ITAT grants relief to 'Moin Qureshi'; No immunity from penalty, even if specific charge not mentioned in SCN issued u/s 274
Issue No. 209 / June 10th, 2020
Dear Professionals,
“Taxsutra Database”, a true Income-tax Research is an archive of over 107375+ Income Tax Rulings reported across ITR, CTR, Taxman, DTR, ITD, TTJ, and ITR(Trib) and which also includes recent ‘unreported handpicked ruling of SC, HC & ITAT’. A completely integrated service with all the latest cases powered by an advanced search engine to provide a seamless user experience; Search results supported by active filters around Court Level, Location, Case Numbers and Citation; A Unique Bulls Eye application to further enhance search by including "Exact words", "Any of these", "none of these"
We are glad to present to you the 209th edition of ‘Taxsutra Database Bulletin’, where we keep you updated with current trends in the tax arena!
***********************
Key Takeaways from Handpicked Rulings
1) ITAT: Profit from undisclosed activity to be undisclosed income for each assessment year - ITAT grants relief to 'Moin Qureshi' (exporter) for past assessment additions over 100cr on computation of undisclosed income undertaking clandestine transactions, holds peak credit / balance to be taxed and not the entire cash payment; ITAT holds that only the net profit is to be added to the total income and not the entire unaccounted sales and under no circumstances the entire amount of cash payments aggregating to Rs.143 crore can be added as it is the same cash which is getting circulated year after year during the entire block period; Notes that the orders of the lower authorities show that the search operation ............. Click here to read and download ITAT order
2) ITAT: Assessee cannot get the benefit of immunity from the penalty merely because there was no specific charge in the penalty notice issued u/s 274 or in the assessment order - ITAT rejects Assessee’s contention that there was no specific charge levied by the AO whether the assessee has “concealed the particulars of income or furnished inaccurate particular of income”; Notes that “the AO has mentioned the specific charge in the penalty order by stating that the assessee has furnished inaccurate particulars of income”; ITAT separately holds that addition/disallowances............. Click here to read and download ITAT order
Editorial Note: Recently HC held that defect in Show cause notice u/s 274 can be rectified u/s 292B, notice not invalid and ITAT in its order held that once the reason for levying penalty u/s. 271(1)(c) is mentioned in the assessment order, mere mention in the notice "for concealing the particulars of income" or "furnished inaccurate particulars of income" would not cause any prejudice to the assessee.
One may also refer following rulings in favour of Revenue on defect of SCN u/s 274
3) ITAT: In absence of any incriminating seized material / document, Sec68 additions cannot be sustained – ITAT rejects Revenue submission that additions u/s 153A can be made without having any incriminating material on record; Relies on jurisdictional HC ruling in Veerprabhu Marketing and distinguishes Revenue’s reliance on HC decisions in Sunny Jacob Jewellers and Dayawanti; ITAT upholds order passed by CIT(A) in holding the additions............. Click here to read and download ITAT order
4) Penalty u/s 271AAB is not mandatory – ITAT: In absence of any undisclosed income revealed by seized materials, income surrendered does not fall within the ambit of undisclosed income as defined in Section 271AAB; ITAT holds that penalty u/s 271AAB is not ipso facto as a result of surrender or disclosure of income during the course of search and seizure, until and unless such surrender of income falls in the definition of........... Click here to read and download ITAT order
5) ITAT: Penalty u/s 271(1)(c) cannot be imposed merely based on addition / disallowances made during the quantum proceedings – ITAT set aside the order passed by lower authorities, directs AO to delete the penalty levied by him u/s 271(1)(c), holds that for the element of income added in the quantum proceedings, there must be some ..........Click here to read and download ITAT order
***********************
Expert Column
The “cess” was introduced in the Finance Act, 2004, as “an additional surcharge” and the issue on deductibility of ‘education cess’ while computing income from business or professional has been a debatable one for a while now.
Author Prabhat Agarwal (Chartered Accountant), in his article, refers to the recent HC decision of SESA GOA LIMITED as reported in [TS-5087-HC-2020(BOMBAY)-O] which held that Education Cess and Higher and Secondary Education Cess is allowable as a deduction. The author highlights that HC relied heavily on circular no. F. No.91/58/66-ITJ(19), issued by the Board and intendment deciphered from the omission of word "Cess" on recommendation of Select Committee of Parliament from Income Tax Bill, 1961. Noting that the Revenue has not challenged the above ruling and other similar HC rulings in SC, the author opines that “this can be tricky and risky to conclude that the "Cess" is not in nature of Tax, hence deductible as expenditure in the year of payment”.
Access to a strong repository of Tax Rulings is a key requirement of tax professionals like yourselves. Taxsutra Database is a brand new addition to the Taxsutra bouquet of services. Largely known for its world class real time news and updates service, Taxsutra brings to you a comprehensive, easy to use Database service which offers the following features:
Over 107375+Income Tax Rulings reported across ITR, CTR, Taxman, DTR, ITD, TTJ, and ITR(Trib) and which also includes recent unreported handpicked ruling
Completely integrated service with all the latest cases powered by an advanced search engine to provide a seamless user experience
Search results supported by active filters around Court Level, Location, Case Numbers and Citation
A Unique Bulls Eye application to further enhance search by including "Exact words", "Any of these", "none of these"
The Taxsutra Database comes at a very special Annual Subscription price of 4200 + GST AND includes a annual license to the Taxsutra Library.
“A Probe into 115BAB”; “Secondment of employees and tax litigation – A perpetual battle" – Part 3
Issue No. 208 / June 4th, 2020
Dear Professionals,
“Taxsutra Database”, a true Income-tax Research is an archive of over 107350+ Income Tax Rulings reported across ITR, CTR, Taxman, DTR, ITD, TTJ, and ITR(Trib) and which also includes recent ‘unreported handpicked ruling of SC, HC & ITAT’. A completely integrated service with all the latest cases powered by an advanced search engine to provide a seamless user experience; Search results supported by active filters around Court Level, Location, Case Numbers and Citation; A Unique Bulls Eye application to further enhance search by including "Exact words", "Any of these", "none of these"
We are glad to present to you the 208th edition of ‘Taxsutra Database Bulletin’, where we keep you updated with current trends in the tax arena!
***********************
Expert Column
Advocate Dharan Gandhi in Part 3 of his article discusses nuances further to reimbursement in cases of secondment of employees and examines the possibility of constitution of various forms of PEs upon such secondment. Considering that when senior employees are seconded, they are mostly given a place in India which is at their disposal, and carry out business of the foreign company from such place for a longer period of time, the author opines that they could constitute a ‘fixed place PE’ of business in India. Similarly, the author contemplates a possibility of a ‘Service PE’ also where the payment is not in the nature of FTS/FIS considering that its common that employees are seconded for providing services to AEs and would stay for a period longer than 90 days. The author also examines the Transfer Pricing implications in cases where in a MNC, a single entity employs such employees who are seconded worldwide, leading to business of such companies being providing of employees, the TP provisions would require such company to earn something more than mere cost.
Authors Sunny Bansal and Akanksha Gupta (Chartered Accountants) in their article unveil the issues and interpretations surrounding Sec. 115BAB recently introduced vide the Taxation Laws (Amendment) Act, 2019 providing a reduced rate of 15% for manufacturing entities. The authors analyse the ‘Elemental Terms’ used in the section. Pondering whether the section allows benefit to Job worker, Contract Manufacturer or the Company engaging such Job worker/Contract Manufacturer, the authors opine that various factors such as license ownership, raw material procurement, supervision, risks, degree of control etc., matter in this regard. Further, the authors examine if R&D activities conducted towards an IP held by the parent company would be challenged as an additional activity other than manufacturing. Thereafter, the authors apprise about the possible scrutiny in cases of SDT wherein the tax authorities might argue that as per sub section (6) of section 115BAB, the taxpayer (a new company) by way of a cost plus arrangement has produced more than ordinary profits which might be expected to arise in the business.
Access to a strong repository of Tax Rulings is a key requirement of tax professionals like yourselves. Taxsutra Database is a brand new addition to the Taxsutra bouquet of services. Largely known for its world class real time news and updates service, Taxsutra brings to you a comprehensive, easy to use Database service which offers the following features:
Over 107350+Income Tax Rulings reported across ITR, CTR, Taxman, DTR, ITD, TTJ, and ITR(Trib) and which also includes recent unreported handpicked ruling
Completely integrated service with all the latest cases powered by an advanced search engine to provide a seamless user experience
Search results supported by active filters around Court Level, Location, Case Numbers and Citation
A Unique Bulls Eye application to further enhance search by including "Exact words", "Any of these", "none of these"
The Taxsutra Database comes at a very special Annual Subscription price of 4200 + GST AND includes a annual license to the Taxsutra Library.
SC: No bar in law for a person dealing in land to also have investment in land; “Secondment of employees and tax litigation – A perpetual battle" – Part 2...and lots more!
Issue No. 207 / May 27th, 2020
Dear Professionals,
“Taxsutra Database”, a true Income-tax Research is an archive of over 107310+ Income Tax Rulings reported across ITR, CTR, Taxman, DTR, ITD, TTJ, and ITR(Trib) and which also includes recent ‘unreported handpicked ruling of SC, HC & ITAT’. A completely integrated service with all the latest cases powered by an advanced search engine to provide a seamless user experience; Search results supported by active filters around Court Level, Location, Case Numbers and Citation; A Unique Bulls Eye application to further enhance search by including "Exact words", "Any of these", "none of these"
We are glad to present to you the 207th edition of ‘Taxsutra Database Bulletin’, where we keep you updated with current trends in the tax arena!
*****************
Expert Column
Earlier in Part 1 of his article, Dharan V. Gandhi ( Advocate) deliberated on tax implications in respect of payments made by Indian companies to their overseas counterparts for secondment of employees, more particularly employees deputed at senior positions. In Part 2, the author discusses the legal jurisprudence rendered by the Indian Courts / Tribunals and extensively evaluates the angle of reimbursement of salary vis-a-vis FTS.
The author highlights that, reimbursement cannot be considered as income per se and therefore, the same cannot be taxed, irrespective of gross or net basis of taxation and remarks that, “once the payment is mere reimbursement of expenses, there arises no tax implication. The subsequent discussion of FTS and Permanent Establishment (‘PE’) is without prejudice to the argument of reimbursement”. In Part 3 the author shall deal with the angle of the secondment transaction vis-a-vis constitution of a Permanent Establishment, computation of profits and a flow chart.
Note: One may also refer to Taxsutra Database Insight, wherein we have compiled 16 rulings in Part 2 & Part 3 which interpret on whether reimbursement of cost towards the services rendered by deputed employees/seconded employees tantamounts to "making available", the technical knowledge to Indian entity & hence taxable as fees for included services; deductibility of salary expenses of seconded employees upon constitution of service PE, what is crucial for bringing to tax and lots more!
******************************************
Key Takeaways from Handpicked Rulings
1) No bar in law for a person dealing in land to also have investment in land - SC: Dismisses Revenue’s SLP challenging HC-order holding sale of non-agricultural land as long-term capital gains instead of business income; Earlier HC had rejected Revenue’s submission that the purpose and object of holding land could only be for business purposes and not as investment as the business of the assessee is of building construction and land developers and any gain / profit earned on sale of land ought to be taxed under the head 'business income' and not as 'capital gains'; HC had noted ...............Click here to read and download SC order
2) SC admits Revenue’s SLP challenging HC-order in case of Insurance Company - HC had dismissed Revenue’s appeal and relying on Delhi HC ruling in Oriental Insurance Co. Ltd. held that provisions of 115JB of the Act, which enables the companies to compute book-profit, may not be applicable to insurance companies......Click here to read and download SC order
3) Interim stay granted and garnishee proceedings placed under suspension till the disposal of the stay petition - ITAT suspends operations of all the garnishee notices to the bankers of the assessee, observes that “such an undue haste in recovery of the disputed demands, in respect of which the hearing of appeal as also the stay petition is already concluded, is indeed inappropriate”; Directs Revenue authorities not to resort to, or continue with, any other coercive measures to recover the disputed outstanding demands.........Click here to read and download ITAT Order
4) State controlled Society / Committees, constituted to implement the educational policy, to be treated as an educational institution and eligible for the benefit of exemption u/s 10(23C) - HC dismisses Revenue’s appeal,......... Click here to read and download HC judgment
5) Deduction u/s 54 allowable even if not claimed in the original return of income; Beneficial provision should be construed liberally - ITAT allows assessee’s appeal, remands issue back to AO with direction to consider the eligibility of the assessees` for deduction u/s 54F of the Act and allow the same if the assessee satisfies the conditions; Notes that in the original return of income, the assessee has not offered the capital gain to tax nor has he claimed deduction u/s 54F, however .......Click here to read and download ITAT order
Access to a strong repository of Tax Rulings is a key requirement of tax professionals like yourselves. Taxsutra Database is a brand new addition to the Taxsutra bouquet of services. Largely known for its world class real time news and updates service, Taxsutra brings to you a comprehensive, easy to use Database service which offers the following features:
Over 107310+Income Tax Rulings reported across ITR, CTR, Taxman, DTR, ITD, TTJ, and ITR(Trib) and which also includes recent unreported handpicked ruling
Completely integrated service with all the latest cases powered by an advanced search engine to provide a seamless user experience
Search results supported by active filters around Court Level, Location, Case Numbers and Citation
A Unique Bulls Eye application to further enhance search by including "Exact words", "Any of these", "none of these"
The Taxsutra Database comes at a very special Annual Subscription price of 4200 + GST AND includes a annual license to the Taxsutra Library.
The battle for custody of tax refunds; No exemption u/s. 54B on investment made in the name of the spouse ....and lots more!!
Issue No. 206 / May 21th, 2020
Dear Professionals,
“Taxsutra Database”, a true Income-tax Research is an archive of over 107240+ Income Tax Rulings reported across ITR, CTR, Taxman, DTR, ITD, TTJ, and ITR(Trib) and which also includes recent ‘unreported handpicked ruling of SC, HC & ITAT’. A completely integrated service with all the latest cases powered by an advanced search engine to provide a seamless user experience; Search results supported by active filters around Court Level, Location, Case Numbers and Citation; A Unique Bulls Eye application to further enhance search by including "Exact words", "Any of these", "none of these"
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!”
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
Access to a strong repository of Tax Rulings is a key requirement of tax professionals like yourselves. Taxsutra Database is a brand new addition to the Taxsutra bouquet of services. Largely known for its world class real time news and updates service, Taxsutra brings to you a comprehensive, easy to use Database service which offers the following features:
Over 107240+Income Tax Rulings reported across ITR, CTR, Taxman, DTR, ITD, TTJ, and ITR(Trib) and which also includes recent unreported handpicked ruling
Completely integrated service with all the latest cases powered by an advanced search engine to provide a seamless user experience
Search results supported by active filters around Court Level, Location, Case Numbers and Citation
A Unique Bulls Eye application to further enhance search by including "Exact words", "Any of these", "none of these"
The Taxsutra Database comes at a very special Annual Subscription price of 4200 + GST AND includes a annual license to the Taxsutra Library.
Taxation of E-commerce Players in India; Performance bonus does not form part of 'salary'; Guideline value is not the market value.....and lots more!!
Issue No. 205 / May 13th, 2020
Dear Professionals,
“Taxsutra Database”, a true Income-tax Research is an archive of over 107070+ Income Tax Rulings reported across ITR, CTR, Taxman, DTR, ITD, TTJ, and ITR(Trib) and which also includes recent ‘unreported handpicked ruling of SC, HC & ITAT’. A completely integrated service with all the latest cases powered by an advanced search engine to provide a seamless user experience; Search results supported by active filters around Court Level, Location, Case Numbers and Citation; A Unique Bulls Eye application to further enhance search by including "Exact words", "Any of these", "none of these"
We are glad to present to you the 205th edition of ‘Taxsutra Database Bulletin’, where we keep you updated with current trends in the tax arena!
Key Takeaways from Handpicked Rulings
1) ITAT: Guideline value is not the market value, it`s only guidance to determine the market value – ITAT holds that guideline value and comparable instances in the locality need to be taken into consideration while determining the fair market value (FMV); Directs lower authorities to find out the guideline value from the concerned registration authorities ............ Click here to read and download ITAT order
Editorial Note: Circle rates are only to act as a guide for the assessment of the duty chargeable on the value of any immovable property ........ Click here to read and download HC judgment
2) HC: Initiation of the period of limitation provided u/s 254(2) starts from the date of actual receipt of the order passed by Tribunal (ITAT) which is sought to be reviewed – HC allows Assessee`s writ, holds that Rule 24 of the ITAT Rules mandates ITAT to decide the appeal on merits and sans examination by ITAT on merits, there is no cogent reason for the ITAT not to entertain the application for recall; Notes that as the order passed by ITAT is not touching upon the merits of the case, it deprives the Court to evaluate, if any, substantial question of law u/s 260A of the Act, thereby impinging upon assessee’s right to get the issue decided by the final fact-finding authority ................ Click here to read and download HC judgment
3) Performance bonus does not form part of 'salary' for the purposes of computing HRA exemption u/s 10(13A); No HRA disallowances on rent paid over 10% of the basic salary – ITAT allows assessee`s (salaried individual) appeal, notes that lower authorities denied benefit of 10(13A) on the ground that any commission or bonus linked to the turnover or the performance has to be treated as salary and hence............. Click here to read and download ITAT Order
4) HC: Instruction of the CBDT cannot be forfeited, if it is against the statutory provision - HC holds that no retrospective benefit of Section 11 & 12, if an application for registration u/s 12A provided from the following financial year in which the application for registration is made and registration was subsequently granted; Sets-aside the order passed by the ITAT, rules in favour of Revenue; Notes that the benefit of registration could not have been extended for the impugned AY 2011-12,............. Click here to read and download HC judgment
5) No reason to deviate and disallow 100% of expenses without there being any change in facts for the impugned assessment year- ITAT deletes suo-moto disallowances of expenditure debited to the profit and loss account made by the Akshaye Khanna (Actor and film production) in his statement of total income; Notes that in the preceding financial year, the AO has made similar disallowances and the ITAT have ................. Click here to read and download ITAT Order
**********************
Expert Column
Recent developments in India concerning International Taxation, could be seen as an albatross around the neck for the non-resident e-commerce players. With an increase in compliance burden and potential increase of costs, many of the e-commerce players consider unilateral measures taken by India as a deterrent to an effective business model. In this regard,
Bharathi Krishnaprasad (Principal Associate, Lakshmikumaran & Sridharan) and Harshit Khurana (Senior Associate) in their article today discuss various provisions of Indian Income Tax as applicable to e-commerce players in India.
Briefly elucidating the provisions of equalisation levy as enhanced by Finance Act 2020, the authors state that considering that the levy has been introduced, not under the Income Tax law as tax on income, rather as an independent levy under a separate legislation, the non-resident e-commerce operators might be denied tax credits for the same. The authors also discuss the impact of the proposed profit attribution rules and Significant Economic Presence (SEP) under the domestic laws and opine that “these rules once implemented, will have significant impact on the traditional businesses as well.” Further with respect to the recently introduced Sec.194-O, the authors highlight that the provision is silent on the residential status and thus one may take a position that non-resident e-commerce operator should not be obligated to deduct tax since responsibility of TDS deduction is of ‘any person’ making the payment, which would only mean residents who have tax presence in India.
Access to a strong repository of Tax Rulings is a key requirement of tax professionals like yourselves. Taxsutra Database is a brand new addition to the Taxsutra bouquet of services. Largely known for its world class real time news and updates service, Taxsutra brings to you a comprehensive, easy to use Database service which offers the following features:
Over 107070+Income Tax Rulings reported across ITR, CTR, Taxman, DTR, ITD, TTJ, and ITR(Trib) and which also includes recent unreported handpicked ruling
Completely integrated service with all the latest cases powered by an advanced search engine to provide a seamless user experience
Search results supported by active filters around Court Level, Location, Case Numbers and Citation
A Unique Bulls Eye application to further enhance search by including "Exact words", "Any of these", "none of these"
The Taxsutra Database comes at a very special Annual Subscription price of 4200 + GST AND includes a annual license to the Taxsutra Library.
Author Prabhat Agarwal (Chartered Accountant), in his article, refers to the recent HC decision of SESA GOA LIMITED as reported in 
Advocate Dharan Gandhi in Part 3 of his article discusses nuances further to reimbursement in cases of secondment of employees and examines the possibility of constitution of various forms of PEs upon such secondment. Considering that when senior employees are seconded, they are mostly given a place in India which is at their disposal, and carry out business of the foreign company from such place for a longer period of time, the author opines that they could constitute a ‘fixed place PE’ of business in India. Similarly, the author contemplates a possibility of a ‘Service PE’ also where the payment is not in the nature of FTS/FIS considering that its common that employees are seconded for providing services to AEs and would stay for a period longer than 90 days. The author also examines the Transfer Pricing implications in cases where in a MNC, a single entity employs such employees who are seconded worldwide, leading to business of such companies being providing of employees, the TP provisions would require such company to earn something more than mere cost.
Authors Sunny Bansal and Akanksha Gupta (Chartered Accountants) in their article unveil the issues and interpretations surrounding Sec. 115BAB recently introduced vide the Taxation Laws (Amendment) Act, 2019 providing a reduced rate of 15% for manufacturing entities. The authors analyse the ‘Elemental Terms’ used in the section. Pondering whether the section allows benefit to Job worker, Contract Manufacturer or the Company engaging such Job worker/Contract Manufacturer, the authors opine that various factors such as license ownership, raw material procurement, supervision, risks, degree of control etc., matter in this regard. Further, the authors examine if R&D activities conducted towards an IP held by the parent company would be challenged as an additional activity other than manufacturing. Thereafter, the authors apprise about the possible scrutiny in cases of SDT wherein the tax authorities might argue that as per sub section (6) of section 115BAB, the taxpayer (a new company) by way of a cost plus arrangement has produced more than ordinary profits which might be expected to arise in the business.
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!”
Bharathi Krishnaprasad (Principal Associate, Lakshmikumaran & Sridharan) and Harshit Khurana (Senior Associate) in their article today discuss various provisions of Indian Income Tax as applicable to e-commerce players in India.