The Income Tax department has today informed the taxpayers that ITR-5 and 6 has been enabled in the e-portal for filing. Till now, all Forms except ITR 6 are available now in the portal.
“ITR 1, 2, 3, 4, 5 and 7 for AY 2018-19 is now available for e-Filing. ITR 6 will be available shortly,” a statement appeared in the income tax department today said.
On April this year, The Central Board of Direct Taxes (CBDT) has notified Income Tax Return Forms (ITR Forms) for the Assessment Year 2018-19.
ITR-5 has to be filed by a person being a firm, LLPs, AOP, BOI, artificial juridical person referred to in section 2(31)(vii), cooperative society and local authority.
ITR-7 is filed when persons including companies fall under section 139(4A) or section 139 (4B) or section 139 (4C) or section 139 4(D).
On Friday, the department has enabled ITR-3 which is applicable for individual and HUF who have income from profits and gains from business or profession.
The Hyderabad bench of the Income Tax Appellate Tribunal ( ITAT ) in M/s. Sri Sai Datta Mutual Aided Co-operative Credit Society vs ACIT, held that the income cannot be taxed on the activities of the Society when principles of mutuality are applicable to it.
The assessee is a mutually aided co-operative society founded by 15 members. After the registration many became the members of the society. The income returns filed by the Society showed NIL, claiming deduction U/s. 80P of the Income Tax Act, 1961 of Rs. 40 Lacs. The Assessing Officer (A.O) found that there were two categories of Members – Ordinary Members and Nominal Members and the transactions with non-Members being third parties is not entitled for deduction either under Section. 80P or under the concept of mutuality. Accordingly, he denied the benefit and restricted it to an amount of Rs. 40,300/- U/s. 80P (2) of the Act. In addition to the above issue, AO noticed that assessee had paid honorarium to its directors to an extent of Rs. 20.76 Lacs and since TDS was not deducted, the said amount was also disallowed under Section 40(a)(ia) of the Income Tax Act, 1961. On appeal, the Commissioner of Income Tax (Appeals) rejected the contentions of the assessee. Thereafter, appeal was filed before the ITAT.
The Counsel for the assessee argued that there was no distinction between ordinary members and nominal members and all the members were having equal rights. He referred to the definition of ‘Membership’ to submit that the nominal members were admitted to the membership of the society. Therefore, according to him, the concept of Mutuality could not be denied only, because some members were categorized as nominal members. It was further submitted that the nominal members also participated in general body meeting and got dividends from the society along with other members as per the objects of the society. Therefore, he concluded that the distinction drawn by the AO on members and non-members was not maintainable.
The Bench comprising of Vice President D. Manmohan and Accountant Member B. Ramakotaiah said that the principle of mutuality Could not be denied simply because there were two categories of members as per the bye-laws of the society. They explained that the class of contributors and the class of participators were more important than classification of members. It found that the class of contributors and class of participators were identical in the instant case.
“Since all the parameters with regard to principles of mutuality are complied, we are of the opinion that the AO’s distinction or findings that society is transacting with non-members is not correct. There is no distinction between ordinary members and nominal members and just because categorized as nominal members, they cannot be treated as ‘non-members’… nominal member cannot be treated as a non-member and so the transactions of nominal members cannot be treated as transactions of non-members… For the reasons stated above, we are of the opinion that the distinction sought to be made by the AO and CIT(A) is arbitrary and artificial. Therefore, we agree that assessee is covered by the principle of mutuality and its income will be exempt on that concept.” observed the Bench.
Subscribe Taxscan Premium to view the JudgmentThe Uttarakhand High Court has held that the persons prosecuted under section 420 of the Indian Penal Code is not eligible to avail the benefit of the Income Declaration Scheme, 2016.
As per the Income Declaration Scheme, 2016 introduced in the Finance Act, 2016, persons can voluntarily declare their undisclosed assets/ income to the department by paying tax. One of the important conditions for eligibility for a person to avail this scheme was that the Scheme shall not apply in relation to prosecution of any offence punishable under Chapter IX or Chapter XVII of the Indian Penal Code, the Narcotic Drugs and Psychotropic Substances Act, 1985, the Unlawful Activities (Prevention) Act, 1967 and the Prevention of Corruption Act, 1988.
In the instant case, the application filed by the petitioner to avail the scheme was rejected by the department by stating that CBI has filed prosecution under the Prevention of Corruption Act against the promoters of the company known as Hillways Construction Company Private Limited.
The petitioner contended that though in a criminal case after investigation the CBI has filed the chargesheet against the petitioner under Sections 120-B, 420, 468 & 471 of I.P.C., but the charges have been framed by the Special Judge, Anti Corruption, CBI against the petitioner only under Sections 120-B, 420, 468 and 471 I.P.C. and not under the provisions of Prevention of Corruption Act.
Justice Sudhanshu Dhulia held that “Admittedly Section 420 of IPC is an offence which comes under Chapter XVII of the IPC. The Scheme, of which the petitioner is seeking benefit, categorically stipulates that in case prosecution is going on against a person for any offence punishable under Chapter IX or Chapter XVII of the IPC, he is not liable to get benefit of the Scheme. Although the order dated 24.10.2016 does not refer to prosecution under Section 420 of IPC but of Corruption of Prevention Act, but since prosecution is going on against the petitioner for an offence which comes under Chapter XVII of the IPC, petitioner is not liable to be granted benefit of the said Scheme.”
Subscribe Taxscan Premium to view the JudgmentThe Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) in ACIT vs. M/s. WTI Advance Technology Ltd. held that payment made to Vendors for doing non-technical works are subject to TDS under Section 194C and not 194 J of the Income Tax Act, 1961.
The assessee is engaged in the business of Information Technology enabled services. As a part of the Restructured Accelerated Power Development and Reforms Programme (R-APDRP) with an overall programme objective to provide an IT backbone and strengthening of the Electricity Distribution System across the Country, which enabled utilities in reduction of AT &C losses to 15% in project areas. The aforesaid work was to be executed in various States and for the State of Maharashtra and Gujarat Tata Consultancy services (TCS) was awarded with this project. The agreement had various modules and in turn TCS had entered into an agreement with the assessee company for creation of Geographical Information systems the execution of the project involved both technical and nontechnical work.
Though the technical work was performed by the assessee through its employees who were technical personnel, but however, the nontechnical and non-skilled work involving the collection of data etc. was outsourced by the assessee to various vendors in the relevant locations for operational convenience. The nature of such non-technical and supporting work that was outsourced by the assessee to the various vendors, involved the field survey for collection of names of major roads/base map features; collection of names/attributes of assets data from ledger available with utility companies‟; collection of consumer data through contact survey by door-to-door survey. The assessee deducted tax at source under Section 194C of the Income Tax Act, 1961. However, the Assessing Officer (A.O.) held that as the payments made by the assessee were in context of technical services, therefore, it was liable to deduct tax at source under Sec.194J and not under Sec. 194C of the Act. Allowing the appeal of the assessee the Commissioner of Income Tax (Appeals) (CIT(A)) held that the work carried out by the vendors did not fall within the ambit of technical services contemplated under Sec. 194J, and rather was clearly in the nature of contract work provided in Sec. 194C of the Act. Revenue appealed before the ITAT.
The Bench comprising of Judicial Member Ravish Sood and Accountant Member B.R. Baskaran affirming the findings of the CIT(A) observed “We find ourselves to be in agreement with the view taken by the CIT(A) that the activities performed by the vendors did not require any technical or professional knowledge, and the vendors had only deployed semi-skilled personnel to carry out the said work. We are persuaded to be in agreement with the view taken by the CIT(A) that as the payments made to the vendors for the work done by them by deploying semi-skilled personnel, did not involve any technical or professional knowledge on their part, the same could not be brought within the sweep of Sec. 194J and had rightly been subjected to deduction of tax at source by the assessee under Sec. 194C. We thus being of the view that the assessee had correctly deducted tax at source on the payment made to the vendors, therefore, no disallowance under Sec.40(a)(ia) as regards the same was liable to be made in the hands of the assessee.”
Subscribe Taxscan Premium to view the JudgmentThe Delhi Bench of the Customs Excise & Service Tax Appellate Tribunal (CESTAT) in M/s. Global Marine Agencies vs. CC held that the renewal of the Customs Broker License could not be refused only for the reason that the appellant had been penalized under Section 114 of the Customs Act, 1962.
The issue arose when the Commissioner of Customs rejected the application of the appellant for renewal of their Customs Broker License. Aggrieved by the decision, appeal was made to the CESTAT.
The Counsel for the applicant argued that the Commissioner had erred in rejecting the application without observing the Regulation 18(C) of the Customs Brokers Licensing Regulations (CBLR), 2013. He submitted that the Commissioner is empowered not to renew the Customs Broker License only in the case of instances of misconduct defined as per the said regulation. He also pointed out that no proceedings were pending against the appellant initiated under CBLR, 2013. He explained that only instances cited by the Revenue about the alleged misconduct on the part of the Customs Broker was penalty imposed on him under Section 114(1) of the Customs Act, 1962 and the penalties imposed were challenged before the Tribunal.
The Counsel for the Department argued that penalties stand imposed against the appellant under Section114 in two different cases and such penalties had been imposed for acts of omission and commission in the case of certain fraudulent exports. He contended that such penalties imposed were to be considered as instances of misconduct and in terms of Regulation 9(2), the Commissioner was within his right not to renew the license.
The Bench comprising of Judicial Member S.K. Mohanty and Technical Member V. Padmanabhan observed that the fact of appellant penalized under Section 114 of the Customs Act, 1962 could not be construed as misconduct for the purpose of Regulation 9(2). “Before such an action can be considered as misconduct, the licencing authority is required to examine whether any regulations have been contravened, through a process of formal enquiry. Unless such procedure has been completed, it will not be proper to view such penalties as misconduct for purposes of Regulation 9(2).”
Setting aside the order, the bench held “In view of the above discussions, we are of the view that the renewal of the Customs Broker License cannot be refused only for the reason that the appellant has been penalized under Section 114. Regulation 18 (proviso) makes it abundantly clear that the actions taken under the CBLR, 2013 will be without prejudice to the action that may be taken under Customs Act, 1962, thereby making it explicit that the proceedings under the Act as well as the Regulation are distinct and separate.”
Subscribe Taxscan Premium to view the JudgmentIn Commissioner of Customs vs. Mahavir Roads & Infrastructure Pvt. Ltd, the Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) held that contracts awarded, prior to 2012, budget by Mumbai Metropolitan Regional Development Authority (MMRDA ) cannot avail the benefit of customs duty exemption on road construction equipment.
In the instant case an appeal has been filed against the order of the Commissioner (Appeals) by the Revenue. The Commissioner (Appeals) had held the view that Mumbai Metropolitan Regional Development Authority (MMRDA) is a road construction corporation under the control of the State Government. It was while interpreting Notification No. 21/2002, the Commissioner pointed out that condition No. 40 (ii) of Notification No. 21/2002 Sr. No. 230 also grants exemption to a person who has been awarded a contract for the construction of roads in India by a road construction corporation under the control of the government of a State or Union Territory.
Aggrieved, the Revenue filed appeal before the CESTAT. The Counsel for the Revenue argued that the eligible Department have been specifically named in the notification, covering only those which are part of and/or under the control of Central/State Government and Union Territories are eligible for the exemption He argued that the notification has to be strictly read and interpreted.
The Counsel for the Respondent argued that MMRDA was established under the Mumbai Metropolitan Regional Development Authority Act, 1974 and therefore a road construction corporation under the control of the State Government. He relied on the Commissioner’s order.
The Bench comprising of Judicial Member Archana Wadhwa and Technical Member Raju found that the said issue was already decided by the Tribunal in the case of Shreeji Construction vs. Commissioner of Customs (Import). In that case the Tribunal had observed that the prior to the 2012 budget the exemption notification differentiated between a Metropolitan Development Authority and a Road construction corporation.
“Otherwise there was no need to specify both these agencies as the persons who can award the contract for the purpose of the Notification. If the intention was to consider Metropolitan Development Authority as a Road construction corporation, the language used would have been different – for e.g. a road construction corporation including a Metropolitan Development Authority or by way of an explanation. That has not been done in the instant case.” remarked the Tribunal.
Relying on the decision of the Tribunal, the Bench held that the contracts awarded by MMRDA did not qualify for the exemption.
Subscribe Taxscan Premium to view the JudgmentIn DCIT vs. M/s. Dominos Pizza International Franchising Inc., the Mumbai Bench of the Income Tax Appellate Tribunal ( ITAT ) held that Jubilant Food Works Limited, who holds the Master Franchise for Domino’s Pizza in India is not a Permanent Establishment of the Domino’s Pizza International Franchising Inc.
In the instant case, the assessee engaged in the business of pizza restaurant chain. It franchises its business to various companies. In India, Jubilant Food Works Limited holds the Master Franchise. The assessee declared its income and offered the income in the nature of Royalty at the rate of 10% as per the India-USA Double Taxation Avoidance Agreement (DTAA). The assessee has offered the income from franchise fee and consultancy services provided to M/s Jubilant Food Works Limited (Jubilant) for opening of store. The Assessing Officer (A.O.) treated Jubilant Food Works Limited as a Permanent Establishment (PE) of the assessee on the ground that Jubilant is not allowed any other activities other than activities prescribed in the Master Franchise Agreement (MFA). Further, the quality of material and equipment used has to be approved by the assessee. The expenses on advertisement and marketing are also carried out in accordance with the provision of agreement. For expansion of the market or penetration has to be followed with the condition of MFA. Princes are also decided by assessee and not by Jubilant or sub-franchise.
Thus, 95% of the income offered by assessee was subjected to tax @ 40% with statutory surcharge. However, the Dispute Resolution Panel (DRP) accepted the contention of assessee that the Jubilant does not constitute a permanent establishment or dependent agency or an agency PE of assessee. Consequent upon the action of Assessing Officer in treating the royalty income as Profit & Gain from business under section 44DA was also set-aside. Revenue appealed to ITAT.
The Counsel for the Revenue argued that Jubilant is an agency PE of the assessee as per definition
provided under India US DTAA means a fixed place of business through which business or enterprise is wholly or partly carried on. Whereas the Counsel for the assessee contended that for existence of dependent agent PE, the Agent must have authority to conclude contract in the name of foreign enterprises and agent recorded as authorize to conclude contract on behalf of Principle if he is permitted to negotiate all aspect of the contract in a matter that might effectively bind its principle. Further, he argued that Jubilant is legal and economically the independent entity.
Considering an appeal against the order of the Dispute Resolution Panel, the Bench Comprising of Judicial Member Pawan Singh and Accountant Member B.R. Baskaran observed that a perusal of the Master Franchise Agreement (MFA) and the Sub Franchise Agreement (SFA) shows that Jubilant Food Works Limited, the Master Franchise is an independent business entity and the restrictions provided in MFA and SFA are only to safeguard the brand value and to ensure the correct receipt of royalty income.
Subscribe Taxscan Premium to view the JudgmentThe Income Tax Appellate Tribunal (ITAT), New Delhi in Institute of Chartered Accountants of India vs ACIT, recently set aside the order of the Commissioner of Income Tax (Appeals) against the Institute of Chartered Accountants of India ( ICAI ). Allowing ICAI’s appeal for statistical purposes, ITAT remanded the case back to the Assessing Officer for proper adjudication as per the law.
The assessee, ICAI, filed return of its income declaring nil income after claiming exemption under section 11 of the Income Tax Act, 1961. The assessee is registered under Section 12A of the Act and also notified under Section 10 (23 C) (114) of the Income Tax Act. The return of income was processed under section 143(1) by the CPC Bangalore, however, the amount accumulated or set apart for application to charitable purposes to the extent it does not exceed 15 per cent of the income, claimed at Rs. 985,7,10,000/- under section 11 (1)(a) (11)(b) of the Act and accumulation of Rs. 10,21,26,000/- under section 11(2) of the Act were not allowed and the total claim was restricted to Rs. 548,35,67,000/- instead of Rs. 657,14,03,000/-. Accordingly, the income was computed at Rs. 108,78,36,000. The assessee appealed to Commissioner of Income Tax (Appeals) (CIT(A)).
The CIT(A) found that the return of income revealed that the amount of Rs. 10,21,26,000/- had been mentioned in the relevant column pertaining to accumulation under section 11(2) of the Act, however, in column no. 5 of Schedule 1 of the ITR which pertained to amount invested or deposited in the modes specified in Section 11(5) for the entry pertaining to the year 2013, the said amount had been mentioned as “zero” which showed that the accumulated amount under section 11(2) had not been invested or deposited in modes specified under section 11(5). She, therefore, did not find infirmity in the intimation of the CPC for not allowing the amount claimed. Regarding the non-granting of permissible deduction or allowance at the rate of 15% of the income of the assessee in accordance with section 11(1)(a) of the Act, the CIT(A) observed that the said section provides that income from property held under trust will be exempted provided the income is applied for charitable purposes to the extent of 85 per cent or more. Aggrieved, assessee filed appeal before the ITAT.
The Counsel for the assessee argued that the assessee’s books of accounts were duly audited by the independent auditor whose report in Form No. 10 BB was filed electronically. He contended that the assessee’s professional while filing the ITR failed to punch the amount of Rs. 98.57 Cores under point no. 1(v) of the ITR 7 but the relevant forms, reports and resolutions etc., such being form no. 10 B, 10 BB wherein the said amount of Rs. 98.57 Crores was duly reflected and claimed as such were furnished electronically. It was further submitted that even the amount of Rs. 10.21 Crores which was sought to be accumulated under section 11(2) of the Act and whose details were also filed in the ITR was considered as income and no benefit with respect to the same was provided in the intimation under section 143(1) of the Act. It was further contended that in the intimation under section 143(1) of the Act neither the benefit of Rs. 98.57 Cores as amount being up to 15% of the income was provided to the assessee and nor the claim of accumulation Rs.10.21 Crores.
The Bench comprising of Judicial Member K.N. Chary and Accountant Member N.K. Saini observed “We, therefore, considering the totality of the facts deem it appropriate to remand this issue back to the file of the AO for adjudication in accordance with law, after proper verification from the material available on the record. We also direct to verify the amount of TDS which was claimed to be at Rs. 4,52,54,823/- while the amount considered was at Rs. 4,51,95,563/-. The AO shall provide a due and reasonable opportunity of being heard to the assessee”.
Subscribe Taxscan Premium to view the JudgmentThe Calcutta High Court in Commissioner of Income Tax (Exemption) vs. St. Joseph Convent Chandannagar Educational Society upheld the decision of the Income Tax Appellate Tribunal (ITAT) in holding that there was is no illegality in allowing the Donations made by one Charitable Trust to another Charitable Trust.
The assessee is a charitable trust and certain amount of money was made over by the assessee to another charitable trust. The assessee also received donations from another charity trust. According to the Revenue, Sections 11 to 13 of the Income Tax Act, 1961 do not permit the income generated by a trust to be made over to another trust irrespective of the nature of the activity of the donee trust since the charitable activity for which exemption is granted by the certificate issued under Section 12A of the Income Tax Act, 1961 is the charitable activity of the assessee trust.
The ITAT interpreted the said provision more liberally and made it clear that the said provision would only apply when a person contributes more than Rs. 50,000 to the assessee charitable trust and the trust makes some payment to such person. It noted that the Revenue had not questioned the propriety of the donation or even asserted that the funds of the trust had been diverted by such process. The Tribunal had held that the true intention of Section 13(1)(c) of the Income Tax Act, 1961 was to ensure that the funds of an entity granted a special exemption are not misapplied or diverted for use as income.
The Bench comprising of Justice Sanjib Banerjee and Justice Abhijit Gangopadhyay found that the Tribunal had rightly decided the case. “In the light of the Tribunal’s treatment of the facts, no real legal issue arises since the Tribunal interpreted the appropriate provisions and applied the same in the context of the facts. As to whether the Tribunal was right or wrong is not really a question of law. As to the interpretation of Section 13(1)(c), it does not appear that the view expressed by the Appellate Tribunal is inappropriate. For the reasons indicated above and, particularly, since there was no allegation of the income of the assessee trust being diverted for non-charitable purposes, the Appellate Tribunal’s order does not warrant any interference.” said the Bench.
Subscribe Taxscan Premium to view the JudgmentThe Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) in ITO vs. M/s. RCIL, held that payment of last mile charges is in the nature of ‘rent’ and TDS under section 194I of the Income Tax Act would be applicable.
The issue before the ITAT was whether the payment of last mile charges is analogous to payment of rent and therefore applicable TDS is u/s. 194I or not. The last mile or last kilometer is a colloquial phrase widely used in the telecommunications, cable television and internet industries to refer to the final leg of the telecommunications networks that deliver telecommunication services to retail end-users (customers). More specifically, the last mile refers to the portion of the telecommunications network chain that physically reaches the end-user’s premises.
The last mile charges paid in the instant case was for use or hire of one or more optical fibers installed between the customers’ premises and the Railtel’s POP. The said connection is used to carry Railtel Data Traffic to and from the customers’ premises. This is a kind of standard facility which may be expected to have been repeated with various other customers and owners of optical fiber cable.
The Counsel for the Revenue contended that the payment is covered under the definition of royalty as per Explanation 2(iva) below Section 1(vi) and applicable provision of TDS is u/s 194J. However, the CESTAT bench comprising of Judicial Member S.S. Godara and Accountant Member Dr. A.L. Saini, rejected the contentions and observed that the assessee used its own internet bandwidth in this entire exercise of involving only hiring of about optical as dark fibre and that the revenue had failed to indicate that the said hiring created any kind of right being vested in assessee’s favour regarding control of the equipment hardware.
Dismissing the Revenue’s appeals, the bench upheld the decision of the Commissioner of Income Tax (Appeals) and observed “A coordinate bench in M/s Standard Chartered Bank vs. CIT ITA 3824/Mum/2006 holds in similar circumstances that a payment made for availing equipment facilities of standard nature without any control on the corresponding hardware does not amount to royalty u/s 9(1)(vi) Explanation-2 clause (iva) of the Act. The CIT(A) has already concluded that the assessee had deducted its TDS at equivalent rate (supra). We further make it clear that the CIT(A)’s above extracted findings also take into consideration various other case law (supra) to conclude that the impugned payments are not in the nature of royalty as insisted by the Assessing Officer.”
Subscribe Taxscan Premium to view the JudgmentIn ITO vs. M/s. Dayamayee Marble & Granite, the Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) cancelling the penalty held that the capital contributed in Cash Transaction by the partner in the partnership firm does not tantamount to loan or deposit within the meaning of section 269SS of the Income Tax Act, 1961.
The assessee, a partnership firm, is engaged in the business of trading in marbles and granites. The assessee had received an amount of Rs.12 lacs in cash from its partner towards capital contribution the said partner in the assessee firm. The Assessing Officer (A.O) observed that as the capital contribution received by the firm from the partner was equivalent to loan or deposit and as the receipts were in the nature of cash, it violated the provisions of section 269SS of the Act. The A.O levied penalty u/s 271D of the Income Tax Act, 1961.
On appeal, the Commissioner of Income Tax (Appeals) (CIT(A)) observed that introduction of capital contributed by the partner in the partnership firm does not fall under the ambit of loan or deposit within the meaning of section 269SS of the Income Tax Act,1961. He further observed that the partner had duly reflected this introduction of capital of Rs.12,00,000/- in the partnership firm in his individual balance sheet. The CIT(A) also noted that the assessee firm also had treated the receipt of Rs.12,00,000/- from the partner as capital introduced by the said partner. Accordingly, he deleted the penalty levied u/s 271D of the Act. Aggrieved, Revenue appealed before the ITAT.
Dismissing the appeal, the Bench comprising of Judicial Member A.T. Varkey and Accountant Member M. Balaganesh observed “We find that the capital contributed by the partner in the partnership firm does not tantamount to loan or deposit within the meaning of section 269SS of the Act and accordingly we do not find any infirmity in the order of the ld. CIT(A) cancelling the penalty levied thereon. Hence, we do not deem it fit to interfere in the order of the ld. CIT(A).”
Subscribe Taxscan Premium to view the JudgmentConsidering the large number of orders of the Authority for Advance Rulings (AAR), the GST Council has asked the Centre and the State Governments to expedite the establishment of appellate authorities for the aggrieved entities.
With AARs in different states started giving rulings since March, it has become imperative for the Centre as well as states to set up the Appellate Authority for Advance Ruling (AAAR), an official said.
“The Secretariat of the GST Council has shot off letters to the states as well as the Central Board of Indirect Taxes and Customs (CBIC) to nominate members to the AAAR on an urgent basis so that they can start functioning,” the official told PTI.
So far only 12 states, including West Bengal, Gujarat, Madhya Pradesh, Rajasthan, Tamil Nadu and Uttar Pradesh, have issued notifications for setting up AAARs. However, these have not become operational as the members have not yet been appointed.
The State GST Laws mandates two members in the appellate authority, i.e, the Chief Commissioner of Central tax as designated by CBIC and the Commissioner of State tax. The authority shall pass order within 90 days of the filing of appeal.
Under the GST (Goods and Services Tax) law, an aggrieved party can file an appeal against the order of the AAR within a period of 30 days, which may be further extended by a month.
As per the law, all states are required to set up at least one AAR for seeking advance ruling over GST levy and one appellate authority to hear appeals against the AAR order.
The department has arrested two persons on Saturday for allegedly duping the exchequer of Rs 127 crore by issuing fake Goods and Services Tax ( GST ) invoices and not paying the service tax.
Reportedly, the arrested persons Amit Upadhyay (40) and Asad Anwar Sayed (42) were sent in judicial custody for 15 days by a local court, a GST official said.
During April 2016 to June 2017, Upadhyay, a city-based businessman, collected service tax of Rs 47 crore but did not deposit the amount with the Service Tax department. Further, he allegedly received Rs 79.38 crore through fake GST invoices with the help of Sayed, who owns a computer solutions company, with the intention of evading tax, the official said.
The Gujarat Authority for Advance Ruling, recently held that the supply of service provided by the applicant is in nature of ‘ outdoor catering ’ and is liable to GST at the rate of 18%.
The Applicant, M/s. Rashmi Hospitality Services Private Limited, is an industrial canteen contractor who provides cantering services to manufacturing industries at various places of their customers who have in house canteens at their factories. The applicant normally charges Goods & Services Tax at the rate of 18% classifying their services under heading 9963 as outdoor catering. One of the customer of the applicant asked the applicant to charge GST at the rate of 12%. The applicant has sought a clarification regarding the rate of taxability, before the AAR.
The applicant submitted that as per the contract made between the applicant and client, the canteen space and all equipments have been provided by the client to the applicant and the applicant is only providing the services pertaining to Food, edible preparation service.
The Authority comprising of Members R.B. Mankodi & G.C. Jain found that the service recipient had engaged the applicant for running of the canteen for their workers/employees. The Members observed that the rates of the meal, snack, tea have been fixed and payable by the service recipient. They thus concluded that the applicant providing service from other than his own premises to the recipient and that the service provided was that of outdoor catering service.
The AAR relying on the decision of the Allahabad High Court in the case of Indian Coffee Workers’ Co-Op Society Ltd vs. CCE & ST. held that the supply of services by M/s. Rashmi Hospitality Services Private Limited is covered under Sr. 7(v) of Notification No.11/2017-Central Tax (Rate) dated 28.06.2017 as amended, issued under the Central Goods and Services Tax Act, 2017 and Notification No. 11/2017-State Tax (Rate) dated 30.06.2017, as amended, issued under the Gujarat Goods and Services Tax Act, 2017, attracting Goods and Service Tax at the rate 18%.
Subscribe Taxscan Premium to view the JudgmentIn Ushaben Jayantilal Sodhan Vs. Income Tax Officer, the Gujarat High Court held that the benefit under Section 54F of the Income Tax Act, 1961 could not be availed by an assessee, if construction work precedes the transfer of immovable property.
The assessee on her land constructed 8 flats, out of which 4 were retained for her use and the other 4 were sold. The assessee considered the proportionate land apportioned to the 04 flat purchasers as the sale of land belonging to her and disclosed long-term capital gain of Rs.58.87 Lacs in the process. The Assessing Officer (A.O.), during the scrutiny assessment of the Return filed by the assessee, raised an objection to the assessee’s claim of deduction from the capital gains received by her on the ground that no construction was carried out after 23.10.2008, which is the date on which the Building Use Permission was granted.
The flats were sold after such date by executing the sale deeds. This was not in tune with the statutory requirements for claiming the deduction. The Tribunal confirmed the view of the Revenue and held that the construction of the building was carried on between 01.02.2007 and 23.10.2008. Since the Building Use Permission was granted on 23.10.2008, it held that no construction activity took place after such date.
According to the Tribunal, for grant of deduction u/s.54F of the Income Tax Act, in case of construction of a residential house, the condition is that the assessee has to, within a period of three years after the date of transfer of a long-term asset, construct a residential house. In the present case, it found that the construction took place prior to the date of transfer and therefore, the conditions of Section 54F of the Act were not fulfilled.
The Counsel for the assessee argued that upon execution of the agreements to sell, there would be a transfer of capital asset and that in the present case all agreements to the sale were executed prior to completion of construction. He submitted that the Tribunal, therefore, committed a serious error in denying the benefit of deduction u/s.54F of the Act to the assessee. He relied on a number of case laws to support his contention.
The Departmental Representative (D.R.) contended that the flats which were sold after such date would not fulfill the conditions laid down in Section 54F of the Act for claiming the deduction. He argued that mere agreement to the sale couldn’t be equated with the sale of any immovable property. He further contended that even though under the agreement to sell certain important rights are created, it couldn’t be stated that upon execution of the agreement to sell, a capital asset would stand transferred.
The Bench comprising of Justice B.N. Karia and Justice Akhil Kureshi observed “What subsection (1) of Section 54 of the Act requires is that the assessee, after the date of transfer, purchases or within three years after such date, constructs a residential unit, only then the benefit of the deduction would be granted. Under the circumstances, if the sale deeds are considered on the date on which the transfer of capital asset took place, the case of the assessee would not fall within the parameters of the said provision.”
Subscribe Taxscan Premium to view the JudgmentThe Madras High Court recently ruled that imposing a tax on proposals that are uncommunicated to the Assessee shall amount to the violation of the principles of natural justice.
The Assessee, D.S. Balachandran is a dealer under the Tamil Nadu Value added tax (TNVAT) Act, was originally served with five proposals but certain other defects were identified from the returns and mismatch from the website.
According to the counsel for the revenue department, those materials were readily available at the office of the revenue and since the assessee failed to appear before the authorities, those materials could not be served to the assessee.
Justice M. Govindaraj set aside the order and remanded the matter back to the revenue department for fresh consideration. He further directed, “issue fresh notice incorporating all the proposals along with materials relied on by him and call for objections from the petitioner, within a period of 15 days from the date of receipt of a copy of this order and in service of such pre-revision notice, the petitioner shall submit his objections within a period of 15 days thereafter. The second respondent is directed to pass orders after affording a personal hearing to the petitioner within a period of 15 days from the date of receipt of objections from the petitioner.”
Subscribe Taxscan Premium to view the JudgmentThe Income Tax department has cautioned the TDS to file TDS statement before the due date, i.e 31st May 2018. The Central Board of Direct Taxes (CBDT), the apex body of direct taxes, issued an advisory to taxpayers, directing them to file their statements within time failing which they would invite a penalty of Rs 200 for each day of default.
As per the income tax rules, TDS is to be deducted by the deductor (employer) from the salary of the employee and has to be filed every quarter or in three months time with the tax department.
the Advisory said: Attention tax deductors. The last date to file Tax Deducted at Source (TDS) statement for the January-March quarter is May 31.
“For delay in filing TDS statement, you pay a fine of Rs 200 for each day of default,” the advertisement cautioned.
It added that the deductors who have deducted the tax and have not deposited the same by the due date must do so “immediately” and that all deductors must register themselves at the official website of the ITD meant for this job–https://www.tdscpc.gov.in.
The ITD ad also advised the deductors to correctly quote their TAN (tax deduction account number) and also the permanent account number (PAN) of the deductees so that they get their “due tax credit.”
Non-quoting of PAN or TAN in TDS statement may lead to levy of penalty,” the advisory said.
If there is no transaction liable to TDS/TCS (tax collected at source) to report for the quarter, do intimate the same at TRACES portal (the website mentioned above) using ‘declaration for non-filing’ functionality, to avoid notice for non-filing of TDS statement.
The Income Tax Appellate Tribunal ( ITAT ) New Delhi, in Huawei Telecommunication (India) vs, ACIT expenditure on account of warranty expenses are the liability in the present which is liable to be deducted on estimate basis.
The appellant-assessee is engaged in the business of trading of telecom equipment. The assessee provides warranty services to the buyers by way of repair and replacement for a predefined period. During the year the assessee company provided for warranty expenses of Rs 37.87 Lacs and debited the same to the profit and loss account. The assessee was asked to explain why the provision for the warranty expenses is allowable to the assessee. The assessee explained that the warranty expenses have been determined on the basis of the costs liable to be incurred in relation to warranty obligation contracted with respective customers. The Assessing Officer (A.O) rejected the contentions of the assessee and reasoned that the warranty expenses provided by the assessee was not on the scientific basis in compliance of the accrual basis of accounting and hence was not allowable as deduction. He further held that the provision made by the assessee is contingent and is not a liability is present. He disallowed the expenditure. The appeal preferred to the Commissioner of Income Tax (Appeals)(CIT(A)) was rejected. Aggrieved, assessee filed appeal before the Tribunal.
The Counsel for the assessee argued that that the according to the percentage of actual work completed the assessee estimates estimated local labor cost for the warranty and other overhead on estimated total warranty costs are determined. From the above figures, the earlier year balance provision is reduced and the balance liability is made during the year. He, therefore, submitted that the lower authorities had failed to appreciate that there was no arithmetical formula, which could apply to each and every industry identically in the case of provision of warranties.
The Counsel for the Revenue reiterated the decision of the lower authorities.
The ITAT Bench comprising of Judicial Member Amit Shukla & Accountant Member Prashant Maharishi found that the revenue earned by the assessee during the year was credited to the profit and loss account of the year and the corresponding warranty provision expenditure required to be made over a period of the warranty claim is definitely charged to the profit and loss account to arrive at the correct figure of the profit for the year. Therefore, according to the Bench, liability of warranty cost was not contingent.
“There cannot be straightjacket formulae for warranty provision in each industry alike. Therefore, the reliable estimate made by the assessee is required to be looked from the perspective of the industry in which the assessee operates. It is further required to be seen that what kind of expenditure has been incurred by the assessee in subsequent years that will give the best picture with the original provision made by the assessee’s reliable estimate or not. Further, as the sale prices have been booked into the profit and loss account the corresponding expenditure on account of warranty expenses are also a liability in present and therefore it cannot be said that it is a contingent liability wherein the contract with the customers the clauses of warranty are existing. Therefore, it is an allowable expenditure. In fact, there cannot be any doubt that the assessee is eligible for the deduction of warranty expenditure.” observed the bench.
Subscribe Taxscan Premium to view the JudgmentThe Central Government today notified that supplies within the Union territories would require E-Way Bill from 25th May 2018.
The notification issued today rescinded the earlier notification as per which, irrespective of the value of the consignment, no e-way bill shall be required to be generated where the movement of goods commences and terminates within the Union Territories.
In March, the Government notified that the supplies made within the territory of Chandigarh, Dadra and Nagar Haveli, Daman and Diu and Lakshadweep do not require E-Way Bill.
Under GST rules, ferrying goods worth more than Rs 50,000 within or outside a state will require securing an electronic-way or e-way bill through prior online registration of the consignment. In the 26th meeting, the GST Council has recommended the introduction of the E-Way Bill for inter-State movement of goods across the country from 01st April 2018. For intra-State movement of goods, e-way bill system will be introduced w.e.f. a date to be announced in a phased manner but not later than 01st June 2018.
Subscribe Taxscan Premium to view the JudgmentThe Karnataka High Court held that the prescribed authorities under the Karnataka value added Tax (KVAT) Act has no power to assess the petitioner-dealer under VAT Scheme for the period when the composition certificate issued under Rule 137 of the Rules was in existence. The Court further quashed the Re-assessment proceedings since the petitioner ready to file VAT 100 returns and to pay the tax under the VAT Scheme subsequent to cancellation of the composition certificate.
The petitioner, Oriental Cuisines Pvt. Ltd is a company engaged in Hotel industry running a chain of restaurants registered under Karnataka VAT 2003 and central sales Tax Act, 1956. The issue begins with the decision of Assistant Commissioner of Commercial Taxes, who cancelled the composition scheme in terms of Section 15(1) of the KVAT Act relating to two outlets by reasoning that petitioner is dealing in liquor either at the principal place of business or branches.
The business premises inspected by the Enforcement Wing and proceeded for reassessment and concluded disallowing the input tax credit and enhancing the tax liability with penalty and interest.
The petitioner challenged the decision and filed a petition before Karnataka High Court. The counsel for the petitioner raised a contention that the re-assessment order is invalid since the composition scheme opted by the petitioner was cancelled earlier by the commissioner.
The counsel also made a further submission that the approach of the Authorities in concluding the Re-assessment and enhancing the tax liability assessing the entire turnover of the assessee in VAT scheme irrespective of the branches without canceling the composition certificate during the relevant period calls for interference by this Court.
On contrary to this, the Additional Government advocate appearing for the respondent with the support of decision in M/s. Aswati inns private limited V/S. The State of Karnataka and another raised a statement that the Composition Scheme under Section 15 of the KVAT Act read with Rules 135 to 141 of the KVAT Rules prescribes the condition of the composite scheme whereby inter-state purchase and selling of liquor is totally prohibited.
The court heard the contentions and perused the cases cited by them. While perusing the inspection report wherein stated that assessee filing return under CoT has effected inter-state purchase of raw-material, purchase and sale of liquor under the excise license CL-9, Re-assessment proceedings under Section 39(1) of the KVAT Act were initiated and concluded, reassessing the dealer under the VAT Scheme and assessing the taxable turnover to levy of tax at 14.5% rejecting the composition scheme.
The Court cited various case laws and observed that ” it is clear that unless the certificate issued under Rule 137 [Composition Certificate] has not been canceled, the Dealer-Petitioner herein would be entitled to continue with the benefit under Section 15 of the KVAT Act on composition scheme”.
“It is also made clear that VAT option is enabled to file VAT100 returns with effect from 1.8.2015. Even in the notice, for cancellation of composition scheme, it was proposed to cancel the COT facility with immediate effect. The same coming into effect from 22.07.2015, the Prescribed Authority has no power to assess the petitioner-dealer under VAT Scheme for the period when the composition certificate issued under Rule 137 of the Rules was in existence. Rule 137 provides for the issuance of certificates. The certificate issued under Rule 137 entitles the petitioner to make payment in terms of composition scheme at 4% unless the same is canceled in terms of Rule 145 of the Rules. Indisputably, the certificate issued under Rule 137 was not canceled during the tax period April 2014 to March 2015.”
The bench, finally, concluded that for the period in question, no reassessment can be made under Section 39[1] of the VAT Act subjecting the petitioner to tax under VAT Scheme.
Subscribe Taxscan Premium to view the JudgmentIn ITO vs. Leelavati Paattamahadei, the Cuttack Bench of the Income Tax Appellate Tribunal (ITAT) held that exemption under Section 54EC of the Income Tax Act, 1961 will be available to the assessee if the payments are made on or before the due date as per section 139(4) of the Act.
The Assessee showed a long-term capital gain of Rs. 1.03 Crores arising from the transfer of land & building. The assessee claimed deduction under Section 54EC towards subscription of some bonds and under section 54 towards the purchase of new flat. The Assessing Officer (A.O) found that the assessee had paid the total consideration in advances and installments from 6th February 2014 to 17th March 2015. The A.O opined that the assessee will qualify for the deduction u/s.54 on account of purchase of new flat at Bhubaneswar only if the payments were made on or before the due date as applicable u/s.139(1) i.e. on or before 31.7.2013. Consequently, the claim of deduction was disallowed and the same was added to the income of the assessee.
Before the Commissioner of Income Tax (Appeals) (CIT(A)) the assessee contended that due date is to be taken as applicable under section.139(4) of the I.T. Act, 1961 which is one year from the end of the assessment year i.e. 31.3.2015. It was submitted that the entire payment was made before 41.4.2015 and therefore, the assessee is eligible to claim deduction u/s.54 of the I.T. Act, 1961. The CIT(A) accepting the contentions of the assessee, allowed the appeal. Aggrieved, the Revenue appealed before the ITAT.
The Bench comprising of Judicial Member Pavan Kumar Gadale & Accountant Member N.S. Saini found that the Departmental Representative (D.R) had simply relied on the order of the A.O and had failed to bring out any specific error in the order of the CIT(A). It observed that the D.R could not place any material record to refute the findings of the CIT(A). Rejecting the appeal of the Revenue, the bench upheld the order of the CIT(A).
