The Hindu Business Line : Don't throw away the delayed Form 16

FORM 16 for the previous year 2002-2003 was not given to employees till March 31, 2004. It was given to them only in April 2004. What would be its effect vis-à-vis Section 271F?

S. Srinivas, Chennai

The assessing officer (AO) may direct payment of penalty of Rs 5,000 for failure to file return before the expiry of the assessment year.

The employees ought to have filed the return even without TDS certificate being attached.

Section 139(9) does not consider such a return defective if the reason for such non-attachment is non-receipt of TDS certificate.

But the employees would have had to cough up tax because they would not have had the certificate to back up their claim of payment vide TDS.

But in terms of Section 155(14) if they produce the TDS certificate within two years from the end of the relevant assessment year, the AO will have to give refund of tax by making a rectification order.

Block out

WHAT if an entire block of asset is destroyed and no insurance compensation is received. Will the block survive?

Nitin Gami, e-mail

This indeed is a lacuna in Section 43(6) spelling out how the WDV is to be computed. It requires insurance compensation to be credited to the relevant block.

But when there is no insurance, obviously there would be an odd spectacle of the destroyed assets surviving just in tax records.

However, one must read this section in conjunction with Section 32 which grants depreciation only if the assets were used during the previous year.

Therefore, in the situation envisaged by you, no depreciation would be granted to the extent the assets have been extinguished.

Fungible, what?

I AM told that under the depositories regime, shares are fungible. Just what does it mean?

Anubha Joshi, Mumbai

Let me illustrate the concept of fungibility with reference to cash deposited with a bank. When you deposit, say, Rs 50,000 in a bank in cash, your account is credited with Rs 50,000.

At the time of withdrawal, you cannot ask for the same set of currency notes that you had deposited.

It is neither feasible nor required. An analogy can be drawn with shares in the depository mode.

An investor who has bought 500 shares of a company in the physical mode may get it dematerialised, that is, hold them through the electronic mode.

Later, when he decides to rematerialise the shares, that is, when he wants these shares back in physical form, he cannot insist on the same set of share certificates being returned back.

(ASK! Send in your queries on accounting, auditing, corporate law and taxation to ask@thehindu.co.in)

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