AAR & AAAR Weekly Round Up

This weekly round-up analytically summarises the key stories related to the Authority of Advance Ruling (AAR) and Appellate Authority of Advance Ruling (AAAR) reported at Taxscan.in during the previous week from January 31 to February 5, 2022. M/s Rochem Separation Systems The Maharashtra Authority of Advance Ruling (AAR) has ruled that the 18% GST on…

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GST not payable on Rent for Locker provided in Bus Stand by a Municipal Corporation: AAAR [Read Order]

The Tamil Nadu Appellate Authority of Advance Ruling (AAAR) has ruled that GST not payable on Rent for lockers provided in bus stands by a Municipal Corporation. The Appellant, Erode City Municipal Corporation is a “Municipality” as defined in clause (e) of article 243P of the Constitution. They are rendering taxable services (viz) renting of…

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Crypto and Metaverse under Income Tax Scanner: Budget 2022 proposes 30% Tax on Transfer of Virtual Digital Assets

In the Union Budget 2022, the Finance Minister, Nirmala Sitharaman had proposed the Scheme for taxation of virtual digital assets wherein the Crypto and Metaverse Investors to pay 30% Income Tax for Transfer of Virtual Digital Assets.

Virtual digital assets have gained tremendous popularity in recent times and the volumes of trading in such digital assets have increased substantially. Further, a market is emerging where payment for the transfer of a virtual digital asset can be made through another such asset. Accordingly, a new scheme to provide for taxation of such virtual digital assets has been proposed in the Bill.

The proposed section 115BBH seeks to provide that where the total income of an assessee includes any income from transfer of any virtual digital asset, the income- tax payable shall be the aggregate of the amount of income-tax calculated on the income of transfer of any virtual digital asset at the rate of 30% and the amount of income-tax with which the assessee would have been chargeable had the total income of the assessee been reduced by the aggregate of the income from transfer of virtual digital asset.

What is a virtual digital asset?

To define the term “virtual digital asset”, a new clause (47A) is proposed to be inserted into section 2 of the Act. As per the proposed new clause, a virtual digital asset is proposed to mean any information or code or number or token (not being Indian currency or any foreign currency), generated through cryptographic means or otherwise, by whatever name called, providing a digital representation of value which is exchanged with or without consideration, with the promise or representation of having inherent value, or functions as a store of value or a unit of account and includes its use in any financial transaction or investment, but not limited to, investment schemes and can be transferred, stored or traded electronically. Non-fungible tokens and; any other token of similar nature are included in the definition.

Effects of crypto investors

As per the provision, the 30% Income Tax shall be payable on any profit generated through Cryptocurrency. No deduction in respect of any expenditure (other than the cost of acquisition) or allowance or set-off of any loss shall be allowed to the assessee under any provision of the Act while computing income from the transfer of such asset.

No set-off of any loss arising from the transfer of virtual digital assets shall be allowed against any income computed under any other provision of the Act and such loss shall not be allowed to be carried forward to subsequent assessment years.

In order to widen the tax base from the transactions so carried out in relation to these assets, it is proposed to insert section 194S to the Act to provide for deduction of tax on payment for the transfer of virtual digital asset to a resident at the rate of one percent of such sum. However, in case the payment for such transfer is wholly in kind or in exchange of another virtual digital asset where there is no part in cash; or partly in cash and partly in kind but the part in cash is not sufficient to meet the liability of deduction of tax in respect of the whole of such transfer, the person before making the payment shall ensure that the tax has been paid in respect of such consideration.

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No Service Tax liability as Consignment Notes not been issued, Activities can’t be covered under ‘GTA’ Services: CESTAT [Read Order]

The Delhi Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has No Service Tax liability as Consignment Notes have not been issued, activities can’t be covered under ‘goods transport agency’ services.

The appellant is a trust registered under the Registration Act, 1908. It was constituted on 05.01.2009 with an aim to carry out charitable objects, which amongst others included yoga education and training for achieving a disease-free and healthy India.

The appellant is also registered under section 12AA read with section 12A of the Income Tax Act, 19613. The appellant claims that in order to fulfill its objectives, it engaged itself in organizing residential as well as non-residential yoga camps to propagate yoga training and vedic knowledge for which it received donations from its members.

An enquiry was, however, conducted in connection with non- payment of service tax on such membership donations, on freight charges paid by the appellant, and on the amount by the appellant for hiring motor vehicles. Ultimately, a show cause notice dated 06.04.2014 was issued to the appellant for the period January 2009 to March 2013 proposing demand of service tax with interest and penalty under the category of ‘club or association service’, ‘goods and transport agency service’ and ‘rent-a-cab operator service’. This show cause notice is pending adjudication.

The coram headed by President Justice Dilip Gupta and Technical Member, P.V.Subba Rao has held that ‘Goods transport agency’ service has been defined in section 65(26) of the Finance Act to mean any person who provides service in relation to transport of goods by road and issues consignment notes, by whatever name called. In the present case, consignment notes have not been issued and so the activities cannot be said to be covered under ‘goods transport agency’ services.

“Thus, service tax liability could not have been fastened on the appellant under the reserve charge mechanism,” the CESTAT said.

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ITAT allows write off of Bad Debts as assessee has successfully discharged its Onus of Proof [Read Order]

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has allowed the  write off of bad debts as the assessee has successfully discharged its onus of proof.

The assessee, GBT India Pvt. Ltd. had written off bad debts amounting to Rs.12,296,711 as irrecoverable in its books of account during the previous year. Such bad debts were taken into account in computing the income of the previous year and earlier previous year. The AO had held that deduction of such bad debts would not be allowed to the assessee, inter-alia on the ground that supporting evidence in relation to bad debts were not furnished and the quantum of bad debts was unreasonable considering that it was the second year of operations.

In the acquisition of the corporate travel division, the assessee had also acquired receivables of Rs. 37.04 crores besides other assets and liabilities. Out of these receivables, the assessee was unable to recover Rs. 2.25 crores from certain parties. The same was written off as bad debts in the profit and loss account.

During the course of scrutiny assessment proceedings, the Assessing Officer noticed that the bad debts are related to very brand conscious entities, which by no stretch of imagination can be made as bad debts. The Assessing Officer further observed that the assessee has not furnished a convincing explanation for considering these entities as bad debts. The Assessing Officer issued notice u/s 133(6) of the Act to Amex and on receiving no reply, disallowed the claim of bad debts which was upheld by the DRP.

There is no dispute that on the acquisition of Corporate Travel Division, the appellant company also acquired receivables. It is also not in dispute that out of the receivables, the receivables amounting to Rs. 2.25 crores from certain parties could not be recovered. It is a settled proposition of law that to claim bad debt, all that is required for the assessee is to actually write off the debts in his books of account. The receivables written off by the appellant company were erstwhile receivables to Amex duly reflected in their balance sheet and, therefore, it can be safely presumed that the receivables were part of business profits of the Amex.

The coram of G.S.Pannu and Amit Shukla has held that the assessee has successfully discharged its onus and has fulfilled the conditions laid down u/s 36 of the Act. “We, therefore, do not find any reason why the write off of bad debts should not be allowed. We, accordingly, direct the Assessing Officer to allow the claim of bad debts,” the court added.

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5% GST on Supply of Pressure Tight Cables, Non-Pressure Tight Cables, Special Cables for use in S4 Submarine supplied to Defence Ministry: AAR [Read Order]

The Telangana Authority of Advance Ruling (AAR) held that 5% GST on supply of pressure tight cables, non-pressure tight cables, special cables for use in S4 submarines supplied to the Defence Ministry.

The applicant, M/s. Radiant Corporation private Limited are supplying pressure tight cables and non-pressure tight cables and special cables for use in the S4 submarine by the Defence Machinery Design Establishment(DMDE), Ministry of Defence, Government of India. The applicant is desirous to clarify the goods supplied by them are eligible for a concessional rate of tax under Sl.No.252 read with Sl.No.250 of Schedule I in Notification No. 01/2017 dated 28.06.2017.

The issue raised was in respect of applicable rate of CGST on the supply of pressure tight cables, non-pressure tight cables and special cables for use in S4 submarine supplied by the Applicant to DMDE, Ministry of Defence, Govt of India and whether these goods would be considered to be as parts of warships and accordingly classifiable under Sl.No.252 read with Sl.No.250 of Schedule I in Notification No. 01/2017 dated: 28.06.2017.

The applicant has submitted certain utilization certificates from the Naval authorities. The certificates categorically state that the goods supplied are used “as stores for consumption onboard an Indian Navy Ship”. Similarly, in the certificate dated: 24.02.2017 it is stated that they are exclusively for use onboard Indian Naval Ships. In the certificate dated: 30.03.2017 it is stated that these goods are required for the ATV program.

The coram of S.V.Kasi Vishveswara Rao and B.Ragu Kiran held that the supplies made by the applicant to Defence Machinery Design Establishment (DMD) for the purpose of use in warship building of Indian Navy will qualify for the concessional rate of tax of 5% under CGST & SGST.

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Delhi HC dismisses appeal against deletion of Addition for Share Premium or Bogus Purchases or Cash deposits in Bank as no challenge was made to evidence [Read Judgment]

The Delhi High Court has dismissed the appeal against deletion of addition for share premium or bogus purchases or Cash deposits in bank as no challenge was made to evidence.

The assessee, Agson Global had filed its return of income qua AY 2012-2013 under Section 139 (1) of the Act. In this return, the assessee had declared its income. The Assessing Officer passed an assessment order under Section 143(3) of the Act. Via the said assessment order, the A.O. made an addition to the declared/returned income of the assessee on account of unexplained share capital and share premium‖. Resultantly, the assessed income shot up to Rs.24,52,85,750/-. Being aggrieved, the assessee preferred an appeal. The CIT(A), vide order dated 31.03.2016, deleted the aforesaid addition. Pertinently, the revenue did not carry the matter further. Consequently, the assessment proceedings vis-à-vis AY 2012-2013, stood concluded.

The division bench of Justice Rajiv Shakdher and Justice Talwant Singh while dismissing a bunch of appeals against deletion of addition u/s 68 towards Share capital/ share premium, bogus purchases and deposit in bank account, the Hon’ble Delhi High Court vide judgement delivered on 19.01.2022 (yesterday) has held that where the ITAT decided the matter based on appreciation of evidences placed on record and the order of ITAT not being challenged on ground of perversity, no substantial question of law arises.

It also held that the investigation wing directed the AO to frame the assessment in a manner that would protect the revenue’s interest.

“The AO performs a quasi judicial function while framing an assessment. The revenue can not dictate the manner in which the A O frames the assessment order,” the court said.

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Glitches in Income Tax Return Filing: CBDT assures in Gujarat HC that No Penalty in case of genuine hardships in Online Filing [Read Order]

The Gujarat High Court has refused to accept the request for physical filing but assures non-imposition of penalty in case of genuine hardship due to technical glitches on Income Tax Portal. The Southern Gujarat Income Tax Bar Association has prayed to extend the time period for filing the Tax Audit Reports and the Income Tax…

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ITC not available on GST paid on expenses incurred towards promotional schemes goods given as brand reminders: AAAR [Read Order]

The Maharashtra Appellate Authority of Advance Ruling (AAAR) has ruled that the ITC is not available on GST paid on expenses incurred towards promotional schemes goods given as brand reminders. The appellant, Sanofi India Limited is engaged in the business of sale of pharmaceutical goods and services. The Appellant has its head office in Mumbai…

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CBIC issues Circular on Alignment of AEO with CAROTAR 2020 [Read Circular]

The Central Board of Indirect Taxes and Customs (CBIC) has notified the Circular regarding the alignment of Authorized Economic Operator (AEO) Circular No. 33/2016 dated July 22, 2016, and 54/2020 dated December 15, 2020, with the Customs Administration of Rules of Origin Under Trade Agreements Rules, 2020 (CAROTAR 2020) implemented vide dated September 21, 2020….

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Maharashtra Govt. issues Guidelines on Scrutiny Parameters, System or Data related issues faced during Return Scrutiny under GST [Read Circular]

The Maharashtra Government has issued Guidelines with respect to scrutiny parameters, system, or data-related issues faced during return scrutiny under GST. The return is a very important aspect of taxpayers’ compliance under GST Act(s), which is the base for the Department to keep track over tax payment, Input Tax Credit availed and Input Tax Credit…

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No GST payable on Recoveries made from Employees towards providing Parental Insurance: AAR [Read Order]

The Maharashtra Authority of Advance Ruling (AAR) no GST payable on recoveries made from employees towards providing parental insurance. The applicant, M/s Syngenta India Limited manufactures or sells pesticides, herbicides & various types of seeds and offers various incentives to its employees as a part of its employment policy, like group insurance policy for its…

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18% GST on Body Building, Mounting of Body on Chassis of Tippers, Tankers, Trucks, Trailers: AAAR [Read Order]

The Uttar Pradesh Appellate Authority of Advance Ruling (AAAR) ruled 18% GST on body building, mounting of body on chassis of Tippers, Tankers, Trucks, Trailers.

The appellant, M/s Adithya Automotive Applications Pvt Ltd has been engaged in the body building and mounting of body on the chassis of different models of Tippers, Tankers, Trucks and Trailers. They receive chassis of these items from TATA Motors and other customers on the basis of returnable challan. They undertake body building as per contract / purchase order issued by M/s TATA Motors.

The applicant has sought advance ruling on the issue whether the body building activity on the chassis provided by the principal would amount to manufacturing services attracting 18%.

The AAR ruled that the body building activity on the chassis provided by the principal would not amount to manufacturing services attracting 18% of GST.

The applicant has challenged the ruling on the ground that The cost of the mounted body is always less than 20% of the cost of the chassis and as such it can be seen that there is no apparent dominant nature of the work of the body building when compared to the chassis. Section 2(68) of the GST Act, 2017 defines job work as ‘any treatment or process undertaken by a person on goods belonging to another registered person’. The one who does the said job would be termed as’ job worker’. The ownership of the goods does not transfer to the job worker but it rests with the principal. The job worker is required to carry out the process specified by the principal, on the goods. This is submitted that the Appellant was carrying on body building process on physical inputs i.e. chassis owned by the principal i.e. TATA Motors, hence the activity of the Appellant will be treated as job work not as manufacture as held by the Authority of Advance Ruling. Further, the issue stands clarified by the CBIC under its Circular No. 38/12/2018 Dated 26.03.2018 The coram of Ajay Dixit and Minishy S. held that body building and mounting of body on the chassis of different models of Tippers, Tankers, Trucks and Trailers, on the chassis to be supplied by the Principal, on delivery challans, by collecting job work charges for such fabrication work is taxable at the rate of 18%, in accordance with Circular No. 52/ 26/ 2018-GST date 09.08.2018, subject to fulfilment of all the conditions prescribed in the Section 141 and 143 of the CGST Act, 2017 read with relevant Rules/Notifications.

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DGFT issues clarification on Steel Import Monitoring System [Read Circular]

The Director General of Foreign Trade (DGFT) has issued the  clarification on the Steel Import Monitoring System.

“Subsequent to the issuance of Notification No.33/2015-2020 dated September 28, 2020 amending import policy of all HSN Codes under chapter-72, 73 and 86 of Schedule-I (Import Policy) of ITC (HS) from ‘Free’ to ‘Free subject to compulsory registration under Steel Import Monitoring System (SIMS), DGFT has received various representations from members of Trade & Industry seeking clarification on SIMS,” the DGFT said.

The issues were referred to M/O Steel and based upon their clarification, responses thereto are given below Whether re-import of goods for packaging purposes falling under HS codes of Chapters 72,73 and 86 of ITC (HS), 2017 is also covered under scope of SIMS and Whether SIMS Registration is required if the steel/steel item is exported from DTA to SEZ and then imported from SEZ to DTA when [i] the item is being imported to DTA without any value addition and [ii] the item is being imported to DTA after some value addition

The DGFT responded that re-import of steel for packaging purposes will not be covered under SIMS as it is not primarily meant for value addition, rather being re-imported for packaging only.

“In both the cases i.e. [i] if the steel/steel item is exported from DTA to SEZ and then imported into DTA from SEZ without value addition, or [ii] with value addition, there should be no requirement for SIMS registration,” the DGFT added.

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INOX cannot utilise ITC of GST restricted under Section 17(5)(d) Charged by IPL: AAAR [Read Order]

The Tamil Nadu Appellate Authority of Advance Ruling (AAAR) while upholding the AAR’s Order held that INOX cannot utilise ITC of GST restricted under Section 17(5)(d) Charged by IPL.

The applicant, INOX Air Products Pvt Ltd. has stated that they are engaged in the business of manufacture and supply of industrial 86 Medical gases, including oxygen (both Industrial 86 Medical Grade), nitrogen, argon etc (in both liquid and gaseous form).; State Industrial Promotion Corporation of Tamilnadu (hereinafter referred as SIPCOT) had entered into an agreement dated 22.07.1993 with India Pistons Limited(hereinafter referred to as IPL) for lease of an area of land in Hosur for a period of 99 years for the purpose of setting up a piston manufacturing industry.; INOX had approached IPL for transfer of the leasehold rights for the remainder period of 72 years in respect of part of the property for setting up of State-of-the-art medical and industrial gases plant, i.e. Air Separation Unit (ASU) for manufacture and supply of Industrial gases.; INOX and IPL entered into a Memorandum of Understanding for transfer of leasehold rights(MOU) dated 20.11.2020.; SIPCOT vide Order No. P-II/SICH/II/IPL/146/2012 dated 28.12.2020 had accorded its approval for transfer of leasehold rights to INOX. Accordingly, SIPCOT has amended its original lease agreement vide a modified lease deed on 12.01.2021 in order to lease the part property to INOX. In terms of Clause 2 of MOU, IPL has agreed to transfer the leasehold rights in the part property to INOX for a total consideration of Rs. 15,00,00,000/-.

The applicant has sought the advance ruling on the issue Whether INOX would be entitled to avail and utilize ITC of GST Charged by IPL if such transaction is considered to be a supply.

The AAR ruled that the applicant is not entitled to avail and utilize ITC of GST charged by IPL as the same is restricted under Section 17(5)(d) of the CGST/TNGST Act 2017, if such transaction is considered to be a supply.

The coram of M.S.Sidhiqui and M.V.S.Choudhary held that ASP is installed and commissioned with foundation and structural support, embedded on the land, the leasehold rights of which is obtained by the appellant by receiving the service of agreeing to withdraw the lease hold rights held by IPL in their favour. Without the appellant having the leasehold rights. they cannot undertake ‘construction’ of the manufacturing Plant, ASP. Also, ASP is an immovable property and not mere ‘Plant’ or ‘machinery’ but can be termed as ‘Plant and Machinery’, the Explanation of which specifically excludes land. Thus, it is clear that intention of law maker is to restrict ITC on services related to land, received for construction. Thus, we hold that, the services received from IPL, the cost of which is capitalised along with ASP, is a service received ‘for construction’ of an immovable property, and therefore the taxes paid is restricted as per Section 17(5)(d) of the CGST/TNGST Act 2017 and we uphold the ruling of the Lower Authority.

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SEBI bestows upon Company Secretaries New Recognition under SEBI (Issue of Capital and Disclosure Requirements) (Amendment) Regulations, 2022: ICSI

The Institute of Company Secretaries of India (ICSI) has notified the SEBI bestows upon Company Secretaries new recognition under SEBI (Issue of Capital and Disclosure Requirements) (Amendment) Regulations, 2022.

The Institute in furtherance of its continuous endeavours to provide new opportunities to its members has been sending suggestions on various draft rules, regulations, policies and guidelines, etc. issued by Ministries, Government organisations and Regulatory Bodies to seek recognitions in new areas of practice and employment.

In this direction, the Institute pro-actively makes representations and submits its views/suggestions/comments on various Consultation/Discussion Papers/Reports issued by the SEBI and seeks opportunities for its Members in the area of Securities Laws.

“We are pleased to inform you that the SEBI has bestowed upon the profession of Company Secretaries a new recognition under the SEBI (Issue of Capital and Disclosure Requirements) (Amendment) Regulations, 2022 issued vide Gazette Notification dated 14th January, 2022, to issue a Certificate of Compliance to the issuer certifying that the proposed preferential issue is being made in accordance with the SEBI (Issue of Capital and Disclosure Requirements) Regulations, 2018,” the ICSI said.

The ICSI has expressed sincere gratitude to SEBI for reposing the confidence in the profession of Company Secretaries.

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ICAI signs MoU with Russian Institute of Professional Accountants, informs ICAI President

The President of Institute of Chartered Accountants of India (ICAI), CA Nihar N. Jambusaria while elaborating on the recent development stated that ICAI signs MoU with Russian Institute of Professional Accountants, informs ICAI President.

CA Jambusaria further stated that the Union Cabinet chaired by the Prime Minister, Narendra Modi approved MoU between ICAI and the Police Chamber of Statutory Auditors on December 22, 2022. The MoU aims at working together to develop a mutual relationship between ICAI and PIBR.

The council has further approved the Certificate Course on Impact Assessment and CSR Reporting.

The Ethical Standard Board has released FAQs on some amendments related to Ethical Standard.

CA Jambusaria further added that the CA Amendments Bill was introduced in Lok Sabha and was referred to the standing committee. The ICAI has submitted its memorandum to the   standing committee seeking changes in some clauses related to the Coordination committee, disciplinary mechanism, etc.

The ICAI international conference was planned in the physical mode in view of the reaction of the gathering laid down in Mumbai due to COVID-19.

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No question of Interest bearing Funds diverted by Assessee as amount was converted into Equity Shares, appearing as Opening Balance: ITAT deletes Disallowance [Read Order]

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) while deleting the disallowance held that no question of interest bearing funds diverted by assessee as amount was converted into equity shares, appearing as opening balance.

The AO during the course of assessment proceedings observed that the assessee, M/s. G.S. Pharmbutor P. Ltd. has diverted interest bearing funds for making investment of Rs.28 crores in M/s. Moderate Leasing & Capital Services Limited, a related company.

AO observed that the assessee has also debited an amount of Rs.24,93,81,512/- as interest expenses in its profit & loss account. Facts which were gathered during the assessment proceedings under section 143(3) of the Act for AY 2014-15 suggested that the assessee has diverted interest bearing funds for making investment of Rs.28 crores in the said company. Based on this premise, the assessee’s case was reopened u/s 148 of the Act as per the reasons recorded in the assessment order. Accordingly, the ld. AO worked out the proportionate disallowance of Rs.3,36,00,000/- by working out the notional interest expenses at the rate of 12% on the amount of Rs.28 crores.

The coram of Accountant Member, Anil Chaturvedi and Judicial Member, Amit Shukla held that the assessee has not given any loan or advances during the year. As can be seen from the copy of account of M/s. Moderate Leasing & Capital Services Limited, assessee has been paying advances and loan to the said company from time to time and was also being repaid by the said company. All throughout, there were debit balances right from the assessment year 2006-07. In the FY 2011-12, the assessee has converted its debit balance of Rs.29.13 crores into convertible debentures on 30.04.2011 for a sum of Rs.28 crores. The said debentures were converted into equity shares on 25.03.2014 i.e. for the assessment year 2014-15. This amount was standing as opening balance to which AO has treated that the amount advanced of Rs.28 crores which was converted into convertible debentures from an advance given out of interest bearing funds. First of all, nowhere AO has analyzed as to when assessee had been advancing loan right from AY 2006-07 from out of any interest bearing funds or during the relevant year any further interest bearing funds have been diverted. Converting of debentures on 30.04.2011 out of debit balance with the said party cannot be treated as diversion of funds to the sister concern out of interest bearing funds for the year under consideration. As stated by the assessee, the long term borrowings were reduced to Rs.6.12 crores during the year.

“Thus, we do not find any reason as to why disallowance can be made on such a premise. Without going into the merit, whether interest free funds were available or not, we hold that under these facts and circumstances, no disallowance can be made. Accordingly, the entire disallowance made by the AO is deleted,” the ITAT added.

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ICAI writes to NFRA on Issuance of NFRA Consultation Paper on Statutory Audit and Auditing Standards for MSME [Read Letter]

The Institute of Chartered Accountants of India (ICAI) wrote to National Finance Reporting Authority (NFRA) on Returning of “Revision of Existing Accounting Standards: Approach Paper (2020) prepared by ICAI” by NFRA and Issuance of NFRA Consultation Paper on “Statutory Audit and Auditing Standards for Micro, Small and Medium Companies.

“We are extremely astounded and surprised to see that the Approach Paper on Revision of Existing Accounting Standards has now been returned by NFRA. It may be mentioned that while formulating the revised ASS as per the Approach Paper; the transparent mechanism was followed by ICAI through all stages wherein exposure drafts were issued, comments thereon were discussed at ASB of ICAI (which broadly comprised of members from SEBI, MCA, RBI, C&AG, Industry Bodies). ICAI’s Council and NACAS meetings were held wherein detailed discussions had taken place. The entire exercise of issue of Exposure Drafts, considering the comment stakeholders ASB of ICAI meetings and then sending the draft revised ASS itself meets the requirement of the intended Regulatory Impact Assessment,” the ICAI said

NFRA has in the last 15 months not discussed a need for Regulatory Impact Assessment either with members of NFRA at its meeting or with ICAI. The ICAI submitted the Approach Paper in May 2020 and a 2-hour presentation was also made to the Chairman, NFRA wherein inputs were given by him to submit the standards as a set on some logical division. In fact, NFRA requested to submit the revised standards in a prescribed format vide letter dated March 11, 2021, which were subsequently submitted. NFRA action of returning the Approach Paper on Revision of Existing Accounting Standards on account of not conducting Regulatory Impact Assessment (RIA), without due deliberations at the Authority meeting is not appropriate.

The Executive Body of the NFRA does not have authority on ASS and SAS and therefore anything related to ASS and SAs has to be mandatorily deliberated in NFRA Board meeting and therefore NFRA action of rejection/return of Approach Paper without discussion at the Board Meeting is outside its functional jurisdiction. The NFRA Board meeting was held as recently as 20th September 2021 and the matter pertaining to the Approach Paper could have been easily discussed there.

At the outset, it is pertinent to note that the Consultation Paper issued by NFRA is outside its functional authority. It is not within its purview to propose whether an audit of a particular class is required or not.

Also, the statement that Statutory Audit has no role to play in the case of companies having Net worth less than INR 250 crores is without any research.

ICAI proposes that NFRA deliberate the Revised approach paper and the standards at its full meeting of its members. Consultation Paper on Statutory Audit and Auditing Standards for MSMCS, be withdrawn forthwith and deliberated at a Full meeting of its members. This is to mention here that the mode of communication opted by NFRA i.e., talking through media should not have opted and this kind of matter of relevance should be discussed with the Board Members at the NFRA Board Meeting.

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ITAT deletes Addition against 80-Year Old Assessee as Savings to the extent of Rs. 2,50,000 cannot be Doubted [Read Order]

In an assessee-friendly ruling, the Bangalore bench of the Income Tax Appellate Tribunal (ITAT) has deleted an addition made by the income tax department against an 80-year old assessee on the ground that the past savings to the extent of Rs. 2,50,000 cannot be doubted. The department, during the course of search, found that a…

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DDMA includes offices of Chartered Accountants and Income Tax Practitioners under ‘Exempted Category’ for COVID-19 Restrictions [Read Notification]

The Delhi  Disaster Management Authority includes offices of Chartered Accountants (CA) and Income Tax Practitioners under “Exempted Category” for COVID-19 Restrictions.

“This is with reference to the letter dated 12.01.2022 received from CIT(ITA), Central Board of Direct Taxes. Department of Revenue, Ministry of Finance, Govt. of India thereby requested for exempting Chartered Accountants and Income Tax Practitioners from the restrictions imposed vide Para 4(1) of DDMA Order F.No.60/DDMA/COVID-19/2021/509 dated 11.01.2022,” delhi government notified.

The Additional CEO, Rajesh Goyal inform to All District Magistrates of Delhi and All District Deputy Commissioners of Police, Delhi that the request has been examined and considered by the Competent Authority, hence, the “Offices of Chartered Accountants and

Income Tax Practitioners” is hereby included in the list of “Exempted Category” as prescribed by GRAP Order No. 460 dated 08.08.2021.

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