Devbhoomi Tax Bar Association: January 2015

Letter no. 4865 dated 22/01/15
Regarding Notification No. 97 Dated 20/01/15
Amendment in Schedule I & Schedule II(B) of UK VAT Act

Entry No 3 & 6 of Schedule I deleted

Entry No 122 & 129 of Schedule II(B) deleted

Schedule Entries prior to 20th Jan 2015
Sch I - Entry No 3

Moulded plastic footwear, hawai chappals & their straps.

Sch I - Entry No 6

Bangles of all kinds except those made of precious metals, and Kumkum, bindi, alta and sindur and power / paste of natural mehandi leaves

Sch II(B) - Entry No 122

Wooden Crates

Sch II(B) - Entry No 129

Plywood including hard-board, leather board and fiber sheets

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Circular No.4721 dated 14/01/15-clarifications regarding "Form Declaration" Under CST Act

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Section 80C – Investment in Equity Linked Savings Scheme (ELSS)

It is the time of year when most of people invest in various products to claim the deduction under Income Tax Act. Surprising that most of them choose either bank FD’s or PPF as their first priority for Tax saving although from so many years Equity Linked Savings Scheme (ELSS) has emerged as best product for tax saving investments in Indian market.

An Equity Linked Savings Scheme (ELSS) is an open-ended Equity Mutual Fund which gives following advantage-

Opportunity to grow your money.
Qualifies for tax exemptions under section u/s. 80C of the Indian Income Tax Act.
Long-term capital gains from these funds are tax free in your hands.
Shorter lock-in period of 3 years as compared to NSC & PPF
Exposure to equity results in high earning potential
Dividend payout option enables gains even during lock-in period
Investing through Systematic Investment Plan (SIP) averages out your investments over a period of time

Even when markets were negative, ELSS has given fair returns with double tax exemption, not only you can claim the exemption u/s 80 C but also the gains will be exempt from tax. Lack of awareness and half knowledge is the most prominent reason for the same. Following is the list of Top performing ELSS.

Fund / Benchmarks	Return %	Rank	Return %	Rank
Reliance Tax Saver Fund	95.47	1	39.20	2
Axis Long Term Equity Fund	71.03	2	41.30	1
Birla Sun Life Tax Relief 96	62.61	3	31.82	3
Kotak Tax Saver	62.43	4	21.65	29
Franklin India Taxshield Fund	62.12	5	29.36	6
HDFC Taxsaver Fund	61.07	6	27.31	13
Birla Sun Life Tax Plan	60.77	7	30.74	4
BNP Paribas Long Term Equity Fund	58.06	8	28.40	7
Religare Invesco Tax Plan	57.49	9	30.28	5
DSP BlackRock Tax Saver Fund	57.19	10	28.18	9
HSBC Tax Saver Equity Fund	55.39	11	25.80	20

Now you can see the difference in return of FD and PPF and ELSS. According to most of the experts in the street ELSS is still the best option to make 80C investments as steep fall in the prices of crude will work as a boon for India. Indian markets will continue to perform robustly.

Points to remember while choosing an appropriate ELSS

You must always remember to do thorough research when you invest in an ELSS fund. You must look at the long term performance of the fund before putting your money in it. Also remember to look at the fund details like the fund manager’s investment approach, portfolio of the fund, the expense ratio of the fund and how volatile the fund has been in the past.

Mutual Fund investments are subject to market risks, read all scheme related documents carefully.

Article on www.taxguru.in

Submitted by Shaifaly Girdharwal

Indexing on Gifted Property will be computed at COA of previous owner who first held gifted assets

DCIT Vs. Soni Sonu Mirchandani (ITAT Delhi), ITA No. 3586/Del/2013, Date- 31/01/2014

Hon’ble Delhi ITAT has in the case of DCIT V/s Soni Sonu Mirchandani has held that indexed cost of acquisition to be computed with reference to the year in which the previous owner first held the gifted assets.

Brief facts of the case are that The assessee had shown long term capital gain in her return of income. AO noticed from the computation of capital gain that all the shares of four companies sold by assessee during the year were neither purchased by her nor allotted to her originally for which she had paid any cost. Instead, she had received all the shares through gift from her two sons Accordingly,the AO concluded that the case of assessee was covered u/s 49(1)(ii) of the I.T. Act which provides that where the capital asset become the property of assessee under the gift, the cost of acquisition of the asset shall be deemed to be the cost for which the previous owner of the property acquired it. He further pointed out that ‘previous owner of the property’ has been explained in relation to any capital asset owned by assessee as the last previous owner of the capital asset who acquired it by a mode of acquisition other than that referred to in clause (ii) of section 49(1) of the I.T. Act.Accordingly, he concluded that benefit of indexation allowable in accordance with second proviso to section 48 of the I.T. Act will be subject to Explanation (iii) of section 48. He, therefore, pointed out that in order to work out the correct indexed cost of the acquisition of shares sold in accordance with Explanation (iii) to section 48 of the I.T. Act, 1961, it would be relevant to find out the cost of acquisition of shares by the previous owner and also assessee. The AO was of the view that the cost inflation index for the year in which the shares were first held by assessee (that is the year of acquisition by assessee) may should be applied and indexed and accordingly cost of acquisition was reworked . Thr Ld CIT(A) decided the case in favour of the assessee and also the Hon’ble tribunal by concluding as under after relying on various judicial pronouncements:-

In the present case also, while computing the capital gains arising on sale of shares acquired by the assessee by way of gift, the indexed cost of acquisition is to be computed with reference to the year in which the previous owners first held the assets and not the year in which the assessee became the owner of the asset. We, therefore, do not find any infirmity in the order of CIT(A) directing the AO to compute the capital gains in the case of the assessee by applying the indexed cost of acquisition in which the previous owners first held the shares in question. In view of the above discussion, the Department’s appeal is dismissed.

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Happy New Year 2015

Dear Members,

Wishing you and your family a Very Happy New Year. We hope 2015 is a year of great happiness and success for you.

Have a Wonderful New Year !!!

From:
Tushar Singhal
Advocate
Gen Sec - DTBA

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