Exp. incurred by solicitor on medical treatment of his eyes is personal expense; disallowable

Exp. incurred by solicitor on medical treatment of his eyes is personal expense; disallowable

Facts:

a) The assessee was a solicitor by profession. He incurred an expenditure in connection with a pre-operation investigation of his eyes. He claimed deduction of this expenditure under section 37(1).

b) The Assessing Officer (‘AO’) disallowed said claim on ground that it was personal expenditure.The CIT(A) upheld order of AO.The Tribunal concurred with findings of the AO and the CIT (A).

The High Court held as under:

1) In the present case no evidence has been brought on record to establish that in the absence of investigation and treatment, the assessee would be handicapped in discharging his obligation as a Solicitor/Advocate.

2) We have a couple of visually challenged Advocates who are very competent in discharging their duties. We may also make reference to the late Mr. Sadhan Gupta who passed away recently and though visually challenged was as such appointed as Additional Advocate General of West Bengal in 1978 and the Advocate General in 1986. If the submission of the applicant is taken to its logical conclusion, then each and every expense incurred on daily living and food would be allowable as expenditure under Section 37.

3) The submission of assessee that eyes are required to be exclusively used for the purpose of profession, cannot be accepted. Eyeis an important organ of the human body and is essential for the efficient survival of a human being. Eyes are thus essential not only for the purpose of business or profession but for purposes other than these which are so many.

4) The impugned expenditure was personal in nature and the benefit of such expenditure in the profession or business was only consequential to the personal expenses. Therefore, it was not an expenditure which could be said to be incurred wholly or exclusively for the purpose of business. - DHIMANT HIRALAL THAKAR v. CIT [2015] 64taxmann.com 177 (Bombay)

Swachh Bharat Cess - FAQs

To provide a boost to the clean India initiative, the government  imposed a Swachh Bharat cess of 0.5% on the services liable for service tax, effective from November 15, 2015. Some FAQs on SBC are:

1. What is Swachh Bharat Cess (SBC)?
SBC is tax in addition to Service Tax which shall be levied and collected in accordance with the provisions of Chapter VI of the Finance Act, 2015,called “Swachh Bharat Cess”, as service tax on all the taxable services at the rate of 0.5% of the value of taxable service. SBC has been imposed for the purposes of financing and promoting Swachh Bharat initiatives by government. (Refer  Official notification No.21/2015-Service Tax, dated 6th November, 2015).

2. How Swachh Bharat Cess will be calculated?
SBC would be calculated in the same way as Service tax is calculated. Therefore, SBC would be levied on the same taxable value as service tax. SBC is not to be calculated on Service Tax but on the taxable value of the service provided.

Example of Swachh Bharat Cess calculation –
For a service worth Rs. 100, Service Tax will be Rs. 14 at 14% rate and SBC will be Rs. 0.05 at 0.5%. So the total chargeable amount will be Rs. 114.5.

3. Whether Cenvat Credit of the SBC is available?
SBC is not integrated in the Cenvat Credit Chain. Therefore, credit of SBC cannot be availed. Further, SBC cannot be paid by utilizing credit of any other duty or tax.

4. How will the SBC be calculated for services under reverse charge mechanism?
In case of reverse charge under section 68(2) of the Finance Act, 1994, the liability has been shifted from service provider to the service recipient. As per section 119 (5) of the Finance Act, 2015, the provisions of Chapter V of the Finance Act, 1994, and the rules made thereunder are applicable to SBC also. Thus, the reverse charge under section 68(2) of the Finance Act, 1994, is made applicable to SBC. In this context, to clarify, Government has issued notification No. 24/2015-Service Tax dated 12th November, 2015 to provide that reverse charge under notification No.30/2012-Service Tax dated 20th June, 2012 shall be applicable for the purpose of levy of Swachh Bharat Cess mutatis mutandis.

5. How will SBC be calculated for services where abatement is allowed?
Taxable services, on which service tax is leviable on a certain percentage of value of taxable service, will attract SBC on the same percentage of value as provided in the notification No. 26/2012-Service Tax, dated 20th June, 2012. So, this notification would apply for SBC also in the same manner as it applies for service tax. For example, in the case of GTA, [Service Tax + SBC]% would be (14% Service Tax + 0.5% SBC) X 30% = 4.35% (4.20%+0.15%)

6. Why has SBC been imposed and Where will the money collected under SBC go?
SBC has been imposed for the purposes of financing and promoting Swachh Bharat Abhiyan initiatives. Proceeds of the SBC will be credited to the Consolidated Fund of India, and the Central Government.

7. Why the government isn’t funding the Swachh Bharat initiative out of its own money?
The Indian government made a substantial allocation of Rs 3,625 crores for the Swacch Bharat Mission for the financial year ending March 2016 which is a healthy 27% increase over last year’s allocation. Not just this, almost 94% of funds earmarked for the initiative were released by the government in the financial year 2013-’14.