In pursuance of decision in the 32nd Meeting of GST Council held on 10th January, 2019 at New Delhi, a Group of Ministers (GoM) for boosting the Real Estate Sector under the GST regime has been constituted.
The ‘GoM for boosting Real Estate Sector under the GST regime’ shall consist of the following members:
| Sl. No. | Name | Designation and State | |
| 1 | Shri Nitin Patel | Hon’ble Deputy Chief Minister, Government of Gujarat | Convener |
| 2 | Shri Sudhir Mungantiwar | Hon’ble Finance Minister, Government of Maharashtra | Member |
| 3 | Shri Krishna Byre Gowda | Hon’ble Finance Minister, Government of Karnataka | Member |
| 4 | Dr. T.M. Thomas Isaac | Hon’ble Finance Minister, Government of Kerala | Member |
| 5 | Shri Manpreet Singh Badal | Hon’ble Finance Minister, Government of Punjab | Member |
| 6 | Shri Rajesh Agarwal | Hon’ble Finance Minister, Government of Uttar Pradesh | Member |
| 7 | Shri Mauvin Godinho | Hon’ble Minister of Panchayat, Government of Goa | Member |
The Terms of Reference (ToR) for the GoM for boosting Real Estate Sector under GST regime shall be as follows:
This issues with the approval of the Union Finance Minister and Chairperson, GST Council.
The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has held that the services in the nature routine support services cannot be treated as Fee for Technical Services under the Indo-US Tax Treaty and therefore, no TDS deductible under section 195 of the Income Tax Act.
Assessee debited an amount Rs. 14,00,976/- to its profit and loss account under the head “other cost recharge” and claimed that it is in the nature of provision for ‘time writing charges’ based on estimated time cost of employees of the assessee company’s sister concern British Gas International Ltd. The Assessing Officer held that TDS has not been deducted on the said provision since the payments were in the nature of fee for technical services and therefore, completed assessment proceedings against the assessee.
The assessee contented that the impugned payment cannot be considered as FTS, as nothing was made available to the assessee by BGIL.
The Tribunal noted that the amount received by BGIL from the assessee has already been taxed in India u/s 44BB of the Act and as mentioned elsewhere, taxes have been duly deducted from the payments made for the time writing charges to BGIL.
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“Be that as it may, the time writing charges paid to BGIL cannot be termed as ‘FTS” under the Act read with India UK DTAA,” the Tribunal said.
“In our understanding, ‘make available’ means the person acquiring the services is enabled to apply technology contained therein on his own in future without recourse to the service provider which means that the knowledge must remain with the service recipient once service has ended and thereafter, service recipient is at liberty to use the technical knowledge, skill know-how and processes. In our understanding of the facts, the service provided by employees of BGIL are merely in the nature of routine support services and, therefore, cannot be termed as ‘FTS’ under Article 13 of the India UK DTAA. Therefore, there was no requirement for the assessee to deduct taxes from such payments in India u/s 195 of the Act,” the Tribunal added.
Subscribe Taxscan Premium to view the JudgmentThe Central Board of Indirect Taxes and Customs (CBIC) has issued a notification amending the meaning of Advance Authorisation wherein the conditions were specified to get the benefit of deemed export under GST for the supply of goods by registered persons against Advance Authorisation.
As per the earlier notification, the supply of goods by a registered person against Advance Authorisation is deemed export.
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The present notification inserted the following words after the entry that “Provided that goods so supplied, when exports have already been made after availing input tax credit on inputs used in manufacture of such exports, shall be used in manufacture and supply of taxable goods (other than nil rated or fully exempted goods) and a certificate to this effect from a chartered accountant is submitted to the jurisdictional Commissioner of GST or any other officer authorized by him within 6 months of such supply,;
It was further said that no such certificate shall be required if input tax credit has not been availed on inputs used in manufacture of export goods.
Subscribe Taxscan Premium to view the JudgmentThe Income Tax Appellate Tribunal ( ITAT ), Ahmedabad bench has held that the Company is eligible to get the deduction in respect of the vehicles registered in the name of its Director. The bench further clarified that the deduction is allowable for the car used for personal use of the Director of the Company treats the same as Business Expenditure.
The assessee, a Private Limited Company, engaged in the business of manufacturing, trading, and export of dyes and dyes intermediates, claimed the deduction of depreciation and vehicle expenses amounting Rs. 8,80,932/- and Rs. 4,09,830/-.
However, the claim was rejected by the Assessing Officer on the ground that the vehicles were registered in the individual name of the Directors. But the assessee claimed the depreciation and the vehicle expenses in its income-tax return. However, the Assessing Officer was of the view that the assessee cannot claim depreciation in respect of such vehicles registered in the name(s) of the directors. He also observed that The Assessing Officer also observed that the personal use of the vehicle could not be ruled out.
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Allowing the contentions of the assessee, the Tribunal observed that the assessee was a limited company and, hence, it could act through its directors only.
“Thus, if cars were used by the directors for their personal use also, the same could be added to the income of the directors as perquisite but insofar as, the assessee-company was concerned the entire expenditure was for its business as the directors were appointed to look after the business of the assessee-company. Hence, no disallowance could be made in the hands of the assessee-company on account of personal use of directors. Accordingly, there cannot be any element of personal use.”
Thus, if cars were used by the directors for their personal use also, the same could be added to the income of the directors as perquisite but insofar as, the assessee-company was concerned the entire expenditure was for its business as the directors were appointed to look after the business of the assessee-company.
Subscribe Taxscan Premium to view the JudgmentThe Central Government and the Institute of Cost Accountants (ICMAI) go hand in hand to train the accountants to deal with the GST related compliances and accounting in the next six to eight months.
The ICMAI President CMA Amit Anand Apte recently confirmed that the Institute of Cost Accountants of India will partner the Government of India to train more than one lakh accountants specifically on GST related compliances and accounting in the next six to eight months.
“The move of the government is tipped to help 12 million GST assesses in filling their returns in a hassle-free manner. This course can be pursued by anyone with the background of accounting. The detailed curriculum of this course is expected to be announced by the Government very soon,” he said.
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He further informed that the Institute is organizing its 59th National Cost Convention (NCC 2019) during its Platinum Jubilee Year on the theme “Cost & Management Accountants – Power of the Past – Force of the Future” on 20th & 21st January 2019 at Hotel JW Marriott, Pune.
“We would also be hosting various SAFA events on the sidelines of the NCC. I earnestly request all the members of the Institute to block your dates, participate actively in this Annual National event of the Institute in large numbers to show the strength of CMA profession and make this mega event a grand success,” he said.
The Income Tax Appellate Tribunal (ITAT) has held that the liquidated damages paid in nature of contractual liability on account of non-compliance of business obligations to customers are allowable as an expenditure under the provisions of the Income Tax Act.
The Assessing Officer disallowed the assessee’s provision for liquidated damages amounting to Rs. 29,92,672/- and Rs. 36,76,295/-
The Revenue’s last substantive ground in both assessment years seeks to revive the Assessing Officer’s action disallowing assessee’s provision for liquidated damaged amounting to Rs. 29,92,672/- and Rs. 36,76,295/-; respectively in both assessment years.
Before the tribunal, the department contended that the assessee’s liquidated damages are in the nature of penal liability not allowable as expenditure incurred wholly and exclusively for the purpose of its business.
“She fails to dispute the clinching fact the impugned liquidated damages are in the nature of contractual liability only than arising from violation of any penal provision. We hold in these peculiar facts and circumstances that the assessee had made the impugned provision as per its contractual liability on account of non-compliance/non-fulfillment of its business obligations to only its customer parties. We, therefore, find no merit in Revenue’s instant last substantive ground as well both of its appeals ITA No.1615-1616/Kol/2017 fail, therefore,” the Tribunal said.
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The Government is planning to integrate NHAI’s FASTag mechanism from April to help track movement of goods and check GST evasion.
The Department of Revenue has set up a committee including officers to integrate e-way bill, FASTag and DMIC’s Logistics Data Bank (LDB) services, after consultation with transporters.
“It has come to our notice that some transporters are doing multiple trips by generating a single e-way bill. Integration of e-way bill with FASTag would help find the location of the vehicle and when and how many times it has crossed NHAI’s toll plazas,” the official said.
The integrated system on an all-India basis is planned to be rolled out from April, the official told PTI.
Presently, Karnataka is implementing an integrated system on a pilot basis, and integration at a national level would be highly beneficial in terms of tracking of goods and ensuring that e-way bill has been generated for the correct duration of travel.
“The officers’ committee would explain the benefits to all stakeholders,” an official said, adding the move would also improve operational efficiencies across the country’s logistics landscape. Currently, lack of harmonization under the ‘track and trace’ mechanism in terms of sharing information among different agencies is affecting the ease of doing business in the country. Besides, it is leading to misuse of the e-way bill. “This would also help in preventing goods and services tax (GST) evasion by unscrupulous traders who take advantage of the loopholes in the supply chain,” the official said.
Transporters of goods worth over Rs 50,000 would be required to present the e-way bill during transit to a GST inspector if asked. “The integration of the e-way bill system with FASTag and LDB is expected to help boost tax collections by clamping down on the trade that currently happens on cash basis,” the official said.
The National Highways Authority of India (NHAI) has put in place the FASTag system for collection of toll electronically on national highways. FASTag also offers non-stop movement of vehicles through toll plazas. Integration of e-way bill with FASTag will help revenue authorities track the movement of vehicles and ensure that they are traveling to the same destination as the transporter or the trader had specified while generating the e-way bill.
The new move will also help the suppliers locate the goods through the e-way bill system. Transporters, too, would be able to track their vehicles through SMS alerts that would be generated at each toll plaza.
The Pune bench of the Income Tax Appellate Tribunal (ITAT) has held that the benefit of section 54F of the Income Tax Act is not available to the assessee on failure of depositing the unutilized amount of capital gains in the capital gains scheme account by the date of filing of return of income.
The assessee sold a land and received a share in sale consideration amounting to Rs.42,20,000/-. The assessment completed against the assessee was re-opened by holding that the unutilized amount of capital gain was not deposited in the Capital Gains Scheme Account.
Section 54B(1) of the Act entitled the assessee to claim the deduction in case the sale proceeds of agricultural land are reinvested in another agricultural land within a period of two years. However, section 54B(2) lays down that in case the sale proceeds are not invested, within the due date of filing of return of income u/s.139 of the Act, then the sale proceeds need to be parked in the capital gains scheme account till it is utilized for the purchase of the new agricultural land.
On appeal, the first appellate authority has sustained the order.
The Tribunal noted that though, admittedly, the assessee has utilized the amount for the purchase of agricultural land within the period of two years, but after the due date of filing the return of income.
The Tribunal noticed the High Court decisions in Humayun Suleman Merchant Vs. CCIT and the Gauhati High Court’s decision in the case of CIT Vs. Rajesh Kumar Jalan wherein the assessee was held to be not entitled to the claim of deduction under section 54F of the Act.
The Tribunal, following the above decisions, held that “In view thereof and applying the aforesaid ratio, I hold that the assessee is not entitled to claim of deduction under section 54F of the Act as the assessee has failed to deposit the unutilized amount of capital gains in the capital gains scheme account by the date of filing of return of income. Since this issue is settled by the Hon’ble jurisdictional High Court, hence, the matter is being decided ex parte the assessee. Grounds of appeal raised by the assessee are thus dismissed.”
Subscribe Taxscan Premium to view the JudgmentThe Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that duty exemption is available to the import of power banks being a mobile battery charger.
The respondent-assessee M/s S.B. Industries, are engaged in the manufacture of power bank/ portable mobile charger out of imported components. The department denied concessional rate of duty on import of power banks.
The assessee contended that the ‘power bank’ is primarily used to charge the battery of mobile phone and is different from accumulator has held in the impugned order. It was further submitted that the ‘power bank’ primarily acts as the charger for mobile handsets and hence the respondent is entitled to Exemption Notification No. 12/2012– Cus, which exempts the part or component as classifiable in any chapter for the manufacture of the battery charger of mobile handsets.
On appeal, the first appellate authority also held that the benefit of aforesaid Notification is available to the power bank as the mobile battery charger.
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Upholding the first appellate order, the division bench of the CESTAT observed that although the Ministry has issued the clarification to the Respondent regarding the classification of ‘power bank’ as the ‘accumulator’ but the same cannot be treated as a circular issued by the Board was as to make it mandatory on the part of the Adjudicating Authority to follow the same.
“In that case, we are also in agreement with the decision of Punjab Recorders and Orient Paper Mills (supra), wherein it is held that clarification issued by the CBEC is not applicable to the Adjudicating Authority. Therefore, we find that the Commissioner(Appeal) has considered the same and rightly deferred with the classification as decided by the Ministry on the basis of his well-reasoned arguments. We do not find any infirmity in the finding of the Ld. Commissioner(Appeal) on this Circular as well,” the Tribunal said.
“Once it is held that power bank is also a kind of mobile charger, automatically the benefit of the Notification is above will be available to the respondent. It is on record that in this case, the goods imported are part and input of power bank (portable mobile battery charger and is entailed for the purpose of use in same, the benefit cannot be denied),” the Tribunal said.
Subscribe Taxscan Premium to view the JudgmentAccording to the recent notification issued by the Comptroller and Auditor General of India (CAG), the empanelment of Chartered Accountants with CAG is meant for audit of financial record only and not for Internal Audit under the Companies Act, 2013.
The CAG of India has issued a notification through which C&AG has invited applications from Chartered Accountants for empanelment of auditors for the year 2019-20 under Sections 139 (5) and 139(7) of the Companies Act 2013. Section 139 deals with Appointment of “Financial Auditor” and Section 139(5) / 139(7) deal with the appointment of the auditor for Government Company or any other company owned or controlled, directly or indirectly, by the Government.
Earlier, this empanelment was called for auditors without mentioning sections, inconsequent to which, confusions were there as to whether the same is for the purpose of internal auditor also.
“However with the present notification, it is clear that the empanelment of Chartered Accountants with CAG is meant for the audit of financial record only and not for Internal Audit under section 138 of the Companies Act,” The President of the Institute of Cost Accountants of India ( ICMAI ), CMA Amit Anand Apte said.
according to him, this initiative of CAG should remove difficulty that the Cost Accountants used to face while filing tenders of Internal Audit since many companies used to also ask for CAG empanelment number as one of the conditions in the tendering process.”
“We are thankful to CAG of India for considering our representation wherein the Institute had highlighted the difficulty faced by our members and bringing about this change in the notification,” he added.
“The Institute had represented to C&AG that in order to ensure unbiased implementation of the provisions of section 138 of the Companies Act, 2013 relating to internal audit and to bring parity between the two professions, the ideal way is to have empanelment of both Chartered Accountants as well as Cost Accountants by the C&AG for Internal Audit purpose. However since C&AG office does not have any panel for Internal Audit, it was requested to issue a clarification stating that the empanelment of Chartered Accountants with C&AG is for Audit under Section 139 (Financial Audit) of the Companies Act only and not for Internal Audit as required under Section 138,” he said.
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The Mumbai bench of the Central Excise, Customs, and Services Tax Appellate Tribunal (CESTAT) has held that the refund of the tax collected under an unconstitutional levy under the Central Excise Act was rightly rejected by the authorities.
The appellant had filed the refund application before the Jurisdictional Service Tax authorities on 19.09.2016 on the ground that the service provided by the club to its members cannot be considered as taxable service by one legal entity to another and hence, not liable to service tax, on the principles of mutuality. The refund application filed by the appellant was rejected by the original authority on the ground that the same was filed beyond the prescribed time limit provided under Section 11B of the Central Excise Act, 1944.
The appellants contended that the limitation prescribed under Section 11B of the Central Excise Act, 1944 does not apply and in such cases, the general rule of limitation prescribed under the Limitation Act, 1963 alone will be applicable. It was submitted that the refund claim having been filed within the limitation period prescribed under the Limitation Act, 1963, the benefit cannot be denied on the ground of limitation.
Section 11B mandates that the refund application has to be filed before the expiry of one year from the relevant date. The appellants filed the refund application beyond the statutory time limit prescribed under the statute.
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It was further noticed that the Supreme Court in the case of Anam Electrical Manufacturing has also held that the period prescribed by the Central Excise Act / Customs Act for the filing of refund application in the case of “illegal levy” cannot be extended by any authority or Court.
In another case, the Supreme Court in the case of Mafatlal Industries, it was held that when any provision in the statute has been held to be unconstitutional, refund of tax under such statute will be outside the scope and purview of such enactment and under such circumstances, refund can be claimed by way of a suit or by way of a writ petition.
“The Hon’ble Apex Court has ruled that where the tax levy is struck down as unconstitutional for transgressing the constitutional limitations, a refund claim in such a situation, cannot be governed under such taxing statute; and such claim is maintainable both by virtue of the declaration contained in Article 265 of the Constitution of India and also by virtue of Section 72 of the Contract Act. It was further held that in such cases, the period of limitation would be calculated as per the provisions contained in clause (c) of sub-section (1) of Section 17 of the Limitation Act, 1963. In the case in hand, since the refund applications were filed by the appellant under Section 11B ibid and entertained by the authorities under the said provisions, as per the ratio laid down by the Hon’ble Supreme Court, the refund claim in such cases (unconstitutional levy) will fall outside the scope and purview of the Central Excise Act, 1944. Hence, rejection of refund benefit cannot be faulted with. Therefore, the judgment relied upon by the appellant squarely covers the case in favor of Revenue for rejection of the refund application,” the Tribunal said.
Subscribe Taxscan Premium to view the JudgmentA two-judge bench of the Delhi High Court has held that deduction under section 57 of the Income Tax Act is allowable for payment of interest to earn interest.
The respondent-assessee taken ICDs of Rs.55.30/- Crores at the interest rate of 12% per annum from M/s Jubilant Energy (Kharsang) Private Limited. Payments under the ICDs were received during the preceding year, except for Rs.15/- lacs, which was received between 5th April 2010 and 4th May 2010. ICDs were repaid to M/s Jubilant Energy (Kharsang) Private Limited between 31st May 2010 to 25th March 2011 leaving an outstanding balance of Rs.1 Crore at the end of the year in question. The respondent paid interest @ 12% on the sum borrowed and had received interest @ 12.5 % on the money lent. The Assessing Officer denied deduction in respect of such interest paid by the respondent.
The First Appellate Authority also not allowed the deduction of the interest paid from interest received.
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The Tribunal observed that the respondent-assessee had incurred expenses of more than Rs.2,00,000/- on operations and support staff etc. The Tribunal has opined that the business had commenced as the respondent-assessee had entered into business transfer agreement dated 1st April 2007. It could be urged that this finding is not detailed, albeit the respondent-assessee had furnished performance bank guarantee for M/s Jubilant Capital Private Limited and M/s Jubilant Services Private Limited. The Tribunal further observed that the Commissioner of Income Tax (Appeals) had allowed deduction under Section 35D of the Act, thereby indirectly accepting that respondent-assessee had commenced business.
Dismissing the appeal filed by the department, the division bench comprising Justices Sanjiv Khanna and Anup Jairam Bhambhani held that the respondent-assessee had advanced more than Rs.12.11 Crores to M/s Jubilant Capital Private Limited in furtherance to the business transfer agreement to meet the cash calls for participatory interest in the Ankleshwar Block.
“Thus, the finding that the business was ‘set up’ has sufficient backing and support from the material and evidence referred to in the impugned order. In any case, this objection regarding ‘commencement of business’ loses much significance and importance in view of the direct nexus between interest paid and interest received on ICDs. Interest paid to earn interest has to be allowed as a deduction under Section 57 of the Act,” the bench said.
Subscribe Taxscan Premium to view the JudgmentThe Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has granted relief to Bollywood actor Jackie Shroff by treating the loan given to wife which was written off as a business loss under the provision of the Income Tax Act.
The transaction is dated way back for the financial year 2008-2009 where the actor took the loss amount in the business book as ITAT challenged and disagreed to such mentions and stated that such an amount was drawn as the personal use and cannot be included as a business loss.
Jackie Shroff became a savior for wife Ayesha and Quest films with whom the actor had proprietorship and suffered losses from having stakes in films like ‘Boom’ and ‘Sandhya’ which were a huge flop at the box-office. This did lead to a production house shut down and Ayesha left with loans to pay. In his return, Jackie had declared it a business loss in his tax return. However, the IT Officer that had reviewed the loan as a personal expense has now written off the total amount as the loss incurred in the business.
Allowing the contentions of the actor, the ITAT held that as the loans were advanced to his wife or her proprietary concern cannot be the only criteria for holding it as personal in nature. As there was no possibility of recovery of these loans in the future, the write-off should be treated as a business loss.
The Tribunal held that the findings of the Ld.CIT (A) that the monies advanced by the assessee are in the nature of business advances have not been challenged by the Revenue.
“However, we find that Ld.CIT (A) sustained the disallowance only for the reason that the assessee has suo moto written off the advances and such suomoto write off is not allowable as deduction u/s. 36(1)(vii) / 37(1) of the Act,” the Tribunal said.
“Once the advances are held to be business advances they are allowable as a deduction either u/s. 37(1) or u/s. 28 of the Act as a business loss. The deduction cannot be denied on the ground that the assessee had suomoto written off the advances,” the Tribunal added.
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There are speculations that the Institute of Chartered Accountants of India (ICAI) is likely to postpone the CA exams to be held in May to June due to the general elections 2019.
Reportedly, during the national student convention held in Mumbai on 12.01.2019, it was announced by CA Dheeraj Khandelwal & Vandana D. Nagpal (Director of Board of studies, ICAI), Now CA Final & CA Inter (IPCC) exams will be held in Jun’19 instead of May’2019 due to Lok Sabha elections.
The Lok Sabha (General) Elections 2019 are due to be held in India sometime around in April and May 2019 to constitute the 17th Lok Sabha. The tenure of the present Narendra Modi led NDA government is to be expired in May.
Further Mr. Rajanath Singh said in an interview to the Hindu, that general Lok Sabha elections to be held as per schedule itself.
The Income Tax Appellate Tribunal (ITAT), Jaipur bench has deleted the penalty proceedings against the State bank of India ( SBI ) for not deducting TDS on LTC to its employees on travel outside India.
Recently, the Income Tax Tribunal had held that the Leave Travel Concession (LTC) provided to the employees of SBI is not covered under section 10(5) of the Income Tax Act in cases where a foreign destination is involved. It was also held that TDS provisions would be applicable on reimbursement of expenditure incurred by the bank.
Following the decision, the department initiated penalty proceedings against the Bank alleging that the Bank has not deducted the tax intentionally, fully knowing that the LFC is applicable for travel in India only and no foreign travel is allowable as it is a case of error of judgment and no malafide can be assumed on part of the bank.
It was contended on behalf of the Bank that it was under a genuine and bona fide belief that it was not under any obligation to deduct tax at source consequently, penalty was not leviable under Section 271C as the respondent in the case has discharged its burden of showing reasonable cause for failure to deduct tax at source.
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The Tribunal noted that the assessee bank has been diligent, and has collected and brought on record evidence to show that its employees had actually utilized the amount paid towards leave travel concession.
The Tribunal said that “To our mind, it is important to be consistent but at the same time, one needs to be mindful of what been submitted by the employees towards their LFC claims. It appears that the assessee bank has looked at these 12 employees’ claim broadly, as in other cases, in terms of actual travel being undertaken, the designated place being in India and the amount of claim not exceeding the economy fare of the national carrier by the shortest route to the place of destination.”
It was held that the assessee bank has undertaken reasonable steps in terms of verifying the assessee’s claim towards their LFC claims and is aware of employees traveling to foreign countries as part of their travel itinerary but at the same time, there is an error of judgment on part of the assessee bank in understanding and applying the provisions of section 10(5) of the Act.
“Therefore, we are unable to accept the Revenue’s contention that the assessee bank has not deducted the tax intentionally, fully knowing that the LFC is applicable for travel in India only and no foreign travel is allowable as it is a case of error of judgment and no malafide can be assumed on part of the bank. Further, nothing has been brought on record which in anyways suggest connivance on part of the assessee bank or forged claims submitted by the employees and which has been discovered by the Revenue during the course of its examination,” the Tribunal said.
While deleting the penalty, the Tribunal said that that there was a reasonable cause in terms of section 273B of the Act for not deducting tax by the assessee Bank.
“As fairly submitted by the assessee bank, while calculating the estimated tax liability of its employees, it always considers LFC claim as exempt under section 10(5) and the same position, being followed and accepted consistently in the past years, was followed in the current financial year as well. However, for the first time, after the survey by the tax department, this issue arose for consideration and after the judgment of the Tribunal, the matter got clarified and the assessee bank has duly complied and deposited the outstanding demand along with interest and has taken corrective steps in subsequent years as well,” the Tribunal added.
Subscribe Taxscan Premium to view the JudgmentIn a major relief to taxpayers, the Central Government may take a major decision in the upcoming interim budget to increase the exemption limit for income tax to five lakhs from the current 2.5 lakhs.
The 2019 Budget will be tabled by Finance Minister Arun Jaitley on February 1. Inputs were sought from various central ministries as early as in October.
It was said that “The impact of Demonetisation has been felt on the collection of personal income tax. Its collections were higher in Financial Year 2018-19 (till 31-10-2018) compared to the previous year by 20.2%. Even in the corporate tax, the collections are 19.5% higher. From two years prior to Demonetisation, direct tax collections have increased by 6.6% and 9% respectively. In the next two years, post Demonetisation the increase by 14.6% (part of the year before the impact of Demonetisation in 2016-17) and an increase of 18% in the year 2017-18.”
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“Similarly, in the year 2017-18, the tax returns filed reached 6.86 crores, an increase of 25% over the previous year. This year, as on 31-10-2018, already 5.99 crore returns have been filed which is an increase of 54.33% compared to the previous year till this date. The new filers added this year are 86.35 lakh.”
“In May 2014, when the present Government was elected the total number of the filers of income tax returns was 3.8 crore. In the first four years of this Government, it has increased to 6.86 crores. By the time the first five years of this Government are over, we will be close to doubling the assessee base.”
The Central Government has re-promulgated the Companies (Amendment) Ordinance, 2019.
The Ordinance is to amend the companies law to further improve the ease of doing business as well as ensure better compliance levels.
Since the Bill to make amendments to the Companies Act, 2013, is pending in the Rajya Sabha, the ordinance has been re-promulgated. The Lok Sabha has passed the Bill on 4th January.
Last week, the Cabinet cleared the proposal to re-issue the ordinance.
The twin objectives of the Ordinance are the promotion of Ease of Doing Business along with better corporate compliance. The main amendments are as under;
Recommendations related to corporate compliance and corporate governance include re-introduction of declaration of commencement of business provision to better tackle the menace of ‘shell companies’; greater disclosures with respect to public deposits; greater accountability with respect to filing documents related to creation, modification and satisfaction of charges; non-maintenance of registered office to trigger de-registration process; and holding of directorships beyond permissible limits to trigger disqualification of such directors.
To amend the Companies Act, the government had first issued the ordinance in November and the same would have ceased to be operational from January 21.
Subscribe Taxscan Premium to view the JudgmentThe Pune bench of the Income Tax Appellate Tribunal (ITAT) has held that the genuineness of the purchases cannot be suspected if the Assessing Officer has not discarded the sales.
The assessment against the assessee was re-opened by the Assessing Officer by making an addition of Rs.2,78,55,984/- as bogus purchases.
On first appeal, the Commissioner of Income Tax (Appeals) restricted the addition to 3% of the said purchases, i.e. Rs.8,35,680/-.
Before the Tribunal, the assessee produced the evidence in the form of Lorry receipts, weighment slips, Octroi receipts etc.
It was noted that the assessee has failed to substantiate movement of goods from the suppliers to the assessee. The Assessing Officer during assessment proceedings has not discarded total sales of the assessee.
The Tribunal observed that the sales of the assessee have been accepted by the Department.
“Without purchases, there cannot be sales. Thus, entire alleged bogus purchases cannot be added in the hands of the assessee,” the Tribunal said.
“Under such circumstances, the possibility of assessee purchasing the goods from grey market and procuring bills from the Hawala dealers cannot be ruled out. The CIT(A) after considering catena of judgments on various facets including the GP ratio to be applied in different set of industries estimated 3% of GP addition on account of bogus purchases in the hands of the assessee. We find the impugned order is reasoned and hence, requires no interference. Taking into consideration entirety of facts, the impugned order is upheld,” the Tribunal added.
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In a major relief to the businesses, the Government may able them to rectify the GST Returns for the non-technical errors.
Recently, the GST Council has directed a committee for IT grievance redressal to quickly draw up a solution that will give relief to the industry.
This is in the light of increasing rate of litigations before High Courts for pending of Thousands of crores of tax credit due to errors in the filing of returns.
Earlier, the Government had allowed the rectification of errors in the returns due to technical glitches in the GST site. The move will be a reprieve for businesses that had lost credit due to minor, non-technical errors.
“The council has approved changes in cases where the error is not IT related,” a government official aware of deliberations told ET. It was felt that in some areas where errors are apparent or high courts have issued directions, those should be settled, he said.
A standard operating procedure will be developed by the grievance committee for all the cases where high courts have given a direction, the amount has been wrongly entered or the concerned jurisdictional commissioner has made a recommendation. The forms TRAN1 and TRAN2, specified for claiming past credits, can now be amended to allow for this.
The GST law does not provide for any appeal on issues related to TRAN1 or TRAN2. This lacuna in the law lead to litigations and therefore, the GST Council is now considering the amendment in the laws.
“Lot of companies could not claim the entire eligible opening credit under TRAN1 due to inadvertent errors,” said Pratik Jain, national indirect taxes leader, PwC. “This move will help them to claim the additional amount, without going to courts, which some of them have already opted for.”
The GST Council had allowed a liberal scheme for claiming credit in lieu of taxes paid under the previous regime against GST liabilities. Businesses could claim credit even if they did not have proof of payment under the deemed benefit provision. However, large transition credit claims, which pulled down overall GST collections, made authorities wary, leading to the increased vigil. Any changes to the TRAN1 were thus not allowed on non-IT related issues.
The Maharashtra Government has re-opened the Migration window for Taxpayers who received Provisional IDs but could not complete the migration process.
Earlier, the State GST department has prescribed detailed procedure for facilitating the completion of migration process in respect of taxpayers whose Part A of FORM GST REG-26 was filled, but Part B of the said FORM has not been filled.
In the Circular issued by the Office of the Principal Chief commissioner, GST Mumbai said that, The window will be open till January 31st 2019.
Subscribe Taxscan Premium to view the JudgmentA division bench of the Kerala High Court has held that a Director of a Private Limited Company is immune from the proceedings under the Kerala General Sales Tax Act, 1963.
The petitioner, through a writ petition, challenged the constitutional validity of the provisions of Section 26C of the Kerala General Sales Tax Act, 1963. It was also contended that there could be no proceedings taken against the Director of a private limited company and if at all such a proceeding is taken then it has to be subject to the provisions of the Companies Act.
Section 26C specifically speaks of joint and several liabilities of every person who was a Director of a private limited company only if the tax or other amounts recoverable under the Act cannot be recovered for any reason from the private company.
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The bench comprising Justice Vinod Chandran and Justice Ashok Menon held that “Hence the proceedings have to be taken first against the company and there should also be sufficient material to show that the recovering authorities were not able to recover the amounts from the assessee company. There are no such averments made by the Government in the counter affidavit also.
Before the High Court, the Counsel for the petitioner Sri. A Kumar would submit that if at all a proceeding is taken against the Director after finding the recovery against the company to be futile, then the Director would be entitled to raise all available contentions as per the Companies Act.
“We find sufficient support for the above submission from the decision of another Division Bench in Mohammed Harid, v. District Collector [(2014) 2 KLT 102]. This Court had declared that since Section 26C contains a specific clause that it would be subject to the Companies Act if any statutory right or protection is available to the Director under the Companies Act contravention of the same could be taken as a defense against the recovery,” the bench said.
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