Query 1]

This is with reference to the tax opinion published in The Hitavada on 27-Oct-2014. I would like to submit followings for your further valuable opinion: section 10(5)

Section 10(5) of the I.T. Act says

“…………….subject to such conditions as may be prescribed (including conditions as to number of journeys and the amount which shall be exempt per head) having regard to the travel concession or assistance granted to the employees of the Central Government…………section 10(5)”

Thus, Section 10(5) prescribes conditions same as allowed to Central Government employees. As per central civil Services (Leave travel concessions) Rules, 1988, “…Where a Government servant and his family perform journeys separately; there is no objection to his presenting separate claims. In each case, however, the claim should be for both outward and inward journeys. [MHA O.M. No. 43/5/57-Ests.(A) dated 4.9.1957] …………”. Thus Central Govt. has already allowed performing journey in separate groups. Kindly publish your further views. [tusharagrawalkps@gmail.com]

Opinion:

Section 10(5) allows an exemption to an individual towards the value of any travel concessions (or assistance) received by (or due) to him from his employer for himself and his family, in connection with his proceeding on leave to any place in India.

Circular No. 8/2012, dated October 5, 2012 clearly mentions that:
a] exemption shall be available either if the employee is travelling alone or accompanying his family.

b] Exemption shall not be available if the family members are travelling separately without the employee who is not on leave.

In the specific query in hand, it may be noted that:

1. Different set of Laws & rules doesn’t necessarily operate in a harmonious, synchronized or a cohesive manner. There are occasions where the provision in one law contravenes or suppresses other laws. Resultantly, interpretation of provisions of the Act gets highly personalized. Contravention amongst different set of rules and law makes life difficult. It may be noted that central service rules governs the admissibility of claim of the employee by the employer & not the taxability. Right to levy income tax originates from Income Tax Act-1961.
2. Civil service rules, as mentioned, allows the claim of an employee from the employer in the case pointed by you. However, for the purpose of Income Tax Act-1961, assessing officer MAY not accept the claim towards exemption if the case is selected for scrutiny assessment. However, it would be a good case that could settle in favor of the assessee at an appellate level on the basis of logical interpretation & reasonable stretch of the provision.
3. In the interest of public at large, a suitable clarification from CBDT would be highly beneficial for the salaried taxpayer.

Query 2]

I am a housewife and starts taking tuition classes at home for time pass since last five years and filling zero tax returns since last three years. Now, from this year, as my son in 10^th class, I have stopped taking tuition classes. So, is it necessary to inform income tax department or what to do in this situation? Please guide me. [Aparna Z-apkz1983@gmail.com]

Opinion:

Under section 176(3) of the Income Tax Act-1961, it is mandatory to intimate the fact of discontinuation of business to the assessing officer within 15 days of discontinuation.

Query 3]

Sir, in the Tax Talk dated 14-09-2014 on wealth tax, you had explained very lucidly the provisions relating to levy of wealth tax. I have my case which calls for further elaboration to understand my wealth tax implications. I and my wife have jointly purchased a new flat recently with a total value exceeding Rs. 30 lakhs. However the part costs borne by me and my wife are less than Rs. 30 lakhs each. Could you please indicate the wealth tax implications in such a situation? On the face of it, it appears that neither me nor my wife would be liable to pay wealth tax. [Krishna Kumar – k_kumar39@hotmail.com]

Opinion:

Income tax isn’t all, there is wealth tax too if the net wealth exceeds Rs. 30 Lacs. The tax is to be paid on the market value of the assets year after year. The best part is that that wealth tax is normally payable only on what is termed as ‘unproductive assets’. Resultantly, assets such as shares, securities, mutual funds, fixed deposits etc which are ‘productive assets’ are exempt from wealth tax. It may be noted that wealth tax is charged for every assessment year on the “Net wealth” of every individual, HUF and company, @1% on the amount by which the net wealth exceeds Rs.30 Lacs. For levy of wealth tax, Assets also include House (Any building or land appurtenant thereto whether used for residential or commercial purposes or for the purpose of maintaining a guest house or a farm house in an urban area) except the following:
i] A residential house, if the following conditions are satisfied:

• It is meant exclusively for residential purposes
• It is allotted by a company to an employee/officer or director in whole time employment
• The gross annual salary is less than Rs. 10 Lacs in case of such employee/ officer/director.

ii] A house held as stock-in-trade.

iii] A house used for own business or profession.

iv] A house which is let out for a minimum period of 300 days in the previous year.

v] One or more property in the nature of commercial establishments or complexes.

In your case, it may be noted that one house property is exempt and is not required to be considered for the levy of Wealth Tax.

[The author is a practicing Chartered Accountant from Nagpur. Readers may send their direct tax related queries at SSRPN & Co, 10, Laxmi Vyankatesh Apartment, C.A. Road, Telephone Exch. Square, Nagpur-440008 or email it at cassrpn@gmail.com. If you wish to unsubscribe from the mailing list, please reply back “unsubscribe” on the same email id]