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 4 OF THE INCOME-TAX ACT, 1961 - ASSOCIATION OF PERSON - ASSESSABLE AS
Rental income: Where assessee and other co-owners purchased a property in their names and let out said property to a Government agency and received rent, since rent was being paid by Government agencies jointly in hands of co-owners treating them as a single land lord, said rental income was to be assessed in hands of co-owners as income of an AOP and not in hands of assessee as income from house property under section 22 - Y. S. & Co-owners v. Income-tax Officer - [2024] 167 taxmann.com 585 (Punjab & Haryana)
SECTION 12A OF THE INCOME-TAX ACT, 1961 - CHARITABLE OR RELIGIOUS TRUST - REGISTRATION OF
Objects of trust: Where Commissioner (Exemption) rejected assessee-trusts application for registration under section 12A on ground that its objects were for benefit of a particular religious community or caste and, accordingly, assessee was not entitled for exemption in terms of section 13(1)(b), since section 13(1)(b) was not relevant at stage of registration under section 12A but rather comes into play at time of assessment when determining exemption under section 11, impugned rejection of registration application was unjustified - Commissioner of Income-tax Exemption v. Jamiatul Banaat Tankaria - [2024] 168 taxmann.com 35 (Gujarat)
SECTION 12AA OF THE INCOME-TAX ACT, 1961 - CHARITABLE OR RELIGIOUS TRUST - REGISTRATION PROCEDURE
Scope of provision: Where assessee charitable society was established with object of imparting education and whatever earnings it received were also utilised for purpose of advancement of education, assessee was entitled to registration under section 12AA - Commissioner of Income-tax v. Yadvindra Public School Association - [2024] 167 taxmann.com 584 (Punjab & Haryana)
Sub-section (2): Section 12AA(2) does not recognize any deeming fiction, that an application for registration under section 12A is deemed to be granted, if it is not disposed of within six months - Commissioner of Income-tax-IV, Pune v. Dr. Kasliwal Medical Care & Research Foundation - [2024] 168 taxmann.com 91 (Bombay)
SECTION 32 OF THE INCOME-TAX ACT, 1961 - DEPRECIATION - ALLOWANCE/RATE OF
Plinths: Where assessee purchased property and thereafter constructed godowns and plinths, plinths constructed by assessee could not be treated as building and income received for letting out plinths could not be treated as income from house property, accordingly, depreciation could not be allowed on cost of plinths - Y. S. & Co-owners v. Income-tax Officer - [2024] 167 taxmann.com 585 (Punjab & Haryana)
SECTION 68 OF THE INCOME-TAX ACT, 1961 - CASH CREDITS
Deposits in foreign bank account: SLP dismissed against order of High Court that where addition was made to assessee's income on account of huge amount deposited in his foreign bank account in Geneva, since there was no material on record to show that said amount was deposited by assessee and justifiable explanation was given by assessee that said account belonged to his nephew residing in U.K who had got his signatures on some papers when he was in India, assessee being an agriculturist and only having a small holding of land apparently could not be in possession of such huge amounts which were also in foreign currency and, thus, impugned addition was unjustified - Principal Commissioner of Income-tax v. Joginder Singh Chatha - [2024] 167 taxmann.com 734 (SC)
SECTION 80G OF INCOME-TAX ACT, 1961 - DEDUCTIONS - DONATION TO CERTAIN FUNDS, CHARITABLE INSTITUTIONS
Time limit for applying for regular approval: Where assessee received provisional approval under section 80G(5) which was valid till assessment year 2024-25 and thereafter, assessee applied for regular approval on 26/09/2023, since assessee was to apply for regular approval before six months of expiry of provisional registration as per section 80G(5), impugned application filed by assessee was well within prescribed time limit - Shree Koteshwardeo Vishwasth v. Commissioner of Income Tax (Exemption) - [2024] 168 taxmann.com 74 (Pune - Trib.)
SECTION 92C OF THE INCOME-TAX ACT, 1961 - TRANSFER PRICING - COMPUTATION OF ARMS LENGTH PRICE
Adjustments - Interest: Where assessee had remitted share application money to its AE in UAE which was to be utilized for setting up a manufacturing plant, however, there was delay in allotment of shares due to non-receipt of approval from SAIF Zone Authority, TP addition proposed by TPO treating share application money as interest free loan/advance to AE and charging interest thereon could not be sustained - Aries Agro Ltd. v. Assessment Unit, NFAC - [2024] 168 taxmann.com 28 (Mumbai - Trib.)
SECTION 251 OF THE INCOME-TAX ACT, 1961 - COMMISSIONER (APPEALS) - POWERS OF (APPEALS) - POWERS OF
General: Commissioner (Appeals) is not vested with any power to summarily dismiss appeal for non-prosecution - Avdesh Jain v. Income-tax Officer - [2024] 167 taxmann.com 730 (Raipur - Trib.)
GOODS AND SERVICES TAX LAWS
GSTN issued advisory on registration applications for ‘Other Territory’ pertaining to continental shelf and exclusive economic zone
Editorial Note: The GSTN has issued an advisory for the applicants applying for new registration application and selecting the category of ‘Other Territory’ pertaining to the continental shelf and exclusive economic zone contiguous to the eastern and western coast of India in the tab of State/UT in Part-A of GST registration form.
SECTION 11 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 - LEVY AND COLLECTION OF TAX - EXEMPTION - POWER TO GRANT
Where no opportunity of personal hearing was provided before passing order due to failure of communication between consultant and assessee, order set aside and matter remanded for fresh consideration after providing hearing opportunity, subject to payment of 10% disputed tax - Ganesa Engineering Enterprises v. Deputy State Tax Officer - [2024] 167 taxmann.com 643 (Madras)
SECTION 17 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 - INPUT TAX CREDIT - CREDIT AND BLOCKED CREDITS, APPORTIONMENT OF
Where no input tax credit was available in ledger, blocking of Electronic Credit Ledger(ECL) under Rule 86A and insertion of negative balance in ledger would be wholly without jurisdiction and illegal - Maa Sharda Endeavour (p.) Ltd. v. State of Jharkhand - [2024] 167 taxmann.com 736 (Jharkhand)
SECTION 29 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 - REGISTRATION - CANCELLATION OF
Cancellation of GST registration order containing contradictory statements about assessee’s reply to show cause notice quashed for lack of application of mind; matter remanded for fresh consideration after allowing assessee to file reply and granting hearing opportunity - Shiv Kumar Sanjeev Kumar v. State of U.P. - [2024] 167 taxmann.com 681 (Allahabad)
Cancellation of GST registration based on vague show cause notice and order citing unmentioned grounds violates principles of natural justice, warranting restoration of registration - Saluja Electronics v. Commissioner of CGST and Central Excise Delhi East Commissionerate - [2024] 167 taxmann.com 711 (Delhi)
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
Non-speaking order rejecting detailed submissions without proper consideration cannot sustain; fresh adjudication directed with six-month timeline, failing which proceedings to lapse - Gujarat Co-Operative Milk Marketing Federation Ltd. v. Sales Tax Officer - [2024] 167 taxmann.com 669 (Delhi)
Where petitioner-assessee did not choose to reply either to notice issued under Section 61 or to notice issued under Section 73, despite, opportunity of hearing was given to petitioner-assessee by respondents-department, therefore, no interference was needed in procedure followed by respondents-department; Writ petition was disposed of - Shree Sai Nath Construction Company v. Union of India - [2024] 167 taxmann.com 710 (Allahabad)
SECTION 74 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 - DEMANDS AND RECOVERY - TAX OR INPUT TAX CREDIT INVOLVING FRAUD OR MISSTATEMENT OR SUPPRESSION
Allegations of unauthorized data access during GST raid and subsequent show cause notice require processing of complaint by police, consideration by GST authorities, and adjudication of show cause notice with opportunity for assessee's reply and personal hearing - R.K. Jain and Sons Hospitality Services (P.) Ltd. v. Union of India - [2024] 167 taxmann.com 742 (Delhi)
Where assessee did not avail opportunity of personal hearing nor submitted explanation clarifying discrepancies pointed out in show cause notice, order passed under section 74 was justified; writ petition was not maintainable on ground that efficacious remedy of appeal was available to assessee - Max Hair Clinic (P.) Ltd. v. State Tax officer - [2024] 167 taxmann.com 553 (Madras)
SECTION 75 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 - DEMANDS AND RECOVERY - GENERAL
Personal hearing mandatory under Section 75(4) before passing order under Section 73 and 122 of GST Act; non-compliance warrants order to be set aside and matter remanded - Anmol Traders v. Deputy Commissioner Auraiya - [2024] 167 taxmann.com 632 (Allahabad)
COMPANY AND SEBI LAWS
NOTIFICATION NO. S.O. 4845(E), DATED 07-11-2024
Companies with turnover above Rs 250 crore must get onboarded on ‘Trade Receivables Discounting Platforms’ by 31.03.2025
Editorial Note: In line with section 9 of the MSME Development Act, 2006, the Central Government has mandated that all companies registered under the Companies Act, 2013, with a turnover of more than Rs. 250 crores and all Central Public Sector Enterprises (CPSEs) be onboarded on the Trade Receivables Discounting System (TReDS) platforms as notified by the RBI. The onboarding process for these entities must be completed by March 31, 2025.
SEBI releases advisory on communication with ‘SEBI Officials’
Editorial Note: SEBI has advised all registered intermediaries / regulated entities implement measures requiring approval/ clarification from SEBI only upon receipt of explicit written approval or written clarification or communication from SEBI. Further, they are also advised to refer to the mechanism provided for under the SEBI (Informal Guidance) Scheme 2003 for seeking interpretive letters/ no action letters from SEBI, if required.
Period of 6 months for contra-trade restriction under PIT norms is calculated from completion date of share acquisition: SEBI Informal guidance
Editorial Note: A listed company sought SEBI's informal guidance on whether the date on which shares have been agreed to be acquired is the relevant date for computing 6 months in relation to contra-trade restriction as per Para 10 of Schedule B under Reg. 9(1) of SEBI (Prohibition of Insider Trading) Regulations, 2015. SEBI clarified that the relevant date for the computation of 6 months in relation to contra-trade restriction would be the date on which the acquisition/purchase of shares was completed.
FEMA BANKING AND INSURANCE LAWS
CIRCULAR NO. RBI/2024-25/88 FMRD.FMD.NO.06/14.01.006/2024-25, DATED 07-11-2024
RBI includes 10-year Sovereign Green Bonds as eligible for non-resident investment under Fully Accessible Route
Editorial Note: RBI has designated 10-year Sovereign Green Bonds issued in the second half of FY 2024-25 as eligible for non-resident investment under the Fully Accessible Route (FAR). Through FAR, certain specified categories of Central Government securities were opened fully for non-resident investors without any restrictions, apart from being available to domestic investors as well.
INSOLVENCY AND BANKRUPTCY CODE
NOTIFICATION NO. IBBI/2024-25/GN/REGXXX, DATED 07-11-2024
IBBI proposes inclusion of land authorities in Committee of Creditors Meetings
Editorial Note: IBBI has released a discussion paper on the issues related to Real Estate. The proposals outlined in the discussion paper include:
(a) inclusion of land authorities in Committee of Creditors (CoC) meetings,
(b) handling of cancelled land allotments in real estate insolvency cases,
(c) empowering CoC to facilitate the participation of associations of allottees as resolution applicants, and
(d) streamlining possession handover in real estate projects.
SECTION 5(8) OF THE INSOLVENCY AND BANKRUPTCY CODE, 2016 - CORPORATE INSOLVENCY RESOLUTION PROCESS - FINANCIAL DEBT
Where corporate debtor failed to repay advance amount taken from financial creditor and there was no dispute regarding fact that corporate debtor owed money to financial creditor, thus, NCLT rightly admitted section 7 petition against corporate debtor - Rahul H. Mehta v. Gajendra Investment Ltd. - [2024] 168 taxmann.com 32 (NCLAT- New Delhi)
SECTION 30 OF THE INSOLVENCY AND BANKRUPTCY CODE, 2016 - CORPORATE INSOLVENCY RESOLUTION PROCESS - RESOLUTION PLAN - SUBMISSION OF
Where resolution plan was approved by 100 per cent of voting share of financial creditors after considering its feasibility and viability and other requirements specified by CIRP Regulations since, said resolution plan complies with all provisions of IBC and did not contravene any of provisions of law for time being in force, revised final resolution plan submitted by resolution applicant was to be approved - State Bank of India v. Vaksh Steels (P.) Ltd. - [2024] 167 taxmann.com 751 (NCLT - Hyd.)
SECTION 238 OF THE INSOLVENCY AND BANKRUPTCY CODE, 2016 - OVERRIDING EFFECT OF CODE
Where interim moratorium applied only to personal guarantee of appellant and, not to partnership firm, since there were no grounds for NCLT to entertained appellant’s application to withdraw notice issued under rule 8(6) of Security Interest (Enforcement) Rules or to restrain respondent from auctioning property, impugned order passed by NCLT rejecting appellant’s application was justified - Ramesh Kumar Chugh v. Assets Care & Construction Enterprises Ltd. - [2024] 168 taxmann.com 44 (NCLAT- New Delhi)
ACCOUNTS AND AUDIT
ICAI announces revised classification criteria of Non-Company Entities for the applicability of Accounting Standards
Editorial Note: The ICAI has revised the classification criteria for Non-Company Entities (NCEs) under the Accounting Standards framework, simplifying the system from four levels to two categories: MSMEs and Large Entities. Large Entities must fully comply with all standards, while MSMEs receive specific exemptions similar to those previously given to Level II, III, and IV entities. Effective from April 1, 2024, this update aims to streamline compliance and enhance clarity for NCEs.
OPINIONS
World Tax News: Italy publishes guidance on tax residency for natural persons, companies and other persons and more… - Taxmann, Editorial Team - [2024] 168 taxmann.com 145 (Article)
Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015 : Overview and Recent Progressions - Bhoomija Verma, Advocate - [2024] 168 taxmann.com 117 (Article)
Substantial Question of Law u/s 260A of the Income Tax Act - Ananya Rath, Advocate - [2024] 168 taxmann.com 116 (Article)
Is it correct to insert Phrase "Under Section 74" into Rule 36(3) effective from 08.10.2024 when Section 74 only applies until FY 2023-24? - CPA CA Rajesh Kumar Khandelwal, Partner, Sanmarks & Associates, Chartered Accountants - [2024] 168 taxmann.com 144 (Article)
RD lowers ROC penalty on Co. & directors for inadequate MSME-1 disclosures, citing director’s health issues during filing - Prof R Balakrishnan, FCS – FCMA - [2024] 168 taxmann.com 118 (Article)
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