Vivad se Vishwas Special : Condonation of delay in appeal-filing by Courts to enable the Scheme benefit!
Issue No. 225 / February 23rd, 2021
The ongoing Vivad se Vishwas scheme, 2020 which was introduced with an aim to reduce pending direct taxes litigations, is very beneficial to both the taxpayers and the Revenue. One of the eligibility criteria for the scheme is that an appeal in case of the taxpayer is ‘pending’ at any appellate forum (CIT(A), ITAT, High Court, Supreme Court) as on 31st January, 2020 or the time limit for filing such an appeal had not expired as on 31st January, 2020. However, in practicality, there are many taxpayers who had not filed an appeal in time before 31st January, 2020 but thereafter desire to opt for the scheme. In such cases, the taxpayers have approached the Courts pleading a condonation of delay in order to enable them to opt for the scheme. Considering the benefits of the scheme to both the taxpayers and the Revenue, the Courts in many occasions have been liberal and granted the condonation of delay in filing an appeal and thereafter allowed the assessee to withdraw the same to enable the taxpayers to approach for the Vivad se Vishwas scheme, 2020.
We, at Taxsutra Database, have made an attempt to collate a few such recent rulings and believe that it will act as a useful aid to our readers.
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1) ITAT admits assessee's appeal condoning delay of 1000+ days as a 'special case', in order to enable the assessee to go for the Vivad se Vishwas Scheme (VsVs); ITAT notes that though the reason given by the assessee for filing the appeal is neither convincing nor satisfactory, since the assessee intends to go for VsVs and pay the resulting taxes and put an end to..............Click here to read and download ITAT order
2) HC: Allows assessee's writ challenging Miscellaneous Application dismissed by ITAT, directs restoration to original number considering assessee's VSVS route undertaking – HC holds that ITAT cannot reject Miscellaneous Application (MA) against ex-parte final order even if decided on merits, merely on the ground that the assessee had sought frequent adjournments before the matter was finally heard; Sets aside ITAT order passed in MA and restores to its original number in view of the undertaking given by the assessee that it would apply under the ‘Vivad Se Vishwas’ Scheme (VsVs) in the event the appeal is restored to its original number.........Click here to read and download HC Judgment copy
3) HC condones delay in appeal filing, adjourns case in view of assessee’s desire to apply under the VsVS – HC condones a delay of 280 days in filing of appeal by Revenue; Also, accepts assessee`s request to adjourn the main appeal considering its wish to file an application for settlement of disputes under the Vivad Se Vishwas Scheme, 2020; Adjourns the case to May 19, 2021.......... Click here to read and download HC order copy
4) ITAT condones delay in appeal filing, allows appeal withdrawal in view of assessee’s wish to settle dispute under VsVS - ITAT condones a delay of 460+ days in filing of appeal by assessee, considers assessee’s submission that he has decided to settle the dispute under Vivad Se Vishwas Scheme, 2020 and therefore, the appeal be admitted so that the assessee may avail the benefit of the same............... Click here to read and download ITAT order
5) ITAT condones delay in appeal filing, allows appeal withdrawal in view of assessee’s bonafide attempt to avail the VsVS - ITAT condones a delay of 100+ days in filing of appeal by assessee, notes that though the delay is not due to appropriate and convincing reasons however, considering the bonafide attempt of the assessee to avail the scheme, condones the delay of 118 days in the filing the appeal..............Click here to read and download ITAT order
Note: Taxsutra Database Insight on “Amnesty Scheme”
1) Taxsutra Database Insight - Admitted and Pending - Amnesty Scheme - Interpretation of the word "Admitted and Pending" - Part 1 – Click here to read
2) Taxsutra Database Insight: Amnesty Scheme - Effect of Pendency of Assessee and Departmental Appeal - Disputed Tax and Tax Arrears – Part 2 – Click here to read
3) Taxsutra Database Insight: Revised Avatar of ‘Vivad Se Vishwas’ – Part 3 – Click here to read
“Taxsutra Database”, a true Income-tax research tool, is an archive of over110965+ 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.
FCCB buy-back at discount, a capital receipt not exigible to tax; FB 2021 - Faceless ITAT, Capital gains on firms/AOPs & more!
Issue No. 224 / February 16th, 2021
Dear Professionals,
“Taxsutra Database”, a true Income-tax research tool, is an archive of over 110800+ 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 224th edition of ‘Taxsutra Database Bulletin’, where we keep you updated with current trends in the tax arena!
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Expert Column
Exploring and evaluating the proposal to introduce faceless ITAT, R.E.Balasubramanyam, (Partner, Balu & Anand, Chartered Accountants) states that the COVID pandemic ensured that all of us had a taste of virtual proceedings before it becomes the norm and has only hastened the process. The author discusses the SC decision in Gullapalli Nageswara Rao v. A.P.S.R.T. Corporation, AIR 1959 SC 308 which elaborated on the rule of “the one who decides must hear” and explained the usefulness of a personal hearing. The author opines that with the advancement of technology, if a person is enabled to put forth his arguments from any place without being physically present before the judges, then there is no reason why such a facility should not be treated as equivalent to a personal hearing. On this note the author expresses his hopes that “when the Finance Minister talked about faceless proceedings of the tribunal, she was in fact actually meaning a virtual hearing.”
Click here to read article titled – “Budget 2021: Courting A Faceless Future”
Section 45(4) of the Income Tax Act, 1961 is proposed to be substituted and section 45(4A) inserted vide the Finance Bill, 2021, with consequential amendment of section 48. CA Dindayal Dhandaria & CA Naveen Kumar Dhandaria explore the proposals and point out the anomalies therein. Noting that the receipt of capital asset is in the hands of the ‘specified person’ but the incidence of tax is on the specified entity which does not receive the capital asset but transfers it, the authors point out that “The provisions of section 2(47) have not been amended to take care of such an exceptional situation”. Further, they highlight that section 45(4A) is proposed to apply to “money” also and state that “By no stretch of imagination, money can be a “capital asset”. The definition of “capital asset” given in section 2(14) of the Act does not cover it.”
Click here to read article titled – “Budget 2021: Capital gains on firms/AOPs”
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Key Takeaways from Handpicked Rulings
1) ITAT: Amount deemed to be undisclosed for the AYs 2016-17 cannot be brought to tax for the AYs 2017-18 - ITAT deletes addition u/s. 69A for AY 2017-18 towards cash found in a locker during search, observes that assessee last operated the locker on 29.10.2015 and that there were no no locker operations between 01.04.2016 to 25.04.2017 (the date on which the locker was operated by the Revenue), i.e., the period relevant for the impugned year, i.e., AY 2017-18; Accordingly, holds that the issue of unexplained cash found during search can be considered in AY 2017-18..........Click here to read and download ITAT Order
2) ITAT: Buy back of foreign currency convertible bonds (FCCBs) at discount falls in the nature of capital receipt not exigible to tax - ITAT dismisses Revenue’s ground, upholds deldetion of addition towards buy-back of FCCBs on discount; Notes that it is undisputed that assessee is in manufacturing business and utilised the FCCBs for purchase of capital assets for the company and most of them being depreciable asset; Further assessee has satisfied the conditions of ...........Click here to read and download ITAT order
3) ITAT : Section 139 is to be read here as section 139(4) and not to be confined to section 139(1) alone for the purpose of deposit of capital gains in the designated bank account – ITAT sets aside lower authorises order, allows exemption u/s.54B towards purchase of another agricultural land; AO denied the said claim on the ground that the assessee did not furnish details of payment as well as Capital gain account maintained with a designated bank which was confirmed by the CIT(A) by relying on the decision of Bombay HC in case of “Humayun Suleman Merchant”; ITAT notes that the HC has infact observed that the requirement of depositing before the date of furnishing of return of Income u/s 139 has not to be restricted only to the date specified in Section 139(1) but would include all sub sections of S. 139 including sub-sec (4) and that the requirement of depositing ........Click here to read and download ITAT Order
Note: In [TS-5578-HC-2014(Karnataka )-O] HC upheld Sec 54F benefit despite non deposit of amount in capital gains account scheme (CGAS)
4) ITAT: Change in the method of accounting is permissible provided it’s genuine and not bogus - ITAT deletes addition made on the premise of fall in gross profit earned by the assessee despite increase in turnover, holds the allegation of reducing profit by obtaining non-genuine bogus purchase bills as wrong and not sustainable; Observes that during the year, assessee has changed its business vastly from export of colour stones to export of diamonds and it is a common fact that the profit margin in diamond is much lesser than in colour stones which ranged between 6% to 7%; Accordingly, opines that “in view of difference in the circumstances, the results of this year i.e. A.Y. 2010-11 cannot be compared to the results of earlier year as the complete nature of business is changed from this year.”; Further, noting that assessee has backed his purchases with evidences, holds that “the allegation of reducing profit by obtaining non-genuine bogus purchase bills .......Click here to read and download ITAT Order
Note: In [TS-5074-ITAT-2020(Mumbai)-O] ITAT held that assessee has the right to change method of accounting over the present method
5) Prohibition from filing a second application before Settlement Commission only when earlier application was ‘allowed’ to be proceeded with, no bar when application is ‘rejected’ - HC dismisses Revenue's writ against ITSC order, holds that there is no bar on filing of a second application before the Settlement Commission (ITSC), when the earlier application was ‘not allowed’ to be proceeded with u/s 245D(1) of the Act; Explains that Section 245K(2) of the Act prohibits a subsequent application, only when the assessee had earlier made an application under Section 245C and such an application has been ‘allowed’ to be proceeded with u/s 245D(1); Holds that there is no provision under the IT Act, disbarring the assessee from subsequently making an application after his original application was ‘rejected’ u/s 245D(1) and ‘not allowed’ to be proceeded with..........Click here to read and download HC Judgment
“Taxsutra Database”, a true Income-tax research tool, is an archive of over110800+ 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.
Budget 2021: Relief from double taxation for NRIs; HC admits writ challenging retrospective amendment to Section 115BBE; Prosecution u/s. 276C(1)...and lots more!
Issue No. 223 / February 3rd, 2021
Dear Professionals,
“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.
“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.
Deduction u/s 80JJAA – A must take incentive; Provisions of section 56(2)(vii) inapplicable to land held as stock-in-trade & more!
Issue No. 221 / January 4th, 2021
Dear Professionals,
We are glad to present to you the 221st edition of ‘Taxsutra Database Bulletin’, with a new feature “Judicial forward & backward reference”. This new feature aims to update readers about the judicial impact of a ruling in terms of the other rulings where it has been relied on, followed, distinguished etc. Every issue of the Database Bulletin will contain 10 rulings with judicial forward & backward references along with updates of current trends in the tax arena!
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Judicial forward & backward reference
1) Vembu Vaidyanathan (2019) 176 DTR 446 (Bombay) affirmed in, [TS-5198-SC-2019-O] on date of allotment for determining holding period of the property.
2) GULSHAN MALIK (2014) 102 DTR 354 (DELHI) affirmed in, [TS-5072-SC-2015-O] on “Booking rights” in flat shall be treated as acquired upon execution of buyer’s agreement with builder.
3) Reliance Petroproducts Pvt. Ltd. [2010] 322 ITR 158 (SC) relied in[TS-5185-HC-2020(BOMBAY)-O] on wrong claim is not at par with concealment.
4) Sudha Prasad [2005] 275 ITR 135 (Jharkhand) distinguished in, [TS-5232-HC-2020(DELHI)-O] on statutory obligation on legal heirs
5) Magadh Stock Exchange Association Patna HC followed Exide Industries [TS-5031-SC-2020-O], Clause (f) of Sec 43B, stands affirmed by SC
6) Foundation of Ophthalmic and Optometry Research Education Centre [2013] 355 ITR 361 (Delhi) affirmed in[TS-5037-SC-2020-O] on registration u/s.12AA subject to CIT's satisfaction of charitable 'objects'
7) P. M. S. Diesels v. CIT [2015] 374 ITR 562 (P&H) approved in[TS-5097-SC-2020-O] on Sec 40(a)(ia) disallowance for TDS default
8) Gujarat Narmada Valley Fertilizer and Chemicals Ltd. [2019] 416 ITR 144 (Guj) followed in[TS-6191-HC-2019(GUJARAT)-O] on Capital or revenue expenditure - Replacement of components of machinery
9) United Electrical Co. P. Ltd. v. CIT [2002] 258 ITR 317 (Delhi) relied on[TS-5539-HC-2020(Madras)-O] on Notice u/s 148, reopening the assessment
10) Jagran Prakashan Ltd. v. Deputy CIT (TDS) [2012] 345 ITR 288 (All) distinguished in[TS-5501-HC-2020(KERALA)-O] on proviso to Section 201, defaulted in deducting tax at the time of payment of interest
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Key Takeaways from Handpicked Rulings
1) HC: Time period of six months for filing rectification applications is from the date of passing the order u/s 245D and not from its date of receipt - HC dismisses assessee writ, holds that Section 245D(6B) creates an embargo on making an application for rectification after expiry of six months from the end of the month in which an order was passed; Notes that the order u/s 245D(4) was passed by the Settlement Commission on 28.11.2016; Thus, six months from the end of the month in which the order ..........Click here to read and download HC Judgment
2) ITAT: Accepts taxpayer's computation of cost inflation of asset from the date of allotment, not date of issue of possession certificate - ITAT rules in favour of assessee, reverses CIT(A) order, directs AO to consider the date of allotment of property i.e. 20.5.1986 for the purpose of determining the cost of inflation of the assets, while computing the cost of acquisition of property in terms of section 49; Notes that SC judgement relied by CIT(A) in the case Balbir Singh Maini have no application and it was delivered on different context with reference to Section 2(47)(v), taxability of capital gain on entering into a Joint Development Agreement (JDA); ITAT observes that it is not necessary that to constitute a capital asset the assessee must be the owner .............Click here to read and download ITAT Order
3) ITAT: Provisions of section 56(2)(vii) not applicable to plots of lands held as stock-in-trade - ITAT holds that stock-in-trade falls in the exclusion clause of the definition of ‘capital asset’ provided under section 2(14); Notes that the term ‘capital asset’ has been defined in section 2(14) of the IT Act and as per clause (a) of section 2(14) any stock-in-trade, consumable stores or raw material held for the purpose of business or profession is excluded from the definition of ‘capital asset’; Clarifies that once the properties in question did not fall in the definition ........ Click here to read and download ITAT Order
4) ITAT: Provisions of section 194-I not applicable when rent paid separately to each co-owner who have entered into a joint partnership agreement - ITAT holds that assessee should not be treated as assessee in default for short deduction of tax on rent payment to M/s. Sadhana Enterprises since the assessee has rightly deducted, collected and paid the tax on share of the rent paid to each of the co-owners; Notes that under a "Joint partnership agreement scheme" between the assessee and Sadhana Enterprises (Co-owners), rent of Rs.32,61,989/- was paid during the year and the payment was not made to .............Click here to read and download ITAT order
5) ITAT: Time limit for passing an order u/s 201(1) is two years from end of financial year in which statement of tax deducted at source filed - ITAT rules in favour of assessee, follows [TS-5170-HC-2016(Gujarat)-O] wherein it has been held that prior to section 201 was amended by Finance Act No. 2 of 2009, no time limit was provided for passing a order u/s 201(1). W.e.f. 01.04.2010 the time limit was provided that such order shall be passed within the two years from the end of the ...............Click here to read and download ITAT order
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Expert Column
Deduction u/s 80JJAA is a Game changer since Budget 2016 as the amended law is with a view to encourage employment generation.
Author CA Sunil Maloo (Managing Partner, Sunil Maloo & Co.) highlights that the benefit u/s. 80JJAA is an additional deduction of 30% of additional employee cost incurred in the previous year, for three AYs and a total Benefit of 90% including the relevant AY to the previous year in which such employment is provided. The author brings out certain differences pre and post benefit available in 2016 such as the fact that before 2016, benefit was available only if there is an increase of at least 10% in total number of workmen, which now stands removed. The author then discusses the applicability criteria and thereafter discusses definitions of key words such as Additional Employee Cost, Additional Employee Emoluments etc. The author signs off by stating that since Section 80JJAA has many technical conditions to be complied with, an attempt is made to decode the same in simple manner.
Click here to readarticle titled - “Tax Benefits on Employment Generation” - Deduction u/s 80JJAA – A must take incentive
“Taxsutra Database”, a true Income-tax research tool, is an archive of over110070+ 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.
ROI processed prior to June, 2015, fees u/s 234E cannot be levied; “Judicial forward & backward reference" and ....lots more!
Issue No. 220 / December 7th, 2020
Dear Professionals,
We are glad to present to you the 220th edition of ‘Taxsutra Database Bulletin’, with a new feature “Judicial forward & backward reference”. This new feature aims to update readers about the judicial impact of a ruling in terms of the other rulings where it has been relied on, followed, distinguished etc. Every issue of the Database Bulletin will contain 10 rulings with judicial forward & backward references along with updates of current trends in the tax arena!
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Expert Column
The word retrospective signifies looking back at, thus retrospective effect of law means giving effect to the amendment in the existing law before the date in which the changes/amendment was brought in.
Authors Rajesh Kumar & Anjali Jain, Advocates in their article discuss the nuances of the principle of retrospectivity under different laws. The authors elucidate that Statutes dealing with Procedure, in contrast to statutes dealing with substantive rights, are presumed to be retrospective unless such a construction is textually inadmissible. Speaking of the principle of retrospectivity in taxation laws, the authors state that general provisions regarding retrospectivity of amending acts, as applicable to other laws are also applicable to tax laws. They highlight that “A Validating Act validating any fiscal provision with retrospective operation is usually held not to be unreasonable or arbitrary. In the case of any Validating Act, the intention of the legislature is generally made sufficiently clear in the section or in the Act which is declared invalid on account of some flaw or defect which is within the competence of Parliament to rectify.”
Click here to read article titled – Retrospective Operations of Amendments in Taxation Laws
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Key Takeaways from Handpicked Rulings
1) ITAT: Return of Income processed prior to June, 2015, fees u/s 234E cannot be levied – ITAT holds that amendment brought in by Finance Act 2015 u/s 200A(c) w.e.f. 1.6.2015 is prospective in nature; Notes that though section 234E of the Act was in the statute prior to 01.06.2015, however, in absence of any enabling provision, no fee u/s 234E of the Act can be levied for late filing of TDS statement for any period prior to 01.06.2015; However, states that where the delay continues beyond 1.06.2015, the AO is well within his jurisdiction to levy fees u/s 234E for the period starting 1.06.2015 to the date of actual filing of the TDS return; Upholds the levy of fees u/s 234E for the period 1.06.2015 to the date of actual filing of the TDS return which is 22.07.2015 and deletes the balance fee so levied……… Click here to read and download ITAT order
2) HC: CBDT notification issued under a different provision of the Act cannot be applied for allowing deduction u/s. 54G against LTCG – HC dismisses assessee’s appeal, upholds ITAT’s order that notification issued by CBDT is applicable for tax credit certificates for shifting of industrial undertaking from urban areas u/s 280Y(d) r.w.s. 280ZA ………..Clickhere to read and download HC judgment
3) Provisions of Sec. 43B Constitutionally Valid; STT deducted, but not deposited with authorities attracts Sec. 43B - HC dismisses Assessee Writ, holds that the Section 43B is an exception to the mercantile system of accounting and is explicitly added to correct the mischief of claiming deductions without payment of taxes due even at a later stage; Holds that provisions of Section 43B squarely attractable if Security Transaction Tax (STT) deducted against the transaction of trading and not deposited with the authorities; HC notes that, the expression used is "same is actually paid by him"…………… Click here to read and download HC Judgment
4) SC: Dismisses Revenue’s SLP; HC ruled that Sec. 143(2) notice limitation period commences from original return date, not defective return correction date - SC dismisses SLP against HC order holding that date of filing of original return u/s 139(1) has to be considered for purpose of computing period of limitation under sub-section (2) of section 143 and not date on which defects actually came to be removed u/s 139(9)…….....Click here to read and download SC order
5) ITAT: Compensation received upon surrender of flat-booking right, attract capital gain tax; Grants Sec. 54 benefit – ITAT holds that excess compensation received on a refund from the builder in case of surrender of flats would attract capital gains tax, not income from other sources; Rejects Revenue’s submission that the incomplete, non-registered "letter of allotment" cannot be treated as an "allotment letter" for deciding ownership of capital asset, held that by virtue of the said allotment letter…… Click here to read and download ITAT Order
Note: SC in [TS-5072-SC-2015-O] dismissed Assessee’s SLP, booking confirmation letter irrelevant for determining Apartment “Booking Rights” acquisition; In another case of SC reported in [TS-5198-SC-2019-O] SC dismissed Revenue's SLP against HC-order considering the date of letter of allotment of flat over the date of sale agreement for determining holding period of the property;
4) PRIME SECURITIES LTD (2009) 28 DTR 119 (Bombay) followed in,[TS-6186-HC-2019(Gujarat)-O] on limitation period commences from original return date
5) A Daga Royal Arts (2018) 64 ITR 55 (Jaipur) followed in,[TS-8907-ITAT-2019(Kolkata)-O] on cash meets business expediency test.
6) TATA TELESERVICES (2016) 132 DTR 1 (GUJARAT) approved in, [TS-5050-SC-2017-O] on limitation u/s 201(3)
7) KUNAL STRUCTURE (INDIA) [TS-5141-SC-2020-O] Affirmed[TS-6186-HC-2019(GUJARAT)-O] on Sec. 143(2) notice limitation period
8) Sivagangai District Central Co-operative Bank [TS-5591-HC-2020(Madras)-O] applied[TS-5592-HC-2020(Madras)-O] on Cash withdrawals by member societies of District Co-operative Bank not income in their hands, thus not subject to TDS u/s. 194N
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Exploring and evaluating the proposal to introduce faceless ITAT, R.E.Balasubramanyam, (Partner, Balu & Anand, Chartered Accountants) states that the COVID pandemic ensured that all of us had a taste of virtual proceedings before it becomes the norm and has only hastened the process. The author discusses the SC decision in Gullapalli Nageswara Rao v. A.P.S.R.T. Corporation, AIR 1959 SC 308 which elaborated on the rule of “the one who decides must hear” and explained the usefulness of a personal hearing. The author opines that with the advancement of technology, if a person is enabled to put forth his arguments from any place without being physically present before the judges, then there is no reason why such a facility should not be treated as equivalent to a personal hearing. On this note the author expresses his hopes that “when the Finance Minister talked about faceless proceedings of the tribunal, she was in fact actually meaning a virtual hearing.”
Section 45(4) of the Income Tax Act, 1961 is proposed to be substituted and section 45(4A) inserted vide the Finance Bill, 2021, with consequential amendment of section 48. CA Dindayal Dhandaria & CA Naveen Kumar Dhandaria explore the proposals and point out the anomalies therein. Noting that the receipt of capital asset is in the hands of the ‘specified person’ but the incidence of tax is on the specified entity which does not receive the capital asset but transfers it, the authors point out that “The provisions of section 2(47) have not been amended to take care of such an exceptional situation”. Further, they highlight that section 45(4A) is proposed to apply to “money” also and state that “By no stretch of imagination, money can be a “capital asset”. The definition of “capital asset” given in section 2(14) of the Act does not cover it.”
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.
Author CA Sunil Maloo (Managing Partner, Sunil Maloo & Co.) highlights that the benefit u/s. 80JJAA is an additional deduction of 30% of additional employee cost incurred in the previous year, for three AYs and a total Benefit of 90% including the relevant AY to the previous year in which such employment is provided. The author brings out certain differences pre and post benefit available in 2016 such as the fact that before 2016, benefit was available only if there is an increase of at least 10% in total number of workmen, which now stands removed. The author then discusses the applicability criteria and thereafter discusses definitions of key words such as Additional Employee Cost, Additional Employee Emoluments etc. The author signs off by stating that since Section 80JJAA has many technical conditions to be complied with, an attempt is made to decode the same in simple manner.
Authors Rajesh Kumar & Anjali Jain, Advocates in their article discuss the nuances of the principle of retrospectivity under different laws. The authors elucidate that Statutes dealing with Procedure, in contrast to statutes dealing with substantive rights, are presumed to be retrospective unless such a construction is textually inadmissible. Speaking of the principle of retrospectivity in taxation laws, the authors state that general provisions regarding retrospectivity of amending acts, as applicable to other laws are also applicable to tax laws. They highlight that “A Validating Act validating any fiscal provision with retrospective operation is usually held not to be unreasonable or arbitrary. In the case of any Validating Act, the intention of the legislature is generally made sufficiently clear in the section or in the Act which is declared invalid on account of some flaw or defect which is within the competence of Parliament to rectify.”