be attracted and the peak debit balance of Rs.146 lacs might be deemed as dividend and If the said sum of Rs.146 lacs is deemed dividend then the company shall be required to deduct Income Tax at Source i.e. TDS u/s 194 of The Income Tax Act, 1961 @10%.

Non deduction of Income Tax (TDS) shall not result in any disallowance u/s 40(a)(ia) even if the Tax
Auditor reports non deduction of Tax in clause 34(A) of Form 3CD but that may trigger the penalty u/s
271C and may also result in taking action against the director for mis-reporting and under reporting of income in the form of deemed dividend.
Director’s Opinion

The directors of company are of the opinion that at the year-end there is no debit balance and the fact that there was debit balance in the account of the director during the year shall not be reflected in the balance sheet as at 31.03.2021 and the balance appearing in the balance sheet shall be in credit as on the balance sheet date and the preceding balance sheet date therefore, there will be no possibility of the debit balance in books during the year against a director shall be treated as deemed dividend in terms of s.2(22)(e)of I. Tax Act.




Queries:

1. Can the director may plead that since at the year-end there is a positive balance in the loan account there is no case of deemed dividend?

2. From auditors perspective, in both the scenario i.e. treating the sum of Rs.146 lacs as deemed dividend as per the opinion of the auditor or not considered as deemed dividend a per the opinion of the Directors please advise as to reporting in Form 3CD clause 34(a) regarding non deduction of income tax at source u/s 194 on such deemed dividend, any qualification in report under CARO or Independent Auditors report if the directors are not ready to consider the sum of Rs.146 lacs as deemed dividend.

3. If the company does not make TDS not treating Rs.146 lacs as deemed dividend whether there will be any mis reporting from the perspective of Companies Act or Income Tax Act on part of the Company? What penal consequences shall follow upon the Company ?

4. What are the remedies to the company to save itself from the sum of Rs.146 lacs being deemed as dividend?

5. Can the company pay remuneration to the Director to the tune of Rs.180 lacs and making TDS on Rs.180 lacs u/s 194J @10% and whether such remuneration shall be permissible under provisions of Companies Act ?

Please advise. Thanks

Hi All

One of my clients is having income as only from capital gains.
Income is below taxable limit. Whether it is taxable?
Whether investments u/s. 54 is to be done to claim exemption?

Thanks in advance.

Hi
I am a teacher and filing tax returns u/s 44AD for couple of years with ITR of 3 Lakh by showing
> Tuition Income : Rs 2 Lakh
> FD Interest : Rs 50K
> commission : Rs 50K

This year i entered and started speculative transaction in Stock market for 5 months in Equity having
> Total Turnover - Rs 75 Lakh
> Equity Intra Day Delivery Loss - Rs 35K
> Equity Short Term capital loss - Rs 7000
> FnO Loss - Rs 50K
and thus after incurring heavy loss of Rs 92K stopped share trading

If I dont want to use this loss against my income. like it was speculative and share trading closed. can i still be allowed to file tax return u/s 44AD as regular tuition income and also any repurcursion of not showing losses in ITR.

Thanks pls guide

Hi Sir,
1. We are paid transport charges paid single payment Rs.50,000/- this applicable tds 194C @2% ?
2. Transporter provide 194C amended 2015 self declaration. Hence if the transporter owning not more than 10 goods carriages at any time during the year, provide his PAN alongwith the declaration then as a payer, you don’t have to deduct his TDS u/s 194C.
3. We need deduct or not to deduct this amount ?