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(22) OF THE INCOME-TAX ACT, 1961 - DEEMED DIVIDEND
Loans and advances: Section 2(22)(e) would not be applicable where the assessee availed unsecured loan from its group company which was paid back with interest in the same year - Principal Commissioner of Income-tax v. Govind Promoters (P.) Ltd. - [2022] 142 taxmann.com 244 (Calcutta)
SECTION 9 OF THE INCOME-TAX ACT, 1961 - INCOME - DEEMED TO ACCRUE OR ARISE IN INDIA
Royalties/Fee for technical services - Commission: Where the assessee-company engaged, a foreign entity (SPA) of Italy under the agreement as export commission agent as the said agent was not providing any technical services to the assessee and was acting only as a commission agent and procuring orders for the assessee and reporting assessee for any infringement of rights, no part of its income could be said to accrue or arise in India - ACIT v. Graziano Transmission India (P.) Ltd. - [2022] 140 taxmann.com 475 (Delhi - Trib.)
SECTION 12AA OF THE INCOME-TAX ACT, 1961 - CHARITABLE OR RELIGIOUS TRUST - REGISTRATION PROCEDURE
Grant of registration: Where assessee-trust claimed exemption under section 11 and AO rejected same on the ground that assessee-trust was not registered under section 12A, however subsequent to filing tax appeals Commissioner (Exemption) permitted assessee-trust registration under section 12AA with effect from 7-7-2004 and copy of same was produced, the matter was to be remanded to AO to consider a certificate of exemption granted by Commissioner (Exemption) - Commissioner of Income-tax v. Soorya Educational Trust - [2022] 142 taxmann.com 232 (Madras)
SECTION 40A(3) OF THE INCOME-TAX ACT, 1961 - BUSINESS DISALLOWANCE - CASH PAYMENTS EXCEEDING PRESCRIBED LIMITS
Illustrations: Where assessee made payments of Rs. 19.78 lacs in cash towards printing charges to various parties and submitted that no payment was made to any single party in cash above Rs. 20,000 since it was unclear whether separate invoices had been raised by various parties and accordingly separate payments disbursed to them were within the permissible limit of Rs. 20,000, the matter was to be restored to file of Assessing Officer for verification on this point - Income-tax Officer v. Rahul Bharatbhushan Jain - [2022] 140 taxmann.com 478 (Ahmedabad - Trib.)
Where assessee had not brought on record any submission in the original assessment proceeding to justify its payments in cash exceeding specified limit under section 40(A)(3), reopening of assessment could not be averred as the change of opinion - Income-tax Officer v. Rahul Bharatbhushan Jain - [2022] 140 taxmann.com 478 (Ahmedabad - Trib.)
SECTION 48 OF THE INCOME-TAX ACT, 1961 - CAPITAL GAIN - COMPUTATION OF
General: Where reassessment was initiated in case of assessee on the ground that assessee claimed excess cost of acquisition of property while computing capital gain/loss on sale of property and, thus, income had escaped assessment and thereafter reassessment order was passed, since the subject matter in issue involved factual matrix which could not be decided by writ court, the assessee was to be directed to file a statutory appeal before appellate authority - East Coast Consultants (India) Ltd. v. Deputy Commissioner of Income-tax - [2022] 142 taxmann.com 245 (Madras)
SECTION 92 OF THE INCOME-TAX ACT, 1961 - TRANSFER PRICING - GENERAL
Scope of provision: Section 92 is not an independent charging section to bring in a new head of income or to charge tax on income which is otherwise not chargeable under Act, and thus, where no income has accrued to or received by assessee under section 5, no notional income can be brought to tax under section 92 - Deputy Commissioner of Income-tax v. Shilpa Shetty - [2022] 142 taxmann.com 235 (Mumbai - Trib.)
SECTION 92A OF THE INCOME-TAX ACT, 1961 - TRANSFER PRICING - MEANING OF ASSOCIATED ENTERPRISE
Applicability of: Section 92A(2)(j) deems two enterprises as AE if one enterprise is controlled by an individual and another enterprise is controlled by such individual or his relatives and without satisfying a second limb, i.e., individual or his relative controlled by other enterprise, provisions of section 92A(2)(j) cannot be applied - Deputy Commissioner of Income-tax v. Shilpa Shetty - [2022] 142 taxmann.com 235 (Mumbai - Trib.)
SECTION 92B OF THE INCOME-TAX ACT, 1961 - TRANSFER PRICING - INTERNATIONAL TRANSACTIONS, MEANING OF
AMP expenses: Where pursuant to share purchase agreement (SPA) entered into by husband of the assessee with Mauritius company to buy shares of said company, assessee rendered brand ambassadorship services to JIPL, 100 per cent subsidiary of Mauritius company, without any consideration, since parties to SPA was not an AE of assessee nor JIPL entered into a prior agreement with AE of the assessee, Section 92B(2) could not be applied to hold that transaction between JIPL and assessee was international transaction - Deputy Commissioner of Income-tax v. Shilpa Shetty - [2022] 142 taxmann.com 235 (Mumbai - Trib.)
SECTION 92BA OF THE INCOME-TAX ACT, 1961 - TRANSFER PRICING - SPECIFIED DOMESTIC TRANSACTION
Scope of provisions: Where threshold monetary limit of Rs. 5 crore was not available to Assessing Officer to characterize transactions with AE as SDT to enable him to make a reference to TPO, order of TPO under section 92CA(3) was non-est and consequently, the extension of time under an erstwhile provision of section 153 for passing assessment order based on such non-est order from TPO was not available to Assessing Officer - Garg Acrylics Ltd. v. Additional Commissioner of Income-tax - [2022] 140 taxmann.com 477 (Delhi - Trib.)
SECTION 92C OF THE INCOME-TAX ACT, 1961 - TRANSFER PRICING - COMPUTATION OF ARM'S LENGTH PRICE
Adjustments - Entity level v. transaction level: TPO should not resort to entity level TNMM for purpose of benchmarking of international transaction of assessee providing investment advisory services to AEs rather he should confine himself only to international transactions carried out with AEs - HSBC Asset Management (India) (P.) Ltd. v. Deputy Commissioner of Income-tax - [2022] 140 taxmann.com 476 (Mumbai - Trib.)
Adjustments - Benefit for transaction/allowability of expenditure: TPO is duty bound to determine ALP of an international transaction only by following any of five prescribed methods provided in rule 10B and not otherwise; where the assessee had availed services and derived benefits therefrom by incurring cost paid to AE on basis of cost allocation depending on actual usage without any mark-up thereon, no transfer pricing adjustment was permitted on ad hoc basis - HSBC Asset Management (India) (P.) Ltd. v. Deputy Commissioner of Income-tax - [2022] 140 taxmann.com 476 (Mumbai - Trib.)
SECTION 147 OF THE INCOME-TAX ACT, 1961 - INCOME ESCAPING ASSESSMENT - GENERAL
Where the Assessing Officer had independently applied his mind before initiating reassessment proceedings under section 147 on account of audit objections, such reopening was justified - Income-tax Officer v. Rahul Bharatbhushan Jain - [2022] 140 taxmann.com 478 (Ahmedabad - Trib.)
Where assessee neither sought the reason for reopening of the case on receipt of the notice initiating reassessment proceedings nor did he object to said reopening but rather sought for the reason of reopening assessment almost after two months and that too just ten days before reassessment was completed by Assessing Officer, assessee’s cross objection that Assessing Officer had erred by passing an order under section 143(3) without providing reasons recorded to him was to be dismissed - Income-tax Officer v. Rahul Bharatbhushan Jain - [2022] 140 taxmann.com 478 (Ahmedabad - Trib.)
SECTION 222 OF THE INCOME-TAX ACT, 1961 - COLLECTION AND RECOVERY OF TAX - CERTIFICATE PROCEEDINGS
Sale of attached property: Where assessee was in arrears of tax and property of assessee was auctioned by Income-tax Department and impugned auction notice clearly stated that terms and condition of proposed auction could be downloaded from the website of Income-tax Department or collected from the office of respondent Tax Recovery Officer, there was no irregularity in an auction conducted by Income-tax Department in not declaring reserved price in auction notice - IGGI Resorts International Ltd. v. Tax Recovery Officer - [2022] 140 taxmann.com 334 (Madras)
SECTION 268A OF THE INCOME-TAX ACT, 1961 - FILING OF APPEAL OR APPLICATION FOR REFERENCE BY INCOME-TAX AUTHORITY
Monetary effect: Where revenue reopened assessee’s case on basis of audit objection, its appeal would be covered by exception mentioned in Circular No. 3/2018, dated 11-7-2018 and, thus, appeal filed by revenue could not be dismissed due to low tax effect - Income-tax Officer v. Rahul Bharatbhushan Jain - [2022] 140 taxmann.com 478 (Ahmedabad - Trib.)
GOODS AND SERVICES TAX LAWS
NOTIFICATION NO. 81/2022-CUSTOMS (N.T.), DATED 23-09-2022
CBIC issues Courier Imports and Exports (Electronic Declaration and Processing) Second Amendment Regulations, 2022
Editorial Note: The CBIC has issued Courier Imports and Exports (Electronic Declaration and Processing) Second Amendment Regulations, 2022 to amend the Courier Imports and Exports (Electronic Declaration and Processing) Regulations, 2010. These amendments simplify a few entries of forms which require details of import or export through e-commerce platforms.
SECTION 2(26) OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 - COMMON PORTAL - DEFINITION OF
Improvement/upgrade of GSTN was found necessary since under CGST Act, service of notices and filing of replies are primarily to be done through GSTN portal through electronic means - Dauji Ispat (P.) Ltd. v. State of U.P. - [2022] 142 taxmann.com 470 (Allahabad)
SECTION 22 OF THE CENTRAL SALES TAX ACT, 1956 - POWERS OF THE AUTHORITY
Where on inter-State sale of the bus through a sales office in AP, CST was paid in the State of AP, CST so paid was to be transferred to State of Jharkhand where the manufacturer was located so as to adjust same with CST liability in Jharkhand - Tata Motors Ltd. v. Central Sales Tax Appellate Authority - [2022] 142 taxmann.com 463 (SC)
SECTION 62 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 - ASSESSMENT - NON - FILERS OF RETURNS
Where order in Form GST DRC-07 as visible in GSTN Portal did not contain reasons, same was wholly defective and, hence was to be remitted back for fresh adjudication - Dauji Ispat (P.) Ltd. v. State of U.P. - [2022] 142 taxmann.com 470 (Allahabad)
领英推荐
SECTION 102 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 - ADVANCE RULING - APPELLATE AUTHORITY - RECTIFICATION OF
Advance ruling passed without considering withdrawal application and rectification application was in violation of principles of natural justice; Matter was remanded for fresh consideration - DM Net Technologies, In re - [2022] 142 taxmann.com 467 (AAAR-GUJARAT)
SECTION 107 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 - APPELLATE AUTHORITY - APPEALS TO
Limitation Act is not applicable to appeals filed under GST law; High Court dismisses challenge against appellate order rejecting appeal as time-barred - Nandan Steels and Power Ltd. v. State of Chhattisgarh - [2022] 142 taxmann.com 466 (Chhattisgarh)
SECTION 129 OF THE CENTRAL GOODS AND SERVICE TAX ACT, 2017 - DETENTION, SEIZURE AND RELEASE OF GOODS AND CONVEYANCES IN TRANSIT
Demand of tax and imposition of penalty for mismatch in vehicle number, when goods were being stock transferred, were not sustainable and same were to be set aside and Authority was to be directed to hear the matter afresh - Symed Labs Ltd. v. Appellate Joint Commissioner ST - [2022] 142 taxmann.com 468 (Telangana)
FEMA BANKING AND INSURANCE LAWS
PUBLIC NOTICE NO. II/21022/23 (22)/2020-FCRA-III, DATED 23-09-2022
Govt. further extends the validity of FCRA registration certificates till 31.03.2023
Editorial Note: The Govt., in the public interest, has further extended the validity of FCRA registration certificates up to 31.03.2023 or till the date of disposal of the renewal application, whichever is earlier. The validity of certificates has also been extended for those entities whose validity was earlier extended till 30.09.2022. Also, validity of those FCRA entities whose 5 years validity period is expiring between 01.10.2022 to 31.03.2023 and who have applied for renewal stands extended to 31.03.2023.
PRESS RELEASE: 2022-2023/927, DATED 23-09-2022
Sovereign Gold Bonds 2016 (Series II) & 2016 – 17 (Series II) can be redeemed prematurely at Rs. 4952 per unit: RBI
Editorial Note: The due date of the fourth and third premature redemptions of SGB 2016 Series II & SGB 2016 - 17, Series II shall be September 29 & 30, 2022. The RBI has notified that the redemption price of SGB for fourth & third premature redemptions due on September 29 & 30, 2022 shall be Rs.4952/-per unit of SGB based on the simple average closing gold price of 999 purity of the week (Monday-Friday) preceding the date of redemption as published by the India Bullion and Jewellers Association Ltd (IBJA).
INSOLVENCY AND BANKRUPTCY CODE
SECTION 7 OF THE INSOLVENCY AND BANKRUPTCY CODE, 2016 - CORPORATE INSOLVENCY RESOLUTION PROCESS - INITIATION BY FINANCIAL CREDITOR
CIRP proceedings u/s 7 can be initiated against both corporate co-borrowers but there can be no double recovery of same amount from both - Maitreya Doshi v. Anand Rathi Global Finance Ltd. - [2022] 142 taxmann.com 484 (SC)
SECTION 12A OF THE INSOLVENCY AND BANKRUPTCY CODE, 2016 - CORPORATE INSOLVENCY RESOLUTION PROCESS - WITHDRAWAL OF APPLICATION
Before CoC is constituted, the applicant is allowed to withdraw his admitted CIRP application without the consent of creditors - Ashok G. Rajani v. Beacon Trusteeship Ltd. - [2022] 142 taxmann.com 465 (SC)
SECTION 65 OF THE INSOLVENCY AND BANKRUPTCY CODE, 2016 - CORPORATE PERSON'S ADJUDICATING AUTHORITIES - FRAUDULENT OR MALICIOUS PROCEEDINGS
Where financial creditor bank approached multiple Courts just to harass borrowers and guarantor in time consuming and expensive litigation, such action of bank fell under category of forum shopping and, therefore, ex parte CIRP order passed by NCLT against corporate guarantor on application of said bank was to be set aside and matter was to be remanded back to decide matter afresh - Partha Paul v. Kotak Mahindra Bank Ltd. - [2022] 142 taxmann.com 237 (NCLAT- New Delhi)
SECTION 238 OF THE INSOLVENCY AND BANKRUPTCY CODE, 2016 - OVERRIDING EFFECT OF CODE
In view of section 238, steps taken under Code by Authority would have precedence over other authorities in parallel proceedings and provision of I&B Code should prevail in case of any conflict and, therefore application filed by applicant on ground that proceedings before DRT needed to be completed before distribution under IBC took place was misconceived - UCO Bank v. Oswal Spinning and Weaving Mills Ltd. - [2022] 142 taxmann.com 238 (NCLT-Chd.)
ACCOUNTS AND AUDIT
How to allocate the manpower cost during the project implementation phase?
Editorial Note: Ind AS 16 provides that costs of employee benefits arising directly from the construction or acquisition of the item of property, plant and equipment form part of the directly attributable costs. The manpower costs that are directly attributable to bringing the PPE to the location and condition necessary for it to be capable of operating in the manner intended by management, should be capitalised on the PPE.
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