The Direct Taxes Committee of ICAI organized a Workshop on Union Budget 2009-10 on 17.7.2009 which was attended by Shri S.S.N. Moorthy, Chairman, Shri Ashutosh Dixit, Joint Secretary(TPLII), and Shri Anand Kedia, Director (TPL-III & IV) of the Central Board of Direct Taxes. Senior professionals from the industry also joined the Workshop.
The ICAIs Budget Workshop commenced with the President, CA. Uttam Prakash Agarwal, extending a very warm welcome to the Chairman and other officials of the Central Board of Direct Taxes. He observed that the Institute annually submits Pre-Budget Memorandum and Post Budget Memorandum to the Government. He was happy to note that many of the suggestions were accepted by the Government and incorporated in the respective Finance Acts. Further, he said that the Institutes views/suggestions are always unbiased and lauded the budget as being bold and transparent.
Some of the views that were placed before the officials of CBDT are as under: Allotment of Document Identification Number both in respect of documents issued and documents received by the Income-tax Authorities were appreciated.
The abolition of FBT would reduce the taxpayers compliance burden substantially.
The Assessing Officer is duty bound to allow deduction even if the same has not been claimed by the assessee. Section 80A(5), proposed to be inserted, may go against the intention of the circular.
Conversion of a firm, company or a sole-proprietoryship concern into an LLP should be revenue-neutral, in the sense, it should not be treated as a transfer.
It was also observed that the proposed amendment in section 115JB requires addition of provision for diminution in the value of any asset to compute book profit. The proposed provision for diminution is in accordance with accepted accounting principles and is required for computing the real income.
The benefit of expense incurred before commencement of specified business under section 35AD should be allowed in the year of commencement of business.
The anonymous donations received by Electoral Trusts should be subject o tax.
Section 56 would also hit trading assets, which might not be the intention of the legislature.
The tax liability on ESOPs should be postponed to the year of actual sale, in line with the tax treatment for conversion of capital asset into stock-in-trade.
Clarification should be issued for treatment of advance FBT paid in June in case of loss-making assessees who have paid advance FBT.
The Chairman, Central Board of Direct Taxes, Shri. S.S.N. Moorthy, thanked the President and other Council Members for welcoming the Budget proposals with a positive spirit. He acknowledged the contribution of ICAI vide its Pre-Budget Memorandum, especially the proposals relating to procedural law which aid in making the assessment hassle-free. He appreciated the efforts of the Institute for making in-depth study in respect of budget proposals and mentioned that the suggestions of the Institute would be taken care of appropriately. Further, it was mentioned that the new Direct Taxes Code would take care of many of the other issues also raised by the Institute.
The other senior officials of the CBDT opined that tax laws have to be harmonized with Accounting Standards. Accordingly, the ICAI has constituted a Study Group for this purpose.