The Delhi High Court while giving relief to the startups from angel tax ruled that if a proper methodology is followed while valuing a company during valuation rounds, it should not be challenged later.
The assessee, M/s Cinestaan Entertainment Pvt. Ltd. is engaged in the business of entertainment. During the concerned Assessment Year, the Respondent-Assessee allotted shares at a premium to various persons, as encapsulated in the assessment order.
The Assessee filed return of income for the relevant Assessment Year 2015-16, declaring nil income. The return was processed under Section 143(1) of the Act. Thereafter, the case was selected for “Limited Scrutiny” and the reasons for scrutiny selection were large share premium received during the year; low income in comparison to very high investment; and Low income in comparison to very high loans or advances or investments in shares.
The notice under Section 143(2) of the Act was issued on 07.04.2016 and was followed by a detailed questionnaire along with the notice under Section 142(1). In response thereto, the Respondent-Assessee filed a valuation report. Thereafter the assessment was framed under Section 143(3) of the Act and the total income of the Respondent-Assessee was assessed as Rs. 90,95,46,200.
The Respondent-Assessee preferred an appeal before the CIT(A), who upheld the additions made by the AO. The second appeal before the ITAT was allowed vide the impugned order and resultantly, the order of the CIT (A) has been set aside.
Mr. Ajit Sharma, Senior Standing Counsel for the Appellant-Revenue submitted that the learned ITAT has erred in deleting the additions made by the AO as confirmed by the CIT(A) and submitted The AO analysed the business profitability of the Respondent-Assessee only to the extent that such profitability was not commensurate with the actual financials provided by the Respondent- Assessee during the course of assessment proceedings. Therefore, the financials of the Respondent-Assessee did not support the business module of the company.
The division bench of Justice Manmohan and Justice Sanjeev Narula noted that ITAT has followed the dicta of the Hon’ble Supreme Court in matters relating to the commercial prudence of an assessee relating to the valuation of an asset. The law requires the determination of fair market values as per the prescribed methodology. The Appellant-Revenue had the option to conduct its own valuation and determine FMV on the basis of either the DCF or NAV Method.
“The Respondent-Assessee being a start-up company adopted the DCF method to value its shares. This was carried out on the basis of information and material available on the date of valuation and projection of future revenue. There is no dispute that the methodology adopted by the Respondent-Assessee has been done applying a recognized and accepted method. Since the performance did not match the projections, Revenue sought to challenge the valuation, on that footing. This approach lacks material foundation and is irrational since the valuation is intrinsically based on projections which can be affected by various factors,” the court said.
The court held that the methodology adopted by the Respondent-Assessee, accepted by the ITAT, is a conclusion of fact drawn on the basis of material and facts available. The test laid down by the Courts for interfering with the findings of a valuer is not satisfied in the present case, as the Respondent-Assessee adopted a recognized method of valuation and Appellant-Revenue is unable to show that the assessee adopted a demonstrably wrong approach, or that the method of valuation was made on a wholly erroneous basis, or that it committed a mistake which goes to the root of the valuation process.
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The Institute of Chartered Accountants of India ( ICAI ) sought the preliminary Expression of Interest for the Welfare Schemes and Practice Management Software for Chartered Accountants.
The ICAI has around 3.15 lakh members and around 90,000 firms specialising in traditional areas of audit, direct, indirect & international taxes including GST and in emergent areas like insolvency, financial services, risk management and corporate restructuring etc. Many of its members are serving the industry occupying senior positions such as C&MDs in Banks/Financial Institutions, CEOs and CFOs in leading and reputed public/private sector companies.
“The Committee for Members in Practice (CMP) of the Institute of Chartered Accountants of India is a non-standing Committee formed under regulatory provisions of Chartered Accountants Act, 1949. This Committee was established for facilitating consolidation and capacity building of CA firms in order to address various problems faced by CA firms and to conceptualize and implement various means for strengthening their capacity as well as providing comprehensive guidelines for consolidation of CA firms. It aims to encourage and enhance close links between the Institute and the Chartered Accountants, so as to provide them, a base of reference in terms of knowledge, expertise, skills and assistance in their professional growth,” ICAI said.
Firstly, one of the key initiatives of activities the Committee is to extend various welfare measures to the members through arrangements with leading service providers which the members may avail at their choice.
ICAI wish to extend better, more, additional welfare schemes to the members of ICAI at discounted rates.
Thus, the Institute sought the expression of interest from the various service providers delivering the schemes in the areas of professional interest namely travel, hospitality, health, Medical Insurance, Term Insurance, Laptops/Desktops, Softwares & other products of professional relevance.
Secondly, one of the major activities of CMP is to develop/ arrange softwares relevant for the Members of the ICAI. In this regard, CMP wishes to develop a Practice Management Software to assist its members and firms to serve their clients and manage their practice.
The Practice Management Software, may inter alia, include Jobs & Billing, Capacity Planning, Documentation, Centralised Client Database, Time Sheets, Invoicing, Attendance etc. “The service providers having the requisite experience and expertise in developing and maintaining the Practice Management Software need to apply. The detailed RFP including Technical and Financial requirements will be uploaded shortly. In the meanwhile, we will request the service providers to send their expression of interest with a budgetary quote at cmp@icai.in,” the ICAI announced.
The Gujarat High Court directed the Goods and Service Tax Network (GSTN) to allow the rectification of entries in the GSTR-3B return which was submitted by the petitioner mistakenly on account of genuine bonafide human error.
The writ applicant, M/s Deepak Print is a proprietary concern and is engaged in the business of printing dress materials, etc. The proprietary concern is registered under the CGST/GGST Act, 2017. The writ applicant had submitted the return of his business in the month of May, 2019 through the Online process, i.e, the GST Online Portal. The writ applicant, inadvertently, in the course of making entries in the GSTR-3B for the month of May, 2019, wrongly uploaded the entries of M/s. Deepak Process instead of M/s. Deepak Print.
The applicant preferred a representation in writing addressed to the Nodal Officer, SGST Office, Rajkot for the rectification in GSTR-3B.
However, the Nodal Officer at Rajkot did not even bother to give a formal reply or respond to the representation preferred by the writ applicant. The writ applicant did try his best to take up the matter with the concerned authority.
The issue raised in this case was whether the writ applicant is entitled to seek rectification of Form GSTR-3B for the month of May, 2019.
The division bench of Justice J.B.Pardiwala and Justice Ilesh J.Vora held that the writ applicant should be permitted to rectify the Form GSTR-3B in respect of the relevant period.
The court has directed the Authority to modify the conditions and rules mentioned in Annexure A (Circular No. 26/26/2017 dated 29.12.2017) by which a registered person can edit any error if occurred during submitting/offsetting the ITC and before the filing of the GSTR-3B return.
The court directed the GSTN that on filing of the rectified Form GSTR-3B, it shall, within a period of two weeks, verify the claim made therein and give effect to the same once verified.
“As the writ applicant has been dragged into unnecessary litigation only on account of the technicalities raised by the respondents, the writ applicant shall not be saddled with the liability of payment of late fees,” the court ordered.
Subscribe Taxscan Premium to view the JudgmentThe Goods and Service Tax Network (GSTN) has enabled new functionality to search HSN/SAC by Name or Code on GST Portal.
Now the taxpayers man search the HSN or SAC by opening the GST Portal, then clicking on Services and selecting User Services.
HSN code stands for “Harmonized System of Nomenclature”. This system has been introduced for the systematic classification of goods all over the world. HSN code is a 6-digit uniform code that classifies 5000+ products and is accepted worldwide. It was developed by the World Customs Organization (WCO) and it came into effect from 1988.
SAC Code or Services Accounting Code is a classification system for services developed by the Service Tax Department of India. Using SAC code, the GST rates for services are fixed in five slabs namely 0%, 5%, 12%, 18% and 28%. If a service is not exempted from GST or if the GST rates are not provided, then the default GST rate for services of 18% would be applicable.
The Aurangabad branch of the WIRC of the Institute of Chartered Accountants of India (ICAI) in association with United CIIGMA Hospital is organising a special camp for COVID-19 vaccination for CA members and their immediate relatives.
The camp has started from March 9 to 19 (except Saturday and Sunday due to lockdown) at the 7th floor non-Covid building of the Hospital, at Shahnoorwadi, from 3 pm to 5 pm.
The branch has given this platform to the CA fraternity to create awareness about and offer protection bers of Covid vaccine. Branch chairman CA Pankaj Soni has appealed to all the CA members to benefit from this special camp.
CA Soni, branch secretary CA Praveen Bangad, treasurer CA Ganesh Bhalerao, branch nominee and Regional Council Member CA Umesh Sharma, WICASA chairperson CA Rupali Bothara, Dr Unmesh Takalkar and Dr Ajay Rotte of CIEMA Hospital, CAS Sachin Sancheti, SA Jaju, CS Shastri and Ashish Zanwar were present at the camp.
The Central Board of Indirect Taxes (CBIC) directed E-Commerce Operators who are required to collect Tax at Source (TCS) under GST to file GSTR-8 Return for the month of February, 2021 by March 10, 2021.
GSTR-8 is a return to be filed by the e-commerce operators who are required to deduct TCS (Tax collected at source) under GST. GSTR-8 contains the details of supplies effected through e-commerce platforms and the amount of TCS collected on such supplies.
Every e-commerce operator registered under GST is required to file GSTR-8. An E-commerce operator has been defined under GST Act as any person who owns or manages a digital or electronic facility or platform for electronic commerce such as Amazon etc. All such e-commerce operators are required to obtain GST registration as well as registered for TCS (Tax collection at source).
It is noteworthy that if the GST return is not filed on time, then a penalty of Rs 100 under CGST & Rs 100 under SGST shall be levied per day. The total will be Rs. 200/day. The maximum is Rs. 5,000. There is no late fee on IGST in case of delayed filing.
Along with the late fee, interest at 18% per annum has to be paid. It has to be calculated by the taxpayer on the tax to be paid. The time period will be from the next day of filing to the date of payment.
The Supreme Court while giving relief to Canon India ruled that Additional Director General of the Directorate of Revenue Intelligence (DRI) was not the proper officer to exercise the power under Section 28(4) and initiate recovery proceedings.
The appellant, Canon India filed the batch of statutory appeals under Section 130E of the Customs Act, 1962 arising from a common final order of the Central Excise and Service Tax Appellate Tribunal (CESTAT).
A show cause notice was issued under Section 28 (4) of the Customs Act, 1962 alleging that the Customs Authorities had been induced to clear the cameras by wilful mis-statement and suppression of facts about the cameras. In particular; that the cameras were capable of recording more than a single video sequence of less than 30 minutes.
In other words, after one sequence of less than 30 minutes was recorded, the camera had sufficient memory (extendable) to record more such sequences.
While the decision to clear the goods for import because they were exempted from customs duties under Notification No.15/2012, was taken by Deputy Commissioner, Appraisal Group, Delhi Air Cargo, the show cause notice was issued by the Additional Director General, Directorate of Revenue Intelligence.
The question that arises is whether the Directorate of Revenue Intelligence had authority in law to issue a show cause notice under Section 28(4) of the Act for recovery of duties allegedly not levied or paid when the goods have been cleared for import by a Deputy Commissioner of Customs who decided that the goods are exempted. It is necessary that the answer must flow from the power conferred by the statute i.e. under Section 28(4) of the Act.
Section 28(4) empowers the recovery of duty not paid, part paid or erroneously refunded by reason of collusion or any wilful mis-statement or suppression of facts and confers the power of recovery on “the proper officer”. The obvious intention is to confer the power to recover such duties not on any proper officer but only on “the proper officer”.
The three judge bench headed by the CJI, S.A.Bobde noted that parliament has employed the article “the” not accidental but with the intention to designate the proper officer who had assessed the goods at the time of clearance.
It must be clarified that the proper officer need not be the very officer who cleared the goods but maybe his successor in office or any other officer authorised to exercise the powers within the same office. In this case, anyone authorised from the Appraisal Group.
Assessment is a term that includes determination of the duty of any goods and the amount of duty payable with reference to, inter alia, exemption or concession of customs duty vide Section 2 (2) (c) of the Customs Act, 1962. The Apex court held that the Additional Director General of DRI was not “the” proper officer to exercise the power under Section 28(4) and the initiation of the recovery proceedings in the present case is without any jurisdiction and liable to be set aside.
Subscribe Taxscan Premium to view the JudgmentThe Central Board of Indirect Taxes and Customs (CBIC) notified the reduction in the Applicability of GST E-invoicing threshold from Rs.100 Crores to Rs.50 Crores with effect from April 1, 2021.
The Board seeks to amend notification No. 13/2020 – Central Tax, dated the 21st March, 2020.
‘E-invoicing’ facilitates exchange of the invoice document (structured invoice data) between a supplier and a buyer in an integrated electronic format by way of standard e-invoice schema (INV-01) through looping the government authorities i.e. invoicing portal to keep a check on suspicious taxpayers.
Earlier, the CBIC notified registered person, other than a Special Economic Zone unit and those referred to in sub-rules (2), (3), (4) and (4A) of rule 54 of the GST rules, whose aggregate turnover in any preceding financial year from 2017-18 onwards exceeds Five hundred crore rupees, as a class of registered person who shall prepare invoice and other prescribed documents, in terms of sub-rule (4) of rule 48 of the said rules in respect of supply of goods or services or both to a registered person or for exports. Later on, the applicability of E-invoicing threshold was Rs.500 crores till December 31, 2020 thereafter 100 crores and now it is again capped to Rs.50 Crores.
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The Ministry of Micro, Small, and Medium Enterprises (MSME) notified that GSTIN is not Mandatory for MSME Udyam Registration.
The Central Government amended in the notification of Government of India, Ministry of Micro, Small and Medium Enterprises number S.O. 2119 (E), dated the 26th June, 2020.
In the said notification, in paragraph (5), after sub-paragraph (3), the “the exemption from the requirement of having GSTIN shall be as per the provisions of the Central Goods and Services Tax Act, 2017 (12 of 2017).” sub-paragraph shall be inserted.
In paragraph (6) the “in case of any proprietorship enterprise not registered under any Act or rules of the Central Government or the State Government, the proprietor may use his or her PAN for registration of the enterprise in the Udyam Registration portal and for all other types of enterprises PAN shall be mandatory,” sub-paragraph shall be inserted.
The government has earlier provided that PAN and GSTIN is Mandatory wef 31St March 2021 for MSME Udyam Registration has now relaxed the condition and provided that the exemption from the requirement of having GSTIN shall be as per the provisions of the Central Goods and Services Tax Act, 2017.
Subscribe Taxscan Premium to view the JudgmentA total of 1,28,733 Declarations under Vivad se Vishwas Scheme have been filed in Form 1 till 1st March, 2021 by taxpayers. These include 1,393 declarations by Central PSUs and 833 declarations by State PSUs/ boards. Declarations have been filed by taxpayers for resolution of Tax disputes amounting to Rs. 98,328 crore till 1st March 2021. Payment of Rs. 53,346 crore have been made by taxpayers under the scheme till 1st March 2021.
This was stated by Shri Anurag Singh Thakur, Union Minister of State for Finance & Corporate Affairs, in a written reply to a question in Lok Sabha today.
The Minister further said that amicable resolution of large number of pending tax disputes was the primary objective of the scheme. Collection of revenue blocked in litigation is an added advantage that has accrued to the Government. The total number of pending tax disputes as on the Eligibility date was 5,10,491. The 1,28,733 declarations relate to 1,43,126 pending disputes (including cross appeals). Thus, the declarations received under the scheme cover more than 28% of pending tax disputes, the Minister stated.
Giving more details, the Minister stated that in order to impart greater efficiency, transparency and accountability to the process of disposal of appeals by the Commissioner (Appeals), the Faceless Appeals Scheme, 2020 was notified on 25.09.2020. Under this scheme, appeals before the Commissioner (Appeals) will be disposed by eliminating the interface between the Commissioner (Appeals) and the appellant in the course of appellate proceedings to the extent technologically feasible.
However, appeals relating to serious frauds, major tax evasion, sensitive & search matters, International tax and Black Money Act will not be covered by the scheme, the Minister stated.
The Finance Bill, 2021 has further proposed a number of measures for better dispute resolution mechanism which are discussed below:-
(i) Faceless Income-tax Appellate Tribunal (ITAT):
The Finance Bill, 2021 has proposed to empower the Central Government to notify a scheme for the purposes of disposal of appeal by the ITAT so as to impart greater efficiency, transparency and accountability by eliminating the interface between the ITAT and parties to the appeal in the course of proceedings to the extent technologically feasible, optimising utilisation of the resources through economies of scale and functional specialisation and introducing an appellate system with dynamic jurisdiction.
(ii) Dispute Resolution Committee (DRC):
With the objective to allow small taxpayers to resolve their disputes with minimum cost and compliance burden, the Finance Bill, 2021 has proposed to create one or more DRC specifically targeted towards such taxpayers. The DRC shall have the powers to reduce or waive any penalty imposable or grant immunity from prosecution for any offence under the Income tax Act, 1961 (“the Act”).The Finance Bill, 2021 has also empowered the Central Government to make a scheme by notification in the Official Gazette for the purpose of dispute resolution by DRC. The scheme shall impart greater efficiency, transparency and accountability by eliminating interface to the extent technologically feasible, by optimising utilisation of resources and introducing dynamic jurisdiction.
(iii) Board for Advance Rulings (BAR):
With a view to avoiding dispute in respect of assessment of tax liability and to provide tax certainty, the Authority for Advance Rulings (AAR) was constituted vide the Finance Act, 1993 by inserting a new Chapter XIX-B in the Act. In order to enhance the effectiveness of advance rulings, the Finance Bill, 2021 has proposed to replace the AAR by one or more BAR for giving advance rulings under the Act. Every such Board shall consist of two members, each being an officer not below the rank of Chief Commissioner. The Finance Bill, 2021has also proposed to empower the Central Government to make a scheme by notification in the Official Gazette for the purpose of giving advance ruling by BAR to impart greater efficiency, transparency and accountability by eliminating interface between the Bar and the applicants to the extent technologically feasible, by optimising utilisation of resources and introducing dynamic jurisdiction.
(iv) Interim Board for Settlement (“Interim Board”):
The Finance Bill, 2021 has proposed to discontinue Income-tax Settlement Commission (ITSC) with effect from 01.02.2021. The pending cases for settlement shall be disposed of by the Interim Board to be constituted by the Central Government. Further, the Finance Bill, 2021 proposes to empower the Central Government to make a scheme, by notification in the Official Gazette, for the purposes of settlement in respect of pending applications by the Interim Board, so as to impart greater efficiency, transparency and accountability by eliminating the interface between the Interim Board and the assessee in the course of proceedings to the extent technologically feasible; optimizing utilisation of the resources through economies of scale and functional specialization; introducing a mechanism with dynamic jurisdiction.”
The Institute of Chartered Accountants of India ( ICAI ) notified the Schedule for the CA foundation exams under the new scheme. The CA Foundation Exam is scheduled to be held on 24, 26, 28, and 30 June, 2021.
The timings for the paper 1 and 2 of the foundation exam will be from 2 pm to 5 pm for the duration of 3 hours and the paper 3 and 4 will be from 2 pm to 4 pm for the duration of 2 Hours.
It is noteworthy that in Paper 3 and 4 of the Foundation Examination there will not be any advance reading time, whereas, in all other papers/exams mentioned above, an advance reading time of 15 minutes will be given from 1:45 PM (1ST) to 2 PM (1ST).
The places for examination centers overseas are Abu Dhabi, Bahrain, Doha, Dubai, Kampala (Uganda), Kathmandu, Kuwait, Muscat.
The Examination commencement timings at Abu Dhabi, Dubai and Muscat Centres will be 12.30 PM 1.e. Abu Dhabi, Dubai and Muscat local time corresponding/equivalent to 2 PM. (IST). The Examination commencement timing at Bahrain, Doha, Kampala and Kuwait Centre will be 11.30 AM I.e. Bahrain / Doha / Kampala / Kuwait local time corresponding / equivalent to 2 PM. (IST). The Examination commencement Timing at Kathmandu (Nepal) Centre will be 2.15 PM Nepal local time corresponding / equivalent to 2 PM (IST).
The Applications for admission to Foundation Examination; Candidates are required to apply online at https://icaiexam.icai.org from 20th April, 2021 to 4th May 2021 and remit the examination fee online by using VISA or MASTER or MAESTRO Credit / Debit Card / Rupay Card / Net Banking / Bhim UPI.
They shall, however, be required to remit an additional 600/- towards late fee (for Domestic & Kathmandu centres) and US$ 10 (for Overseas centres) in case the on-line application is made after 4th May, 2021 and up to 7th May, 2021.
The foundation exam fee for the Indian Centre, for overseas centres excluding Kathmandu Centre and for Kathmandu (Nepal) will be Rs.1500, UDS 325 and Rs.2200 respectively.
It is noteworthy that the late fee for submission of the examination application form after the scheduled last date would be Rs.600/- (for Indian/ Kathmandu Centres) and the US $ 10 (for Abroad Centres) as decided by the Council. “Candidates of Foundation Examination will be allowed to opt for English / Hindi medium for answering papers. Detailed information will be found in guidance notes hosted at http://icaiexam.icai.org,” the ICAI announced.
For Official announcement Click here.
The Central Board of Direct Taxes (CBDT) will relax the ‘residency rule’ if forced to stay in India due to COVID-19 resulted in double taxation.
The Board has received various representations requesting for relaxation in the determination of residential status for the previous year 2020-21 from individuals who had come on a visit to India during the previous year 2019-20 and intended to leave India but could not do so due to the suspension of international flights.
It can be seen that OECD as well as most of the countries have clarified that in view of the provisions of the domestic income tax law read with the DTAAs, there does not appear a possibility of the double taxation of the income for PY 2020-21.
The possibility of double taxation does not exist as per the provisions of the Income-tax Act, 1961 read with the DTAAS.
However, in order to understand the possible situations in which a particular taxpayer is facing double taxation due to the forced stay in India, it would be in the fitness of things to obtain relevant information from such individuals.
After understanding the possible situations of double taxation, the Board shall examine whether any relaxation is required to be provided in this matter, and if required, then whether general relaxation can be provided for a class of individuals or specific relaxation is required to be provided in individual cases. Therefore, if any individual is facing double taxation even after taking into consideration the relief provided by the respective DTAA, he may furnish the information in Form-NR.
Subscribe Taxscan Premium to view the JudgmentIn the ongoing drive to counter the menace of fake billing operators, information from analytics tool NETRA (Network Exploration Tool for Revenue Augmentation), was developed by the officers of Central Goods and Service Tax (CGST) Commissionerate, Delhi East to unearth a network of fictitious firms used to generate and pass on fake Input Tax Credit (ITC) of Goods and Service Tax (GST).
Investigation revealed that the multilayered network was being operated by one Shri Nihaluddin who has confessed to having created a fake firm in his own name and also arranging ITC from 38 other fictitious firms on a commission basis to pass on fake Input Tax Credit (ITC) to multiple beneficiaries. The investigation has so far established the issuance of fake bills of Rs 216.06 crore involving fake Input Tax Credit (ITC) of Rs. 38.91 crore, which is expected to increase as the investigation progresses.
The offence committed by the accused Shri Nihaluddin is covered under Section 132(1)(b) of the CGST Act, 2017 which is cognizable and non-bailable offences as per the provision of Section 132(5) and punishable under clause (i) of subsection 1 of Section 132 of the Act ibid. Accordingly, Shri Nihaluddin was arrested under Section 69(1) of the CGST Act, 2017 and produced before the Duty Magistrate on 01.03.2021 who remanded him to judicial custody of 14 days till 15.03.2021.
Further investigation into the case is underway. It is pertinent to mention here that since the inception of GST Central Tax, Delhi Zone has made 28 arrests in various cases involving GST evasion amounting to more than Rs. 4058.86 crore.
The Supreme Court has ruled that no TDS is applicable on Indian Companies for amount Paid to Use Foreign Software.
The appeals of the Engineering Analysis Centre of Excellence may be grouped into four categories.
The first category deals with cases in which computer software is purchased directly by an end-user, resident in India, from a foreign, non-resident supplier or manufacturer.
The second category of cases deals with resident Indian companies that act as distributors or resellers, by purchasing computer software from foreign, non-resident suppliers or manufacturers and then reselling the same to resident Indian end-users.
The third category concerns cases wherein the distributor happens to be a foreign, non-resident vendor, who, after purchasing software from a foreign, non-resident seller, resells the same to resident Indian distributors or end-users.
The fourth category includes cases wherein computer software is affixed onto hardware and is sold as an integrated unit/equipment
It is also important to note that vide Circular No. 10/2002 dated January 9, 2002, the Revenue, after referring to section 195 of the Income Tax Act and deciding that a No Objection Certificate from the Department would not be necessary if the person making the remittance is to submit an undertaking along with the certificate of an accountant to the Reserve Bank of India has itself made a distinction in the proforma of the certificate to be issued.
The Three-Judge bench of Justices R.F.Nariman, Hemant Gupta, and B.R.Gavai noted that given the definition of royalties contained in Article 12 of the DTAAs mentioned in paragraph 41 of this judgment, it is clear that there is no obligation on the persons mentioned in section 195 of the Income Tax Act to deduct tax at source, as the distribution agreements/EULAs in the facts of these cases do not create any interest or right in such distributors/end-users, which would amount to the use of or right to use any copyright. The provisions contained in the Income Tax Act (section 9(1)(vi), along with explanations 2 and 4 thereof), which deal with royalty, not being more beneficial to the assessees, have no application in the facts of these cases.
The court said that the amounts paid by resident Indian end-users/distributors to non-resident computer software manufacturers/suppliers, as consideration for the resale/use of the computer software through EULAs/distribution agreements, is not the payment of royalty for the use of copyright in the computer software, and that the same does not give rise to any income taxable in India, as a result of which the persons referred to in Section 195 of the Income Tax Act were not liable to deduct any TDS under section 195 of the Income Tax Act. The answer to this question will apply to all four categories of cases.
Subscribe Taxscan Premium to view the JudgmentThe Central Board of Indirect Taxes and Customs ( CBIC ) has extended the deadline of GST Annual Returns ( GSTR-9 and GSTR-9C) for the financial year 2019-20 to March 31st 2021.
The CBIC said that, It may be noted that the due date for furnishing of the Annual returns (GSTR-9 and GSTR-9C) specified under section 44 of the CGST Act read with rule 80 of the CGST rules for the financial year 2019-20 was earlier extended from 31.12.2020 to 28.02.2021 vide Notification No. 95/2020- Central Tax dated 30.12.2020.
In view of the difficulties expressed by the taxpayers in meeting this time limit, the Government has decided to further extend the due date for furnishing GSTR-9 and GSTR-9C for the financial year 2019-20 to 31.03.2021 with the approval of the Election Commission of India.
This press note is being issued to keep taxpayers informed so that they may plan their return filing accordingly. Suitable notification to give effect to this decision is being issued.
The Central Board of Direct Taxes ( CBDT ) has again extended the Deadline for filing declaration under ‘Vivad Se Vishwas’ scheme till 31 March, 2021, and the due date for payment without additional amount under VSV extended to 30th April, 2021.
As per a CBDT’s notification, the date for payment of tax without additional interest under VSV remains unchanged at 30 April, 2021. Notification no. 09/2021 in S.O. 964(E) dated 26/02/2021 issued. Date for payment without additional amount under VSV extended to 30th April, 2021,” the Income Tax department said in a tweet late Friday.
As many as 1,25,144 cases have so far opted for the Vivad se Vishwas (VsV) Scheme, which is 24.5 per cent of the 5,10,491 cases that were pending at different legal fora. About Rs 97,000 crore worth disputed tax has opted for resolution under the scheme. Earlier also the government had extended the due date for filing declaration under Vivad Se Vishwas Scheme extended to 31st January 2021 and 28th February.
Under this scheme, taxpayers whose tax demands are locked in dispute in multiple forums, can pay due to taxes by March 31, 2020, and get a complete waiver of interest and penalty. If a taxpayer is not able to pay within the deadline, he gets a further time till June 30, but in that case, he would have to pay 10% more on the tax.
The Vivad se Vishwas scheme is similar to the ‘Indirect Tax, Sabka Vishwas’ scheme, which was introduced by Finance Minister during her maiden budget presentation in July 2019. The “Sabka Vishwas” legacy dispute resolution scheme was aimed at reducing disputes related to excise and service tax payments.
Subscribe Taxscan Premium to view the JudgmentThe Tamil Nadu Appellate Authority of Advance Ruling (AAAR) while setting aside the AAR’s ruling held that only 5% GST on “Nizam Pakku” betel nut.
The appellant, M/s S.A. Safiullah is owned by Abdul Razak Safiullah and is engaged in trading of Betel nut, under the name and style “Nizam Pakku” and the said brand name is owned and registered in favour of the Applicant. “Pakku” is a tamil word for “betel nut”. The said “Nizam Pakku” is manufactured by M/s Azam Laminators Pvt. Ltd. who sells the “Nizam Pakku” exclusively to the Applicant, which is marketed by them through Dealers and Distributors network.
The issue raised in this case was whether the ‘Nizam Pakku’ bought and sold by the Applicant, the manufacturing process of which has been explained by them is classifiable under Chapter heading 0802 8030 of the Customs Tariff and hence attract 2.5 % CGST as per Sl.No.28 of Schedule I of Notification 1/2017 Central Taxes (Rate) Dated June 28, 2017, and equal rate of SGST.
The Lower Authority ruled that “Nizam Pakku” traded by the applicant merits classification under Chapter 0802 80 90 of the Customs Tariff and attracts 6% CGST as per SI.No. 15 of Schedule II under Notification 1/2017-Central Tax (Rate) dated June 28, 2017, and 6% SGST under Notification No. II(2)/CTR/532(d-4)/2017 vide ) G.O.(Ms) No: 62 dated June 29, 2017, as amended.
However, the appellant challenged the order of the lower authority before the AAAR.
The Coram consisting of M.A.Siddiqui and G.V. Krishna Rao found that from the Commercial Invoice and the related Shipping Bill for Export, the product is described as ‘Nizam BetelNut (Arecanut)’. Thus, it is seen that the product of the appellant is known as Betel nut (Areca nut) and assessed accordingly by the Customs. After considering the appellant’s claim that the terms ‘betel nut’ and ‘areca nut’ are the same and used interchangeably, the Appellate Authority ruled that the applicable GST rate for the product is 5% only and set aside the AAR’s order imposing 12% of GST.
Subscribe Taxscan Premium to view the JudgmentThe Karnataka High Court stayed service tax demand on the grant of Mining Lease/Royalty.
The petitioner, M/s Zeenath Transport Company has challenged the constitutional validity of Section 174 Central Goods and Services Tax Act, 2017 is against the constitutional (101st) Amendment Act 2016 being violative of Article 14, 19, and 265 of the Constitution of India and also sought for quashing the show cause notice.
The petitioner submitted that a similar issue is pending before Apex Court wherein it granted the interim order for payment of service tax of the grant of Mining lease/Royalty by the petitioner.
Following the interim order passed by Apex Court the Gujarat High Court has also passed the interim order regarding payment of scriec tax for grant of Mining Lease /Royalty by the member of petitioner’s Society subject to petitioner filing of an undertaking.
The single-judge bench of Justice Ashok S. Kinagi noted that the petitioner has been made out of the ground for granting of the interim order. The court has ordered that until further orders, payment of service tax for grant of Mining Lease/Royalty shall remain stayed subject to petitioner filing of the undertaking before this Court that in case if the petitioner did not succeed in the petition, the petitioner would discharge the obligation for payment of service tax on the royalty.
Subscribe Taxscan Premium to view the JudgmentThe Institute of Chartered Accountants of India (ICAI) announced the 1 March, 2021 as the last date of registration in the Intermediate Course under the Revised Scheme of Education and Training for appearing in November, 2021.
“Students who have passed Foundation Examinations held in November, 2020 or before may note that the last date of registration in Intermediate Course under the Revised Scheme of Education and Training for appearing in November 2021 Intermediate (New) Examination is 1st March 2021,” ICAI announced.
For registration, students may visit the Self Service Portal here.
In the ensuing initiative to counter the menace of fake billing operations, the officers of Central Goods and Services Tax (CGST) Commissionerate, Delhi North, on the basis of intelligence developed through extensive data analytics, have unearthed a network of fictitious firms to generate goods-less invoices and pass-on fake Input Tax Credit to multiple beneficiaries. In all, four individuals were arrested in three different cases in terms of Section 69(1) of the CGST Act, 2017 for the commission of offences under Section 132 (1) of the CGST Act, 2017. The total Input Tax Credit involved in the three cases is Rs. 178 crores. Further investigations in all the matters are in progress and the amount of fake credit and the total number of companies/persons involved are likely to increase.
In the first case, four non-existent firms were created by the main perpetrators to pass-on ITC of Rs. 54 crores, primarily to 14 other firms. These firms were not only involved in issuing goods-less invoices on commission basis but also used such invoices for claiming IGST refund on export of goods. The main operators behind all these firms, Shri Vikas Goyal and Shri Gopal Aggarwal have confessed to their involvement in running this web of fake firms and were, arrested on 12.02.2021.
In the second case, investigations revealed that one Sh. Mohinder Kumar received fraudulent GST Input Tax Credit of Rs 111 crore in his two firms, M/s VMW Enterprises and M/s Shree Bahadur Steel Company from several bogus firms and passed on this credit to several other firms without actual supply of goods. Sh. Mohinder Kumar was placed under arrest on 13.02.2021.
In another similar case, one Shri Surender Kumar Jain, Director of M/s VDR Colors and Chemicals Pvt Ltd. & A.V. Metals Marketing Pvt Ltd. and proprietor of M/s Surender Kumar Jain was found involved in availing ineligible ITC of Rs. 13 crores on the strength of goods-less invoices issued by non-existent firms. Shri Surender Kumar Jain was also arrested on 13.02.2021. All the accused have been remanded to 14 days of judicial custody by the Metropolitan Magistrate. It is pertinent to mention here that since the inception of GST, Central Tax, Delhi Zone has made 25 arrests in various cases involving GST evasion amounting to more than Rs. 3,969.65 crore.
The Institute of Chartered Accountants of India ( ICAI ) has launched the Accounts Assistant Scheme towards Skill Development and Employability of CA.
In its continuous endeavor to contribute towards Skill Development and making youth employable by ensuring successful training to develop skill sets in the subject of Accounting, Tax Compliances & related topics and to develop expertise on book-keeping, GST and Income Tax Compliances, the first-ever pilot project of ICAI ARF – Accounts Assistant Scheme launched today by Shri Anurag Singh Thakur, Hon’ble Minister of State for Finance & Corporate Affairs at ICAI Head Office, New Delhi. This Pilot Project of the Scheme is a step towards sustainable skill development of the local youth and make them readily employable locally.
The Institute of Chartered Accountants of India (ICAI) established the ICAI Accounting Research Foundation (ICAI ARF), a core research body in the areas of accounting, auditing, capital markets, fiscal policies, monetary policies, and other related disciplines. As a part of its continued pursuit to promote research, the ICAI Accounting Research Foundation (ICAI ARF) has undertaken and completed various basic and applied research projects. It also provides financial assistance to researchers/scholars for undertaking basic research projects of contemporary national/international significance in the aforesaid areas.
Shri Anurag Singh Thakur, Hon’ble Minister while congratulating ICAI stated “This Pilot Project of ICAI ARF is being launched initially for local youth of Hamirpur district of Himachal Pradesh. This scheme is going to help the students who are above the age of 21 years & will train the local youth for bookkeeping, GST filing, and understanding the tax procedures of GST. This is a major step towards employment of the local youth and the fee structure is also were reasonable.”
The Hon’ble Minister further remarked “As this Scheme is being monitored & evaluated by ICAI, the premier accountancy body of India, it has more credibility and the students who will clear this scheme shall get the chance to intern with experience CAs, organisations, etc. The experience gained by the students would help them to get jobs locally & through ICAI job portal, they will have ample career opportunities.”
The salient features of the scheme are:
CA. Atul Kumar Gupta, President, ICAI said “Education brings forth the treasure of life’s innate dignity and releases the capacity to freely shape the future. The importance of learning enables the individuals to put their potential to optimal use.”
President, ICAI further said “From the time of its inception, the ICAI has consistently held the lofty vision and established a tradition of educating the students by constantly working for their all-round development. This Pilot Project of Accounts Assistant Scheme is one more step towards ICAI’s constant endeavor to encourage the young aspirants who wish to pursue their dream of gaining knowledge in the field of accountancy and serve the nation with their capabilities and knowledge.”
The Scheme will be accessible to the interested candidates and thus empower the youth through skill development and will also help them to be a part of the mainstream economy.
The Institute of Chartered Accountants of India (ICAI) established the ICAI Accounting Research Foundation (ICAI ARF), a core research body in the areas of accounting, auditing, capital markets, fiscal policies, monetary policies, and other related disciplines. As a part of its continued pursuit to promote research, the ICAI Accounting Research Foundation (ICAI ARF) has undertaken and completed various basic and applied research projects. It also provides financial assistance to researchers/scholars for undertaking basic research projects of contemporary national/international significance in the aforesaid areas.
Shri Anurag Singh Thakur, Hon’ble Minister while congratulating ICAI stated “This Pilot Project of ICAI ARF is being launched initially for local youth of Hamirpur district of Himachal Pradesh. This scheme is going to help the students who are above the age of 21 years & will train the local youth for bookkeeping, GST filing, and understanding the tax procedures of GST. This is a major step towards employment of the local youth and the fee structure is also were reasonable.”
The Hon’ble Minister further remarked “As this Scheme is being monitored & evaluated by ICAI, the premier accountancy body of India, it has more credibility and the students who will clear this scheme shall get the chance to intern with experience CAs, organisations etc. The experience gained by the students would help them to get jobs locally & through ICAI job portal, they will have ample career opportunities.”
The salient features of the scheme are:
CA. Atul Kumar Gupta, President, ICAI said “Education brings forth the treasure of life’s innate dignity and releases the capacity to freely shape the future. The importance of learning enables the individuals to put their potential to optimal use.”
President, ICAI further said “From the time of its inception, the ICAI has consistently held the lofty vision and established a tradition of educating the students by constantly working for their all-round development. This Pilot Project of Accounts Assistant Scheme is one more step towards ICAI’s constant endeavor to encourage the young aspirants who wish to pursue their dream of gaining knowledge in the field of accountancy and serve the nation with their capabilities and knowledge.” The Scheme will be accessible to the interested candidates and thus empower the youth through skill development and will also help them to be a part of the mainstream economy.
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