Daily Tax & Corporate Law Digest
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Today’s newsletter analytically summarizes today’s top Tax & Corporate Law stories reported at?taxmann.com, in a unique section-wise format.
INCOME TAX
SECTION 2(15) OF THE INCOME TAX ACT, 1961 - CHARITABLE PURPOSE
Trust running newspaper is not entitled to exemption u/s 11 if ad receipts exceed the quantitative threshold imposed by the proviso to Section 2(15) - Principal Commissioner of Income-tax (Exemptions) v. Servants of People Society - [2023] 147 taxmann.com 79 (SC)
SECTION 32 OF THE INCOME-TAX ACT, 1961 - DEPRECIATION - ALLOWANCE/RATE OF
General: Where the assessee was enjoying physical possession of the immovable property even prior to the date of agreement as licensor, the assessee would be entitled to depreciation under section 32 on the said property from the date of agreement - Jet Freight Logistics Ltd. v. Commissioner of Income-tax Appeal (NFAC) - [2023] 146 taxmann.com 349 (Mumbai - Trib.)
SECTION 68 OF THE INCOME-TAX ACT, 1961 - CASH CREDIT
Tax on income: Where entire cash deposits made by the assessee during the demonetization period in Specified Bank Notes stood properly explained by the availability of cash balance in its books, no addition thereon could be made under section 68 - Jet Freight Logistics Ltd. v. Commissioner of Income-tax Appeal (NFAC) - [2023] 146 taxmann.com 349 (Mumbai - Trib.)
Immovable property: Where Assistant Commissioner, Mumbai who recorded reasons for reopening assessment in case of the assessee had no jurisdiction over the assessee to issue a notice under section 148(1) and continuation of such reassessment proceedings by jurisdictional Assistant Commissioner without issuing any fresh notice under section 148, being vitiated were to be set aside - Charu K. Bagadia v. Assistant Commissioner of Income-tax - [2023] 146 taxmann.com 345 (Madras)
SECTION 92C OF THE INCOME-TAX ACT, 1961 - TRANSFER PRICING - COMPUTATION OF ARM'S LENGTH PRICE
Adjustments - Aggregation of transaction: Where assessee aggregated group fee paid to its French AE which constituted service fee and research and development fee with all its other international transactions of purchase of raw material and components, payment of royalty, professional expenses etc., since transaction of payment of group fee was not closely connected with other international transactions, such transactions should be benchmarked separately - Faurecia Automotive Seating India (P.) Ltd. v. Deputy Commissioner of Income-tax - [2023] 146 taxmann.com 327 (Pune - Trib.)
Adjustments - Rendition of service/Benefit from transactions: Receipt of services is the sine qua non for justifying deduction towards their payment - Faurecia Automotive Seating India (P.) Ltd. v. Deputy Commissioner of Income-tax - [2023] 146 taxmann.com 327 (Pune - Trib.)
Adjustments - Depreciation: WDV of machinery in books of account of an associated enterprise cannot be considered as ALP for the transaction of purchase of such machinery by an assessee from associated enterprises - Infinity Retail Ltd. v. Assistant Commissioner of Income-tax - [2023] 146 taxmann.com 348 (Mumbai - Trib.)
Adjustments - Reimbursement of expenses: Where assessee had claimed a deduction for payments made by its AEs contending same to be reimbursement of out of pocket expenses incurred by AEs on behalf of assessee since auditors in audit report had certified financial statements to be true after carrying out verification on test check basis and TPO had not pointed out any discrepancy in supporting documents furnished by the assessee, no adjustment would be permitted - Infinity Retail Ltd. v. Assistant Commissioner of Income-tax - [2023] 146 taxmann.com 348 (Mumbai - Trib.)
SECTION 271C OF THE INCOME-TAX ACT, 1961 - PENALTY - FOR FAILURE TO DEDUCT TAX AT SOURCE
Illustrations: Where assessee paid external development charges to Haryana Urban Development Authority (HUDA) without deduction of tax at source, since such payment to HUDA was deposited in consolidated Fund of State and consequently assessee was not required to deduct tax on such payment, levy of penalty under section 271C upon assessee was not sustainable - Regards Developers (P.) Ltd. v. Additional Commissioner of Income-tax - [2023] 146 taxmann.com 342 (Delhi - Trib.)
GOODS AND SERVICES TAX LAWS
CLASSIFICATION OF GOODS
Construction Service - Residential quarters: Where construction of residential quarters for employees of the power plant is exclusively meant for use of employees of NPCIL, a government entity, and aforesaid construction is ancillary to the attainment of the main object of NPCIL, therefore applicant-assessee is eligible for concessional rate of 12% under Entry 3(vi) of Notification No. 11/2017-C.T.(Rate) dated 28.06.2017 for a period up to 31.12.2021 - SOM VCL (JV), In re - [2023] 147 taxmann.com 74 (AAAR - TAMILNADU)
SECTION 9 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 - LEVY & COLLECTION OF TAX
GST, at the hands of the applicant, is not leviable on the amount of employees' portion of canteen charges collected and paid by the applicant to Canteen service provider - Cadila Healthcare Ltd., In re - [2023] 147 taxmann.com 69 (AAR - GUJARAT)
SECTION 97 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 - ADVANCE RULING - APPLICATION FOR
Writ jurisdiction is not exercisable by High Court when the issue involved is a classification of goods as only scientific and technical experts can give opinion as to composition and method of manufacture; High Court rejects the challenge to order on classification - Harsh Polyfabric (P.) Ltd. v. Union of India - [2023] 147 taxmann.com 70 (Calcutta)
SECTION 129 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 - DETENTION, SEIZURE AND RELEASE OF GOODS AND CONVEYANCES IN TRANSIT
Goods and vehicles could not be detained where the e-way bill had expired during transit as per Shree Govind Alloys case; Department was directed to refund tax and penalty deposited as demanded under Section 129 of CGST Act - Orson Holdings Company Ltd. v. Union of India - [2023] 147 taxmann.com 71 (Gujarat)
COMPANY AND SEBI LAWS
CIRCULAR NO. SEBI/HO/CFD/POD2/P/CIR/2023/18, DATED 03-02-2023
SEBI introduces two new methods to achieve ‘Minimum Public Shareholding’
领英推荐
Editorial Note: SEBI has introduced two new methods to achieve the Minimum Public Shareholding (MPS) by the listed Cos. Now, MPS can be achieved by allocating shares to employees through the ESOP subject to a maximum of 2% of the paid-up equity share capital of the listed entity. However, no shares will be allotted to the promoters/promoters group under this method. Further, MPS can be achieved by transferring shares held by promoters to an exchange-traded fund managed by a SEBI-registered mutual fund.
CIRCULAR NO. SEBI/HO/DDHS/DDHS-RACPOD1/P/CIR/2023/020, DATED 03-02-2023
SEBI lists out ‘Dos and don’ts’ for issuers of 'green debt securities' to avoid occurrences of greenwashing
Editorial Note: In order to address the concerns of market participants, regarding greenwashing, the SEBI has issued a list of Dos and Don’ts for issuers of green debt securities to avoid the occurrence of greenwashing. SEBI requires issuers to continuously monitor to check whether path undertaken towards a more sustainable form of operations results in reduction of adverse environmental impact. Also, issuers must use funds for purpose(s) falling under definition of ‘green debt security’ only.
CIRCULAR NO. SEBI/HO/DDHS/DDHS-RACPOD2/P/CIR/2023/19, DATED 03-02-2023
SEBI tweaks guidelines on withdrawal of rating by CRAs; exempts CRAs to provide withdrawal rating in certain cases
Editorial Note: SEBI has amended the operational circular for ‘Credit Rating Agencies’ (CRAs). As per the amended norms in case of withdrawal of credit rating by CRAs there is no need to assign a rating and to make a press release where there are no outstanding obligations under the security rated by the CRA or the company whose security is rated is wound up or merged or amalgamated with another company. Earlier, the rating/press release for withdrawal was required in each case.
FEMA BANKING AND INSURANCE LAWS
PRESS RELEASE, DATED 03-02-2023
Indian banking sector remains resilient and stable, says RBI
Editorial Note: The RBI has issued a statement on the health of the Indian Banking sector amid media reports expressing concern about the exposures of Indian banks to a business conglomerate. As per the RBI’s current assessment, the banking sector remains resilient and stable. RBI stated that it maintains a constant vigil on the banking sector and on individual banks with a view to maintain financial stability.
SECTION 3 OF THE FOREIGN CONTRIBUTION (REGULATION) ACT, 2010 - PROHIBITION TO ACCEPT FOREIGN CONTRIBUTION
Where the petitioner, Association for Democratic Reforms sought directions to constitute an independent Tribunal or committee to oversee the enforcement of FCRA, however, an entire case of the petitioner was premised on the possibility of a political party, who was at the helm of affairs at the Centre, abusing provisions of FCRA to suppress, dissent and receive foreign contributions in its own favour, prayer made by petitioner could not have been accepted - Association For Democratic Reforms v. Union of India - [2023] 147 taxmann.com 68 (Delhi)
INSOLVENCY AND BANKRUPTCY CODE
SECTION 5(8) OF THE INSOLVENCY AND BANKRUPTCY CODE, 2016 - CORPORATE INSOLVENCY RESOLUTION PROCESS - FINANCIAL DEBT
A precondition for the application of Explanation (i) of section 5(8)(f) is raising of an amount from an allottee under a real estate project; where landowners were entitled to share 45 per cent constructed area in lieu of their entitlements under a development agreement, same does not amount to financial debt under section 5(8) and, therefore, NCLT was justified in not holding landowners as financial creditors - Namdeo Ramchandra Patil v. Vishal Ghisulal Jain - [2023] 146 taxmann.com 329 (NCLAT- New Delhi)
OPINIONS
Litigation – the lesser it be, more rewarding it is - Dr (CA) Hemant O Sharma, VP- MD College, Gopal C Mehta, Advocate High Court - [2023] 147 taxmann.com 81 (Article)
Market Linked Debentures No Longer a Sweet Vanilla Scoop of Ice-cream!! - Mayank Mohanka, Senior Partner in M/s. S M Mohanka & Associates & Founder Director in Tax Aaram India Pvt. Ltd. - [2023] 147 taxmann.com 80 (Article)
Online Gaming: Controversy, Challenges & way forward - Surjeet Singh Negi, CA, Indirect Tax Consultant - [2023] 147 taxmann.com 76 (Article)
"Consequences of not maintaining minutes for different meetings under Companies Act, 2013 - a case study - Prof R Balakrishnan, FCS - FCWA - [2023] 147 taxmann.com 78 (Article)
Related Party Transactions (RPTs): An Overview - CA Bimal R. Bhatt, Ex-Public Interest Director - [2023] 147 taxmann.com 77 (Article)
That’s it from us for today! Stay Tuned for more updates from?Taxmann.com
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