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The battle for custody of tax refunds; No exemption u/s. 54B on investment made in the name of the spouse ....and lots more!!

May 21, 2020
Issue No. 206 / May 21th, 2020 
 
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We are glad to present to you the 206th edition of ‘Taxsutra Database Bulletin’, where we keep you updated with current trends in the tax arena!
 
Expert Column
 
The inordinate delays in the issue of refunds, particularly in the cash-crunch times of COVID-19 crisis, have prompted certain taxpayers to take the custody battle to Courts, latest ruling on the issue being in the case of Vodafone Idea Ltd by the Apex Court. 
 
BS Nagaraj and GL Rinitha, Chartered Accountants, in their article explore on the issue in light of the aforesaid ruling and provisions relating to processing of refunds and the recent legislative changes. The authors discuss the changes in law with amendments in Sec. 143(1D) which stated that processing of a return shall not be necessary, where a notice has been issued to the assessee under sub-section (2) and introduction of Sec. 241A which laid down provisions on withholding of refunds in certain cases. The authors further discuss the implications of the SC ruling in Vodafone and ponder “If the observations of the Hon’ble SC on the interplay between sections 143(1), 143(1D) and 143(2) as they stood prior to AY 2017-18,  are interpreted on a standalone basis to mean that once notice under 143(2) is issued, there is no requirement for 143(1) processing, it may lead to a conclusion that, there is no requirement for any discretion to be exercised by the AO”. The authors sign off stating that “While the law has since changed, the battle for custody of tax refunds is likely to continue before the Courts and the facts of each case would determine which party wins the battle!”
 
Click here to read the article titled – The battle for custody of tax refunds!
 
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Key Takeaways from Handpicked Rulings
 
1) Mere inclusion of son name as joint owner does not disentitle assessee for exemption u/s 54 - ITAT sets aside, lower authorities order restricting capital gain exemption u/s 54 to the extent of 50% of the claim made on the reasoning that the new residential house has been purchased in the name of assessee and his son;  ITAT notes that...... Click here to read and download ITAT order
  
 
2) Chapter VI-A benefits on expenses disallowed as they are forming part of CSR cannot be denied as that would lead to double disallowance - ITAT holds in favour of assessee, if the assessee is denied benefit of deduction u/s.80G, merely because such payment forms part of CSR, would lead to double disallowance, which is not the intention of Legislature; Rejects revenue submission that, expenditure incurred by an assessee on activities relating to CSR referred to in section 135 of Companies Act, 2013 shall not be deemed to be an expenditure incurred by assessee for purpose of business or profession and therefore, no deduction would be allowed for such expenditure; Explains that …. Click here to read and download ITAT order
 
3) HC: No exemption u/s. 54B on investment made in the name of the spouse - HC dismisses assessee's appeal, rejects Sec 54B exemption for investment in the name of spouse; Notes that assessee on sale of agricultural land, purchased a land worth his share, in the name of his spouse ......... Click here to read and download HC judgment
 
4) No prosecution initiation u/s 276C absent willful intent to evade payment of tax – HC quashes prosecution initiation u/s 276C, notes that assessee-petitioner voluntarily disclosed the undisclosed income during an inspection conducted u/s 132 and paid entire tax as demanded; HC holds that as per the.......... Click here to read and download HC judgment
 
5) Penalty cannot be levied u/s 271D on mere assumption of acceptance of loan / deposit – HC dismisses Revenue’s appeal, upholds ITAT order deleting the penalty levied u/s. 271D; Notes that according to the AO, the Assessee had accepted a loan or deposit in cash from one, Jivraj Desai, and therefore, a penalty u/s 271D was levied for contravention of section 269SS ......... Click here to read and download HC judgment
 
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