In a significant move, the Lok Sabha today passed the Companies (Amendment) Bill 2016 which aims to amend the Companies Act, 2013 in relation to structuring, disclosure and compliance requirements for companies. The Bill was passed through a voice vote after Arjun Ram Meghwal, Minister of State for Finance moved as many as 43 amendments to the original Bill.
The Bill, facilitates greater flexibility in incorporation of companies, simplifies procedure for raising capital and allows independent directors to have pecuniary interest up to 10 per cent in companies.
The Bill removes the limits in the number of intermediary companies through which investments can be made in a company. It also removes the restrictions in the number of layers of subsidiaries a company can have.
The Bill requires a group of persons who exercise beneficial control (above 25%) in a company to disclose such interest.
Under the Act, a separate offer letter should be issued to individuals to whom a private offer of shares has been made. The Bill removes the requirement of such offer letter, but retains the provision related to notifying the Registrar of the return of allotment.
The Act permits the appointment of members at the level of Joint Secretary to the quasi- judicial tribunal. Under the Bill, a technical member must be at least of the level of an Additional Secretary.
Replying to the discussions on the Bill, Meghwal said that the changes to the Company Law would go a long way in improving the ease of doing business in India. It would also help India move higher in the rankings in the Ease of Doing Business index, he added.
Read the full text of the Bill below.
While talking about the most controversial anti-profiteering authority under the new Goods and Services Tax (GST) law, Revenue Secretary Hasmukh Adhia said that the authoority will investigate only those cases that have mass impact and not small cases of alleged undue profits.
Once constituted by the GST Council, the national anti-profiteering authority will be responsible for applying anti-profiteering measures in cases where a reduction in tax incidence or the benefit of input tax credit has not been passed on to customers by way of a commensurate reduction in prices.
Recently, the GST Council has formed a selection committee under cabinet secretary PK Sinha to identify and recommend eligible persons for appointment as the chairman and members of national anti-profiteering authority.
As proposed, the authority will be headed by a secretary-level officer and assisted by four technical members, will lapse after two years. “The authority will take up cases of mass importance. It will not look into small cases, but no monetary threshold has been fixed for cases to be picked up for scrutiny by the authority,” Adhia said.
The complaints will be processed through a three-tier structure consisting of a standing committee at the GST Council level and a screening committee in each state. Any application seeking to revoke anti-profiteering measures will be examined by the central standing committee, but in case the business concerned is located in only one state, it will be taken up by screening committee in that state. Additionally, the standing committee is empowered to refer cases requiring detailed enquiry to the director general of safeguards in the Central Board of Excise and Customs (CBEC), who will give his recommendation for consideration of the authority.
The Committee has the power to apply anti-profiteering measures to appropriate case and can order the concerned business to reduce its prices or return the undue benefit availed along with interest to the recipient of the goods or service.
If the undue benefit cannot be passed on to the recipient, it can be ordered to be deposited in the consumer welfare fund within a stipulated time. Separately, in extreme cases the authority can impose a penalty on the defaulting business entity and even order the cancellation of its registration under GST, the government said, and added that the constitution of the authority is expected to bolster consumer confidence.
In CIT Mumbai v. M/s.E-City Project Construction Pvt. Ltd, division bench of the Bombay High Court held that rental income and service charges received by the assesse from leasing out malls/commercial complex constitute ‘business income’ under the Income Tax Act, 1961.
Assessee engaged in the business of constructing malls/commercial complex and lease it from the year 2001. Assesse treated the amount collected from leasing out the above properties as their business income and had filed the returns disclosing the income as “Profit and Gains from Business and Profession”.
After demerger of the Company, the Assessing Officer refused to accept the same as business income and held that the entire income is rent income except the other paltry sum received by the interest on fixed deposits and sale of scrap.
On appeal, ITAT allowed the contentions of the assessee by applying the principle of consistency.
Challenging the ITAT order, the department approached the High Court contending that the income constitute rental income in view of Apex Court’s ruling in many cases including the recent decision in Raj Dadarkar & Associates v. Assistant Commissioner of Income Tax.
Justices Gangapurwala and A.M Badar upheld the findings of the lower authorities.
The bench relied on the findings of the Tribunal that the operational income received by the assesse from various malls built by them, in the form of rent, and other service charges was consistently offered to tax as its business income in the earlier years and the same was accepted by the Department as a business income. After demerger, both the Assessee Companies took over the assets and liabilities of the demerged Company and continued the same business of operating and running the malls.
The bench dismissed the departmental and observed that the facts of the present case are much similar to the case of Chennai Properties and Investments Limited, Chennai.
“The Tribunal has considered the nature of the business activities of the Assessee Company, as well as, terms and conditions of the relevant agreements, under which the commercial space in the mall was given on hire by the Assessee Companies to the concerned parties. It also considered the various services provided by the Assessing Companies during the course of operation and running of the Family Entertainment Centre cum malls. On appreciation of facts, the Commissioner (Appeals) and the Tribunal have concurrently arrived at a conclusion that the intention of the Assessing Companies was to commercially exploit the property by way of complex commercial activities and it was not a case of letting out the property simplicitor. The rental income and the service charges thus were received by the Assessee Company as business income during the course of business carried out by them of operating and running a Mall as a commercial activity,” it said.
Read the full text of the Order below.
A division bench of the Bombay High Court in CIT v. M/s.Urban Infrastructure Venture Capital Ltd has allowed a tenants’ claim for depreciation towards capital expenditure incurred on the leased premises.
The division bench comprising of Justices Gangapurwala and A.M Badar, while dismissing the departmental appeal, clarified that such claims are allowable under Section 32(1) of the Income Tax Act, 1961 since it amount to Revenue Expenditure on the basis of the decision in Talathi and Panthaky Associates Pvt. Ltd.
Assessee, a tenant claimed depreciation in respect of expenditure incurred on leased premises. The expenses were in the nature of building maintenance charges to the society, labour charges, charges for carpenter work, plumbing work, masonry work, pending labour charges and provisional fees.
The tenant is deemed owner as per explanation 1 to Section 32(1) of the Income Tax Act.
The department took a stand that the expenses cannot be treated as Revenue expenditure.
ITAT allowed the claim of assesse by relying on the decision in the case of Talathi and Panthaky Associates Pvt. Ltd.
The department approached the High Court against the ITAT order contending that the Tribunal has wrongly relied on the judgment wherein explanation 1 to Section 32(1) of the Act was never a subject matter of consideration. They claimed that bare perusal of expenses would categorically show that the same are capital in nature.
The bench overruled the above contentions and noted that Explanation 1 to Section 32(1) of the Act was a subject matter of interpretation and consideration of this Court in case of Talathi and Panthaky Associates Pvt. Ltd.
Aligning with the findings of the Tribunal, the bench observed that Explanation I is attracted. “it is necessary that any capital expenditure is incurred by the assessee. It is necessary to emphasise that what Explanation I brings about is a deeming fiction by which expenditure of a capital nature incurred by the assessee for the purposes stipulated therein including inter alia for the construction of any structure or the work of renovation, extension or improvement can form the basis of a claim for depreciation as if the structure or work is a building owned by the assessee. But for the Explanation, an assessee would not be entitled to the benefit of depreciation even if the expenditure which was incurred was of a capital nature and the effect of the Explanation is to entitle the assessee to the benefit of the provisions of Section 32.”
Read the full text of the Order below.
The Bombay High Court in Bajaj Tempo Ltd. Pune v. CIT, held that the guarantee commission paid to the bankers for securing timely repayment of credit facility and loan from Financial Institutions for the purposes of machinery and equipments, would constitute revenue expenditure for the purpose of Income Tax Act, 1961.
As part of expanding its business, assesse purchased equipments and machinery by obtaining foreign exchange loan from financial institutions and deferred credit facilities under IDBI Bills discounting scheme. It treated the entire guarantee commission paid to the bankers for securing timely repayment of credit facility and loan from Financial Institutions for the above purpose as revenue expenditure.
On appeal, ITAT held that the same constitute capital expenditure.
The bench comprising Justices Gangapurwala and G.S Kulkarni noted that the act of borrowing money was incidentally to carrying on business.
It noticed the decision in the case of Kinetic Engineering Ltd wherein the Court decided the same issue in favour of the assesse. “In the said case, the Assessee had to pay guarantee commission for securing timely repayment of credit facility obtained for the purpose of machinery and equipments required for running business. This Court considering various judgments of the Apex Court categorically came to the conclusion that the expenditure incurred for payment of guarantee commission is revenue expenditure.”
Read the full text of the Order below.
In M/S. L.G Electronics India v. The Assistant Commissioner (Assessment), Department Of Commercial Taxes, the Kerala High Court held that concessional rate of tax under the provisions of the Kerala Value Added Tax is not applicable to goods supplied to Unit-run canteens from the assessment year 2014-15.
The petitioners, in the instant case, claimed that they are entitled to the benefit of concessional rate of tax in respect of the supply of products effected by them to canteens run by units of the Military, Navy and Air force.
The department took a view that the benefit of concessional rate of tax was not available in respect of the supplies effected to the Unit run canteens.
According to the petitioners, as per the statutory provisions, the benefit of concessional rate of tax is applicable, not only in respect of supplies effected to the Canteens Stores Department, but also in respect of supplies effected to the Unit run canteens of the Military, Navy and Air Force.
Justice Jayasankaran Nambiar analyzed the provisions of s. 6(1) of the KVAT Act and said that “taking note of the distinction between a sale effected directly to the Canteen Stores Department and sales effected directly to Unit-run canteens of the Military, Navy, Air force etc., the State Government decided to depart from the earlier practice of granting concessional rate of tax even in respect of supplies effected to Unit-run canteens and confined the benefit of concessional rate of tax only to supplies effected to the Canteen Stores Department. The amendment, however, was to take effect only from the assessment year 2014-15, and for the prior period, it was felt not necessary to interfere with the benefit of concessional rate of tax, that was already extended to unit run canteens.”
Quashing the assessment orders, the Court said that they were passed without taking note of the amendment which came into effect only from the assessment year 2014-15.
However, the Court clarified that the petitioner will not be entitled to the benefit of the concessional rate of tax in respect of supplies effected to Unit-run canteens.
Read the full text of the Judgment below.
The Central Board of Direct Taxes (CBDT) invited nominations for the “Chairman’s Certificate of Appreciation” which will be distributed on the occasion of the Independence Day.
The last day for sending the nominations is July 31st.
A letter issued with the approval of the CBDT Chief Sushil Chandra said that “It is requested that as per the scheme nominations may be send by 31st July 2017 for the consideration of the Central Committee.”
The “Chairman’s Certificate of Appreciation” would be conferred upon selected employees at the All India Level in different grades who have done outstanding work in diverse areas of direct tax administration during the year.
The awards would comprise a citation/certificate and would be announced in respect of every financial year, on the occasion of Independence Day immediately succeeding the said financial year, except when specifically rescheduled by Central Board of Direct Taxes (CBDT), Department of Revenue.
The Union Cabinet, chaired by the Prime Minister Narendra Modi has given its ex-post facto approval for replace GST amendment of the Constitution (Application to Jammu & Kashmir) Order, 1954 by way of the Constitution (Application to Jammu & Kashmir) Amendment Order, 2017.
The approval paves the way for applicability of Goods and Services Tax (GST) regime in the State of Jammu & Kashmir.
The Constitution (Application to Jammu & Kashmir) Amendment Order, 2017 has already been notified in Gazette of India on 6th July, 2017 after the assent of the President.
The Union Cabinet chaired by the Prime Minister Narendra Modi has given approval for revision of guidelines of Sovereign Gold Bonds (SGB) Scheme with a view to achieve its intended objectives.
Two sets of changes have been made in the scheme:
Following specific changes in the scheme have been approved:
Background:
Sovereign Gold Bond (SGB) Scheme was notified by the Government of India on November 05, 2015 after due approval of the Cabinet. The main objective of the scheme was to develop a financial asset as an alternative to purchasing metal gold. The target was to shift part of the estimated 300 tons of physical bars and coins purchased every year for Investment into ‘demat’ gold bonds. The target mobilisation under the scheme at Rs. 15,000 crore in 2015-16 and at Rs.10,000 crore in 2016-17. The amount so far credited in Government account is Rs. 4,769 crore.
In view of less than expected response of the investors to the scheme, and considering its bearing on CAD and consequently on overall macro-economic health of the country, it was felt necessary to make changes in this scheme to make it a success.
The Government of India has taken several steps to address the problem of benami transactions across the country.
(i) The Benami Transactions (Prohibition) Act, 1988 (the Act) was comprehensively amended through the Benami Transactions (Prohibition) Amended Act, 2016 to provide for an effective regime for prohibition of benami transactions. The amended Act, 2016 came into effect from 1st November, 2016.
(ii) Relevant rules relating to the Act were duly notified.
(iii) The Act prohibits benami transactions and empowers the authorities specified in the Act to provisionally attach and eventually confiscate the benami properties.
(iv) The Act also provides for prosecution of any person found guilty of the offence of benami transaction by the competent court. The offence of entering into a benami transaction is punishable with rigorous imprisonment for a term not less than one year but which may extend to 7 years and shall also be liable to fine which may extend to 25% of the fair market value of the property.
(v) The Government has set up 24 Benami Prohibition Units (BPUs) across India for taking effective action under the Benami Act.
(vi) Action against the benami transactions under the new law is an ongoing process. More than 400 benami transactions have been identified since the coming into effect of the amended law. Provisional attachment of properties under the Act has been done in more than 230 cases. The market value of properties under attachment is more than Rs. 800 crore. The benami properties attached include deposits in bank accounts, immovable properties etc.
This was stated by Santosh Kumar Gangwar, Minister of State for Finance in written reply to a question in Rajya Sabha yesterday.
The Central Board of Direct Taxes (CBDT) has issued a Notification allowing the Income Tax Department to furnish the details of income tax returns and Tax Audit reports with the Ministry of Corporate Affairs among other information as per furnishing bulk information under section 138 of the Income Tax Act, 1961.
As per Section 138 of the Income Tax Act, the tax department can share information with other authorities dealing with laws related to any tax, duty, cess or foreign exchange or to other notified authorities subject to certain conditions.
Recently, the IT department had paved the way for seamless exchange of information between various government agencies to check illegal wealth by amending the 2003 notification, seeking to remove any ambiguity about sharing of taxpayer information by the tax department with other government agencies.
Read the full text of the Notification below.
The Ministry of Corporate Affairs (MCA) recently announced its decision to constitute a Review Committee for the purpose of withdrawal of 10 year old or above matters as a Special Arrears Clearance Drive.
The Special Arrears Clearance Drive was initiated by the Government with a view to reduce the arrears and backlog of cases in Courts and the need to review all pending court cases
As per an order issued by the Government yesterday, the Government will form two Review Committees, each of them consisting three members including a Chairman.
The committees would be chaired by the Director General of Corporate Affairs and other two members.
Read the Full text of the Notification below.
The Odisha Cabinet today approved 19 proposals, including revised GST rates. The State Cabinet has granted its nod for the revised Goods and Services Tax (GST) rates and provided its consent for changes in cadres of Agricultural department.
It also approved the decision to reduce VAT on Aviation Turbine Fuel (ATF) to 1% will give a huge boost to regional air connectivity, linking various possible places of Odisha more efficiently.
Besides, the Cabinet also approved the proposal to invite tenders to provide portable water facility in Baripada, Sambalpur, Rourkela and Jharsuguda districts and provided its nod for the proposal of formation of Higher Education Council for state varsities and degree colleges.
In Director of Income Tax v. Vanenburg Facilities BV, Andhra Pradesh High Court has held that gains arising from a Dutch company’s sale of shares of an Indian immovable property company to a Singapore company do not amount to a sale of immovable property situated in India since India-Netherlands tax treaty exempts such transaction.
The factual settings of the case are that The assessee, Vanenburg Facilities BV, a Dutch BV company has a subsidiary Company in India called, Vanenburg IT Park Limited. The Subsidiary Company is engaged in the business of development, operation, and maintenance of an industrial park constructed on the land, and owned land in Hyderabad.
The assessee sold its entire shareholding in VITPL to the Ascendas Property (Fund) India Pte Limited, a private company incorporated in Singapore. A certain amount of interest was also paid to the taxpayer due to delayed payment of the sale consideration.
Thereafter, assesse made an application to the Indian tax department for a nil withholding tax certificate on the sale consideration and interest. However, the AO rejected the application and passed an order directing the buyer to withhold tax on the sale consideration and interest. The AO was of the view that the gains arising from the transfer of shares of VITPL were taxable in India since the shares of VITPL constituted ‘immovable property’ under India’s domestic tax laws, and therefore, Article 13(1) of the India-Netherlands tax treaty would apply. The provision specifically provides that gains arising from the transfer of ‘immovable property’ situated in India may be taxed in India.
On appeal, Assessee claimed a refund of the entire tax withheld on the sale consideration and interest.
The ITAT, however, concluded the issue in favour of the assesse.
Upholding the Tribunal’s ruling, the High Court held that Article 13(5) of the Dutch treaty would be applicable to the gains arising from the sale of shares of VITPL and therefore the gains were not taxable in India.
Justice Sanjay Kumar and Justice Durga Prasad Rao upheld the legal principle that a company is a separate legal entity from its shareholders and the fact that all its shares may be owned by one person has nothing to do with its separate legal existence.
The bench further rejected the contention of the department that the definition of immovable property under India’s domestic tax law should be regarded as “law of the State” under Article 6 of the India-Netherlands tax treaty, favoring a more traditional definition of immovable property (such as that under India’s Transfer of Property Act).
It further clarified that Article 13(4) of the Dutch tax treaty cannot be applied to the transaction by raising a new argument that the immovable property of VITPL was not actually immovable property in which the business of VITPL was carried on since the tax authorities had failed to raise these arguments either before the CIT(A) or the Tribunal.
Read the full text of the Judgment below.
The Central Board of Direct Taxes (CBDT) yesterday directed the Income Tax department to scrutinize 30,000 cases of alleged tax evasion wherein the income returns or ITRs were revised by assessees post demonetization.
This is to tackle assessees who did not report about their bank accounts to the tax authority even after the first phase of ‘Operation Clean Money’, said CBDT Head Sushil Chandra.
He said that these cases were detected after the Tax authorities scrutinized latest ITRs – filed after November 8 – against their earlier tax compliance.
‘Operation Clean Money’ was launched by the Government to verify the transaction made after demonetization. Recently, the Department identified 5.56 lakh new persons whose tax profiles were found to be inconsistent with the cash deposits made by them during the demonetization period.
Under Operation Clean Money, details of the cash deposited in bank accounts aggregating to Rs 2 lakh or more are required to be given in the ITR. This information will be matched with the information in possession of the Income Tax Department.
The operations were carried out during the second phase of Operation Clean Money. In the first phase, 1.79 million people were identified for e-verification as they had made large cash deposits. “We are taking action in these instances,” Chandra said.
Chandra also talked about newly enacted Benami Transactions Act under which the tax department has made attachments worth Rs 840 crore in 233 cases till now. “We have found that many shell companies are owning such (benami) properties. Action will be taken,” he added.
While upholding the vires of section 43 of the West Bengal Value Added Tax Act, 2003, the Calcutta High Court held that a notice need not be issued to assesse at the time of selection for audit under the said provision.
The petitioners, Paharpur Cooling Towers Limited, approached the High Court alleging that the method of selection for audit under Section 43 of the West Bengal Value Added Tax Act, 2003 is arbitrary, illegal and violative of principles of natural justice.
Section 43 of the Act provides that audit based review of accounts of the dealers will be done within five completed years prior to the date of selection as against existing provision of completion of assessment within two years from the year end under West Bengal Sales Tax Act, 1994. The provision allows a Commissioner to select on a random basis or upon information or otherwise, such percentage or such class or classes of assessees, as may be prescribed, for audit of accounts, registers of documents. The Commissioner, therefore, has to make a selection for the purpose of audit of accounts of an assessee in respect of a financial year. Section 43(1) of the Act of 2003 casts a duty upon the Commissioner to select a certain prescribed percentage of the assessees.
According to the petitioner, it has a right to be heard at the time of selection process since the provision implies principle of natural justice.
Justice Debangsu Basak noted that in a given financial year there will be a certain percentage of assessees who will be required to undergo an audit in terms of the said provision.
Dismissing the petition, it further said that the nature of activity involved in the selection of an assessee does not create a right of being heard in favour of an assessee prior to the selection. “The Commissioner, in the first place has to select an assessee. The assessee has to be selected from out of a large number of assessees as a certain percentage is required to be selected and not the entirety of the assessees. Therefore, at a given stage, the Commissioner has to select the percentage prescribed.”
“Requirement of audit in revenue jurisprudence is well recognized. Subjecting an assessee to an audit by itself does not result in an adverse civil consequence for the assessee. Section 43 mandates a selection of the prescribed percentage. Acting under Section 43 of the Act of 2003 a Commissioner is obliged to select the prescribed percentage in the manner mandated. The petitioner has not substantiated that, the petitioner has been selected beyond the parameters of Section 43. Therefore, the question of giving him a hearing does not arise prior to his selection. Subsequent to the selection the assessee falls within the procedure prescribed in Section 43,” it added.
Read the full text of the Judgment below.
The Haryana State cabinet on Tuesday approved the Haryana Municipal Entertainment Duty Bill, 2017 for levying entertainment duty in addition to the Goods and Services Tax (GST) levied on entertainment.
The duty will be collected by urban local bodies (ULB) and the funds received would be utilised for the development and betterment of civic amenities municipal areas.
It will be levied on entertainment points, outlets in municipal areas and will be uniform across the state. There will be a common list of exempted events or shows of entertainments.
Before the rollout of GST from 1st July 2017, 30% entertainment tax was levied on movie tickets. Consequently, the price of cinema tickets was reduced after the imposition of GST in the state. Before the introduction of GST, 30% entertainment tax was levied on movie tickets. However, after the imposition of GST from July 1, movie tickets less than Rs 100 attracted 18% GST while tickets over Rs 100 were levied 28% GST, bringing a relief for movie watchers.
The duty on public entertainment will be collected by urban municipal bodies. Once the Haryana Municipal Entertainment Duty Bill is passed in the next assembly session, the movie-goers will have to shell out more. Officials said funds received from entertainment duty would be utilised by municipalities on civic amenities in urban areas.
In The Palakkad District Co-Operative Bank Ltd v. The Deputy Commissioner of Central Excise, a division bench of the Kerala High Court held that the department should grant more time to assesse before denying the benefit of Service Tax Voluntary Compliance Encouragement Scheme on ground of inconsistency between the declaration and Returns.
The appellant, a Co-operative Society incorporated under the Kerala Co-operative Societies Act, 1969 approached the High Court challenging the order of the Deputy Commissioner of Central Excise denying the benefit of Service Tax Voluntary Compliance Encouragement Scheme, 2013 to them.
Under the CENVAT Credit Rules, 2004, a Co-operative Society engaged in providing services by way of extending deposits, loans or advances shall pay for every month an amount equal to 50% of the CENVAT credit availed on inputs and input services in that month. The appellant failed to make a true declaration of the said liability in their service tax returns filed during the period from April, 2011 to March, 2013.
The application filed by the appellant under the above scheme was rejected by the respondent by pointing out the inconsistency between the declaration and ST-3 returns. When a show cause notice in this regard was issued to them, they sought more time to reconcile the same, which was rejected by the officer as per the impugned order.
Subsequently, the Single Judge confirmed the order dismissing the writ petition.
On writ appeal, the division bench quashed the order. “we feel that when a mistake in the returns filed by the appellant is pointed out and on that basis, the application made by the appellant was proposed to be rejected, the respondent ought to have considered the request of the appellant for more time for reconciliation and on that basis, should have afforded the appellant an opportunity to explain the inconsistency so pointed out. Having not done so, we are inclined to think that the matter needs to be re-considered by the respondent.”
Read the full text of the Judgment below.
The Direct Tax Committee of the Institute of Chartered Accountants of India (ICAI) has recently published a “Technical Guide on Income Computation and Disclosure Standards (ICDS) – First Edition July, 2017”.
The Central Government last year notified 10 Income Computation and Disclosure Standards (ICDS) for the purpose of computation of taxable income by certain Assessees. It provides for a new framework for computation of taxable income by all assessees (other than individual or a HUF who is not required to get his accounts of the previous year audited in accordance with the provisions of Section 44AB of the Income-tax Act, 1961) following the mercantile system of accounting for the purpose of computation of income under the heads “Profits and gains of business or profession” or “Income from other sources”.
The accounting standards, which came into effect from April 2016 (assessment year 2017-18), aims at ensuring consistency and help minimise tax-related disputes.
The technical guide, issued by the ICAI is an effort has been made by the ICAI to gear up the members of our fraternity for implementation of ICDSs and to guide the stakeholders about the significant changes and impact which will take place in computation of taxable income. Reference to Indian Accounting Standards (Ind-AS) and Accounting Standards (AS), to the extent as considered necessary has been made at many places in this technical guide. Also, this publication will assist the members to remove the ambiguity and guide them in implementation of the ICDSs in a more effective manner.
A division bench of the Delhi High Court dismissed a petition filed by Jet Airways India Ltd claiming refund of Rs. 2.36 crore of the Inland Air Travel Tax (IATT) deposited by it for the period between October 1, 2001, to October 8, 2003, for carrying Sky Marshals.
Petitioners approached the High Court seeking refund of Inland Air Travel Tax (IATT) deposited by it for the period, 1st October, 2001 to 8th October, 2003.
In view of the increasing threat perception to air passengers, crew and aircrafts, the Government of India issued a Notification making it mandatory for air carriers to carry Sky Marshals free of charge. The deployment of Sky Marshals was to be done by the Bureau of Civil Aviation Security from time to time. Initially, this obligation was imposed only on Indian Airlines.
Subsequently, the Government exempted the Indian Airlines from payment of IATT and thereafter, the obligation to deploy Sky Marshals, was extended to private airlines as well.
As per this notification, the Petitioner had to necessarily carry Sky Marshals on board its aircrafts. Thereafter, the Finance Ministry issued Notification dated 8th October, 2003 extending the exemption granted to Indian Airlines from payment of IATT to all domestic private airlines.
In view of the above findings, the petitioners claimed that Sky Marshals who were deployed on its aircrafts are not `passengers’ within the meaning of Section 41(f)(ii) of the Finance Act, 1989 and hence no IATT is payable on the sky marshals.
Though the petitioner had approached the Commissioner of Customs on appeal, it had dismissed the same finding that the airliner had gone in appeal after a delay of 400 days and had not even made an application for condonation of delay.
A bench comprising Justices S Muralidhar and Prathibha M Singh dismissed the petition finding that that the exemption from paying IATT on carrying Sky Marshals was extended to private airlines only on October 8, 2003.
Upholding the order of the Commissioner, the bench noted that the appeal was delayed by more than 400 days and not even an application for condonation of delay was filed by the Petitioner.
It said that the Assistant Commissioner of Customs (IATT) was justified in not allowing the refund claim for the above period since it “cannot be faulted with inasmuch as it is a matter of fact that Notification No.2 of 2001 dated 19th April, 2001 granted the exemption from IATT to only sky marshals performing inland journey by air on free tickets issued by the Indian Airlines. The exemption was only subsequently extended to other domestic private airlines. Thus, there is no error in the order impugned.”
Read the full text of the Order below.
The Central Board of Direct Taxes (CBDT) today issued clarification on Implementation of Minimum Alternate Tax (MAT) provisions relating to Indian Accounting Standard (Ind AS) compliant Companies.
Finance Act, 2017 amended the provisions of section 115JB of the Income Tax Act,1961 so as to provide the framework for computation of book profit for the purposes of levying Minimum Alternate Tax (MAT) in case of Indian Accounting Standards (Ind AS) compliant companies in the year of adoption and thereafter. This framework was specified on the basis of the recommendations of the MAT-Ind AS Committee constituted for this purpose.
Subsequently, representations have been received from various stakeholders regarding certain issues arising from the implementation of provisions of amended section 115JB of the act. These representations were forwarded to the Committee for examination. After detailed examination of implementation issues raised by the stakeholders, the Committee vide report dated 17th June, 2017 has recommended certain amendment to the provisions of section 115JB of the Act with effect from 1st April,2017 (i.e. A.Y.2017-18) which is the date of coming into effect of the amendments made in section 115JB of the Act by the Finance Act, 2017.
The recommendations of the Committee regarding issuance of circular in the form of FAQs have been accepted by the Government and circular in the form of FAQs has been issued vide No 24/2017 dated 25.07.2017.
Further, in order to have wider consultation in response of Committee’s recommendations regarding amendment to the provisions of section 115JB of the Act w.e.f. 1st April, 2017. The stakeholders are requested to send the comments/ suggestions on E-mail ID dirtpl2@nic.in latest by 11th August, 2017.
Read the full text of the FAQs and Relevant report below.
