YOUR QUESTIONS AND OUR ANSWERS
V. H. Patil, Advocate
YOUR QUESTIONS & OUR ANSWERS Ans. To start with, on the facts of the case it Q.1 If you run an establishment where being only an information received from VAT payments for sales are received via credit authorities, the ITO cannot make the proposed cards and the Banks are entitled to a charge additions. The querist must ask the ITO to for facilitating the said payments. The banks summon all these creditors for examination. withhold the charge and pay the balance sale However, in no case, he can make both these proceeds to the Merchant every payment cycle proposed additions. The total of these purchases and no TDS is done on the bank charges so will cover the peak credit and as such if total sales levied – on the ground that it’s like an interest are added, no further addition can be made. paid to a bank and is exempt from TDS u/s. In my opinion, at the highest, the ITO can only 194A. Is this view correct or should these add the peak of these credits and he cannot add payments be treated as commission and TDS total of the purchases. must be withheld u/s. 194H? Q.3 An owner of land has entered into an Ans. The charge of the Bank is for providing Agreement for transfer of Development Rights in a facility for payment through credit cards and Financial Year 2012-13 and as per the agreement the same is not for giving any loan and as such, he will be entitled to 20% of the gross sales such charges cannot be considered as interest revenues as and when the amount is received charges and as such, such bank charges cannot by the developer. The project will be completely be considered as interest payment and as such executed by the buyer. The project is likely to S.194A cannot be invoked for TDS purposes. be completed after 4 years and the sales will Q.2 As per list of suspicious dealers put up also be realised over the period of 4 years. Will by the VAT authorities on its website and the amount be assessable as business income also forwarded to the Assessing Officer of the or capital gain on sale of land in the hands of owner of the land. the following additions in the assessment order; Ans. The land owner has not entered into a a) The peak credit in the account of these joint development agreement with the builder/ developer. He has only sold his development suppliers b) The total purchases made from these rights in the land owned by him. Right to suppliers u/s. 40A(3) on the premise that develop a property is itself a property and a transfer of such rights, amounts to a transfer of purchases are made in cash. property leading to capital gain and as such the Can he make additions of an amount exceeding sale price of such right will attract capital gain the amount of purchases made from these and it will not be a business income. parties?
Facts & Query
202
The Chamber's Journal April 2013
ML-524