Our Updates 2024
21/04/2024
Arrest of CA or Advocate in GST matters
In the case of Akhil Krishnan Maggu Vrs DGGI [(2020) 32 GSTL 516 (P&H)], the hon’ble court held that a CA or an advocate cannot be arrested if he simply files GST Returns and not involved in fraud with his client. a significant ruling, the Delhi Income Tax Appellate Tribunal (ITAT) emphasized that the mere disallowance of expenditure or enhancement of returned income does not inherently warrant the imposition of a penalty under section 271(1)(c) of the Income Tax Act. This crucial decision came as the ITAT deleted the penalty in a recent case of Dion Global Solutions Limited vs ACIT (Case Number: I.T.A. No.7789/DEL/2018). The Bench, comprising Kul Bharat (Judicial Member) and Pradip Kumar Kedia (Accountant Member), underscored that the absence of specific allegations regarding the nature of default and the lack of satisfaction as contemplated under Section 271(1B) preclude the imposition of penalties. The ITAT observed that without firm satisfaction regarding the alleged default, the Assessing Officer (AO) cannot invoke Section 271(1)(c) of the Act.
In a remarkable feat, April 2024 witnessed the highest-ever GST revenue collection, soaring to an impressive ?2.10 lakh crore. This milestone marks a momentous 12.4% year-on-year growth, highlighting the robust economic activity in the country. According to the latest press release from the Ministry of Finance on May 1st, 2024, the surge in GST collections can be attributed to a substantial increase in both domestic transactions, up by 13.4%, and imports, which saw an 8.3% rise compared to the previous year. Breaking down the figures, the net GST revenue for April 2024 stands tall at ?1.92 lakh crore after accounting for refunds, showcasing a remarkable 15.5% growth from the corresponding period last year.
20/04/2024
Inheritance tax in US:
These days inheritance tax is in news. United States levies inheritance tax. Let us examine the same in more detail:
1. What are inheritance taxes?
An inheritance tax is a state levy on the assets an individual receives as part of an inheritance. The rules on inheritance tax vary depending on the beneficiary's relationship to the deceased, the value of the asset and the state the deceased resided in at the time of their death.
2. Is there a federal inheritance tax?
There is no federal inheritance tax. In fact, only six states tax inheritances.
3. Which states have an inheritance tax?
Six states currently impose an inheritance tax — Iowa, Kentucky, Maryland, Nebraska, New Jersey and Pennsylvania — although Iowa is eliminating its inheritance tax in 2025.??4. What are state wise regulations? Each state has different regulations regarding how much the tax is and who needs to pay it.
Iowa
The tax ranges from 1% to 4%. Spouses, children, stepchildren, parents, grandparents and great-grandparents, grandchildren and great-grandchildren are exempt. Charities are exempt up to $500. (Iowa is eliminating its inheritance tax in 2025.)
Kentucky
The tax ranges from 4% to 16% on assets over $500 or $1,000, depending on the relationship to the deceased. Spouses, parents, children, stepchildren and grandchildren and siblings are exempt.
Maryland
The tax rate is 10% on assets over $1,000. Spouses, children, parents, grandparents, grandchildren, siblings and charities are exempt. Maryland. is the state that imposes both an inheritance tax and an estate tax.
Nebraska
Parents, children, siblings and grandparents pay 1% on assets over $100,000. Aunts, uncles, nieces and nephews pay 11% on assets over $40,000. All other heirs pay 15% on assets over $25,000. Spouses and heirs under age 22 are exempt.
New Jersey
The tax ranges from 11% to 16%, depending on the value of the assets and the relationship with the deceased. Spouses, children, parents, grandparents, grandchildren and charitable organizations are exempt. Siblings and sons/daughters-in-law are exempt up to $25,000.
Pennsylvania
The tax is 4.5% for lineal heirs (children, parents and grandparents) on assets over $3,500, 12% for siblings and 15% for other heirs. Spouses, children under 21 and charities are exempt.
According to the latest data from the Income Tax department, almost half of Indians have a Permanent Account Number (PAN). It said that although there is still a difference in the number of male and female PAN holders, it is rapidly narrowing. 42.10 crore men and 31.05 crore women had PAN cards as of March 31, 2024. The data further stated that over 14 crore PANs are facing the threat of becoming in-operative as they have not been linked with Aadhaar (as on March 31). Over 74.67 crore PAN had been allotted as of March 31, 2024, according to the data, a 10% increase from the 67.67 crore recorded as of March 31, 2023. In addition, this number represents a sharp increase of roughly 2,500% over the 2.76 crore PANs that were issued as of March 31, 2014. Individuals made up between 97% and 98% of PAN holders, with a higher proportion of male than female holders. According to the data, male-female ratio is coming down. It was 1.96 in FY14. It was dropped to 1.69 at the end of FY19 and it was further dipped to 1.35 at the end of FY24.
19/04/2024
Important Judgments:
1) Contribution towards corpus fund of RWA is an advance payment; liable to GST at time of receipt: AAAR West Bengal in re: Prinsep Association of Apartment Owners
2) No GST on supply of teachers and lecturers to Schools/Colleges of municipality: AAR Karnataka in re: Crystal Infosystems & Services
3) Madras High Court set-aside order as assessee’s reply to notice wasn’t considered before confirming tax demand in Tvl. Sri Venkateswara Cements vs. State Tax Officer.
4) Madras High Court set-aside order passed without providing reasonable opportunity to assessee to produce documents in Tvl. Vela Steels vs. State Tax Officer.
5) Writ petition against best judgment assessment order passed by GST Officer without filing appeal is not maintainable. Rajasthan High Court in
Ashok Varandani vs. Central Board of Indirect Taxes and Customs, Jaipur
6) Transporter isn’t required to carry original tax invoice; HC quashes order imposing tax and penalty. Karnataka High Court in Divya Jyothi Petrochemicals Co. vs. Joint Commissioner of Commercial Taxes (Appeals)
7) Recovery proceedings initiated against assessee without issuing SCN and granting opportunity of being heard to be set aside. Bombay High Court in Prasanna Karunakar Shetty vs. State of Maharashtra.
8) CESTAT can’t adjourn matter beyond three times which is the maximum number statutorily provided. CESTAT Allahabad in Sanjay Prabhakar vs. Commissioner of Customs (Pre.)
Court: SUPREME COURT OF INDIA
Citation: SPECIAL LEAVE PETITION (CIVIL) DIARY NO (S). 36391 OF 2023
Parties: Commissioner of Income-tax v. Vantage International
Management Co.
Facts:
The case involved the taxation of a non-resident company, Vantage International Management Co., engaged in mineral oil exploration or production in India under Section 44BB of the Income-tax Act, 1961.
The dispute centered on whether reimbursement of service tax should be included in the taxable income under Section 44BB(2). The HC held that it should not be included.
The Commissioner of Income-tax challenged the HCs decision with a SLP in the Supreme Court.
Decision:
The Supreme Court, after considering the case and hearing arguments, dismissed the SLP, upholding the HCs decision.
The Court agreed with the HCs ruling that reimbursement of service tax should not be part of the taxable income under Section 44BB.
This dismissal meant that the HCs judgment in favor of the assessee remained in effect, and the case was concluded with the disposal of pending applications.
18/04/2024
Important Recent Gst rulings :
Judgement - Tax on credit notes issued taken in ITC in place of to be entered in GSTR-1
2024-VIL-352-MAD
M/s OASYS CYBERNETICS PRIVATE LIMITED Vs STATE TAX OFFICER
Date of Order – 12-04-2024
*HIGH COURT OF MADRAS*
The petitioner’s case is that the amount of tax against sale return had been adjusted in ITC account. Such transactions as to be made in GSTR-1 were not done. Accordingly, such transactions were not auto populated in GSTR-2A. The mismatch was occurred between GSTR-3B and GSTR-2A in petitioner account.
The petitioner stated that the credit notes were erroneously reported as Input Tax Credit and that there was no revenue impact as a consequence. The CA certificate was also submitted in this respect.
The officer did not agree to plea of the petitioner. The demand was raised on the ground that no such invoice/credit note were reported in GSTR-1. The petitioner failed to rectify his mistake in the returns.
*The case was remanded back for reconsideration*
• On examining the above findings, I find that the explanation of the petitioner was not duly examined from the perspective of ascertaining whether the amount reflected as ITC tallies with the value of credit notes issued by the petitioner. If such exercise had been carried out, it would become clear as to whether there was revenue loss by way of excess availment of ITC. Since such exercise was not carried out and findings were recorded confirming the tax demand merely because credit notes were not duly reported in GSTR 1 or in the auto populated GSTR 2A, the impugned order calls for interference on this issue.
• It is unclear as to why the certificate was rejected because no reasons are discernible from the impugned order.
In the case of M/S Loknath Construction private limited the Calcutta HC held that if the authority has admitted the fact that the recipient-appellant has made payment of the tax to the supplier against the transaction and if it is a case of the department that such tax has not been remitted to the State exchequer, the elementary principle to be adopted is to cause enquiry with the supplier and without doing so to penalise the appellant would be arbitrary, illegal and without jurisdiction – the impugned show cause notice and orders are set aside with a direction to the authorities to first proceed against the supplier and only under exceptional circumstances as clarified in the press release issued by the CBIC proceedings can be initiated against the appellant - the writ petition is allowed.
The Delhi High Court set aside the Demand Order after the Petitioner raised the issue that they had appeared before the Adjudicating Authority for a personal hearing, but this was neither recorded nor mentioned in the Order that was passed.
Facts of the Case
The petitioner challenged an order dated 29.12.2023, which followed a Show Cause Notice from 27.09.2023, demanding a tax obligation.
Despite attempts to comply, their documents were deemed unsatisfactory, and the petitioner was recorded as absent for a hearing, leading to the contested demand.
Issue:
The main was whether the demand was justified given the petitioner's claim of appearance and attempted compliance, marred by administrative errors.
Argument by the Petitioner :
The petitioner argued that they did appear for the hearing and had submitted a reply, but due to an office error, crucial documents weren't uploaded. They sought another chance to present their case fully, with all necessary documentation.
Respondent's Argument:
The respondent maintained that the petitioner's response was unsatisfactory and noted their absence at the hearing, justifying the demand based on procedural defaults.
Court Judgment :
Delhi HC set aside the impugned order, remitting the case for re-adjudication with instructions for the petitioner to submit all relevant documents and be given another hearing. The court made no comment on the merits of the arguments, preserving all rights.
Title: ELECTRA POWER TRANSMISSION SYSTSEMS vs COMMISSIONER DELHI GOODS AND SERVICE TAX
Court: DELHI HIGH COURT
Citation: W.P.(C) 4630/2024 & CM APPL. 19002-03/2024
Dated: 01-Apr-2024
Impact Analysis :
This judgment reinforces the principle of fairness in administrative proceedings, ensuring parties have a full opportunity to present their case.
Court: HIGH COURT OF BOMBAY
Citation: WRIT PETITION (L) NO.17026 OF 2023
Parties: Vinod Metal v. State of Maharashtra
Facts:
The petitioner, under Article 226 of the Indian Constitution, complained about GSTN Portal issues preventing them from filing an appeal under Section 107 of CGST Act. They made a voluntary CGST deposit under Section 73(5) and sought to use it for pre-deposit compliance under Section 107(6). The dispute revolved around the applicability of the voluntary deposit to fulfill the pre-deposit requirement.
Decision:
The court acknowledged the petitioner's argument that procedural rules should not obstruct appeal remedies. Referring to VVF India Ltd. v. State of Maharashtra, the court ruled that the voluntary deposit made under protest could be considered for fulfilling the pre-deposit requirement. It granted the petitioner permission to file an appeal within two weeks, allowing adjustments for the pre-deposit, and emphasized the need for adjudication on merits without time limitation objections.
HIGH COURT OF ALLAHABAD
Chemsilk Commerce (P.) Ltd. v. State of U.P.
SAUMITRA DAYAL SINGH AND
DONADI RAMESH, JJ.
WRIT TAX NO. 403 OF 2024: APRIL 9, 2024
Registration -Cancellation of – Show Cause Notice - Violation of national justice - Assessee's registration was cancelled on 6.5.2019 w.e.f. 31.1.2019 – Assessee filed petition against cancellation of its registration –
Held : Assessee was not obligated to visit GST
portal to receive show cause notices that might have been issued to it for 2017-18 through e-mode, preceding adjudication order passed in pursuance thereto – It was also not case of revenue that any physical/offline notice was issued to or served on assessee before impugned order came to be passed – No useful purpose might be served in keeping petition
pending or calling counter affidavit at this stage or to relegate assessee to forum of alternative remedy – Since essential requirement of rules of natural justice had remained to be fulfilled, impugned order was set aside [Section 29 of Central Goods and Services Tax Act, 2017/Uttar Pradesh Goods and Services Tax Act, 2017] [Paras 2, 3, 4 and 5] [In favour of assessee]
17/04/2024
Traders’ Federation challenges constitutionality of Section 43B(h) before Supreme Court for violating Article 14 & 19(1)(g)*
Taxsutra learns that All India Vyapar Mandal Union has filed writ petition before Supreme Court that challenges constitutional validity of Section 43B(h); The Petitioner primarily questions Section 43B(h) (inserted by Finance Act, 2023 w.e.f. 01.04.2024) for violating the fundamental rights of its members across India under Articles 14 and 19(1)(g); The Petitioner prays for interim stay on the implementation and operation of Section 43B(h) and ultimately a writ of mandamus for quashing the provision.
Section 43B(h) is a colourable legislation as clauses (a) to (g) deal with governmental or industrial institutions whereas clause (h) deals with private businesses.
Section 43B(h) infringes upon Article 19(1)(g) of micro and small enterprises from doing business on their own terms by granting the credit of more than 45 days to the buyers.
Section 43B(h) violates right to equality under Article 14 for micro and small enterprises as the same does not cover medium enterprises which also fall under MSMED Act.
Section 43B(h) contradicts the notion of limited governance on the citizens.
Section 43B(h) violates India's commitment before WTO.
Section 43B(h) affects the allowability of purchases which cannot be termed as mere expenditure as purchases along with sales constitute business which has been mistaken as an expenditure of business.
Section 43B(h) disregards the norm that RBI in export and import allows Letter of Credit for 90 days.
Section 43B(h) also disregards that credit period depends on the product cycle and in other laws acknowledge the credit period of upto 180 days.
The Finance Act, 2023 states that Section 43B(h) comes into effect from 01.04.2024 which means that transactions of Financial year 2024-25 would get affected. However, the Explanatory Notes to the Finance Act, 2023 states that the amendment is effective from Assessment year 2024-25 due to which transactions with micro and small enterprises for Financial year 2023-24 get impacted by the amendment. This contradiction will affect the assesses at large as their purchases made during Financial year 2023-24 may get disallowed under Section 43B.
The legislature overlooks the impossibility of managing huge working capital for complying with the requirements of Section 43B(h).
25/03/2024
1. Allahabad High Court has held that the Supreme Court in Union of India v. Ashish Agarwal had not issued a general mandamus quashing all notices issued under Section 148 of the Income Tax Act, 1961. The Court observed that the order of the Supreme Court was limited to those notices which had been challenged before the Apex Court and various High Courts in India.
2. In Union of India v. Ashish Agarwal, the Union Government had challenged the order of the Allahabad High Court quashing the reassessment notices issued by the Revenue under Section 148 as being barred by the Finance Act 2021 which had introduced new provisions regarding reassessment proceedings with effect from 01.04.2021.
3. The Supreme Court partly allowed the appeals filed by the Union of India, holding that notices of reassessment issued to all the assesee under Section 148 of the Income Tax Act shall be deemed to be issued under the newly added Section 148A. It was held that any order passed by any High Court regarding challenge to notices issued under Section 148 after 01.04.2021 shall be modified accordingly. However, no direction was issued regarding the notices which were not under challenge before any court.
4. Section 148 of the Act provides for issuance of notice to an assessee whose income has escaped assessment before passing reassessment order under Section 147. Newly added Section 148A provides for inquiry and opportunity of hearing prior to issuance of notice under Section 148.
5. Original assessment order of the petitioner for assessment year 2017- 18 was passed in 2019. Thereafter, reassessment proceedings were initiated under Section 148 by notice dated 31.03.2021. Final reassessment order was passed on 28.03.2022 which was not challenged by the petitioner and had attained finality.
6. Subsequently, the petitioner was issued another notice under Section 148 for initiating reassessment proceedings under Section 148 for assessment year 2017- 18. Petitioner challenged this initiation of re-assessment proceedings under Section 147 read with Section 148 vide notice dated 30.07.2022.
7. Counsel for Revenue argued that since the notice was digitally signed on 01.04.2021, it was vitiated by virtue of introduction of Section 148A as held in Union of India v. Ashish Agarwal. It was argued that the entire proceedings were vitiated.
8. The Court observed that the Supreme Court in Union of India v. Ashish Agarwal had not directed annulment of all notices including those which were not challenged before the Court. The Court held that reassessment notices issued under Section 148 of the Income Tax Act, 1961 which were not challenged before the Supreme Court in Union of India v. Ashish Agarwal were not quashed. Subsequent issuance of fresh reassessment notices under Section 148 for the same assessment year is without jurisdiction.
9. The bench comprising of Justice Saumitra Dayal Singh and Justice Donadi Ramesh held that parties did not dispute that “neither the petitioner challenged that reassessment order nor that order was revised by the Commissioner nor there was any declaration made by the Supreme Court in rem to annul or in all assessment orders other than those that may have been specifically under challenge in the proceedings before the Supreme Court.”
10. The Court held that the assessment order was passed on 28.03.2022 was not affected by the decision of the Supreme Court. Since there was no declaration in law for setting aside that assessment order, the Court held that fresh reassessment proceedings were wholly without jurisdiction and set aside. Accordingly, the writ petition was allowed. Case Title: M/S Arvind Kumar Shivhare vs. Union Of India And Another 2024 LiveLaw (AB) 249 [WRIT TAX No. - 1238 of 2022]
PAN Allotment Statistics up to 31.03.2024
Total PAN Card holders as on 31/03/2024 : 74,67,20,403
Individuals holds 97.97% PAN Card out of Total PAN Cards
Up to 31.03.2024 total 60,51,91,436 PANs have been linked with the Aadhaar.
Source - Income tax of india
24/03/2024
According to a recent update on 5 April 2024 by the Income Tax Department, Form 1, Form 10-IEA, Form 10IFA and Form 3AF has been released by the department.
1. Form 1: Leasing of aircraft by IFSC Units
According to the Notification 65/2022 Dated 16 June 2022, no deduction of tax shall be made under section 194-I of the Income-tax Act on payment of lease rent, made by a person (Lessee) to a Lessor being a Unit located in International Financial Services Centre (IFSC), for lease of an aircraft.
To avail the above benefit, the lessor has to furnish a statement-cum-declaration in Form No. 1 to the lessee giving details of previous years relevant to the ten consecutive assessment years for which the lessor opts for claiming deduction under subsection (1A) read with section (2) of the section 80LA of the Income-tax Act.
2. Form 1: Dividend exempt u/s 10(34B)
According to the Notification 52/2023 Dated 20 July 2023, no deduction of income tax shall be made under section 194 of the Income-tax Act from any income in the nature of dividend paid by any unit of an International Financial Services Centre, primarily engaged in the business of leasing of an aircraft (payer) to a company, being a Unit of an International Financial Services Centre primarily engaged in the business of leasing of an aircraft (payee).
To avail this benefit, the payee shall furnish a statement-cum-declaration in Form No. 1 to the payer giving details of previous year relevant to the assessment year in which the dividend income eligible for exemption under Section 10 (34B) of Income-tax Act is payable.
3. Form 1: Ship Leasing Business
According to Notification 57/2023 Dated 1 August 2023, no deduction of tax shall be made under section 194-I of the Income-tax Act on payment in the nature of lease rent, made by a person (lessee) to a person being a Unit of an International Financial Services Centre (lessor) for lease of a ship.
To avail this benefit, the lessor shall furnish a statement-cum-declaration in Form No.1 to the lessee giving details of previous years relevant to the ten consecutive assessment years for which the lessor opts for claiming deduction under sub-sections (1A) and (2) of section 80LA of the Income-tax Act.
4. Form 10-IEA: Exercise of option under Section 115-BAC (6)
According to Notification 43/2023 Dated 21 June 2023, the option to be exercised in accordance with the provisions of sub-section (6) of section 115-BAC by a person, being an individual or Hindu undivided family, or an association of persons (other than a co-operative society) or a body of individuals, whether incorporated or not, or an artificial juridical person referred to in sub-clause (vii) of clause (31) of section 2, for any previous year relevant to the assessment year beginning on or after the 1st day of April, 2024, shall be in Forms 10-IEA on or before the due date specified under sub-section (1) of section 139 for furnishing the return of income for such assessment year.
5. Form 10 IFA: Exercise of option under Section 115-BAE (5)
According to Notification 83/2023 Dated 29 September 2023, the option to be exercised in accordance with the provisions of sub-section (5) of section 115-BAE by a person, being a co-operative society resident in India, for any previous year relevant to the assessment year beginning on or after the 1st day of April, 2024, shall be in Forms 10-IFA.
6. Form 3AF: Preliminary expenses incurred under section 35D
According to Notification 54/2023 dated 1 August 2023, the statement containing particulars of expenditure required to be furnished under proviso to clause (a) of subsection (2) of section 35D by the assessee shall be in Forms 3AF for each previous year.
Form No. 3AF shall be furnished one month prior to the due date for furnishing the return of income as specified under sub-section (1) of section 139. (3) It shall be furnished to the Principal Director General of Income-tax (Systems) or the Director General of Income-tax (Systems), as the case may be, or any person authorised by the Principal Director General of Income-tax (Systems) or Director General of Income-tax (Systems).
23/03/2024
In a recent development, the Bombay High Court has ruled in favour of four employees of Maersk Line, the Indian arm of a Denmark-based shipping giant- The high court struck down a notice issued by the GST Intelligence that sought to impose a hefty tax liability and penalty of ?3,731 crore on these employees, despite the tax being allegedly payable by their employer. The employees had challenged the notices issued by the Joint Director of GST Intelligence in September 2023, which demanded an explanation as to why a penalty equivalent to the tax allegedly evaded by Maersk should not be imposed on them. According to Senior advocate Harish Salve, representing the employees, they were granted power of attorney to represent the foreign company before tax authorities due to its absence of establishment in India. He argued that the employees did not benefit from the Input Tax Credit (ITC) of ?1,561 crore, making it unjust to impose tax or penalties on them under the CGST Act. Salve emphasized that the employees were not involved in decision-making for Maersk nor were they responsible for its business operations. Their role was solely to represent the Denmark-based company before the GST Intelligence authorities, responding to queries during the probe initiated in July 2021 regarding alleged wrongful tax credit availing by Maersk. However, the GST department contended that the employees held responsibilities for Maersk’s Indian business and therefore could not evade their involvement. They alleged that the employees were complicit in the company’s tax evasion. In its verdict, the high court division bench of Justice GS Kulkarni and Justice Firdosh Pooniwalla sided with the employees, ruling that the penal provisions of the GST Act apply only to ‘taxable persons’ benefiting from covered transactions. The bench clarified that employees of a group company like Maersk cannot be considered ‘taxable’ or ‘registered persons’ under the CGST Act to retain such benefits. The high court bench concluded that the officer’s invocation of this provision against the employees was unjustified, leading to the striking down of the show cause notice. The decision emphasized that applying a provision inapplicable to individual employees was beyond jurisdiction.
The Punjab and Haryana High Court in the matter of Munjal BCU Centre of Innovation- has held that the assessee is not expected to keep the e-portal of the department open all the time so as to have knowledge of what the department is supposed to be doing.
22/03/2024
Order Exceeding Rs.10 Lakh Can’t be Passed by the GST & Central Excise Superintendent- The jurisdictional limit of the Central Excise Superintendent and the GST with respect to orders above Rs. 10,000,000 is addressed in the recent verdict rendered by the Allahabad High Court in the case of Mansoori Enterprises v. U.O.I. The court’s ruling clarifies the proper procedure and authority for passing such orders under the CGST Act. Mansoori Enterprises, the petitioner, contested an order dated November 20, 2023,passed under Section 73 of the Central Goods and Services Tax Act, 2017 (CGST Act) by the Superintendent, Central Goods and Services Tax and Central Excise, Range – Bahraich. The primary argument was based on a circular from the Ministry of Finance, Department of Revenue, Government of India, stating that the Superintendent lacked authority to make the order. The circular dated 9.2.2018 assigned jurisdiction to various authorities based on the maximum amount of Central Tax involved. According to this circular, the Superintendent’s power was limited to matters not exceeding Rs.10,00,000. However, the amount involved in this case was more than Rs.16,00,000, rendering the Superintendent’s order without jurisdiction. The respondent’s counsel acknowledged that the contested order was beyond the Superintendent’s authority in accordance with the circular after receiving instructions from the Assistant Commissioner, Central GST and Central Excise Division, Lucknow – IV, Barabanki. As a result, the court set aside the order and granted liberty to the respondents to proceed afresh in accordance with the law.
Activities To Be Completed Before 31st March 2024 From GST Standpoint
New Tax Invoice Series for FY 2024-25 – the taxpayers are advised to adopt a new tax invoice series unique for FY 2014-25 for each GST registration.
Register for E-invoicing – the taxpayers whose aggregate turnover exceeds more than INR 5 crores in FY 2023-24 are required to generate e-invoices from 01 April 2024 onwards, accordingly such taxpayers are required to register themselves for E-invoicing.
Filing of refund claim for FY 2021-22 – the last date for filing of refund application for the refund claims pertaining to FY 2021-22 is 31 March 2024.
Annual reconciliations for the FY 2023-24
GSTR-1 with GSTR-3B
GSTR-1 with E-way Bill
GSTR-1 with E-Invoice, if applicable
ITC of Books with GSTR-3B
ITC of Books with GSTR-2B/2A
GSTR-3B with GSTR-2B
Re-computation of reversal of Input tax credit under Rule 42 and Rule 43
21/03/2024
Checklist for 31st March, 2024
A. Income-tax
- Ensure 43B(h) compliance which deals with timely payment to MSME. Such payments have to be made within 45days/15 days as applicable.
- If turnover for FY 2023-24 exceeds Rs. 10 Crores, then, TDS provisions under section 194Q, TCS provisions under section 206C(1H) will become applicable for FY 2024-25.
- Obtain declarations from transporters for non-deduction of TDS under section 194C.
B. GST
- File Letter of Undertaking (LUT) for FY 2024-25. LUT has to be filed if you make exports of goods/services or supplies to SEZ units /developers without payment of IGST.
- Application to opt for composition scheme for FY 2024-25.
- GTA services providers need to file a declaration for opting to pay tax under forward charge mechanism for FY 2024-25. Recipients are recommended to obtain and maintain a record of such declaration from GTA to justify non-payment of tax under reverse charge mechanism.
- If turnover for FY 2023-24 has exceeded Rs. 5 Crores for the first time since inception of GST, then, generate and issue E-Invoice for supplies from 01st April, 2024.
- If payments to creditors are due for more than 180 days, then, reverse the input tax credit availed on such transactions.
- Start new invoice series from 01st April, 2024, unique for FY 2024-25.
- Reconcile the data filed in GST returns with books of accounts and pass necessary entries, if any. (Eg: Reconcile the turnover, Match balance in Electronic Credit/Cash Ledger with books of accounts, make necessary adjustment to ITC available in books but not appeared in GSTR-2B, reverse the excess ITC claimed, if any, discharge the RCM liability if any, missed during the year, etc…)
- Reconcile and/or account for the GST-TDS and GST-TCS credit in books of accounts.
The Maharashtra government has decided to extend the stamp duty amnesty scheme for the third time until June 30, 2024, providing relief to property owners. The Maharashtra government had said last year that the Scheme will be implemented in two phases to simplify its execution. The first phase started on December 1, 2023 and continued until January 31, 2024. The second phase began on February 1, 2024 and ends on March 31, 2024. Beneficial to Those looking to regularize their contracts where insufficient stamp duty was paid in the past. This extension allows for more flexibility for those looking to avail this amnesty scheme.
20/03/2024
RBI’s 1 Million $ Scheme for NRIs remitting funds abroad:
1. The Reserve Bank of India (RBI) has formulated under the FEMA Regulations, a pivotal avenue for the repatriation of funds exclusively for Non-Resident Indians (NRIs), Persons of Indian Origin (PIOs), Overseas Citizens of India (OCIs), and Foreign Nationals (referred to as “NRI/POI/OCI/Foreign Nationals”).
2. Under this scheme, individuals falling under the purview of NRI/POI/OCI/Foreign Nationals are granted the privilege to repatriate various assets of India which are as follows:
Proceeds from the sale of securities or immovable properties
Superannuation or PF benefits
Maturity proceeds of insurance policies
Gifts Received from Resident Individuals
Bank Balance savings, previous income, savings in India
Any other asset held in India in accordance with the provisions of FEMA,1999, or rules/regulations made thereunder.
3. Following are the benefits under the scheme:
No Tax Collected at Source (TCS) is applicable during the repatriation of funds under this scheme.
Borrowed funds are ineligible for repatriation under this scheme.
Repatriation of funds is exclusively facilitated through the Non-Resident Ordinary Rupee Account (NRO Account).
Taxes on income earned in India must be duly paid before repatriation.
Funds must be transferred solely to the individual’s overseas bank account, because third-party transfers are prohibited.
4. This scheme outlines a framework for the seamless transfer of Indian assets amounting to $1 million, approximately 8.3 crores in Indian rupees as of February 2024, within a given financial year.
Business support services are not technical services as per Article 13 of DTAA between India and UK
Shell India Markets Private Limited (WP No 10788 of 2012)
Facts:
1. Assessee 'Shell India Markets Private Limited' is engaged, inter alia, in the business of operating chain of retail fuel stations in India.
2. Assessee entered into cost contribution agreement for availing general business support services from its group company, Shell International Petroleum Company Limited, a UK resident.
3. It filed an application before AAR seeking determination of the tax liability on the payment to AE wherein it was held that the subject payment is taxable as FTS and thus, Assessee was held liable to withhold taxes under Section 195. Aggrieved, the Assessee preferred the instant writ petition.
Hon Bombay HC held as below:
1. The support services which have been provided are related to managerial services and are not of a technical nature.
2. As per Article 13 between India and UK, 'consultancy' necessarily relates to consultancy which makes available technical or any other knowledge, experience, skill, know-how or processes and does not relate to consultancy on managerial issues.
3. As per Article 13(4)(c)“consultancy services which are not of a technical nature are not taxable as fees for technical services. Thus, these business support services are not taxable as fees for technical services.
19/03/2024
The Federation of Indian Micro and Small & Medium Enterprises (FISME) is lobbying the Indian government ahead of the upcoming general election. The federation is urging policymakers to consider several key measures to support the MSME sector, which is the backbone of the Indian economy. FISME argues that currently, many entrepreneurs work from home due to the nature of their business. However, this informal setup prevents them from being recognized as legitimate businesses and hinders their access to government schemes and formal credit. Legalizing WFH would address this issue.
The Income Tax Department has warned stern action against employees of various government departments, including police department, in Jammu and Kashmir for allegedly indulging in large scale fraudulent refund claims. The issue was raised by the principal commissioner of income tax, J&K and Ladakh, prompting the finance department to issue a circular seeking filing of updated income tax returns (ITRs) by defaulter employees and withdrawing incorrect claims forthwith.
18/03/2024
IT-Portal inflated Income in Tax Notice; Rs.250 shown as Rs.25000- The Income-tax department‘s ‘Compliance Portal’ displays inaccurate/inconsistent financial information for various taxpayers, according to several complaints on social media and chartered accountants. the compliance site displays significantly inflated transaction values and advance tax liabilities. In this regard, the Income-tax Department stated on Twitter on March 11, 2024, “Based on feedback from taxpayers on the e-campaign for Advance Tax, the Department has identified certain inconsistencies in the securities market data (SFT-17) provided by one of the Reporting Entities.” The reporting body has been asked to submit a revised statement with new information. Therefore, the data on AIS will be updated.
Filing Income Tax Returns is a shared responsibility between the taxpayer and the Chartered Accountant. While CAs can offer valuable assistance and expertise, taxpayers are ultimately accountable for the accuracy and timeliness of their ITR filing. Understanding the roles and responsibilities of both parties is essential for a seamless tax-filing process. Seeking professional assistance from a CA is beneficial, but ensuring accurate information and active participation from the taxpayer is crucial for compliant and accurate ITR filing.
17/03/2024
Both Public Provident Fund (PPF) and Sukanya Samriddhi Yojana (SSY) are investing schemes backed by the Government of India.
Investment in both the schemes are eligible for tax deductions under Section 80C of the Income Tax Act, allowing individuals to claim deductions of up to Rs 1.5 lakh.
But there are differences between the two.
SSY is a scheme specifically for the welfare of girl children, aimed at securing their future, while PPF aims to build a retirement corpus.
Let’s understand them in detail.
What is PPF?
The government of India launched the Public Provident Fund (PPF) in 1965 as a retirement savings option for individuals working in the unorganised sector or those who are not covered by the Employees' Provident Fund scheme.
The goal of the PPF was to provide a way for these individuals to build a retirement corpus. The product is available at post offices throughout the country, making it accessible to many citizens.
The PPF has a 15-year lock-in period and offers a guaranteed interest rate on invested money. It also has tax benefits under Section 80C of the Income Tax Act, allowing individuals to invest up to Rs 1.5 lakh per financial year and claim deductions on those investments.
The current interest rate for the PPF is 7.1%.
Due to the guaranteed returns and low risk, the PPF is a popular choice among risk-averse investors.
What is SSY?
The Government of India's "Sukanya Samriddhi Yojana" was launched in 2015 as part of the "Beti Bachao Beti Padhao" campaign to encourage savings for the future and prosperity of girl children.
The SSY has 21 year lock-in period and offers you a guaranteed return on maturity. The minimum investment is Rs. 250, and the maximum is Rs. 1.50 lakh per year for a total investment tenure of 15 years.
The government sets the interest rate for the Sukanya Samriddhi Yojana every quarter.
As of the quarter ended, December 2022, the interest rate is 8% per year, compounded annually.
Physical presence in India is essential to constitute service PE, virtually providing services do not constitute a service PE: ITAT: Clifford Chance PTE Ltd. (ITA Nos. 2681 & 3377/Del/2023)
Facts:
1. During the relevant AYs, the assessee entered into legal advisory contracts with the Indian clients. In AY 2020-21, part of the advisory services were rendered remotely outside India and while there were situations where employees of the assessee travelled to India for rendering services. In AY 2021-22, the services were rendered remotely from outside India and no employees had visited India for provision of services.
2. Ld. AO passed final assessment order holding that the assessee constituted service PE based on physical presence of employees in India and also virtual service PE on the ground that in terms of para 6 of Article 5 of the India-Singapore DTAA what is important is the aggregate duration of provision of services by the non-resident within India and Singapore and duration of physical presence of the employees in India is not material. He further attributed 100% of the gross receipts amounting to Rs. 7,76,53,507/- to such alleged virtual service PE.
Delhi ITAT held as below:
1. Applying the provisions of Article 5(6)(a) to the present case, in our considered view to constitute a service PE actual performance of service in India is essential.
2. Accordingly only when the services are rendered by the employees within India with their physical presence during the financial year relevant to the AYs under consideration shall be taken into account for computing threshold limit for creation of a service PE of the assessee in India.
3. The Hon’ble Supreme Court in the case of E-funds IT Solutions Inc. (CA NO. 6082 OF 2015) observed that requirement of service PE is that services must be furnished “within India”.
4. The services have been furnished by the assessee only for 44 days in India after excluding vacation period, Business Development days and common days and accordingly the assessee does not constitute service PE in India as per India-Singapore DTAA during the AY 2020-21.
5. So far as AY 2021-22 is concerned, as discussed above physical rendition of services in India beyond the threshold period is a prerequisite for creation of service PE and as none of the employees of the assessee were physically present in India during the AY 2021-22, in our view, the assessee does not constitute service PE even in AY 2021-22.
Business Restructuring Amongst Foreign Group Entities To Eliminate Duplicate Corporate Procedure Is 'International Transaction' U/s 92B: Mumbai ITAT
Dimexon Diamonds Ltd vs ACIT- Case Number: ITA. No 2429/Mum/2022
Facts:
1. The assessee, engaged in diamond manufacturing/distribution, was a wholly owned subsidiary of Dimexon (India) Holding Pvt. Ltd. (DIHPL), which in turn was wholly owned by Dimexon International Holdings B.V., Netherlands (DIHBV).
2. The assessee entered into scheme of amalgamation with DIHPL, which was sanctioned by NCLT. Accordingly, assessee's holding company became DIHBV, and assessee paid purchase consideration for the merger to DIHBV in the form of equity shares, CCDs and cash.
3. The TPO took the view that assessee's valuation report had no scientific basis, and that fresh equity shares issued to DIHBV represent fair value of assessee's shares post-merger but consideration paid in the form of CCDs and cash is excessive payment and not at arm's length.
4. The TPO thus held that cash of Rs.100 crore paid to DIHBV represents deemed loan and computed interest thereon, and that ALP of interest paid on CCDs should be treated as NIL.
ITAT Mumbai held as below:
1. Business restructuring is not defined in the Act, but as per the OECD Guidelines, the business restructuring in the present case is an organizational change in the Dimexon Group.
2. Merely because the scheme of amalgamation appears to be fair and reasonable and not violative of any provision of law or contrary to public policy, the same doesn't mean that the consideration paid pursuant to the said scheme is also at arm's length price and if the TPO has proceeded to compute the arm's length price as per the provisions of Chapter-X of the Act the same cannot be construed to be sitting over the judgment of the Court/Tribunal in approving the scheme of amalgamation.
3. The valuation reports submitted by assessee cannot be considered for benchmarking of payment of merger consideration by adopting “other method” as NAM, since the purchase consideration, though stated to be determined by applying Net Asset Method, is based on management decision.
16/03/2024
Why has SEBI barred JM Financial from acting as a lead manager of debt securities?
Securities and Exchange Board of India (SEBI) on Thursday barred JM Financial from acting as a lead manager for any public issue of debt securities.
The restrictions have been imposed after the capital market regulator observed that regulatory norms were violated in the public issues of non-convertible debentures (NCDs) during the year 2023.
What were the findings of SEBI examination?
1. SEBI in its interim order said that it undertook a routine examination of the public issues of non-convertible debentures (NCDs) during the year 2023 for which JM Financial was one of the lead managers.
2. The regulator observed that in a particular issue, a significant number of individual investors sold the securities allotted to them on the day of listing itself.
3. The holding pattern of the securities showed that a very large percentage of securities issued changed hands on the day of listing as a result of which retail ownership came down sharply.
4. On further examination of the transactions on the day of listing of the said issue, it was observed that JM Financial Products Limited (JMFPL), a subsidiary of JM Financial, acted as counterparty to the trades of these individual investors and had also provided the funds deployed by these investors for subscribing to the issue.
5. JMFPL, subsequently, on the very same day, offloaded at a loss, a significant portion of the securities that it had acquired from these investors to corporate investors.
6. The examination also revealed that these investors had submitted their applications in the public issue through the stock broker JM Financial Services (JMFSL), another subsidiary of JM Financial.
CBDT has made amendments in Tax Audit Report: The Central Board of Direct Taxes (CBDT) has amended the tax audit form (Form 3CD & Form No. 3CEB) and the form for filing a tonnage tax application (Form 65).
The following are the key changes introduced in the forms:
1. Disclosure of expenses for violation of law in India or Outside India:
Clause 21 of Form 3CD seeks details of amounts debited to the profit and loss account, including capital, personal, advertisement expenditure, etc. This includes reporting of ‘Expenditure by way of penalty or fine for violation of any law for the time being force’. The CBDT has amended the clause to include expenditure for any purpose which is an offence or is prohibited by law or expenditure by way of penalty or fine for violation of any law (enacted in India or outside India).
2. Disclosure of expenditure for Compounding of Offences
Clause 21 further seeks details for “Expenditure by way of any other penalty or fine not covered above”. This field has been amended to include the expenditure incurred to compound the offences under the law whether in India or outside India, i.e., “Expenditure incurred to compound an offence under any law for the time being in force, in India or outside India”.
3. Amendment in Clause 26 for disallowance of delayed payment to MSEs:
Clause (h) of section 43B has been inserted to seek details of the delayed payments to Micro and Small Enterprises in violation of section 43(b)(h).
4. New disclosure of specified domestic transaction under section 115BAE(4)
Form 3CEB has been amended seeking particulars with respect to specified domestic transactions in the nature of any business transacted between the persons referred to in sub-section (4) of section 115BAE, which has resulted in more than ordinary profits expected to arise in such business.
5. Amendments with respect to IFSC and deduction claimed under section 80LA
Form 65 has been amended to include a new filed under “Verification” seeking certification that the applicant-company is a unit of an International Financial Services Centre and has filed the application within three months from the date on which the deduction under section 80LA of the Income-tax Act, 1961 is no longer applicable. Further, the applicant is required to specify the date on which such deduction was no longer applicable if the company availed deduction under section 80LA and date of qualifying company status.
(Notification No. 27/2024, dated 05-03-2024)
Section 263 proceeding based on mere audit objections without independent assessment is invalid: ITAT Jaipur- Pink city Jewelhouse Pvt. Ltd. Vs PCIT (ITAT Jaipur) Appeal Number : ITA No. 63/JP/2021
Facts:
1. It was found by the ld. PCIT that assessee is transferring semi-finished goods from the Mahapura Unit (Non-deduction claiming unit) to Sitapura Unit(SEZ Unit deduction claiming u/s.10AA) for onwards sale/exports from SEZ Unit. During survey proceedings u/s 133A of the Income Tax Act it was learnt that SEZ Unit did not make any value addition on the same.
2. The ld. PCIT noted that the AO had passed the assessment order without making necessary inquiries regarding eligibility & allowability of the deduction u/s 10AA of the IT Act. The PCIT, in his order under Section 263 of the Income Tax Act, held that the AO’s actions were erroneous and prejudicial to the interests of revenue.
ITAT Jaipur held as below:
1. On an examination of procedural aspects of the case, including the basis of the proceedings initiated under Section 263, It can be noted that the action was primarily based on revenue audit objections, which raised questions about the independence and validity of the PCIT’s decision.
2. A consistent approach in tax matters, especially when there is no material change to justify a different view, has to be maintained in tax matters and legal proceedings.
3. The AO while framing the assessment had taken a possible view. In fact, when the ld. AO has conducted the required enquiry and not violated any of the conditions mentioned for revision of order as required by Explanation 2 of Section 263 of the Act, the order passed by the Assessing Officer could not be deemed to be erroneous so as to be prejudicial to the interests of the revenue
4. The order passed by the PCITis hereby quashed.
Dumb documents cannot be a base for making Sec 69 additions without corroborative evidences: Delhi ITAT- RSWM Ltd. versus DCIT- Case Number: ITA No.145/Del/2021
Facts:
1. The assessee had purchased land during the captioned assessment years. A search was conducted on the assessee on 04/08/2016, wherein an estimated working was seized from the laptop of the employee of the assessee containing details of certain land which was registered in the name of the assessee.
2. The assessee was asked by the A.O to file details of land purchased along with the copy of the registered deed, proof of payment along with source of investment and charges paid for registration of the plot.
3. The AO observed that the assessee was confronted with the seized document, but assessee has not furnished any details.
4. As assessee failed to explain the source of cash payment of Rs.1,52,45,000/-, the said amount has been computed as cash payment made for the purchase of land which has been considered as unaccounted and the same has been added by the AO to the total income of the assessee U/S 69 of the Income Tax Act.
5. The assessee maintained that the AO has not made any enquiry from the seller of the land, or registering authority to substantiate that the cash payment has been made in transferring the land and so no addition can be made on account of the purported cash payment.
ITAT Delhi held as below:
1. At no point of time, the AO have made any enquiry from the seller of the land, or registering authority to substantiate that the cash payment has been made in transferring the land.
2. The said working seized from the laptop was 'incomplete estimation' and not ending final shape as certain information still to be required to complete the said estimation.
3. It is well settled law that the dumb documents having no evidentiary value cannot be taken as sole basis for determination of undisclosed income of the assessee. If the Department of Revenue wants to make use of dumb documents, then the onus on the Revenue Department to collect cogent corroborative evidences.
4. Since no opportunity of cross examination was given to the assessee, the appeal by assessee is allowed.
15/03/2024
Confession by the accused U/S 50 of PMLA is not a judicial confession and can only be treated as a corroborative evidence: Delhi HC- Sanjay Jain (BA No: 3807/2022)
The observations by the Hon Delhi HC while holding that the confession by an accused in his/her statement under Section 50 of the Prevention of Money Laundering Act (PMLA) cannot be used against another accused and can only be treated as corroborative evidence:
1. The proceedings under Section 50 of the PMLA may be judicial proceedings for the limited purpose mentioned in the Act but a confession made by an accused in his statement under Section 50 of the PMLA is not a judicial confession.
2. The Court cannot start with the confession of the co-accused to arrive at a finding of guilt. Rather, after considering all other evidence placed on record and arriving at the guilt of the accused, can the Court consider the statement of the co-accused to receive assurance to the conclusion of guilt.
3. There is no provision in the PMLA like Section 15 of Terrorist and Disruptive Activities Act, 1987 (TADA) or Section 18 of Maharashtra Control of Organised Crime, 1999 (MCOCA) which specifically makes confession of a co-accused admissible against the other accused under certain eventualities.
4. Therefore, Section 30 of the Evidence Act has to be invoked for consideration of a confession of an accused against a co-accused, abettor or conspirator charged and tried in the same case along with the accused… The expression `the court may take into consideration such confession' in Section 30 of the Evidence Act, signifies that such confession by the maker as against the co-accused himself should be treated as a piece of corroborative evidence.
5. The statements under Section 50 of the PMLA have to be taken at their face value, but in case any such statement is patently self-contradictory or two separate statements of the same witness are inconsistent with each other on material aspects, then such contradictions and inconsistencies will be one of the factors that will enure to the benefit of the bail applicant.
In the case of K.S. Chawla & Sons (HUF) Vs JCIT, the ITAT Delhi held that amounts considered as undisclosed income cannot simultaneously be considered as loans to attract penalties under Section 271D of the Income Tax Act.
Commerce ministry is in discussions with the RBI to facilitate e-commerce exports by liberalizing the Foreign Exchange Management Act (FEMA) guidelines, Santosh Kumar Sarangi, Director General of Foreign Trade (DGFT) said.
14/03/2024
Goods and Services Tax Network has issued an advisory regarding Introduction of New 14A and 15A tables. It is informed to all taxpayers that as per Notification No. 26/2022 – Central Tax dated 26th December 2022 two new Table 14A and Table 15A have been introduced in GSTR-1 to capture the amendment details of the supplies made through e-commerce operators (ECO) on which e-commerce operators are liable to collect tax under section 52 or liable to pay tax u/s 9(5) of the CGST Act, 2017.
Total number of registered enterprises on the government’s Udyam portal on Friday crossed the 4-crore milestone. According to the data from the portal, launched on July 1, 2020, over 4 crore (4,00,42,875) MSMEs have been registered with the MSME Ministry including 3.93 crore micro enterprises followed by 6.08 lakh small enterprises and 55,488 medium-sized enterprises.
The procedures and timelines for the grant of refunds after filing an application in FORM GST RFD-01 are clearly outlined under the GST framework. Upon filing the refund application in FORM GST RFD-01, an acknowledgement in FORM GST RFD-02 should be issued within 15 days if the application is complete. The date of generation of the Application Reference Number (ARN) for FORM GST RFD-01 is considered as the date of filing of the refund application. If deficiencies are noticed, a deficiency memo in FORM GST RFD-03 will be issued within the same 15-day period. The final sanction of the refund is made in accordance with the provisions of rule 92 of the CGST Rules. The proper officer may refund on a provisional basis 90% of the refundable amount in accordance with the provisions of rule 91 of the CGST Rules. Notably, there is no legal prohibition against the proper officer sanctioning the entire amount within 7 days of the issuance of the acknowledgement through the issuance of FORM GST RFD-06, instead of granting a provisional refund of 90% of the amount claimed through FORM GST RFD-04. If the proper officer is fully satisfied about the eligibility of a refund claim on account of zero-rated supplies and believes that no further scrutiny is required, a final order in FORM GST RFD-06 may be issued within 7 days of the issuance of the acknowledgement. In summary, the initial response to a refund application (either an acknowledgement or a deficiency memo) should be issued within 15 days of filing. Provisional refunds can be processed quickly, and in cases where the officer is fully satisfied, the entire refund amount may be sanctioned within 7 days of issuing the acknowledgement.
13/03/2024
In few cases, it has been found that the First Appellate Authority rejects the Appeal on the basis of non-submission of certified copy of the Original Order.
1. Orissa High Court
1.1 Atlas PVC Pipes Ltd. (2022)
Where petitioner had enclosed copy of impugned order as made available to it in GST portal while filing memo of appeal, non-submission of certified copy, was to be treated as mere technical defect; therefore,
its submission should be allowed
1.2 Shree Jaganath Traders (2021)
Where assessee against an order dated 18-8-2020 filed appeal before Appellate Authority within time on 13-11-2020 electronically, accompanied by a downloaded copy of order appealed against and
submitted certified copy of order late (13-11-202), Appellate Authority dismissed appeal for not being timely filed, order of Appellate Authority deserved to be set aside with a direction to decide appeal on merits.
1.3 Shree Udyog (2021)
Mere delay in enclosing a certified copy of order appealed against along with appeal should not come in way of petitioner's appeal for being considered on merits by Appellate Authority.
1.4 Trimurty Textiles (2024)
Appeal filed by assessee was rejected on ground of non-filing of certified copy of order appealed against. Assessee contended that in meantime assessee had already filed certified copy of order-in-original and also filed show cause reply,
but without taking same into consideration, impugned order had been filed - HELD : Impugned order was to be quashed and matter was to be remanded to Appellate Authority for rehearing of appeal.
2. Madras High Court
2.1 PKV Agencies (2023)
Where statutory appeal was filed electronically on time, non-submission of certified copy of order within time was to be treated as mere technical defect and to be accepted. ARR
3. Allahabad High Court
3.1 Visible Alpha Solutions India Private Limited
The failure to submit a certified copy within the prescribed time should not be grounds for dismissal of the appeal. ARR
4. Bombay High Court
4.1 JEM Exporter
Where appellant had not provided challan/proof of pre-deposit and certified copy of order-in-original nor was appeal signed by proprietor or signatory submitted authority letter, Commissioner (Appeal) could not reject appeal;
he had to issue a defect memo to appellant pointing out procedural defect and would give him adequate opportunity for rectify.
5. Punjab & Haryana High Court
5.1 Oaknorth India Pvt. Ltd.
Appeal was dismissed on ground that appeal was not accompanied with certified copy of impugned order as per rule 108(3) of Haryana GST Rules.
Where copy of assessment order was uploaded on common portal, same would tantamount to substantial compliance of rule 108 of CGST Rules so as to maintain appeal against assessment order.
12/03/2024
Common ITC Issues- Maximum Notices and Orders in GST are on the Issue of ITC.
Here are some general common issues related to the ITC and tentative replies or case law that you can use while drafting.
Issue-1: IGST claimed as CGST-SFGST or vice-versa*
You can use the judgments
1.1 Kerala High Court
1.1.1 Diva S.R (2024)
1.1.2 Jayakrishnan K.S. (2024)
Issue-2: ITC denied where GST Registration of your supplier cancelled retrospectively.*
You can use the judgments:
2.1 Madras High Court
2.1.1 Engineering Tools Corporation (2024)
2.1.2 Tvl .Cleon Optobiz Pvt. Ltd. (2024)
2.2 Calcutta High Court
2.2.1 Gargo Traders (2023)
2.2.2 Sanchita Kundu (2022)
2.2.3 LGW Industries (2021)
Issue-3: ITC mismatch as per GSTR-2A and GSTR-3B*
You can use the judgments:
3.1 Bombay High Court
3.1.1 NRB Bearings Ltd. (2024)
3.1.2 Anvita Associates (2024)
3.1.3 Railroad Logistics India Pvt. Ltd (2024)
3.2 Kerala High Court
3.2.1 Mina Bazar (2023)
3.2.2 Diya Agencies (2023)
Issue-4: ITC claimed through GSTR-9 instead of GSTR-3B*
You can use the judgments:
4.1 Madras High Court
4.1.1 Sri Shanmuga Hardwares Electricals (2024)
Issue-5: Where your ITC is denied because your Supplier has filed his return late (Sec. 16(4) on Supplier)*
You can use the judgments:
5.1 Kerala High Court
5.1.1 Unityooh Media Solutions Pvt. (2023)
5.1.2 Heena Medicals (2023)
11/03/2024
ITC mismatch as per GSTR-2A and GSTR-3B
Top 5 High Court judgments of 2024
1. Bombay High Court allowed the rectification of clerical error in GSTR-1 to restore Input Tax Credit, prioritizing fairness over technicalities. NRB Bearings Ltd. vs Commissioner of State Tax (14-Feb-2024)
2. Bombay High Court ruled that if sales invoices were not disclosed in Form GSTR-1, the assessee should rectify it with GST Authorities. Anvita Associates vs Union of India (15-Jan-2024)
3. Bombay High Court: Where assessee made an inadvertent error in submitting GST number of Mahindra & Mahindra (Rajasthan) in its form GSTR-1 instead of correct GST number of Mahindra & Mahindra (Orissa), said dispute was not a case where any loss of revenue would be caused to government as already tax had been paid, therefore rectification was to be permitted to assessee. Railroad Logistics India Pvt. Ltd. vs Union of India (15-Jan-2024)
4. Kerala High Court: Where assessee wrongly claimed IGST credit under CGST and SGST in GSTR-3B, revenue authority was directed to consider assessee's rectification application expeditiously. Jayakrishnan K.S. vs Union of India (03-Jan-2024)
5. Kerala High Court: Where assessee by mistake claimed entire IGST credit under heads of CGST and SGST instead of claiming it under head IGST and filed rectification application before GST Authorities, said application of assessee was to be considered and necessary order was to be passed. Divya S.R. vs Union of India (03-Jan-2024)
10/03/2024
Select Five Landmark Judgments of 2023
1) Kerala High Court in Chukkath Krishnan Praveen vs State of Kerala (08-Dec-2023)*
The petitioner asked for a Writ of mandamus to correct a *mistake in Form GSTR-3B by accounting input tax credit as IGST instead of SGST and CGST credit. High Court directed the department to consider the representation as a rectification application and issue necessary orders.
2) Madras High Court in Kavin HP Gas Gramin Vitrak vs The Commissioner of Commercial Tax* (24-Nov-2023)
The judgment is on relief from Section 16(4). Not notifying of Form GSTR-2 is clearly a ground to consider the petitioner`s claim of belated returns. Since the GSTR-2 was not notified, which is meant for claiming ITC, hence the petitioner could not claim the ITC within the prescribed time. It was held that in the absence of any enabling mechanism, the assessee cannot be prejudiced by not granting ITC. The respondents are directed to accept the belated returns and if the returns are otherwise in order and accordance to law, the claim of ITC may be allowed.
3) Kerala High Court in Divya Agencies vs The State Tax Officer* (12-Sep-2023)
Merely on the ground that in *Form GSTR-2A the said tax is not reflected should not be a sufficient ground to deny the assessee the claim of the input tax credit.*
4) Bombay High Court in Nirakar Ramchandra Pradhan* vs Union of India (11-Sep-2023)
The show cause notice cannot be an empty formality.* GST Registration cannot be cancelled merely by writing that registration being obtained by means of fraud, wilful misstatement or suppression of facts without providing the supporting evidence.
5) Andhra Pradesh High Court in Arhaan Ferrous and Non-Ferrous Solutions Pvt Ltd* vs Deputy Assistant Commissioner (03-Aug-2023)
This case was of Section 129 and 130. Responsibility of purchaser will be limited to the extent of establishing that he bonafidely purchased goods from the seller for valuable consideration by verifying the GST registration available on the official web portal.
09/03/2024
GST Favorable Judgment on 2A and 3B Mismatch- By Honorable Madras High Court- In case of Sri Shanmuga Hardwares Electricals
Held - ITC Cannot be denied if ITC is not claimed in GSTR 3B (Here 3B were filed NIL), Officer need to have checked 2A and relevant Docs As well
This can also be used in response to section 16(4) matters.
Jeff Bezos sold $8.5 billion selling 50 million Amazon shares in the last two weeks.
Jamie Dimon CEO of JP Morgan- Amy Diamond sells 125 milion dollars of JP Morgan stock, this is the first time he ever sold since 2006.
Mark Zuckerberg sold 428 million dollars of meta aka Facebook stock, Unloaded nearly 1.28 million shares in last two months.
India’s Home Ministry severely curtailed the scope of activity for Overseas Citizens of India cardholders in a bulletin issued March 4, and reclassified them as “foreign nationals.” The OCI Cardholder (including a PIO cardholder) is a foreign national holding passport of a foreign country and is not a citizen of India,” stated the Ministry in its bulletin. Up to this point, OCI cardholders were treated in parity with Indian citizens. This is really a setback for OCI cardholders and the Indian diaspora,” George Abraham, vice chair of the Indian Overseas Congress, told India-West. “We always felt as though we were moving towards dual citizenship, but now the government is saying it will treat us like foreigners.”
A spokesman for the Consul General of India in San Francisco explained to India-West that the bulletin was a clarification of existing rules established in 2005, 2007, and 2009.
The rules — which can be viewed in their entirety here — https://bit.ly/3cKjVyu — state that OCI cardholders must obtain special permission from the Indian government for any missionary work; “Tabligh,” defined as promoting a Muslim agenda; journalistic and mountaineering activities.
They must also obtain permission to travel to areas the Indian government has designated “restricted.” Such areas include: all of Arunachal Pradesh; parts of Himachal Pradesh; portions of Jammu & Kashmir; all of Manipur, Mizoram, Sikkim and Nagaland; portions of Rajasthan and Uttarakhand.
The new clarifications also put new restrictions on inter-country adoptions of children by OCI cardholders, and set down stricter guidelines for the diaspora who wish to obtain higher education in India.
OCI cardholders who reside in India must check in with the Foreigners Regional Registration Officer or the Foreigners Registration Officer by email whenever there is a change in their residential address or in their occupation, according to the bulletin.
The Indian government threw OCI cardholders a sop in the new bulletin, stating that entry fees for visiting national parks, wildlife sanctuaries, national monuments, historical sites and museums, and plane fares for in-country travel will be at par with those for Indian nationals.
OCI cardholders must also obtain permission from the Reserve Bank of India to buy and sell property, said Abraham, noting that the Indian diaspora is still prohibited from buying agricultural land. “This sends a negative message. It is not a step forward in reclaiming the Indian diaspora to engage with India’s development,” he told India-West.
07/03/2024
RBI'S RECENT ACTIONS
Oct 10, 2023: Bank Of Baroda- Suspended onboarding of customers onto 'BoB World' mobile application. Action based on certain material supervisory concerns
Jan 31, 2024: Paytm Payments Bank- Barred from banking services. Audit report revealed persistent non-compliances
March 4, 2024: IIFL Finance- Directed to not sanction or disburse gold loans after supervisory concerns observed in gold loan portfolio
March 5, 2024: JM Fin Pdts- Barred from doing any form of financing against shares and debentures & from sanctioning & disbursing loans against IPO shares.
What is OPC-
One Person Company (OPC) is a company incorporated by a single person. Before the enforcement of the Companies Act, 2013, a single person could not establish a company. If an individual wanted to establish his business, he/she could opt only for a sole proprietorship as there had to be a minimum of two directors and two members to establish a company. An individual to reap benefits of being a company with a limited liability.
As per Section 2(62) of the Company's Act 2013, a company can be formed with just 1 Director and 1 member. It is a form of a company where the compliance requirements are lesser than that of a private company.
An OPC can be started with a minimum Paid-up capital of Rs. 1 lakh. Paid up share capital of an OPC exceeds fifty lakh rupees or its average annual turnover of immediately preceding three consecutive financial years exceeds two crore rupees, then the OPC has to mandatorily convert itself into a private or public company.
The GST Portal now lists the following 26 banks adding DCB Bank in its list where taxpayers can make their GST payments: Axis Bank
Bank of Baroda
Bank of India
Bank of Maharashtra
Canara Bank
Central Bank of India
City Union Bank
DCB Bank Limited
Federal Bank
HDFC Bank
ICICI Bank Limited
IDBI Bank
Indian Bank
Indian Overseas Bank
IndusInd Bank Limited
Jammu and Kashmir Bank Limited
Karnataka Bank Limited
Karur Vysya Bank
Kotak Mahindra Bank Limited
Punjab and Sind Bank
Punjab National Bank
RBL Bank Limited
South Indian Bank Limited
State Bank of India
UCO Bank
Union Bank of India
CBDT releases order to “Waive off Tax demand” outstanding as of Jan 31, 2024;“Capped at Rs. 1 lakh per Assessee”- Consequent to the finance minister's budget speech, the CBDT released an order that outstanding tax demands pertaining to income tax, wealth tax and gift tax as on January 31, 2024, shall be remitted and extinguished "subject to the maximum ceiling of Rs 1 lakh for any specific taxpayer/assessee". The limit of Rs 1 lakh would include principal component of tax demand, interest, penalty or fee, cess, surcharge. However, the remission shall not be applicable on the demands raised against the tax deductors or tax collectors under TDS or TCS provisions of the I-T Act. Further, this waiver or cancellation does not entitle taxpayers to any claims for credit or refunds.
MCA deploys the ‘Change Request Form’ on MCA-21 for the convenience of users of MCA-21 services- MCA vide Circular has provided for deployment and usage of the ‘Change Request Form’ (CRF) on MCA-21. This web-based Form is to be used only under exceptional circumstances, for making a request to ROC, for purposes which cannot be catered through any existing form or services or functionality available either at Front Office level (users of MCA-21 services) or Back Office level (RoCs).
06/03/2024
MSME Minister Narayan Rane has initiated a transformative scheme tailored for Informal Micro Enterprises (IMEs), aiming to enhance their access to credit facilities and alleviate financial constraints. Launched under the aegis of the Credit Guarantee Fund Trust for Micro and Small Enterprises (CGTMSE), this scheme promises collateral-free loans of up to Rs 20 lakh, exempting IMEs from the rigors of the Goods and Services Tax (GST) regime.
Objective of the Scheme
Dubbed as the 'Special Provision for Informal Micro Enterprises under Credit Guarantee Scheme,' the initiative stands poised to provide crucial credit support to micro and nano enterprises. By mitigating the perceived credit risk associated with lending to IMEs, the scheme aims to foster a conducive environment for financial institutions to extend loans, thus bolstering credit flow within the Micro and Small Enterprises (MSE) sector.
Guarantee Cover and Lending Provisions
The scheme offers an impressive 85% guarantee cover for unsecured loans up to Rs 20 lakh, specifically tailored for IMEs registered on the Udyam portal. This substantial guarantee cover is anticipated to incentivize Member Lending Institutions (MLIs) to ramp up lending activities, thereby empowering IMEs with the requisite financial resources.
CGTMSE Milestones
Established in 2000, CGTMSE has achieved remarkable milestones, surpassing Rs 1.50 lakh crore in guaranteed amount during the current fiscal year. This substantial increase, up by 50% from the previous fiscal year, underscores the effectiveness of the scheme in bolstering financial inclusivity and support for MSEs.
Budgetary Support and Financial Inclusions
Finance Minister Nirmala Sitharaman's allocation of Rs 9,000 crore in the CGTMSE corpus during the 2023 budget speech reflects a concerted effort to fortify financial support for MSMEs. This infusion aims to facilitate an additional Rs 2 lakh crore in collateral-free credit, thereby reducing the cost of credit by 1% and stimulating economic growth.
Udyam Portal and Formalization Initiatives
With nearly 1.41 crore IMEs already registered on the Udyam portal out of a total of 3.74 crore MSMEs, the government's formalization drive is gaining momentum. Initiatives such as the Udyam Assist Platform (UAP) have been instrumental in simplifying the registration process for IMEs, thereby enabling them to avail themselves of priority sector lending (PSL) benefits.
Seamless Integration with Digital Ecosystem
The UAP, as envisioned in the report by the standing committee on finance led by Jayant Sinha, seeks to seamlessly integrate IMEs into the burgeoning digital ecosystem. This integration encompasses platforms like the Government e-Marketplace (GeM) and the Trade Receivables Discounting System (TReDS), facilitating IMEs' participation in the digital economy and amplifying their market reach.
Conclusion
MSME Minister Narayan Rane's launch of the Special Provision for Informal Micro Enterprises under Credit Guarantee Scheme marks a significant milestone in the government's ongoing efforts to bolster financial inclusivity and support for MSEs. By extending collateral-free loans and streamlining access to credit facilities, this scheme holds the potential to catalyze growth and prosperity within the vibrant MSME sector, fostering economic resilience and sustainability.
Source-CClubI
The Income Tax Department will soon send notices to people who have not filed ITR. According to Business Today, the Economic Times report states that tax notices will also be sent to those people whose tax has been deducted at source. This means that if TDS has been deducted but ITR has not been filed then a notice may come.
The Goods and Services Tax Network (GSTN) has issued an announcement, stating that taxpayers can opt for the GST Composition Levy Scheme by filing Form CMP-02 in the Goods and Services Tax Portal by March 31, 2024. The Goods and Services Tax composition levy is an alternative method of levy of tax designed for small taxpayers whose turnover is up to Rs.75 lakhs (Rs. 50 lakhs in case of few States). The objective of the GST composition scheme is to bring simplicity and to reduce the compliance cost for the small taxpayers.
The CBIC vide Notification No. 11/2024-Customs dated February 19, 2024, amending the Notification No. 11/2021 – Customs dated February 01, 2021 on the effective rate of Agriculture Infrastructure and Development Cess for certain goods. Specifically, it amends the cess rate for goods under tariff item 5201 (other than 5201 00 25) to 5%. These changes, substitute the serial number 14 in the originally listed goods with new entries, are to take effect from February 20, 2024.
The Hon’ble Calcutta High Court in the case of Fairdeal Metals Ltd. v. Assistant Commissioner of Revenue, State Tax, Bureau of Investigation (NB) [Writ Petition Application No. 170 of 2024 dated February 01, 2024], held that the Supplier was given registration by the GST authority and if there had been any deficiency on the part of the Supplier, the registration should not to have been issued. After registration has been issued and tax has been paid by the Supplier, the allegation made against the Supplier does not stand. Further, the Petitioner was not connected with any of the allegations levelled against the Supplier. Hence, the Recipient cannot be held responsible for availing the wrong ITC on account of bogus invoices circulated by the Supplier. Therefore, the Petitioner was not liable to pay the penalty.
The Ministry of Corporate Affairs ( MCA ), with an aim to enhance the Ease of Doing Business with the establishment of the Central Processing Centre ( CPC ). This initiative, in line with the objectives outlined in the Union Budget Announcement 2023-24, aims to streamline the processing of forms filed under the Companies Act, 2013 and Limited Liability Partnership ( LLP ) Act in a centralised manner, eliminating the need for physical interaction with stakeholders. Commencing operations on February 16, 2024, the CPC will initially process 12 forms and applications, with plans to expand its scope to include additional forms from April 1, 2024. Once fully operational, it is anticipated that approximately 2.50 lakh forms will be processed annually through the CPC.
The GST department has issued GST notices to numerous builders, directing them to reverse their input tax credit (ITC) for the years 2017-18 and 2018-19. These notices pertain to the ITC claimed on unsold apartments at the time of obtaining Building Use (BU) permission. Builders are instructed to reverse the ITC for units sold post-BU permission, as GST payments were not made for these units. Consequently, the department has urged developers not to claim ITC for such apartments. A knowledgeable source revealed that several developers have been targeted for claiming excessive ITC during the 2018-19 period. It’s worth noting that the option of GST rates at 8% or 12% (with ITC) was exclusively available for ongoing projects as of March 31, 2019. Projects commenced after April 1, 2019, must adhere to the GST rates of 1% or 5% (without ITC). However, GST isn’t applicable to unit sales post-BU permission.
e-Way bill cannot be generated without an e-invoice
From 1st March 2024, e-way bill generation will be blocked without e-invoice details for B2B sales and exports. On 5th January 2024, the NIC released this advisory directing e-invoicing-applicable taxpayers to generate e-way bills by including the e-invoice or Invoice Reference Number (IRN) details in them. Taxpayers are advised to link their e-invoices with e-way bills for accurate reconciliations, better compliance, and uninterrupted business operations. The objective is to ensure consistency in invoice details entered in the e-way bill and e-invoicing systems for certain parameters. However, B2C and non-supply transactions shall continue as usual without any change.
The Hon’ble Supreme Court of India in the SLP filed in the case of Shanti Motors v. Union of India & Ors. [SLP(C) Dy. No.4695/2024 dated February 09, 2024], wherein the constitutional validity of Section 16(4) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”) is challenged, which imposes a time limit for availing of Input Tax Credit (“ITC”), as being violative of Articles 14, 19(1)(g) and 300A of the Constitution of India. The Hon’ble Supreme Court has admitted the SLPs and issued Notices to the Respondents, along with interim reliefs. Representing the Petitioners for Shanti Motors, Mr. Sujit Ghosh, Sr. Adv., Mr. Bimal Jain, Adv., Ms. Mannat Waraich, AOR, Mr. Ajinkya Tiwari, Adv. and Mr. Keshav Jatwani, Adv. The next date of hearing was February 19, 2024.
Article on Section 16(4) of CGST act
Read More
https://taxonation.com/show-detail-article/172608/understanding-the-impact-and-legal-interpretations-of-gst-section-164-in-the-cgst-act-recent-judicial-perspectives-and-business-implications
The CBIC vide Instruction No. 02/2024-Customs dated February 15, 2024, issues revised guidelines and formats for arrest and incident reporting, emphasizing timely sharing of Annexure-II incidents to enhance risk profiling and prevent smuggling. The revised formats aim for uniformity and require reporting via email to designated addresses. Arrest intimation (Annexure-I) remains within 24 hours by Chief Commissioners/Director Generals. Boards stress the importance of immediate reporting of incidents (Annexure-II) to enable effective risk-based targeting, urging strict compliance across all Zones.
The undersigned is directed to draw your attention to Board’s Instruction No. 19/2018-Customs dated November 22, 2018 from F.No. 394/107/2018 Commr (Inv.-Cus.) which prescribed formats for informing arrest (Annexure I) or other incident (Annexure II). Subsequent instruction dated October 05, 2021 had reminded for timely reporting, while communication dated August 03, 2022 had directed sharing of reports with the DG, ARM.
Read More
https://taxinformation.cbic.gov.in/view-pdf/1000494/ENG/Instructions
The Union Government on 23.02.2024, has notified that the new criminal laws - Bharatiya Nyaya Sanhita, Bharatiya Nagarik Suraksha Sanhita and the Bharatiya Sakshya Adhiniyam- will come into effect from July 1,2024. The Ministry of Home Affairs issued three notifications today regarding the date of commencement of these three laws. At the same time, the Centre has put on hold implementation of Sub Section (2) of Section 106 of Bharatiya Nyaya Sanita, the specific provision relates to 'causing death of a person by rash and negligent driving of a vehicle. It may be noted that there were widespread protests by truckers against this provision.
05/03/2024
TRACES PORTAL UPDATE: Form 13/ Form 15E -Functionality for application for Lower or Nil TDS/TCS deduction for FY 2024-25 is now live on Traces Portal.
1. The functionality to file application in Form 13 for lower/nil deduction certificate under section 197 of the Income Tax Act 1961 for Financial Year 2024-25 will be available from 28.02.2024 onwards.
For financial year 2023-24, it’s available till 15.03.2024
2. The functionality to file application in Form 15E for lower/nil deduction certificate under section 195(2) of the Income Tax Act 1961 for Financial Year 2024-25 will be available from 28.02.2024 onwards.
For financial year 2023-24, it’s available till 15.03.2024
What is Form 13 application for lower deduction of TDS?
1. As per the provisions of the Income Tax Act, TDS is required to be deducted at the time of making any payment. In cases where such TDS is being deducted, the tax payable will be computed by first deducting the TDS and then the recipient of income claims a refund of TDS at the time of filing of his Income.
2. Therefore, when a taxpayer’s final tax liability is less than the amount of TDS being deducted, based on TDS rate in force, he may file an application for Nil/ Lower deduction of TDS U/S 197 of the Income Tax Act in Form 13. This is possible in cases where justification can be made for lower deduction of TDS on the basis of low projected profitability.
3. Application in FORM 13 can be made by the recipient of income in case of the following category of receipts where TDS is required to be made under the following Sections:
* Section 192 – Salary income
* Section 193 – Interest on securities
* Section 194 – Dividends
* Section 194A – Interest other than interest on securities
* Section 194C – Contractors income
* Section 194D – Insurance commission
* Section 194G – Commission/remuneration/prize on lottery tickets
* Section 194H – Commission or brokerage
* Section 194-I – Rent
* Section 194J – Fee for Professional or technical services
* Section 194LA – Compensation on acquisition of immovable property
* Section 194LBB – Income in respect of units of investment fund
* Section 194LBC – Income in respect of investment in securitization trust
4. Documents to be submitted for FORM 13?
* Signed Form 13
* Copies of return of income along with enclosures and acknowledgment for previous 3 financial years
* Copies of assessment orders for previous 3 financial years
* In case of assessee having business or profession income, copies of financial statement along with audit report if any for previous 3 financial years
* Projected profit and loss account for the current financial year
* Computation of income statement for previous 3 financial years and estimated computation for the current financial year
* Copy of PAN card
* Tax Deduction Account Number of all parties responsible for paying you
* E-TDS return acknowledgment for previous 2 financial years
* Estimated income during financial year
* Any other documents depending on nature of income
* TDS default, if any
TDS exemption is available U/S 194C in case of a declaration, even when the transporter is not the owner: ITAT Jodhpur- Adhunik Khanan VA Parivahan Theka Sahakari Samiti Limited Vs. ITO (ITA Nos. 177 to 180/Jodh/2023)
Facts:
1. The petitioner deductor has the business of transportation and logistic services. A survey was executed at the taxpayer’s business premises deductor for verification of compliance with the provisions of Chapter XVII-B of the Income-tax Act, 1961.
2. At the time of the survey proceedings, it was revealed that the deductor had made transportation payments to distinct individuals without deducting TDS based on declarations obtained from the vehicle owners.
3. It is seen that in certain cases the transportation charges are paid to an individual other than the owner of the vehicle based on the power of attorney, Sahmati Patra, and TDS has not been deducted.
4. The AO mentioned that the declaration received via the taxpayer deductor could not be deemed a valid document under the provisions of Section 194C(6) of the Income Tax Act, 1961. Therefore the taxpayer has not fulfilled the basic condition stated under Section 194C(6) of the Income Tax Act. Hence, the taxpayer deductor is an assessee in default and obligated to file interest. CIT(A) affirmed the order.
The ITAT Jodhpur held as below:
1. The transporters furnish the declaration including their permanent account number (PAN) to the payer to prevent TDS deduction. The Finance Act 2015 has authorized the revision to Section 194C(6) furnishing the deduction of tax at source till the transporter having the business of playing, hiring, or leasing goods carriages, owns not more than ten goods carriages and provides the declaration to this effect including a PAN to the payer.
2. The term owner suggests anyone in possession of the carriage of the goods and not the registered owner. The term ‘who owns” essentially means the one “who possesses,” and the taxpayer has paid the charges to the person who possesses the vehicle and has also filed the declaration.
3. Thus, the taxpayer is not liable to deduction of TDS U/S 194C of the Income Tax Act.
Very useful gst ruling - M/s. Afortune Trding Research Lab LLP, v Additional Commissioner (Appeals I) - Madras High Court- Receipt of payment through paypal recognised as valid form of receipt of export proceeds
_Para 36.The routing of the payment by the intermediary viz., Paypal from its account in CITI Bank to the petitioner's own account with HDFC Bank in Indian Rupees is in accordance with the provisions of the Foreign Exchange Management (Manner of Receipt and Payment) Regulations, 2016 as notified by Notification No: FEMA 14(R)/2016-RB dated 02.05.2016.
40. Thus, there is no dispute with on the services provided by the petitioner to its foreign clients. The petitioner has provided the export services within the meaning of Section 2(b) of the IGST Act, 2017. The Paypal merely acts as an intermediary who receives the remittances in freely convertible foreign exchange and in as much required to comply with the requirements of the foreign exchange.
04/03/2024
Can any property of an accused be attached by ED?
Introduction:
1. The ED has power to provisionally attach a property in terms of Section 5(1) of the Prevention of Money Laundering Act, 2002 (PMLA Act) if (apart from satisfaction of other conditions) a person is in possession of “proceeds of crime”.
2. As per Section 2(u) of the PMLA Act, proceeds of crime means as under:
"proceeds of crime" means any property derived or obtained, directly or indirectly, by any person as a result of criminal activity relating to a scheduled offence or the value of any such property [or where such property is taken or held outside the country, then the property equivalent in value held within the country [or abroad].
[Explanation.-- For the removal of doubts, it is hereby clarified that "proceeds of crime" include property not only derived or obtained from the scheduled offence but also any property which may directly or indirectly be derived or obtained as a result of any criminal activity relatable to the scheduled offence.
3. Now the above definition makes it clear that any property acquired as a result of tainted money earned from a scheduled offence is a proceeds of crime and by that virtue can be attached under the PMLA Act.
However the moot point arises on account of the Explanation, whether, property acquired indirectly as a result of criminal activity, would include, any property owned by the person accused of a scheduled offence?
1. In the case of Seema Garg and Ors. vs. The Deputy Director, Directorate of Enforcement (06.03.2020 - PHHC), MANU/PH/0204/2020, the Hon’ble Punjab and Haryana High Court has categorically held the following:
a. Value of such property appearing in the definition of proceeds of crime does not mean and include any property which has no link direct or indirect with the property derived or obtained from commission of scheduled offence.
b. Any property acquired prior to commission of scheduled offence i.e. criminal activity or introduction of PMLA cannot be attached unless property obtained or acquired from scheduled offence is held or taken outside the country.
2. Further, the Hon’ble Supreme Court in the landmark case of Vijay Madanlal Choudhary and Ors. Vs. Union of India (UOI) and Ors., Special Leave Petition (Criminal) No. 4634 OF 2014, also held that the property alleged to be 'proceeds of crime' must have nexus, be it direct or indirect, with the predicate (schedule ) offence.
Thus, it can be safely concluded that property which has been obtained from the proceeds of a scheduled offence can be attached under PMLA Act.
Reason for spat between India and Thailand at the WTO meet:
Introduction:
A comment by Thailand's ambassador to WTO Pimchanok Vonkorpon Pitfield accusing India of using subsidised rice procured for the public distribution system for capturing the export market has created a diplomatic storm with the government lodging a protest against the statement and Indian negotiators refusing to participate in discussions where Thai representatives are present
The Thai ambassador's statement came during the meeting of the World Trade Organisation (WTO) in Abu Dhabi.
What is the genesis of the spat?
1. Back in 1994, the WTO set up an agreement to lower import taxes and subsidies that affect agriculture.
2. Subsidies can make farming and trade unfair because they might encourage overproduction or lower prices too much.
3. The rules allow developing countries to subsidise up to 10% of their agriculture's value of production. For developed countries, the cap is 5%.
4. But rich countries have found ways to go much higher than their cap. For instance, a paper by the Centre for WTO Studies estimated that EU was providing 150% of its sugar's value of production as subsidy, and the US 189% to coffee.
5. The rules favour wealthier nations, giving them more ways to support their farmers and dominate the global market. This makes it harder for poorer countries to compete.
6. For example, India has exceeded the 10% subsidy limit for rice, and others might too. The prices, set in the 1980s as a reference for what counts as a subsidy, are outdated, not accounting for inflation or current market prices.
7. Farms are small in India, which makes government support vital. There is also the need to keep food in stock for the poor during crises like the Covid pandemic or global conflicts.
8. Calculations by Centre for WTO Studies show that per farmer support in India is around $300, whereas in US it is around $80,000. So, an American farmer, with average land holding of 180 hectare, gets 267 times what a tiller gets in India, where average land holding is just above one hectare.
9. To move forward with trade discussions, developed countries agreed to a 'peace clause' that prevents disputes over subsidy limits. Since then, India and others have been pushing to find a permanent solution.
10. Rich countries think public stockholding programmes distort trade. They've accused developing countries like India of exporting subsidised grains. This is where Thai ambassador's Wednesday allegation comes in.
Source: TOI
Delivery charges and warranty expenses are lost sales expenses and cannot form a part of AMP expenses: ITAT Bangalore
Amazon Seller Services Private Limited Versus The Commissioner of Income-Tax (TP)
Case No.: IT(TP)A No.418/Bang/2023
Facts:
1. The appellant/assessee is a wholly owned subsidiary of Amazon Corporate Holdings Private Limited engaged in rendering marketing support services, marketplace services, and wholesale trading of e-book reader devices (kindles) along with accessories.
2. The CIT (TP) on examination of records noted that the assessee has recognized the expense on account of share-based compensation transactions, and the TPO allowed the exclusion of share-based compensation (SBC) in the form of ESOP cost from the operating cost and also excluded depreciation and amortization from the operating cost without due inquiry or verification.
3. While delivery charges and related warranty charges are to be considered in AMP expenses, the TPO has excluded delivery charges and warranty charges from the AMP expenses without due inquiry or verification while determining the AMP adjustment. Therefore, the CIT (TP) considered the TPO's order as erroneous and prejudicial to the interests of revenue and issued a show cause notice for revision of the order under Section 263.
ITAT Bangalore held as below:
1. The delivery cost and warranty expenses cannot be regarded as having been incurred for the purpose of developing the brand since these are post-sales activities and part of a sales expenditure.
2. The delivery costs and warranty expenses are not part of advertising, marketing, and promotion (AMP) expenditures.
Subscription to database is not royalty or professional fees and so not taxable: Delhi HC
THE COMMISSIONER OF INCOME TAX - INTERNATIONAL TAXATION -3 Vs RELX INC
Facts:
1. The case is pertaining to the taxation of subscription fees collected by RELX INC from Indian subscribers for its renowned legal database, “Lexis Nexis.”
2. The Income Tax Department contested that the subscription fees should be treated as business income, arguing the existence of a Permanent Establishment (PE) in India.
3. The Department also said that the fee for imparting technical training is taxable even under Article 12 (concerning royalties and fees for included services) of the India-USA DTAA, particularly sub-clause (4)(b) which concerns making available "technical knowledge, experience, skill, know-how," etc.
4. However, RELX INC countered this assertion, maintaining that lacking a PE in India meant the income should not be taxed under the India-USA Double Taxation
5. Furthermore, RELX INC contended that the subscription fees did not qualify as royalties or fees for technical services under the Income Tax Act.
6. The matter then reached the Income Tax Appellate Tribunal (ITAT) which ruled in favour of Relx. This led to a challenge before the High Court.
Hon Delhi HC held as below:
1. A mere access of a subscriber to a legal database would not fall within the ambit of Section 9(1)(vii) of the IT Act.
2. All that the assessee [Relx] does is provide access to the database. It has not been shown to be providing any further managerial, technical or consultancy service to a subscriber.
3. If the Department were to describe subscription fee as ‘royalty‘, they would necessarily have to establish that the payments so received by the assessee was consideration for the use of or the right to use any copyright or a literary, artistic or scientific work as defined by Article 12(3) of the DTAA.
4. We thus find no justification to interfere with the view as expressed by the Tribunal. The appeal fails and shall consequently stand dismissed on the aforesaid terms,
TRC is the valid document for determining treaty benefits: ITAT
M/s Sarva Capital LLC (ITA No. 2073/Del/2023)
Facts of the Case:
1. M/s Sarva Capital LLC, a non-resident corporate entity incorporated under the laws of Mauritius, is engaged in investment activities in India across various sectors, including education, agriculture, healthcare, microfinance institutions, and financial services.
2. Sarva Capital LLC sold equity shares of two Indian companies, Sewa Gruh Rin Ltd. and Veritas Finance Pvt. Ltd., during the assessment year in question.
3. In the original return of income filed, Sarva Capital LLC claimed that the capital gains arising from the sale of shares should be exempt from taxation in India under Article 13(4) of the India-Mauritius Double Taxation Avoidance Agreement (DTAA), as it was a resident of Mauritius.
4. The issue before ITAT was whether, Sarva Capital LLC was entitled to exemption as per Article 13(4) of the DTAA or subject to taxation as per article 13(3A).
ITAT Delhi held as below:
1. Once a valid Tax Residency Certificate (TRC) has been issued by the competent authority of another country, it serves as conclusive evidence of tax residency and eligibility for treaty benefits.
2. For shares acquired before April 1, 2017, the the capital gains fall under Article 13(4) of the DTAA and were exempt from taxation in India.
3. Sarva Capital LLC's appeal is allowed and that the capital gains derived from the sale of shares were not taxable under Article 13(4) of the India-Mauritius DTAA.
04/03/2024
What is Financial Intelligence Unit- India?
Introduction:
1. Financial Intelligence Unit - India (FIU) is the central, national agency responsible for receiving, processing, analyzing and disseminating information relating to suspect financial transactions to enforcement agencies and foreign FIUs.
2. FIU was set by the Government of India vide O.M. dated 18th November 2004. FIU is a member of the Egmont Group, an international network of financial intelligence units that work together to combat money laundering and terrorist financing.
3. FIU is also responsible for coordinating and strengthening efforts of national and international intelligence, investigation and enforcement agencies in pursuing the global efforts against money laundering and related crimes.
4. FIU is an independent body reporting directly to the Economic Intelligence Council (EIC) headed by the Finance Minister.
The functions of FIU are:
1. Collection of Information: Act as the central reception point for receiving Cash Transaction reports (CTRs), Cross Border Wire Transfer Reports (CBWTRs), Reports on Purchase or Sale of Immovable Property (IPRs) and Suspicious Transaction Reports (STRs) from various reporting entities.
2. Analysis of Information: Analyze received information to uncover patterns of transactions suggesting suspicion of money laundering and related crimes.
3. Sharing of Information: Sharing information with national intelligence/law enforcement agencies, national regulatory authorities and foreign Financial Intelligence Units.
4. Act as Central Repository: Establish and maintain national data base on cash transactions and suspicious transactions on the basis of reports received from reporting entities.
5. Coordination: Coordinate and strengthen collection and sharing of financial intelligence through an effective national, regional and global network to combat money laundering and related crimes.
Constitution of FIU
1. The FIU – IND is a multidisciplinary body with a sanctioned strength of 74 members from various government departments.
2. The members are inducted from organizations including Central Board of Direct Taxes (CBDT), Central Board of Indirect Tax and Customs (CBIC), Reserve Bank of India (RBI), Securities Exchange Board of India (SEBI), Department of Legal Affairs and Intelligence agencies.
An example of information collection by FIU:
As per the guidelines issued by the Reserve Bank of India (RBI), financial institutions are required to file Non Profit Organisation Transaction Report (NTR) for transactions exceeding Rs. 10 lakh (or its equivalent in foreign currency) in a single day for Non Profit Organisations. The purpose of NTRs is to help FIU-IND detect and prevent money laundering, terrorism financing, and other illegal activities that may be carried out through NPOs.
03/03/2024
Whether agri operations on leased land be eligible for exemption under Income Tax Act?
Introduction:
1. Agriculture income earned by individuals and HUF is exempt under the Sec 10(1) of the Income Tax Act. This means that income earned from agricultural operations is not taxed.
2. The reason for exemption of agriculture income from Central Taxation is that the Constitution gives exclusive power to make laws with respect to taxes on agricultural income to the State Legislature.
3. However while computing tax on non-agricultural income agricultural income is also taken into consideration.
Issue: The issue is whether agriculture income earned by farming on leased land is entitled to exemption under the Income Tax Act or is it in the nature of contract farming?
Reply: This issue was before the ITAT Hyderabad, which held that:
1. There was no dispute that the assessee took the agricultural lands on lease and conducted normal agricultural operations to produce the hybrid variety of foundation seeds in order to sell them in the open market to the seed industries, and in that pursuit, they engaged the labour, supervisors, etc.
2. The assessee produced voluminous record to show the engagement of labour and the payment of salaries to the supervisors apart from producing the agreements with the landowners.
3. Merely because the assessee took the land on lease for conducting their research operations to produce the foundation seeds of the hybrid varieties, such a lease cannot ipso facto make the operations of the assessee as contract farming. Further, the fact that foundation seeds of hybrid varieties are produced as per customer requirements will also not make it a case of contract farming.
4. Contract farming case would be that if the assessee outsources the agricultural operations which they are doing for themselves now, to some other third party.
Conclusion: Agricultural operations, whether in leased land or own land will be eligible for exemption under Income Tax.
02/03/2024
Singapore has introduced a new tax on sale of foreign capital assets with effect from 1st Jan, 2024:
1. Historically, Singapore does not tax capital gains. Only gains which are “income” in nature are taxed.
2. However, from January 1, 2024 onwards, Singapore has introduced into law the new Section 10L of the Income Tax Act 1947 (“ITA”).
3. Foreign-sourced gains from the sale or disposal of a foreign asset (not being an Intellectual Property Right) will not be subject to Singapore income tax, if the entity concerned can meet the “adequate economic substance” requirement in the basis period in which the sale or disposal occurs.
4. The scope is limited to gains derived by an entity1 of a “relevant group”. A group is a “relevant group” if one of the entities of the group is incorporated, registered or established in another jurisdiction or where at least one entity of the group has a place of business outside Singapore. As such, domestic groups and standalone entities are excluded.
5. The remittance of foreign-sourced dividends originating from gains from disposal of foreign assets is not in scope of Section 10L.
6. Only gains that are received in Singapore from outside Singapore are caught. Gains are typically considered to be received in Singapore if (deemed) remitted into Singapore. As such, foreign entities that are not operating in or from Singapore are not in scope of Section 10L.
Singapore to move ahead with corporate tax reform under Pillar 2 of BEPS 2.0:
1. An Income Inclusion Rule (IIR) will take effect for businesses’ financial years starting on or after Jan 1, 2025, Finance Minister Lawrence Wong said in his Budget speech on Friday (Feb 16).
2. The IIR will subject the overseas profits of multinational enterprise (MNE) groups that are parented in Singapore to a minimum effective tax rate of 15 per cent, regardless of where they operate.
3. A second component, the Domestic Top-up Tax (DTT), will also be introduced on the same date.
4. With the DTT, MNE groups have to pay a minimum effective tax rate of 15 per cent on their Singapore profits.
5. Both the IIR and DTT will apply to MNE groups with annual group revenues of at least 750 million euros (S$1.1 billion) – in line with Pillar 2 of BEPS 2.0.
6. “Without this tax, these MNE groups would have had to pay their parent jurisdictions the effective tax rate of 15 per cent on their Singapore profits,” said FM, Mr Wong. “Therefore it is in our interest to implement the DTT, so that we collect the tax rather than have it go elsewhere
7. Singapore’s commitment to implement corporate tax changes under Pillar 2 of BEPS 2.0 was first announced in Budget 2023.
8. Since then, several jurisdictions have made moves to implement tax changes related to Pillar 2.
9. These include markets such as the European Union, the United Kingdom, Switzerland, Japan and South Korea, which are implementing Pillar 2 rules from this year, while Hong Kong and Malaysia have announced plans to do so from 2025.
01/03/2024
Minimum room occupancy guarantee payments by OYO not liable to TDS u/s 194C- M/s Oravel Stays Pvt Ltd. Versus The A.C.I.T (ITA No. 6370/DEL/2019)
Facts:
1. During the course of scrutiny assessment proceedings, the Assessing Officer (AO) noticed that the assessee has not deducted tax at source on minimum guarantee expense. The assessee was asked to show cause why this expense should not be disallowed u/s 40(a)(ia) of the Income Tax Act.
2. The assessee, in its submissions explained that those payments were not governed by provisions of Chapter XVII-B of the Income Tax Act and therefore, no TDS has been deducted.
3. The assessee explained that the minimum guarantee expense is not any payment towards any contract but it is in the nature of compensatory payment for shortfall in room occupancy. The assessee guarantees the hotels for certain minimum occupancy of the rooms and if the occupancy is not achieved, the assessee would compensate the shortfall.
4. The contention of the assessee did not find any favour with the Assessing Officer who was of the firm belief that the assessee had violated the provisions of section 194-I of the Income Tax Act and, alternatively, section 194-C of the Income Tax Act by not deducting tax at source and invoking provisions of section 40(a)(ia), he made the impugned disallowance.
Delhi ITAT held as below:
1. As per provisions of section 194C provides that any person responsible for paying any sum to any resident for carrying out any work in pursuance of a contract between the contractor and a specified person shall deduct tax on the sum paid or credited to the account of the contractor, sine qua non for applicability of this provision is “Carrying out any Work”.
2. The records showed that no work has been carried out. Therefore, provisions of section 194C of the Act have no application. The assessee was merely compensating the shortfall pursuant to the agreement.
3. Thus, section 194C of the Act is not applicable. The Assessing Officer is hereby directed to delete the impugned addition.
Mere default in loan and suspicion is not a ground for issue of LOC: Delhi HC
Shalini Khanna vs Union of India & Anr in W.P.(C) 10951/2022
Hon Delhi HC has held that has held that the issuance of a lookout circular (LOC) cannot be resorted to in every case of bank loan defaults or credit facilities availed for business.
Following are the observations of the Hon HC:
1. Right of a citizen of the country to travel abroad cannot be curtailed only because of failure to pay a bank loan more so when the person against whom the lookout circular is opened has not been even arrayed as an accused in any offence for misappropriation or siphoning off the loan amounts.
2. During investigation role of Smt. Shalini Khanna w/o Sanjay Khanna (A-4), Guarantor of the credit facility given to M/s. Metaphor Export Pvt Ltd (A-6) have also been looked into. It is revealed that she had no prior knowledge of fraudulent acts or omission of accused person at the time of her giving Collateral Security and Personal Guarantee to the Bank. Hence, her name has been kept in the column no. 12 of Charge sheet.
3. Merely because the Office Memorandum dated December 5, 2017 permits the issuance of a look-out circular, in exceptional circumstances, even when the individual is not involved in any cognizable offence, it has to be remembered that this power is meant to be used in exceptional circumstances and not as a matter of routine.
4. It must therefore, be interpreted in a manner that indicates an offence of such a magnitude so as to significantly affect the economic interests of the country.
5. Mere suspicion of a person opening bank accounts in other countries and of investing in a foreign company cannot be accepted as the basis for holding that the petitioner being allowed to travel abroad would be ‘detrimental to the economic interest of India’, when it is undisputed that this suspicion has remained a suspicion for such a long period of almost three years.
Gujarat High Court upholds Income Tax Department's search and seizure, condemns misconduct:
Maulikkumar Satishbhai Sheth vs Income Tax Officer, Assessment Unit, Ahmedabad (SPECIAL CIVIL APPLICATION – No. 20187 of 2023)
Facts:
1. Maulik Sheth, a lawyer, had filed a petition challenging the search conducted between November 3 and 7, asserting that documents related to his professional activities were seized during the operation.
2. The advocate raised concerns about the violation of his fundamental rights, including privacy infringements.
3. He had told the court that documents held by him in his professional capacity were seized during the search operations.
4. Also, summons were issued to Sheth’s associate, a lady advocate, to accompany the Income Tax Inspector, in absence of any lady police officers, to the office premises of the petitioner and compelled her to open the same at 7 am on 3.11.2023.
Hon. Gujarat HC held as below:
1. In this case, attorney-client privilege as defined in Section 126 of the Evidence Act does not apply. If a lawyer becomes aware of fraudulent or illegal activities by their clients after engagement, incriminating material can be used against third parties. However, if the lawyer possesses client documents before engagement, the Income Tax department cannot act based on such documents.
2. The initiation of search proceedings, does not require any interference by this court and the petitioner’s challenge to the raid initiated under Section 132 of the Income Tax Act “would fail”.
3. The “glaring misconduct” during the search operation, which involved a female colleague of Sheth should be condemned. Restriction of free movement for Sheth and his family members, including children, during the search, ought to be criticised.
4. The officials are urged to issue a formal apology to colleague of Sheth, condemning the violation of basic human decency.
5. The manner in which free movement of Sheth and his family members, including his children, were restricted during the search proceedings, has to be deprecated.
29/02/2024
Receipt from sale of software as an end user is not taxable as Royalty: ITAT
ACIT,Circle-2(2),International Taxation, New Delhi Vs. Newspage Pvt Ltd (ITA 1992 / DEL / 2022)
Facts:
1. The appeal was filed by the Revenue against the order of the Ld.CIT(Appeals) for the Assessment Year 2012-13.
2. The primary issue under consideration was whether the consideration received by the assessee from Pepsico India Holdings Ltd. and ITC Limited for the sale of software licenses and provision of support and maintenance services and customization services constituted royalty/FTS within the meaning of Article 12(3) of the India-Singapore Double Taxation Avoidance Agreement (DTAA).
3. Initially, the assessee filed an appeal with grounds challenging the taxability of these receipts as royalty/FTS.
4. Subsequently, the Revenue filed revised grounds challenging the same and also questioning the admission of certain claims by the Ld.CIT(A) without proper authorization.
5. The Ld.CIT(A) held that the receipts from the sale of software licenses and provision of services were not taxable as royalty/FTS based on the decision of the Hon’ble Supreme Court in the case of Engineering Analysis Centre of Excellence Pvt. Ltd. Vs. CIT.
ITAT held as below:
1. No copyright was transferred by the assessee to the customers.
2. The terms of the agreements were similar to End User License Agreements, and merely authorizing or enabling a customer to use copyrighted software did not amount to transferring rights in relation to copyright.
3. The Ld.CIT(A) has rightly held that the receipts from the sale of software licenses and provision of services cannot be assessed as royalty/FTS.
4. Therefore, the appeal of the Revenue is hereby dismissed.
SC rejects the Government’s argument that citizens have no right to know about political funding
1. The Supreme Court has declared the electoral bonds scheme, allowing anonymous political donations, as unconstitutional, citing a violation of the right to information under Article 19(1)(a) of the Constitution.
2. The SC held that “At a primary level, political contributions give a seat at the table to contributors, i.e., it enhances access to legislators. This access also translates to influence over policymaking. There is also a legitimate possibility that financial contributions to a political party would lead to quid pro quo arrangement because of the close nexus between money and politics.”
3. The court found that the amendment made to Section 182 of the Companies Act, 2013, permitting unlimited political contributions by companies, to be manifestly arbitrary.
4. The unanimous decision by the five-judge Constitution Bench also nullified amendments to Sec 80GGB and Sec 80GGC of the Income Tax Act and Sec 29C of the Representation of People Act, which permitted anonymous donations.
5. The court rejected the government’s argument that the scheme would combat black money, emphasizing that absolute exemptions compromise transparency in political funding.
6. The State Bank of India has been directed to provide details of electoral bonds received by political parties to the Election Commission of India by March 6.
7. The Election Commission will publish this information on its official website by March 13.
8. Un encashed electoral bonds are to be returned, with the issuing bank refunding the amount to the purchaser’s account.
(Association for Democratic Reforms & Anr. v. Union of India & Ors. | Writ Petition (Civil) No. 880 of 2017)
28/02/2024
Secretarial Standards - I & II
1. The ICSI has released the revised Secretarial Standards on Meetings of the Board of Directors (SS-1) and Secretarial Standards on General Meetings (SS-2).
2. ?These Secretarial Standards are revised after obtaining the approval of the Central Government (MCA) for specification of the Revised SS-1 and SS-2 under Section 118(10) of the Act, which was accorded vide Ministry of Corporate Affairs (MCA) letter dated January 02, 2024.
3. ?Considering the legal amendments on the subject particularly in the Companies Act, 2013 and read with Rules, these SS-1 and SS-2 have been further revised by the ICSI to bring them in alignment with the provisions of the Companies Act, 2013 and Rules made thereunder (“the Act”).
4. ?The Revised SS-1 and SS-2 shall be effective from April 01, 2024. The Secretarial Standards on Meetings of the Board of Directors (SS-1) and General Meetings (SS-2) were made applicable from July 01, 2015 and revised versions thereof were made applicable from October 01, 2017 (“Existing version”).
ITAT upholds cap-gain exemption to Mauritius entity, for shares acquired prior to April 1, 2017
Comstar Mauritius Ltd (ITA No. 1529/Mum/2023)
Facts:
1. Assessee filed an appeal for the assessment year 2018-19 against a revisionary order passed by the Commissioner of Income Tax, Mumbai-2, under Section 263 of the Income-tax Act, 1961.
2. The revisionary order deemed the assessment order passed by the Assistant Commissioner of Income Tax, International Taxation, as erroneous and prejudicial to the interest of the Revenue, and directed a fresh assessment.
3. Comstar Mauritius Ltd, a non-resident foreign company based in Mauritius, is in the business of investment in securities. It filed its return of income declaring nil income, as it earned capital gains from the sale of Indian securities, which it claimed as exempt under the India-Mauritius Double Taxation Avoidance Agreement (DTAA). The assessment order accepted this claim and assessed the income as nil.
4. However, the Commissioner of Income Tax found the assessment order to be erroneous and prejudicial to the Revenue's interest, as the Assessing Officer allegedly failed to conduct necessary inquiries to ascertain the eligibility of the claimed exemption under Article 13 of the DTAA.
5. The Commissioner noted discrepancies in the company's financial statements, such as the absence of routine expenses and apparent indications that the company's affairs were arranged primarily to benefit from the lower tax rate.
6. In response, Comstar Mauritius Ltd provided detailed explanations and documentation supporting its claim for exemption under Article 13 of the DTAA, asserting that the shares were acquired before 1st April 2017 and therefore qualified for the grandfathering provisions. It argued that the assessment order was not erroneous, as the Assessing Officer had conducted sufficient inquiries and accepted the claim based on the information provided.
The ITAT Mumbai held as below:
1. The Assessing Officer had indeed made inquiries and accepted the claim based on the documentation provided by Comstar Mauritius Ltd. Additionally, it observed that the company had provided comprehensive explanations and evidence to support its claim for exemption under the DTAA.
2. The CBDT press release dated 29th August, 2016 had provided for grandfathering of investments prior to 1st April, 2017.
3. The amendment to the Double Taxation Avoidance Agreement limiting the benefit of profit or gains on sale of shares in the hands of the Mauritius entity as per Article 13 (3B) and 27(A) would apply with effect from 1st April, 2017.
4. Considering these factors, the revisionary order passed by the Commissioner of Income Tax, Mumbai-2, is set aside and the original assessment order be reinstated.
27/02/2024
RBI is planning tokenisation of assets, bonds under wholesale CBDC pilot
1. The Reserve Bank of India (RBI) is planning tokenisation of assets and government bonds under the wholesale Central Bank Digital Currency (CBDC) pilot project, with the focus being to try the technology and not to generate volumes, said T Rabi Sankar, Deputy Governor, RBI.
2. Mr Sankar said that a standard response to new technology may not be the right approach towards Artificial Intelligence (AI) and quantum computing.
3. With artificial intelligence and its ability to process a huge amount of data in a much shorter period of time, and with new technologies like quantum computing, you probably have to completely rebuild most of your encryption systems that you have today, according to Sankar.
4. He emphasised that new technology does not always eat up jobs as much as is generally thought, and banking will continue to exist as money has to be created. It is important that bankers must adapt and develop quickly to these technological advancements and not be complacent about Artificial Intelligence.
Intricacies of TDS U/S 194O:
1. According to Section 194O of the Income Tax Act, an E-commerce operator is responsible for deducting TDS at the rate of 1% of the gross amount credited to the seller's account or at the time of making payment, whichever is earlier.
2. This applies to any transaction the e-commerce platform facilitates involving goods and services which includes professional and technical services.
3. The TDS must be deducted at the time of crediting the seller's account, irrespective of the mode of payment. Section 194O under the Financial Act 2020 imposes taxes on the e-commerce platform, which was not done before.
4. Certain issues are addressed in the guidelines outlined in Circular No. 20 of 2023-Income Tax dated December 28, 2023 by CBDT:
A. E-commerce operators impose convenience fees or commission per transaction, delivery fees, etc on the transaction of sale of goods or services through the E- Commerce Platform. Do these elements constitute part of the “gross amount” for TDS purposes under section 194-O of the Act?
These charges are considered part of the gross amount. Payments made to the platform or network provider, such as ONDC, which facilitates the transaction, will also be included in the gross amount subject to TDS under Section 194-O.
B. Who should deduct tax at source where there are multiple E-Commerce operators (ECO) involved in a transaction?
In compliance with section 194-O of the Act, the responsibility lies with the E-Commerce Operator making the payment to the seller.
26/02/2024
ALP of Intra-group Services Cannot be Considered Nil If Services Were Backed by Agreement & Evidence: ITAT Mumbai
Case Details: Pall India (P.) Ltd. v. DCIT - [2023] 157 taxmanncom 238 (Mumbai-Trib.)
Facts:
1. The Assessee-company had entered into a multi-lateral service agreement with its Associated Enterprises for various intra-group services.
2. These services are related to strategic inputs such as product information, marketing field engineering services, scientific and laboratory services, logistics, administrative, etc.
3. The Transfer Pricing Officer (TPO) held that the evidence submitted by the assessee was only data excel sheets of cost allocation. Further, these were duplicative in nature and a shareholder’s activity.
4. Therefore, he determined the ALP of such services to be nil.
ITAT Mumbai held as below:
1. The assessee had submitted an agreement showing the description of services and benefits received therefrom. Various email correspondences were also submitted, which said that services had been rendered by AE and received by the assessee.
2. Further, certificates of various AE were produced to show the basis of allocation and exact cost allocation to assessee and employee wise cost sheet which showed distribution and allocation of such cost
3. Assessee had reasonably substantiated benefit, need, and rendition tests for said intra-group services.
4. Thus, there was no justification for determining ALP as nil.
25/02/2024
Sec 80G deduction on account of contribution to the Ram Mandir Trust:
1. The Shri Ram Janmabhoomi Teerth Kshetra (PAN: AAZTS6197B) has been notified under sub-clause (b) of Section 80G(2), thus enabling deduction U/S 80G for donations made to the Trust.
2. Starting from the fiscal year 2020-21 and onwards, contributions made during this period are deemed eligible for deductions under Section 80G.
3. Regardless of whether the donation is made before or after the pran pratishtha of Ram Lalla, deduction is available U/S 80G subject to conditions.
4. We need to note that only 50% deduction available. Also, if the aggregate donation surpasses 10% of the adjusted gross total income, any excess amount beyond this threshold will not be eligible for deduction under Section 80G.
5. For claiming donation as a deduction, we need the receipt from the Trust, which is a proof of payment of donation.
6. We also need the Form 10BE as an evidence to support the Section 80G deduction while filing ITR.
Income Tax on Convertible Bonds:
1. A convertible bond is a fixed-income corporate debt security that yields interest payments, but can be converted into a predetermined number of common stock or equity shares. The conversion from the bond to stock can be done at certain times during the bond's life and is usually at the discretion of the bond holder.
2. According to section 2(47) of the Income Tax Act, 1961, ‘Transfer‘ includes the exchange of assets. Any conversion of bonds into shares or any other asset is considered an “exchange” and falls within the definition of transfer.
3. As per Section 45, “any profits or gains arising from the transfer of a capital asset effected in the previous year will be chargeable to income-tax under the head Capital Gains.“
4. However, in accordance with sec 47(x), any transfer by way of conversion of bonds or debentures, debenture-stock or deposit certificates in any form, of a company into shares or debentures of that company would not be regarded as transfer for the purpose of capital gain computation.
5. Hence the said conversion of bonds into shares does not attract any capital gains tax implications at the point of conversion.
6. However, when such shares are sold off, capital gains tax would be applicable and for the purpose of computing capital gains from such shares, the acquisition cost as well as the period of holding of the debenture would be relevant.
24/02/2024
A Red Flag Over Chinese Nationals As Company Directors
1. The National Security Advisor has red-flagged Indian companies appointing Chinese nationals as directors without clearance from the Ministry of Home Affairs
2. As many as 27 appointments in 2022 and six in 2023 in various companies controlled mostly by Chinese nationals in Hyderabad, Bengaluru, Mumbai, and New Delhi are under the central agencies’ scanner.
3. Ministry of Corporate Affairs (MCA) vide Notification No. F. No. 1/22/2013-CL-V dated 1st June 2022 had notified that government clearance is a must for Chinese nationals’ appointment as directors in Indian companies.
4. Notification issued by the government, requires nationals of land border-sharing nations who are appointed as directors on boards of corporations to receive a security clearance from the Ministry of Home Affairs in order to prevent Chinese enterprises from evading Indian rules in order to do business in the country.
5. Among the companies is a supply chain firm incorporated in 2013 in Bengaluru. It made some foreign nationals as directors in August 2022, which the MCA is now verifying to determine whether there was a violation.
6. In another instance, ROC Delhi is verifying the appointment of a Chinese national as director in a packaging firm located in Shyam Vihar in West Delhi. The company was incorporated in 2018, and a new director was appointed in September 2022.
7. Similarly, a company located in the Pasha Mailaram industrial area in Hyderabad is also under the scanner. It registered with ROC Hyderabad, while the director applied before June 2022. It became effective in September 2022.
Source: TOI
No Income Tax in India for salary earned by a Korean Resident outside India: ITAT Delhi
Amit Laroya Vs ACIT (ITA No.1457/Del/2022)
Facts:
1. Amit Laroya, the appellant, challenged the decision of the Commissioner of Income Tax (CIT) in an appeal dated 29/04/2022 against the order issued by the Dispute Resolution Panel (DRP) under Section 144C(5) of the Income Tax Act for the Assessment Year 2018-19.
2. The primary point of contention was whether Laroya’s salary income of Rs.5,11,71,307, earned in Korea, qualified for exemption under Article 15(1) of the India-Korea Double Taxation Avoidance Agreement (DTAA).
3. During the assessment year, the appellant, classified as a non-resident, filed an income return disclosing a total income of Rs.57,69,390. The Assessing Officer (AO), relying on Form 26AS, noted that Laroya received Rs.5,40,07,330 as salary from an Indian resident company, 3M India Limited. Despite Laroya’s brief stay of 31 days in India during the relevant year, he declared a sum of Rs.29,86,022 as a salary proportionate to his Indian residency.
4. The pivotal argument centred around the interpretation of Article 15(1) of the India-Korea DTAA, which grants an exemption for employment income if the individual is a resident of Korea and the employment takes place outside India. Laroya fulfilled both criteria, making his salary earned in Korea not subject to taxation in India.
5. The revenue’s argument, referencing Section 9 of the Income Tax Act, underscored the taxation of all incomes directly or indirectly linked to India. However, the tribunal clarified that Section 9 should be interpreted alongside the explanation, which considers income earned in India only when services are provided in India.
ITAT Delhi held as under:
1. Concerning Laroya’s voluntary offer of Rs.29,86,022, the tribunal asserted that the revenue’s authority to impose taxes is contingent upon the provisions outlined in the Act, and an incorrect submission by the taxpayer does not confer such authority.
2. Laroya’s services were rendered outside India, and as a result, the income could not be considered as accruing or arising in India. Furthermore, Article 15(1) of the India-Korea DTAA explicitly exempted employment income that meets the specified conditions.
3. Laroya’s services were rendered outside India, and as a result, the income could not be considered as accruing or arising in India.
ITR filed without Financials is a defective return but not necessarily an invalid return:SC
Mangalam Publications Vs CIT (Civil Appeal Nos. 8580-8582 of 2011)
Facts:
1. The assessing officer passed the reassessment order on 21.03.2002 under Section 144/147 of the Act determining the total income of the assessee at Rs.25,06,660.00. Thereafter allocation of income was made amongst the partners in the manner indicated in the order of reassessment.
2. The AO took cognizance of the profit and loss account and the balance sheet filed by the assessee before the South Indian Bank on the basis of which assessment of income for the assessment years 1988 – 1989 and 1989 – 1990 were completed.
3. Objection of the assessee that the aforesaid balance sheet was prepared only for the purpose of obtaining loan from the South Indian Bank and therefore could not be relied upon for income tax assessment was brushed aside. The reassessment was made on the basis of the accounts submitted to the South Indian Bank.
4. AO also held that in the absence of submission of books of accounts along with the ITR, the assessee had not furnished the documents and particulars required under Section 139 (9)
Hon SC held as below:
1. On the basis of the “balance sheet” submitted by the assessee before the South Indian Bank for obtaining credit which was discarded by the CIT(A) in an earlier appellate proceeding of the assessee itself, the assessing officer upon a comparison of the same with a subsequent balance sheet of the assessee for the assessment year 1993-94 which was filed by the assessee and was on record, erroneously concluded that there was escapement of income and initiated reassessment proceedings
2. Once the primary facts are disclosed by the assessee, the burden shifts onto the assessing officer. It is not the case of the revenue that the assessee had made a false declaration.
3. It is only when the defective return is not accepted by the AO , that it can be held as invalid and not otherwise and in the instant case when the return was accepted even without balance sheet, the return could not have been treated as invalid.
4. If he does not exercise the discretion, the return of income cannot be construed as a defective return. As a matter of fact, in none of the three assessment years, the assessing officer had issued any declaration that the returns were defective.
5. Once the primary facts are disclosed by the assessee, the burden shifts onto the assessing officer. It is not the case of the revenue that the assessee had made a false declaration.
23/02/2024
Section 56(2)(vii)(b)(ii) of the IT Act does not apply in case of property bought by partnership firm for business use: ITAT
Smt. Chandrasekaran Valarmathi (ITA No.652/Chny/2022)
Facts:
1. The taxpayer Chandrasekaran Valarmathi is a partner in a firm M/s Chandran Steels, including three other partners of the firm, purchased a specific building for Rs.95.72 Lacs. This amount was remarked to be debited in the firm. The building loan of Rs.70 Lacs was received against that.
2. The Assessing Officer (AO) observed that the property, acquired at a value of Rs. 85 Lakhs, deviated from the guideline value of Rs. 155.77 Lacs.
3. Consequently, the AO invoked the provisions of Sec.56(2)(vii)(b)(ii), suggesting that the differential amount should be treated as ‘income from other sources’ for the assessee, with the specific share being one-fourth.
4. The assessee contended that according to Section 14 of the Indian Partnership Act, any property, rights, or interest acquired with the firm’s funds is deemed to be owned by the firm. Since the entire purchase amount was funded by the firm, the assessee argued that the property rightfully belonged to the firm.
ITAT Chennai held as under:
1. The property had been acquired through joint ownership involving four individuals, all of whom were partners in the firm M/s Chandran Steels.
2. Furthermore, the firm was granted depreciation, and it was exclusively utilizing the property for its business needs, with the repayment of the loan instalment handled by the firm.
3. So, the property was effectively acquired by the firm itself and not by the individual partners. Consequently, the provisions of Sec.56(2)(vii)(b)(ii) could not be invoked, as these provisions did not apply to partnership firms during the relevant period.
I-T Dept mandates LEI for Non-individuals for Refunds of INR 50 Crore or above:
1. The Income Tax Department recently made an announcement by displaying on its website a message stating that “According to the RBI Notification, in the case of non-individuals, a Legal Entity Identifier (LEI) No. is required for credit of refunds of Rs. 50 Crores and above. For hassle-free refund processing, please submit LEI details on the Income Tax portal in Login->Dashboard->Services->LEI.”
2. Thus, this is a new requirement made by the Income Tax Department for non-individual entities where the tax refunds are of an amount of Rs. 50 Crores or more.
3. The incorporation of LEI aims to streamline and expedite the refund processing procedure for eligible firms. Entities falling within this category are advised to swiftly provide their LEI information using the officially approved online platform.
22/02/2024
Taxation of Bitcoin ETF in India?
1. The USA SEC has approved the Bitcoin Exchange Traded Funds (ETF)s, allowing investors to invest in Bitcoin indirectly through ETFs.
2. The Indian investors may face uncertainty regarding the tax implications of Bitcoin ETFs, with long-term capital gains potentially subject to taxation under different provisions.
3. Until the tax authorities provide clarity on the taxation of Bitcoin ETFs, the long-term capital gains arising from the transfer of such units should be taxable under Section 112 of the Income Tax Act.
4. Section 112 of the Income Tax Act applies to all long-term capital assets under Section 2(29AA) of the Income Tax Act. Taxable persons are liable to 20% after indexation or 10% before indexation on capital gains on long-term capital assets as outlined in Section 2 (29A)
Mere outsourcing of services to Indian subsidiary would not give rise to PE in India: ITAT Delhi- M/s EXL Service. Com INC (ITA No. 4989/DEL/2014)
Facts:
1. Exl India has entered into a service agreement with Exl Inc (assessee) under which, Exl India provides internet and voice-based customer care services and backroom operation services to the customers of Exl Inc and in consideration of these services, Exl India invoices Exl Inc at determined hourly rates and Exl Inc, in turn, raises invoices on the end customers.
2. The bone of contention is the assessment order dated 30.03.2006 framed u/s 143(3) of the Income-tax Act, wherein the Assessing Officer (AO) held that the assessee had established a Permanent Establishment [PE] in India under Article 5 of the DTAA between India and the United States of America u/s 9(1)(ii) of the Income Tax Act.
3. The AO was of the view that the assessee and Exl India were nothing but one and the same, as the primary activity of the assessee is carried out by the Indian company and facilities of Exl India was a fixed place of business for the assessee. Also marketing work, technical work was all performed by Exl India, however profit was retained by the assessee.
ITAT Delhi held as below:
1. None of the customers of the assessees are located in India or have received any services in India. This being the case, it is clear that the very first ingredient contained in Article 5(2)(l) is not satisfied. On account of this, Exl India does not have authority to conclude contracts with customers of the assessee too.
2. No part of the main business and revenue earning activity of the two American companies is carried on through a fixed business place in India which has been put at their disposal. It is clear from the above that the Indian company only renders support services which enable the assessees in turn to render services to their clients abroad. This outsourcing of work to India would not give rise to a fixed place PE.
3. It is not the case of the Revenue that the employees of foreign enterprises furnished services in India. Nothing has been brought on record by the Revenue to show that there was secondment of employees by Exl US to Exl India.
4. Merely because the assessee owns 100% of share capital of EXl India does not have effect or consequence of EXL India becoming the PE of the assessee in India.
5. We are of the considered view that the assessee does not have a fixed place PE in India, Service PE in India and dependent Agent PE in India. Therefore, no profit is attributable as no business connection has been established under Article 5 of the DTAA between India and the US.
21/02/2024
Stock difference should be taxed as business income and not unexplained investment: ITAT Chennai- Ethiraj Hotel Mart (ITA No.: 1086/CHNY/2022)
Facts:
1. The appellant/assessee operates in the wholesale trading sector, dealing with stainless steel items, crockery, aluminium, and electric items. A survey was conducted at the business premises of the assessee.
2. The AO concluded the assessment by noting that the physical stock at the business premises exceeded the inventory recorded during the survey. Upon comparing it with the stock in the books of accounts, the survey team identified excess stock valued at Rs. 1,04,00,600.
3. Upon being notified, the assessee voluntarily included a sum of Rs. 1,04,00,600 for taxation. The assessee argued that the excess stock had been categorized as ‘business income’ and therefore should not be considered for addition under Section 69B of the Income Tax Act.
4. However, the Assessing Officer (AO) determined that the excess stock should be treated as an unexplained investment under Section 69B and subjected to taxation according to the provisions of Section 115BBE. Consequently, the AO assessed the income offered during the survey as an unexplained investment and levied tax.
Note: The income earned from undisclosed sources is taxed at a flat rate of 60% under Section 115BBE, significantly higher than the normal rate.
ITAT Chennai held as under:
1. The assessee has declared additional income attributable to excess stock discovered during the survey as arising from business income earned during the current year or previous year.
2. The AO has not done anything to dispute the claim of the assessee that the source of excess stock was from the Business income.
3. Thus, the admitted difference of Rs. 1,04,00,600 should be taxed as ‘normal business income’ and not as an ‘unexplained investment’ under Section 69B of the Income Tax Act.
ITAT Mumbai judgement on whether employment includes self employment for the purpose of determining residential status
ACIT Vs Nishant Kanodia (ITA No. 2155/Mum./2023)
Facts:
1. The assessee, being an individual, was in India for a total period of 176 days. As per the assessee during the year, he had left India for the purpose of employment with Firstland Holdings Ltd., Mauritius. The assessee was appointed as Strategist – Global Investment in Mauritius.
2. The assessee claimed his residential status to be “Non–Resident” and accordingly did not offer his global income to tax in India. In this regard, the assessee has placed reliance on Explanation– 1(a) to section 6(1) of the Income Tax Act and submitted that since during the year, the assessee has left India for the purpose of employment in Mauritius, therefore while determining the residential status, the period of 60 days as per section 6(1)(c) shall be substituted with 182 days as per Explanation–1(a) of section 6(1).
3. On the contrary, as per the Revenue, the assessee left India not for the purpose of employment but he left India as an Investor on a business visa to Mauritius, therefore Explanation–1(a) of section 6(1) is not applicable as so he is a resident of India and global income should hence be taxable in India.
ITAT Mumbai held as under:
1. No technical meaning is intended for the word “employment” used in the Explanation. In our view, going abroad for the purpose of employment only means that the visit and stay abroad should not be for other purposes such as a tourist, or for medical treatment or for studies or the like.
2. Going abroad for the purpose of employment therefore means going abroad to take up employment or any avocation as referred to in the Circular 346 dated 30/06/1982, which takes in self-employment like business or profession.
3. So much so, in our view, taking up own business by the assessee abroad satisfies the condition of going abroad for the purpose of employment covered by Explanation (a) to section 6(1)(c) of the Act. Therefore, we hold that the Tribunal has rightly held that for the purpose of the Explanation, employment includes self-employment like business or profession taken up by the assessee abroad.
20/02/2024
The Income Tax Department has enabled online filing of Form 15CD for the fiscal year 2023-24. This initiative, notified through the CBDT’s notification no. 89/2023 dated October 16, 2023, streamlines the process for taxpayers.
1. Form 15CD is a statement to be furnished electronically by a qualifying unit of an International Financial Services Centre (IFSC), with respect to remittances to a non-resident (not being a company) or to a foreign company.
2. The notification exempts a unit of an IFSC from furnishing Form No. 15CA (Part D) in respect of remittances which are not chargeable to tax as per the provisions of the ITA and requires them to furnish electronically Form No. 15CD in respect of all remittances.
3. Form No. 15CD requires, amongst others, the following details of the unit:
- Permanent Account Number (PAN)
- Tax deduction/collection account number
— Status of the unit
- Residential status of the unit
- Complete address, email, and phone number
4. It also requires details of remittances made (which includes, amongst others, the details of remittee such as name, PAN, address, email, phone number, etc.)
5. Further, it may be pertinent to note that earlier, only PDGIT(S) was authorized to specify the procedure, formats and standards in relation to the Forms; now DGIT(S) can also specify them.
6. Further, the Forms could be furnished only with the PDGIT(S); now the same can be furnished with the DGIT(S), if specified.
7. The Notification shall come into force with effect from 1 January 2024.
Delhi HC questions Dept’s U-Turn on denying 80IA benefit in the 4th Year of Assessment- Navneet Bhardwaj Vs PCIT (ITA No.516/Del/2021)
Facts:
1. Principal Commissioner of Income Tax (PCIT) exercised revisional jurisdiction under Section 263, issuing a show cause notice to the assessee dated March 15, 2017. In the subsequent order under Section 263, the PCIT asserted that the assessee was not eligible for any deduction under Section 80IA(4)(ii) of the Income Tax Act.
2. The department argued that the PCIT was justified in utilizing revisional powers under Section 263. According to their stance, the assessment order under Section 143(3) was deemed erroneous and prejudicial to the revenue’s interest in the opinion of the PCIT.
3. Contrarily, the assessee contended that the exercise of revisional powers was inappropriate, as it was based solely on a difference of opinion between the assessing officer and the PCIT. The department had granted deductions under Section 80IA to the assessee in the three previous assessment years. Therefore, there was no valid reason to make a reversal in the fourth year by invoking revisional jurisdiction.
Hon Delhi HC held as below:
1. The assessee had consistently been eligible for deductions under Section 80IA since Assessment Year 2007-08.
2. The Principal Commissioner of Income Tax (PCIT) erroneously invoked jurisdiction under Section 263 of the Income Tax Act and made a mistake by reversing course in the fourth assessment year. This led to the denial of the benefits provided by Section 80IA of the Income Tax Act.
3. The PCIT did not have the authority to gather the revisionary requirements of Section 263 of the Income Tax Act, 1961, as determined by the Delhi Bench of the Income Tax Appellate Tribunal (ITAT).
4. The order for reassessment for the Assessment Year 2016-17 ought to be overturned.
16/02/2024
The Australian government has released draft legislation for the Stage 3 tax cuts. The Exposure Draft - Treasury Laws Amendment (Cost of Living Tax Cuts) Bill 2024 will:
Reduce the 19% tax rate to 16%
Reduce the 32.5% tax rate to 30%
Increase the threshold above which the 37% tax rate applies from $120,000 to $135,000
Increase the threshold above which the 45% tax rate applies from $180,000 to $190,000.
Foreign residents: For 2024-25 and later income years, the tax rates for foreign residents will be:
$0 - $135,000 – 30%
$135,001 - $190,000 – 37%
$190,001+ – 45%.
Working holidaymakers: For 2024-25 and later income years, the rates of tax for working holiday makers will be:
$0 - $45,000 – 15%
$45,001 - $135,000 – 30%
$135,001 - $190,000 – 37%
$190,001+ – 45%.
Date of effect: The bill will commence from the first quarter after the bill receives assent, applicable from the 2024-25 income year.
The Exposure Draft - Treasury Laws Amendment (Cost of Living - Medicare Levy) Bill 2024 will increase the Medicare levy low-income threshold for singles to $26,000 for 2023-24. For couples with no children, the family income threshold will be increased to $43,846. The additional amount of threshold for each dependent child or student will be increased to $4,027.
For single seniors and pensioners eligible for the SAPTO, the Medicare levy low-income threshold will be increased to $41,089. The family threshold for seniors and pensioners will be increased to $57,198, plus $4,027 for each dependent child or student.
Date of effect: The bill will commence from the first quarter after it receives assent, applicable from the 2023-24 income year.
Japan unexpectedly slipped into a recession at the end of last year, losing its title as the world's third-biggest economy to Germany and raising doubts about when the central bank would begin to exit its decade-long ultra-loose monetary policy. Japan's gross domestic product (GDP) fell an annualised 0.4% in the October-December period after a 3.3% slump in the previous quarter, government data showed on Thursday, confounding market forecasts for a 1.4% increase. Two consecutive quarters of contraction are typically considered the definition of a technical recession. While many analysts still expect the Bank of Japan to phase out its massive monetary stimulus this year, the weak data may cast doubt on its forecast that rising wages will underpin consumption and keep inflation durably around its 2% target. Economy minister Yoshitaka Shindo stressed the need to achieve solid wage growth to underpin consumption, which he described as "lacking momentum" due to rising prices.
"Our understanding is that the BOJ looks comprehensively at various data, including consumption, and risks to the economy in guiding monetary policy," he told a news conference after the data's release, when asked about the impact on BOJ policy.
The Supreme Court observed that a Director of a company who resigned before issuance of cheque cannot be prosecuted for the offence of cheque bouncing under Section 138 and 141 of Negotiable Instruments Act. The Director of a company had resigned in accordance with the Companies Act, 1956 whereby Form 32 was also accepted. The relevant records were rectified and the changes were incorporated accordingly. However, the Director was arrayed as an accused in a complaint filed under Section 138 of the Negotiable Instruments Act, 1881 (N.I. Act) for dishonour of a cheque on account of insufficient funds.
Cause Title: Rajesh Viren Shah v. Redington (India) Limited (2024 INSC 111)
A five-judge Constitution Bench of the Supreme Court in a batch of pleas challenging the validity of the electoral bond scheme for political funding of parties has unanimously concluded that: -the Electoral Bond Scheme, the proviso to Section 29C (1) of the Representation of the People Act, 1951 as amended by Section 137 of the Finance Act, 2017 Section 182(3) of the Companies Act as amended by Section 154 of the Finance Act 2017 and Section 13A (B) as amended by Section 11 of the Finance Act 2017 are violative of Article 19(1) a of the Constitution of India and unconstitutional.
The bench headed by Chief Justice of DY Chandrachud and also comprising Justice Sanjiv Khanna, Justice BR Gavai, Justice JB Pardiwala and Justice Manoj Misra while pronouncing the judgment in the batch of four pleas including those filed by Congress leader Jaya Thakur and the CPI(M), issued the following directions: -The issuing bank shall herewith stop issuance of electoral bonds; -State Bank of India shall submit details of bonds purchased since the interim order of this court dated April 12, 2019 till date to the Election Commission of India (ECI). The details shall include the date of each electoral bond, the name of the purchaser of the bond and the denomination of the electoral bond purchased.
State Bank of India shall submit the details of the political parties which has received contributions through electoral bonds since the interim order of this court. -SBI must disclose details of each electoral bond encashed by political parties, which shall include the date of encashment and the denomination of the electoral bond. -SBI shall submit the above information to the ECI within 3 weeks from the date of this judgment i.e. March 6, 2024. -the ECI shall publish the information on its website within one week of receipt of information i.e. March 13, 2024. -Electoral bonds which are within the validity period of fifteen days but which have not been encashed by political parties yet shall be returned by the political parties to the purchaser, depending on who is in possession of the bond, to the issuing bank. The issuing bank upon the return of the valid bond shall refund the amount to the purchaser's account. The scheme, which was notified by the government on January 2, 2018, was pitched as an alternative to cash donations made to political parties as part of efforts to bring in transparency in political funding. According to the provisions of the scheme, electoral bonds may be purchased by any citizen of India or entity incorporated or established in India. An individual can buy electoral bonds, either singly or jointly with other individuals.
Cause Title: Association For Democratics Reforms And Anr. v. Union Of India And Ors.
15/02/2024
ICAI issue’s guidelines, technical guide, guidance notes.
1. ICAI issues Implementation Guide (Revised) on Reporting on Audit Trail-
Click the link to access the Implementation guide: https://resource.cdn.icai.org/78922aasb63149.pdf (icai.org)
2. ICAI issues Revised Standard on Auditing (SA) 800, SA 805 and SA 810-
These revised standards will apply to audits/engagements for the financial year 2024-25 and onwards.
Click the link to access the revised standards: https://www.icai.org/post/aasb-issuance-sa800-805-810-revised
3. ICAI issues Technical Guide on Preparation of Financial Statements under Cash Basis of Accounting-
This publication is relevant for the entities who follows cash basis of accounting including Non-corporate entities (NCEs), LLPs, small entities and individuals.
Click the link to access the Technical Guide:
https://resource.cdn.icai.org/78907asb63134.pdf
4. Guidance note on Audit of Banks (2024 Edition)-
Click the link to access the guidance note:
https://resource.cdn.icai.org/78977aasb-gnab2024-b.pdf
14/02/2024
Pensioners To Be Handled With Sympathy, Doctrine Of Delay & Laches Not Thumb Rule Where No Third Party Rights Created: Karnataka High Court- The Karnataka High Court has held that observed that the State pensioners have to be handled with sympathy and that doctrine of delay and laches per se cannot defeat the legitimate right of a citizen in a case where no third party rights are created. Observing thus, a division bench of Justice Krishna S Dixit and Justice G Basavaraja partly allowed the petition filed by one Seethalaxmi who had approached the court grieving the denial of one solitary increment which avails to all civil servants who have studied in Kannada Medium upto SSLC with Kannada as one of subjects in the syllabus. She was fighting for her legitimate right to get the increment which is her property in the light of Article 300A of the Constitution,” Court said. It also noted that the value of KLE increment is only Rs.2,900. "It is just nothing these days when bread is costlier than blood," Court remarked. The evening of life poses age related difficulties which may be arguably mitigated with the aid of money. Denying any relief in its entirety would do great injustice to the pensioner.
S-LLaw
In a bid to meet the revenue targets set for the current financial year, the Central GST & Excise Commissionerate at Surat has issued a crucial direction to all Grade A & B officers. The office circular, dated 07.02.2024, follows the D.O. dated 18.01.2024 from Chief Commissioner, Vadodara Zone. The directive, approved by the competent authority, underscores the importance of sustained efforts and operational continuity. All officers in the mentioned grades – Grade A & Grade B are directed to abstain from routine leaves until 31st March 2024, unless faced with exceptional circumstances or for medical reasons.
The Gujarat AAR in the case of In Re: M/s. Unique Welding Products Pvt. Ltd. [GUJ/GAAR/R/2024/01 dated January 05, 2024] held that Assessee is eligible to claim Input Tax Credit (“ITC”) on rooftop solar system with installation and commissioning service used in the course or furtherance of business, as it would be considered as plant and machinery, therefore, would not fall within the purview of blocked credit under Section 17(5)(d) of the Central Goods and Services Tax Act, 2017 (“the CGST Act”). the Roof Solar Plant not permanently fastened to earth, would be considered as plant and machinery, not immovable property. Therefore, as per Section 17(5)(d) of the CGST Act, it would not be covered within the purview of blocked credit.
Held that, the Applicant is eligible to avail ITC on rooftop solar system with installation and commissioning service.
13/02/2024
The Reserve Bank of India’s pilot retail digital currency programme recorded transactions worth Rs 5.70 crore in the first four months, a right to information (RTI) report filed by Moneycontrol showed. As per the data published in the balance sheet of the Reserve Bank of India as on March 31, 2023, the E-Rupee issued for CBDC (Retail) at Rs 5.70 crore,” the RBI said in a response to the query on January 16. The first phase of the pilot involved four banks in four cities – State Bank of India, ICICI Bank, Yes Bank and IDFC First Bank in Mumbai, New Delhi, Bengaluru and Bhubaneswar. Later, the pilot was extended to four more banks – Bank of Baroda, Union Bank of India, HDFC Bank and Kotak Mahindra Bank and new cities – Ahmedabad, Gangtok, Guwahati, Hyderabad, Indore, Kochi, Lucknow, Patna and Shimla.
The cryptocurrency has risen some 16.3% so far this year, on Monday touching its highest since Dec. 27, 2021. At 11:31 a.m. EST (1731 GMT), bitcoin was up 5.58% on the day at $50,196. $50,000 is a significant milestone for bitcoin after the launch of spot ETFs last month not only failed to elicit a move above this key psychological level but led to a 20% sell-off," said Antoni Trenchev, co-founder of crypto lending platform Nexo.
The Lok Sabha on February 7 passed the Rs 47.66-lakh-crore interim Budget 2024-25 of the Union Government with a voice vote.
In the current Financial Year 2023-24 (up to December 2023), 1,700 fake ITC cases involving Rs. 18,000 crore have been detected and 98 fraudsters/masterminds have been apprehended by the Directorate General of GST Intelligence (DGGI). In the current financial year, the Directorate General of GST Intelligence (DGGI) has laid special emphasis to identify and apprehend the masterminds of fake Input Tax Credit (ITC) and disrupting syndicates, operating across the country. DGGI has unraveled cases using data analysis aided by advanced technical tools which led to the arrest of tax evaders. These tax syndicates often use gullible persons and enticed them with job / commission / bank loan etc. to extract their Know Your Customers (KYC) documents which were then used for creation of fake / shell firms / companies without their knowledge and consent.
Stricter GST return norms will make life easier for the honest: CBIC Chief -The Central Board of Indirect Taxes and Customs chairman Sanjay Kumar Agarwal said tighter norms for filing returns under the goods and services tax will reduce enforcement action and improve compliance while making the life of honest taxpayers easier. "I feel that this tightening is not actually making the life of taxpayers difficult but it is making the life of honest taxpayers easy," Agarwal said in an interview. He said there will be no need for enforcement action if return filing is tightened. He cited the example of online gaming companies, saying the amendment to GST laws to levy 28% tax on online money gaming, casinos and horse racing were earlier termed as the "death knell" for the industry, but revenues of online gaming companies and the tax payments have gone up by 400% since the amendment. "Earlier, roughly they (online gaming companies) were filing returns of 225 crore, now post amendment, monthly filing of returns has become 1,200 crore, as there is clarity for companies," Agarwal said. He said as far as past cases and notices were concerned, they were given as per the understanding of the law at that time and now that the matter is with the Supreme Court, the department will take a call after the court decides.
12/02/2024
The Ministry of External Affairs announced on Monday that the Unified Payment Interface (UPI) services have been extended to Sri Lanka and Mauritius. With this expansion, UPI is now operational in a total of seven countries, facilitating seamless digital transactions for users across borders. Unified Payments Interface (UPI) is an instant realtime payment system that facilitates money transfers across multiple bank accounts without revealing sensitive details. Its global expansion over the past years reflects its growing popularity and convenience for users worldwide. Expansion of UPI services in 7 countries:
Bhutan wef 13.7.2021
Oman wef 04.10.2022
Mauritius
Sri Lanka
Nepal
France
Southeast Asia including Malaysia, Thailand, Philippines, Vietnam, Singapore, Cambodia, South Korea, Japan, Taiwan, and Hong Kong.
Functionality of UPI overseas:
Users must register their bank accounts with a UPI-enabled mobile app to initiate international payments.
Transactions can be conducted by scanning QR codes or entering recipient details and transfer amount.
In Paris, India’s UPI service is operational at the Eiffel Tower, allowing Indian visitors to make payments via QR code scanning.
Users can activate international UPI payments through their UPI app settings, followed by verification with their UPI PIN.
S-RpW
The Supreme Court today sought responses from the Centre and others on a plea challenging the Delhi High Court judgement which upheld the validity of a provision of the Central Goods and Services Tax (CGST) Act mandating that whatever companies save in tax they must reduce in price. A bench of Chief Justice D Y Chandrachud, Justice JB Pardiwala and Justice Manoj Misra took note of the appeal of M/S Excel Rasayan Private Ltd against the high court verdict and issued notices to the Union Ministry of Finance, National Anti-profiteering Authority, its Director General, Central Board of Indirect Taxes and Customs and the GST Council. A Division bench of the High Court, on January 29, upheld the constitutional validity of Section 171 of the CGST Act, 2017 which mandates that whatever the companies save in tax they must reduce in price.
The rules in question pertain to the establishment and functioning of the National Anti-Profiteering Authority (NAA). The High Court had said it was possible that there may be cases of arbitrary exercise of power under the anti-profiteering mechanism but the remedy lay in setting aside such order on merits and not striking down the provision itself which invests such power in the authority. The petitioners, companies running diverse businesses, had approached the High Court after they were directed by the NAA to pass on the commensurate benefit of reduction in the rate of tax or the Input Tax Credit to its consumers along with interest. The High Court had directed that the matters be listed for appropriate directions next month.
The Kerala Textile and Garments Dealers Welfare Association ( KTGDA ) has requested micro and small enterprises ( MSEs ) in the textile industry to change their MSME category from “manufacturing” to “trading” with immediate effect. This request comes after the introduction of a new clause in the Income Tax Act, which requires businesses to make payments to suppliers within 45 days, namely Section 43B(h). The KTGDA says that most of its member retailers cannot make payments within 45 days, and that they are considering returning all goods for which payments cannot be made under the new provision. The association also says that its members are planning to stop further purchases from MSEs that do not change their category. The KTGDA acknowledges that the new amendment was introduced in response to demands from MSME suppliers, but they believe that it will damage the trust-based relationship between businesses. They have requested MSEs to cooperate with their request in order to avoid harming the industry.
Default committed by Supplier: Gauhati HC stays SCN seeking Reversal of ITC [Read Order] The Gauhati HC stayed the operation of SCN seeking reversal of ITC as there was default committed by the supplier. The Gauhati High Court stayed the operation of a show cause notice ( SCN ) seeking reversal of input tax credit ( ITC ) as there was default committed by the supplier. The petitioner in this writ petition has challenged a Show Cause Notice dated 11.01.2024 issued under Section 73[1] read with Section 50 of the Assam GST Act, 2017, whereby the petitioner was called up to show cause within 30 [ thirty ] days from the date of receipt of Show Cause Notice.
The Rajasthan GST Department has issued a Notification on February 08, 2024, introducing the much-anticipated Amnesty Scheme-2024. This scheme aims to provide substantial benefits to dealers and individuals by offering rebates on taxes and facilitating the settlement of outstanding demands and disputed amounts under the Goods and Services Tax Regime. Key Provisions of the Amnesty Scheme-2024: The scheme, officially titled Amnesty Scheme-2024 is effective immediately and will remain in force until July 31, 2024. The scheme applies to all dealers or individuals with outstanding demands or disputed amounts under various Acts until June 30, 2017, excluding those related to the Rajasthan Value Added Tax Act, 2003, and the Central Sales Tax Act, 1956 concerning goods specified in Entry 54 of the State List of the Seventh Schedule to the Constitution of India. The scheme outlines a structured table detailing conditions and the extent of rebate of tax and waiver of interest, penalty, and late fees for different categories of outstanding demands or disputed amounts. To avail the amnesty benefits, applicants must electronically convey their willingness on the Commercial Taxes Department’s website www.rajtax.gov.in to the concerned Assessing Authority. Separate intimation is required for outstanding demands/disputed amounts under different Acts and before different Assessing Authorities.
11/02/2024
Amazon founder Jeff Bezos sold around 12 million shares of the online retail and cloud services firm for roughly $2 billion, according to a company filing on Friday. The sale plan, which is subject to certain conditions, was adopted on November 8, 2023, and would be completed by January 31, 2025, according to the company's latest annual report. Bezos, who stepped down as the company's chief executive and took over as executive chairman in 2021, founded Amazon as a bookseller in 1994. He is currently the world's second-richest person with a net worth of $200 billion, according to the Bloomberg Billionaires Index.
The Directorate General of GST Intelligence (DGGI), Central Board of Indirect Taxes and Customs (CBIC) has recently noticed that some individuals with fraudulent intent are creating and sending fake summons to the taxpayers who may or may not be under investigation by the DGGI. The fake summons that are being sent out might look real because they have a Document Identification Number (DIN), but these DIN numbers are not issued by DGGI in the case of these entities. To deal with this issue, DGGI has been taking serious steps by informing and filing complaint with the Police against those involved in creating and sending fake and fraudulent summons. Individual taxpayers who get summons from DGGI/CBIC formations that seem suspicious or possibly fake may immediately report them to concerned jurisdictional DGGI/ CBIC office also for verification, so that necessary action against those responsible for these fraudulent activities can be taken.
F. No. P-11/14/19/Misc/02/2022-Rev. II Dated 02.06.2023- some MCA registered employers who had registered with Zero number of employees have informed that dormant option is not reflecting in their employer id and therefore unable to exercise this option on the employer's portal. In this regard the matter has been examined in consultation with the ICT Cell and it is observed that application has been developed in such a matter that Companies registered in
ESIC through MCA portal have to declare the status of the company within six month of registration to avoid defaulter action. Before the end of the 'Inactive" mode, the company can further extend the Inactive mode for six months and continue to extend in similar manner as per the status of the company.
The option of declaring Inactive mode is not available to employer after expiry of six months".
The newly incorporated companies are issued a registration number under the PF and ESIC, regardless of whether or not they are eligible for coverage. However, such companies are not required to file PF or ESIC returns until they reach the threshold limit of employment under the respective Acts. While ESIC coverage cannot be taken voluntarily, companies can opt for voluntary coverage under the PF scheme with the consent of most employees. Once the number of employees reaches the threshold limit, compliance with the EPFO and ESIC Acts becomes mandatory. In case of non-compliance, the establishment should reply to the notice stating the reason for non-filing.
10/02/2024
The following grounds can be relied on while moving an appeal/ petition against Section 73 demand orders that are issued invoking the extended period of limitation as per various extension Notifications:
1. No Force Majeure in existence, at the time of issuance of notification to extend the time limit.
2. GST Council Meetings or Press Releases give no reference to recommending such an extension.
3. Perpetual extension is possible, citing “Force Majeure”, giving a wide range of power to the government to act against honest GST taxpayers.
4. Retrospective applicability of insertion of Section 168A can also be questioned, being detrimental to the assessee and oddly in favor of the revenue.
For the above stated reasons, the notification extending the deadline is both ultra vires of the Goods and Services Tax Act, 2017 and unconstitutional for grave deprivation of rights of GST Taxpayers.
The following case laws are also in favour of the assessee, even though only interim orders have been issued in the favour of the petitioners —
1. M/s SRSS AGRO PVT. LTD. Versus UNION OF INDIA CITATION: 2023 TAXSCAN (HC) 1718- Extension once made to Period of Limitation to issue order u/s 73 of GST cannot be further extended: Gujarat HC
2. M/s NEW INDIA ACID BARODA PVT. LTD. vs UNION OF INDIA- Second Extension of GST Notice Time Limit in 2023 under Challenge for violation of S. 168A, Gujarat HC issues Notice.
Considering the above submissions, issue Notice returnable on 8th February, 2024. By way of ad-interim relief, no final order shall be passed by the respondent authority.
3. GAJANAND MULTISHOP THROUGH PANKAJKUMAR ROSHANLAL GANDHI [R/SPECIAL CIVIL APPLICATION NO. 20227 of 2023, Gujarat HC].
Considering the above submissions, issue Notice returnable on 8th February, 2024. By way of ad-interim relief, no final order shall be passed by the respondent authority.
In summary, the recent notifications extending the time limits for issuing Goods and Services Tax demand orders under Section 73(9) raise significant concerns regarding their constitutionality and adherence to the statutory framework.
08/02/2024
Two new tables in GSTR-1 from January 2024- applicable while filing Gst1 for Jan24 month onwards
1. Table 14 – Supplies Made Through E-Commerce Operators (In this table, you can add details of taxable outward supplies made through e-commerce operator.)
2. Table 15 – Supplies under Section 9(5) of the CGST Act (In this table, you can add details of taxable outward supplies on which the e-commerce operator is liable to pay tax under Section 9(5) of the CGST Act.)
In a recent legal battle under GST, Hindustan Herbal Cosmetics a registered cosmetics dealer found themselves entangled in a dispute over a typographical error in the e-way bill. The petitioner, engaged in the legitimate supply of cosmetics to another registered dealer, M/s Shree Sai Infotech in Jharkhand, faced a significant setback when authorities intercepted their goods in transit. The crux of the matter revolved around a discrepancy in the vehicle number mentioned in the e-way bill. The judgement concludes that the typographical error in the present case, involving a difference of three digits in the vehicle number, falls within the realm of minor discrepancies. Drawing parallels with precedent, it argues that imposition of penalties under Section 129 of the Act, without establishing mens rea, is unjust and illegal. The court quashes the impugned orders dated 29.8.2019 and 24.5.2018, providing the petitioner with consequential relief within the next four weeks.
STARTUP SCHEMES
A. START-UP INDIA:
This initiative aims to provide financial assistance to SC/ST and women entrepreneurs; Facilitates Loan from rs10 lakh to rs1 crore, inclusive of term loans or working Capital or a combination of both;
These funds are earmarked for Greenfield projects spanning manufacturing, services, or trading sectors;
The Loan under this scheme can be provided without any collateral or security under the guarantee of Credit Guarantee Fund Scheme;
In the case of a partnership or multiple business owners, it’s mandatory that the SC/ST or female entrepreneur holds a minimum ownership share of 51%;
Meeting the eligibility criteria for the loan involves maintaining a clear track record and ensuring no default history with any bank or financial institution; and Entrepreneurs meeting these criteria can explore this scheme through various commercial banks.
B. CREDIT GUARANTEE SCHEME FOR MICRO & SMALL ENTERPRISES (CGTSME):
Objective: The scheme aims at motivating first generation entrepreneurs towards self-employment by providing credit guarantee funding for third-party guarantee-free / collateral free loans.
Current Micro, small and service Entrepreneurs & Aspiring Entrepreneur all are eligible:
Guarantee on credits for loan up to rs 2 crore to new businesses and start-ups without any third-party guarantee and collateral;
Extent of guarantee coverage ranges from 75% (others) to 85 %( Micro enterprise up to Rs. 5 Lakhs);
The extent of guarantee cover is 80% for:
Micro and Small Enterprises operated and/or owned by women; and
All credits/loans in the North East Region (NER) for credit facilities upto Rs. 50 Lakh.
The trust settles 75% of the amount extended by the lending institutions for credits up to INR 200 lakhs.
Extent of guarantee cover if of 50% for credit ranging from INR 10 lakh to INR 100 Lakh per micro and small enterprise borrower retail trade activity.
C. PRADHAN MANTRI MUDRA YOJANA (PMMY)
This scheme, initiated by the Indian government in 2015, is widely recognized as one of the most popular programs. Its overarching vision is articulated as follows:
“To be an integrated financial and support services provider par excellence, benchmarked with global best practices and standards for the bottom of the pyramid universe, promoting comprehensive economic and social development.”
The initiative is particularly designed to streamline the process of providing credit, extending support to micro-enterprises;
Facilitates loans of up to rs10 lakh.
Interested borrowers have the flexibility to approach any commercial bank, small finance bank, or NBFC to access this financial assistance.
The scheme categorizes loans into three distinct types, enhancing its adaptability to the diverse needs of the target audience:
Shishu loans covering loans up to rs 50,000;
Kishor Loans covering loans above rs 50,000 and up to rs 5 Lakh; and
Tarun Loans covering loans above rs 5 Lakh and up to rs10 Lakh
D. MSME SCHEMES
E. PRIME MINISTER’S EMPLOYMENT GENERATION PROGRAMME (PMEGP):
Financial Assistance: Offers financial assistance for setting up new micro-enterprises in the rural as well as urban areas.
Sustainable Employment Generation: Aims to generate sustainable employment opportunities.
F. CREDIT LINKED CAPITAL SUBSIDY SCHEME (CLCSS):
The scheme is to facilitate technological upgradation in Micro and Small Enterprises (MSEs) by providing upfront capital subsidy of 15 percent on institutional finance, capped at Rs.1 Crore, obtained by them.
This subsidy is intended for the adoption of well-established and improved technology within the specified 51 sub-sectors approved.
It seeks to promote the upgrading of plant and machinery in MSEs, encouraging state-of-the-art technology, whether for expansion purposes or for newly established enterprises.
This applies to facilities equipped and proven technology.
The comprehensive list of approved technologies is accessible at www.dcmsme.gov.in
G. TECHNOLOGY UPGRADATION FUND SCHEME (TUFS):
Textile and Jute Industries: Provides financial assistance for the modernization of technology in textile and jute industries.
Global Competitiveness: Aims to make these industries globally competitive.
H. GOODS AND SERVICES TAX (GST) SUPPORT FOR MSMEs:
The modifications made to MSME-related compliances within the Goods and Services Tax (GST) regime: The initial exemption threshold for commodities, originally set at Rs.20 Lakhs, has been raised to Rs.40 Lakhs.
Additionally, the annual limit for the composition program has been elevated to Rs.50 Lakhs for services and Rs.1.5 Crore for commodities.
This adjustment now permits those engaged in the composition scheme to offer services as well.
I. CLUSTER DEVELOPMENT PROGRAMME:
Common Facilities: Supports the development of industrial clusters with common facilities to improve infrastructure and competitiveness.
Collaboration: Encourages collaboration and resource sharing among businesses within a specific cluster.
J. MSME CHAMPIONS PORTAL:
The Portal serves as a dedicated platform for the resolution, redressal, and remedies pertaining to MSMEs. Moreover, the portal functions as a support system by guiding and assisting MSMEs in navigating various government schemes and policies. It offers comprehensive advisory services in areas such as Finance, Marketing, Technology, Raw Material, Labour, Infrastructure, and Capacity Building.
It plays a crucial role in connecting MSMEs with key officials from the Ministry, State Governments, Lending Institutions, and other government agencies. This networking capability enhances collaboration and facilitates smoother interactions for MSMEs within the bureaucratic landscape.
Additionally, the portal serves as a valuable source for disseminating information, thereby ensuring transparency and accessibility for the MSME community.
BENEFITS:
Income Tax Exemptions: Eligible startups can avail of income tax exemptions for the first three consecutive years.
Capital Gains Tax Exemption: Exemption on capital gains for investments in eligible startups.
Simplified Compliance: Quarterly filing of GST returns for reduced compliance burden.
Composition Scheme: Allows eligible businesses to opt for a simplified tax structure.
Startups can self-certify compliance with labour and environmental laws for the first three years of their existence.
Startups can fast-track the examination of their patent applications to expedite the protection of their innovations.
Facilitates funding through various channels, including the Fund of Funds.
Connects startups with investors, mentors, and incubators through the Startup India Hub.
Provides financial support to startups for proof of concept, prototype development, product trials, market entry, and commercialization.
By availing these schemes and benefits, company businesses, especially startups and MSMEs, can enjoy a range of benefits, including financial support, tax exemptions, technology upgradation, and streamlined processes. It’s crucial for businesses to assess their eligibility and take advantage of the available opportunities to foster growth and sustainability.
07/02/2024
MSME Schemes;
1. Various initiatives taken by Govt to promote the Development of MSME sector. Revised criteria for classification of MSMEs to promote investment. Udyam Registration for MSMEs, for Ease of Doing Business w.e.f. July 01, 2020.
2. Launch of Udyam Assist Platform (UAP) on January 11, 2023 to bring the Informal Micro Enterprises (IMEs) under the formal ambit for availing the benefit under Priority Sector Lending (PSL).
3. Roll out of Raising and Accelerating MSME Performance (RAMP) programme with an outlay of Rs. 6,000 Crore over 5 years.
4. Launching of an online Portal Champions in June, 2020 to cover many aspects of e-governance including redressing grievances and handholding of MSMEs.
5. Rs. 5 lakh Crore Emergency Credit Line Guarantee Scheme for business, including MSMEs. Rs. 50,000 Crore equity infusion through Self Reliant India Fund. No global tenders for procurement up to Rs. 200 Crores.
6. Inclusion of Retail and Wholesale traders as MSMEs on July 02, 2021. Non-tax benefits extended for 3 years in case of an upward change in status of MSMEs.
7. As announced in Budget 2023-24, Rs. 9,000 Crore has been infused in the corpus of CGTMSE to enable additional credit of Rs. 2 lakh Crore with a reduced cost of credit.
8. Expanding the network of Technology Centres across the country through ‘Technology Centre Systems Programme.
06/02/2024
Clarification on section 43B(h)
1. Section 43B(h) was introduced in Finance Act, 2023. But as FY end is near, consultants are constantly getting calls from clients & their accountants. Everybody wants to understand the section and want to know how to finalize accounts under this new rule.
2. What does section says
Any sum owed by an assessee to a micro or small enterprise that is outstanding beyond the time limit specified in section 15 of the MSMED Act, 2006, shall be allowed only in the previous year in which such sum is paid.
3. What does section 15 of MSMED Act says:
1. When there is no agreement between the buyer and the seller; payment to be done within 15 days of purchase.
2. When there is an agreement; Payment to be done within the time-limit decided by buyer and seller which can be maximum 45 days.
4. Some examples for clarification:
1. Purchases done from MSE seller on 01.03.2024. No agreement regarding credit period. Time allowed for payment will be 15 days.
If amount is o/s as on 31.03.2024, purchases will be disallowed
If not paid within 15 days but paid before 31.03.2024, purchases will be allowed.
2. Purchases done from MSE seller on 01.03.2024. Seller and buyer agreed for a credit period of 40 days. The expense will be allowed even if payment is o/s as on 31.03.2024
3. Purchases done from MSE seller on 01.02.2024. Seller and buyer agreed for a credit period of 90 days. As per MSMED Act payment must be made within 45 days. If the amount is o/s as on 31.03.2024, expense will be disallowed.
5. Key clarifications:
The provision is applicable from AY 2024-25. Purchases done in FY 2023-24 will be covered.
Purchases from Medium Enterprises not covered.
Applies only to purchases from manufacturers and service providers.(Traders under confusion still clarification required)
Does not apply to purchases before 01.04.2023, no disallowance even if unpaid by 31.03.2024.
Even if payment is made before ITR filing, it will be allowed only in the year of payment. In case of any dispute, the timeline starts post dispute resolution.
Not applicable to the buyers opting for presumptive taxation.
Applicable for all the buyers whether MSME or non-MSME.
6. Action plan for buyers-
a. Send a letter to verify your suppliers’ MSE status’. Ask for their Udyam Certificate.
b. Maintain a separate MSE supplier database, tracking due dates and payments.
C. No MSE creditors outstanding exceed 15/45 days as on 31.03.2024.
d. Pre-agree on payment terms for purchases.
e. Regularly monitor payments and outstanding to MSE suppliers.
7. Action plan for sellers-
a. Display Udyam registration on invoices; inform buyers of your MSE status.
b. Specify a credit period (up to 45 days) on invoices.
The government has collected over Rs 600 crore as penalty for delay in linking PAN with Aadhaar, and about 11.48 crore Permanent Account Numbers are still not linked with biometric identity, Parliament was informed. “Number of PANs not linked with Aadhaar, excluding exempted categories, is 11.48 crore as on January 29, 2024,” Minister of State for Finance Pankaj Chaudhary said in a written reply in the Lok Sabha. To a question regarding the details of government earning through late penalty of Rs 1,000 from the persons who have not linked their PAN and Aadhaar after the last date of June 30, 2023, Chaudhary said “the total collection of fee from persons who have not linked their PAN with Aadhaar is Rs 601.97 crore from July 1, 2023 to January 31,2024”.
05/02/2024
Press Release dtd 03.02.2024- In the current Financial Year 2023-24 (up to December 2023), 1,700 fake ITC cases involving Rs. 18,000 crore have been detected and 98 fraudsters/masterminds have been apprehended by the Directorate General of GST Intelligence (DGGI).
Four Major Cases Unearthed by DGGI during this year
1. Sirsa, Haryana – Rs. 1,100 Crores ITC Evasion: DGGI uncovered a well-organized racket operating from Sirsa, Haryana, with the analysis revealing 38 fake firms and potential ITC evasion of Rs. 1,100 crores. The arrest of Mr. Manoj Kumar, a key operator, shed light on the intricate network of fake firms.
2 Jaipur, Rajasthan – Rs. 1,033 Crores ITC Evasion: DGGI booked cases against a beneficiary firm in Jaipur, Rajasthan, involved in availing ITC from 294 fake firms in Sonipat, Haryana, and Delhi. Mr. Ashutosh Garg, the mastermind behind M/s. Shree Jee Spices, was arrested for orchestrating the creation and operation of fake firms, passing on fake ITC totalling Rs. 1,033 crores.
3. Sagarpur, New Delhi – Rs. 315 Crores ITC Evasion: Intelligence led to the discovery of an IP address used for filing GST returns for unrelated/fake firms in Sagarpur, Delhi. The subsequent search revealed 122 fake firms, and the masterminds, including Mr. Mukesh Kumar Jha, admitted to creating and operating these firms, resulting in a fake ITC of Rs. 315 crores.
4. Pitampura, New Delhi – Rs. 393 Crores ITC Evasion: DGGI uncovered a complex ITC fraud involving 190 fake firms in Pitampura, Delhi. The investigation led to the arrest of Mr. Rahul, instrumental in operating the fake firms, with forged PAN cards and Aadhar cards used for obtaining Digital Signatures. The total ineligible ITC passed on amounted to Rs. 393 crores.
Budget 2024- The income tax exemptions extended in the three key areas of startups, IFSC units, and sovereign funds demonstrate the government’s commitment to fostering economic growth and investment. The one-year extension in each category provides businesses with added flexibility and incentives to thrive in their respective sectors. As India continues to position itself as an attractive destination for startups and international financial activities, these tax measures are poised to contribute to a more robust and competitive economic landscape.
The Union Budget 2024-2025 reflects the government’s commitment to stability and continuity in taxation, with a focus on taxpayer-friendly measures and support for key sectors like start-ups. The announcements aim to further simplify the tax system, boost compliance, and foster economic growth.
04/02/2024
Ministry of Consumer Affairs, Food & Public Distribution, Department of Food & Public Distribution, Krishi Bhawan, New Delhi Dated the 2nd February, 2024. Stock disclosure by Traders/Wholesalers, Retailers, Big Chain Retailers, Processors/Millers of Rice/Paddy
Department of Food and Public Distribution, Ministry of Consumer Affair, Food and Public Distribution directs Traders/Wholesalers, Retailers, Big Chain Retailers and Processors/Millers in all States and Union Territories to declare their Stock position of Rice/Paddy in the Categories (i) Broken Rice, (ii) Non-Basmati White Rice, (iii) Parboiled Rice, (iv) Basmati Rice and (v) Paddy, on the portal (https://evegoils.nic.in/rice/login.html) within 7 days of issue of this order and then, on every Friday. All the respective legal entities to ensure that stocks are regularly and correctly disclosed on the portal.
What Paytm Users Need to Know about Their Accounts From street vendors to big company CEOs are using the same application for their transactions. So, we can’t push back the importance of this platform. As a Paytm account holder, each and every common citizen in India would be worried about the future of their accounts. To all account holders, there is no need to worry about having accounts in paytm. The RBI has assured that the account users can use their account up to their available balance. The Paytm holder cannot make further deposits or credit transactions or top ups, prepaid instruments, wallets, FASTags, NCMC cards, etc. after February 29, 2024. However, the interest, cashbacks, or refunds which may be credited anytime to the account which ensure that the money in any way is safe. The Paytm holders can withdraw or utilise balances from your accounts including savings bank accounts, current accounts, prepaid instruments, FASTags, National Common Mobility Cards, etc. are to be permitted without any restrictions, up to their available balance. Also, no other banking services, other than those referred to above, like fund transfers (irrespective of name and nature of services like AEPS, IMPS, etc.), BBPOU and UPI facility should be provided by the bank after February 29, 2024. Thus, there will be no adverse effect on the paytm users even after the ban of the Paytm. And what you can do next: You can stop using the application till the issues are resolved as the company is big and definitely the RBI will lift the ban or, You can completely stop using paytm and shift to other platforms which your own bank provides or other private platforms which are available for Fastags, NCMC cards..etc. You can withdraw the money completely and close the bank account. The RBI directed the Paytm company to settle all pipeline transactions and nodal accounts (in respect of all transactions initiated on or before February 29, 2024) by March 15, 2024 and no further transactions shall be permitted thereafter. Also directed to terminate the Nodal Accounts of One97 Communications Ltd and Paytm Payments Services Ltd at the earliest. In 2022, a similar situation happened to HDFC bank too. In December 2020, the RBI directed HDFC Bank to cease all launches of its forthcoming digital business initiatives and the acquisition of new credit card customers. This action was prompted by recurrent outages at the bank’s data centre, causing disruptions to its operations. However, in 2022, the RBI removed the ban. However, whether the ban is lifted or not, it is the right of all account holders and the public to be informed about the violations committed by Paytm. Ideally, the central bank will release a press statement or provide comprehensive details about the issue without any concealment. After all, it is the people who sustain the company, and it involves the public’s funds. Consequently, individuals have the right to decide whether to continue with Paytm for their future transactions. Paytm Stock Shares update Paytm’s stock witnessed a 20% decline, bringing the current share value to Rs. 487.20 after the ban by the RBI. Yesterday, the closing value was Rs. 609 and today when the market closed at 3:30 pm, the value again went down to Rs. 487.20.
S-TS, Moneycontrol
Every private company (which is not a small company as on last day of the financial year, ending on or after 31st March, 2023) should within 18 months from closure of such financial year, issue its securities only in dematerialized form & ensure dematerialization of all its existing securities. (i.e., on or before 30th September, 2024. In case a company ceases to be a small company after 31st March, 2023, the timeline of 18 months apply from the end of the financial year in which it ceases to be a small company.
Every private company covered under above provisions must ensure that the entire holding of its promoters, directors and KMPs are held in dematerialised form only, prior to making any: –
1. Issue of securities
2. Buy back of securities 3. Issue bonus shares
4. Rights offer
Apart from the aforesaid, the compliances given under sub-rule (4) to (10) of Rule 9A are also applicable to private companies.
Transfer of securities: – On or after 18 months from the date of applicability of dematerialisation provisions to a private company, the holders of securities should ensure the following: Transfer or transmit shares in demat form Subscribe the securities of such private company in demat form Non-compliance: – Since, there are no specific penal provisions for the non-compliance, the general penal provisions under section 450 of the Act shall apply.
03/02/2024
Majorly two amendments have been proposed in GST:
1. "Dying ISD provision proposed to become alive".
It was appearing under GST that ISD provision was unscrupulous when cross-charge provision was being followed by the industry in trade parlance.
Even circular no.199/11/2023-GST dated 17-07-2023 was also encouraged to issue tax invoice by head office instead of distributing the common input service credit via ISD mode.
Now this amendment has introduced a major compliance measure on the industry which is having multiple registrations under GST and common input services are being booked at head office.
After this amendment, such offices need to take mandatory ISD registration (over and above regular GST registration) to distribute the common ITC to their branches and moreover, such distribution of ITC will also include ITC related to RCM on services prescribed. Making cross charge by head office to branches on common ITC on input service will now attract violation of ISD provision and thereby ask for penal provision.
2. "Penalty on manufacturers, offered in the packet of Pan masala/Jarda". Notification no. 03/2024 - Central Tax and 04/2024 - Central Tax Dated 05-01-2024 prescribed a mandate on the registered person engaged in the manufacturing of notified goods like pan masala or Jarda to furnish the details of packing machines in the specified format and in the specified manner. Now, the union budget has introduced an additional penalty provision of Rs. 1,00,000/-per non-registered machine as per said notifications, along with seizure and confiscation strict provision.
In a significant update, the MSME Udyam Portal has rolled out an enhanced verification facility, eliminating the requirement for OTP entry. This strategic move aims to simplify the process of verifying Udyam Registration details, aligning with the latest amendments in the Section 43B(h) Income Tax Act, 1961. Users can now effortlessly verify specific Udyam Registration details without the hassle of entering OTPs. This streamlined process caters to the need for a more efficient and user friendly experience on the MSME Udyam Portal. The newly introduced feature allows users to verify critical information such as activity type ( Manufacturing/Trading ), yearly classification ( Micro/Small/Medium ), and other pertinent details associated with the Udyam Registration. This comprehensive approach ensures accuracy and transparency in the verification process. This update is poised to have a positive impact on businesses, allowing them to efficiently verify their Udyam Registration details without unnecessary hurdles. The ability to access and confirm critical information swiftly enhances the overall ease of doing business for Micro, Small, and Medium Enterprises ( MSMEs ).
https://udyamregistration.gov.in/udyam_verify.aspx
02/02/2024
MCA Notification dated 02.02.2024 effective from 06.02.2024- MCA has established Central Processing Centre at Manesar which will now process and dispose of all e-forms filed by companies all over India. Registrars of Companies will be free fom this responsibility.
FM Nirmala Sitharaman’s Sixth Budget and Interim Budget 2024.
FM holds the record for the longest Budget Speech of 2 hours 42 minutes in 2020.
She is India’s first full time Finance Minister.
Highlights:
Indian economy transformed in last 10 years under Modi Govt.
Development of villages, Har ghar jal, free ration to 80 crore people. Minimum support prices increased for farmers.
Working to make India Viksit by 2047.
Country overcame covid challenges.
Social justice - garib, annadatas, yuva, nari - equality and growth for all.
Modi govt ended nepotism, corruption.
Direct transfer of subsidies led to savings of 2.47 lac Crores to govt.
Total of 78 lac street vendors,
Direct assistance to farmers
Electronic agricultural market provides subsidies to farmers.
Jan dhan account boosted By direct transfer of 34 lac crore.
Empowering the Yuva, skilled 54 lac youth
Established 7 IITs, 15 AIMS, 3000 universities, mini IITs
Women empowerment gained momentum. 30 Crores mudra loan given. Female education gone up in last 10 years.
Made triple talaq illegal.
Reservations of seats for women. 70% houses under PM Awas yojna given to women to enhance their skills and dignity.
Governance Development Performance- GDP
Economic management-
All infrastructure forms are built in record time
All country parts are active participant in growth
Digitisation
Gst - widening of tax base
Strengthen of financial sectors
GIFT IFSC- creating robust gateway
Pro active inflation management
Geo politically - a new world order is emerging after covid
India assumed G 20 presidency
India Middle East economic corridor - will become basis of world trade for 100 years.
Mission for Viksit Bharat - sky is the limit for India.
Financial assistance to 11.8 crore farmers
MSMEs should grow globally as per the policy.
Aspiratinal districts program
Development of eastern region - powerful driver of the growth engine
PM awas yojna- close to 3 crore target of houses. 2 Crores to be given in next 5 years
Roof top solarisation- free electricity of 200 units - savings of 15ks to 18ks annually.
Charging of electric vehicles
Housing for middle class- scheme to be launched- buy or build own houses.
Medical colleges - more to be set up - committee to examine
Cervical cancer vaccinations for young girls.
Maternal and child growth to be promoted.
Ayushmann Bharat to be extended to all asha and anganwadis workers.
38 lac farmers mobilised.
Female enrolment in education sector gone up by 28%.
Nano DAP- application to be extended on various crops.
Aatmanirbhar seed abhiyan for mustard groundnut sunflower seeds- with modern techniques crop insurance
Diary development for diary farmers- india is largest milk producer but with low productivity of milch animals.
Matsya Sampada - separate deptt for fisheries to help fisherman’s - enhance aqua culture activities to 5 tonnes hectares
Double exports and generate 53 lac employment Opportunity
Lacpati didis - 1 crore already achieved it. Next target is 3 Crores.
Research and innovation-
Jai jawan jai Kisan
Jai jawan jai Kisan jai vigyan
Jai jawan jai kisan jai vigyan jai anushandan- corpus of 1lac crore for tech youth. Corpus to provide long term loans with almost nil interest rates. To combine youth power and technology
Infrastructure development- massive outlay increased to 11 lac 11 thousand 11 crores rupees - comprising 3.4% gdp
Cement Corridor
High traffic corridors - resulting in increase in productivity, reduce logistic costs
40000 normal rail bogis to be converted to vande bharat improvements.
Tier 2 Tier 3 cities expansion.
Development of new airports. 517 new udan routes for air travel.
Metro rail under namo bharat to be improved and expanded
Coal gasification to reduce imports of Amonia, other imports.
Bio manufacturing and bio foundry- to promote green growth- will help in regenerative principals
Blue economy 2.0-
Development of tourist culture
Attractive destination for economic conferences
Development of iconic tourist centres
Framework to be established
Long term interest free loans to states to promote domestic tourism.
Islands including Lakshadweep to generate employment by promotion
Encouraging foreign investment for First Developed India -FDI
Provision - 600 billion dollars FDI since Modi govt.
Govt to form high powered committee to examine population growth, demographic information
27.56 lac Crores being the receipts - 30 lac Crores being revenue receipts.
44.90 lac Crores being the expenditure
Revised fiscal deficit is 5.8% of gdp
By 2025-26, proposed fiscal deficit to be below 4% of gdp.
Lower borrowing by central govt will improve private sector.
Part B
Direct tax collection more than doubled in last 5 years.
Tax payers increased
Appreciate the tax payers for contributions
New tax scheme threshold increased to 7 lacs
Professionals presumptive was increased to 75 lacs
Domestic corporate tax rates reduced.
New form 26AS introduced.
Average processing time reduced fm 93 to 10 days in 2023.
Gst reduced compliance burden. Industry acknowledged its contribution. 80% respondents of the survey said that gst helped.
Tax base more than doubled-2.5 times
Average collection 1.66 lac Crores lately.
Achieved buoyancy.
Reduction in logistic costs.
Reduced prices of commodity.
Import time reduced at container sea air ports.
Average income of people increased to 50%.
Tax proposals-
No changes related to taxation and indirect taxation including import duties.
No changes in tax slabs.
Certain benefits to start ups
To provide continuity, extend dates to 31.3.2025 from 31.3.2024.
Improve tax payer services - petty direct tax demand - as far as 1962- propose to withdraw tax demands upto 25000 upto fin year 2009-10; upto 10000 upto 2010-11 to 2013-14.
Australia Stage 3 tax cuts: government announces changes:
1. The Prime Minister has announced changes to the stage 3 tax cuts due to come into effect on 1 July 2024, if they are passed. In a press release the government said it will increase the Medicare levy low-income thresholds for 2023-24.
2. The Treasury briefing document states that "the redesign will not impact the inflation outlook".
To achieve the above, changes will:
reduce the 19% tax rate to 16%
reduce the 32.5% tax rate to 30%
increase the threshold above which the 37% tax rate applies from $120,000 to $135,000, and
increase the threshold above which the 45% tax rate applies from $180,000 to $190,000.
01/02/2024
With an aim to deal with the menace of counterfeit currencies in the cash-strapped country, Pakistan’s central bank has announced to introduction of new currency notes with enhanced security features including distinct security numbers and designs to modernise the Pakistani currency. The currency notes will be incorporated with advanced international security features, said Jameel Ahmed, the Governor of the State Bank of Pakistan, adding that the transition would be gradual so that Pakistan does not face any disruption. However, some financial experts wonder whether introducing new currency notes could also include demonetisation of the Rs 5,000 or higher denomination notes to combat the counterfeit and black money market. According to experts, cash-strapped Pakistan’s economy is influenced a lot by the illegal use of black money which is easier due to the circulation of higher denomination notes.
S-FP
31/01/2024
CBDT, vide Order under Section 119 dt. Jan 31, 2024, extends the timeframe prescribed under Section 143(1) for AYs upto AY 2020-21 from Jan 31, 2024 to Apr 30, 2024; This applies to all ITRs validly filed electronically with refund claims; The Order is issued to address grievances of taxpayers related to issue of refund; CBDT, thus, partially modifies prior orders dt. Dec 1, 2023 (pertaining to AYs 2018-19, 2019-20 and 2020-21) and Oct 16, 2023 (pertaining to AY 2017-18) by extending the time-frame for processing the ITRs and keeps other content unchanged.
30/01/2024
The central government has implemented a new rule for assessment year 2024-25 under which buyers must pay for goods bought from MSMEs within 45 days of delivery and clear all dues to MSMEs before March 31, 2024, failing which the pending payment will be deemed to be income on which tax will be levied. While the government’s intent is to protect MSMEs, this has caused uncertainty in the market and Ahmedabad’s textile markets are seeing cancellation of orders. Some chemical traders are also feeling the effect. Some buyers have decided not to buy goods before Feb 16 to ensure that their payment deadline comes after March 31. The textile value chain on the other hand operates on a credit period of up to 120 days, so this rule has affected it the most.
In the textile business, the norm is a credit period of 120 days, so making payments within 45 days to MSMEs will be difficult and impractical. We have seen that several traders have cancelled recent orders, and many have stopped buying goods from MSME manufacturers at least till Feb 16, so that their payments fall due only in the next financial year.
In the chemical industry, the credit period offered is about 60 days but as demand is low this period is often extended. As the new rule has been implemented, many buyers are inquiring with sellers if they are registered as MSMEs or not.
Customs Public Notice 01/024- Special Drive from 05.02.2024 to 07.02.2024 for disposal of IGST refund pending as on 31.12.2023- Attention of Exporters, Customs Brokers is invited to the fact that a large number of IGST refunds are pending for disbursement as the Shipping Bills are having error code waiting for rectification from the exporter. The list of shipping bills pending as on 31.12.2023 in the Exporter queue is enclosed as Annexure-A along with the specific error code and its meaning. Accordingly as a trade facilitation measure, this Commissionerate is conducting a Special Drive from 05.02.2024 to 07.02.2024 for disposal of such IGST refund pending as on 31.12.2023. The said lists have alsobeen uploaded on ICD, TKD, Export Commissionerate website http://delhicustoms.gov.in for ready reference. All Exporter/Customs Brokers are requested to come forward and submit the necessary documents in respect to their Shipping Bills on the scheduled date of the Special drive.
http://delhicustoms.gov.in/files/tughlakabad-exports/public-notices/Public_notice_01_24.pdf
Indian companies wanting to list on the international exchanges at GIFT IFSC may face a number of roadblocks. The norms that were notified on Wednesday allow only the 'permissible holder' to in-vest, trade or hold equity shares of Indian companies listed on international exchanges. The permissible holder is not a person resident in India. The regulations restrict resident Indians from owning stock that is listed on the IFSC exchange. This effectively may be interpreted to mean that this shareholding block is not capable of being transacted as listed stock. The FEMA provisions now permit both unlisted and listed Indian companies to access international exchanges. The equity shares listed on international exchanges will be counted towards the foreign holding of the company. Existing listed companies will have to comply with SEBI norms. However, it is not clear whether reverse fungibility of shares listed on both domestic exchanges and at IFSC will be allowed. Some procedural aspects such as mode of payment and other conditions for remittance of proceeds to India are still subject to RBI clarifications that are awaited.
No cash payments at AIIMS-Delhi from March 31-AIIMS Delhi to go fully digital, only accepting electronic payments via UPI, debit/credit cards, and AIIMS smart card. Cash payments will only be accepted at AIIMS smart card “top up” counters. The decision was made after an outsourced service provider tampered with discharge bills, causing financial loss to patients.
Direction to Stop using Public Email Ids for Official Communications: In a recent move to bolster cybersecurity, the Directorate General of Systems & Data Management of the central government of India has issued a crucial circular to all customs & GST field formations, directorates, and officers. The directive urges them to promptly transition from using public Email IDs such as Gmail, Yahoo, and Hotmail for official communication to the more secure gov.in/nic.in Email IDs. The circular highlights the vulnerability in the security architecture of the Central Board of Indirect Taxes and Customs (CBIC), citing concerns related to privacy theft, credential dumping, and targeted attacks like phishing. It emphasizes that the security policy of the All-in-Ones (AIOs) used for official work currently allows access to any public Email IDs, posing a potential risk to the digital footprint of CBIC. While acknowledging that the use of public Email IDs was unavoidable in the past due to the unavailability of gov.in or nic.in e-mail IDs, the circular points out that NIC has now provisioned personal name-based gov.in IDs to all officers. Additionally, departments/sections can apply for generic e-mail IDs representing their entities, and officers can have designation-based e-mail IDs for continuity and knowledge transfer. In conclusion, the circular emphasizes that, to safeguard the digital environment of CBIC, all Customs & GST Field formations, directorates, and officers are required to transition to gov.in/nic.in Email IDs for all official communication by the set deadline of 01.02.2024.
29/01/2024
CII demands for the budget:
1. The Confederation of Indian Industries (CII) urged Finance Minister Nirmala Sitharaman to target a 20% increase in the capital expenditure outlay for the upcoming financial year, reaching Rs 12 lakh crore in her forthcoming budget.
2. The industry body also recommended a revision of beneficiary criteria for the free food scheme and the initiation of pilot projects to assess an urban employment guarantee scheme modelled after the Mahatma Gandhi National Rural Employment Guarantee Act (NREGA).
3. The CII proposed the creation of an independent Ministry for Investment, serving as a central point of contact to facilitate both domestic and foreign private investments, and to assist Indian investors in international ventures.
4. It advocated for linking the exemption limit and rebate of personal income tax with inflation. It called for an extension of the interest subvention scheme for low-cost housing to cover a total housing cost of up to Rs 35 lakh, an increase from the current Rs 25 lakh limit.
5. The industry body also emphasized the need for augmented allocations for flagship schemes like the Pradhan Mantri Awas Yojana, Pradhan Mantri Gram Sadak Yojana, and the National Rural Employment Guarantee Scheme.
6. In its report, the CII recommended the launch of a National Mission for Advanced Manufacturing to enhance quality and productivity in manufacturing. This mission would fortify the ecosystem for the development of a technologically advanced manufacturing industry and expedite the adoption of transformative technologies.
7. Furthermore, the CII called for the expansion of the Production-linked Incentive Scheme (PLI) to labour-intensive sectors such as apparel, toys, and footwear to stimulate employment generation. It also suggested extending the PLI to sectors with substantial imports but domestic capability, including capital goods and chemicals, to decrease import dependence.
8. It also called for introducing measures to promote affordable housing, target a fiscal deficit of 5.4% in FY25
Madras High Court Clarifies GST Levy on Gift Vouchers as 'Actionable Claims' not Subject to Schedule III"
27/01/2024
NAGPUR Customs has booked a case of attempt to smuggle gold at Nagpur International Airport in early hours on January 25, 2024. Based on passenger profiling Nagpur Customs officers have prevented an attempt to smuggle gold at the Nagpur International Airport in the early hours of January 25.One passenger holding Indian passport and a resident of Kerala travelled from Sharjah to Nagpur by Qatar Airways flight No.
QR-590 had attempted to smuggle gold in paste form which was kept concealed in the inner wear he was wearing. In this operation 549 grams of 24 Karat fine gold having market value of approximately Rs 34 lakh has been recovered from him.
The passenger, travelled to Nagpur for first time was caught when attempting to smuggle the gold into India to evade the payment of Customs Duty. However, the alert and vigilant officers of Customs at Nagpur The passenger, travelled to Nagpurfor first time was caught when attempting to smuggle the goldinto India to evade the payment of Customs Duty. However, the alert and vigilant officers of Customs at Nagpur. As per direction of theCustoms Commissioner Sanjay Kumar and under the guidand of the Additional Commissioner Peeyoush Bhati, the vigil team of Customs. Officers of Air Intelligence Unit (AIU) and Air Customs Unit (ACU) of Nagpur Customs led by their Assistant Commissioners V Suresh Babu, Anjum Tadvi have booked the case.
The Supreme Court refused to interfere with the Delhi High Court judgment, holding that an advocate's office run from a residential building is not not subject to property tax under the Delhi Municipal Corporation Act as a "business building." While doing so, the Bench of Justices BV Nagarathna and Augustine George Masih affirmed that the "professional activity" of lawyers does not fall within the category of "commercial establishment" or business activity," and the firm of lawyers is not a "commercial establishment. Under the Delhi Municipal Corporation Act, 1957 (DMC Act), there is no power to tax "professional activities" carried out in residential buildings. The Court noted that the language of section 116 A (1) of the Delhi Municipal Corporation Act, 1957 does not include tax on professional activities. Thus, the Court opined that the rule of strict interpretation of taxation statute has to be applied. There is no scope of reading any derivative meaning or any intentment of the statute.
The Supreme Court recently (on January 23) held that as per Section 15 of the Societies Registration Act, 1860, disqualified members would not be entitled to any notice as they had no right to vote or to be counted as members.
Members In Default Of Membership Fee Stand Disqualified From Society Without Notice; They're Not Entitled To Vote : Supreme Court. If they were not entitled to vote and they were not to be counted as members, there would be no illegality or for that matter any prejudice being caused by not issuing any notice as the same would be an exercise in futility., the Division Bench of Justices Vikram Nath and Ahsanuddin Amanullah held. Case Title: ADV BABASAHEB WASADE & ORS v. MANOHAR GANGADHAR MUDDESHWAR & ORS., CIVIL APPEAL NO. 10846 OF 2018 Citation : 2024 LiveLaw (SC) 59
26/01/2024
Some Gst citations —
Delhi High Court Judgement GST Registration to be Cancelled wef Date Of SCN- In The High Court OF Delhi At New Delhi W.P.(C) 15670/2023: Varyam Dass Khurana
The order cancelling the registration shall take effect from 18.05.2020, the date of the Show-Cause notice.
Judgment passed by Punjab and Haryana High Court in the case of Hans Raj Sons v. Union of India and others [CWP No. 36396 of 2019 dated December 16, 2019], and Adfert Technologies Private Limited v. Union of India and others [CWP No. 30949 of 2018 dated November 04, 2019], wherein the Hon’ble Court held that the in absence of any enabling mechanism the assessee should not be denied from availing credit.
The Hon’ble Madras High Court in the case of Tvl. Kavin HP Gas Gramin Vitrak v. The Commissioner of Commercial Taxes & Ors. [W.M.P. (MD) Nos. 6764 and 6765 of 2023 dated November 24, 2023] held that the Respondents without giving any opportunity to file the returns by notifying the Form GSTR-2, cannot expect the taxable person to file returns. Hence, the Respondents ought to allow the dealers to file returns manually and the writ petitions were allowed without any cost.
The High Court of Allahabad in the case of Rama Brick Field v. Addl. Commissioner [2023] 156 taxmann.com 252 It has been argued on behalf of petitioner that Rohit Coal Traders has filed his return for A.Y. 2018- 19 i.e. GSTR-1 and GSTR-3B. It is a matter of common knowledge that after filing of GSTR -1, an auto pop up widow would be opened for filing of Form GSTR 3 B for payment of tax and form GSTR 2 A can be viewed by the purchaser of goods in question. Once the said form was generated and the said fact has not been disputed by the authorities below while passing of the impugned order, which goes without saying that at the time of transaction, purchaser and supplier both were registered. However at the subsequent time if the seller i.e. Rohit Coal Trader was found non- existence, the proceeding can be initiated but the authorities has failed to consider the fact that GSTR returns as prescribed under the Act was filed by the seller to which not a single word has been whispered while passing the impugned order. On the contrary an observation has been made that the petitioner has failed to bring on record any cogent material to show that Rohit Coal Traders has deposited the tax and therefore proceedings were held to be justified. Under the GST regime all details are available in the portal of GST department. The authorities could have very well verified as to whether after filing of GSTR-1 and GSTR 3 B how much tax has been deposited by the selling dealer i.e. Rohit Coal Traders but the authorities have failed to do so. Thus looking to the said facts, the impugned orders cannot be sustained in the eyes of law.
The Hon'ble Allahabad High Court in the case of Jai Maa Jwalamukhi Iron Scrap Supplier v. State of U.P. [2021] 127 taxmann.com 474/86 GST 115/2021 (53) G.S.TL. 257 categorically decided that – THERE SHALL BE NO LEVY ON THE BASIS OF GSTR-3B VS GSTR-2A. The Hon'ble High court opinioned that "The invoice is primary evidence of the transaction. Unless the revenue authority disputes its genuineness, it cannot be lightly overlooked. Perusal of the said order would reveal that other than the defect of non- production of books of account, assessing authority has also taken into consideration the fact that there were discrepancies arising on the basis of the details mentioned in the auto-populated GSTR-3B and GSTR-2A, filed by the petitioner. Even otherwise, in face of the admission, as to the genuineness and existence of the tax invoice and the e-way bills, mere existence of some discrepancies may not have ever led the revenue authority to the conclusion that tax had been evaded or the transaction had not been disclosed."
When the assessee makes the payment through DRC-03 during the investigation and the department neither issued acknowledgment in DRC-04 nor the show cause notice under sections 73 or 74 of the CGST Act, even after the significant lapse of time, the High Court directed the department to refund the said amount with interest.
Samyak Metals (P.) Ltd vs. Union of India [2023] (Punjab & Haryana)
The scrutiny proceedings of return as well as proceeding under section 74 are two separate and distinct exigencies and issuance of notice under section 61(3), therefore, cannot be construed as a condition precedent to initiation of action under section 74 of the Act. Naarjuna Agro Chemicals (P.) Ltd vs. State of UP [2023] (Allahabad HC)
Where the assessee’s registration is cancelled on the grounds of excess ITC availment in GSTR-3B as compared to GSTR-2A/2B as the petitioner’s vendor did not file GSTR-1/GSTR-3B, the department was directed to verify the facts and revoke the cancellation if no fault lies with the assessee.- Electro Steel Corporation vs. State of Jharkhand [2023] (Jharkhand)
25/01/2024
M/S. Raj Enterprises Versus Superintendent Range 25 GST Division New Delhi [2024 (1) TMI 232] - Hon'ble Delhi High Court dated December 20, 2023:
Issue Involved: Whether GST registration can be cancelled by GST authorities from the date of registration, on the ground of non-filing of GST returns for a continuous period of 6 months?
Answer: No
Held that: The Hon'ble Delhi High Court held that non-filing of returns for a period of 6 months or more cannot lead to the conclusion that the petitioner's GST registration is required to be cancelled even for the period while it was carrying on its business and duly filing its returns.
Non- consideration of the reply to show cause notice prejudices the Assessee and denies the Assesee a reasonable opportunity to establish its position. Matter remanded for reconsideration. High Court of Madras in MakeMyTrip (India) (P.) Ltd. Vs. State Tax Officer
W.P.Nos.16866 & 22013 of 2023 and W.M.P.No.32200 of 2023- M/s.Eicher Motors Limited: Madras High Court
Held that
1. in the present case, the tax amount has already been credited to the Government within the prescribed time limit, i.e., before due date, the question of payment of interest would not arise. Under these circumstances, this Court passes the following orders:
1) The credit to the account of Government would always occur not later than the last date for filing the monthly returns in terms of the provisions of Section 39(7) of the Act.
2) Once the amount is paid by generating GST PMT-06, the said amount will be initially credited to the account of the Government immediately upon deposit, at which point, the tax liability of a registered person will be discharged to the extent of the deposit made to the Government. Thereafter, for the purpose of accounting only, it will be deemed to be credited to the ECL as stated in the Explanation (a) to Section 49(11) of the Act.
3) As long as the GST, which was collected by a registered person, is credited to the account of the Government not later than the last date for filing the monthly returns, to that extent, the tax liability of such registered person will be discharged from the date when the amount was credited to the account of the Government.
2. Citation- The Gujarat High Court in the Vishnu Aroma case
3. interest under section 50 will not be payable if amount equal to tax is available as balance in electronic cash ledger.
24/01/2024
The Halwa ceremony, marking the final stage of the Budget preparation process for Interim Union Budget 2024, was held in North Block, today, in the presence of Union Finance & Corporate Affairs Minister Smt. Nirmala Sitharaman and Union Minister of State for Finance Dr. Bhagwat Kisanrao Karad. The Budget documents will be available on the Mobile App after the completion of the Budget Speech by the Union Finance Minister in Parliament on 1st February, 2024. At the Halwa Ceremony, the Union Finance Minister was also accompanied by Dr. T.V. Somanathan, Finance Secretary & Secretary Expenditure; Shri Ajay Seth, Secretary, Economic Affairs; Shri Tuhin Kanta Pandey, Secretary, DIPAM; Shri Sanjay Malhotra, Secretary, Revenue; Shri Nitin Gupta, Chairman, Central Board for Direct taxes (CBDT); Shri Sanjay Kumar Agarwal, Chairman, Central Board for Indirect Taxes and Customs (CBIC); and Shri Ashish Vachhani, Additional Secretary (Budget), besides others officers and staff of the Ministry of Finance, involved in the Budget preparation and compilation process, were also present on the occasion.
Amazon has been fined €32 million in France for "excessive" surveillance of its workers, including measures the data watchdog CNIL found to be illegal. It found Amazon tracked activity so precisely that it led to workers having to potentially justify each break.
According to data released by the Central Board of Direct Taxes, the cost of tax collection decreased to 0.51 percent of total collection in 2022-23 from 0.57 percent in 2013-14
India’s direct tax-to-GDP ratio hit a 15-year high of 6.11 percent in 2022-23, hovering near its peak of 6.3 percent reached in 2007-08, according to data released by the Central Board of Direct Taxes (CBDT).
The data, released late on January 23, showed that the contribution of direct taxes – which majorly comprises corporate tax and personal income tax – to total tax collections has reached the pre-pandemic levels. In 2022-23, direct taxes made up 54.62 percent of the government’s total tax revenue, up from 52.27 percent in 2021-22 and 46.84 percent in 2020-21 – the lowest in 15 years.
According to Moneycontrol’s calculations, if the central government meets its budget estimates for 2023-24, the direct tax-to-GDP ratio could rise further to around 6.2 percent. However, economists expect the government to exceed its budget estimates of Rs 9.23 lakh crore for corporate tax and Rs 9.01 lakh crore for personal income tax. A snap-poll of 10 economists’ estimates suggest that the direct tax-to-GDP ratio could reach an all-time high of 6.5 percent this year.
A total of 7.78 crore income tax returns were filed in 2022-23, up 6.5 percent from the number filed in 2021-22. Income tax returns filed by individuals make up the majority, with 2022-23 seeing 7.33 crore such returns being filed by this category.
23/01/2024
India Overtakes Hong Kong as World's Fourth-Largest Stock Market
• South Asian nation remains an investor darling in the new year
• China's economic struggles have stymied growth in Hong Kong. India's stock market has overtaken Hong Kong's for the first time in another feat for the South Asian nation whose growth prospects and policy reforms have made it an investor darling.
The combined value of shares listed on Indian exchanges reached $4.33 trillion as of Monday's close, versus $4.29 trillion for Hong Kong, according to data compiled by Bloomberg. That makes India the fourth-biggest equity market globally. Its stock market capitalization crossed $4 trillion for the first time on Dec. 5, with about half of that coming in the past four years.
Central banks have been buying gold at record levels, with China and Russia leading the way, as a strategic response to economic uncertainty and de-dollarization.
The U.S. Federal Reserve's potential easing of monetary policies in 2024 and existing inflation fears are driving central banks to hedge with gold.
Global political instability, including the upcoming U.S. presidential election, is further encouraging central banks to increase their gold reserves. The first half of 2023 was a record-breaking moment for central bank gold buying, led by none other than China and Russia. Organizations like the World Gold Council reported a staggering increase compared to 2022. Whether or not The January Effect will apply to the gold price as we finish the first month of 2024, there are plenty of indicators that the central bank buying spree will continue for at least the first half of the new year. Accelerating de-dollarization is just one factor, as powerhouses like China and Russia continue strategically moving further and further from the grips of USD hegemony. Of course, actions by the Biden administration to isolate Russia with sanctions in the wake of the Ukraine conflict only provide further impetus for the Russians to continue divesting in any way they can from the US dollar. Combined with a volatile ruble and a wave of new American spending to feed its proxy wars in Ukraine and Israel, it only makes sense that Russia’s gold coffers will continue to grow. Finally, 2024 brings even more uncertainty in the face of the US’s continuing proxy conflicts and, notably, a US presidential election that is reinforcing a global picture of domestic political instability. With candidates on both sides like RFK Jr. and Vivek Ramaswamy embracing anti-establishment messages about reigning in central banks, the military-industrial complex, and the US debt spiral, there are plenty of candidates shaking the nest in ways that would have been unheard of just a couple elections ago.
22/01/2024
In a recent development, the Income Tax department has clarified that donations made for the repair, rebuild, or renovation of the Ram Mandir in Ayodhya, under the Shri Ram Janmabhoomi Teerth Kshetra Trust, are eligible for deduction under Section 80G (2) (b) of the Income-tax Act, 1961 provided that person chooses the old tax regime. The government has notified that 50 percent of the donation for the purpose of temple repair or renovation qualifies for this deduction. However, it’s important to note that cash donations exceeding Rs 2,000 are not eligible for deduction. The Central Board of Direct Taxes (CBDT) has explicitly stated that donations to the Shri Ram Janmabhoomi Teerth Kshetra are eligible for this tax benefit.
Section 80G And Eligibility Criteria: Section 80G of the Income Tax Act, of 1961, deals with deductions for donations to certain funds, charitable institutions, etc. The recent notification by the Central Government specifies “SHRI RAM JANMABHOOMI TEERTH KSHETRA” (PAN: AAZTS6197B) as a place of historic importance and a renowned place of public worship, making it eligible for deductions under Section 80G(2)(b) from the financial year 2020-2021.
Over Rs 1 lakh crore trade has happened from January 1 till today—all in the small business sector.
Multiplier effect:
Ayodhya-based Pakka Ltd, a manufacturer of compostable packaging solutions, saw its share price jump over 150% in the past two months. The company has collaborated with Ram Janmabhoomi Teerth Kshetra Trust to promote eco-friendly practices. Zepto Co-founder and CEO Aadit Palicha posted on X that the number of pooja flower orders on the quick commerce app grew 6X on January 22.
the Government of Canada today announced that will set an intake cap on international student permit applications to stabilize growth, for a period of two years.
Details: https://Inkd.in/gdWxMh5z
For 2024, the cap is expected to result in approximately 360,000 approved study permits, a decrease of 35% from 2023. Study permit renewals will not be impacted.
Those pursuing master's and doctoral degrees, and elementary and secondary education are not included in the cap.
Current study permit holders will not be affected.
To implement the cap, as of January 22, 2024, every study permit application submitted to IRCC will also require an attestation letter from a province or territory.
Provinces and territories are expected to establish a process for issuing attestation letters to students by no later than March 31,2024.
In order to better align the Post-Graduation Work Permit Program, we are changing the eligibility criteria:
• Starting September 1, 2024, international students who begin a study program that is part of a curriculum licensing arrangement will no longer be eligible for a postgraduation work permit upon graduation.
•Graduates of master's and other short graduate-level programs will soon be eligible to apply for a 3-year work permit.
In the weeks ahead, open work permits will only be available to spouses of international students in master's and doctoral programs.
The spouses of international students in other levels of study, including undergraduate and college programs, will no longer be eligible.
21/01/2024
The Directorate of Income Tax (Systems) has issued a communication regarding the dissemination of high-risk CRIU/VRU PAN cases and non-PAN cases through the ‘Verification’ module of the Insight Portal. This directive, based on the Board-approved Risk Management Strategy (Cycle-3), outlines the identification and actions to be taken under section 148/148A of the Income Tax Act, 1961.
Reassessment under Income Tax must be based on new and substantive grounds: Case Name : Kuehne+Nagel Pvt. Ltd. Vs ACIT (Delhi High Court).
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The GST Department came with more methods of e-payment in addition to net-banking i.e. Cards and Unified Payments Interface (UPI). Cards facility includes Credit Card (CC) and Debit Card (DC) namely Mastercard, Visa, RuPay, Diners(CC only) issued by any Indian bank.
SEBI has found more than 40 cases where AIFs (alternative investment funds) appear to have been structured to facilitate circumvention of certain financial sector regulations, to the tune of over Rs 30,000 crore.
Central Tax dated 26th December 2022 two new tables Table 14 and Table 15 were added in GSTR-1 to capture the details of the supplies made through e-commerce operators (ECO) on which e-commerce operators are liable to collect tax under section 52 of the Act or liable to pay tax u/s 9(5). These tables have now been made live on the GST common portal. These two new tables will be available in GSTR-1/IFF from January-2024 tax periods onwards.
Advisory on GSTR-1/IFF: Introduction of New 14 and 15 tables
Notification No.: 26/2022 – Central Tax dated December 26, 2022
1. Purpose: The purpose of this advisory is to make taxpayers aware of the new Table 14 and 15 in FORM GSTR-1 and These tables are relevant for only those taxpayers who either supply through E-Commerce operator (ECO) or are themselves liable to pay tax under Section 9(5) of the GST Act.
2. Introduction: As per Noti?cation 26/2022 – Central Tax dated 26th December 2022 two new tables Table 14 and Table 15 were added in GSTR-1 to capture the details of the supplies made through e-commerce operators (ECO) on which e-commerce operators are liable to collect tax under section 52 of the Act or liable to pay tax u/s 9(5). These tables have now been made live on the GST common portal. These two new tables will be available in GSTR-1/IFF from January-2024 tax periods onwards.
20/01/2024
Section 15 of the MSMED Act, 2006 talks about the time limit to make payments to Micro and small enterprises. According to this section, the buyer is required to make payment on or before the due date agreed upon between him and the supplier, or in case of no agreement, before the appointed day, which is explained below.
With agreement
If there is an agreement between the supplier and the recipient, the time limit shall be the period specified in the agreement or 45 days, whichever is less. That is, in any case, the time limit cannot be beyond 45 days. Even if the time limit specified in the agreement is more than 45 days, the buyer will have to make payment within 45 days, or else the deduction under The Income-tax Act will be allowed on a payment basis and further the buyer will have to pay interest as specified in section 16 of the MSMED Act, 2006.
Without agreement
If there is no agreement between the buyer and the seller the payment has to be made before the appointed day. Section 2 of the MSMSED Act, 2006 defines appointed day-
“appointed day” means the day following immediately after the expiry of the period of fifteen days from the day of acceptance or the day of deemed acceptance of any goods or any services by a buyer from a supplier."
Further explanation to this definition also clarifies, the meaning of the day of acceptance and the day of deemed acceptance. Where the buyer does not make any objections regarding the goods/services within 15 days from the day of the delivery of goods or the rendering of services, the day of acceptance or the day of deemed acceptance shall be the date of actual delivery of goods or the rendering of services. However, where any objection has been made by the buyer in writing within 15 days, the day of acceptance will be the day on which such objection is removed by the supplier.
Consequences under MSMED Act, 2016
Section 16 of the Micro, Small and Medium Enterprises Development Act, 2006 provides that where any buyer fails to make payment of the amount to the supplier, as required under section 15, the buyer shall, notwithstanding anything contained in any agreement between the buyer and the supplier or in any law for the time being in force, be liable to pay compound interest with monthly rests to the supplier on that amount from the appointed day or, as the case may be, from the date immediately following the date agreed upon, at three times of the bank rate notified as by the Reserve Bank.
Further, Section 23 of the MSMED Act has specifically prohibited the assessee from claiming the deduction from the income on account of interest paid to MSME.
This amendment applies only to micro and small enterprises. Medium enterprises are kept out of the ambit of this section.
The amendment extends its coverage to all assesses involved in any business or profession, regardless of their turnover or income in the preceding year.
The Unique Identification Authority of India (UIDAI) has recently notified significant amendments to the Aadhaar (Enrolment and Update) Rules, simplifying the process of enrolling and updating Aadhaar details for both resident and non-resident individuals (NRIs). These changes aim to enhance the convenience and accessibility of Aadhaar services.
1. The updated rules now provide two methods for updating information in the Central Identities Data Repository (CIDR): visiting an enrolment centre or using the UIDAI website/mobile application.
2. Specifics of the Nine New Forms
Form 1: For resident and NRI adults for Aadhaar enrolment and detail update.
Form 2: For NRIs with address proof outside India.
Form 3: For children (resident/NRI with Indian address) aged 5 to below 18 years.
Form 4: For NRI children with addresses outside India.
Form 5: For resident or NRI children (with Indian address) below 5 years.
Form 6: For NRI children (with address outside India) below 5 years.
Form 7: For resident foreign nationals above 18 years for Aadhaar enrolment or update.
Form 8: For resident foreign nationals below 18 years.
Form 9: For cancellation of Aadhaar number upon attaining 18 years of age.
3. Documentary Proof for Complete Date of Birth—The new rules state that if the individual’s age is declared without documentary proof, only the year of birth will be printed on the Aadhaar card. To have the complete date of birth printed, documentary evidence must be provided.
4. Head of Family (HoF) Confirmation— Enrolment and update can also be done based on confirmation by the HoF, requiring their Aadhaar details and signature on Form 1. NRIs must provide an email ID, and only a valid Indian passport is acceptable as Proof of Identity (POI) for them.
5. Mandatory Update after 10 Years— UIDAI now requires Aadhaar number holders to update their documents or information after 10 years from the date of Aadhaar generation. This update can be done online or by submitting a form at the enrolment centre.
The West Bengal state has finally changed the flat and house registration module according to real estate regulatory authority (RERA) guidelines. House and flats in the state will now be registered according to carpet area instead of super built up area, which was the prevailing norm till this week. The inspector general of registration (IGR) has started to register property according to carpet area from Wednesday. According to RERA, real estate players had to sell flats as per carpet area. Earlier, in the state flats and houses had to be registered as per super built area. The super built up area, which includes common facilities like staircase, landing and open areas, is generally 20% higher than carpet area — a super built area of 1,000 square feet translates into 800 square feet of carpet area. The stamp duty paid by buyers, calculated according to carpet area, will be lower than in case of super built up area. However, the circle rate has been adjusted to some extent to avoid losses to the state exchequer. For instance, if the rate was Rs 3,500 per square feet in an area, it may be revised to Rs 4,000-Rs 4,200 per square feet or above, leading to the total outgo from buyers remaining almost unchanged.
S-TOI
The ITAT Delhi’s ruling in Simran Bagga Vs ACIT sets a precedent affirming that income tax deductions under section 54F can be claimed even if the new property is registered in the name of the spouse. The decision aligns with purposive construction, interpreting tax laws liberally in favor of taxpayers. This victory reinforces the importance of documenting the direct connection between sale proceeds and new investments to substantiate claims. The ITAT considered the documentary evidence, including HDFC bank statements and payment receipts, establishing that the investment was made from the sale proceeds of the Delhi property. The Assessee explained that due to travel restrictions amid the COVID-19 pandemic, the property was registered in Mr. Ajay Suri’s name for convenience. The ITAT referred to precedents and High Court judgments, emphasizing that the crucial factor is the utilization of sale proceeds for the new investment. The Tribunal held that the Assessee is eligible for the deduction under section 54F, considering the investment made within the stipulated time.
John Doe orders are blanket cease and desist injunctions that are issued against anonymous entities. They are usually passed in suits involving infringement of intellectual property rights since it is often practically impossible to track down every infringing party. Single-judge Justice Bharati Dangre passed the order after government authorised UTI Infrastructure Technology and Services Limited (UTIITSL) filed a copyright infringement suit seeking to restrain John Doe companies and 13 known companies from passing off UTIITSL registered mark as their own. The Bombay High Court on January 12 passed a John Doe order directing take down of unauthoried websites providing PAN card related services online.
S-B&B
The Rajasthan bench of the Authority for Advance Rulings has held that GST (Goods and Services Tax) is applicable on the rent if a residential property is used for commercial purpose by a lessee (who is registered for GST purposes). In the case of Deepak Jain (the applicant) who had leased out his property to a private limited company, which was engaged in back-office operations, the AAR observed that, up to July 17, 2022, renting of residential dwellings for use as a residence was exempt from GST, while renting for commercial use was taxable at 18%. However, from July 18, 2022, the taxability of renting residential property underwent certain changes and services by way of renting of residential dwelling used as a residence is taxable under the reverse charge mechanism, if rented to a registered person. In this case, the lease deed issued by the Jaipur Development Authority stipulated that the land use of the property is residential. However, the lease agreement entered into by Jain and the private company stipulated that the property would be used solely for commercial use. According to the AAR despite potential classification as residential by local authorities, the predominant commercial use becomes the determining factor for GST levy. Renting for commercial use is taxable at 18% and the applicant will have to pay GST on forward charge basis.
S-TOI
Employment includes self employment for business profession purposes: ACIT Vs Nishant Kanodia (ITA No. 2155/Mum./2023)
Facts:
The assessee, being an individual, was in India for a total period of 176 days. As per the assessee during the year, he had left India for the purpose of employment with Firstland Holdings Ltd., Mauritius. The assessee was appointed as Strategist – Global Investment in Mauritius.
The assessee claimed his residential status to be “Non–Resident” and accordingly did not offer his global income to tax in India. In this regard, the assessee has placed reliance on Explanation– 1(a) to section 6(1) of the Income Tax Act and submitted that since during the year, the assessee has left India for the purpose of employment in Mauritius, therefore while determining the residential status, the period of 60 days as per section 6(1)(c) shall be substituted with 182 days as per Explanation–1(a) of section 6(1).
On the contrary, as per the Revenue, the assessee left India not for the purpose of employment but he left India as an Investor on a business visa to Mauritius, therefore Explanation–1(a) of section 6(1) is not applicable as so he is a resident of India and global income should hence be taxable in India.
ITAT Mumbai held as under:
1. No technical meaning is intended for the word “employment” used in the Explanation.
2. In our view, going abroad for the purpose of employment only means that the visit and stay abroad should not be for other purposes such as a tourist, or for medical treatment or for studies or the like.
3. Going abroad for the purpose of employment therefore means going abroad to take up employment or any avocation as referred to in the Circular 346 dated 30/06/1982, which takes in self-employment like business or profession.
4. So much so, in our view, taking up own business by the assessee abroad satisfies the condition of going abroad for the purpose of employment covered by Explanation (a) to section 6(1)(c) of the Act.
5. Therefore, we hold that the Tribunal has rightly held that for the purpose of the Explanation, employment includes self-employment like business or profession taken up by the assessee abroad.
Income Tax — Know Your Refund Status functionality is shifted to Post-login from Pre-login Mode.
Please access this functionality after login to the e-Filing portal by navigating through Services -> Know Your Refund Status.
Now it shows Date of Refund and Last four digits of bank account in which refund get credited.
19/01/2024
Emerging Emojis Law and With the rise in the usage of emojis, they have become a digital language for expression. Emojis can have different interpretations by different users with different expressions and mindset. Same emoji give different understanding and different expression depending on the type of smart phone and type of user interface. Different interpretations of Emoji’s in different rulings :
A. 06.07.2023- The Guardian- Canadian judge rules thumbs-up emoji can represent contract agreement. A Canadian judge has ruled that the "thumbs-up" emoji is just as valid as a signature, arguing that courts need to adapt to the "new reality" of how people communicate as he ordered a farmer to pay C$82,000 ($61,442) for an unfulfilled contract.
Whereas, thumbs up can be an acknowledgment of reading/ delivery of the message.
B. 31.3.2016- The Local- Jilted Frenchman jailed for texting gun emoji to ex
C. 05.12.2017- NEW YORK POST- Sending an emoji can be a jailable offense, the judge sentenced the accused to 8 months jail.
D. 09.06.2018- Live Law- Madras HC Quashes Criminal Complaint Against BSNL Employees Who Put 'Smiling Face With Tears' Emoji In Official WhatsApp Group.
E. Goldman Sachs Report- "EMOJI LAW" ON THE RISE IN THE U.S.
2016- 26 CASES
2017- 33 CASES
2018- 53 CASES
F. The Washington Post- Your honor, it's an eggplant: Lawyers call for guidance on interpreting emoji
G. The Times of London- Noting the rise of emoji in court cases, and the multiple meanings couched in images such as a peach or a bathtub, lawyers in Britain are urging the judiciary to issue guidance on the interpretation of the digital symbols.
Section 15 of the Micro, Small and Medium Enterprises Development Act 2006 mandates payments to micro and small enterprises within 45 days in case of written agreement and 15 days in case of no-written agreements. There have been numerous instances, when payment was delayed. Micro enterprises mean a unit where the investment in plant and machinery or equipment does not exceed one crore rupees and turnover does not exceed Rs 5 crore rupees. For small enterprises, these figures will be rs 10 crore and rs 50 crore, respectively. Accordingly, a new clause (h) in section 43B of the Act was inserted to provide that any sum payable by the assessee to a micro or small enterprise beyond the time limit specified in section 15 of the Micro, Small and Medium Enterprises Development (MSMED) Act 2006 shall be allowed as deduction only on actual payment. If the actual payment is after March 31, which is beyond the above time limit of 15/45 days even if made before the due date of return; is to be disallowed unlike other payments referred in section 43B of the Income-tax Act 1961. However, the said payment will be allowed in the next year. This amendment has cast additional duties and responsibilities upon the taxpayers to identify the micro and small enterprises and examine if the payments have actually been made within 15 /45 days as the case may be and if the same is beyond the said limit, then to face disallowance of said payments.
Delhi High Court Judgement GST Registration to be Cancelled wef Date Of SCN- In The High Court OF Delhi At New Delhi - W.P.(C) 15670/2023- Varyam Dass Khurana. The order cancelling the registration shall take effect from 18.05.2020, the date of the Show-Cause notice.
MINISTRY OF LABOUR & EMPLOYMENT, GOVERNMENT OF INDIA- EPFO- File no No: WSU/2024/1/UIDAI Mater/ 4090 dtd 16.01.2024- Employees' Provident Fund Organisation will not take Aadhaar as a valid document to verify date of birth as it is only for authenticating the identify of a person. This aspect of the Aadhaar Act, 2016 has been reiterated/highlighted/stressed upon by different High Courts in recent judgments. The most recent one is given by the Hon'ble High Court of Bombay, in the case of State of Maharashtra V/s Unique Identification Authority of India And Ors. dated 28.07.2023. Read the full circular
https://www.epfindia.gov.in/site_docs/PDFs/Circulars/Y2023-2024/Circular_WSU_16012024.pdf
January 31, 2024 is the extended last date to declare opening balance of ITC reversal in Electronic Credit and Re-claimed Statement at the GST Common Portal. This statement helps in tracking ITC that has been reversed in Table 4B(2) and thereafter re-claimed in Table 4D(1) and 4(5). In case of any mistakes or inaccuracies in reporting, amendment can be done 3 times only till February 29, 2024.
Existing GTA taxpayers can choose to pay GST on Forward Charge mechanism or RCM by e-filing declaration in Annexure V Form or Annexure VI Form for FY 24-25 from 01.01.24 to 31.03.24. New GST taxpayers can choose the same for FY 23-24 onwards, before the expiry of 45 days from the date of applying for GST registration or 1 month from the date of obtaining registration, whichever is later.
Regular Worker & Daily Wager Equal under Gratuity Act - The Payment of Gratuity Act does not differentiate between a regular employee and a daily wage employee, Karnataka HC recently observed while directing the state government to settle arrears of a 75-year-old retired D' Group employee in relation to the period when he worked as a daily wager.
Wef 1 Jan 2024, manufacturers and importers of packaged items will have to mention the price of products per unit as well as the overall MRP on packets.
Extension of deadline of nomination or opt out for demat and mutual fund account holders from Dec 31, 2023 to June 30, 2024.
New settlement mechanism for stock trades from January 1. The proposed system is similar to the Application Supported by Blocked Amount (AS BA) facility available to'an IPO applicant, which ensures that money will move from the applicant's bank account only after the allotment in the IPO. The new facility will initially be available only in the equity cash segment but may later be extended to other segments.
The Income Tax Department has enabled online filing of Form 15CD for the fiscal year 2023-24. This initiative, notified through the CBDT’s notification no. 89/2023 dated October 16, 2023, streamlines the process for taxpayers.
1. Form 15CD is a statement to be furnished electronically by a qualifying unit of an International Financial Services Centre (IFSC), with respect to remittances to a non-resident (not being a company) or to a foreign company.
2. The notification exempts a unit of an IFSC from furnishing Form No. 15CA (Part D) in respect of remittances which are not chargeable to tax as per the provisions of the ITA and requires them to furnish electronically Form No. 15CD in respect of all remittances.
3. Form No. 15CD requires, amongst others, the following details of the unit:
- Permanent Account Number (PAN)
- Tax deduction/collection account number
— Status of the unit
- Residential status of the unit
- Complete address, email, and phone number
4. It also requires details of remittances made (which includes, amongst others, the details of remittee such as name, PAN, address, email, phone number, etc.)
5. Further, it may be pertinent to note that earlier, only PDGIT(S) was authorized to specify the procedure, formats and standards in relation to the Forms; now DGIT(S) can also specify them.
6. Further, the Forms could be furnished only with the PDGIT(S); now the same can be furnished with the DGIT(S), if specified.
7. The Notification shall come into force with effect from 1 January 2024.
18/01/2024
All business establishments to pay attention to the new Income tax legislation to prevent disallowance of claim of expenses, interest amount payable. The businesses need to categorise the outstandings/ payables into MSME category and take annual declarations:
Effect of Section 43B for the running financial year 2023-24:
1. Micro Enterprise Investment less than Rs. 1 crore , Turnover less than Rs. 5 crore
2. Small Enterprise Investment less than Rs. 10 crore , Turnover less than Rs. 50 crore
3. Medium Enterprise Investment less than Rs. 50 crore , Turnover less than Rs. 250 Crores.
It is advisable to the business entities to take an Annual Declaration from their supplier indicating that they are micro or small enterprises registered under the Micro, Small and Medium Enterprises Development Act, 2006 which will facilitate the buyer to identify the enterprise and to ensure the due compliances. Further, the micro and small enterprises are also advised to mention a note on the invoice issued by them indicating that they are registered as micro or small enterprise under MSME Development Act, 2006 to facilitate the buyer about the compliance requirements. Any outstanding sum payable to the micro & small enterprises as on the last day of financial year 2023-24 and onwards remaining unpaid beyond the time limit specified in 15 of the Micro, Small and Medium Enterprises Development Act, 2006 shall be disallowed and added back to the income as computed under section 28 of the Income Tax Act, 1961 from 1st April 2024.
The Income Tax (I-T) department constituted 40 teams comprising as many as 250 officials to conduct searches at spots linked to four Noida-based construction groups, including, Bhutani Infra, Group 108, Advent, and Logix, over tax evasion charges. After conducting a 6-day search at all spots linked to the companies, the I-T officials recovered unaccounted cash worth over Rs 1,500 crore. The Income Tax department has named the operation ‘Mahakal’, which targeted the four companies that were evading tax while selling commercial spaces. The I-T officials also raided two broker companies. Officers discovered two pen drives hidden by employees of Bhutani Group, which contained information about the company receiving a huge amount of cash. In the financial years 2019-20, 2020-21, and 2021-22, the group received cash amounting to Rs 429 crore. Data obtained from the pen drives revealed that the Bhutani Group had accepted an unaccounted-for cash amount of Rs 595 crore from the financial year 2019-20 until now. The entire tax evasion revolved around the Assured Cash Return scheme. The enticing advertisement promised investors monthly payments towards the cost of space, ensuring them a substantial return until possession.
The scheme was used for tax evasion, as revealed in the agreements. As per the Securities and Exchange Board of India (SEBI) guidelines, the scheme is legal, and investors are advised to steer clear of it to avoid legal consequences.
S- TxCnct
Applicability Of Internal Audit: Sec 138 of Company Act 2013
1. Every Listed Company
2. Every Unlisted company-
a. Paid Up Share Capital of 50 Cr or more During the Preceeding Financial Year, Or
b. Turnover 200 Cr or More During the Preceeding Financial Year, Or
c. Outstanding Loan or Borrowing from banks or Public Financial Institutions Exceeding 100 Cr or More at any point of time during the preceding financial year, Or
d. Outstanding Deposits of 25 Cr or More at any point of time during preceeding financial year.
3. Every Private Company-
a. Turnover 200 Cr or More During the Preceeding Financial Year, Or
b. Outstanding Loan or Borrowing from banks or Public Financial Institutions Exceeding 100 Cr or More at any point of time during the preceeding financial year.
The implicit recognition of Bitcoin as a commodity by the Securities and Exchange Commission (SEC) marks a significant turning point for the digital asset. With the authorization of spot Bitcoin ETFs under NYSE Arca Rule 8.201-E, which governs Commodity-Based Trust Shares, Bitcoin has ascended to the status of the second largest commodity in the U.S. by assets under management (AUM). The landscape of Bitcoin ETFs has rapidly expanded to encompass several spot Bitcoin ETFs, amassing a combined value of $27.9 billion, according to Capital15C. Fundamentally, this value equates to 647,651 Bitcoin, of which Grayscale holds approximately 600,000. The conversion of Grayscale to a spot Bitcoin ETF essentially solidified Bitcoin's position on its own. To put these figures in context, the 'Broad Diversified' asset class, previously the second-leading commodity in terms of assets under management (AUM), secures
$12,826 billion across 22 ETFs. In third place, Silver trails with $11,546 billion held across 5 ETFs, according to etfab.com. The implicit recognition of Bitcoin as a commodity by the SEC demonstrates a noteworthy evolution in the perception and integration of digital assets in mainstream financial ethos. While Bitcoin is not currently present in the ETF list below, it would be ranked number 2 were it to be added in the future.
S-Cryptoslate
The Indian Stamp Act, 1899, a pre-Constitution Act, has been amended from time to time to enable a more modern Stamp Duty regime. However, a number of provisions contained in the Indian Stamp Act, 1899 have become redundant/ inoperative and hence, there is a need to re-orient the Indian Stamp Act, 1899. Accordingly, it has been proposed that the Indian Stamp Act, 1899 is repealed and a new legislation is enacted to reflect the present realities and objectives. As a part of pre-legislative consultative process, the draft ‘Indian Stamp Bill, 2023’ has been uploaded on the website of ‘D/o Revenue’ [https://dor.gov.in/stamp-duty/] for inviting suggestions from public in a prescribed proforma within a period of 30 days.
PIB Release ID: 1997072
17/01/2024
Two new tables Table 14 and Table 15 were added in GSTR-1 to capture the details of the supplies made through e-commerce operators (ECO) on which e-commerce operators are liable to collect tax under section 52 of the Act.
Haryana Government (Excise and Taxation Department) issued a Notification No. 71/ST-1 dated 30th December, 2023 regarding Haryana One Time Settlement Scheme for Recovery of Outstanding Dues, 2023. This scheme is operational from January 1, 2024, to March 30, 2024.
India was one of the biggest recipients of global liquidity in 2023. Around $15 billion was deployed by global mutual funds into Indian equities (all into dedicated funds), according to a report by Elara Capital. "In CY23- US, India & Japan have been the biggest recipients of foreign flows.
Gstn alignment and new look for notices/ additional notices tab:
Following Notices/Orders issued by tax authorities are available under "Notices and Orders":
• Notice/Orders/Intimations pertaining to registration including new registration, amendment, cancellation, revocation and other communications.
• Notices issued by System to return defaulters in Form GSTR-3A.
• Notices pertaining to Return module comprising GST DRC-01B and GST DRC-01C.
• Summary of assessment orders issued in Form GST DRC-07 where notices and other proceedings were held offline.
2. Following Notices/Orders issued by tax authorities are available under "Additional Notices and Orders":
• Notices /Orders pertaining to modules- Advance Ruling, Appeal, Assessment/ Adjudication, Audit, Enforcement, Prosecution and Compounding, Recovery, LUT etc.
In a recent development, the Hon'ble Kerala High Court, in the matter of M/s. Chukkath Krishnan Praveen v. State of Kerala, delivered a significant judgment allowing rectification in Goods and Services Tax Returns (GSTR-3B). The court's decision addresses the issue of erroneously accounting for ITC as IGST credit instead of CGST and SGST credits. The judgment of the Kerala High Court offers relief to the petitioner by allowing rectification in GSTR-3B for the inadvertent accounting of ITC as IGST credit instead of CGST and SGST credits. The court's directive emphasizes the significance of rectifying genuine errors in tax returns and aligns with the principles of natural justice by granting the petitioner a fair hearing in the rectification process. This decision sets a precedent for similar cases, underlining the importance of addressing errors in a timely and just manner within the framework of tax regulations.
16/01/2024
Finance Minister Nirmala Sitharaman is gearing up to present her sixth consecutive Budget on February 1. The focus of the budget is likely to be on infusing more funds into the hands of the public, with potential adjustments to tax slabs or an increase in standard deductions as possible avenues for achieving this goal.
Delhi High Court given favour to assessee that After giving effect of order of the Supreme Court, in case of Union of India v Ashish Agarwal, the revenue authority issued a order under Section 148A(b) of the Act after obtaining approval from Pr.CIT instead of Pr.CCIT. Delhi HC quashed such order as well as proceedings u/s 148. Case Name: Twilight Infrastructure (P) Ltd. vs. ITO, 05/01/2024.
Commerce and Industry Minister Piyush Goyal said the rate of rupee depreciation has come down and expressed hope that after 8-10 years, it will start appreciating against the US dollar, helping the Indian economy to grow at a faster pace.
15/01/2024
HC: ITC CANNOT BE AVAILED IF RETURNS ARE FILED BEYOND SPECFIED TIME LIMIT U/S 16(4): The Hon'ble Calcutta HC in the case of M/S BBA INFRASTRUCTURE LIMITED s SENIOR JC OF STATE TAX AND OTHERS dismissed the writ petition and held that ITC cannot be availed by the Registered person if Returns are filed beyond statutory time limit prescribed U/S 16(4) of the CGST Act. Conjoint reading of Sec-16(2)(d) and Sec-16(4) makes it clear that the entitlement of IT in respect of any supply of goods or services or both arises after filing of return U/S 39 of the Act. This condition is further qualified by imposing a time limit U/S 16(4). The Court held that Sec-16(1) is the enabling provision allowing ITC and Sec-16(2) restricts the credit on filing returns after the stipulated time period for availing credit is valid in nature and not in violation of Article 300A of the Constitution of India.
Kerala High Court reaffirms the constitutionality of GST Section 16(2)(c) and CGST Rule 36(4): In a recent development, the High Court of Kerala at Ernakulam, in Case No. WA Nos.1853 & 1857/2023, has upheld the constitutional validity of specific provisions under the Central Goods and Services Tax (CGST) Act and Rules. Two businessmen, Nahasshukoor of M/s N. S. Metals and Ansil Ibrahim of M/s Light House, both located in Alappuzha, Kerala, had challenged the denial of Input Tax Credits (ITC) under the CGST Act and State Goods & Service Tax (SGST) Act. Their appeals were dismissed by the Assessing Authority, leading to penalties and recovery proceedings.
Case title: MRITYUNJAY KUMAR v. THE UNION OF INDIA AND ORS. [SLP(C) No. 28270/2023]
Supreme Court issued notice in response to a Special Leave Petition (SLP) filed by an assessee challenging a Patna High Court judgment that upheld the constitutional validity of section 16(4) of the CGST/Bihar GST Act, 2017. Section 16(4) denies Input Tax Credit (ITC) for any invoice or debit note issued after the due date of furnishing returns under section 39, specifically for the month of September/November following the end of the financial year or the relevant annual return, whichever is earlier.
Matter listed on 5th Feb 2024
Lovelesh Singhal v. Commissioner, Delhi GST (Delhi HC)
Hon’ble Delhi HC holds that taxpayer is entitled to refund of the amount recovered by way of coercive proceedings during search.
Revenue was directed to re-credit the amount recovered by way of reversals of ITC by the taxpayer. Further, Revenue was not precluded from taking legal steps where it has reasons to believe that ITC has been availed fraudulently.
Baba Super Minerals (P.) Ltd. v. Union of India: Rajasthan High Court
Held : Interest was liable to be paid to TaxPayer as per Section 56, Where refund of Utilized Input Tax Credit was given after 60 Days by Department.
14/01/2024
Precautionary Steps in Search & Seizure in GST
1- DELHI HIGH COURT in the case of Lovelesh Singhal Prop Shivani Overseas Vs. Commissioner, Delhi Goods and Services Tax & Ors.
2- The petitioner alleges that during the course of the inspection, the visiting team of officers forced him to reverse the Input Tax Credit (ITC) amounting to Rs. 18,72,000/- in respect of supplies purchased from one M/s Samridhi Exports.
3- The petitioner was informed that the GST registration of the said supplier was cancelled retrospectively.
4- The petitioner is contesting the SCN and has filed the present petition being aggrieved by the failure on the part of the respondents to refund the amounts, which he claims was deposited involuntarily and under duress, during the course of search.
5- This court direct the respondents to reverse the ITC of Rs. 18,72,000/- deposited by the petitioner on 08.10.2022 and forthwith credit the same in his ECL.
Case referred/cited-
Suresh Kumar P.P. Versus The Deputy Director, Directorate General of GST Intelligence (DGGI) — (SC)
Vallabh Textiles Versus Senior Intelligence Officer — (Delhi)
Shri Nandhi Dhall Mills India Private Limited Versus Senior Intelligence Officer — (Madras)
Dayamay Enterprise Versus State of Tripura — (Tripura)
Bhumi Associate Versus Union of India — (Gujarat)
RCI Industries and Technologies Ltd. Through its Director Rajeev Gupta Versus Commissioner DGST Delh - (Delhi)
S.S. Industries Versus Union of India — (Gujarat)
Suresh Kumar P.P. Versus The Deputy Director, Directorate General of GST Intelligence (DGGI) — (Kerala)
13/01/2024
In recent developments, the Income Tax Department has intensified its scrutiny of Non-Resident Indians (NRIs), requesting sworn statements to ascertain the exact number of days spent in India. The aim is to determine whether these NRIs have fulfilled their tax obligations for specific years, especially focusing on the critical 181-day threshold that triggers tax liabilities for individuals staying in India beyond the stipulated period. Unlike residents, NRIs are not obliged to pay tax on overseas earnings or disclose foreign assets. However, the tax regulations become applicable if an NRI exceeds 181 days of stay in India within a fiscal year. To ensure compliance, the Income Tax Department has been serving notices to numerous NRIs, asking for signed affidavits affirming their non-resident status and specifying the number of days spent in India for each relevant year for the purpose of scrutiny of their cases.
Following are the big numbers of 2023:
1. 15.4 billion: The number of games downloaded in India this year, the second highest globally, only after China.
2. 80 crore: The number of Indian citizens whose personal identifiable information was leaked after a security breach at the Indian Council of Medical Research (ICMR) two months ago.
3. 467 million: The number of social media users in India in January 2023, equating to 32.8% of the population.
4. 1.5 million: The number of e-commerce purchases in the month of November 2023 on Open Network for Digital Commerce (ONDC).
5. 138.08 crore: The number of people covered by Aadhar, comprising 99% of India’s population.
6. 16,454: The reduction in headcount at Infosys in the second quarter of FY24 as compared to the corresponding period last year.
7. 51.11 crore: The total number of accounts created under the Jan Dhan Scheme, which was announced by the government in August 2014.
8. 1,600: The number of global capability centres (GCCs) in India. As many as 21 GCCs came up in Q3 FY23.
9. 6: That’s how many years it has taken for India to put in place its privacy law, with the Digital Personal Data Protection Bill being ratified in August 2023.
10. 27: The number of companies granted approvals to set up laptop, servers and other IT hardware manufacturing in the country.
11. $17 trillion to $24 trillion: The credit gap for MSMEs in India. Less than 11 per cent of MSMEs have access to formal credit in the country.
12. Rs 615 crore: What it cost ISRO to carry out the Chandrayaan-3 mission which got Vikram lander and Pragyan rover to touchdown on the ‘far side’ of the moon.
13. 900 million: The number of smartphone users in the country as of December 2023.
14. 4 Tn $: Indian Stock Market hit this market cap milestone on 29th Nov, 2023.
15. 2,68,923: The number of students who went abroad in 2023, a 35% jump Y-O-Y.
16. 1,425,775,850: India’s population matched China’s in April 2023 and then surpassed it to become the world’s most populous country.
17. 30 Crores: Approximate viewership of ICC World Cup Final between India and Australia.
18. 16th Finance Commission: The Government of India, with the approval of the President of India, has constituted the Sixteenth Finance Commission, in pursuance to Article 280(1) of the Constitution with Dr Arvind Panagariya as it’s Chairman.
19. 4.22 million units: 2023 has been a bumper year in terms of car sales and growth.
Source: Times of India and Economic Times
When is Fed likely to cut interest rates in US?
1. US Federal Reserve officials appeared increasingly convinced at their meeting last month that inflation was coming under control, with "upside risks" diminished and growing concern about the damage that "overly restrictive" monetary policy might do to the economy, according to minutes of the central bank's Dec. 12-13 policy meeting.
2. "Most" Fed Officials felt that monetary policy was having its intended impact and would continue to do so by dampening household and business spending and pulling inflation back to target.
3. Participants "stressed...that it would be appropriate for policy to remain at a restrictive stance for some time until inflation was clearly moving down sustainably toward the Committee's objective."
4. The Fed held its benchmark overnight interest rate steady in the current 5.25%-5.50% range at last month's policy meeting, with new economic projections showing most officials expect that the policy rate will need to be lowered by three-quarters of a percentage point over the course of 2024.
5. Precisely when the Federal Reserve will start cutting interest rates stands as the big unknown for markets and economists at the start of 2024. Market pricing shows investors currently betting the Fed will cut rates beginning at its meeting in March while economists on balance see the Fed holding off until closer to mid-year.
Source: Mint
Taxation on income of foreign IPL players: Many may be wondering, how are non Indian IPL players taxed for the income they earn in India. A simple one line answer is they are taxed at 20% plus surcharge and education cess. The legal position and the mechanism is explained as below:
1. Section 115BBA of the Income Tax Act provides the answer:
This section provides a special tax rate @ 20% (plus EC and SHEC), Plus Surcharge as applicable on specified income arising to a Non-Resident Sportsman or Entertainer who is also not a citizen of India or a non resident Sports Association, in respect of income arising in India. ?However, no deduction for any expenditure incurred and allowance is given to such assessee u/s 115BBA.?2. Specified income includes the following: Income from participating in any games/ sports/ performance.
Income from advertising
Income from contributing articles in the newspaper.
3. TDS U/S 194E of the Income Tax Act:
For the above cases TDS has to be deducted at 20% plus Surcharge and Education Cess while making payment to the sportspersons.
4. ITR need not be filed:
It shall not be necessary for the assessee to furnish return u/s 139(1) if his income consists of only the above income and the TDS has been deducted u/s 194E.
Income Tax Department is issuing alerts around high-value crypto transactions
1. The Income Tax Department is issuing alerts around high-value crypto transactions. The matter came to light earlier this week when There has been a rise in income tax-related queries tied to crypto transactions from the income tax department.
2. Essentially, the government is maintaining a strict oversight on all tax-work related to crypto transactions in India.
3. Given the confusion around filing crypto taxes, only about 0.07 percent crypto holders in India paid their taxes last year.
Source: KoinX
Note: 30 % tax is levied on crypto incomes and 1%TDS is deducted on each crypto transaction – aiming to track potential defaulters and suspicious crypto holders
Payment made for promotion purposes is not royalty: ITAT: Indian Oil Corporation Ltd. Versus DCIT (ITA No.987/Mum/2008.)
Facts:
1. The assessee was appointed as the official sponsor of International Cricket Council (ICC) Events.
2. An Official Sponsorhip (Worldwide) Agreement was entered into between the Global Cricket Corporation PTE Ltd. - Singapore (GCC), World Sports Nimbus PTE Ltd-Singapore (WSN), and the assessee.
3. The sponsorship agreement covered ICC Cricket Events from ICC Champions Trophy 2004 to ICC Cricket World Cup 2007.
4. The assessee filed an application to remit sponsorship amounts to GCC without deduction of tax at source, claiming no Permanent Establishment (PE) in India for GCC.
5. The Assessing Officer rejected the application, treating the amounts as "Royalty" and directed the assessee to deduct tax at 24%, plus education cess.
6. The CIT(A) upheld the observation but granted partial relief, considering 50% of the payment as "Royalty" taxable under the India-Singapore Tax Treaty.
7. The assessee argued that payments were for non-exclusive rights to use Event Marks, footage, and still images for advertising and promotion.
8. The assessee also referred to a Tribunal decision involving Hero MotorCorp Ltd., highlighting similar agreements where payments were not treated as "Royalty."
9. The assessee also contended that the payments were for promotional purposes, not for the use of trademark or brand name.
ITAT Mumbai held as under:
1. The Official Sponsorship Agreement and Schedule-4, emphasized the non-exclusive rights granted to the assessee for using Event Marks, footage, and still images.
2. The payments are made for the purpose of promotion purposes and not for the purpose of use of brand or trademark.
3. The payments made by the assessee to GCC were not in the nature of Royalty as defined under the Act or India-Singapore DTAA.
4. The appeal is allowed.
Deduction U/S 80-IB(10) can be allowed even in the case of belated returns: PCIT vs. H.P. Housing & Urban Development Authority (ITA No.: 35/2019)
Facts:
1. The Assessee filed its return belatedly u/s. 139(4). Thereafter, the Assessee filed revised ITR wherein for the first time the Assessee claimed deduction u/s. 80-IB(10) (which was not claimed in earlier ITR).
2. The AO disallowed the claim for deduction u/s. 80-IB(10) on the ground that since the ITR was not filed within due date specified u/s. 139(1), such claim was not allowable pursuant to section 80AC.
3. The claim for deduction u/s. 80-IB(10) was also examined on merits and AO held that project was not eligible for benefit of section 80-IB.
4. On merits, the CIT(A) held that project was eligible for deduction and stated that part of it can be allowed. However, the CIT(A) concluded that the Assesse cannot revise the ITR u/s. 139(5) which is already filed belatedly u/s. 139(4) and accordingly held that the claim for deduction u/s. 80-IB(10) was not valid.
5. The ITAT held that the claim for deduction u/s. 80-IB(10) cannot be made based on a non-est ITR i.e. revised ITR in which claim was made u/s. 80-IB(10).
Hon Himachal Pradesh HC held as below:
1. The assessee cannot be burdened with taxes which it otherwise is not liable to pay under the law.
2. A duty is cast upon the department to charge legitimate taxes from the tax payers. Revenue cannot punish the tax payers for the bonafide mistakes.
3. If the assessee is otherwise entitled to deduction under Section 80IB(10), but due to ignorance or for some other reason could not claim the same in the return of income, but has raised its claim before the Appellate Authority, then the Appellate Authority should have looked into the same.
4. Accordingly, the claim for deduction u/s. 80-IB(10) is allowed.
12/01/2024
The Directorate General of Goods and Services Tax Intelligence (DGGI) detected 6,323 cases involving a tax evasion of 71.98 lakh crore in 2023, the finance ministry said Thursday. The amount of GST evasion detected last year was more than double compared with the previous year. The agency detected significant GST evasion in sectors including online gaming, casinos, insurance, secondment (import of manpower services) and in fake input tax credit, the ministry said in a statement. The DGGI action resulted in voluntary payments of Rs 28,362 crore by those found to have evaded tax and the arrest of 140 people. S-ET
The Centre has collected rs14.70 lakh crore as direct tax net of refunds till January 10 in this financial year, up 19.41% year-on-year, official data released on Thursday showed. It is about 80.61% of the budgeted estimate for 2023-24. The Centre has budgeted direct tax collection of rs 18.20 lakh crore for this fiscal, projecting a growth of 9.6%. Collections in this fiscal have been better than projected. Direct tax collection, net of refunds, was & 12.31 lakh crore on January 10, 2023. Gross direct tax collections, before refunds, stood at rs 17.18 lakh crore, up 16.77% from 14.71 lakh crore a year ago. The income tax department issued refunds of Rs 2.48 lakh crore between April 1, 2023 and January 10, 2024. S-ET
The Central Board of Indirect Taxes & Customs (CBIC) will roll out an app to alert officials about timely disposition of tax appeals by tracking all cases under the litigation process, officials said. Named ‘Samay’, the app will capture all the pending orders across levels from adjudicating officer to the Customs, Excise and Service Tax Appellate Tribunal (Cestat) to High Courts, and reflect the pendency of review orders that are either under process at various levels or awaiting processing at the commissionerate level. The initiative will greatly reduce the litigation time, CBIC officials said.
“Zonal heads can assess how much time their team is taking to dispose of a case and a reminder will be issued every month after that,” a senior official told ET. The app was launched during the National Coordination Meeting held last month and will be formally made available to officials from January 15, officials said. ‘Samay’ will have the summary of all the cases and rulings, which can guide an official regarding the legal position on certain demands.
The Goods and Services Tax (GST) authorities have dropped a plan to block generation of goods transportation permits, or e-way bills, from 1 March for companies that fail to produce ‘e-invoices’ for their wholesale transactions through designated portals. These portals aid in more accurate data capturing across various tax forms using a standardized invoice. This decision likely stems from the difficulties businesses, particularly small and medium enterprises, encounter in generating e-invoices, such as increased administrative work and the need for technological upgrades.
Interest on refund to be paid if amount isn’t refunded within 60 days from date of application. THE HON'BLE RAJASTHAN HIGH COURT in the case of BABA SUPER MINERALS PVT. LTD. V/s UNION OF INDIA, decided on 5-1-2024
Issue:-
Can Assessee get any benefit if refund was paid to assessee beyond sixty days
The Hon'ble High Court Judgement :-
Where assessee filed application seeking refund of unutilized input tax credit and amount of refund was paid to assessee beyond sixty days, respondent Authorities were to be directed to calculate period of delay and make payment of amount of interest to assessee in terms of provisions of Section 56 of CGST Act,2017.
11/01/2024
UAE issues guidelines to determine corporate tax liability for individuals
Introduction:
The UAE Federal Tax Authority has issued guidelines for determination of Corporate Tax liability on Individuals. The guide provides a "comprehensive and simplified" explanation and instructions for natural persons making income in the UAE. The term natural person refers to a “living human person of any age, whether resident in the UAE or elsewhere”.
A Summary of the guidelines:
1. A natural person must register for corporate tax purposes and obtain a Tax Registration Number if their total turnover from business or business activities exceeds Dh1 million ($272,294) within a calendar year from 2024.
2. Income from wages, personal investment and real estate shall not be considered as arising from business activities.
3. Where a UAE non resident natural person conducts a business in UAE, he shall also be subject to corporate tax.
4. A natural person residing outside UAE may also be a non resident natural person and not subject to corporate tax in case they derive state sourced income ie income derived from UAE but not through business activities conducted in UAE.
5. Corporate tax rate is 9%.
6. Interest deduction cap of 30% applicable to corporates is not applicable to natural persons and the entire interest expense is tax deductible.
7. Transactions of natural persons with related parties shall be required to follow the arms length principle.
The Income Tax Department prominently displayed a message on its website stating, “According to the RBI Notification, in the case of non-individuals, a Legal Entity Identifier (LEI) No. is required for Credit of Refunds of Rs. 50 crore and above. The requirement for Legal Entity Identifier (LEI) information is mandated for all single payment transactions amounting to ?50 crore and above, specifically involving entities (non-individuals). This stipulation applies to transactions conducted through the National Electronic Funds Transfer (NEFT) and Real-Time Gross Settlement (RTGS) payment systems. In the case of RTGS, the obligation extends to both customer payments and inter-bank transactions that meet the specified criteria, necessitating the inclusion of LEI information. This stringent guideline aims to enhance the transparency and traceability of large-value financial transactions, ensuring comprehensive identification of entities involved in these transactions for effective risk management and regulatory oversight.
Adjustment of income tax refund against demand:
1. Section 245 of the Income Tax Act requires the department to send an intimation to the taxpayer before making any adjustment, stating the amount of refund due, the amount of tax demand outstanding, and the proposed adjustment.
2. The taxpayer is given a chance to respond to the intimation within 30 days, either agreeing or disagreeing with the adjustment. If the taxpayer agrees with the adjustment, the department will proceed to adjust the refund against the demand and issue the balance refund, if any, to the taxpayer. If the taxpayer disagrees with the adjustment, and the claim of the Assessee is found not to be true based on the information available with the Assessing Officer and explanation provided by the Assessee, the department may still adjust such refund.
3. Before the beginning of Financial Year 2023-24, Section 241A of the Income Tax Act empowers the Assessing Officer, in case where a refund becomes due to an Assessee after processing the ITR but the Assessment/reassessment proceeding(s) are pending against him, to hold the refund till the date of completion of such assessment/reassessment, if he is of the opinion that the grant of refund is likely to adversely affect the tax revenue of the Government. Such withholding can be done only with the prior approval of the Principal Commissioner or Commissioner, and applicable to assessment years on or after 2017-18.
4. Finance Act 2023 merged Sec 241A with Sec 245 and Sec 245 was accordingly amended to provide that where a part of the refund has been set off or where no amount is set off, and refund becomes due to a person but the assessment/reassessment proceeding is pending, then, the Assessing Officer may withhold the refund till the date on which such assessment or reassessment is completed with the approval of the Principal Commissioner or Commissioner.
5. It has also been provided by amending Section 244A of the Act that interest on income tax refund shall not be given for the period starting from the date of holding the refund till the date of completion of assessment/reassessment.
10/01/2024
Every director shall disclose his concern or interest in any company or companies or bodies corporate, firms, or other association of individuals which shall include the shareholding, in such manner as may be prescribed. The disclosure shall be –
(a) at the first meeting of the Board in which he participates as a director
(b) thereafter at the first meeting of the Board in every financial year or
(c) whenever there is any change in the disclosures already made, then at the first Board meeting held after such change – section 184(1) of Companies Act, 2013 [corresponding to section 299(3)(a) of the 1956 Act].
The disclosure should be in form MBP.1. It is his duty to ensure that it is disclosed at the meeting held immediately after date of notice – Rule 9 of Companies (Meetings of Board and its Powers) Rules, 2014.
Normal practice is that all directors used to submit a list of companies in which they are directors, companies in which they hold shares and firms in which they are partners/proprietors. Such notice expires at the end of financial year and it is renewed by giving fresh notice in the first Board meeting of next financial year.
Notices must be kept at registered office and in proper custody – All notices given by directors should be kept at registered office and preserved for eight years from end of financial year. These should in custody of Secretary or person authorized by Board – Rule 9(3) of Companies (Meetings of Board and its Powers) Rules, 2014.
Specific disclosure when contract comes for discussion even if general disclosure made and non-participation in meeting – Even if general disclosure as required under section 184(1) of Companies Act, 2013 has been made, specific disclosure is required when the contract comes before the Board for discussion.
When the contract comes for discussion, the interested director shall not participate in the Board meeting – section 184(2) of Companies Act, 2013.
In case of private company, the director is required to disclose his interest in contract. Then he can participate in the meeting (and vote) – MCA Notification dated 5-6-2015 issued under section 462 of Companies Act, 2013.
Effect of non-disclosure of interest
If a director fails to disclose his interest in any contract or arrangement to Board of Directors as required, his office as director becomes vacant – section 167(1)(e) of Companies Act, 2013 [Corresponding to section 283(1)(i) of the 1965 Act]
If a director of the company contravenes the provisions of section 184 of Companies Act, 2013 [relating to disclosure], he shall be liable to a penalty of one lakh rupees – – section 184(4) of Companies Act, 2013 as amended on 21-12-2020.
As per section 185(1) of Companies Act, 2013, as substituted w.e.f. 7-5-2018, no company shall, directly or indirectly advance any loan, including any loan represented by a book debt to or give any guarantee or provide any security in connection with any loan taken by
(a) any director of company or of a company which is holding company or any partner or relative of any such director or
(b) any firm in which any such director or relative is a partner.
Such loan or security or guarantee can be given in connection with any loan taken by any person in whom any of the directors of the company is interested, if
(a) special resolution is passed in general meeting and
(b) the loans are utilised by borrowing company for its principal business activities – section 185(2) of Companies Act, 2013, as substituted w.e.f. 7-5-2018.
Madras High Court allowed ITC after Sec 16(4) date and in favour of the registered taxpayer. W.M.P.(MD)Nos.6764 and 6765 of 2023 :Date: 24.11.2023
KAVIN HP GAS GRAMIN VITRAK
Vs
1. THE COMMISSIONER OF COMMERCIAL TAXES,
OFFICE OF THE PRINCIPAL AND SPECIAL COMMISSIONER OF COMMERCIAL TAXES, CHENNAI
2. THE DEPUTY STATE TAX OFFICER-1,
OFFICE OF STATE TAX OFFICER, MELUR ASSESSMENT CIRCLE, MADURAI
It is held by Court that ITC is allowed to taxpayer even after Sept of Next Year 16(4) time limit.
As per Section 38 of the CGST Act, 2017 read with Rule 60 of the CGST Rules, 2017, ITC shall be claimed through GSTR-2 but the GSTN had not provided the facility of GSTR-2 till now. When the GSTR-2 Form itself is not available and electronical filing is not possible, then taxable person cannot be expected to file the Form electronically. Therefore, the entire basis of initiation of the proceedings itself is not sustainable.
It is submitted that Section 16(4) restriction apply only for the take/availment of the ITC after the Sept of next financial year and as per the above discussion, there is no facility of availment of ITC in GSTR 3B which is summary return itself, when there is no take/availment of ITC in the GSTR 3B, then the time limit of Section 16(4) is not apply as per the Act, Hence your SCN is illegal and beyond the provision of the Act, infect, still there is no facility for take/avail ITC in the GSTR 3B.
Reliance is placed on the Hon'ble Jharkhand High Court in case of Shri Kumaran Construction Co., a proprietorship Firm, District-East Singhbhum W. P. (T) No. 2582 of 2020, the Section 16(4) constitutional validity is challenged before the high court in this case, the interim order is issued as below on Dated 13-10-2020.
While the GST regime envisaged the filing process and recording of ITC and payment of taxes as above, admittedly, due to system issues and under preparedness with regard to the extent of data to be processed, Form GSTR-2, and 3 were not made operational; and have been now completely done away with. Form GSTR-2A was made operational only in September 2018 by the Government.
It is first decision of any court in favour of taxpayer on 16(4) issue.
Judgment passed by Punjab and Haryana High Court in the case of Hans Raj Sons v. Union of India and others [CWP No. 36396 of 2019 dated December 16, 2019], and Adfert Technologies Private Limited v. Union of India and others [CWP No. 30949 of 2018 dated November 04, 2019], wherein the Hon’ble Court held that the in absence of any enabling mechanism the assessee should not be denied from availing credit.
The Hon’ble Madras High Court in the case of Tvl. Kavin HP Gas Gramin Vitrak v. The Commissioner of Commercial Taxes & Ors. [W.M.P. (MD) Nos. 6764 and 6765 of 2023 dated November 24, 2023] held that the Respondents without giving any opportunity to file the returns by notifying the Form GSTR-2, cannot expect the taxable person to file returns. Hence, the Respondents ought to allow the dealers to file returns manually and the writ petitions were allowed without any cost.
09/01/2024
GST Payments through Credit Card / Debit Card option have been enabled on the GST Portal.
Sec 269SS is not applicable to advances: Bombay HC: Case Title – Arti Rajesh Karangutkar v. Anna Rocky Fernandes and Anr. : Case no. – Criminal Appeal No. 764 of 2009
Facts:
1. The appellant, Arti Karangutkar, and the respondent, Anna Fernandes, were friends and neighbours. In January 2007, Karangutkar extended a friendly loan of Rs. 3,00,000/- to Fernandes due to the latter's financial difficulties arising from her husband's blood cancer and her daughter's training as an Air Hostess.
2. Fernandes promised to repay the loan by the end of June 2007 and issued four post-dated cheques in return. However, the cheques, totalling Rs. 3,00,000, were dishonoured due to insufficient funds.
3. When Fernandes neither replied to the demand notice nor repaid the amount, Karangutkar filed a complaint under Section 138 of the NI Act. The Metropolitan Magistrate acquitted Fernandes, applying Section 269-SS of the IT Act and holding that the complainant failed to prove the source of her income.
Hon Bombay HC held as below:
1. As per Sec 269SS of the Income Tax Act, no person should accept any loan or deposit of a sum of Rs.20,000/- or more otherwise than by an account payee cheque or account payee bank draft.
2. The provision does not say that a person cannot advance more than Rs.20,000/- in cash to another person. Restriction on cash advances was, in fact, on the taker and not on the person who makes an advance.
3. The penalty for taking such advance or deposit in contravention of provisions of Section 269-SS was to be suffered by the taker who accepts the advance. The learned Magistrate has wrongly invoked the aforesaid provisions while dismissing the complaint.
4. The bar under Section 269-SS Income Tax Act is applicable to a person who accepts deposit by way of cash and not to a person who makes or offers any money to the payee.
08/01/2024
CBDT notifies Power Grid Infrastructure Investment Trust as a prescribed mode of investment U/S 11(5):
1. The CBDT vide Notification No. 103/2023 dated December 18, 2023, has amended the Income-tax Rules, 1962.
2. CBDT has notified that Power Grid Infrastructure Investment Trust as a prescribed mode of Investment under Section 11(5) of the Income Tax Act, 1961.
3. Section 11(5) prescribes the mode in which the income of a trust or institution claiming income-tax exemption under various provisions shall be invested or deposited. These modes include immovable property, Central Government or State Government Securities, Government Savings Certificates, etc.
4. Further, Rule 17C also lists various forms and modes of investment or deposits under section 11(5).
Foreigner on business visa collecting money for charitable activities is liable for deportation: Delhi HC
1. The Delhi High Court held that foreigners collecting funds purportedly for charitable activities while on a business visa is not permitted. The Court refused to interfere with the blacklisting and deportation of the Petitioner from the Trivandrum Airport.
2. The Court observed that the decision to deport and blacklist the Petitioner was not arbitrary, thereby negating the need for intervention under Article 226 of the Constitution.
3. The Court noted that the permissible purposes for a Business visa, include establishing ventures, purchasing/selling goods, attending meetings, recruiting manpower, and participating in exhibitions.
4. However, the Bench noted that collecting funds for charitable activities on a business visa is prohibited. The Court noted that the Petitioner failed to demonstrate infringement of rights as the jurisdiction of the court under Article 226 is limited to rights violations.
(Randa Chehab v Union Of India & Ors. (2023:DHC:9126))
Bookkeeping is required to be maintained to invoke Section 69A Of Income Tax Act: Delhi High Court: CIT Versus Hersh Washesher Chadha (ITA 676/2023)
Facts:
1. The respondent, a non-resident individual in the UAE, disclosed an income of Rs. 1,02,288, which included interest from savings accounts and income tax refunds in the Assessment Year 2017-18.
2. Through scrutiny, the Assessing Officer made additions under Section 69A: Rs. 1,40,09,733 for unexplained bank credits, Rs. 1,64,219 for under-reported interest, and Rs. 4,69,335 as a deemed dividend under Section 2(22)(e).
3. Sec 69A pertains to undisclosed income and its inclusion in the overall income assessment. It stipulates that if, during a financial year, the assessee is found to possess money, precious metals, jewellery, or other valuables not recorded in their records maintained, if any, and if there is no satisfactory explanation or none provided by the assessee regarding its source, it may be considered as their income for that fiscal year.
Hon Delhi HC held as below:
1. The phrase “if any” in Section 69A specifies that the absence of such records precludes the application of this provision.
2. The assessee is not obligated to maintain books of accounts in India.
3. Absent departmental allegations of irregularity, under Section 260A, the court refrains from delving into fact-based assessments and document analysis.
4. Sec 69A cannot be invoked and the revenue appeal is dismissed.
07/01/2024
Local committees deal with Taxpayers grievances arising from high pitched scrutiny
1. In high-pitch assessments, tax officials issue orders for taxes and penalties far from the amount legally payable.
2. The result of high-pitch assessments can be devastating for small taxpayers who may not have the means to fight back against an unjust assessment.
3. The Central Board of Direct Taxes (the 'CBDT'), by its Instruction NO.17/2015 dated 09.11.2015 (copy enclosed) has provided for constitution of 'Local Committees to deal with Taxpayers' Grievances from High-Pitched Scrutiny Assessment' in each Pr.CCIT region.
4. Local Committees to deal with Taxpayers' Grievances from High-Pitched Scrutiny Assessment are required to be constituted in each Pr.CCIT region across the country including the Pr.CCIT(Exemption) and Pr.CCIT(Inremational Taxation).
5. The Local Committee shall consist of 3 members of Pr.CIT/CIT rank. To have a perspective of processes involved in Faceless Assessment process, Local Committees so constituted in each Pro CCIT region and Pr.CCIT(Exeruption) shall have one Pr.CIT (AU) of the region. The Local Committee constituted under the Pr.CClT(lnternational Taxation) need not have a Pr.CIT(AU) as a member, as the assessments under the International Taxation charges are outside the purview of Faceless Assessment regime.
6. The other members may be selected from the pool ofofficers posted as Pr.CslTlPr. CIT(Central)/CIT(Judicial)/ CIT(Audit)/CsIT(DR), ITAT of the respective Pr.CClT region. For the Local Committees constituted under the Pr. CCIT(Exemption) and All Pr. CCsITIDGsITlPr.CCIT(Exemption)lPr. CCIT(Internatioual-tax)
7. The report shall be submitted within two months from the end of the month in which petition is received. Suitable explanations could be called for from the assessing officer, if necessary. Also, the Pr. CIT may be instructed not to take coercive action for recovery of outstanding demand.
Share of agriculture in India's GDP declined to 15% in FY23: Govt
1. Share of agriculture in India's GDP declined to 15 per cent last fiscal year from 35 per cent in 1990-91 due to rapid growth in the industrial and service sector.
2. "The share of agriculture in total Gross Value Added (GVA) of economy has declined from 35% in 1990-91 to 15% in 2022-23. The decline is brought out not by the decline in agricultural GVA but a rapid expansion in industrial and service sector GVA," Union Agriculture Minister Arjun Munda said in a written reply to Lok Sabha.
3. In growth terms, agriculture and allied sector has registered an average annual growth of 4 per cent during last five years. As far as global experience is concerned, share of agriculture in the world's GDP has also declined over the decades and stands at about 4 per cent in recent years,
Merely because capital gains were not deposited in the capital gains account scheme, exemption U/S 54 cannot be denied, if other conditions are fulfilled: ITAT Delhi: Sarita Gupta (ITA No.1174/Del/2022)
Facts:
1. The assessee has made investment in purchase of new residential property of the entire capital gain amount, hence, claimed exemption under section 54 of the Income Tax Act. After verifying all the details, the Assessing Officer accepted the return of income filed by the assessee and accordingly completed the assessment.
2. Post completion of assessment, learned PCIT called for and examined assessment record and while doing so, it was found that the capital gain amount was not deposited in the capital gain account scheme during the interim period till its utilization in purchase/construction of new property. The aforesaid facts were not considered/inquired into by the Assessing Officer.
3. Thus, PCIT set aside the order the assessment order due to non- consideration of these facts under section 263 of the Income Tax Act.
ITAT Delhi held as below:
1. In our view, learned PCIT has adopted a hyper-technical approach while dealing with the issue. When the basic conditions of section 54(1) has been satisfied, in our view, the assessee remains entitled to claim the deduction under section 54 of the Act.
2. In any case of the matter, there is no prejudice caused to the Revenue as the assessee in terms of section 54(1) of the Act is entitled to deduction.
3. In the aforesaid view of the matter, we hold that exercise of power under section 263 of the Act to revise the assessment order in the instant case is invalid. Accordingly, we quash the order passed under section 263 of the Act and restore the assessment order.
06/01/2024
Composite contracts cannot be divided in order to subject a part of the contract to a higher rate of TDS.
The Commissioner Of Income Tax (TDS) And Another v. Lalitpur Power Generation Co. Ltd. (ITA No. 111 of 2018)
Facts:
1. The assessee was engaged in business of generation of power. To set up the thermal power plant, the assessee entered into two sets of contracts. First, with Bharat Heavy Electric Ltd. (BHEL) to set up a Boiler Turbine Generator (BTG) and the second with Carbery Infrastructure Pvt. Ltd. (CIPL) to set up Balance of Plant (BOP).
2. On 19th June, 2014, individual orders came to be passed u/s. 201 of the Income Tax Act describing the assessee to be in default of deduction of TDS required to be made by it at the higher rate of 10% (u/s. 194J of the Income Tax Act) against the lower rate of 2% (u/s. 194C of the Income Tax Act) applied by the assessee, to the payments made by the assessee in each year, against the two contracts for the works done under the head of “services of Transportation, Insurance, Erection, Installation, Testing and Commissioning of BTG”, awarded to BHEL and also the work done under the head of “Erection, Installation and Commissioning of BOP”, awarded to CIPL.
3. The revenue maintained that, assessee had not maintained any account to establish the actual payment made to BHEL for the work of Testing and Commissioning of BTG. Similarly, the assessee had not maintained separate account to establish the payment made to CIPL for Installation and Commissioning of BOP. Since payments for those works performed by the BHEL and CIPL fell under the head “fees for technical services” as defined under clause (b) of sub-section (1) of Section 194J of the Act, read with Explanation [2] to clause (vii) to sub-section (1) of Section 9 of the Act, the assessee was liable to deduct the Tax at Source/TDS, at the rate of 10% in terms of Explanation (b) to section 194J of the Act.
Hon Allahabad High Court held as below:
1. A contract should be interpreted based on its main objective and, in the absence of an enabling law, the taxing authorities cannot overlook the dominant object of the contract.
2. An indivisible contract cannot be artificially dissected by taxing authorities to the detriment of the taxpayer.
3. It is the responsibility of the taxing authority to demonstrate the legal basis for dividing an otherwise indivisible contract. Taxing authorities are not permitted to presume or assume facts but are mandated to apply tax laws to established facts.
4. The appeal is dismissed in favor of the taxpayer.
05/01/2024
The New Tax System doesn't offer certain exemptions and deductions, such as HRA, LTA, 80C, 80D and more. The New Income Tax Regime is apt for those who prefer minimal deductions or wish to avoid the burden of extensive tax preparation. On the other hand, the Old Tax Regime is fit for those who have investments in tax-saving instruments and have a habit of saving. Few top points to consider while choosing the new tax regime:
1. Income Tax Rebate: Before the Union Budget 2023, individuals with an annual income up to Rs 5 lakh were not required to pay any tax. This limit was hiked to Rs 7 lakh. The rebate amount was hiked by Rs 12,500,so from Rs 12,500 earlier it was made Rs 25,000 in new tax regime.
2. Standard deduction under New Tax Regime: The standard deduction of Rs 50,000, which was earlier restricted to the Old Tax Regime, was extended to the new tax regime in Union Budget 2023. Following the inclusion, the tax-free income, including the rebate, now stands at Rs 7.5 lakh.
3. Revised tax slabs: A major difference between the Old Tax Regime and the New Tax Regime is that the latter offers lower tax rates. The government announced new income tax slabs in its 2023 Budget. The new tax regime offers a higher threshold for tax relief, broader tax slabs and reduced tax rates.
4. Reduced Surcharge for High Net Worth Individuals: FM Sitharaman reduced the surcharge rate on income over Rs 5 crores has been reduced from 37% to 25%. This move brought down the effective tax rate from 42.74% to 39%. This was introduced only under the New Tax Regime. Before this, the surcharge (the tax on tax for those with income exceeding Rs 5 crore) was 37% of the tax amount under both the Old and New Tax regimes. This pushed the highest marginal tax rate (including surcharge) to 42.74%, which is the highest tax rate levied in the last three decades.
5. Higher Leave Encashment Exemption: Citing a general salary increase, FM Sitharaman increased the leave encashment amount claimed as exemption increased to Rs 25 lakh from Rs 3 lakh for non-government employees, which is almost an 8-fold increase.
04/01/2024
A list of some of key changes set to come into force with effect from January 1, 2024:
1. Bank Locker Agreements: For individuals with lockers in banks, there's a crucial deadline. By December 31, they have the option to deposit funds by signing the revised bank locker agreement. Failure to do so will result in the freezing of lockers starting January 1.
2. Insurance Policy: Starting January 1, the Insurance Regulatory and Development Authority of India (IRDAI) has mandated all insurance companies to furnish a customer information sheet to policyholders. This document aims to explain crucial insurance-related information in simple terms.
3. Insurance Trinity Project: The Insurance Trinity Project is set to launch. Comprising Insurance Sugam, Insurance Extension, and Insurance Carrier products, this project seeks to achieve diverse goals. From simplifying the purchase of products or services through Bima Sugam to offering affordable insurance protection through insurance expansion, the initiative also aims to contribute to women's empowerment through insurance carriers. The official launch of these products is expected in January or later in the new year.
4. Income Tax Return Filing: As of January 1, taxpayers who failed to file their income tax returns for the financial year 2022-23 (AY-2023-24) will no longer have the option to file belated returns. Additionally, individuals with errors in their returns will be unable to submit revised returns. It's a crucial reminder for all taxpayers to ensure compliance with these updated regulations.
5. SIM Card Regulations
Going forward, the digital Know Your Customer (KYC) process will be mandatory for obtaining a SIM card. Telecom companies will require customers to provide biometric data during the SIM card acquisition process. Possession of counterfeit SIM cards could lead to imprisonment of up to three years and a hefty fine of Rs 50 lakh. Additionally, SIM sellers will now be subjected to thorough verification, and bulk distribution of SIM cards will be prohibited.
Two new tables in GSTR-1 from January 2024. Table 14 – Supplies Made Through E-Commerce Operators (In this table, you can add details of taxable outward supplies made through e-commerce operator.) Table 15 – Supplies under Section 9(5) of the CGST Act (In this table, you can add details of taxable outward supplies on which the e-commerce operator is liable to pay tax under Section 9(5) of the CGST Act.)
02/01/2024
Ten comprehensive steps in planning finances for the upcoming year 2024 and beyond:
1. Define Clear Financial Objectives:
a. Identify short-term and long-term goals, such as building an emergency fund, purchasing a home, or planning for retirement. b. Prioritize goals based on urgency and importance.
2. Evaluate Current Financial Status:
a. Conduct a thorough analysis of income, expenses, assets, and liabilities.
b. Calculate your net worth.
c. Understand spending patterns.
3. Craft a Detailed Budget: a. Develop a realistic budget aligned with your financial goals.
b. Categorize expenses (e.g., fixed, variable) and track spending.
c. Allocate a portion of income to savings and investments.
4. Establish an Emergency Fund:
a. Ensure 3 to 6 months’ worth of living expenses are in an accessible account.
b. Regularly reassess and adjust based on changes in financial circumstances.
5. Strategize Debt Management:
a. List all outstanding debts, including interest rates.
b. Develop a plan to pay off high-interest debt first. c. Consider debt consolidation strategies.
6. Review and Optimize Insurance Coverage:
a. Evaluate life, health, home, and auto insurance. b. Ensure coverage aligns with current needs.
c. Consider increasing coverage if necessary.
7. Strategize Tax Planning: a. Optimize deductions and tax credits.
b. Consider consulting a tax professional for personalized advice.
8. Plan for Education Expenses:
a. If applicable, plan for education expenses for yourself or dependents.
b. Explore tax-advantaged education loan schemes.
9. Diversify Investment Strategy:
a. Diversify investments based on risk tolerance and goals.
b. Rebalance the investment portfolio periodically.
c. Explore tax-saving instruments based on your capacity.
10. Prioritize Retirement Planning:
a. Assess retirement savings goals.
b. Contribute consistently to retirement accounts.
c. Explore and leverage employer-sponsored plans.
S-TScan
01/01/2024
Happy and Prosperous New Year |