Answers To Your Tax Problems

Only I-T director, commissioner can make inquiries in cases where no proceedings are pending

Q: I am assessed to tax at Delhi. I bought a car at Lucknow. The ITO (Survey) Lucknow has issued notices under Section 133(6) and summons under Section 131 to provide various details. I replied that he had no authority under these sections. But he is still insisting for compliance. Please clarify the legal position.

A: As a result of the amendment (w.e.f. 1.7.95) of Section 133(6) by the Finance Act, 1995, the prescribed authorities shall have the power to call for any information from any person for the purpose of any inquiry under the 1961 Act even in cases where no proceeding is pending. However, as provided in the newly inserted (w.e.f. 1.7.1995) second proviso to Section 133(6) by the Finance Act, 1995, the power in respect of an inquiry, in a case where no proceeding is pending, shall not be exercised by any income-tax authority below the rank of director or commissioner without the prior approval of the director or, as the case may be, the commissioner.

In view of the above legal position, you may appear before the ITO, inform him about the designation of your assessing officer and request him that to avoid duplication of proceedings he may pass on the information to your assessing officer so that you may file the relevant details regarding the purchase of your car to him.

Q: I (a retired person) assist my son (a visiting professor) in profession by helping in the collection or preparation of case or lecture materials on the computer. I have to visit many reputed libraries, make notes, select books, etc, and assist him in the preparation of course materials. He wants to pay me Rs 2,000 per month as part-time assistance charges. (I would be showing this income under income from other sources in my income-tax returns). Can my son show the above payment to me as expenses incurred in the furtherance of profession and admissible as deduction in his income and expenditure account? He uses the extension of a room in our apartment for the purposes of his profession (as an office) where he keeps his computer and works on it and also prepares the course materials and evaluates papers, etc. He wants to pay one or two electricity bills per year directly to DVB by cheque in his name (as a percentage of his consumption for his professional work). Is this expense admissible as deduction in his income and expenditure account?

A: Considering the situations explained in detail regarding the two items of expenditure, there should be no difficulty in claiming these as deductible expenditure in computing the income from profession as prima facie these relate to the carrying on of the profession by the son of the querist.

Q: Chapter XX-C-Section 269U was introduced to stop under-valuation, but such clearance from AA is needed even in cases where properties are purchased from Noida/DDA/other government, semi-government authorities like UP Housing Board/Development Authority. I think it only results in uncalled for harassment and corruption. Please clarify.

A: The legal position is that even in the situations mentioned, the provisions of Chapter XX-C will apply. The objective of the provisions is to check tax evasion and to know about both the purchaser and the seller. By the application of the provisions, the information about the purchaser will be known to the tax department even though there may be no case of suppression of the purchase price.

TN Pandey is former chairman, Central Board of Direct Taxes. (Readers can send their queries to TN Pandey B-107, Sector-15, Noida,UP)