Reetu | Dec 21, 2019 |
FAQ’s on Common issues raised by the AOs during Computation of ITRs
1. Prior Return has not been processed / Return is not processed for PAN and AY / Pending for data entry for PAN AY.
Processing of the return u/s 143(1) is mandatory from AY 2017-18 onwards even though proceedings u/s 143(3) are contemplated in the case. However, it is seen that the Assessing Officer has not initiated the return for processing u/s 143(1) in many cases
CPC has shared all such cases with PCT Admin, where NO return is processed u/s 143(1).
Processing of the return takes 3-4 working days since it passes through different stages like Prima Facie Adjustment/ Defective Checks, Refund/ Demand Approval etc.
2. Below issue with respect to INCOME and TAX computation has been FIXED by CPC.
The AO’s are requested to reinitiate Computation in such cases.
Traceability of the common issues raised by the AOs and issues noticed by CPC during Computation of ITRs from AO:
| SL. No. | Schedule Name | Particulars of issues | Action required from AO |
| 1 | Salary | Entertainment Allowance (2500)
| Check employer category, if Govt, then allowance allowed. |
| 2 | B TI- Incorrect data input by AO | Fill the data in Part BTI | |
| 3 |
BP | Reduction for Income considered under other heads of Income is not allowed/ from Net Profit, in Sch BP | AO has to enter the Income in the respective Schedule i.e. Sch CG, HP, Salary, OS |
| 4 | Reduction of Exempt Income not allowed from Net Profit in Sch BP | AO has to enter the Income in Schedule EI | |
|
5 | Net Profit entered in Sr. No. 38 – Net Profit after applying Rule 7A, 7B or 8, is not considered by CPC | Rule 7A, 7B or 8 is applicable to the assessee engaged in the business of Tea, Coffee or Rubber. Hence the AO should verify the Nature Of Business Code in such cases | |
|
6 |
MAT | In Sch MAT, Amount entered in Sr. no. 5a is disallowed either in part or in full. | In Sr. No. 5a of Sch MAT, deduction will be allowed based on the amount offered in sr. 46 & 47 of Schedule P & L. Hence the AO has to verify the amount |
| 7 |
MATC | MAT Credit is not given in Part BTTI | For Claiming MAT Credit, the AO has to ensure that details of the Tax amount and the amount of MAT Credit to be claimed/ utilized this year is correctly filled in Schedule MATC and Part BTTI |
| 8 |
Schedule VI-A | Deduction u/s 80P is disallowed | Deduction u/s 80P is allowed only to Co-operative Society. Hence the AO should check the Status/ Sub status while claiming the deduction u/s 80P. |
| 8.1 | Sch VI A disallowed (part C deduction). | Sch-VIA deduction not allowed as the return filed date is after due date. Request the AO to confirm the Due date before submitting the computation. | |
| 9 | Deduction under chapter VI-A is disallowed | Before submitting the computation request, the AO should verify that the Total & Sub-Total are correctly filled in Schedule VI-A and Part BTI | |
|
10 |
Part BTTI | Tax is computed twice on the Dividend Income u/s 115BBDA | For AY 2017, for any Individual, HUF or Firm, Dividend Income in excess of Rs. 10,00,000 is taxable u/s 115BBDA. Hence the AO should enter Dividend Income to the extent of Rs. 10 Lakh in Sch EI and Income in excess of Rs. 10 lakh should be offered in Sch OS. |
|
11 |
Part BTTI | Interest u/s 234B & C is not computed for Senior Citizen | If the assessee is a senior citizen and does not have any income from Business or Profession, he is not liable to pay advance tax and hence interest u/s 234B & C will not be computed in such cases |
|
12 |
Part BTTI | Interest u/s 234C is incorrectly computed by System | For ITBA-Ws (143(3)), Interest u/s 234C is adopted from the value computed in 143(1). In case if the Interest is incorrectly charged, then the AO has the option to modify the Interest u/s 234C with prior approval of the Range Head. |
| 13 | Part BTTI | Interest u/s 244A is not computed for Computation Request | Interest u/s 244A is computed at the time of passing of the final order only i.e. when the AO submit the record for Accounting to CPC. |
| 14 | ITR 7 – Part BTI | Additions in schedule Part BTI has not been considered for exemption. | The income of section 11(1B), 11(3), 12(2), Anonymous donation(115BBC), Income in respect of which exemption under section 11 is not available by virtue of provisions of section 13 are not eligible for exemption. The AO has to enter the income in the respective income (BP/HP/CG/OS) schedules. |
| 15 | CG | Deduction u/s 115F | In Sch CG, in Sr. No. 7, the AO can allow/ disallow the deduction u/s 115F |
| 16-21 | ITR-7 Part BTI | Tax on income has not been computed at MMR. | Anonymous donation has to be entered in schedule VC under Part D and in schedule Part BTI against the field – ‘Anonymous donations to be taxed under sec 115BBC @ 30 %(Diii of schedule VC)’. If the amount is not the anonymous donation but chargeable to tax at MMR it should be entered in the field ‘Income chargeable at maximum marginal rates’ |
| 22 | Manual Order | Points to be noted while uploading Manual Order, if Prior Order Exists | Prior Order Refund/ Demand Details should be provided while uploading Manual Order |
| 23 | Manual Order | Details to be provided where Prior Order is having a Refund | The AO should treat the Refund of the Prior Order as Paid while Passing the Manual Order |
| 24 | Manual Order | Upload of more than ONE Manual Order for Same PAN and AY | The AO should NOT upload more than ONE Manual Order for Same PAN and AY with same Section Code and Read With Section |
| 25 | Manual Order | Points to be considered while uploading OLTAS Challan in Manual Order | AO should verify the PAN, AY, Minor Head, Major Head, Amount, BSR Code etc in the OLTAS and upload the precise details of the challan. |
| General Query | NA | Not able to download intimation u/s143(1) in Itr Processing module of ITBA | Alternatively, the AO can raise a request on the efiling portal to get an intimation u/s 143(1) on the registered email id of the AO. |
| General Query | NA | How to proceed with various issue on ITBA arisen in the cases of Amalgamation , Demerger | Follow FAQ of sl.no 27, issued by ITBA on Nov’ 2019. |
Q1. In Schedule Salary, deduction u/s 16 is disallowed by the system.
Ans. As per the Act, deduction u/s 16 – Entertainment allowance by government will be allowed only to the Government employee. Hence if in the personal information, the Employer Category is not “GOVERNMENT EMPLOYEE”, deduction for Entertainment allowance will not be allowed.
As per the provisions of the Act, for AY 2017, deduction for Tax on Employment will be allowed only to the extent of Rs. 2500/-.
Q2. There is a variance in Income considered in Part BTI and the Income offered in Schedule Salary.
Ans. The user should enter the consistent data in all the schedules i.e. Schedule Salary, Schedule CYLA, Schedule BFLA.
Q3. Income offered in Schedule BP in the column- ‘Income/ Receipts credited to P/L account (like House Property, Capital Gains, etc.,) considered under other heads of income’ is not being considered.
Ans. In Schedule BP, the amount offered as Income considered under other heads of income will be allowed only to the extent Income is offered in the respective Schedule.
Eg: If an interest income of Rs. 1,00,000 is reduced in sl.no.3 of Schedule BP as other sources then the same has to be offered in Schedule Other Sources (OS) as well.
Q4. Exempt Income offered in sr. no. 5 of Sch BP – ‘Income credited to Profit & Loss account which is exempt’ is not considered by the system.
Ans. For the amount of Exempt Income reduced from Sch BP, the user has to offer the amount in Schedule Exempt Income (EI) also, else the amount reduced in Schedule BP will not be considered or it will be allowed partially to the extent Income is offered in Sch EI.
Q5. In Schedule BP, amount entered in Sr. No. 38, Net Profit or loss after applying Rule 7A, 7B or 8 is not considered by CPC.
Ans. As per the provisions of the Act, Rule 7A, 7B or 8 is applicable to the assessee engaged in the business of Growing or manufacturing of Tea, Coffee or Rubber. Hence if the assessee is engaged in such business and has selected the Nature of Business code as 1001, 1002, 1003, then the Net Profit entered in SR. no 38 will be considered else, the Net Profit Entered in Sr. no. 37 will be adopted.
User request to enter in Sch.BP Additions in accordance with section 28 to 44DA.
Q6. How to claim MAT Credit in ITBA-WS where in the original return MAT Credit was not claimed since the assessee was liable to pay tax as per the MAT provisions however in assessment, after making addition the assessee is liable to pay tax as per Normal rates.
Ans. If in assessment, the taxpayer is liable to pay Tax as per normal rates and the AO wants to allow the credit of MAT paid in the earlier years, the AO should fill the amount of Tax Sch MATC and also should enter the amount of MAT Credit to be allowed in Sch Part BTTI.
Q7. In Schedule MAT, the amount entered by the user in Sr. no. 5a- ‘Income Tax paid or payable or its provision including the amount of deferred tax and the provisions thereof’ is not considered by the system.
Ans. In Schedule MAT, in sr. no. 5a – ‘Income Tax paid or payable or its provision including the amount of deferred tax and the provisions thereof’, system will compute the Total of Sr. no. 46 & 47 of Sch P&L i.e. Total of the amount available in – Provision for Current Tax and Provision for deferred Tax and Deferred Liability
Q8. When will be the deduction under section 80P is not allowed in the return
Ans. Deduction u/s 80 P is to be allowed only for Co-operative society. In Schedule Personal Information, Status/ Sub-status should be selected as Co-operative society.
Q9. Deduction under chapter VI-A is disallowed by CPC.
Ans. Deduction under Chapter VI-A is disallowed, if the data is not filled correctly in Schedule VI-A or Part BTI. Hence before submitting the record for computation/ Accounting, the AO should ensure that the Values are correctly populating in the Total and Sub-Total Columns in Schedule VI-A and Part BTI.
Q10. Dividend Income u/s 115BBDA is getting taxed twice.
Ans. For AY 2017, for any Resident Individual, HUF or Partnership Firm, Dividend Income in excess of Rs. 10,00,000/- is taxable at 10% u/s 115BBDA. Hence the user should enter the Dividend Income to the extent of Rs. 10,00,000 in Sch Exempt Income (EI) and the Income in excess of Rs. 10,00,000 should be entered in Sch Other Source > Other, Gross > 115BBDA.
Q11. Interest u/s 234B & 234C is not computed where assessee is a senior citizen.
Ans. As per the provisions of the Act, if the assessee is a senior citizen and does not have any Business Income, then he is not liable to pay advance tax and hence interest u/s 234B & C will not be charged in such cases.
Q12. In assessment, Interest u/s 234C is charged incorrectly by the system.
Ans. As per the act and CPC rules, Interest u/s 234C should be charged on he returned income. Hence at the time of processing of the original return, Interest u/s 234C is computed on the Tax computed by the system and the same value of interest u/s 234C is adopted at the time of processing of the Assessment Order.
If in the original return, the Income determined was higher than the Income offered by the assessee, due to the prima facie adjustments done by CPC, then the tax and interest will be charged on such higher income. In Assessment, even if the Tax liability gets reduced, but Interest u/s 234C is adopted from the value computed at the time of processing of the return u/s 143(1).
In Such a scenario, the AO has to take either of the following actions:-
(i) Before passing an order u/s 143(3), the AO has to pass a Rectification order u/s 154 on the Return processed u/s 143(1), by correcting the mistakes made in the original return. In such rectification, interest u/s 234C will be recomputed by CPC and the same value will be adopted in the Assessment Order.
(ii) The AO has to enter the correct amount of Interest u/s 234C in the column Modified Interest by AO and the value as entered by the AO will be adopted by CPC.
Q13. Interest u/s 244A is not computed for Computation Web Service Request.
Ans. For any record, interest u/s 244A is computed at the time of Accounting Stage Only. Hence when the AO submits a record for Accounting, interest u/s 244A will be computed.
Q14. User is not able to submit the case for computation. Error message populates on the screen – ‘Processing of the Return is in Pending/ In Progress at CPC’.
Ans. CPC transfers the Original and Revised Return to the AO for verification. Before initiating the record for computation, the AO should ensure that processing of any return is not pending with the AO. To verify the same, the AO should follow the below Steps: –
Login to the ITBA Portal > Click on RRR Register > Search for PAN and AY.
All the returns filed by the assessee will be displayed to the AO and the status of such returns will also be displayed. If for any return, the status is ‘Pending for Data Entry’, the AO should push the return to CPC for processing.
From AY 2017 onwards, processing of the Original and Revised Return is mandatory even for the CASS Cases.
Q15. How to allow / disallow deduction u/s 115F from Long Term Capital Gain on sale of Foreign Exchange Asset
Ans. The AO can allow / disallow, as the case may be, the deduction u/s 115F from Long Term Capital Gain on sale of Foreign Exchange Asset, in Sch CG in the following Field:-
Schedule CG > Sr. No. 7 – From Sale of Foreign Exchange Asset by Non Resident Indian > ‘Deduction u/s 115F’
Q16. Section 11 exemption claimed in the return but not allowed
Ans. Section 11 is allowed if the following particulars are furnished.
a) Registered u/s 12A/12AA and in the schedule Part A Gen other details ‘whether registered under section 12A/AA is ‘Y’ and the details are furnished.
b) Section 11(2) ‘Amount in addition to amount referred to in (iv) above, accumulated or set apart for specified purposes if all the conditions in section 11(2) and 11(5) are fulfilled (fill out schedule I)’ – As per section 13(9) the said exemption will be allowed if the return of the income for the previous year is filed before due date as specified u/s 139(1)- Check due date entered and the date of filing the return.
c) For the claim of exemption on account of ‘Amount accumulated or set apart for application to charitable or religious purposes to the extent it does not exceed 15 percent of income derived from property held in trust/institution under section 11(1)a/11(1)(b)[restricted to the maximum of 15%’- the amount of exemption has to be entered in schedule Part BTI and the field ‘Aggregate of income referred to in section u/s 11 and 12 derived during the previous year’ has to be entered. The 15% exemption is computed on the ‘Aggregate income……..’ less ‘Voluntary contribution forming part of co\rpus’.
d) The following three Forms/ Compliance of the related provisions of the Act are required to be verified by AO and the allowable exemptions are to be entered in the respective field of the schedule Part BTI. The amount of exemption as entered in the schedule will be allowed. (Subject to point no. b above)
Q17. Section 10 exemption claimed but not allowed
Ans. Section 10 is allowed if the following particulars are furnished.
In the schedule Part A Gen Personal Information- under the table ‘Details of Projects/institutions run by you’- the field ‘Section under which exemption claimed’ to be filed.
The clause of section 10 under which exemption is claimed has to be furnished.
Amount of exemption has to be entered in schedule Part BTI against the respective rows-
a) Amount eligible for exemption under section 10(21), 10(22B), 10(23A), 10(23B), 10(23C)(iv), 10(23C)(v), 10(23C)(vi), 10(23C)(via)
b) Amount eligible for exemption under section 10(23C)(iiiab), 10(23C)(iiiac), 10(23C)(iiiad), 10(23C)(iiiae), 10(24), 10(46), 10(47)
c) Amount eligible for exemption under any clause of section 10 other than those mentioned above.
As per section 11(7)– Where a trust or an institution has been granted registration under section 12A/AA and registration is in force for the previous year exemption under any clause section 10 will not be allowed except exemption u/s 10(23C), Subject to Q. no. 2b above.
Q18. Additions in schedule Part BTI has not been considered for exemption.
Ans. The income of section 11(1B), 11(3), 12(2), Anonymous donation(115BBC), Income in respect of which exemption under section 11 is not available by virtue of provisions of section 13 are not eligible for exemption. If the field has been wrongly entered by the assesse in the return the same as to be corrected and income has to be entered in the income schedules.
Q19. Computation income has been increased u/s 11(3)
Ans. In schedule I the amount appearing in field ‘Amount deemed to be income within meaning of sub-section (3) of section 11’ has been taken in schedule Part BTI under ‘Addition’-‘Income chargeable under section 11(3)’. If the amount is wrongly entered in this field it as to be corrected.
Q20. Tax on income has not been computed at MMR.
Ans. Anonymous donation has to be entered in schedule VC under Part D and in schedule Part BTI against the field – ‘Anonymous donations to be taxed under sec 115BBC @ 30 %(Diii of schedule VC)’.
If the amount is not the anonymous donation but chargeable to tax at MMR it should be entered in the field ‘Income chargeable at maximum marginal rates’
Q21. How can the provisions of section 13(8) applied in scrutiny and exemption u/s 11 disallowed
Ans. In Part A-Gen ‘Other Details’ against the field ‘Where, in any of the projects/institutions run by you, one of the charitable purposes is advancement of any other object of general public utility then –
Flag should be ‘Y’ and
a) Whether there is any activity in the nature of trade, commerce or business referred to in proviso to section2(15)
b) Whether there is any activity of rendering any service in relation to any trade commerce or business for any consideration as referred to in proviso to section 2(15)
Flag should be ‘Y’ against a or b above. And the below field has to be entered.
‘If yes, then percentage of receipt from such activity vis-à-vis total receipts’
Exemption u/s 11 will not be allowed if the percentage of receipt from activities exceeds 20%.
Q22. Points to be noted while uploading a Manual Order if any Prior Order exists.
Ans. The AO should provide the following details of the Prior Order, if any exists, while uploading Manual Order –
Q23. Details to be Provided while uploading the Manual Order where the Prior Order has resulted into a Refund.
Ans. While providing the details of the Refund of Prior Order in the ‘Refund Details’Table, the AO should enter the Amount (i.e. Refund Paid to the assesse (Including Interest) + Refund Adjusted against Outstanding Demand, if any ) in the ‘Refund Amount’ Column.
Any net refund determined in prior order, AO shall treat it as “PAID“ even though it is paid or failed during refund transmission. If the refund of the prior order is failed due to any reasons the same will be issued to assessee on receiving refund reissue request.
Q24. What are the points to be considered while uploading OLTAS challan in Manual order
Ans. AO should verify the following points before providing the Challan details:
Q25. AO has uploaded more than ONE Manual Order for a PAN and AY with same section code, Read with Section.
Ans. If the Assessing Officer uploads more than ONE Manual Order for a PAN and AY with same ‘Section Code’, ‘Read with Section Code’ and ‘Output (i.e. Refund/ Demand/ NDNR), then the same gets erred out in the System while Accounting. Hence the AO is requested to upload only ONE Manual Order for a PAN and AY under Same Section Code and Read with Section Code.
User Advise to contact helpdesk in case of any Assistance for difference in computation results.
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