Daily Tax | Corporate Laws | Accounting Digest
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Welcome to Taxmann.com | Newsletter – Reporting the Facts with Taxmann’s Analysis. Today’s Edition Brings to You with a Section-wise Digest of Statutes | Judgments?| Opinions.
INCOME TAX
SECTION 9 OF THE INCOME-TAX ACT, 1961 - INCOME - DEEMED TO ACCRUE OR ARISE IN INDIA
Business Profit - Commission: Commission paid to foreign agents with whom assessee had entered into agreements to render services abroad and no part of services was ever rendered in India, provisions of section 195 were not applicable to assessee and, therefore, there was no need for deduction of tax at source from payments made to foreign commission agents - ITC Ltd. v. ACIT - [2024] 162 taxmann.com 734 (Kolkata - Trib.)
SECTION 14A OF THE INCOME-TAX ACT, 1961 - EXPENDITURE INCURRED IN RELATION TO INCOME NOT INCLUDIBLE IN TOTAL INCOME
Computation of: Where assessee invested surplus fund generated from its business activities in shares and securities and thus derived income by way of dividend and tax free interest, non-maintenance of separate books of account evidencing expenditure incurred in relation to non-taxable income could not be a ground to reject assessee apportionment of expenditure incurred in relation to exempt income - ITC Ltd. v. ACIT - [2024] 162 taxmann.com 734 (Kolkata - Trib.)
SECTION 28(i) OF THE INCOME-TAX ACT, 1961 - BUSINESS INCOME - CHARGEABLE AS
Carbon credits: Income received by assessee on sale of carbon credit units being a capital receipt was not taxable - ITC Ltd. v. ACIT - [2024] 162 taxmann.com 734 (Kolkata - Trib.)
Excess stock: Where income surrendered by assessee during survey as excess stock was from business operations, same could not be brought to tax under deeming provisions of section 69B read with section 11BBE - Gurinder Makkar v. DCIT - [2024] 162 taxmann.com 731 (Chandigarh - Trib.)
Cost of building: Where assessee had surrender certain amount on account of cost of building during course of survey, since no bills/vouchers have been found during course of survey, Assessing Officer was not justified in invoking deeming provisions of section 69B read with section 115BBE and normal tax rate should be applied - Gurinder Makkar v. DCIT - [2024] 162 taxmann.com 731 (Chandigarh - Trib.)
SECTION 32 OF THE INCOME-TAX ACT, 1961 - DEPRECIATION - ALLOWANCE/RATE OF
Cost of construction: Once assessee had surrendered amount on account of cost of extension, renovation and same had been brought in books of accounts, same would form part of block of building and assessee would be eligible for claim of depreciation thereon - Gurinder Makkar v. DCIT - [2024] 162 taxmann.com 731 (Chandigarh - Trib.)
SECTION 37(1) OF THE INCOME-TAX ACT, 1961 - BUSINESS EXPENDITURE - ALLOWABILITY OF
Trademark registration fee: Registration expenses incurred on existing as well as new patents were wholly and exclusively incurred for purpose of business and were revenue in nature - ITC Ltd. v. ACIT - [2024] 162 taxmann.com 734 (Kolkata - Trib.)
Liquidated damages: Where assessee received liquidated damages as compensation from suppliers for failure to supply machinery/complete construction of building within the stipulated time, same were capital receipts not to be reduced from cost of fixed assets - ITC Ltd. v. ACIT - [2024] 162 taxmann.com 734 (Kolkata - Trib.)
Forward exchange contracts: Exchange fluctuation loss on account of mark to market loss at year end in respect of outstanding forward contracts and foreign currency receivable/payable is eligible for deduction - ITC Ltd. v. ACIT - [2024] 162 taxmann.com 734 (Kolkata - Trib.)
Design charges: Where assessee had incurred expenditure on low value items of spares and consumables required for rearrangement of packing material, since same was debited to profit and loss account as per existing Accounting Standards and such expenditure being regular and recurring in nature, was revenue expenditure - ITC Ltd. v. ACIT - [2024] 162 taxmann.com 734 (Kolkata - Trib.)
Information technology expenses: Expenditure incurred in respect of payment made to various parties on account of annual maintenance of information technology assets and related consumables was revenue expenditure - ITC Ltd. v. ACIT - [2024] 162 taxmann.com 734 (Kolkata - Trib.)
Advances written off: Advances given to farmers against supply of materials/crops in ordinary course of business being in nature of trade advances were allowable under section 37(1) - ITC Ltd. v. ACIT - [2024] 162 taxmann.com 734 (Kolkata - Trib.)
SECTION 40A OF THE INCOME-TAX ACT, 1961 - BUSINESS DISALLOWANCE - CASH PAYMENTS EXCEEDING PRESCRIBED LIMIT
Amount surrender during survey: Where expenditure had been held disallowable in terms of section 40A(3) which means that certain expenditure had been incurred, accounted for in books of accounts and had been found to be incurred in cash in violation of section 40A(3), question of unexplained expenditure or unaccounted expenditure did not arose for consideration, and hence, action of Assessing Officer in invoking deeming provisions of section 69B read with section 115BBE in this regard was to be set-aside - Gurinder Makkar v. DCIT - [2024] 162 taxmann.com 731 (Chandigarh - Trib.)
SECTION 68 OF THE INCOME-TAX ACT, 1961 - CASH CREDIT
Purchases: Where assessee had furnished details comprising number of goods received, copies of invoices and delivery challans, photograph of products purchased which were given as free along with food products, copies of bank statements reflecting payment made in respect of miscellaneous purchases, addition made under section 68 with reference to Investigation Wing report without carrying on any further investigation was rightly deleted by Commissioner (Appeals) - ITC Ltd. v. ACIT - [2024] 162 taxmann.com 734 (Kolkata - Trib.)
SECTION 69A OF THE INCOME-TAX ACT, 1961 - UNEXPLAINED MONEYS
Opportunity of hearing: Where assessee filed an instant writ assailing an order under section 153C passed making addition on account of unexplained money paid by assessee to purchase a property on the fulcrum of inordinate delay, since when assessee was provided with an opportunity of hearing, it chose not to reply to notice in initial stage, and further, instant was not case where principles of natural justice was not met or Assessing Officer had not duly applied his mind before passing impugned order, extraordinary powers under article 226 of Constitution could not be exercised - Sunita Goel v. Deputy Commissioner of Income-tax - [2024] 162 taxmann.com 740 (Delhi)
Reassessment: Where a reopening notice was issued upon assessee on ground that as per information flagged under risk management strategy (RMS) formulated by CBDT, revenue had been noticed that assesee had supplied goods/services of certain amount to a company which was not doing any actual business activities and was involved in receiving and giving bogus contracts/sub-contracts and raising invoices without delivery of any actual goods/services, impugned reopening on basis of said information was justified - Rahul Sachan v. Income-tax Officer - [2024] 162 taxmann.com 738 (Allahabad)
SECTION 80G OF THE INCOME-TAX ACT, 1961 - DEDUCTIONS - DONATION TO CERTAIN FUNDS, CHARITABLE INSTITUTIONS
Where assessee-trust incorporated in 1974 filed application in Form No. 10AB under section 80G(5)(iii) and CIT(E) rejected application on ground that application was not filed within time-limit stated in section 80G(5)(iii), since assessee having been incorporated in 1974, it was not possible to file application within six months of commencement of its activities, as per provisions of section 80G(5)(iii) delay in filing Form 10AB, under section 805(5)(iii) was to be condoned - Shri Kabir Kirti Mandir Kashi v. Commissioner of Income-tax (Exemption) - [2024] 162 taxmann.com 735 (Rajkot - Trib.)
SECTION 115JB OF THE INCOME-TAX ACT, 1961 - MINIMUM ALTERNATE TAX - PAYMENT OF
Reassessment: Where assessee filed Form No. 29B required u/s.115JB disclosing all material facts including reduction of unabsorbed depreciation or business loss, as reduction under item–(iii) of proviso to Section 115JB at time of regular assessment, impugned reopening notice issued under section 148 on ground that assessee wrongly reduced certain amount asreduction under item (iii) of proviso to section 115JB while computing book profit, was without jurisdiction - Italia Ceramics Ltd. v. Deputy Commissioner of Income-tax - [2024] 162 taxmann.com 733 (Gujarat)
Book profits: Reopening of an assessment is unwarranted when tax liability under MAT provisions remains higher and unchanged despite adjustments made under normal tax provisions - Genus Power Infrastructure Ltd. v. Assistant Commissioner of Income-tax - [2024] 162 taxmann.com 730 (Delhi - Trib.)
SECTION 132 OF THE INCOME-TAX ACT, 1961 - SEARCH AND SEIZURE - GENERAL
Freezing of bank accounts: Where pursuant to search and seizure operation conducted in case of certain persons, bank accounts of assessees were debit frozen to avoid leakage of revenue, perpetuation of freezing of bank accounts beyond 60 days was completely unsustainable and dehors provisions, hence, there was to be a direction to immediately defreeze concerned bank accounts of assessees - Pooja Trading Co. v. Deputy Director of Income-tax (Inv.) - [2024] 162 taxmann.com 737 (Delhi)
SECTION 144C OF THE INCOME-TAX ACT, 1961 - TRANSFER PRICING - DISPUTE RESOLUTION PANEL
Passing assessment order: Where TPO passed assessment order determining TP adjustment to which assessee filed an application in Form No. 35-A manually before DRP as well as Assessing Officer and due to technical glitches and on account of bonafide reasons, unavoidable circumstances and sufficient cause assessee could not e-file acknowledged copy of Form No.35-A, impugned order was to be set aside and matter was to be remitted back for reconsideration afresh - Himalaya Wellness Company v. Assessment Unit, National Faceless Assessment Centre - [2024] 162 taxmann.com 732 (Karnataka)
SECTION 244A OF THE INCOME-TAX ACT, 1961 - REFUNDS - INTEREST ON
Interest received on income tax refund and the interest paid on delayed payment of income tax both have same character and as such if interest received from tax department exceeds interest paid, then only net amount could be taxed - ITC Ltd. v. ACIT - [2024] 162 taxmann.com 734 (Kolkata - Trib.)
领英推荐
GOODS AND SERVICES TAX LAWS
SECTION 9 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 - LEVY & COLLECTION OF TAX
Budgetary support under Budgetary Support Scheme is in nature of grant and not refund of duty under taxation law and when a procedure is prescribed, assessee while seeking grant of budgetary support, is required to follow that procedure and not work out a different procedure for authorities to follow; Since scheme required assessee to file claim on quarterly basis, however same was filed on monthly basis, assessee was not entitled to any relief against order rejecting claim of assessee - Glenmark Pharmaceuticals Ltd. v. Union of India - [2024] 162 taxmann.com 295 (SIKKIM)
SECTION 29 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 - REGISTRATION - CANCELLATION OF
Where registration of assessee was cancelled retrospectively vide impugned order, which did not spell out reason for retrospective cancellation, since assessee did not wasn’t to continue with business, impugned order was to be modified to extend that registration was to be treated as cancelled from date of show cause notice - Mukesh Kumar Singh v. Commissioner of Delhi GST - [2024] 162 taxmann.com 298 (Delhi)
Where Show Cause Notice was itself defective and cancellation order was cryptic without any reason, therefore, cancellation order could not be sustained; however, since, petitioner-assessee did not seek to carry on business or continue with registration, impugned cancellation order was to be modified to limited extent that registration should be treated as cancelled with effect from date of order i.e. 02.08.2023 and not retrospectively - Arvind Sharma v. Superintendent - [2024] 162 taxmann.com 696 (Delhi)
SECTION 30 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 - REGISTRATION - REVOCATION OF CANCELLATION OF
Where assessee's application for revocation of cancellation of registration rejected on ground of limitation, subject to assessee depositing all taxes, interest, late fee, penalty, etc., due and complying with other formalities, delay in invoking proviso to Rule 23 of OGST Rules to be condoned and assessee's application for revocation was to be considered in accordance with law - Achyuta Nanda Sethi v. Deputy Commissioner of State Tax, CT & GST - [2024] 162 taxmann.com 743 (Orissa)
SECTION 49 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 - PAYMENT OF TAX - INTEREST, PENALTY AND OTHER AMOUNTS
Where claim of assessee for GST amount (differential tax liability) for works executed under agreement was rejected by Executive Engineer of respondent-organization who did not have jurisdiction to pass said order, same was to be set aside and matter was to be remanded for fresh consideration - Mother India Construction (P.) Ltd. v. Bihar Urban Infrastructure Development Corporation Ltd. - [2024] 162 taxmann.com 296 (Patna)
SECTION 73 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 - DEMANDS AND RECOVERY - TAX OR INPUT TAX CREDIT DUE NOT INVOLVING FRAUD MISSTATEMENT OR SUPPRESSION
Where assessee filed writ petition challenging order passed under section 73(9) and contended that he was unaware of proceedings culminating in impugned order, since DRC 7 was uploaded on porta, impugned order was to be set aside and GST Officer was to be directed to issue a fresh order on condition that assessee remitted Rs. 15 lakhs towards tax demand - Nagaraj Sangiah v. Superintendent of GST & Central Excise (Grp-IV) - [2024] 162 taxmann.com 301 (Madras)
Where assessee’s tax liability was confirmed by impugned order as he failed to reply or appear for personal hearing, impugned order was to be set aside and matter was to be remanded for reconsideration on condition that assessee remitted 10 percent of disputed tax demand - Muthu Traders v. Deputy Commercial Tax Officer - [2024] 162 taxmann.com 300 (Madras)
SECTION 75 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 - DEMANDS AND RECOVERY - GENERAL
Where notice issued before assessment order passed against assessee raising demand in excess of Rs. 2,44,21,574sought reply within 30 days, assessing officer mentioned "NA" against column description "Date of personal hearing" and against columns for "Time of personal hearing" and "Venue where personal hearing will be held", assessee was denied opportunity of oral hearing, impugned order was to be set aside - Ashok Kumar v. State of U.P. - [2024] 162 taxmann.com 710 (Allahabad)
SECTION 129 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 - DETENTION, SEIZURE AND RELEASE OF GOODS AND CONVEYANCES IN TRANSIT
Where a writ petition seeking to quash a penalty for allegedly transporting goods without an E-Way bill was filed, the court granted relief, finding the petitioner complied with statutory requirements before interception and that the penalty violates natural justice principles due to lack of a hearing - Mid Town Associates v. Additional Commissioner - [2024] 162 taxmann.com 736 (Allahabad)
COMPANY AND SEBI LAWS
SEBI proposes relaxation in valuations of investment portfolios of ‘Alternative Investment Funds’
Editorial Note: SEBI has issued a Consultation Paper to review certain aspects of the framework for valuing the investment portfolio of Alternative Investment Funds (AIFs). The objective is to seek public comments on proposals to relax certain aspects of the valuation. These include changes in valuation methodology on material change, eligibility criteria of independent valuers to be appointed by AIFs, and computing the valuation of AIFs' investment portfolios.
SEBI seeks public comments on redefining the valuation framework for AIFs’ investment portfolios
Editorial Note: SEBI has issued a Consultation Paper dated May 23, 2024 to review specific aspects of the framework for the valuation of investment portfolios of Alternative Investment Funds (AIFs). The key proposals include (a) the applicability of valuation norms under SEBI (Mutual Fund) Regulations to compute the valuation of AIFs’ investment portfolios, and (b) the eligibility criteria for independent valuers to be appointed by AIFs. Comments on the same may be submitted by June 13, 2024.
FEMA BANKING AND INSURANCE LAWS
SECTION 24 OF THE PREVENTION OF MONEY LAUNDERING ACT, 2002 - BURDEN OF PROOF
Where an ECIR was registered alleging that one M, in collusion with certain other entities was engaged in illegal foreign remittances to Hong Kong by submitting fake import documents to banks and evidence exists in form of statements of witnesses, including that of main accused and other accused persons apart from other evidence, which incriminate appellants-forex dealers/agents, on other hand, other than bare denials, appellants have not presented any credible evidence to discharge their burden of proof under section 24, impugned order passed by Adjudicating Authority for attaching various movable and immovable properties of appellants was justified and accordingly, appeal against same was to be dismissed - Rajeev Wadhwa v. Deputy Director Directorate of Enforcement - [2024] 162 taxmann.com 748 (SAFEMA - New Delhi)
SECTION 45 OF THE PREVENTION OF MONEY LAUNDERING ACT, 2002 - OFFENCES TO BE COGNIZABLE AND NON-BAILABLE
Delhi HC takes a tough stand on corruption cases by denying bail to Manish Sisodia in Liquor Policy scam cases - Manish Sisodia v. Directorate of Enforcement - [2024] 162 taxmann.com 746 (Delhi)
INSOLVENCY AND BANKRUPTCY CODE
SECTION 25 OF THE INSOLVENCY AND BANKRUPTCY CODE, 2016 - CORPORATE INSOLVENCY RESOLUTION PROCESS - RESOLUTION PROFESSIONAL - DUTIES OF
Vesting of goods under section 126 of Customs Act, 1962 is not dependent on exercise of option to pay redemption fine - Principal Commissioner of Customs GST v. Pratim Bayal RP For B.K.M. Industries Ltd. - [2024] 162 taxmann.com 745 (NCLAT- New Delhi)
ACCOUNTS AND AUDIT
Checklist for Clauses 1 to 4 of Form 3CD in Tax Audit under the Income Tax Act, 1961
Editorial Note: Part A of Form No. 3CD covers routine particulars in Clauses 1 to 8A. Specifically, Clause 1 requires the assessee's name and branch details if applicable; Clause 2 requires the address; Clause 3 mandates the PAN or Aadhaar Number for individuals and PAN for other entities, noting if PAN is not allotted; Clause 4 requires details of indirect tax liabilities, such as registration or GST numbers. To assist tax auditors, this story provides a detailed audit checklist for Clauses 1 to 4.
OPINIONS
World Tax News: UK releases statutory guidance on Pillar 2 top-up tax registration and more…. - Taxmann, Editorial Team - [2024] 162 taxmann.com 758 (Article)
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