A three-judge bench of the Supreme Court last day clarified its order on appointment in Tribunals and barred litigations on the selection process.
The bench comprising Chief Justice Dipak Misra and Justices AM Khanwilkar and DY Chandrachud has clarified that accepted suggestions made by the Central Administrative Tribunal Bar Association with regard to appointments of chairpersons and judicial/ administrative/ technical/ expert members for all tribunals.
Accordingly, the bench clarified its previous order in the following terms;
The Court further reiterated that the selection process that has commenced shall continue and no litigation in that regard shall be entertained. Any other grievance, in this regard, shall be dealt with at the time of final hearing of the main case.
Subscribe Taxscan Premium to view the JudgmentIn Sub Registrar Dhansura v. Director of Income Tax, the Ahmedabad bench of Income Tax Appellate Tribunal (ITAT) recently ruled that no penalty can be levied for delay in filing Annual Income Tax Return since the Assessee was unaware of Income Tax provisions and the department did not informed him about the said responsibility.
Assessee in the instant case is a Government servant having the charge of Sub Registrar and he has failed to file Annual Information Report (AIR) on time.
Thereafter, the Assessee has filed a letter stating that he is having the charge of Sub Registrar and he is newly directly recorded and hence did not had any knowledge. Further, he was not provided any information from AIR from his office. He has filed the return and hence return will be foiled in time in future. But the Revenue refused to accept the contention of the Assessee and imposed penalty accordingly.
When the matter reached before the Tribunal on second appeal, the bench comprising Judicial Member Mahavir Prasad and Accountant Member N.K.Billaiya noted the fact that the Assessee is a newly incumbent with the office and was not aware of the income tax provisions.
“Moreover, department authority did not inform in above said responsibilities of during the same. Moreover, income tax was paid on time therefore, no loss to the revenue,” the bench said .
The bench further held that “Assessee in the present case was having reasonable cause for delay filing on AIR and benefit of section 273B should be given to the Assessee. While perusing the material facts it is clear that the Assessee is a newly appointed staff and he may not aware of the income tax provisions. In such circumstances it is not possible to impose penalty”. Therefore the Tribunal deleted the penalty imposed by the Revenue.
Subscribe Taxscan Premium to view the JudgmentThe Delhi High Court recently ruled that a Chartered Accountants ( CAs ) cannot be compelled to give the response on his involvement in the violation of the provisions of the Income Tax Act, FEMA, Benami Act, Prevention of Money Laundering Act before the Institute of Chartered Accountants of India (ICAI).
In the instant case, disciplinary proceedings were initiated against the petitioner, a Chartered Accountant on the basis of information received from Serious Fraud Investigation Office (SFIO). Accordingly, the disciplinary committee issued a show-cause notice requiring the petitioner to explain his involvement in money laundering operations with S.K.Jain and V.K.Jain and other professionals; inflation of Balance-Sheet by rotational transfer of funds amongst the entities controlled by S.K.Jain/V.K. Jain and thereby abetting defrauding the National Exchequer to the tune of 73 crores.
Before the Court, the counsel for the petitioner, Advocate Mr. Shariq J. Reyaz argued that no proceedings can be initiated against the petitioner since the action was merely on the basis of SFIO report and no subjective satisfaction has been recorded by the Disciplinary Authority in the impugned ‘prima facie opinion’, which renders it illegal. He further argued that petitioner cannot be asked to file a written statement in respect of his involvement under the aforesaid provisions as it is beyond the purview of the Show-Cause Notice.
After considering the facts and circumstances of the case, the bench observed that the impugned ‘prima facie opinion’ meticulously refers to the allegations against petitioner in detail and takes note of petitioner’s Reply to Show-Cause Notice and so, it cannot be said that there is non-application of mind by Disciplinary Authority in rendering the ‘prima facie opinion’.
“The stand taken by petitioner in Reply to the Show-Cause Notice justifies initiation of disciplinary proceedings against him. Merely because respondent-SFIO has sent a Reminder, it would not justify an inference that respondent is bound to initiate disciplinary proceedings against petitioner,” the Court said.
While concluding, the Court observed that “Considering the nature of the allegations leveled against petitioner and his Reply to it, initiation of disciplinary proceedings against petitioner is well justified. Impugned ‘prima facie opinion’ though holds petitioner guilty cannot be said to be stigmatic as it is only a prima facie opinion and the finding of guilt has to be returned only after the conclusion of the disciplinary proceedings. Impugned ‘prima facie opinion’ is clarified to the aforesaid extent while making it clear that jurisdiction of respondent in initiating disciplinary proceedings shall be confined to the Show-Cause Notice and so, petitioner cannot be called upon to give his response in respect of applicability of the provisions of Income Tax Act, FEMA, Benami Act, Prevention of Money Laundering Act, etc..”
Subscribe Taxscan Premium to view the JudgmentIn Mahanadi Coalfields Ltd vs Deputy Commissioner of Income Tax, the Cuttack bench of the Income Tax Appellate Tribunal (ITAT) recently ruled that lease-hold rights being intangible assets are not eligible for depreciation under section 32(1)(ii) of the Income Tax Act 1961.
The assessee in the instant case, is a Government of India Enterprises and engaged in the exploration, prospecting, development, and administration of collieries & production of coal and filed its return of income for the relevant assessment year and declared total income at Rs.275926.69 lakhs. During the financial year, the Assessee claimed depreciation on premium paid for leasehold land as intangible assets.
During the course of assessment proceedings, the Assessing Officer (AO) noticed that the Assessee-Company acquired the said land from the Government for exploration of coal out of the designated allotment of land. He also noticed that in the preceding year, such a claim has been disallowed by the CIT(A) and the Tribunal.
Before the AO, the Assessee submitted that the amount paid for the leased land are the commercial assets of the company and the price paid is actually for the purchase of a mining right which is a capital expenditure. However, the AO refused to accept the contention of the Assessee and disallowed the claim of the Assessee.
On appeal, the CIT(A) also rejected the claim of the Assessee and upheld the decision of the AO by referring the preceding order passed by the Tribunal in the Assessee’s own case. Aggrieved by the order of the authority the Assessee carried the matter before the Tribunal on further appeal.
After analyzing the above narrated facts and circumstances deeply the Tribunal bench comprising of Judicial Member Pavan Kumar Gadale and Accountant Member N.S Saini jointly upheld the orders of the lower authorities and held that leasehold rights are not eligible for depreciation under section 32(1)(ii) of the Act considering it as an intangible asset.
The division bench further observed that the depreciation under section 32 is restricted to the tangible/intangible assets which are specifically enumerated therein and depreciation is not allowable on all tangible/intangible assets. The tenancy rights cannot be construed as intangible assets falling within the meaning and explanation of section 32(1) and, therefore, there is no question of allowing depreciation on said rights. While dismissing the appeal filed by the Assessee the bench further held that the depreciation is not allowable under section 32(1)(iii) of the Act in respect of intangible assets.
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In M/s. Sukumar Dutta versus Income Tax Officer, the Kolkata ITAT recently held that the provisions relating to Tax deduction at source ( TDS) under section 194C of the Income Tax Act are not applicable to off-transactions made by the assessee.
In the instant case, the Assessee having a partnership firm in the field of fertilizers, pesticides, and seeds filed his return of income. During the course of assessment proceedings, AO found that Assessee made a single payment to Sri Rama Road lines towards transport charges without deduction of tax at source as required by section 194C of the Income Tax Act. Accordingly, the AO invoked the provisions of section 40(a)(ia) and made a disallowance of Rs.31,900/-.
On appeal before the Commissioner of Income Tax (Appeals), the authority confirmed the said addition and dismissed the appeal of the assessee by finding that the above transactions are subject to TDS. Being further aggrieved, the Assessee carried the matter to the Tribunal on the second appeal.
Accountant Member P.M. Jagtap heard the contention of Assessee and noted that Sri Rama Road lines was not a regular transporter and the said transporter was engaged by the assessee for transportation of goods only once in the year under consideration.
Finally, the Tribunal found merits in the contention of assessee noted that “the transportation of goods by Sri Rama Roadlines thus was only one off transaction and in the absence of any written or verbal contract with the said party, the assessee was not under an obligation to deduct tax at source from the one-off payment made to Sri Rama Roadlines under section 194C of the Act. The disallowance made by the Assessing Officer under section 40(a)(ia), in my opinion, therefore, was not sustainable and the ld. CIT(Appeals) was not justified to confirm the same.” Accordingly, the bench reversed the findings of the CIT(A).
Subscribe Taxscan Premium to view the JudgmentThe Bombay High Court has recently ruled that trust would not be entitled to get the exemption since it had not maintained books of accounts in respect of its incidental business.
The assessee in the present case is a company registered under Section 12A of the Income Tax Act 1961 as a charitable Trust and it also registered under Section 25 of the Companies Act 1956.
During the assessment period, the Assessing Officer (AO) noticed that the Assessee has received Rs.4,76,80,230 in tune of a trade fair exhibition organized by the Assessee named as IMTEX92 and the AO also noticed that the Assessee earned a profit of more than Rs.1.72 crores by holding the said Trade Fair Exhibition. Therefore he holds that the activity of the Assessee appeared to be a business activity which is not incidental to the attainment of the objects of the Assessee and the same was escaped from Assessee’s returns and its tax liability also.
In response, the Assessee submitted that association conducts the exhibition almost every alternate year and earned some income as part of such activities but the predominant object of the Association is to carry out a charitable purpose. Further, the Assessee contended that the activity of holding an exhibition cannot be held to be a business activity and also highlighted its registration certificate under section 12A of the Act as a charitable Trust. Therefore the said income cannot be considered as business income and the same is not taxable in the hands of the Association and also claimed the benefit under section 11 of the Act.
However the AO refused to accept the contention of the Assessee and accordingly he added the said income to the returns of the Assessee and the same was brought into tax by holding that the main activity of the assessee during the year has been to hold trade fair and by doing so, and the Assessee has earned handsome profit also.
The division bench comprising of Justice Riyaz I Chagla and Justice M.S.Sanklecha observed that assessee in the present case it has found that the business of holding exhibition¬IMTEX¬92 is incidental to the objective of the Trust to share knowledge amongst its members and the Assessee has not maintained any proper books of accounts regarding the incidental business.
While dismissing the appeal filed by the Assessee the Court further held that benefit of Section 11 of the Act is not available to the Assessee as it had not maintained separate books of accounts in respect of its incidental business as mandated by section 11(4A) of the Act. While concluding the issue the High Court declared that a Trust would not entitle to get the exemption since it had not maintained Books of Accounts in respect of its incidental business.
Subscribe Taxscan Premium to view the JudgmentWhile granting relief to famous cricket player Karn Sharma, the Ahmedabad bench of the CESTAT held that no service tax liability can be attributed to the cricket players for promotional activities provided by them during the Indian Premier League (IPL) prior to 01.07.2010.
In the instant case, the appellant, Karn Sharma was playing for M/s Royal Challengers Bangalore. Under a franchise agreement entered into with the team, the appellant received Rs. 20 lakhs for the period 01.04.2010 from 31.12.2010. The service tax department took a view that the appellant was promoting activities of the franchise by wearing franchisee’s official cricket clothing, displaying franchisee’s mark/logo etc. which was nothing but akin to promotion or marketing of the logo/brands/marks of the franchisee/ sponsor. The department said that the services/promotional activities provided by appellant during the said IPL matches was covered und.er the category of ‘Business Support Service.
The bench further relied on the decision in the case of Sourav Ganguly Vs. UOI wherein the Calcutta High Court held that the services of brand promotion before 01.07.2010 are not taxable.
Relying on the above decision, the CESTAT quashed the order against Karn Sharma and held that no service was provided nor requiring him to discharge any service tax.
Recently, while allowing relief to former Rajasthan Royal’s player, Swapnil Asnodkar, the Mumbai CESTAT also took a similar view and held that no service tax is leviable on Brand Promotion Fee.
Chartered Accountant Shri Amresh Vashisht appeared for the appellant.
Subscribe Taxscan Premium to view the JudgmentThe Delhi bench of Income Tax Appellate Tribunal ( ITAT )while hearing the case of Pitney Bowes Software India vs Addl. CIT has held that Interest on receivables comes within the ambit of ‘ International Transaction ’.
In present case Appellant is a company incorporated in India, which is subsidiary of Pitney Bowes Software Inc., USA, they engaged in the business of providing solutions with the help of technologies.
The current issue arose against the transfer pricing adjustment of Rs.11,57,791/- on account of Interest on delay in realization of receivables from the associated enterprises (AEs). No relief was provided by DRP which leads to the equal amount of addition.
The bench comprising of Vice President R.S. Syal and Judicial Member Suchitra Kamble deprived of the arguments raised by Assessee before TPO that interest on receivables is not an international transaction.
Because with the introduction of new explanation to section 92B with retrospective effect from 1.4.2002. Clause (i) of this Explanation, described the international transaction as “Once any debt arising during the course of business has been ordained by the legislature as an international transaction, it is, but, natural that if there is any delay in the realization of debts arising during the course of business, it is liable to be visited with the TP adjustment on account of interest income short charged or uncharged”.
The bench said foregoing discussion reveals that non-charging or undercharging of interest on the excess period of credit allowed to the AE for the realization of invoices amounts to an international transaction and the ALP of such an international transaction is required to be determined.
Accordingly tribunal set aside the issue by declaring that interest on receivable is termed as the international transaction.
Subscribe Taxscan Premium to view the JudgmentThe Visakhapatnam bench of Income Tax Appellate Tribunal (ITAT) recently pronounced that amount of Loan taken for acquiring the Asset should be deducted from the Value of Assets under Wealth Tax Act.
In the instant case, the AO has allowed the deduction of Rs.85,00,000/- in respect of loan taken from Assessee’s mother Dr. C. S. Padmavathi and rejected the assessee’s claim for deduction of loan taken from his wife Smt.Sireesha Toleti for a sum of Rs.5,09,00,000/-. Similarly, in another case, Assessee filed the return of net wealth after deducting the loans taken from his wife Smt.Aparna Toleti and mother, Dr. C. S. Padmavathi for the similar amounts.
AO enhanced the demand since the confirmation letters given by the creditors do not indicate the place of repayment and the debtor is not a resident of India, the impugned debt deemed to be outside India.
The CWT(A) enhanced the taxable net wealth for the certain expenses paid for the purchase of Asset. Assessee argued for the said claim as per section 2(m) of Wealth Tax Act and also added that Circular No.392[F.No.321/78/75-WT] has no application in the assessee’s case since the debt is taken from his wife in India in Indian Rupees which should be repaid in India and accordingly argued that the debt incurred for purchase of the asset should be excluded from the net wealth of the assessee.
The Tribunal bench comprising V. Durga Rao, Judicial member & D.S. Sunder Singh, Accountant member explained the provision of Wealth Tax Act section 2(m), the net wealth required to be computed after reducing the debts owned by the assessee.
The Tribunal bench observed that the aforementioned circular cannot override the Act and held that since the assessee incurred the debt for purchasing the asset, then the assessee is entitled to deduction of the loan amount from the value of the asset.
Subscribe Taxscan Premium to view the JudgmentThe Prime Minister’s Economic Advisory Council Chairperson Bibek Debroy on Monday reportedly said that India’s most celebrated tax reform, the Goods and Services Tax (GST) would take more than ten years to settle down,
“GST is a process and if we expect that the entire process will settle down in anything less than 10 years, then we are being unrealistic,” Debroy said at the annual general meeting of India International Chamber of Commerce.
He further said that only seven countries in the world had actually implemented the GST system in its true form out of which, five had unitary GST and only two countries, including India, had implemented a federal GST.
“There are very few countries which have implemented GST. There are around 140 countries which have implemented VAT but only seven which have implemented GST,” Debroy said. He added that out of those seven, only two countries had implemented a federal GST, the other being Canada whose GST system is also “not perfect”.
On direct taxes front, the NITI Aayog member made a case for removal with exemptions which he said was on government agenda.
A task force has been set up to look into the issue further, he said.
Last week, the World Bank had said that Indian GST is one of the most complex with the second highest tax rate in the world among a sample of 115 countries which have a similar indirect tax system.
In DIT v. Dawood Abdulhussain, Mumbai bench of Income Tax Appellate Tribunal (ITAT) recently ruled that capital gain exemption under section 54F of the Income Tax Act cannot be denied to the Assessee even though he has only a partial or fractional ownership in the residential house.
Assessee in the present case, is an individual duly filed his return of income for the relevant assessment year and declared total income at Rs. 5,96,947 and processed under section 143(1) of the Act. During the relevant year, he purchased a house property and claimed exemption regarding the capital gain arising from the house property under section 54F of the Income Tax Act 1961.
During the assessment proceedings, the Assessing Officer (AO) noticed that the Assessee had received an amount of Rs. 1,00,00,000 on surrender of tenancy rights in respect of a flat and the investment made by the Assessee towards the purchase of the new residential house was in excess of the amount received on surrender of the aforesaid tenancy rights. He was of the view that the Assessee owned more than one house property at the time of purchase of the new residential property and he also observed that the Assessee has only partial or fractional ownership of the property therefore he cannot be considered as the absolute owner of the said properties. Accordingly he denied the claim of the Assessee under section 54F of the Act.
On appeal the CIT(A) granted relief to the Assessee and held that the Assessee is entitled for claim of the deduction under Section 54F as raised by him in his return of income. Aggrieved by the order of the authority, the Revenue approached the Tribunal on appeal.
After analyzing the above narrated facts and circumstances, the Tribunal bench consists of Judicial Member Ravish Sood and Accountant Member Rajendra observed that the sole issue in the present case is whether the Assessee is entitled to get deduction under section 54F of the Act or not. The division bench further observed that the Assessee in the present case is only a co-owner having fractional ownership in the said respective properties, therefore, the precondition of being the owner of more than one residential house, other than the new asset, on the date of transfer of the original asset was not satisfied.
While concluding the issue in favour of the assessee, the bench held that nevertheless the Assessee still has partial or fractional ownership of the property. Therefore, the Assessee is entitled to get capital gain exemption under the said section.
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The Goods and Services Tax (GST) portal recently issued an advisory for change in taxpayer type from Special Economic Zone (SEZ) to Regular or Regular to SEZ.
According to the portal, the Migrated taxpayers who have inadvertently selected themselves as SEZ, can send their requests to become SEZ in the email: reset.sezflag@gst.gov.in.
Taxpayers who have not migrated as SEZ can send their requests to become SEZ in the email: reset.sezflag@gst.gov.in. Please attach the scanned copy of LOA for obtaining registration as SEZ /SEZ developer units.
The Institute of Chartered Accountants in India (ICAI) ARF has invited applications from individual/team (for all three designations) of CA professionals.
The Institute of Chartered Accountants of India (ICAI), set up by an Act of Parliament (The Chartered Accountants Act, 1949) established ICAI Accounting Research Foundation (ICAI ARF) in January 1999.
Number of vacancies: 01
Qualification: Chartered Accountant
Required Experience: requirements 10+ years in practice or industry Knowledge and understanding of one large ERP-SAP, Oracle Design, Process gap studies especially in Supply Chain area Large FMCG audits/operations.
Number of vacancies: Two
Qualification: Chartered Accountant
Required Experience: 5+ years in practice or industry Knowledge and understanding of one ERP – SAP, Oracle Process gap studies, ICOFR, SOX etc.- working knowledge Internal audits of FMCG’s/bulk commodity organisations
Number of vacancies: 02
Qualification: Chartered Accountant
Preferred Qualification: CISA
Required Experience 3+ years of experience in practice or industry Knowledge and understanding of one ERP – SAP, Oracle Process gap studies, ICOFR, SOX etc.- working knowledge Internal audits of FMCG’s/bulk commodity organisations.
The last date for submission of application with the detailed resume is 2nd April 2018.
Subscribe Taxscan Premium to view the JudgmentDelhi bench of the Income Tax Appellate Tribunal (ITAT) recently held that the non-compete fee paid for acquisition of going concern is not eligible for depreciation under section 32 of the Income Tax Act, 1961.
The bench comprising R.S. Syal, vice president, and MS Suchitra Kamble, judicial member were held so while deciding the matter in favor of Assessee.
In the instant case, the Assessee engaged in the business of manufacturing specialty chemicals used in oil drilling industry. For the year under consideration, the Assessee made the purchase of going concern called M/s EP Industrial and Agrochemicals Pvt. and allocated Rs.10.72 crore attributed as the non-compete fee, which is a part of the slump sale consideration. The AO has not disputed regarding the bifurcation of slump sale into tangible or intangible assets, including the amount shown as the non-compete fee. He, however, held that the non-compete fee cannot be allowed as a revenue expenditure u/s 37(1). The AO also opinioned that the payment of non-compete fee did not fall in any of the items of intangible assets specified in section 32(1)(ii) and disallowed even the claim of depreciation.
The CIT (A) accepted the stand of AO in so far as the treatment of non-compete fee as a non-revenue expenditure is concerned, however, held such amount to be covered u/s 32(1)(ii) eligible for depreciation @ 25%.
Being aggrieved with the decision of CIT (A) Revenue carried the matter before Appellate Tribunal wherein Ms. Rachna Singh appeared for them, but no appearance from the side of the assessee despite several notices.
The Tribunal relied on the decision of the Delhi High Court in the case of Sharp Business System VS. CIT wherein the Court rejected a similar claim made by the assessee.
In case of non-competition agreement, the Court held that “For the ownership of the intellectual property or know-how or license or franchise, it would be unable to either access the advantage or assert the right and the nature of the right mentioned or spelt-out in the provision as against the world at large or in legal parlance “in rem”. However, in the case of a non-competition agreement or covenant, it was held that the advantage was a restricted one, in point of time. It did not confer any exclusive right to carry-on the primary business activity. The right can be asserted in the present instance only against L&T and in a sense, the right “in personam”.”
Following the above decision, the bench allowed the appeal of the assessee.
Subscribe Taxscan Premium to view the JudgmentIn a bid to tackle fraudulent transitional credit claims, the Central Board of Excise and Customs (CBEC) has decided to verify the claims made by 50,000 taxpayers in their TRAN-1 return.
“The verification has to be conducted in respect of the list of top 50,000 GSTINs in the order of transitional credit availed. Five sets of data have been generated in this regard have been uploaded on Antarang for ease of reference,” CBEC Chief Vanaja N Sarna said.
The verification of “unreasonable” transitional credit claims would be conducted in four phases, a source said, adding that credit verification will remain one of the focus areas in 2018-19.
A communication issued by the CBEC Chairperson on Wednesday said that tax officers will verify transitional credit claims where the growth is more than 25 percent or the credit availed is in excess of Rs 25 lakh in the first phase.
This verification is to be completed by June and a status report has to be given to the Central Board of Excise and Customs (CBEC) by July 10.
One-third of the remaining claims of 50,000 taxpayers will be verified in three phases — July-September, October-December, and January-March (2019).
As part of the transition to GST last July, taxpayers were allowed to file Form TRAN-1 and avail tax credit on the basis of the closing balance of the credit declared in the last return under the pre-Goods and Services Tax regime.
The communication further said that efforts should be made on the basis of data already available with the department without contacting the taxpayer.
Reportedly, the CBEC advised the officers to take caution wherever contact with taxpayers is absolutely essential. “Summon should be issued only where the taxpayer is not sharing information even after repeated requests and lapse of an unreasonable period of time,” it said.
Subscribe Taxscan Premium to view the JudgmentThe Reserve Bank of India ( RBI ) has notified the due dates for the submission of returns by the Non-Banking Financial Companies (NBFCs) as mandated by the provisions of the Reserve Bank of India Act, 1934.
“The returns should be compiled on the basis of the figures available in the books of accounts of such NBFCs and filed with the RBI on-line (using the COSMOS software package) by an authorized official of the NBFC, who shall be specifically authorized in this regard by the Board of Directors of such NBFC concerned. The name of the authorized official may be informed to us,” a notification issued by the Bank last week said.
The first set of returns should be filed with effect from the: (i) last Friday of December 2017 for the weekly return; (ii) quarter ended – December 31, 2017, for the quarterly returns; (iii) half-year ending March 31, 2018, for the half-yearly returns; and (iv) year ending March 31, 2018, for the annual returns. All weekly, quarterly returns up to December 31, 2017, shall be submitted by April 15, 2018. Thereafter, these returns shall be submitted within the timeline stipulated in the Master Direction on returns to be submitted by the Non-Banking Financial Companies.
Subscribe Taxscan Premium to view the JudgmentThe Central Board of Excise and Customs (CBEC) issued a clarification on the issue relating to delay in processing of IGST Integrated Goods and Services Tax (IGST) refund to exporters in due errors in Export General Manifest ( EGM ).
The CBEC circular points out that Non-filing of EGM at the gateway port or information mismatch between local and gateway EGMs are one of the main reason for holding up the refunds in Inland Container Depots (ICD).
“Absence of electronic EGMs and their integration with local EGMs has been the major obstacle in the processing of refund claims in the case of exports from ICDs.”
“In order to overcome this issue, the Shipping lines have been mandated to include the shipping bills originating from ICDs while filing the electronic EGMs at the gateway ports. In cases where the EGMs have not incorporated the shipping bills pertaining to ICDs, the shipping lines/ agents have been asked to file supplementary EGMs. While the shipping lines have been largely co-operative filing regular or supplementary EGMs for Cargo originating from ICDs, there are still many instances where no EGMs have been filed or EGMs have been filed with errors. This is causing the avoidable delay in processing of refund claims. The jurisdictional officers at the Gateway Port may initiate swift penal actions against shipping lines/ agents who failed to file either regular or supplementary EGMs electronically for the Cargo originating from ICDs,” the Circular said.
The circular prescribes certain steps to be followed by the jurisdictional officers to ensure a hassle-free processing of Refund claims.
It further points out the reasons for mismatch of information provided in local and gateway EGMs. “the procedure to be followed for each type of errors has been clearly delineated in the step by step guide issued by the Directorate of System for dealing with the errors. In case of specific difficulties, the same may be taken up with Directorate of Systems.”
Subscribe Taxscan Premium to view the JudgmentIn a petition challenging Rajasthan Government’s decision to not extend benefits earlier promised under the state investment promotion scheme, after the rollout of the new tax regime, the High Court has issued the notice to the Centre, Rajasthan Government, and the GST Council.
In 2014, the Rajasthan Investment Promotion Scheme was announced to give entertainment tax exemption to multiplexes, water, and theme parks, among other sectors for seven years. There was the exemption from entry tax for companies making the investment of more than Rs 7.5 billion on capital goods.
A similar benefit was given in case of State Value Added Tax also in various sectors, to boost investments and create jobs. With the rollout of the Goods and Services Tax (GST), all these benefits have been taken away.
Though the State Budget, presented in February, announced the extension of these, no notification has come, said the people who have filed cases against the discontinuation of the scheme.
The businesses made investments on promises of the Government. They have legitimate expectations that these promises will continue, said Abhishek Rastogi partner with Khaitan & Co, the counsel for the petitioners.
“Any deviation by the state government will be tested in courts, based on the principle of promissory estoppel,” he added.
The principle of promissory estoppel means if a party changes position substantially on a promise, the other party can petition to enforce the promise, even if the essential elements of a contract are not present.
In a recent ruling in Suneela Soni vs Deputy Commissioner of Income Tax, Delhi bench of Income Tax Appellate Tribunal (ITAT) recently held that jewellery received by a lady during the span of 20 years of marriage cannot be treated as unexplained.
During the financial year, a search was conducted at the residence of the Assessee Ms Suneela Soni. During the course of the search operation, certain jewellery was found from the residence and lockers of the Assessee. Accordingly, notice under Section 142(1) of the Income Tax Act 1961 was issued to the Assessee. In response to the notice, the Assessee filed her return of income for the relevant assessment year and declared a total income at Rs. 6,04,170.
Thereafter the Assessee was asked to explain about the seized jewellery along with books of accounts and to give the source of acquisition of the same with proper evidence. Thereafter, counsel for the Assessee advocate Gautam Jain submitted that out of the total jewellery found, most parts were her streedhan given by her parents and relative at the time of her marriage and the silver utensils /coins belonged to her mother in law which was her streedhan. He also argued that streedhan in the form of jewellery received during the span of 25 years cannot be said to be unexplained investment under section 69A of the Income-tax Act 1961 by relying upon the decision of High Court in the similar issue.
However, the AO refused to accept the contention of the Assessee by referring section 132(4A) and Section 69 of the Act and accordingly considered the amount of Rs. 10,65,312 as deemed income and added the same to the total income of the Assessee by holding that the Assessee has failed to discharge her onus of satisfactorily explaining the source of acquisition of gold jewellery and silver utensils.
On appeal, the CIT(A) also rejected the submissions of the Assessee by referring the CBDT circular and also upheld the addition made by the AO. Thereafter the Assessee carried the matter before the Tribunal on further appeal.
After considering the rival submissions of both the parties, the Tribunal bench comprising of Judicial Member H.S.Sidhu observed that “AO has made the addition of Rs. 10,65,312.00 on account of purported unexplained jewellery claimed by the assessee without appreciating the fact that the jewellery found during the course of search and seizure operations was from the locker held by the father in law and husband of the assessee and hence the addition in the hands of the assessee is uncalled for”.
The division bench further observed that that streedhan in the form of jewellery received during the span of 25 years cannot be said to be unexplained investment under section 69A of the Income Tax Act 1961.while perusing the available material facts on records it is clear that the Assessee had been married more than 20 years and the acquisition of the jewellery valued to Rs. 10,65,312.00 could not be treated as unexplained. Accordingly, the orders of the authorities below are cancelled and the AO was directed to delete the addition made him while concluding the issue.
Subscribe Taxscan Premium to view the JudgmentThe ITAT in the case of M/s. Asia Investments Private Limited vs revenue has said that expenses incurred for earning dividend income including finance charges are allowable as deduction.
Presently Asia Investments Private Limited is Non-government Company makes the investment in group companies for controlling interest. In instant case Assessee made an alternate plea by submitting that finance charges incurred shall be deductible under section 57(iii) of the Act, as its dividend income is taxable under the head “Income from other sources”. Advocate H.P. Mahajani & Prasad Bapat appeared for Assessee.
During the Assessment proceedings, AO noted that Assessee debited a sum under the head finance charges which represents interest payment made on borrowed funds, therefore called upon the assessee to explain why the finance charges should not be considered as expenses not relatable to the business, since no business was carried out for the year under consideration.
AO after considering the relevant submissions of the assessee and also analysis of provisions of section 36(1)(iii) and 57(iii) of the Act, AO disallowed the amount and added back to the total income of the assessee.
Upon appeal, first Appellate authority directed the AO to allow finance charges on the proportionate basis in respect of investments which earned dividend income after verifying the facts. Aggrieved by the order of CIT (A), the assessee as well as the Revenue is in appeal before the bench.
The assessee contended that investment in group companies like Anand Group of Companies for holding controlling interest cannot be considered as the main business activity of the assessee in the nature of trade or commerce and also added that such investment should be treated as long-term investment in its financial statements.
The same contention of Assessee was accepted by the Tribunal and reasoned that the assessee itself had admitted that all its investments are not earned dividend income and the statutory auditors of the company admitted the fact that the company is not engaged in carrying on any business or as part of its business activity of acquisition of shares except making long-term investments.
The bench including Joginder Singh, Judicial member and G. Manjunatha, Accountant Member had restored the decision of Appellate authority and allowed the finance charge as the deduction on the proportionate basis in respect of investments which earned dividend income.
Subscribe Taxscan Premium to view the JudgmentThe Income Tax Appellate Tribunal ( ITAT ) allowed the appeal of the assessee and held that Return filed by a Govt Undertaking on the basis of Provisional Information must be accepted since the audit of the account was not within the hands of the assessee.
In instant case, Assessee carried the issue of action of the Assessing Officer denying carry forward of losses of the assessee without any valid and cogent reason. Here Assessee engaged in the business of trading and distribution of fertilizer, paddy, rice and also derives income from rent.
The assessee was asked to produce the final accounts on the basis of which the loss could be assessed thereafter; Assessee submitted that since the statutory audit is not done it would not possible to submit the same. Accordingly, in the absence of final accounts, AO denied the claim off assessee to allow carry forward losses. On appeal, the CIT (A) confirmed the action of the Assessing Officer.
The tribunal bench comprising Judicial Member Pavan Kumar Gadale and Accountant Member N.S Saini found that the audit of account of the assessee was not within the hands of the assessee, which is a Government Undertaking.
The tribunal bench also endorsed the decision of this Bench of the Tribunal in the case of assessee and also in the case of OMC vs ACIT wherein, it has been held that carry forward of losses which are not accompanied with audited accounts of assessee, A Orissa government undertaking and its accounts are audited by the auditors appointed by the CAG which is not within the control of the assessee—Assessee filing return under Section 139(1) of the Income Tax Act.
By following the aforesaid order bench directed the AO to allow the claim of Assessee.
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