The Hindu Business Line : TDS on perquisite value of education

Children of employees are eligible for free education in the school run by our company. The salary disbursing officer worked out the value of free education per child at Rs 1,500 a month and applying rule 3(5) and the proviso thereon included only Rs 500 a month as value of perquisite for tax deduction at source on salary under Section 192 of the Income-Tax Act.

The facts relate to assessment year 2003-04. The assessing officer (AO) sought to levy interest under Section 201(1A) of the Act till November 2008. How to mitigate the tax consequences?

Rule of consistency in accounting treatment: Our company is engaged in construction of infrastructure projects under built, operate and transfer (BOT) scheme. As per the agreement we are eligible to construct and maintain 20 km in a national highway for a period of 16 years.

We are eligible to collect toll from the users (except State and Central Government undertakings). For the first year we collected Rs 60 lakh as toll from users and after meeting revenue expenditures the net amount was amortised from the construction cost.

While it was accepted for the first two years (assessed under Section 143(1)) now in the third year the AO wants to tax the net income by not allowing its amortisation against project cost. Is the rule of consistency applicable? Can the AO disturb the consistent accounting practice followed by our company?

Cost of scrips not recovered from clients by share broker: I am a share broker engaged in purchase and sale of shares on behalf of my clients. In the market slide I have been badly affected by reduction in business and resultant brokerage.

I could not recover brokerage dues of Rs 3,50,000 for the year ended March 31, 2008. Also, in the current fiscal I could not collect cost of scrips from my clients and by disposal of those scrips I have suffered a loss of Rs 14,15,000.

I desire to claim the cost of scrips representing the loss due to non-recovery and its consequent sale. Is it eligible for deduction as business loss or as bad debt? I have already written off Rs 3.50 lakh relating to brokerage as bad debt which my income-tax counsel says as not eligible for deduction. Please clarify.

Demerger and essential conditions to be satisfied: Our company engaged in mobile service wants to hive off a division to yet another company for a consideration of Rs 300 crore.

The vendee has asked us to provide the roadmap for transfer. Our company management desires to go by demerger method of hiving off. Could you please list the precautions to be taken to minimise the tax burden?

HUF succeeding the business of dissolved firm: Our HUF, one of the partners, took over the business of a firm on its dissolution. At the time of dissolution the firm had unadjusted business loss of Rs 4,25,000.

Since our HUF took over the business on ‘going concern’ basis we would like to know whether the business loss of the erstwhile firm could be set off by the successor viz. the HUF. Please clarify.

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