The Income Tax Department to levy penalty of 7 years imprisonment for persons depositing money in other’s account during the 50 day window period. Sources reveals that the Department has decided to impose charges under the newly enforced Benami Transactions Act against bank violators that carries a penalty, prosecution and rigorous jail term of a maximum seven years.
Reportedly, the Department has conducted about 80 surveys and 30 searches, as result of which almost 200 crores have been seized as undisclosed income. further, the Department has initiated a country-wide operation to identify suspect bank accounts where huge cash deposits have been made post ban of Rs. 1000 and 500 currency notes.
In cases where the suspicion is found to be true, both the depositor and the actual owner of the money will be prosecuted under the Benami Property Transactions Act, 1988. The act is applicable on both movable and immovable property, that has been enforced from November 1 this year.
“The CBDT has asked the Income Tax department to closely monitor all such transactions where people are using bank accounts of other persons for hiding and converting into white their black money using the old currency notes of Rs 500 and Rs 1000.
The Department has already been asked to issue notices in cases of huge cash deposits beyond the threshold of Rs 2.5 lakh. However, investigation can be initiated in cases where a suspicious report is received from the bank or the Financial Intelligence Unit below this threshold.
“Such an arrangement where a person deposits old currency of Rs 500 and Rs 1000 in the bank account of another person with an understanding that the account holder shall return his money in new currency, the transaction shall be regarded as benami transaction under the said Act.”
“The person who deposits old currency in the bank account shall be treated as beneficial owner and the person in whose bank account the old currency has been deposited shall be categorised under this law as a benamidar,” a Senior official explained.
“The benami amount in the bank account deposited post de-monetisation will be seized and confiscated and the accused will also be liable to fine which extends upto 25 per cent of the fair market value of the benami property,” he added.
While upholding the attachment warrant issued against the Insurance Company, the Bombay High Court held that the Company need not pay TDS in respect of the interest payment made under the award of the Tribunal. The Court was considering a writ petition challenging the attachment warrant by the Company.
In the instant case, Maharashtra Accident Claims Tribunal, Mumbai issued a warrant of attachment was the petitioners, New India assurance Co. Ltd, on an application filed by an individual who sustained injuries in an accident where compensation was allowed by the Tribunal. The petitioners while paying the award amount, deducted TDS from such amount. On receipt of the warrant, the petitioner, approached the High Court challenging the same.
Before the Court, the petitioners contended that it has satisfied the Award of the Tribunal by depositing a cheque of an amount of Rs.3,23,502/towards the principal amount, after adjusting no fault liability amount already paid. Further, it was submitted that 2011 guidelines were not applicable in the instant case, and the TDS amount is already paid with the Department.
Justice G.S Kulkarni noticed the decision in Gauri Deepak Patel &Ors. Vs. New India Assurance Co.Ltd. & Anr.” In which it was observed that the Petitioner ought not to have deducted a lumpsum TDS and deposited the same with the Income Tax department.
While rejecting the submissions of the petitioners, the Court said “The submissions on behalf of the Petitioner relying on a cumulative reading of Sections 56, 145A and 194A(3)(ix) of the Act cannot be accepted for two reasons, firstly there cannot be any dispute in the context what Section 56 and 145A would provide in respect of tax to be paid on interest directed to be paid on the compensation awarded by the Tribunal, as these provisions would stipulate and secondly, in view of the above clear position in law as laid down by the Division Bench of this Court in Gauri Deepak Patel & Ors. (supra) as also reiterated in the decision of the Division Bench of the Gujarat High Court in the this Court in “New India Assurance Co.Ltd. Vs. Bhoyabhai Haribhai Bharvad” (supra) interpreting Section 194(3)(ix) of the Act, relevant in the present context. Thus, the reliance on behalf of the Petitioner on the decision of the learned Single Judge of the Madras High Court in “The New India Assurance Co.Ltd.Vs. Mani S.Nachimuthu, N.” and the decision in the case “Bikram Singh & Ors.Vs. Land Acquisition Collector & Ors.” 9 may not assist the Petitioner.”
Read the full text of the Judgment below.
Goods and Services Tax (GST) is an important milestone in the concept of cooperative federalism where the Centre and the States have come together to address an important national issue of complex indirect tax regime in the country, says Cabinet Secretary P.K. Sinha.
Successful implementation of GST can lead to this model of cooperative federalism being replicated in other spheres.
The Cabinet Secretary Shri Pradeep Kumar Sinha said that Goods and Services Tax (GST) is an important milestone in the concept of cooperative federalism where the Centre and the States have come together to address an important national issue of present complex indirect tax regime in the country. He said that the successful implementation of GST can lead to this model of cooperative federalism being replicated in other spheres. The Cabinet Secretary Shri Sinha also highlighted that GST reform process would lead to a move from the regime of tax exemptions in various sectors of economy to a regime of seamless flow of credit and payment of tax.
The Cabinet Secretary Shri Sinha was addressing the Seminar being organized by the GST Council in the national Capital today in which more than 400 senior officers including Secretaries of various Ministries/Departments of the Government of India participated. The Seminar was organized to sensitize these officers about the key features of the GST.
Speaking further on the occasion, the Cabinet Secretary Shri Sinha urged the senior officers to be fully prepared for roll-out of GST and to keep in touch with the various stakeholders to address their concerns for smooth implementation of GST.
The Seminar was also addressed by the Revenue Secretary Dr. Hasmukh Adhia. A presentation on the salient features of GST was made by the Chairman CBEC, Shri Najib Shah. The seminar concluded with a vibrant session of ‘Questions and Answers’ in which clarifications were given to many queries particularly pertaining to sectors of exports, transport, real estate, railways and airlines etc.
The division bench of the Madras High Court, in a recent decision, held that the assessee cannot be denied the benefit provided under s. 54EC of the Income Tax Act, 1961 solely on ground that the provisions relating to Minimum Alternative Tax is applicable in his case.
In the instant case, the assessing officer denied the benefit of s. 54EC to the assessee on ground that the provisions of Minimum Alternate Tax (MAT) is applicable to the assessee. On appeal, both adjudicating authorities decided in favour of the assessee by quashing the order. Aggrieved with the order, the Revenue preferred an appeal before the High Court.
“The allowance or otherwise of the claim under Section 54AC has to be seen in the context of the provisions of Section 115 JB which is a self contained code of assessment. The levy of tax is on the ‘book profits’ after effecting various upward and downward adjustments as set out in terms of the Explanation thereto. The provisions of sub-section (5) of s.115 JB open the assessment to the application of all other provisions contained in the Income tax Act except if specifically barred by that section itself. “
While analyzing the provision, the Court said that the plain language of Section 115 JB thus admits of the grant of relief under section 54 EC in an assessment.
The Revenue relied on the decision of apex Court in in the case of Apollo Tyres Ltd vs CIT (255 ITR 273) and Bombay High Court in the case of Commissioner of Income Tax Vs. Veekaylal Investments (P) Ltd (249 ITR 597), in which the claim under section 54EC was rejected for the purpose of computation of tax under Section 115 JB of the Act.
While dismissing the contention, the Court observed “The Supreme Court, in the case of Apollo Tyres, (supra) is to the effect that the assessing officer is not empowered to embark on an enquiry with regard to the entries in the profit and loss account maintained in accordance with the provisions of the Companies Act 1956 and approved in the AGM except to the extent of effecting modifications in accordance with the Explanation to section 115J. The Bombay High Court in the case of Veekaylal Investments (supra) considers the inclusion of capital gain for the purposes of assessment under section 115 J. Both judgements are rendered in the context of Section 115 J which does not contain a provision analogous to sub-sections (4) of section 115 JA or (5) of section 115 JB of the Act.”
“While an assessment u/s 115J would be concluded exclusively on the basis of the book profits as adjusted by the items set out in the Explanation thereunder, in an assessment in terms of sections 115 JA or JB, the adjusted book profits would be further subjected to the effect of other provisions of the Act that are specifically brought into play by virtue of sub-sections (4) of section 115JA and (5) of section 115JB”. The Court added.
Read the full text of the Judgment below.
The Cabinet Secretary Shri Pradeep Kumar Sinha will be chairing an interactive seminar on Goods and Services Tax (GST) today. The seminar is being organized for senior officers of the different Departments of the Government of India to familiarize them on the important features of GST.The Seminar is being organised by the GST Council in national capital.
Introduction of Goods and Services Tax (GST) is the most important reform of indirect tax system in the country, made possible by Constitution (One Hundred and First Amendment) Act, 2016. Indirect tax structure in India is highly complex with hidden costs for trade and industry. Non uniformity across the States, cascading of taxes due to ‘tax on tax’ and multiplicity of taxes in the current tax laws are huge deterrents for the businesses. Introduction of GST will simplify the system, broaden the tax base and improve tax compliance.
Impact of GST’s introduction will be felt by all the sectors of Indian economy. Although its benefits will start flowing right from the beginning, various stakeholders need to be familiarized with the new taxation system to ensure smooth transition. Senior government officials can contribute to this in a major way by educating the different stakeholders.
Action under the Income-tax Act, 1961 has been taken on the 12 trusts/entities, involving 26 individuals of Indian origin/nationality, based upon the information received from the German Tax Authorities under the Double Taxation Avoidance Agreement (DTAA) between India and Germany. Similarly, action has been taken in the cases of 628 Indians holding black money in bank accounts in HSBC bank in Switzerland information regarding whom was received from the Government of France under the Double Taxation Avoidance Convention (DTAC) between India and France. The action includes investigation, assessment of income, the imposition of penalty and filing of prosecution complaints, wherever applicable.
Disclosure of information regarding specific taxpayers is prohibited except as provided under section 138 of the Income-tax Act, 1961. Further, information received under the provisions of DTAAs/DTAC is governed, inter alia, by the confidentiality clause in such instruments.
Action against evasion of taxes/black money is an on-going process. Such action under direct tax laws includes searches, surveys, inquiries, assessment of income, levy of taxes, penalties and filing of prosecution complaints in criminal courts, wherever applicable.
This was stated by Shri Santosh Kumar Gangwar, Minister of State in the Ministry of Finance in written reply to a question in Lok Sabha today.
The Central Board of Direct Taxes (CBDT) signed three (3) Bilateral Advance Pricing Agreements (APAs) here today taking the total number of APAs signed [both- bilateral and unilateral] so far to 111. These Agreements are a result of the understanding reached with the Competent Authority of United Kingdom (UK) some time ago. The Competent Authorities of India and UK had earlier exchanged mutual agreements amongst them under the Mutual Agreement Procedure (MAP) Article of the India-UK Double Taxation Avoidance Convention (DTAC).
These three (3) Agreements cover international transactions in the nature of payment of intra-group service charges and pertain to the telecom industry. They also have a roll-back provision. With this, India and UK have concluded 5 bilateral APAs and some more would be concluded in the near future. The total number of bilateral APAs concluded so far by the CBDT is 7.
The Advance Pricing Agreement (APA) Programme was introduced by the Finance Act, 2012 with a view to provide a predictable and non-adversarial tax regime and to reduce the litigation in the Indian transfer pricing arena. An APA can be entered into for a maximum of 5 years at a time. Since the notification of the APA scheme on 30.08.2012, a total of about 700 APA applications have been received during the first 4 years of the Programme (Financial Years 2012-13 to 2015-16), which indicates the wide acceptance of the APA programme by the taxpayers. Rollback of APAs was announced in the Budget in July 2014 to provide certainty on the pricing of international transactions for 4 prior years (rollback years) preceding the first year from which APA is to be applicable.
The Indian APA programme has been appreciated nationally and internationally for being able to address complex transfer pricing issues in a fair and transparent manner.
A revised Agreement between India and Cyprus for the Avoidance of Double Taxation and the Prevention of Fiscal evasion (DTAA) with respect to taxes on income, along with its Protocol, was signed today in Nicosia, which will replace the existing DTAA that was signed by two countries on 13th June 1994. The Protocol was signed by Mr. Ravi Bangar, High Commissioner of India to Cyprus on behalf of India and Mr. Harris Georgiades, the Minister of Finance on behalf of Cyprus.
New DTAA provides for source based taxation of capital gains arising from alienation of shares, instead of residence based taxation provided under the existing DTAA. However, a grandfathering clause has been provided for investments made prior to 1st April, 2017, in respect of which capital gains would continue to be taxed in the country of which taxpayer is a resident.
The new Agreement provides for Assistance between the two countries for collection of taxes. The new Agreement also updates the provisions related to Exchange of Information to accepted international standards, which will enable exchange of banking information and allow the use of such information for purposes other than taxation with the prior approval of the Competent Authorities of the country providing the information. The new Agreement expands the scope of ‘permanent establishment’ and reduces the tax rate on royalty in the country from which payments are made to 10% from the existing rate of 15%, in line with the tax rate under Indian tax laws. It also updates the text of other provisions in accordance with the international standards and consistent policy of India in respect of tax treaties.
Provisions of new DTAA will enter into force after the completion of necessary internal procedures in both countries and is expected to come into effect in India in respect of income derived in fiscal years beginning on or after 1st April, 2017.
There is no official estimation of the amount of black money within the country and stashed abroad. The Government had commissioned a study on the above through National Institute of Public Finance and Policy (NIPFP), National Council of Applied Economic Research (NCAER) and National Institute of Financial Management (NIFM), reports from which have been received. These reports are under consideration of the Government.
Appropriate action against tax evasion including in respect of unaccounted income stashed in foreign countries, is an on-going process. Such action under direct tax laws includes searches, surveys, enquiries, assessment of income, levy of taxes, penalties, etc. and filing of prosecution complaints in criminal courts, wherever applicable. Recognizing various limitations under the existing legislation [Income-tax Act, 1961, etc.], the Government enacted ‘The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015’ – to specifically and effectively tackle the issue of black money stashed away abroad. This has, inter alia, provided for more stringent provisions of penalties and prosecutions in respect of black money stashed away abroad. Further, under this law, for the first time the offence of wilful attempt to evade tax, etc. in relation to undisclosed foreign income/assets has been made a Scheduled Offence for the purposes of the Prevention of Money-laundering Act, 2002 (PMLA). This enables attachment and confiscation of the proceeds of crime of wilful attempt to evade such tax, etc., eventually leading to recovery of such undisclosed foreign income and assets/black money stashed away abroad. The new law came into force w.e.f. 01.07.2015.
However, before the cases involving black money stashed away abroad were subjected to more stringent provisions of the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015, a one-time three months’ compliance window closing on 30th September 2015 was provided under the new law wherein 648 declarations involving undisclosed foreign assets worth Rs.4164 crore were made. The amount collected by way of tax and penalty in such cases is about Rs.2476 crore.
The Government has taken several steps to effectively tackle the issue of black money, particularly black money stashed away abroad. Such measures include policy-level initiatives, more effective enforcement action on the ground, putting in place robust legislative and administrative frameworks, systems and processes with due focus on capacity building and integration of information and its mining through increasing use of information technology. Recent major initiatives in this regard include – (i) Constitution of the Special Investigation Team (SIT) on Black Money under Chairmanship and Vice-Chairmanship of two former Judges of Hon’ble Supreme Court, (ii) Enactment of a comprehensive law –‘The Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015’ which has come into force w.e.f. 01.07.2015 to specifically and more effectively deal with the issue of black money stashed away abroad, (iii) Constitution of Multi-Agency Group (MAG) consisting of officers of Central Board of Direct Taxes (CBDT), Reserve Bank of India (RBI), Enforcement Directorate (ED) and Financial Intelligence Unit (FIU) for investigation of recent revelations in Panama paper leaks, (iv) Proactively engaging with foreign governments with a view to facilitate and enhance the exchange of information under Double Taxation Avoidance Agreements (DTAAs)/Tax Information Exchange Agreements (TIEAs)/Multilateral Conventions, (v) According high priority to the cases involving black money stashed away abroad for investigation and other follow-up actions including prosecutions in appropriate cases, (vi) While focusing upon non-intrusive measures, due emphasis on enforcement measures in high impact cases with a view to prosecute the offenders at the earliest for credible deterrence against tax evasion/black money, (vii) Proactively furthering global efforts to combat tax evasion/black money, inter alia, by joining the Multilateral Competent Authority Agreement in respect of Automatic Exchange of Information (AEOI) and having information sharing arrangement with USA under its Foreign Account Tax Compliance Act (FATCA), (viii) Renegotiation of DTAAs with other countries to bring the Article on Exchange of Information to International Standards and expanding India’s treaty network by signing new DTAAs and TIEAs with many jurisdictions to facilitate the exchange of information and to bring transparency, (ix) Enabling attachment and confiscation of property equivalent in value held within the country where the property/proceeds of crime is taken or held outside the country by amending the Prevention of Money-laundering Act, 2002 through the Finance Act, 2015, (x) Enactment of the Benami Transactions (Prohibition) Amendment Act, 2016 to amend the Benami Transactions (Prohibition) Act, 1988 with a view to, inter alia, enable confiscation of Benami property and provide for prosecution, (xi) Initiation of the information technology based ‘Project Insight’ by the Income Tax Department for strengthening the non-intrusive information driven approach for improving tax compliance and effective utilization of available information.
These measures have equipped the Government better in curbing the menace of black money stashed away abroad. Further, sustained and prompt action taken by the Income Tax Department in various cases involving black money has resulted into assessment of substantial amounts of undisclosed income, levy of concealment penalty and filing of criminal prosecution complaints for various offences in appropriate cases.
As part of enforcement measures, during the period from 01.04.2014 to 31.10.2016, the Income Tax Department (ITD) conducted searches in 1242 groups of assesses, seizing undisclosed assets worth Rs.2,029 Crore. These assesses admitted undisclosed income of Rs.28,567 Crore. During the same period, 13,690 surveys conducted resulted in detection of undisclosed income of Rs.30,001 Crore. Similarly, during the period from 01.04.2014 to 30.09.2016, the Income Tax Department has filed 1514 prosecution complaints while offences were compounded in 2244 cases and 75 persons have been convicted by the Courts.
Further, under the Income Declaration Scheme, 2016, the Government has received 64,275* declarations disclosing undisclosed income of Rs.65, 250 crore*.
*Provisional figures
This was stated by ‘Shri Santosh Kumar Gangwar, Minister of State in the Ministry of Finance in written reply to a question in Lok Sabha today.
The Department of Financial Services has published the revised Draft of “Banning of Unregulated Deposit Schemes and Protection of Depositors’ Interests Bill, 2016” for public comments.
Comments / inputs / suggestions on the Draft Bill, have been invited up to 17th December 2016.
Earlier, a copy of the “Banning of Unregulated Deposit Schemes and Protection of Depositors’ Interests Bill, 2015”, along with the Report of the Inter-Ministerial Group (IMG) for identifying gaps in the existing regulatory framework for deposit-taking activities and to suggest administrative/ legislative measures including formulation of a new law to cover all relevant aspects of ‘deposit-taking’, was placed on the website of the Department of Financial Services (DFS) in March, 2016 for eliciting public comments.
Based on the comments received and further consultations with the stakeholders, the Draft Bill has been modified which now again has been uploaded on Department of Financial Services website for public comments.
Read the full text of the draft bill below.
Person(s) who allows His Or Her Bank Account to be misused for this purpose can be Prosecuted for Abetment under Income Tax Act; Government appeals to people NOT to come in the Lure of Black Money Converters and be a Partner in this Crime of Converting Black Money into White through this method and help join the Government in eradicating it.
It was announced by the Government earlier that small deposits made in the banks by artisans, workers, housewives, etc. would not be questioned by the Income Tax Department in view of the fact that present exemption limit for income tax is Rs. 2.5 lakh. There are some reports received that some people are using other persons’ bank accounts to convert their black money into new denomination notes for which reward is also being given to the account holders who agree to allow their accounts to be used. This activity is reported in case of Jandhan Accounts also.
It is hereby clarified that such tax evasion activities can be made subject to income tax and penalty if it is established that the amount deposited in the account was not of the account holder but of somebody else. Also the person who allows his or her account to be misused for this purpose can be prosecuted for abetment under Income Tax Act.
However, the genuine persons having their own household savings in cash and depositing the same in the bank would not be questioned.
The people are requested NOT to come in the lure of black money converters and be a partner in this crime of converting black money into white through this method. Unless all citizens of the country help the Government in curbing black money, this mission of black money will not succeed. Also the people who are against the black money should give information of such illegal activities going on to the Income Tax department so that immediate action can be taken and such illegal transfer of cash can be stopped and seized.
Black money is a crime against humanity. We urge every conscientious citizen to help join the Government in eradicating it.
In a recent ruling, the division bench of the Delhi High Court held that the if the Principal noticee has settled his liability under the ‘Kar Vivad Samadhan Scheme’, the benefit of ssuch settlement would be extended to all the co-noticees. The decision was on the basis of the Apex Court verdict in the case of Union of India v. Onkar S. Kanwar.
The petitioner-Company, along with its three employees, approached the Court challenging the order of the Central excise Commissioner. Coming to the facts of the case.The respondent imposed penalty on the petitioner-Company and its employees finding that they failed to declare the actual value of goods imported with an intention to evade the payment of tax.
The petitioner-Company applied under the Kar Vivad Samadhan Scheme, 1998 and made an appropriate declaration with respect to its liability and paid the amount. The other petitioners challenged the order of penalty before the High Court contending that in terms of the scheme once the settlement is recorded with respect to the tax liability of the principal noticee, the question of further liability on the part of others, who may not play a permanent role, does not arise.
The Court accepted the fact that the principal noticee’s liability was the real basis for the finding of abatement recorded against the other petitioners who were employees. Further, the order of adjudicating authority amply clarifies that not only tax but the penalty imposed against the company was to a substantially higher degree than that against the employees. The penalty was imposed on the employees for the offence of abatement.
The division bench comprising of Justice S. Ravindra Bhat and Justice Deepa Sharma while allowing the petition on the basis of the Supreme Court decision in Onkar S. Kanwar, the Court observed; “the tax arrears of the Directors and officers of a company can be proceeded with independently, if they do not join it in making an application. This case, however, it is not tax arrears which are in dispute but the penalty which is wholly dependent upon the findings that led to the tax arrears (which has not been settled by the company) in the part of other three petitioners. Secondly, and more importantly, the Supreme Court clearly stated that object of the removal of difficulties order in respect of the scheme was to give benefit of settlement by the main parties to all other co-noticees.”
Read the full text of the Judgment below.
A PIL has been filed before the Bombay High Court against the Government’s decision to waive off entertainment duty on the upcoming coldplay concert by the British rock band which is scheduled to be held on November 19 at the MMRDA grounds in suburban Bandra Kurla Complex (BKC).
Earlier, the Government had granted exemptions from entertainment duty and MMRDA had decided to grant 75 per cent concession on rentals. According to the petitioner, Anjali Damania, this would amount to a loss of almost six crores to the Government.
Petitioner’s lawyer Uday Warunjikar said that the concert is a commercial activity and hence, such waivers cannot be granted. Further, granting such waivers was beyond the scope of the Bombay Entertainment Duty Act, He said.
The Petition will be heard by the division bench headed by Chief Justice Manjula Chellur.
The single bench of Madras High Court in a recent ruling, held that no additional sales tax is payable in respect of turnover of exempted goods under the provisions of the Tamil Nadu General Sales Tax Act, 1956. While allowing the writ petition, the Court directed the State to refund the amount of additional sales tax paid by the petitioner.
The petitioner M/s.Neel Auto Private Limited is a registered dealer under the provisions of Tamil Nadu General Sales Tax Act, and engaged in the manufacture of two wheeler spare parts and accessories for supplies to TVS Motor Company Limited, Hosur.
The petitioner had filed its returns and claimed exemption from payment of Sales Tax with regard to the raw materials which were supplied to M/s TVS Motor Company for manufacture of two and three wheelers in their factory at Hosur. The claim for exemption was based on a notification issued by the Government in G.O.Ms.No.181. The Government while issuing the said notification passed three orders, all bearing same Government Order Number and date viz. Notification Nos. I, II and III.in view of the notification no. II, they were granted refund of tax and Surcharge, but was denied the amount paid as additional sales tax on ground that the notification is silent about the same.
Justice T.S Sivagnanam held that,“there is no specific provision exempting additional sales tax in the exemption notification and therefore, the petitioner is not entitled for exemption. This view is not sustainable for more than one reason, in the light of the decision of the Hon’ble Supreme Court as well as the decision of the Hon’ble Division Bench of this Court”.
The Court relied on two decisions ASHOK SERVICES CENTRE AND ANOTHER v. STATE OF ORISSA and HSI AUTOMOTIVES LIMITED v. THE STATE OF TAMIL NADU, and observed that, the levy of penalty was wrong. Thus, by applying the above referred two decisions, the petitioner herein is entitled to the relief.
“any dealer who is not liable to pay tax under the principal Act, either by reason of his not having sufficient gross turnover of goods or by reason of exemption given under section 7 of the principal Act, is not liable to pay the additional sales tax. If a dealer is exempted by the State Government under the second proviso to section 3(1) of the Act of 1975, he is also not liable to pay the additional sales Tax. Further, the turnover in respect of goods whose sales or purchases are not taxable under the principal Act in the hands of any dealer by reason of section 8 of the principal Act is not liable to the payment of additional tax by reason of the first proviso to section3(1). Any other turnover which is exempted by the State Government under the second proviso to section 3(1) is also not liable to additional tax.”
Based on the above findings, the Court observed that the turnover in respect of the goods, which is sales or purchases are not taxable under the principal Act in the hands of any dealer by reason of section 8 of the principal Act, is not liable to payment of additional tax.
The Court also directed to extend the benefit of the exemption notification and effect the refund of the Additional Sales Tax paid by the petitioner, by considering their claim date 18.07.2013, under section 55 of the TNGST Act.
Read the full text of the Judgment below.
In the aftermath of the cancellation of the legal tender character of the old Rs. 500 and Rs. 1000 notes, the Government of India has been receiving several suggestions including those from the State Governments. The Government has considered various suggestions and the following decisions relating to certain operational aspects of this scheme have been taken:
i. We are now at the beginning of the Rabi season. The farmers need various inputs for their agricultural activities. While the Government is keen on promoting payment through the banking or digital system, it is felt necessary to make some quantum of cash available with farmers to meet various expenses in connection with agricultural operations. It has, therefore, been decided that farmers would be permitted to draw upto Rs. 25000/- per week in cash from their KYC compliant accounts only. These cash withdrawals would be subject to the normal loan limits and conditions. This facility will also apply to the Kisan Credit Cards (KCC).
ii. Farmers are currently selling their produce from the Kharif season in the APMC markets/mandis. The farmers who receive such payments in their bank accounts through cheque/ RTGS will be permitted to draw up to Rs. 25000/- per week in cash. These accounts will have to be KYC compliant. This facility will enable the farmers to meet their various expenses connected with agriculture. This will also infuse lot of liquidity into the rural sector.
iii. Traders registered with APMC markets/mandis will be permitted to draw up to Rs. 50,000/- per week in cash from their KYC compliant accounts as in the case of business entities. This will enable these traders to pay wages and facilitate easy loading, unloading and other activities at the mandis.
iv. For payment of crop insurance premium, States fix time limits depending on their local requirements and conditions. Consequently, the last date for payment expires on different dates. It has now been decided to extend the last date for payment of crop insurance premium by 15 days.
v. While encouraging families to incur wedding expenses through cheques or digital means, it has been decided to permit families celebrating weddings to draw up to Rs. 2,50,000/- in cash from their own bank accounts. These accounts have to be necessarily KYC compliant. The amounts can be drawn only by either of the parents or the person getting married. Only one of them will be permitted to draw this amount. This limit of Rs. 2,50,000/- will apply separately to the girl’s family and the boy’s family. The person drawing such amount has to furnish the PAN details. Further, a self-declaration will have to be submitted by the person to the effect that only one person from his/her family is drawing the amount. It is expected that members of the public will fully cooperate to ensure that the above guidelines are adhered to. Any misuse of this facility will invite appropriate action based on the self-declaration and other details.
vi. At present, over the counter exchange of old Rs. 500/- and Rs. 1000/- notes is limited up to maximum of Rs. 4500/- per person. Reports have been received that the same persons are going back to the counter again and again, thereby cornering the facility and depriving many other people from exchanging old notes. There are also reports of organized groups indulging in such practices to convert their black money into white. It is now expected and desirable that people put their old notes into their bank accounts. However, for convenience of the people who may be on temporary visit either for work or otherwise, it has been decided to reduce this limit of exchange of old Rs. 500/- and Rs. 1000/- notes across the counter in banks from Rs. 4500/- to Rs. 2000/-. This facility will be available only once per person. The reduced limit of Rs. 2000/- will take effect from 18th November, 2016.
vii. Central Government employees up to Group `C’ including equivalent levels in the Defence and Para Military Forces, Railways and Central Public Sector Enterprises will be given an option to draw salary advance up to Rs. 10,000/- in cash. This amount will be adjusted in their salary for November, 2016. It is expected that this decision will ease the pressure on the banks.
India–USA Bilateral Competent Authority MAP/APA Meeting – Resolution of more than 100 cases under MAP and Agreement on terms and conditions of First ever Bilateral APA involving India and USA.
The Bilateral Competent Authority Mutual Agreement Procedure (MAP) / Advance Pricing Agreement (APA) meeting between India and USA was held in Washington DC, USA during the last week of October, 2016. The discussions in the meeting were focussed on resolving MAP cases pending for a long time and to achieve significant developments in Bilateral APA Process.
During the meeting, 66 MAP cases relating to Transfer Pricing issues and 42 MAP cases relating to Treaty Interpretation issues were agreed to be resolved successfully. The total amount that was locked-up in dispute in these cases is approximately Rs.5,000 crore and these cases were related to Assessment Years ranging from AY 1999-2000 to AY 2011-12. The resolved cases pertain to various issues like transfer pricing adjustments made to the international transactions in the nature of Payment of Royalty, Payment of Management Fees, Cost Contribution Arrangements, Engineering Design Services, Contract R&D Services, Investment Advisory Services, Marketing Support Services, Software Development Services, IT enabled Services (both BPO and KPO services) etc. and treaty interpretative issues in the nature of Presence of Permanent Establishment (PE) in India and Profit Attribution to such PEs, disputes pertaining to royalty income v/s business income of foreign companies, etc.
Further, during the meeting, the two Competent Authorities reached an agreement on the terms and conditions of the first ever Bilateral APA involving India and USA. Though India started its Bilateral APA process with the USA by accepting applications from the Indian taxpayers from FY 2012-13, the USA started its Bilateral Process with India only in February 2016 by way of accepting applications from US taxpayers. Within a short span of 8 months, the Agreement has been reached upon in the first ever Bilateral APA involving India and USA.
The speedy resolution of cases and agreement on Bilateral APA due to effective mechanism of development of mutual trust and cooperation between the Competent Authorities of two countries would really be a positive factor in creating a conducive atmosphere for investments and business by US Companies in India.
In a recent ruling, the division bench of the Kerala High Court held that assessments completed without full and true disclosure of material necessary for assessment during the original assessment proceedings is liable to be quashed.
The decision was against an appeal preferred by the Revenue impugning the order of the Appellate Tribunal who struck down the assessment order for the reason that the assessment was completed without disclosing full and true materials.
While dismissing the appeal, the division bench comprising of Justice Thottathil B Radhakrishnan and Justice Devan Ramachandran noted that there is no error in the order of the Tribunal. Concurring with the findings of the Tribunal, the Court said that proceedings under section 147(1) of the Income Tax Act can be initiated only if the income chargeable to tax has escaped assessment by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under Section 142(1) or Section 148 of the Income Tax Act or to disclose fully and truly all material facts necessary for the assessment. “As is clearly discernible from what we have quoted above out of the order of the Tribunal, it was crystal clear for the Tribunal that the assessee had responded to the queries raised by the assessing officer in the original assessment proceedings and during the course of such proceedings had produced all material facts as were called for and were relevant and necessary for completing the assessment for the year. Under such circumstances, we are of the view that the Tribunal was abundantly justified in the facts and in the circumstances of the case in hand to have concluded that this is a case where proceedings were impermissible in view of the embargo under the first proviso to Section 147 of the Income Tax Act.”
Read the full text of the Judgment below.
A single bench of the Madras High Court held that payment of Terminal Excise Duty (TED) altogether cannot be a valid reason for denying refund to the assessee under the excise law. The Court was considering a bunch of writ petitions filed by the Lenovo (India) Pvt Ltd. against the Excise authorities.
The sole issue raised by the petitioners was whether they are entitled to refund of Terminal Excise Duty. The authorities rejected the application for refund filed by the petitioners by relying up on the policy circular which states that in cases where the relevant taxes should not have been collected at the beginning, if there has been an error or oversight committed, then the agency collecting the tax would refund it, rather than seeking reimbursement from another agency. On the basis of the above circular, the authorities took a stand that refund cannot be allowed for payment of tax in respect of supplies, the supply of goods under invalidation letter issued against the Advance Authorisation; supply of goods under ICB and supply of goods to EOU. According to them, such supplies are ab-initio exempted from payment of excise duty.
Justice T.S Sivagnanam noticed that the issue was covered by the decision of the Delhi High Court in the case of Kondoi Metal Powers Mft. Co. Pvt. Ltd., V. Unkon Of India [2014 (302) E.L.T. 209(Del). Later, the decision was followed by the Calcutta High Court in a recent decision.
In view of the above, the Single bench allowed the Writ petitions and held that subsequent amendment was made to the existing regime which in effect liberalised the position further and exempted payment of TED altogether cannot surely be a reason for denying the scheme for refund of payment already made.
Read the full text of the Judgment below.
Another googly from the Government to clean bowled the black money holders….!!
The latest decision of the Income Tax Department to monitor bank accounts which exceeds 2.5 lakhs or an abnormal rise in income during the 50 day window period is a shocking one. the Department Officials clarified that such income may be subject to 200% penalty as the same may not be seen as eligible for the current year’s assessment.
Following the ban of Rs 1000 and Rs. 500 notes, the Government made the people deposit their cash to their bank accounts.Subsequently, the Banks were asked to monitor and collect the information regarding cash deposits above 2.5 lakhs.
“In case a person fails to explain the source of income for cash deposited in his or her account they will be asked to pay tax and penalty of up to 200% on the amount deposited,” the source said.
“We have asked all income tax officials across the country to detect such depositors who have cash deposits which do not match with their income in any previous year,”
Reportedly, the IT Department has started survey of jewellers across the country who are reported to be engaged in discounting banned notes in exchange of illicit cash.
Following the amendment to Rule 114B and Rule 114E of the Income Tax Rules by the CBDT through its Notification, the RBI today directed the Banks to collect a copy of PAN card while accepting deposits exceeding 50,000 from the customers.
“With a view to ensuring compliance with provisions of 114B of the Income Tax Rules, 1962, the banks are advised that anybody depositing more than Rs 50,000 in cash in their bank account has to submit a copy of the PAN card in case the bank account is not seeded with PAN,” Reserve Bank said in a notification.
Apart from this, the RBI also directed the Banks to ensure sharing of PAN by the customers for all applicable transactions mandated under the I-T rule.
Through a recent Notification, the CBDT has amended the Income Tax Rules as per which PAN is a mandatory requirement for cash deposits in bank account during 09-11-2016 to 30-12-2016 if the amount exceed Rs. 250000/-. Banks should furnish information regarding cash deposits during 09-11-2016 to 30-12-2016 by way of AIR information if cash deposit in current account of customer exceeds Rs. 1250000 and cash deposit in saving account exceeds Rs. 250000 during this period.
In its pre-Budget presentation with the Finance Ministry, the ASSOCHAM has sought immediate reduction in the corporate tax to 25% to attract more investment in the country while for driving the consumption led demand, income tax for individuals should also be reduced along with upward revision in the exemption limit upto Rs 5 Lakhs.
The Associated Chamber of Commerce and Industry of India (ASSOCHAM) in its Pre-budget meeting with the Revenue Secretary Dr. Hasmukh Adhia made some important suggestions. The proposed multiple Goods and Service Tax (GST) rate structure could increase classification disputes. Therefore, the categorisation of products under each duty slab should be carefully done.
Corporate tax needs to be reduced to 25% to attract more investment in the country. The income tax rate for individuals to be reduced and threshold limit should be increased in view of the current situation prevailing in the country at the pre-budget meeting with the Revenue Secretary.
The Associated Chamber of Commerce and Industry of India (ASSOCHAM) in its Pre-budget meeting with the Revenue Secretary today made some important suggestions. The proposed multiple Good Service Tax (GST) rate structure could increase classification disputes. Therefore, the categorisation of products under each duty slab should be carefully done.
It said the committed investment link tax incentive for specifies period should be grant fathered under GST for the un-expired period of committed incentives.
During the initial period of two year after implementation of the GST penal provision should not be made applicable unless there are frauds cases, the chamber.
The tax administrative provision under the draft GST law are quite harsh and may leave to Inspector Raj and this need to modify in the final GST law.
The valuations of stop transfers and inter branch transaction need certainty in the GST law.
Inverted Duty structure under excise on pharmaceutical products needs to be corrected. The basic custom duty rate on some of the products like aluminium, copper, steel and polymer need to be reduced in the current scenario.
ASSOCHAM further suggested that corporate tax needs to be reduced to 25% to attract more investment in the country. The income tax rate for individuals to be reduced and threshold limit should be increased in view of the current situation prevailing in the country.
Demonetisation of currency notes of Rs. 500/1000 will have a short term adverse impact on demand on items for mass consumption hence duty rates for such products should be reduced in the next budget to revive the demand.
