Issue No. 243 / August 17^th, 2021 

Dear Professionals,   

We are glad to present to you the 243^rd edition of ‘Taxsutra Database Bulletin’, where we keep you updated with current trends in the tax arena! 

Status of Journals Updated 

 ***********************

Expert Column 

The ‘The Taxation Laws (Amendment) Act, 2021’ was notified in Aug 13, 2021. It withdraws the retrospective amendments on taxability of indirect transfers. The bill is an outcome of India’s long-time tax disputes with UK firms Cairn Energy PLC and Vodafone Group. Indian economy is regarded as one with a huge potential on the global platform holding a promising future for any business enterprise and thus, India’s tax policy needs to be clear, unambiguous and consistent. 

CA Sachin Kumar B P (Chief Strategic Partner, Manohar Chowdhry & Associates), in this article, analyses the amendments and some of the potential issues required to be addressed. He states that the retrospective amendment was brought in to nullify the SC’s judgement and raise demand on Vodafone which met widespread disapproval from stakeholders,  and it was contended that such amendment was against the principle of tax certainty. He  states that India had initiated proceedings under the 2012 amendment in the case of 17 taxpayers including Cairn, New Singular Wireless, WNS Capital, Sanofi and SABMiller out of which lost to Cairn and Vodafone who took it to International Arbitration against the Indian Government. 

Mr. Kumar elucidates on the implications of the amendment and highlights that though the amendment seeks to bury the past disputes, it is not futuristic. However, concludes by saying “…India withdraws the retrospective amendment. This is a welcome step from the Government. Retrospective amendment after the Hon’ble SC’s judgement in favour of Vodafone was unfair and did not augur well for India’s image in the international arena”

Click here to the article titled: “Indirect Transfers – Impact of withdrawal of the retrospective amendment" 

***********************

Key Takeaways from Handpicked Rulings 

1) ITAT: Voluntary donation to Trade Federation not deductible expenditure, eligible u/s 80G - ITAT holds donation made to All India Gems & Jewellery Trade Federationnot a revenue expenditure, confirms CIT(A)’s order of treating it as donation eligible for deduction u/s 80G, Allows Assessee’s claim for repair & renovation expenses on leased premises as revenue expenditure; Assessee, engaged in manufacture and sale of gold, silver, platinum etc. availed membership of All India Gems Jewellery & Trade Federation, and paid Rs. 15.25 lacs to the federation as corpus donation; Assessee claimed the body was working for the interest of business Assessee was engaged in, and claimed the amount u/s 37(1) citing commercial expediency; Assessee further submitted that it had participated in a programme conducted by the federation and such payment of the such amount as donation was mandatory to participate therein; Revenue held that such donation was eligible for deduction u/s 80G and disallowed 50% of the claim which was confirmed by the CIT(A); On perusal of material on record, ITAT finds donation to be...............Click here to read and download ITAT Order

2) HC: Grants partial relief of interest u/s 234B to Trust - Madras HC allows writ petition, modifies the impugned order and grants partial waiver on interest u/s 234B; Assessee-Trust established in 1954 and claimed exemption from payment of tax; Post introduction of section 11(4) w.e.f AY 1984-85, Assessee was still under the bonafide belief that it was eligible to claim exemption from payment of income tax as 75% of surplus was deployed for educational purpose; The Division Bench of HC had allowed such exemption to the Assessee, against which Revenue filed an appeal before SC, and orders of the HC allowing exemption were reversed; Assessee claims that since the issue about claim of exemption was clarified by the SC in 2001; It remitted the amount of tax belatedly and approached the Revenue for grant of waiver of interest u/s 234B which was rejected; HC refers to...............Click here to read and download HC Judgment

3) ITAT: Exemption u/s 54F allowable on investment in spouse’s name, amount not invested in special account - Bangalore ITAT hold exemption u/s 54F cannot be denied in case where capital gain was not invested in CG account scheme within due date of filing return, and further where investment in new residential house is made in spouse’s name; Assessee was in receipt of certain immovable property as gift, which were sold during AY 2015-16 for Rs. 4.42 Cr, and invested Rs. 3.37 Cr upto October 31, 2017, and the balance was utilised in construction of residential property in spouse’s name on land owned by him; AO denied the exemption as amount of capital gain was not deposited in the CG account scheme within the due date of return, further on the grounds that investment was made in Assessee’s spouse’s name; On appeal CIT(A) confirmed AO’s action...............Click here to read and download ITAT Order

4) ITAT: Default TDS compliance prior to June1, 2015, late fee u/s 234E inapplicable - ITAT directs deletion of late fee u/s 234E for defaults in filing TDS statements being prior to June 01, 2015; Assessee-local body required to deduct and deposit TDS for Q1 of FY 2014-15 duly deducted and deposited the same, however filed the TDS statement for the first quarter on November 14, 2015; AO raised a demand for delay in furnishing the TDS statement; On appeal, CIT(A) confirmed the same; Assessee preferred an appeal with ITAT, but failed to appear despite issuance of notices, ITAT decides the matter basis available documents; ITAT observes Assessee challenged of the provisions u/s 200A empowering the AO to levy late fee u/s 234E , contending lack of machinery provisions, and finds the same tenable...............Click here to read and download ITAT Order

5) ITAT: No addition u/s 43CA, variation between stamp value, sale consideration less than 10% - Delhi ITAT holds addition made u/s 43CA not sustainable where difference between stamp duty value and actual sale consideration is less than 10% of the stamp duty value; Assessee-company entered into a collaboration agreement with another entity for construction of flats, under which Assessee was to get 35% of total revenue from sale of flats; During assessment proceedings, AO observed sale consideration in respect of a flat to be less than the stamp duty value, and accordingly made an addition to the extent of 35% of the difference between stamp duty valuation and sale consideration, which was confirmed by the CIT(A)...............Click here to read and download ITAT Order

***********************

Lot's more at Taxsutra Database  

Govt. notifies Taxation Laws (Amendment) Act, 2021 

Access all “Taxsutra Database Newsletters”, in case you have missed any! 

Access latest News....and more! 

----------------------------------------------------------------------------------------------

About Taxsutra Database!

“Taxsutra Database”, a true Income-tax research tool, is an archive of over 113160+ Income Tax Rulings reported across ITR, CTR, Taxman, DTR, ITD, TTJ, and ITR (Trib) and also includes recent ‘unreported handpicked rulings of SC, HC & ITAT’. It is a completely integrated service with the following features:  

• Comprehensive coverage of all latest cases powered by an advanced search engine to provide a seamless user experience; 

• Effective search results supported by active filters around Court Level, Location, Case Numbers and Citation; 

• Enhanced search feature, using the Unique Bulls Eye Application, by including "Exact words", "Any of these", "none of these" options.   

• Judicial “forward & backward reference” 

The Taxsutra Database comes at a very special Annual Subscription price of 4200+ GST AND includes an annual license to the Taxsutra Library.

Click Here to Sign up, make payment and join the Taxsutra Family. 

Copyright © TAXSUTRA. All Rights Reserved