TAX UPDATES

Monday, 8 August 2016

Investigation Wing of Income Tax department launches following drive to locate tax evaders in wake of Income Declaration Scheme [ Letter dated 05-07-2016] as under

1. Non PAN AIR Information to be targeted. In CIT-1, Amritsar there are 6928 cases of Non PAN AIR Information. In CIT-2, Amritsar, t...

Introduction of a new entry and inclusion of certain services in that entry would pre-suppose that there was no earlier entry covering the said services

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Bombay High Court in the case of Indian National Shipowners' Association- v.- Union of India , 2009 (14) STR 289, at paragraph 38 of ...

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Tuesday, 26 July 2016

As per Section 19(7) of GST Law, registration is required to be granted with in prescribed period. Further As per section 19(9), if registration is not granted with in stipulated period and also no deficiency is communicated to the dealer, the registration under GST law shall be deemed to have been granted. Comments: This is a welcome provision under GST law. This is just like section 12AA(2) of Income tax law, where after six months from end of month in which application for grant of registration of trust is made, if application is not rejected, the assesse trust is granted deemed registration. Such like provision does not exist in present vat or service tax law. [GST Law Note-4]

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Tuesday, 12 July 2016

Tug of War for Limitation period for penalties not linked to assessment of Income like 271D/271E/271C imposable by Range Heads i.e. Joint Commissioners

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Under Section 271D penalty is imposable by Joint Commissioner for failure to comply 269SS i.e. accepting loan or deposit for Rs. 20,000/- ...

CBDT vide letter dated 11-07-2016 has provided three revised format of issuing notices u/s 143(2). 1. Limited Scrutiny 2. Complete Scrutiny 3. Mannual Scrutiny

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CBDT vide letter dated 11-07-2016 has provided three revised format of issuing notices u/s 143(2). 1. Limited Scru...

Monday, 11 July 2016

Revised Return can be filed even after intimation u/s 143(1) is issued since the same is not considered as an assessment order in the court law though referred to as summary assessment. Since even after the issuance of intimation u/s 143(1), regular/scrutiny assessment can be done without any restriction. There is a case law of Gujarat High court in which the court held that the assessee can file revised return even after intimation is served . S. R. Koshti v. Commissioner of Income-tax [2005] 276 ITR 165 (Guj). The issue is settled to rest by the decision of Supreme Court in the case of ACIT vs Rajesh Javeri Stock Brokers (P) Ltd. 291 ITR 500 in which it was held that intimation although deem to the notice of demand U/s. 156 can not taken as assessment order. Revised return can be filed after intimation u/s 143(1)(a)-AO must amend such intimation on the basis of revised return-Gujarat HC [2011] 333 ITR 0508 Commissioner of Income-tax Versus Himgiri Foods Limited

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Crown Consultants (P.) Ltd. v. CIT [2014] 362 ITR 368/224 Taxman 81 (Mag.)/44 taxmann.com 397 (Bombay High Court) has taken a view that where an objection is not taken before the Assessing officer while responding to the reasons in support of a notice seeking reopen an assessment, then it is not open to assessee to raise such objection for the first time before this (High) Court in writ proceedings under Article 226. The exception of course being if the impugned notice is ex-facie without jurisdiction and no determination of facts are required to establish it is without jurisdiction.

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During the regular assessment proceedings leading to the assessment order, the eight lenders referred to in the reasons were a subject matter of examination and then assesse provided evidence in the form of loan confirmation to establish its genuineness. However, during search of one person, he admitted to have given entry only. Thus, it is submitted by the assesse that this is a case of change of opinion. High Court held that the exact nature of the transaction is only privy to the parties to the transaction and when one of the parties to the transaction states that what appears is not factually so, then the Assessing Officer certainly has tangible material to form a reasonable belief that income chargeable to tax has escaped assessment. [para 8] Bright Star Syntex (P.) Ltd. [2016] 71 taxmann.com 64 (Bombay)

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Supreme Court in Phoolchand Bajranglal v. ITO [1993] 203 ITR 456/69 Taxman 627 - "One of the purposes of Section 147 appears to us to be to ensure that a party cannot get away by willfully making a false or untrue statement at the time of original assessment and when that falsity comes to notice, to turn round and say "you accepted my lie, now your hands are tied and you can do nothing."

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The Court will certainly interfere in 148 matters where the reason to believe that income has escaped assessment, is a clear case of change of opinion i.e. the same material was subject to consideration in regular assessment proceedings or where the reopening is being done only on suspicion and/or to carry out investigation or where the assessment is sought to be reopened after a period of more than four years from the end of the relevant assessment year and there has been no failure on the part of the assessee to truly and fully disclose all material facts necessary for assessment [para 6] Bright Star Syntex (P.) Ltd. [2016] 71 taxmann.com 64 (Bombay)

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Apex Court in ITO v.Lakhmani Mewal Das [1976] 103 ITR 437 held that the expression "reason to believe" cannot be read to mean that the Assessing Officer should have finally established beyond doubt that income chargeable to tax has escaped assessment. It held that the only requirement to reopen an assessment is a reasonable belief on the part of the Assessing Officer issuing the reopening notice that income chargeable to tax has escaped assessment.

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Supreme Court in S.V.R. Mudaliar v. Rajabu F. Buhari [1995] 4 SCC 15 held as follows:— "…we have no doubt in our mind that before reversing a finding of fact, the appellate court has to bear in mind the reasons ascribed by the trial court. This view of ours finds support from what was stated by the Privy Council in Rani Hemanta Kumari Debi v. Maharaja Jagadindra Nath Roy Bahadur [10 CWN 630 : 8 Bom LR 400] wherein, while regarding the appellate judgment of the High Court of Judicature at Fort William as "careful and able", it was stated that it did not "come to close quarters with the judgment which it reviews, and indeed never discusses or even alludes to the reasoning of the Subordinate Judge".

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A Court of appeal interferes not when the judgment under attack is not right but only when it is shown to be wrong. (See Special Land Acquisition Officer, Bangalore v. T. Adinarayan Setty [1959 Supp 1 SCR 404 : AIR 1959 SC 429 : 1959 Cri LJ 526] ;Dattatraya Shankarbhat Ambalgi v. Collector of Sholapur [(1971) 3 SCC 43] and Dollar Company, Madras v.Collector of Madras [(1975) 2 SCC 730] .)

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While reversing the order of the CIT(A) the Tribunal is duty bound to examine and discuss the reasons given by the CIT(A) to hold one way or the other and then to dispel those reasons. If the Tribunal fails to make such an exercise the judgment will suffer from serious infirmity.[Para 15] Assuming that another view was possible, that itself would be no ground to interfere with the order of the CIT(A) by ITAT unless it is shown that the appreciation of evidence by the CIT(A) was either perverse or untenable and that in holding in favour of the assessee the CIT(A) either ignored material evidence or that the view taken by him was patently untenable.[Para 17 of Judgement] Prahlad Bhattacharya [2016] 71 taxmann.com 63 (Calcutta) MARCH 4, 2016

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A donor cannot be expected to disclose or answer any question which was not specifically put to him in the course of proceedings u/s.131. The inspector deputed by the assessing officer had full opportunity to make inquiry and the assessee should not suffer on account of a lapse on the part of the inspector. [Para 14 of the Judgement] Prahlad Bhattacharya [2016] 71 taxmann.com 63 (Calcutta) MARCH 4, 2016

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Rajasthan High Court in the case of CIT v. Padam Singh Chouhan [2009] 315 ITR 433 for the proposition that:— "There is no legal basis to assume, that to recognize the gift to be genuine, there should be any blood relationship, or any close relationship, between the donor and the donee. He further submitted that instances are not rare, when even strangers make gifts, out of very many considerations, including arising out of love, affection and sentiments.

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Delhi High Court in the case of CIT v. Suresh Kumar Kakar [2010] 324 ITR 231 held that when the donor and the donee are in blood relationship with each other, the donor does not need any particular occasion to make any gift.

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Assessee was a closely held company incorporated in USA In India, assessee-company entered into contract with DPC .First phase of contract was completed - Second phase of contract did not run its full course . Same was terminated by assessee-contractor on account of non-payment of bills by contractee DPC. Assessee raised a claim which had not been accepted by contractee DPC. Since ultimate collection was not certain while raising bills, assessee did not credit same to its profit and loss account . Thus, said amounts were not shown by assessee as its income - Whether since, suits/ disputes between assessee-contractor and contractee were pending, contractual income could not be said to be accrued when invoice raised by assessee had been rejected by contractee in view of its bankruptcy - Held, yes - Whether, however, on actual receipt of invoice amount, same would be taxed in year of receipt - Held, yes Bechtel International Inc [2016] 71 taxmann.com 62 (Mumbai - Trib.) OCTOBER 30, 2015

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Facts Assessee , a closely held company in USA , entered into contract with Indian Companies. Contract could be executed partly only bec...

Wednesday, 6 July 2016

As per Section 2(14)(iii), agricultural land outside specified limit is not capital asset and hence there can be no capital gain on transfer of such agricultural land. Hence it is important to determine whether land is agriculture land or not. A few case laws relevant to the subject:

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In Gemini Pictures Circuit (P.) Ltd. v. CIT [1981] 130 ITR 686/6 Taxman 42 (Mad.) it was held that onus is on the department to...

Where assesse enters into agreement to sell agri land. There after makes an application to the authorities to permit to covert the land into farm houses and authority replies that no such conversion required for farm houses and there after the sale deed with buyer is registered. Whether the land ceases to be agricltual land on the date of registration of sale deed. What is the relevant date of transfer, the date of agreement or date of registration of sale deed?

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As per Section 2(14)(iii), agricultural land outside specified limit is not capital asset and hence there can be no capital gain on transf...

Ratan Melting & Wire Industries, 2008 (12) STR 416. At paragraph 6 of the judgment, the Hon'ble Apex Court observed as follows "6. Circulars and Instructions issued by the Board are no doubt binding in law on the authorities under the respective statutes, but when the Supreme Court or the High Court declares the law on the question arising for consideration, it would not be appropriate for the Court to direct that the Circular should be given effect to and not the view expressed in a decision of this Court or the High Court. So far as the clarifications/circulars issued by the Central Govt. and/or the State Govt. are not concerned they represent merely their understanding of the statutory provisions. They are not binding upon the Court. It is for the Court to declare what the particular provision of statutes says, and it is not for the executive. Looked at from another angle, a circular which is contrary to the statutory provisions has really no existence in law

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Registration of sale / transfer deed is not relevant factor to the matter of capital gain and related aspect. 1. CIT v. Poddar Cement (P.) Ltd. [1997] 226 ITR 625 (SC) 2. Mysore Minerals Ltd. - 239 ITR 775 (SC) 3. B.L. Sood - 245 ITR 727 (SC)

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Old and Gold Rule of Law reiterated by Calcutta High Court in Sheo Kumar Mishra [2016] 70 taxmann.com 375 (Calcutta) FEBRUARY 26, 2016 that In the absence of an appeal or cross-objections by the department against the order in dispute, the Appellate Tribunal will have no jurisdiction or power to enhance the assessment. Under Section 251, CIT A has power to enhance the assessment but u/s 253 Tribunal does not have the power to enhance the enhancement. it is not open to the Tribunal itself to raise a ground or permit the party, who has not appealed, to raise a ground, which will work adversely to the appellant

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Facts and Decision

Tuesday, 5 July 2016

As per N/N 30/2016, dtd 28-06-2016, a person who obtains registration as first stage dealer shall not be required to obtain registration as importer and a person registered as importer shall not be required to obtain registration as FSD. Further in Circular No. 1032/20/2016 dated 28-06-2016, CBEC has clarified that a person who conducts business both as FSD as well as importer may now have common registration but this is optional and he can have separate registrations also. Further clarified that a person who conducts business both as FSD as well as importer shall have option to file single quarterly return

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Procedure for online submission of TDS return through incometaxindiaefiling.gov.in provided by CBDT vide N/N 11/2016 dated 22-06-2016

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Procedure for online submission of TDS return through incometaxindiaefiling.gov.in provided by CBDT vide N/N 11/2016 dated 22-06-2016 as u...

Relaxation from deduction of tax at higher rate under section 206AA by inserting Rule 37BC vide Notification dated 24-06-2016

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Finance Act 2016 had amended Section 206AA(7) to provide that higher rate of TDS u/s 206AA shall not apply to payments made to non residen...

Time Limit for taking central excise registration by jewelers extended to 31-07-2016. Excise for March 2016 to June 2016 to be paid till 31-07-2016 [Circular 1033/21/2016 dated 01-07-2016]

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Clarifications Issued on Income Declaration Scheme vide Circular No. 24/2016 dated 27-06-2016

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Further Clarifications Issued on Income Declaration Scheme vide Circular No. 24/2016 dated 27-06-2016 1. In case of part paymen...

Friday, 24 June 2016

Vide NN 1/2016 dtd 03-02-2016, refund of service tax under NN 41/2012 was allowed on use of service for export of goods beyond factory. The reference to place of removal was omitted to dispel the contention that rebate of service tax on service from factory gate to port of shipment shall not be allowed. Now, section 160 of Finanace Bill 2016 passed by Lok sabha on 04-05-2016, has required retrospective application of above amendment i.e. from 01-07-2012 to 02-02-2016 (both days inclusive) by virtue of Tenth Schedule of Finance Bill passed by Loksabha. Further restoration of service tax credit denied allowed by section 160(2). Also, assessee who had not availed refund, can now apply for refunds for retrospective periods from 01-07-15 to 02-02-16 with in one month from the date of passing of Finance Act 2016.

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Krishi Kalyan Cess is applicable from 01-06-2016 @ 0.5% and thus service tax rate shall become 15%. Krishi Kalyan Cess to be applied even for outstanding amount of services rendered before 01-06-2016 for which payment is not received till 31-05-2016. E.g. for bank audit fee, if the amount is not received till 31-05-2016, Krishi Kalyan cess shall have to be paid for amount received after 31-05-2016. However, Krishi Kalyan Cess is Cenvatable. So, service providers should collect amount before 31-05-2016 to avoid payment of Krishi Kalyan Cess

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Separate date for furnishing 15G/15H announced by CBDT vide Notification dated 09-06-2016

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Separate date for furnishing 15G/15H announced by CBDT vide Notification dated 09-06-2016 Earlier, TDS return for June was required to b...

Issues /Observations/ Ambiguties Regarding Income Declaration Scheme, 2016

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1 As per Section 183(2) , FMV of asset on 01-06-2016= Deemed Undisclosed Income u/s 183(1). As per Section 183(3), FMV of an asset shall b...

Inspection Procedure for grant of registration certificate under Punjab Vat framed vide order dated 17-06-2016

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Inspection Procedure for grant of registration certificate under Punjab Vat framed vide order dated 17-06-2016 as under: 1. TI to inform...

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Yet another circular on TCS [23/2016 dtd 24-06-2016] sets at Knot all speculations regarding TCS 1. Goods Sold for Rs. 5 lac. Cheque Received Rs. 4 lacs. Cash Received Rs. 1 lakh. Since cash received lesser than 2 lacs, no TCS applicable 2. Goods Sold for Rs. 5 lac. Cheque Received Rs.2 lacs. Cash Received Rs.3 lakh. TCS shall apply on Rs. 3 lacs only and not whole of consideration of Rs. 5 lacs

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Under Lok pal and Lokayaukta Act 2013, as per section 14(1)(g) the Lokpal shall inquire any allegation of corruption made in a complaint in respect of any person who is or has been a director, manager, secretary or other officer of every other society or association of persons or trust (whether registered under any law for the time being in force or not), by whatever name called, wholly or partly financed by the Government and the annual income of which exceeds such amount as the Central Government may, by notification, specify; It has been notified vide Notification dated 20-06-2016 issued by Ministry of Pesonnel, Public Grievances and Pensions that inquiry into allegations of corruption in above cases to be made only where grants or financial assistance given by the Central Government exceeds Rs. 1 crores. Income other than Central Government Grants not to be considered for conducting such inquiry. Even state government grant not covered. The moot point is whether Invocation of section 13(1)(c) of Income Tax Act i.e. use or application of any part of income or assets of the trust for the benefit of trustee etc. might invite such enquiry

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Clarified by CBDT vide press release dated 21-06-2016 that no statement regarding arrest of willful defaulters has been issued. CBDT also expressed that though the provisions for arrest and detention by the Tax Recovery Officers in respect of the non-compliant tax defaulters are contained in the Income-tax Act, these are used extremely sparingly

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U/s 11 of Model GST law, remission of tax on quantities found deficient due to natural causes has been allowed. U/r 21 of Central excise law similar remission is available for deficiencies arising out of natural as well as accidental cases and other cases where goods found unfit for consumption or marketing before removal. U/R 21 of PVAT Rules, ITC is required to be reversed where goods are lost or destroyed due to whatever reasons. Hence remission should be allowed under GST law on quantities found deficient on account of reasons other than natural causes also. Although Schedule I of Model GST law, dealing with supplies without consideration also does not include deficiencies due to unnatural reasons with in definition of supply but perhaps matter needs a bit of more clarification also. [GST Law Note-3]

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TAX UPDATES

Pages

PAN and TAN may now also be obtained online

IDS Form 1 amended to provide for revised declaration

No Capital Gain without incurring cost

cash flow statement cannot be considered as keeping the books of account

No Addition u/s 69C for actual expenditure lesser than presumptive expenditure

Department after AIR Transactions without PAN

Signed Hard Copy of digitally signed Excise Invoice can be accepted

“Project Insight” to catch hold of tax defaulters

Lawyers presumed to Know law, not judges

Apna Tax Scheme of Punjab Government

Investigation Wing of Income Tax department launches following drive to locate tax evaders in wake of Income Declaration Scheme [ Letter dated 05-07-2016] as under

Introduction of a new entry and inclusion of certain services in that entry would pre-suppose that there was no earlier entry covering the said services

Tug of War for Limitation period for penalties not linked to assessment of Income like 271D/271E/271C imposable by Range Heads i.e. Joint Commissioners

CBDT vide letter dated 11-07-2016 has provided three revised format of issuing notices u/s 143(2). 1. Limited Scrutiny 2. Complete Scrutiny 3. Mannual Scrutiny

Delhi High Court in the case of CIT v. Suresh Kumar Kakar [2010] 324 ITR 231 held that when the donor and the donee are in blood relationship with each other, the donor does not need any particular occasion to make any gift.

As per Section 2(14)(iii), agricultural land outside specified limit is not capital asset and hence there can be no capital gain on transfer of such agricultural land. Hence it is important to determine whether land is agriculture land or not. A few case laws relevant to the subject:

Registration of sale / transfer deed is not relevant factor to the matter of capital gain and related aspect. 1. CIT v. Poddar Cement (P.) Ltd. [1997] 226 ITR 625 (SC) 2. Mysore Minerals Ltd. - 239 ITR 775 (SC) 3. B.L. Sood - 245 ITR 727 (SC)

Procedure for online submission of TDS return through incometaxindiaefiling.gov.in provided by CBDT vide N/N 11/2016 dated 22-06-2016

Relaxation from deduction of tax at higher rate under section 206AA by inserting Rule 37BC vide Notification dated 24-06-2016

Time Limit for taking central excise registration by jewelers extended to 31-07-2016. Excise for March 2016 to June 2016 to be paid till 31-07-2016 [Circular 1033/21/2016 dated 01-07-2016]

Very Important Circular on Income Declaration Scheme dated 30-06-2016

Effective Tax Rate under Income Declaration Scheme come down to 31%?

Rule for tax credit of foreign taxes

Clarifications Issued on Income Declaration Scheme vide Circular No. 24/2016 dated 27-06-2016

Separate date for furnishing 15G/15H announced by CBDT vide Notification dated 09-06-2016

Issues /Observations/ Ambiguties Regarding Income Declaration Scheme, 2016

Inspection Procedure for grant of registration certificate under Punjab Vat framed vide order dated 17-06-2016