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Direct Taxes 8 th July, 2009 New Delhi

Direct Taxes 8 th July, 2009 New Delhi. DIRECT TAX PROPOSALS RATES OF TAX. * Surcharge of 10% where taxable income exceeds Rs. 10 lac has been abolished. DIRECT TAX PROPOSALS RATES OF TAX. * Surcharge of 10% where taxable income exceeds Rs. 10 lac has been abolished.

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Direct Taxes 8 th July, 2009 New Delhi

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  1. Direct Taxes8th July, 2009New Delhi

  2. DIRECT TAX PROPOSALSRATES OF TAX * Surcharge of 10% where taxable income exceeds Rs. 10 lac has been abolished

  3. DIRECT TAX PROPOSALSRATES OF TAX * Surcharge of 10% where taxable income exceeds Rs. 10 lac has been abolished

  4. DIRECT TAX PROPOSALSRATES OF TAX • * Surcharge of 10% where taxable income exceeds Rs. 10 lac has been abolished • No change in the rates of tax for Indian and foreign companies • Firms - surcharge abolished – effective tax rate would be 30.90%

  5. IMPACT OF PROPOSED CHANGES IN THE TAX SLABS

  6. IMPACT OF PROPOSED CHANGES IN THE TAX SLABS

  7. IMPACT OF PROPOSED CHANGES IN THE TAX SLABS

  8. PERSONAL TAXATION VRS payments – Relief under section 10(10C)/89 [Clauses 4 & 38] (w.e.f. 01.04.2010) • An employee getting VRS payments would either be able to claim relief under section 89 or exemption u/s 10(10C) in relation thereto. • The following decisions where the Courts held that in law both, relief u/s 89 and exemption u/s 10(10C) may be claimed by an employee in respect of VRS payments, would no longer be good law: • CIT vs. Abdul Kareem: 311 ITR 162 (Mad. HC) • CIT vs. Koodathil Kallyatan Ambujakshan: 309 ITR 113 (Bom HC) • State Bank of Travancore vs. CBDT: 282 ITR 587 (Ker HC)

  9. PERSONAL TAXATION Tax on non-monetary gifts : Section 56 [Clauses 26 & 27] (w.e.f. 01.04.2010) • New clause (vii) proposed to be inserted in section 56 to bring all transfers, other than from specified persons, of moveable or immovable property, without adequate consideration, to tax in the hands of the recipient. • Moveable property to include shares, jewellery, drawings, archaeological collections, works of art, etc. • Quantum of taxable income shall be as follows: • Stamp duty value (in case of immovable property) and consideration paid if any, provided the difference in aggregate exceeds Rs.50,000 • Market value (in case of movable property) and consideration received, if any, provided the difference in aggregate exceeds Rs.50,000.

  10. PERSONAL TAXATION Comments/Observation: The aforesaid provision would lead to double taxation in case of transfer of immovable property – national capital gains in the case of the transferor and notional income in the hands of transferee Increase in limit for deduction in respect of medical treatment of dependants [Clause 31] (w.e.f. 01.04.2010) The limit of deduction under section 80DD in respect of expenditure incurred for the medical treatment, training and rehabilitation of a dependant, being a person with severe disability, enhanced from seventy five thousand rupees to one hundred thousand rupees.

  11. PERSONAL TAXATION Deduction for contribution to National Pension Scheme [Clauses 4 & 30] (w.r.e.f 01.04.2010) Deduction u/s 80CCD in respect of contributions made by “employees” to the National Pension Scheme - proposed to be extended to “self-employed” individuals also. Comments/Observation: The amount of deduction admissible and the basis of computation thereof in respect of self-employed individuals not provided.

  12. PERSONAL TAXATION Expansion of benefit of deduction in respect of interest on loans for higher education [Clause 32] (w.e.f 01.04.2010) Under existing section 80E deduction in respect of interest on loans is available for pursuing full time studies for any graduate or post-graduate course in specified disciplines. It is proposed to extend the above deduction to all fields of studies (including vocational studies) pursued after passing the Senior Secondary Examination or its equivalent from any school, board or university recognised by the Central Government or State Government or local authority or by any other authority authorized by the Central Government or State Government or local authority to do so.

  13. FRINGE BENEFIT TAX Abolition of Fringe Benefit Tax and reintroduction of tax on perquisites [Clauses 9 & 48] (w.e.f. 01.04.2010) • Fringe Benefit Tax is proposed to be abolished w.e.f. assessment year 2010-11. • As a corollary, new clauses (vi), (vii) & (viii) are proposed to be inserted in sub-section (2) to section 17, to include following items within the ambit of ‘perquisites’ taxable in the hands of the employee • ESOPs • Contribution to superannuation fund for an employee, exceeding Rs. 1 lacs. • Value of any other fringe benefit or amenity as may be prescribed

  14. FRINGE BENEFIT TAX The value of specified security or sweat equity would be the difference between the fair market value thereof as on the date of exercise of the option and the amount paid for the same by the employee Comments/Observations No mechanism for refund/adjustment of FBT instalment paid on 15.06.2009 Whether tax would be payable by an employee, if FBT paid by the employer on ESOPs exercised in the current financial year?

  15. Expansion of the ambit of “charitable purpose” [Clause 3(a)] (w.r.e.f. 01.04.2009) The definition of “charitable purpose” in S.2(15) widened to include “preservation of environment (including watersheds, forests and wildlife) and preservation of monuments or places or objects of artistic or historic interest”, and to take such activities outside the purview of the proviso. Timeline for filing application seeking exemption under section 10(23C) extended [Clause 4] (w.r.e.f. 01.04.2009) The deadline for making application for exemption u/s 10(23C), would now be 30th September of the relevant assessment year, instead of the relevant previous year. NON PROFIT ORGANIZATIONS, POLITICAL CONTRIBUTIONS ETC.

  16. Allowability of political contribution to “electoral trusts” [Clauses 3(b), (d), 8, 34 & 35] (w.e.f. 01.04.2010) Presently, under sections 80GGB and 80GGC, contributions made directly to a political party are eligible for deduction. It is proposed to allow deductions in respect of contributions given by companies and other tax payers to electoral trusts. Section 13B introduced to provide that voluntary contributions received by an electoral trust not to form part of total income of such electoral trust, subject to 95% of donations received and the surplus of any earlier year being contributed by such trust to political parties. NON PROFIT ORGANIZATIONS, POLITICAL CONTRIBUTIONS ETC.

  17. Donations to certain funds, charitable institutions, etc. [Clause 33] (w.e.f. 01.10.2009) Funds, charitable institutions etc., approved under clause (vi) of section 80G for the previous year commencing on April 1, 2007 and ending on March 31, 2008, and were thereafter excluded from the scope of section 80G pursuant to the amendment of the definition of “charitable purpose” under section 2(15) by the Finance Act, 2008, would be deemed to have been approved under the said clause for the previous year commencing on April 1, 2008 and ending on March 31, 2009. Consequently, donation made to such trusts/institutions in the financial year 2008-09 would qualify for deduction under section 80G NON PROFIT ORGANIZATIONS, POLITICAL CONTRIBUTIONS ETC.

  18. BUSINESS INCOME Aligning the definition of “block of assets” [Clause 11] (w.e.f. 01.04.2010) • “Block of assets” is defined under section 2(11) and Explanation 3 to section 32(1) - to avoid any confusion, it is proposed to delete the definition of “block of assets” in explanation to section 32(1) - Consequently, “block of assets” shall only have the meaning as provided in section 2(11) of the Act. Weighted deduction for in-house research and development [Clause 12] (w.e.f. 01.04.2010) • With a view to promote research and development in all sectors of economy, instead of specified sectors like pharma, computers, telecom, etc., it is proposed to extend the benefit of weighted deduction of 150% on scientific research expenditure u/s 35(2AB) to all companies engaged in manufacture or production of article or thing except those specified in the Eleventh Schedule to the Act.

  19. BUSINESS INCOME Investment linked tax incentive for specified businesses [Clauses 10, 13, 17, 24, 28] (w.e.f. 01.04.2010) • Section 35AD introduced to provide 100% deduction in respect of capital expenditure incurred wholly and exclusively for the purpose of specified businesses in the year in which such expenditure is incurred; • Capital expenditure incurred on acquisition of land, goodwill, financial instruments shall not qualify for deduction; • Specified businesses must commence operation from the dates specified therein; • Consequential amendment to section 28 - any sum received/receivable on demolition, destruction, transfer of capital assets in respect of which deduction has been allowed/allowable under section 35AD shall be deemed to be business income.

  20. BUSINESS INCOME • For purposes of section 43(1) & section 50B - cost of capital asset on which deduction has been allowed/allowable under section 35AD of the Act shall be treated as Nil. • Current or carry forward loss in relation to specified business would only be set off against income from specified business and against no other business income • However, no time limit for carrying forward the loss. • Specified business and dates of commencement of operations are as follows: • Business relating to laying and operating of cross country natural gas pipelines network 01.04.2007 • Business of cold chain facilities 01.04.2009 • Warehousing facilities for storage of agricultural products 01.04.2009

  21. BUSINESS INCOME Deduction is also available to the assessees carrying on the specified business relating to laying and operating of cross country natural gas pipelines, for capital expenditure incurred in any earlier year provided that no deduction of such amount has been allowed or is allowable in such year(s); No deduction under any other provision of Chapter VIA or under any other provision of the Act shall be available in respect of specified businesses / expenditure. Comments/Observations In the case of newly set up units how capital expenditure incurred during construction phase would be allowed, since during the years of construction there would be no income assessable under the head PGBP as the section provides for deduction of expense in the year of incurring of the same and not in other year.

  22. BUSINESS INCOME Remuneration to partners in a firm [Clause 15] (w.e.f. 01.04.2010) • Upward revision of the existing limit of deduction in respect of remuneration payable to working partners • On the first Rs. 3,00,000 of the book-profit or in case of a loss - Rs.1,50,000 or @ 90 per cent of the book-profit, whichever is more; • On the balance of the book-profit @ 60 per cent; Disallowance of cash payments [Clause 16] (w.e.f. 01.10.2009) • In case of cash payment made to truck owners for plying, hiring or leasing goods carriages, no disallowance under section 40A(3) will be made if such payment does not exceed Rs.35,000 (against normal limit of Rs.20,000).

  23. Safe harbor for computing arm’s length price (ALP) [Clause 40] (w.e.f. 01.10.2009) Under existing laws relating to transfer pricing, where more than one price is determined by applying the most appropriate method, the ALP is determined at the option of the assessee, at a variance of +/(-) 5% of arithmetic mean of the prices determined by applying the most appropriate method. This variance was considered by the Tribunals as allowable like a standard deduction in the following cases: Development Consultants (P) Ltd. vs. DCIT : 115 TTJ 577 (ITAT-Kol) ACIT vs. Philips Software Centre Pvt. Ltd. : 26 SOT 226 (ITAT-Bangalore) DCIT vs. Sony India Ltd. (1189/Del/2005, 819/Del/2007 & 820/Del/2007) (ITAT-Delhi) TRANSFER PRICING

  24. It is proposed that where more than one price is determined by the most appropriate method, the ALP shall be taken to be the arithmetical mean to such price. But, if arithmetical mean is within five per cent of the transfer price - transfer price to be treated as ALP and no adjustment is required to be made. TRANSFER PRICING

  25. TRANSFER PRICING Power of the Board to make safe harbour rules [Clause 41] (w.r.e.f. 01.04.2009) • Section 92CB has been inserted to empower CBDT to formulate safe harbour rules to provide for circumstances in which Income-tax authorities shall accept the transfer price declared by the assessee.

  26. MINIMUM ALTERNATE TAX Rates of Tax Increased [Clauses 43, 44 & 45] It is proposed to increase the rate of minimum alternate tax payable by company under section 115JB from 10% to 15%, w.e.f., assessment year commencing on or after 1.4.2010. Period for which MAT Credit is allowed has been extended from 7 assessment years to 10 assessment years immediately succeeding the assessment year in which tax credit becomes due.

  27. MINIMUM ALTERNATE TAX New Adjustments to book profits It is proposed that net profit as shown in the Profit & Loss Account shall be increased by the provision for diminution in the value of any asset, debited to the Profit & Loss Account, for computing ‘book profits’ u/s 115JA/115JB. [w.r.e.f 01.04.1998 – 115JA, 01.04.2001 – 115JB ] Comments/Observations The decision of SC in CIT v. HCL Comnet Systems & Services Limited: 305 ITR 409 has been nullified in the process Distorts the working of book profits by introducing artificial adjustments contrary to accounting principles. There is no rationale for making the aforesaid adjustment, when provision for ascertained liability is not required to be adjusted under section 115JB.

  28. INCENTIVES/DEDUCTIONS Manufacturing defined [Clause 3(e)] (w.r.e.f. 01.04.2009) • Clause (29BA) has been inserted in section 2 to define manufacture to mean, “change in a non-living physical object or article or thing – • resulting in transformation of the object or article or thing into a new and distinct object or article or thing having a different name, character and use; or • bringing into existence of a new and distinct object or article or thing with a different chemical composition or integral structure” Deferment of Sunset clause for section 10A/10B units [Clauses 5 and 7] (w.r.e.f. 01.04.2009) • It is proposed to amend sections10A and 10B to extend the benefits under both the sections by one year, i.e., up to assessment year 2011-12

  29. INCENTIVES/DEDUCTIONS SEZ units – quantum of deduction [Clause 6] (w.e.f. 01.04.2010) • Under existing sub-section (7) of section 10AA, deductible profits of a unit in Special Economic Zone (SEZ) was computed by apportioning the profits of the business of the unit in the ratio of `export turnover of the unit’ to the `total turnover of the business of the assessee’. • In order to remove discrimination between assessees with multiple units against those with single units, it is proposed to amend sub-section (7) of section 10AA to substitute `total turnover of the business carried on by the assessee’ in the denominator by `total turnover of the business carried on by the undertaking’ Comments/Observations • The amendment should have been made retrospective.

  30. INCENTIVES/DEDUCTIONS Multiple deductions for same profits curbed – Section 80A [Clause 29] (w.r.e.f. 01.04.2003) • New sub-section (4) - where deduction is claimed under sections 10A or 10AA or 10B or 10BA or provisions of Chapter VI-A, deduction in respect of the same amount shall not be allowed under any other provision of the Act for the same assessment year and the deductions shall not exceed the profits of the eligible undertaking/ unit/ enterprise/ business. • New sub-section (5) - no deduction allowed under sections 10A or 10AA or 10B or 10BA or Chapter VI-A, unless such deduction is claimed in the return of income.

  31. INCENTIVES/DEDUCTIONS Comments/Observations Cases allowing simultaneous deduction for same profits – no longer good law. Retrospective amendment barring claim before appellate/ revisional authorities is against the spirit of law.

  32. INCENTIVES/DEDUCTIONS New sub-section (6) - eligible profit for claiming deduction under sections 10A or 10AA or 10B or 10BA or Chapter VI-A shall be computed as if the transfer of goods and services between the eligible undertaking/ unit/ business and non-eligible undertaking/ unit/ business of the assessee is as at `market value’ of such goods or services, subject to statutory or regulatory restrictions (w.r.e.f 01.04.2009)

  33. INCENTIVES/DEDUCTIONS Extension of Tax holiday to Power units section 80IA [Clause 36 (a) to (c)] (w.r.e.f. 01.04.2009) • Undertakings, set up for the purposes of generation and distribution of power, transmission or distribution of power by laying new transmission or distribution lines and renovation and modernization of existing transmission or distribution lines, may now commence operation upto 31st March, 2011, instead of 31st March, 2010. • Undertakings set up for the purposes of reconstruction or revival of a power generating plant, which begins to generate or transmit or distribute power, may now commence operation upto 31st March, 2011, instead of 31st March, 2008.

  34. INCENTIVES/DEDUCTIONS No deduction to works contractor under section 80IA/IB [Clause 36 (d)] (w.r.e.f. 01.04.2000) Deduction under section 80IA is not allowed to a person who executes a work contract entered into with the eligible undertaking or enterprise. It is proposed to clarify that deduction under section 80-IA shall not be admissible to an eligible undertaking or enterprise from any business referred in the said section, which is in the nature of a works contract awarded by any person.

  35. INCENTIVES/DEDUCTIONS Deduction for refineries set up in the private sector [Clause 37] (w.r.e.f. 01.04.2000) In terms of existing S.80-IB(9), on or after 1st April, 2009, only a public sector company notified by Central Government is entitled to deduction in respect of profits of the undertaking engaged in refining of mineral oil. It is proposed to extend benefit to the refineries in the private sector which commence operations upto 31st March, 2012, as against the existing terminal date of 31st March, 2009. A new clause (iv) is proposed in S.80(IB)(9) to also allow 100% tax holiday to an undertaking engaged in commercial production of natural gas, which commence commercial production on or after 1st April, 2009.

  36. INCENTIVES/DEDUCTIONS “Undertaking” defined in relation to Oil Wells: section 80IB It is proposed to define the term ‘undertaking’ eligible for deduction under section 80-IB(9), in relation to oil wells, to include all blocks licensed under a single contract, a separate undertaking.

  37. INCENTIVES/DEDUCTIONS Housing Projects [Clause 37(c)] (w.e.f. 01.04.2010) • Under the existing provisions of S.80IB(10), 100% tax holiday is allowed to an undertaking developing and building housing projects having residential units not exceeding the specified built-up area. • It is proposed to insert two new clause (e) and (f) to provide that the developer shall not be allowed to allot more than one residential house to any person (not being an individual) and where the person is an individual, to the same individual or any relative of the said individual. • However, explanation is proposed to be inserted to provide that the deduction shall not be allowed to a developer if the activity is undertaken as a ‘works contract’. Comments/Observations • It has been held by the Benches of the Tribunal that only the proportionate profits relating to residential units exceeding the prescribed built up area, should be denied deduction and not the profits of the entire undertaking.

  38. SEARCH AND SEIZURE Authorization of search : Section 132 [Clause 50, 41] (w.r.e.f. 01.06.1994) • It is proposed to retrospectively amend the provisions of section 132(1) to include Additional Director and Additional Commissioner as authorities empowered to authorize search and seizure operations. • Similar amendments have been made in section 132A for exercising powers relating to requisition books of accounts, etc • The Courts, inter alia, in the following decisions, held that any warrant issued by Additional Director or Additional Commissioner is illegal and consequently search and seizure operations based on such warrant is also illegal: • Dr.Nalini Mahajan v. Director of I. Tax (Inv.): 257 ITR 123 (Del.) • Raghuraj Pratap Singh V. ACIT: 179 Taxman 73 (All.) • The retrospective amendment seeks to overrule the aforesaid decisions and legalize authority exercised illegally by certain Income-tax authorities to authorize search and seizure operations.

  39. ASSESSMENTS & APPEALS Re-assessment proceedings [Clause 57] (w.r.e.f. 01.04.1989) • New Explanation 3 proposed to be inserted to provide that powers of the assessing officer are not restricted to make assessment/reassessment only in respect of the issues for which reasons have been recorded while reopening the assessment under section 147, but even those issues which come to his notice subsequently in the course of proceedings initiated under section 147, notwithstanding that no reasons recorded at the time of issue of notice under section 148.

  40. ASSESSMENTS & APPEALS Comments/Observations The amendment seeks to overcome the following decisions of Courts, wherein it was held that the AO cannot make additions in relation to issues other than those for which reasons recorded for re-assessment: Jay Bharat Maruti Ltd: 223 CTR 269 (Del) Travancore Cements Ltd: 305 ITR 170 (Ker) It should be possible to still argue that in re-assessment proceedings no fishing and roving enquiries can be made by the assessing officer. Refer: CIT v. M.P. Iron Traders : 136 Taxman 520 (P&H) Amrinder Singh Dhiman v. ITO : 269 ITr 378 (P&H) Vipan Khanna v CIT : 255 IT 220 (P&H)

  41. ASSESSMENTS & APPEALS Alternate Dispute Resolution [Clause 55] (w.e.f. 01.10.2009) New section 144C is proposed to be inserted to provide an Alternate Dispute Resolution Mechanism to facilitate disposal on fast track basis, of cases of foreign entities and cases involving transfer pricing issues. Salient feature of the mechanism are as under: Draft order to be forwarded by AO to assessee to invite objections to any disallowance/addition Within 30 days, the assessee to file objection with DRP and the AO If no objections received within stipulated period, AO to pass assessment order. DRP may issue direction to AO for guidance of the AO to enable him to complete assessment Directions to be issued by DRP within 9 months from the end of month in which draft order is forwarded to the assessee. Direction of the DRP to be binding on the AO Assessment order passed by AO pursuant to directions of DRP would be appealable before the Tribunal but not to the CIT(A)

  42. TAX DEDUCTION/COLLECTION AT SOURCE TDS rate not to include surcharge / education cess: [Clause 2] (w.e.f. 01-04-2010) it is proposed to remove surcharge and cess on the basic tax rates provided for tax deduction on non-salary payments made to resident taxpayers Person liable to deduct tax under section 194C: [Clause 60] (w.e.f. 01-04-2010) Definition of “Specified person” under Explanation to section 194C to, inter alia, include “any Government or foreign state or foreign enterprise or any association or body established outside India”. Comments/Observation TDS provisions impliedly made extra-territorial in operation

  43. TAX DEDUCTION/COLLECTION AT SOURCE No TDS from payments for manufacturing/supply contracts : [Clause 60] (w.e.f. 01-04-2010) • The definition of ‘work” has been amended to exclude therefrom contracts for manufacturing or supplying of products as per customer’s specifications, provided the material is purchased by the contractor from third parties TDS from payment to contractors: [Clause 60] (w.e.f. 01.10.2009) • Section 194C is proposed to be substituted to provide the following: • At present tax is deductible @ 1% in case payment is made for an advertisement contract and @ 2% if payment is made for any other contract. In order to provide uniformity, it is proposed to provide same rate of TDS @ 1% where payment under a contract is to individuals / HUF, and @ 2% where payment under a contract is to other entities

  44. TAX DEDUCTION/COLLECTION AT SOURCE TDS shall be deducted on the invoice value excluding the value of material purchased from customer, if value is mentioned separately in the invoice. Where the material component has not been separately mentioned TDS shall be deducted on the whole of the invoice value. No distinction between TDS rates for contractors and sub contractors. It is proposed to exempt payments to transporters as defined in section 44AE from the purview of tax deduction at source. where the transporter furnishes his PAN to the deductors. The proposed rates of TDS under section 194C are summarized as follows:-

  45. TAX DEDUCTION/COLLECTION AT SOURCE

  46. TAX DEDUCTION/COLLECTION AT SOURCE

  47. TAX DEDUCTION/COLLECTION AT SOURCE Amendment to rates of deduction under section 194-I [Clause 61] (w.e.f. 01.10.2009) A downward revision in the TDS rates has been proposed to avoid blocking of working capital funds of the deductee The proposed rates under section 194-I are as under:-

  48. TAX DEDUCTION/COLLECTION AT SOURCE Procedure for processing of statement of tax electronically: section 200A inserted [Clause 64] (w.e.f. 01.04.2010) • Processing of statements on computer electronically on the same lines as processing of Income-tax returns is proposed. • Adjustment proposed for any arithmetical errors and variation in rates of taxes as per laws. • After making adjustments, tax and interest would be calculated and sum payable or refund due to the deductor will be determined and shall be intimated to him. However, no intimation shall be sent after the expiry of one year from the end of the financial year in which the statement is filed.

  49. TAX DEDUCTION/COLLECTION AT SOURCE Assessee in default under Section 201: [Clause 65] (w.e.f. 01.04.2010) • It is proposed to provide time limit for passing of order under section 201(1) in case of resident deductees. • sub-section (3) provides that the time limit for passing order under section 201(1) shall be two years from the end of the financial year in which the statement of tax deduction at source is filed by the deductor if the deductee is a resident taxpayer and where no such statement is filed, within four years from the end of the financial year in which the payment is made or credit is given. • An order for a financial year commencing on or before 1st day of April, 2007 may be passed at any time on or before 31st day of March, 2011. Comments/observations • No time limit is provided for passing order under section 201(1) of the Act in case of tax deducted at source under section 195 of the Act from payment to non resident.

  50. TAX DEDUCTION/COLLECTION AT SOURCE Improving compliance relating to provisions of quoting PAN through TDS regime [Clause 68] (w.e.f. 01.04.2010) • It is proposed to insert S.206AA to provide that any person, whose receipts are subject to deduction of tax at source, i.e., the deductee, shall mandatorily furnish his PAN to the deductor, failing which the deductor shall deduct tax at the higher of the following rates - (i) rates prescribed under the Act, (ii) rates in force, i.e., the rate mentioned in Finance Act, or (iii) @ 20%. • The above provisions for deduction of tax at source would also apply in cases where the assessee file declaration in Form 15G or 15H (under section 197A of the Act) for non-deduction of tax at source but does not provide his PAN. It is further proposed that no certificate under section 197 of the Act would be granted by the assessing officer unless the application contains the PAN of the applicant.

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