The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) has held that no penalty can be initiated against the assessee under section 271(1)(c) of the Income Tax Act, 1961 for a bonafide mistake committed on the part of the Chartered Accountant.
The sole grievance of the assessee was that the Assessing Officer imposed a penalty of Rs.1,77,000/- under section 271(1)(c) of the Act on account of failure to voluntarily add back provision of gratuity in the computation of income, holding this mistake as mala fide even though all facts were disclosed.
The first appellate authority confirmed the order and refused to grant relief to the assessee.
Before the Tribunal, the Revenue argued that penalty was rightly imposed on the assessee u for filing inaccurate particulars of income. It was also submitted that if reassessment proceedings had not been taken up, the assessee would have escaped levy of tax.
The bench noted that though the provision for gratuity was not added back while computing the income of the assessee, but in the balance sheet, the assessee had disclosed it, as provision for gratuity. While preparing the IT return of the assessee, the Chartered Accountant did not add back it as income due to bona fide mistake.
“We further observe from the computation of income submitted by the assessee for preceding and subsequent assessment years that the assessee has correctly added back the provision for gratuity and it was offered as income. Therefore, it appears that there was no malafide intention of the assessee for filing inaccurate particulars of income. It is observed that the case was originally assessed u/s. 143(3) of the IT Act and all the information including the provision for gratuity were available with the Assessing Officer, as the provision for gratuity stood added back as income of the assessee in the balance sheet filed with the return of income,” the bench said.
It was also said that the disclosure of provision for gratuity as income in the balance sheet of the current year filed with the return of income and offering such provision for gratuity as income in preceding year’s computation of income, inspire confidence on the submission of the assessee that it was due to the mistake of Chartered Accountant not to add back such provision in the computation of income of the year under consideration.
The bench relied on the decision of the Punjab & Haryana High Court in the case of CIT vs. Rice Mills, where it has been held that the fault of Chartered Accountant cannot be visited on the assessee, in our considered opinion, no adverse inference can be drawn against the assessee.
“This being a bona fide mistake, the assessee did not challenge the quantum addition made by the Assessing Officer. This, however, would not be proper in the interest of justice to saddle penalty against the assessee in the peculiar facts and circumstances of the case and the circumstantial evidences available to prove the bona fide mistake with no ulterior motive on the part of assessee, as assessment proceedings and penalty proceedings are two separate and distinct proceedings,” the bench said.
Subscribe Taxscan Premium to view the JudgmentThe Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has held that the Patanjali Trust not liable to pay service tax in respect of membership donations.
The Trust is engaged in the activities of teaching Yoga and for research on Vedic traditions of Yoga and are registering the interested people in these activities as their members. The Trust received an amount of 11 Thousand to 11 lakhs for extending lifetime membership. The department levied service tax on the same under the category of Club and Association Services as defined under Section 65 (25) A of the Finance Act, 1994.
Before the Tribunal, the appellants relied on the decision in the case of Sports Club of Gujarat Ltd. vs. Union of India wherein it was held that the Club and Association Services have already been held ultra vires.
While granting relief to the Trust, the CESTAT noted that “the amount of consideration ranging from Rs.11,000/- to 11,00,000/- has been received by the appellant for extending lifetime membership is an amount, which is received where the person paying it is becoming the member as a shareholder of the Trust and the element of mutuality as discussed in the Sport Club case (supra) comes into existence between the Trust and the said members. As a result, this demand is held to be squarely covered under the Sports Club decision. Accordingly, is held to have been wrongly confirmed by the Department.”
Subscribe Taxscan Premium to view the JudgmentThe Income Tax Appellate Tribunal ( ITAT ), Delhi bench has held that the claim for business expenditure cannot be allowed because the items distributed are more of a personalized in nature.
The assessee-company is engaged in the business of manufacturing of automobile parts. During the relevant assessment year, the Assessing Officer disallowed Rs.2,06,254/- being 10% of sale promotion expenses by finding that the assessee had claimed expenditure on account of purchase of diamond and gold jewellery.
The assessee claimed that these expenses were incurred for business promotion to various customers. However, the claim was rejected.
After hearing both the parties, the Tribunal found that “though assessee has given the list of the item distributed to various customers, however, nowhere it is borne out from the records as to whether distribution of gold and diamond ring and chains were part of the sales promotion activities. Neither any pamphlet of any scheme of sales promotion has been filed nor has any business purpose been shown specifically when the items distributed are more of a personalized in nature. In absence of any proper evidence to demonstrate that these items were actually used for business purpose, we hold that Assessing Officer was far more reasonable in disallowing only 10% of the said expenditure. Accordingly, ground raised by the assessee on this score is dismissed.”
Subscribe Taxscan Premium to view the JudgmentThe Hyderabad bench of the Income Tax Appellate Tribunal (ITAT) has held that the penalty for cash transactions cannot be imposed on genuine transactions.
In the instant case, the Assessing Officer initiated penalty proceedings under section 271D and section 271E of the Income Tax Act on the ground that the assessee has received loans in cash and also repaid the loans in cash in violation of the provisions of section 269SS and 269T of the Income Tax Act.
The assessee submitted that his family members had intended to purchase a property and therefore, they entered into an agreement of sale and had requested the assessee to take out a D.D and consequently had received a sum of Rs.6,29,000 and the assessee had taken out the DD accordingly. But, since the transaction did not go through, the DDs were cancelled and the amounts were repaid to his children, and therefore, the transaction is not a loan and the penalty is not leviable.
While considering the second appeal preferred by the assessee, the Tribunal bench noted that the assessee had furnished all the necessary details of the transaction before the CIT (A), but the CIT (A) has failed to consider the details filed by the assessee.
“On examination of the documents filed by the assessee, we are convinced that the amount received and repaid by the assessee subsequently is not a loan. This is a transaction done on behalf of his children to accommodate than in obtaining DD’s without charges and cannot be considered as taking of loan or repayment of loan in cash.”
The bench further noted the decisions in CIT vs. Deccan Designs (India) P Ltd and also in the case of Director of Income Tax (Exemption) vs. All India Deaf and Dumb Society wherein it was held that where the transactions are genuine and enough reasons are offered by the assessee to justify the cash transaction, the penalty is not leviable both u/s 271D and 271E of the Act.
Subscribe Taxscan Premium to view the JudgmentThe President of India Ram Nath Kovind has approved The Fugitive Economic Offenders Act, 2018. The Act would help in laying down measures to deter economic offenders from evading the process of Indian law by remaining outside the jurisdiction of Indian courts.
The cases where the total value involved in such offences is Rs.100 crore or more, will come under the purview of this Act.
Impact:
The Act is expected to re-establish the rule of law with respect to the fugitive economic offenders as they would be forced to return to India to face trial for scheduled offences. This would also help the banks and other financial institutions to achieve higher recovery from financial defaults committed by such fugitive economic offenders, improving the financial health of such institutions.
It is expected that the special forum to be created for expeditious confiscation of the proceeds of crime, in India or abroad, would coerce the fugitive to return to India to submit to the jurisdiction of Courts in India to face the law in respect of scheduled offences.
Salient features of the Act:
- Application before the Special Court for a declaration that an individual is a fugitive economic offender;
- Attachment of the property of a fugitive economic offender;
- Issue of a notice by the Special Court to the individual alleged to be a fugitive economic offender;
- Confiscation of the property of an individual declared as a fugitive economic offender resulting from the proceeds of crime;
- Confiscation of other property belonging to such offender in India and abroad, including benami property;
- Disentitlement of the fugitive economic offender from defending any civil claim; and
- An Administrator will be appointed to manage and dispose of the confiscated property under the Act.
If at any point of time in the course of the proceeding prior to the declaration, however, the alleged Fugitive Economic Offender returns to India and submits to the appropriate jurisdictional Court, proceedings under the proposed Act would cease by law.
All necessary constitutional safeguards in terms of providing hearing to the person through counsel, allowing him time to file a reply, serving notice of summons to him, whether in India or abroad and appeal to the High Court have been provided for. Further, provision has been made for the appointment of an Administrator to manage and dispose of the property in compliance with the provisions of law.
Implementation strategy and targets:
In order to address the lacunae in the present laws and lay down measures to deter economic offenders from evading the process of Indian law by remaining outside the jurisdiction of Indian courts, the Act is being proposed. The Act makes provisions for a Court (‘Special Court’ under the Prevention of Money-laundering Act, 2002) to declare a person as a Fugitive Economic Offender.
A Fugitive Economic Offender is a person against whom an arrest warrant has been issued in respect of a scheduled offence and who has left India so as to avoid criminal prosecution, or being abroad, refuses to return to India to face criminal prosecution. A scheduled offence refers to a list of economic offences contained in the Schedule to this Act. Further, in order to ensure that Courts are not over-burdened with such cases, only those cases where the total value involved in such offences is 100 crore rupees or more, is within the purview of this Act.
There have been several instances of economic offenders fleeing the jurisdiction of Indian courts, anticipating the commencement, or during the pendency, of criminal proceedings. The absence of such offenders from Indian courts has several deleterious consequences – first, it hampers investigation in criminal cases; second, it wastes precious time of courts of law, third, it undermines the rule of law in India. Further, most such cases of economic offences involve non-repayment of bank loans thereby worsening the financial health of the banking sector in India.
Subscribe Taxscan Premium to view the JudgmentThe ICAI president CA Naveen N D Gupta has enumerated the new initiatives by the Institute of Chartered Accountants of India ( ICAI ) to strengthen its member services.
“With its sincere efforts of leveraging technology to empower its stakeholders including its members and bringing various relevant services to their doorstep, ICAI keeps taking up significant initiatives in the interest of our members particularly,” he said.
Some of the initiatives are:
The Ministry of Women and Child Development has requested Ministry of Finance for amendment to section 64 of the Income Tax Act, 1961 for not including income arising from the asset transferred for inadequate consideration by an individual to his wife or son’s wife, said by Minister of State for Women and Child Development, Smt. Maneka Sanjay Gandhi in reply to an Starred Question in the Rajya Sabha, today
As informed by the Central Board of Direct Tax (CBDT), Department of Revenue, under the existing provisions of the Income Tax Act,1961, any sum of money received by a person without consideration is liable for taxation if the aggregate value of such sum exceeds Rs.50,000. Similar provisions exist for taxation of receipt of an immovable property or specified property without consideration or inadequate consideration. However, these provisions are not applicable to receipts of any sum/ immovable property/specified property by an individual from following relatives:¾
(i) spouse of the individual;
(ii) brother or sister of the individual;
(iii) brother or sister of the spouse of the individual;
(iv) brother or sister of either of the parents of the individual;
(v) any lineal ascendant or descendant of the individual;
(vi) any lineal ascendant or descendant of the spouse of the individual;
(vii) spouse of the person referred to in (ii) to (vi) above.
Therefore, receipt by women of any sum/immovable property/specified property without/inadequate consideration from the relatives under the existing provisions of the Income tax Act, 1961 are not taxable.
The Income Tax Appellate Tribunal ( ITAT ), Delhi bench has observed that advance payment made for participating in the exhibition must be allowed as business expenditure in the year in which assessee made the payment.
The assessee-company is engaged in the business of manufacturing of automobile parts. The assessee had made a payment of sum of Rs.5,75,860/- for participation in exhibition to M/s. Messee Franfurt Trade Fairs India (P) Ltd. for a stall in the international trade fair for the automobile industry. The Assessing Officer disallowed Rs.7,75,861/- being exhibition expenses incurred on the ground that these did not pertain to impugned Assessment Year and it cannot be allowed under section 37 of the Income Tax Act.
The assessee submitted that the payment of Rs.5,75,861/- has been made during the year for booking a space for exhibition to be held next year and such an amount paid for participation in the exhibition was non-refundable even if the assessee cancels it on at the later stage.
The Tribunal bench noted that the payment made by the assessee is not in dispute which is evident from the letter written by M/s. Messee Frankfurt Trade Fairs (P) Ltd.
“When the payment of participation for exhibition purpose has been made in this year then ostensibly such a payment is revenue in nature incurred for the purpose of business, then the same has to be allowed in the year in which it has been incurred, because for participating in the exhibition it was essential that payment has to be made in advance even if such an exhibition of international trade fair was to be held in the next Assessment Year. Hence, the expenditure incurred cannot be disallowed on this ground. Accordingly, we agree with the contention of the learned counsel that the exhibition expenses paid by the assessee in this year has to be allowed as business expenditure and thus, the ground raised by the assessee on this score is allowed.”
Subscribe Taxscan Premium to view the JudgmentThe Bangalore bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has ruled that no service tax can be levied on the treatment given by the ayurvedic centres run by the resorts.
The respondents are engaged in running resorts and they are operating ayurvedic treatment centres at the respective resorts. They have licenses issued by the Department to operate the said ayurvedic centre as private hospital establishment; they operate the ayurvedic centre with full time qualified ayurvedic doctors and qualified staff for giving the treatment. The department held that the respondents are providing taxable services under the head “health club and fitness centre.”
The first appellate authority held that the ayurvedic centres are providing therapeutic treatment under ayurvedic system.
Before the Tribunal, it was contended on behalf of the department that these resorts are only for pleasure and holidaying and massages are optional and invariably are of general well-being than treatment of a particular disease.
The bench, after perusing the records maintained by these ayurvedic centres, noted that they are maintaining case sheets/treatment files and the treatment process schedule which is a normally done by hospitals also.
“By the mere fact that the ayurvedic centres are located in the premises of the resorts, it cannot be said that they cease to be ayurvedic centres coming to ayurvedic treatment per se,” the bench said.
The bench further accepted the contention of the respondents that these processes/ treatments are emanating from the ayurvedic texts like Astangahrudaya, Sahasrayoga, Charakasamhitha, Susruthasamhitha, etc. Supervision of such treatments are being given by or given under the guidance of professional ayurvedic doctors.
“Such ayurvedic centres are licensed to function as ayurvedic centres by the respective authorities. Therefore, we find that all the required conditions for such treatments to be treated as therapeutic are specified and will fall under the exclusion provided by the Board Circular,” the bench added.
Subscribe Taxscan Premium to view the JudgmentThe Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has ruled that the service tax can be levied on long-term lease of commercial properties and shops for 99 years.
In the instant case, the assessee, Rajasthan Housing Board has constructed shops which were leased to successful bidders in the auction process for a period of 99 years and various amounts were recovered. The Department was of the view that the amounts recovered as lease charges were liable to payment of service tax under the category of “Renting of Immovable Property Service” falling under Section 65(90a) read with Section 65(105)(zzzz) of the Finance Act, 1994.
On behalf of the appellants, it was contended that the lease rent has been charged from various shops, which have been granted lease for 99 years. The ownership/ title in such property and transferred to the buyer and such transactions are subject to levy of stamp duty. It was, therefore, contended that no service tax is payable since 99 years lease partakes the character of sale.
The first appellate authority confirmed the demand.
The bench noticed that in the case of Greater Noida Industrial Development Authority vs. CCE&ST, Noida, the Tribunal affirmed the imposition of service tax by finding that the long term lease of 99 years will be covered within the definition of “Renting of Immovable Property.”
“The above decision of the Tribunal was affirmed by the Hon’ble Allahabad High Court, reported as 2015 (40) STR 95 (All.). In the above case, the Tribunal has examined the leviability of service tax on long term lease of vacant land but we are of the view that the finding is equally applicable to the present case,” the bench said.
Following the above decision, the bench held that RHB will be liable for payment of service tax on the lease amounts recovered by them from the allottee of commercial properties.
Subscribe Taxscan Premium to view the JudgmentIn a setback to the Patanjali Trust, the Delhi bench of the Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) has ruled that service tax can be levied on the consideration received by the Trust under Vanprastha Ashram Scheme.
The Trust is engaged in the activities of teaching Yoga and for research on Vedic traditions of Yoga and are registering the interested people in these activities as their members.
Under the Vanprastha Ashram Scheme, the appellant was leasing the accommodation to all those who are interested to visit the appellant premises till their life time on payment of certain amount ranging from Rs.5,00,000/- to 21,00,000/-. The department demanded service tax on the above consideration by finding the it is a taxable service under the Finance Act, 1994.
The Tribunal noted that as per the scheme, by making the above payment, a person does not become the member of the Trust as such, but become the lease-holder for a particular accommodation respective to the price paid by him under the Scheme.
“This observation is sufficient to hold that such person become the shareholders of the appellant’s Scheme but not the members of the Trust. Such members cannot be cloth with the status as that of founder members of the Trust and the element of mutuality therefore, is missing in such a relationship. The transaction with such members will be the one with some other person with no principle of mutuality involved. As such, the Trust and the member of Vanprastha Ashram Scheme become two different legal entities. Any services of club and association being provided by the appellant to such members are therefore, taxable services under Section 65 (25a) and are absolutely out of the scope of Sport Club (supra) decision. Hence we are of the opinion that the Adjudicating authority below has rightly confirmed the said demand,” the bench said.
Subscribe Taxscan Premium to view the JudgmentThe Income Tax Appellate Tribunal ( ITAT ), Mumbai bench had allowed tax relief to the Indian Plastics Institute by holding the activity of organizing International Conference by the Institute would not constitute a ‘Commercial activity’ for denying tax benefit to them.
The assessee-trust is registered under the Bombay Public Trusts Act, 1950 and also registered under section 12A of the Income Tax Act, 1961. In the year 2011, the Income Tax registration was withdrawn. However, the same was restored by the Tribunal in the year 2014 with a specific finding that the receipt on account of the International conference and interest on deposit was in the nature of business income.
The activities of the assessee-trust are for advancement and development for the benefit of its members and public, the art, science, technology and engineering of plastics, natural and synthetic and other related materials which is achieved through regular technical lectures, seminars and workshop on topical interest, and international conference held in India by inviting foreign delegates and faculties, conducting one-year part-time Diploma Courses, conducting Plastics Processing Operators Training (PPOT) in 100 Govt. Industrial Training Institutes (ITI) all over India, conducting two-day short-term courses and publishing IPI Journals giving latest technological developments.
Overruling the order of the Tribunal, the bench held that “We observe that assessee trust it is not carrying on any activity which can be termed as “commercial activity” or an activity in the nature of trade, commerce or business by conducting an International Conference. The assessee is disseminating knowledge on the subject of plastics by different ways and means like holding courses, holding conferences, holding lectures, publishing literature on new subjects, publishing its journal, conducting diploma course, etc. Thus the activities of the assessee are purely of a general public utility inasmuch as it helps all those classes of persons connected with the plastics and its application with a useful knowledge and information from time to time.”
Subscribe Taxscan Premium to view the JudgmentThe Hyderabad bench of the Income Tax Appellate Tribunal ( ITAT ) has held that the Revenue cannot disallow the payment of cash for land purchase by assessee by invoking Section 40A(3) of the Income Tax Act, 1961 as the same was not claimed as business expenditure or treated as stock or capitalized the same in order to claim depreciation.
The assessee, Kalyan Constructions, Hyderabad purchased the land at Haripuri colony with the registered value of Rs. 58 lakhs, but, he has entered into the agreement of sale for Rs. 2.08 crores. The assessee paid the registered value by cheque and balance in cash. During the course of re-assessment, the AO disallowed the payment in cash under section 40A(3) in respect of the purchase of the business asset.
The assessee submitted that the said interest expenditure was not claimed in the P&L account as expenditure. According to them, the land was shown in the Balance sheet under “Fixed assets” but not shown in the books of accounts as ‘stock-in-trade’, hence the provisions of Section 40A(3) would not apply.
Allowing the contentions of the assessee, the bench held that section 40A(3) can be invoked only when the assessee claims the payment in cash as business expenditure or treated as stock or capitalized the same in order to claim depreciation in the future.
“The assessee has not capitalized the above cash payment in fixed assets. Therefore, assessee cannot claim any expenditure or even convert the same as business assets or stock in trade, the cash payment of Rs. 1.50 crores is not part of value of land. Hence, it cannot be a part of future business expenditure. Therefore, the contention of the revenue authorities is not correct to say that assessee has converted the land in the subsequent year amounts to claim of expenditure in the subsequent AY, as the value of Rs. 1.50 crore is not part of land in first place. Hence, the disallowance u/s 40A(3) is accordingly deleted,” the bench said.
Subscribe Taxscan Premium to view the JudgmentIn the light of recent controversies on NPAs and frauds from audit perspective, changes are expected in the area of appointment of statutory auditors as the Institute of Chartered Accountants of India ( ICAI ) is taking all the possible measures to revamp the present mechanism.
The ICAI President CA. Naveen N. D. Gupta recently said in a statement while addressing the Members that the meeting of Expert Committee on NPAs and Frauds, constituted by RBI under the Chairmanship of ICAI Past President and NACAS founder Chairman CA. Y. H Malegam, held in Mumbai, the ICAI representatives had submitted their suggestions.
They recommended that autonomy with regard to the appointment of statutory auditors should be reversed. The role and effectiveness of various types of audits conducted in banks in mitigating the incidence of divergence and frauds cannot be overlooked. Accordingly, we suggested that the scope of bank-branch audit should be enlarged. We also stressed that not all bank branches are being subjected to statutory audit, and discussed the issues that included the appointment of statutory auditors by banks, concurrent audit to be done by CAs and uniformity be maintained for appointment, remuneration to be linked with scope of work, banks to have robust appraisal and an effective credit monitoring mechanism, among others,” ICAI Chief said on Tuesday.
He also pointed out about a software developed by ICAI regarding the appointment of statutory auditors and implementation of UDIN which was also briefed before the committee.
“This can randomly map the statutory auditors associating them with the available vacancies in the public-sector banks. This year, three banks, namely Syndicate Bank, Dena Bank and Oriental Bank of Commerce, have used the software for the first time and submitted a positive feedback. We have conveyed to the Expert Committee that other banks should also be encouraged to use our software,” he said.
The Central Board of Direct Taxes (CBDT) has entered into nine more Unilateral Advance Pricing Agreements (UAPAs) during the month of July, 2018. With the signing of these Agreements, the total number of APAs entered into by the CBDT has gone up to 232, which includes 20 Bilateral Advance Pricing Agreements (BAPAs).
The UAPAs entered into during this month pertain to various sectors and subsectors of the economy like manufacturing, engineering, media, irrigation, education, healthcare, telecommunications, industrial gases, pharmaceuticals, etc. and cover international transactions including software development service, manufacturing and sale of engineering good, import of raw materials, payment of royalty and AMP, among others.
Complex issues like capacity utilization adjustment; treatment of AMP expenses etc. have been carefully examined and resolved in some of these agreements. Thus, the APA Scheme continues to make good progress, gaining maturity over the passage of time. It reflects the Government’s commitment towards fostering a non-adversarial tax regime.
Oil Minister Dharmendra Pradhan said on Wednesday said that the Centre and the industry are in favour of including petroleum products in the Goods and Services Tax (GST) but the GST Council will take a final call on it.
Whatever the GST Council decides on including petroleum products within GST ambit, “we would stand by that,” Pradhan said in reply to a question in the Rajya Sabha.
Five petroleum products– petrol, diesel, natural gas, crude oil and ATF — are still out of the ambit of GST.
Union Minister has said that Article 279A (5) of the Constitution provides that Goods and Services Tax Council shall recommend the date on which goods and services tax shall be levied on petroleum crude, high speed diesel, motor spirit, natural gas and aviation turbine fuel.
In a written reply in Rajya Sabha today, the Minister said that while, petroleum products are constitutionally included under GST, the date and rate on which GST shall be levied on such goods, shall be as per the decision of the GST Council.
As part of the continued focus of the Government of India to liquidate pending GST refunds, the Central Board of Indirect Taxes and Customs (CBIC) has successfully concluded the Third Refund Fortnight from 16th July, 2018 to 31st July, 2018. Till 31st July, 2018, the total GST refunds disposed by the Centre and the States are to the tune of Rs 54,378 Crore.
During this Refund Fortnight, apart from various measures like Special Refund Cells at CBIC offices, Exporter Awareness Campaigns etc., a unique facility was provided by CBIC. It was for the First Time that officers of CBIC reached-out to doorsteps of the exporters for sanctioning of refunds by the way of GST Refund Help Desks. The GST Refund Help Desks were established at 11 locations in the offices of FIEO, EEPC and AEPC for the ease of exporters. These Help Desks were manned by the officers of CBIC who were tasked with assisting the exporters in resolving issues related to refunds. These Help Desks provided an extension of CBIC offices, thus eliminating any need to go to Customs office for submission of documents. During the period, all field formations of CBIC and the States, once again worked very hard to provide all assistance to the exporters to ensure quick disposal of their refund claims.
By the end of 31st July,2018, the total amount of IGST refund claims disposed by CBIC is Rs 29,829 crore taking the disposal rate to 93%. During the third Refund Fortnight, the IGST refunds of amount Rs 3,391 crore have been sanctioned by CBIC.
As on 31st July, 2018, in case of RFD-01A refunds, the amount disposed by the CBIC is Rs 16,074 crore and that by State authorities is Rs 8475 crore, taking total amount of RFD-01A refunds to Rs 24,549 crore.
The remaining GST refunds pending with CBIC will continue to be processed expeditiously. However, the exporters are requested to ensure that the correct procedure of filing returns, giving accurate information in Shipping Bill and submitting RFD01A Application Forms to the jurisdictional formations are followed for quick disbursal of their GST refund claims.
The Mumbai bench of the Income Tax Appellate Tribunal ( ITAT ) has held that the addition of on-money received by the builder on sale of flats has to be determined based on evidence found during search & seizure operations.
The bench also clarified that such addition must be made in the year in which the project has been completed as the assessee- builder is following the Project completion method.
The assessee company, a builder, was subjected to search & seizure operations upon which applications for booking of flats were found. It was revealed that the assessee sold flats in its projects at rates of upto Rs 38000/- per sq. ft. while a lesser amount had been shown in its books. The assessee later admitted receipt of on-money from customers for sale of flats. Statements of various employees of the company were taken, including those of the managing director, who admitted receipt of on-money over and above registered value of properties.
Assessee admitted that out of the additional income of Rs 38.06 crores, 18.82 crores was on-money. Based on the same, the Assessing Officer made an addition.
On appeal, the CIT(A) sustained the Assessment order.
On further appeal, the Tribunal noted that there is no dispute with regard to the fact of receipt of on-money from sale of flats.
The assessee never disputed the fact of receipt of on money; however, disputed the manner in which the undisclosed income has been quantified. Therefore, we are of the considered view that the AO was incorrect in quantifying undisclosed income by adopting average rate and then applying such rate to all flats sold in the project without any evidence found as a result of search.
On-money receipt should be worked out on the basis of evidence found as a result of search;
While allowing relief to the assessee, the bench observed that “the AO was erred in quantifying undisclosed income by taking average rate of Rs.21,400 per sq.ft. and applying such rate to 21 flats without any evidence found as a result of search. Hence, direct the AO to restrict the quantification of undisclosed income to the extent of incriminating material found as a result of search. We further direct the AO to delete addition made towards on-money received from sale of flats in the assessment year and make addition in the year in which the project has been completed, since the assessee is following project completion method for recognition of revenue.”
Subscribe Taxscan Premium to view the JudgmentThe Income Tax Appellate Tribunal, Delhi bench has ruled that the receipt of refund of Excise duty by the assessee is capital receipt and the same can be excluded while determining book profit under section 115JB of the Income Tax Act, 1961.
In the instant case, the assessee, Montage Enterprises Pvt. Ltd approached the Tribunal against the orders of lower authorities wherein it was held that the refund of Excise duty (Self Cenvat Credit) amounting to Rs.2,80,82,949/-, is not a capital receipt and the assessee is not entitled to the exclusion of refund of the same in the determination of total income u/s 115JB of the Income Tax Act, 1961.
The Tribunal bench found that a similar issue had been earlier concluded by its co-ordinate bench in favour of the assessee and against the Revenue.
‘Respectfully following the above decision reached by Co-ordinate Bench, we decide both these issues in favour of the assessee and against the revenue holding that the Excise duty refund (self Cenvat Credit) is a capital receipt of the assessee and the assessee was eligible to exclude such excise duty refund for determination of total income u/s. 115JB of the Act,” the bench said.
Subscribe Taxscan Premium to view the JudgmentThe Union Cabinet has today approved the amendment to the Goods and Services Tax (GST) laws. This is the biggest amendment to be made in the GST laws after its rollout from 1st July 2017.
There are several proposals in the bill including hiking threshold limit for availing composition scheme dealers to Rs 1.5 crore, among other things.
With the approval of the Cabinet, the Government will now table amendments to the Central GST law, Integrated GST law, Compensation Cess law in the ongoing monsoon session of Parliament.
“GST laws amendments have been cleared,” an official source said after the Cabinet meeting chaired by Prime Minister Narendra Modi.
In all, there are 46 amendments, which among other things, will allow employers to claim input tax credit on facilities like food, transport and insurance provided to employees under any law.
It also provides for modification of reverse charge mechanism, separate registration for companies having different business verticals, cancellation of registration, new return filing norms and issuance of consolidated debit/credit notes covering multiple invoices.
The Income Tax Appellate Tribunal ( ITAT ), Delhi bench has held that the no income tax can be levied on the salary earned by an Indian employee who resided out of India for 182 or more days and the said salary had been subjected to TDS.
In the instant case, the assessee earned salary from his foreign employer (Korea). The amount was received outside India and has not declared in the return of income and also not claimed any relief under Section 90 of the Income Tax Act.
The Assessing Officer made an addition on the basis of the Form 26AS and held that the salary income of Rs.17,09,702/- earned in Korea is subject to income tax in India in the impugned assessment year. According to him, tax has been deducted by the employer from such salary income and assessee has not disclosed the same in his salary income.
Under the Income Tax laws, if an individual has spent less than 182 days in India during a previous year and was outside India for the purposes of employment, then regardless of his being in India for 365 days or more during 4 preceding previous years, he cannot be treated as a resident of India.
The assessee submitted that since he was outside India for more than 182 day, he became a non-resident and not liable to tax on the salary income.
The Tribunal accepted the above argument of the assessee and held that the income is not taxable as the assessee in the instant case has stayed outside India for more than 182 days,
“It has been held in various decisions that when a citizen of India leaves India for employment abroad and stayed outside India for 182 days or more, then he becomes a non-resident and the income received from services rendered outside India cannot accrue or arise or deemed to accrue or arise in India and cannot be taxed in India notwithstanding the fact that the same is credited in the bank in India or TDS has been deducted on such income,” the bench said.
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