Welcome to the world of taxation where you never know what goes on in the mind of Mr. P. Chidambaram. So what might have appear to the untrained eye as an inadvertent silly mistake or an error of omission/commission could be possibly be a deliberate act of mischief on part of the mandarins in the Finance Ministry!!
If for the purposes of the Income Tax Act, they want a donkey to be called a horse, they have every right to have their wishes fulfilled. The deeming fiction created by legislation often catches you unawares.
More to go
Section 115WA of the Income Tax Act
In addition to Income Tax, there shall be charged for every AY additional income tax in respect of fringe benefits provided or deemed to have been provided by an employer to his employees
So the question which areises is whether FBT is applicable in cases where an eligible employer has got only one employee in his establishment.
I am dead sure that you will be tempted to reply in the negative.
Here's the googly for you
The 111 year old "General Clauses Act" has an interesting segment which goes as follows
In all Central Acts and Regulations, unless there is anything repugnant in the subject or context:—
Words in the singular shall include the plural, and vice versa.
Howzatt????
And mind you this was only the tip of the iceberg.....
In legal parlance...the list of such centreshocks can at best be illustrative but never exhaustive....
Before I proceed any further, I need to emphasise that there is a subtle difference between studying taxation :
1)For your bread and butter (I mean in case you want to pursue it as a career post-qualification) and
2)Just for the CA Final exam itself.
While it is highly recommended that you pursue your study of this subject with intense zeal and enthusiasm, a more practical view would be to considet DT as simply Paper VII with 100 marks at stake, out of an aggregate total of 800, which comes to 12.5 % of the CA Final portfolio.
So you need to accordingly decide on the time you are going to spend on this subject. There is no point being gripped by DT mania and have a craving to master the entire gamut of legislative histories, judicial interpretations, case laws and section numbers.
From an examination perspective, you got to be pragmatic and simply move on...
Analyse everything from the cost vis a vis returns perspective !!
Is the time you would need to spend to master a particular topic worth the marks involved ???
Case Studies
Only when the tide goes out does one understand who had been swimming naked...rite?
In CA Final, there are subjects like Auditing where you can always punch in some global gyaan , topics like QT where you need to blindly follow a prescribed algorithm and snatch away marks from the examiner.
But this subject belongs to a different league altogether.
Taxation belongs to those who dare to think beyond the obvious.
It is an amalgamation of a theory as well as a practical paper.
While you need to be thorough with the provisions, an integrated approach needs to be followed while solving the sums.
e.g. while solving a problem which is apparently based only on application of Section 80 IC, you need to be alive to the possibility of Minimum Alternate Tax (MAT) creeping in like a hidden monster and wreak havoc.
Similarly you got to connect a problem based on Section 80QQB (Royalty Income of Authors) with the stipulations of Section 91 (Double Taxation)in specific cases.
However, contrary to popular perception, all you need to win this battle is tons of conceptual clarity.
Some case studies are simply meant to be beyond comprehension of the general student fraternity. They are like the popular 'Thums Up' advertisiments wherein it would be fatal to try performing the tricks yourself. They are only meant to be watched and enjoyed.
Dont lull yourself into believing that you are infallible and would be able to solve each and every sum entirely .I think that would be demanding too much out of yourself and would only diminish your self confidence in the long run.
Taxation teachers owing to paucity of time discuss only the phooljhudis(fireworks) in the class but that should not lead you to get the wrong impression that the entire question paper would be laced only with these literally impossible sums. Trust me , besides a couple of phooljhudis, there would be cakewalks plethora in any question paper.
Just learn the trick from each case study and simply move on instead of getting emotionally bogged down by them.
Professionals make things look easy because they have mastered the fundamentals of whatever they do. In a short timespan of just 4 months which is availbale to you, even if you study taxation 24*7 , you will invariably fail miserably in becoming an expert. It is so vast.But certainly you will end up screwing your 8 subject CA Final preparation in the process.
Don't endeavour to get expert knowledge. Just try to scrape through with functional knowledge.
However, a large number of sums are always worth an honest attempt and there is no point simply jotting down the solutions in your exercise book and bringing them home to appreciate their beauty for the rest of your lifetime.
Exercise your mental faculties a bit . Occassionally take a stance ..whether in the class or at home practising problems.
If you can't be a galloping horse, at least don't turn yourself into a sleepy cow.
Again a lot many students have this strange habit of literally verifying from a standard textbook like VKS, whether what is written in their tuition teacher's study material is correct or not. They are on Cloud Nine if they are able to spot out a contradiction between the two. Trust me, the exercise is simply not worth the effort. These contradictions which surface can be ignored on materiality grounds from an examination perspective. On the contrary, you could end up losing your precious preparation time in the process and become all the more confused.I don't think any wise student should want to have his concepts clouded by controversies.
Wealth Tax is simply 10-15 marks handed over to you on a platter. The most challenging aspect is the House Property Valuation sum. The rest of it, I believe is manageable and could easily facilitate implementation of the "Well Begun Is Half Done" maxim, both during your preparation as well as in the exam hall.
For the Sections 80IA and the 80IBs or the 10As and the 10Bs, I am sure that each time you study them , you will get lost in the murky waters. The ideal way out would be preparing a chart instead.
for e.g. 10A , 10AA, 10B and 10BA along the column headings
12-13 conditions ranging from that of used plant and machinery to that of furnishing a return u/s 139(1) could be plotted along the rows.
All you need to do is put either a cross or a tickmark in each cell or punch in the relevant year say 1999-2000 for 10A ......04-05 for 10AA etc. in the unabsorbed depreciation and b/f loss not set off till row.
Acronyms like I am Builder for 80IAB could work.
Depreciation in PGBP, Assessment Procedure and Non Resident are the three most difficult segments of the syllabus offering infinite potential to the examiner to act malicious.
While there is no fool-proof strategy for them, I am sure that repeated reading of the provisions would slowly help you recover from the initial shock.
Beware of certain inherent fineprints. You need to be be extra cautious with expressions like " AO must put on record a new fact" , "revised return steps into the shoes of the original return" and "erroneous and prejudicial to the interests of revenue ". About a dozen odd mutations of the same story would inadvertently come as a bolt from the blue to you.Can't help it dude??? You have to have this reality with a pinch of salt and hope that ultimately you are able to crack the examination problem (either by your own intellect/through hall collection).
In Assessment Procedure, the plethora of time limits like "12 months from the end of the month in which return is filed" applicable to proceedings under different sections would irritate. Try preparing a chart for them.
The Non Resident chapter could make you utter the Veer Zaara song "Ye Hum Aa Gaye Hain Kahaan???"
The sea of tax rates at the very outset of the chapter would confuse even the most patient of the lot.
The most difficult sum I found was one pertaining to a Non Resident Indian where there is an option to choose between two alternative taxation structures for income from Specified Assets.
Again the Dividend Stripping/Bonus Stripping segment is an eyesore. It is not feasible to expect that in the examination hall amidst all the tension and pressure of performance, you will remain as cool as a cucumber to identify that Section 94(7)...Bonus Stripping would override all other provisions and would prevail over Dividend Stripping ....and then again apply the Section 73 condition ....If you try something like "Mein Bhool Jayungaa" stuff..its nothing but application of the Von Restorff Effect. With a bit of conceptual understanding as to why this section was inserted, things will be relatively simpler.
Try small stories say titled "Teen Muhinaa Pehle Nau Muhinaa Baad" ....i.e. 3 mnths before 9 mnths later for time limits of Dividend Stripping
The only thing tricky in the TDS chapter is the exceptions to each section .You have no choice except to simply mug them up and then try to apply them in case studies like joint application of Section 40(a)(i)(a)with Section 194A w.r.t. zero coupon bonds.
Finally PGBP and CG
These are the most interesting ...but simultaneously the most voluminous of the lot. Before emabarking on their pursuit, just have a look at the scanner and do some Cost Benefit Ratio Analysis and then decide the time you are going to spend.
Only the most recent case laws and that too at the Supreme Court level are the most relevant. If you are lucky enough you could get one from the ICAI's website in your term like we did (although I had not known about it)
Finally a bit on the examination
DT is an attempt all questions affair. So you really can't afford to skip any topic, even say the minnows like Shipping Companies in the course of preparation or revision on exam eve.
Again don't hastily jump to conclusions after cursory glances at questions.
In Nov'07, we had so stupidly read the first expression of Question 1 which indicated that it was a Partnership sum..
Since it had featured as a Compulsory Question in May'07, we had taken it lightly and now there ran a chill down our spine. Only in the last 15 minutes, when we actually read the whole question, did we realise that the expression PQR & Co was a mirage. It was actually a PGBP sum.
Again don't be stupid enough to commit silly mistakes like considering the basic exemption limit for a corporate assessee or applying a surcharge of 10 % for a foreign company. You might be giggling rite now when you read this but it could actually happen amidst the exam hall tension and anxiety. So better steel your nerves dude
The study of Taxation is an endeavour to win the war. Don't be fussy about winning each battle.
Best of Luck