“Taxsutra Database”, a true Income-tax research tool, is an archive of over 110610+ 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”
We are glad to present to you the 223rd edition of ‘Taxsutra Database Bulletin’, where we keep you updated with current trends in the tax arena!
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Expert Column
Income accumulated in Indian retirement funds such as PF & PPF are typically taxed in the year of withdrawal and not in the year of accrual. However, in the absence of a specific provision in the Indian tax law that deferred taxation even in respect of foreign retirement funds, the income earned from such funds (interest / dividends / capital gain distributions) would usually be treated as taxable in each year. In order to cure this mismatch, the Budget 2021 has proposed to insert Sec. 89A which as per author CA Rohini Ramya (Partner, Taxkode Consulting LLP) will hopefully provide relief to individuals caught in the dilemma of the differing tax treatments in India versus the country in which the fund is maintained. While the author welcomes the said amendment, he also ponders over the taxability of income that accrued into such foreign retirement funds in past years and until 31 March 2021 considering the amendment is made effect prospectively. The author also ponders over some other aspects such as the actual mechanism of the relief, Foreign Tax Credit for any foreign taxes paid on doubly taxed income etc.
Click here to read, article titled - Budget 2021: Relief from double taxation for non-resident Indians (NRIs) on Foreign Retirement Funds
Click here to read - Budget 2021: Memorandum Explaining the Provisions in the Financial Bill
Click here to read - Key Highlights & Summary of of Union Budget 2021-22
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Key Takeaways from Handpicked Rulings
1) HC admits writ petition challenging retrospective amendment to Section 115BBE, restrains coercive steps for recovery - HC admits petition filed by applicant engaged in the business of jewellery, bullion and construction, challenging constitutional validity of the notification dated 15.12.2016, wherein by insertion of the Taxation Laws (Second Amendment) Act, 2016 (No.48 of 2016), the provision as contained in Section 115BBE of the IT Act, 1961 came to be retrospectively amended w.e.f 1st April, 2017 applicable for the AY 2017-18; Opines that “Having regard to the nature of the litigation, more particularly, the challenge to the notification..........Click here to read and download HC Order
2) HC: Prosecution can be launched without waiting for assessment to be completed - HC dismisses assessee’s writ, refuses to quash prosecution under 276C(1) of Income Tax Act, holds that there is no requirement under the Act that the assessment proceedings should be completed before launching prosecution; HC notes that the complaint is not filed on the basis of any assessment order or assessment proceedings and it is filed in consequence of the concealment of share transactions in the return of income (ROI); It was noticed by the Department that the assessee had entered into share transactions during the year 2007-08, however he did not disclose any capital gain in the income tax filed for the AY 2008-09; Further in response of prosecution show cause notice, the assessee replied that he was under impression that TDS of Rs.3,53,22,371/- deducted on such income will be sufficient to meet the tax liability ................... Click here to read and download HC Order
3) HC: Cost of acquisition of shares converted from FCCBs to be calculated in terms of issue of Foreign Currency Convertible Bonds (FCCBs) and Ordinary Shares (through Depository Receipt Mechanism) Scheme, 1993 - HC confirms ITAT order that period of holding shares should be from the date of conversion into shares to the date of sale of shares; Notes that bonds issued to the petitioner were issued under the FCCB scheme and the conversion price was determined on the basis of price of shares at Bombay Stock Exchange or National Stock Exchange on the date of conversion of FCBBs into shares; HC holds that the cost of acquisition has to be determined ............... Click here to read and download HC Judgment
4) ITAT: MAT credit includes surcharge and education cess - ITAT allows assessee’s appeal and directs inclusion of surcharge / cess and then allow MAT credit; Assessee submitted given that Explanation 2 to section 115JB defining 'income tax' for the purposes of Explanation (a) inter alia includes surcharge and education tax, section 115JAA does not indicate that the word "tax" has to be understood in a manner different from its usage under the rest of the Act; Assessee submitted that had the intention of legislature been to provide MAT credit without including surcharge and cess, the same would have been specifically stated in the section itself, thus submitted that MAT credit should be provided inclusive of surcharge and cess; ITAT, agreeing with the assessee and following co-ordinate bench ruling in case of Consolidated Securities, sets aside CIT(A) order and remits the matter to the AO .............Click here to read and download ITAT Order
NOTE: Delhi HC as reported in [TS-5987-HC-2013(Delhi)-O]has admitted the appeal to examine whether surcharge and education cess paid by an assessee while paying minimum alternate tax u/s 115JB are to be included while allowing credit of MAT u/s 115JAA
5) HC: Conversion of ROM to Iron Ore Concentrate constitutes 'manufacture', EOU eligible for deduction u/s 10B - HC upholds assessee's (approved 100% EOU) stand that the process of magnetic separation of impurities from the raw material through beneficiation constitutes 'manufacturing' and hence eligible for deduction u/s 10B on export profits earned during the year; Assessee purchases Run-of-Mines (ROM) and 'manufactures' Iron Ore Concentrate Fines, using high intensity magnetic separator to increase the iron content through concentration, which is eventually exported; HC clarifies that ROM is a crude ore which is of no use until it is processed and made suitable for steel making industry and this purification process is nothing but manufacturing; HC refers to definition of the term 'manufacture' ..........Click here to read and download HC Judgment
Note: In [TS-6242-ITAT-2016(Bangalore)-O] held ITAT rejects Sec 10B deduction; ‘Run of Mines’ (ROM) process is only to make Iron ore convenient to use, cannot be called ‘manufacture’ or ‘production’ of an article or thing to qualify for deduction u/s 10B and ITAT co-ordinate bench in [TS-5374-ITAT-2018(Bangalore)-O] held that Processing of Run of Mines (ROM) into iron ore is a manufacturing activity and assessee is eligible for deduction u/s. 10B.
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About Taxsutra Database!
“Taxsutra Database”, a true Income-tax research tool, is an archive of over110610+ 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.
Income accumulated in Indian retirement funds such as PF & PPF are typically taxed in the year of withdrawal and not in the year of accrual. However, in the absence of a specific provision in the Indian tax law that deferred taxation even in respect of foreign retirement funds, the income earned from such funds (interest / dividends / capital gain distributions) would usually be treated as taxable in each year. In order to cure this mismatch, the Budget 2021 has proposed to insert Sec. 89A which as per author CA Rohini Ramya (Partner, Taxkode Consulting LLP) will hopefully provide relief to individuals caught in the dilemma of the differing tax treatments in India versus the country in which the fund is maintained. While the author welcomes the said amendment, he also ponders over the taxability of income that accrued into such foreign retirement funds in past years and until 31 March 2021 considering the amendment is made effect prospectively. The author also ponders over some other aspects such as the actual mechanism of the relief, Foreign Tax Credit for any foreign taxes paid on doubly taxed income etc.
