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I-T dept directs full use of new powers to reopen old cases
August, 28th 2009

The Central Board of Direct Taxes ( CBDT) has directed re-opening of all cases under the search and seizure label, income-escaping assessments and deductions claimed from profits and gains on all eligible businesses.

This is now allowed, thanks to amendments to relevant sections which have provided for reopening of cases much beyond the present stipulated limit of eight years. The amendments to relevant Sections 80A, 80IB,132 and 147 have been made with retrospective effect, from financial year 2003, 2000, 1998 and 1989.

In its plan for the year 2009-10 for boosting tax collection, discussed in the presence of the finance minister last week, the board feels its departments across India should reopen all such cases which attract provisions where amendments have been made in the Finance Bill, 2009, with retrospective effect.

The plan also requires the companies to furnish complete details of the latest balance sheet and bank accounts during their tax assessment, instead of the current practice of providing details pertaining to only that assessment year. Regular assessment is an exercise to find why there is gap between taxes paid by a company year on year.

Sources added the board has directed the department to assess cases for scrutiny not only for cases getting time-barred on March 31, 2010, but also to pick up cases which are to be assessed next year, where the department has noticed blatant violations through advance tax returns filed by the companies.

Section 80A deals with companies seeking deduction of profits and gains of undertaking or enterprise from total income. (Exempt from this new amendments scope are deductions for newly established undertakings in special economic zones, 100 per cent export oriented units or free trade zones, and projects for commercial production and/or refining of mineral oil, from total income). The amendment to this section stated that a company seeking deductions under this section cannot claim these under any other provisions for the same assessment year.

Besides, it has also been clarified in the amendment that if any goods/services are transferred from such undertaking/enterprise to another but the value of transfer of goods do not correspond to the market value of these goods, the profit or gains of such undertaking will be calculated as if the transfer was done on the basis of market value of the goods/services. This amendment has been made with effect from 2003.

Similarly, Section 801B has made changes in the mode of deduction of profits or gains from commercial production or refining of mineral oil from total income. Cases which have availed of such deductions could be reopened from April 2000, from which the amendment comes into effect. The amendment has widened the number of cases that become eligible for claiming deduction and thus become liable for reopening.

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