Issue No. 186th / September 24th, 2019
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Expert Column:
  Recently the Government announced certain major tax concessions in an attempt to revive the Indian economy. Authors Vinay Deshmane (Director, TRS, BDO India LLP) & Dhwanil Shah, (Assistant Manager) discuss the amendments brought about by way of an ordinance viz. the Taxation Laws (Amendment) Ordinance 2019. The authors elaborate on the salient features of the Concessional Tax Regime (CTR), for existing and new manufacturing companies along with the relevant conditions to avail the same, rollback of enhanced surcharge and grandfathering Buyback Tax in case of listed shares. Comparing the CTR with the existing tax rates, the authors opine that “Reduction in tax rates will make India an attractive jurisdiction for making investments”. Thereafter the authors bring out how the CTR would have an impact on the preference of choice of entity from a LLP form to a corporate form. Speaking of the unavailability of MAT Credit to entities opting for the CTR, the authors suggest that “ since no timeline has been prescribed for exercising the option under section 115BAA, a domestic company having credit of MAT, may opt for CTR after utilising the said credit against the regular tax payable.” They further bring out that while the domestic Transfer Pricing provisions shall be applicable to new manufacturing companies opting for CTR, it is not applicable to other existing companies opting for the same. The authors sign off listing the benefits of the regime such as boost to foreign investments, higher profits being distributed to the stakeholders, stimulus to ‘Make in India’ initiative, etc. Click here to read the article titled “Economic Turnaround by sweeping reforms: Taxation Aspects and Issues”
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Issue No. 184th / August 26th, 2019
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Key Takeaways from Handpicked rulings
1. [TS-5607-HC-2019(GUJARAT)-O] : Relevance of ‘disposal of objections’ law u/s. 147 to Benami Act : Proviso of sec. 24(2) of the Benami Act and 147 of IT Act are completely different, AO not bound to dispose by passing a separate speaking order to the objections raised - HC dismisses assessee's petition, holds holds claim of the assessee to pass a separate order dealing with the objections as not supported by any provision of law; Examines sec.24, 25 and 26 and notes that “Section 24 of the Benami Act and the subsequent provisions are for the purpose of coming to conclusion as to whether the property in question is to be treated as benami property whereas operation of Section 147 of the Income Tax Act and the subsequent provisions, viz. Sections 148 to 153 would be operating while the process for assessing or reassessing of the income is undertaken by the concerned officer”... Click here to read the Ruling Copy.
2. [TS-6943-ITAT-2019(BANGALORE)-O] : Business expenses during liquidation : Running expenses incurred during liquidation of a company, allowable as a business expenditure - Bangalore ITAT allows assessee’s appeal for AY 2015-16, allows expenses (such as professional fees, audit fees etc.) as a deduction though the business of the assessee has come to a halt, observes that though the business came to a halt in the year 2010, the assessee was still liquidating its assets until the previous year; States that “All these expenses had to be incurred since the assessee was a company and it was required to maintain its legal status till the assets of the company are liquidated”, follows Karnataka HC judgment in Lawrence D’souza...
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3. [TS-6942-ITAT-2019(VISAKHAPATNAM)-O] : Completion Certificate vis-a-vis deduction u/s. 80-IB(10) : Completion Certificate mandatory requirement for claiming deduction u/s. 80-IB(10) - ITAT upholds CIT(A) order denying deduction u/s. 80-IB(10) absent completion certificate, evidence to establish that the project was completed in all respects as per the plan for AY 2007-08; Holds furnishing of completion certificate mandatory for purpose of claiming dedcution u/s. 80IB(10); Assessee’s case was reopened upon noting that though the assessee had claimed deduction u/sec. 80IB(10) during the pendency of the project, subsequently the assessee has not filed returns of income, thus, viewed that the assessee has not completed the project...
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4. [TS-6944-ITAT-2019(BANGALORE)-O] : Souharda co-operatives : Souharda co-operatives also a form of co-operative societies, eligible for deduction u/s. 80P(2)(a)(i) - ITAT rules in favour of assessee, allows deduction u/s. 80P(2)(a)(i) to a ‘souharda co-operative’; Refers to the definition of co-operative society and observes that any co-operative society registered under any other law of any State for registration of co-operative society is also regarded as co-operative society under the Act, states that ‘Souhardas’ also operate on the principle of co-operation and infers that “Cooperative Societies and Co-operatives are all founded on the principle of cooperation.”...
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5. [TS-6942-ITAT-2019(MUMBAI)-O] : Royalty Payments : Payments made for obtaining access to the information, not resulting in acquisition of any capital asset, are revenue in nature - ITAT allows assessee’s appeal, holds royalty expenditure to be revenue in nature and thus, allowable u/s. 37(1); Notes that the assessee made the payments only for obtaining access to the information, which does not become the property of the assessee as there is no purchase of technical know how and the title and ownership has not been transferred to the assessee, follows SC decision in Ciba of India; Observes that “under the agreement, the assessee did not become entitled exclusively, even for the period of agreement, to the patents and trademarks of the licensor, it had merely assessed to the technical knowledge and experience, which the licensor commanded and was a mere licence for a limited period of the technical knowledge with the right to use the patent and trademarks.”...
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CBDT Updates:
 1. CBDT clarifies on eligibility of small startups to avail Sec. 80-IAC tax holiday
2. CBDT directs quoting of 'DIN' in all Departmental communication from October 1st
3. MOF : Government withdraws enhanced surcharge on tax payable on transfer of certain assets
4. CBDT rebuts incorrect reports about Income Tax notices to Durga Puja Committees
5. Income tax department unearths Rs 700 crore undisclosed income in Tamil Nadu
6. CBDT simplifies the process of assessment in respect of Startups
7. CBDT further enhances monetary limits for filing Departmental appeals before ITAT / Courts
Click here to read more latest news |
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Issue No. 182nd / April 23rd, 2019
Key Takeaways from Handpicked rulings
1. [TS-5140-HC-2019(BOMBAY)-O] : Delay in filing application before CBDT for condonation of delay in filing ROI : HC dismisses assessee’s writ petition against CBDT’s order rejecting its plea for condonation of delay in filing the return of income for AY 2008-09; Observes that, quite apart from delay in filing the return, the assessee also had to demonstrate why the application for condonation of delay could not be filed for as long as six years, which it failed to demonstrate satisfactorily; Hence, opines that “the petitioner has not been prompt in pursuing the remedies on the ground of limitation and latches”; Click here to read the Ruling Copy 2. [TS-5141-HC-2019(MADRAS)-O] : Appeal dismissal by ITAT for want of prosecution : A legal and binding responsibility lies upon the Tribunal to decide an appeal on merits irrespective of the appearance of the assessee or his representative before it - HC allows assessee’s appeal, sets aside ITAT order and directs ITAT to decide the matter afresh on merits in accordance with law; Holds that ITAT erred in dismissing assessee’s appeal for want of prosecution without touching upon merits of the case and then further in dismissing the Miscellaneous Petition filed for recalling the ex parte order; Considering the enabling powers in the words 'as it thinks fit' employed in Section 254 read with Rule 24 of the ITAT Rules, explains that “Even if the assessee could not appear, the Tribunal could have decided the appeal only on merits, ex parte, after hearing the Revenue Side but, the dismissal of the appeal for want of prosecution is not only illegal but also entails further litigation” Click here to read the Ruling Copy
3. [TS-5798-ITAT-2019(MUMBAI)-O] : Reassessment / Issue of shares at premium : Mere issuing of shares on premium, cannot be a reason to believe for re-opening of assessment in absence of adverse allegation more particularly when the receipt is on capital account - ITAT holds reassessment for AY 2009-10 as bad in law; Noting that assessee had submitted all the relevant details which were examined by the AO in the original assessment proceedings, states that the reassessment is “nothing but a change of opinion on the same set of facts and cannot be resorted to u/s 147”; Also notes that the AO has recorded and proceeded on factually incorrect facts such as premium amount, no of shares etc. and thus, holds the reassessment proceeding as illegal and liable to be quashed; Follows precedents;
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4. [TS-5109-HC-2019(MADHYA PRADESH)-O] : Mere non-filing of Income Tax Return does not automatically dislodge the source of income of a person - HC in a criminal case under Negotiable Instruments Act while dealing with a dispute on a dishonoured cheque, examines the relevance of Income Tax Returns for establishing source of income of a person alleging to have granted a loan, holds that mere non-filing of Income Tax Return by itself would not mean that the person claiming to have granted a loan had no source of income; HC clarifies that whether there was any loan transaction between the parties or not and whether there was any legally recoverable debt or not, is the subject-matter which can be ascertained in the light of entire case led by the parties;
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5. [TS-5802-ITAT-2019(PUNE)-O] : Interest on NPAs, Depreciation on Investment of a Co-operative Bank : Interest on NPAs of a cooperative bank not chargeable to tax; Depreciation on investment is allowable as a deduction- ITAT dismisses Revenue’s appeal, observes that prudential norms issued by RBI are applicable to Co-operative Banks and that interest on sticky advances cannot be said to be accrued and are hence, not taxable, follows decisions of Bombay and Delhi HCs in the cases of Deogiri Nagari Sahakari Bank and Shri Mahila Seva Sahakari Bank; Further, allows depreciation on investment, follows Bombay HC decision in HDFC Bank wherein it was held that though they have been shown as investments in the balance sheet as per RBI Guidelines, they are stock in trade and hence, if the market value is less than the cost price, in law, assessee is entitled to deductions and it cannot be denied by the authorities under the pretext that it is shown as investment in the balance-sheet
Click here to read the Ruling Copy |
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