CBIC lays down Procedure for Electronic Submission and Processing of Refund Applications [Read Circular]

The Central Board of Indirect Taxes and Customs ( CBIC ) has laid down the procedure for Electronic submission and processing of Refund applications.

After the rollout of GST w.e.f. 01.07.2017, on account of the unavailability of electronic refund module on the common portal, a temporary mechanism had to be devised and implemented wherein applicants were required to file the refund application in FORM GST RFD-01A on the common portal, take a print out of the same and submit it physically to the jurisdictional tax office along with all supporting documents.

Further processing of these refund applications, i.e. issuance of acknowledgement of the refund application, issuance of deficiency memo, passing of provisional/final order, payment advice etc. was also being done manually.

In order to make the process of submission of the refund application electronic, Circular No. 79/53/2018-GST dated 31.12.2018 was issued wherein it was specified that the refund application in FORM GST RFD01A, along with all supporting documents, shall be submitted electronically. However, various post submission stages of processing of the refund application continued to be manual.

Filing of refund applications in FORM GST RFD-01

With effect from 26.09.2019, the applications for the following types of refunds shall be filed in FORM GST RFD 01 on the common portal and the same shall be processed electronically:

1. Refund of unutilized input tax credit (ITC) on account of exports without payment of tax;
2. Refund of tax paid on export of services with payment of tax;
3. Refund of unutilized ITC on account of supplies made to SEZ Unit/SEZ Developer without payment of tax;
4. Refund of tax paid on supplies made to SEZ Unit/SEZ Developer with payment of tax;
5. Refund of unutilized ITC on account of accumulation due to inverted tax structure;
6. Refund to the supplier of tax paid on deemed export supplies;
7. Refund to the recipient of tax paid on deemed export supplies;
8. Refund of excess balance in the electronic cash ledger;
9. Refund of excess payment of tax;
10. Refund of tax paid on an intra-State supply which is subsequently held to be inter-State supply and vice versa;
11. Refund on account of assessment/provisional assessment/appeal/any other order;
12. Refund on account of “any other” ground or reason.

The following modalities shall be followed for all refund applications filed in FORM GST RFD-01 on the common portal with effect from 26.09.2019:

1. FORM GST RFD-01 shall be filled on the common portal by an applicant seeking a refund under any of the categories mentioned above. This shall entail filing of statements/declarations/undertakings which are part of FORM GST RFD-01 itself, and also uploading of other documents/invoices which shall be required to be provided by the applicant for processing of the refund claim. A comprehensive list of such documents is provided at Annexure-A and it is clarified that no other document needs to be provided by the applicant at the stage of filing of the refund application. The facility of uploading these other documents/invoices shall be available on the common portal where four documents, each of maximum 5MB, may be uploaded along with the refund application. Neither the refund application in FORM GST RFD-01 nor any of the supporting documents shall be required to be physically submitted to the office of the jurisdictional proper officer.
2. The Application Reference Number (ARN) will be generated only after the applicant has completed the process of filing the refund application in FORM GST RFD-01, and has completed uploading of all the supporting documents/ undertaking/ statements/invoices and, where required, the amount has been debited from the electronic credit/cash ledger.
3. As soon as the ARN is generated, the refund application along with all the supporting documents shall be transferred electronically to the jurisdictional proper officer who shall be able to view it on the system. The application shall be deemed to have been filed under sub-rule (2) of rule 90 of the CGST Rules on the date of generation of the said ARN and the time limit of 15 days to issue an acknowledgement or a deficiency memo, as the case may be, shall be counted from the said date. This will obviate the need for an applicant to visit the jurisdictional tax office for the submission of the refund application and /or any of the supporting documents. Accordingly, the acknowledgement for the complete application (FORM GST RFD-02) or deficiency memo (FORM GST RFD-03), as the case may be, would be issued electronically by the jurisdictional tax officer based on the documents so received from the common portal.
4. If a refund application is electronically transmitted to the wrong jurisdictional officer, he/she shall reassign it to the correct jurisdictional officer electronically as soon as possible, but not later than three working days, from the date of generation of the ARN. Deficiency memos shall not be issued in such cases merely on the ground that the applications were received electronically in the wrong jurisdiction. e. It may be noted that the facility to reassign such refund applications is already available with the Commissioner or the officer(s) authorized by him.

The CBIC also said that, The refund application in FORM GST RFD-01 filed by all taxpayers, who have already been assigned to the Centre or the State tax authorities, shall be automatically forwarded by the common portal to the concerned authority. At the same time, there might be some migrated taxpayers, who have remained unassigned so far.

The refund application in FORM GST RFD-01 filed by such unassigned taxpayers shall be forwarded, for processing, by the common portal to the jurisdictional proper officer of the tax authority from which the taxpayer has originally migrated. Such officers will continue to process these applications up to the stage of issuance of the final order in FORM GST RFD-06 and the related payment order in FORM GST RFD-05 even if the applicant is assigned to the counterpart tax authority while the refund claim is under processing.

However, if such an applicant gets assigned to one of the tax authorities after generation of the ARN and a deficiency memo gets issued for the refund application submitted by him, then the re-submitted refund application, after correction of deficiencies, shall be treated as a fresh refund application and shall be forwarded to the jurisdictional proper officer of the tax authority to which the taxpayer has now been assigned, irrespective of which authority handled the initial refund claim and issued the deficiency memo.

The CBIC also clarified that, Any refund claim for a tax period may be filed only after furnishing all the returns in FORM GSTR-1 and FORM GSTR-3B which were due to be furnished on or before the date on which the refund application is being filed. However, in case of a claim for refund filed by a composition taxpayer, a non-resident taxable person, or an Input Service Distributor (ISD) furnishing of returns in FORM GSTR-1 and Form GSTR-3B is not required. Instead, the applicant should have furnished returns in FORM GSTR-4(along with FORM GST CMP-08), FORM GSTR-5 or FORM GSTR-6, as the case may be, which were due to be furnished on or before the date on which the refund application is being filed.

In the Circular, the CBIC also given clarity on Deficiency Memos, Provisional Refund, Scrutiny of Application, Re-crediting of electronic credit ledger on account of rejection of refund claim, Application for Refund of integrated tax paid on export of services and supplies made to a Special Economic Zone developer or a Special Economic Zone unit, Disbursal of refunds, Guidelines for refunds of unutilized Input Tax Credit, Guidelines for refund of tax paid on deemed exports, Guidelines for claims of refund of Compensation Cess, Clarifications on issues related to making zero-rated supplies, Refund of transitional credit, Restrictions imposed by sub-rule (10) of rule 96 of the CGST Rules, etc…

Compensation in lieu of ‘Right to Sue’ of Capital Nature, not chargeable to Tax: ITAT [Read Order]

The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) in the case of M/s Chedda Housing Development Corporation v Addl. CIT held that compensation in lieu of ‘right to sue’ is of capital nature not chargeable to tax under Section 45 of the Income Tax Act.

The assessee is a partnership firm engaged in the business of financing, construction and development. The assessee filed its return of income declaring Nil income and claimed the refund of tax paid in advance. The AO noted that assessee claimed an amount to be a capital receipt not chargeable to tax which he received as compensation under agreement for relinquishing his right to sue in a development agreement.

The revenue questioned the basis giving rise to the cause of action for the creation of ‘right to sue’.

The Bench constituting of members S.S. Pannu and Pawan Singh held that receipt towards compensation in lieu of ‘right to sue’ is of capital nature which is not chargeable to tax under Section 45 of the Act.

The Bench elaborated that the assessee executed a development agreement to facilitate the assessee to construct and to share the profits from the transaction. When the assessee sold his land, the advantage which accrued from the agreement was also taken away sold away. Similarly, when the assessee in the agreement came across a threat of filing suit by the developer (another party to the development agreement), he paid the amount of compensation in consideration of turning down the suit by the developer. This payment of the amount to avoid litigation was held to be enough evidence for the existence of the ‘right to sue’, holding against the contention of the revenue.

CBIC issues Clarification on Optional Filing of GST Annual Return [Read Circular]

The Central Board of Indirect Taxes and Customs ( CBIC ) has issued a clarification regarding the optional filing of GST annual return under notification No. 47/2019- Central Tax dated 9th October, 2019.

As per proviso to sub-rule (1) of rule 80 of the CGST Rules, a person paying tax under section 10 is required to furnish the annual return in FORM GSTR-9A. Since the said notification has made it optional to furnish the annual return for FY 2017-18 and 2018-19 for those registered persons whose aggregate turnover in a financial year does not exceed two crore rupees,.

The CBIC clarified that, the taxpayers under composition scheme, may, at their own option file FORM GSTR-9A for the said financial years before the due date. After the due date of furnishing the annual return for the year 2017-18 and 2018-19, the common portal shall not permit furnishing of FORM GSTR-9A for the said period.

As per sub-rule (1) of rule 80 of the CGST Rules, every registered person other than an Input Service Distributor, a person paying tax under section 51 or section 52, a casual taxable person and a non-resident taxable person, shall furnish an annual return as specified under sub-section (1) of section 44 electronically in FORM GSTR-9. Further, the said notification has made it optional to furnish the annual return for FY 2017-18 and 2018-19 for those registered persons whose aggregate turnover in a financial year does not exceed two crore rupees.

The CBIC also clarified that the taxpayers, may, at their own option file FORM GSTR-9 for the said financial years before the due date. After the due date of furnishing the annual return for the year 2017-18 and 2018-19, the common portal shall not permit furnishing of FORM GSTR-9 for the said period.

While concluding the Circular, the CBIC also said that, if any registered taxpayer, during the course of reconciliation of his accounts, notices any short payment of tax or ineligible availing of the input tax credit, he may pay the same through FORM GST DRC-03.

Tax Associate Vacancy in Thomson Reuters

The Thomson Reuters has invited applications from B.Com/MBA candidates for the post of Tax Associate.

Thomson Reuters is the leading source of intelligent information for the world’s businesses and professionals. We combine industry expertise with innovative technology to deliver critical information to leading decision-makers in the financial and risk, legal, tax and accounting, intellectual property and science and media markets, powered by the world’s most trusted news organization.

Our Tax & Accounting division is seeking to appoint Product Support Associate, based in Hyderabad office working primarily on our Corporate suite of products. This role will suit a person who is interested in pursuing a career as a Tax & Accounting Product Specialist.

Key Responsibilities Include

• Answering, resolving and updating all incidents and service requests from users and logging them in the service management system
• Answering phone calls in a timely manner, responding to all calls within the Service Level Agreements (SLA) and simultaneously working on Salesforce tickets.
• Resolving as many incidents and service requests as possible on the first call/contact
• Stakeholder management – providing timely and relevant updates to internal and external stakeholders
• Contributing to a positive business relationship with our customers
• Must be flexible to work in morning shifts 6 AM to 3 PM

Key Skills & Attributes

• Experience in a client-facing Service Desk or Support Analyst role
• Troubleshooting and desire to learn
• Working knowledge on Salesforce would be an added advantage
• High standard of professionalism along with excellent written and verbal communication skills
• Good numerical and problem-solving skills
• Ability to learn and understand new software products with ease
• Excellent organisation, planning and implementation skills
• High level of empathy and interpersonal skills
• Ability to work in a team

Qualifications

• Accounting related Degree (BCOM/MBA)
• 1-2 years’ experience in Tax & Accounting field preferred

Shift Timings

6AM IST to 3PM IST

At Thomson Reuters, we believe what we do matters. We are passionate about our work, inspired by the impact it has on our business and our customers. As a team, we believe in winning as one – collaborating to reach shared goals, and developing through challenging and meaningful experiences. With more than 25,000 employees in more than 100 countries, we work flexibly across boundaries and realize innovations that help shape industries around the world. Making this happen is a dynamic, evolving process, and we count on each employee to be a catalyst in driving our performance – and their own.

As a global business, we rely on diversity of culture and thought to deliver on our goals. To ensure we can do that, we seek talented, qualified employees in all our operations around the world regardless of race, color, sex/gender, including pregnancy, gender identity and expression, national origin, religion, sexual orientation, disability, age, marital status, citizen status, veteran status, or any other protected classification under applicable law. Thomson Reuters is proud to be an Equal Employment Opportunity/Affirmative Action Employer providing a drug-free workplace.

We also make reasonable accommodations for qualified individuals with disabilities and for sincerely held religious beliefs in accordance with applicable law.

For Further Information Click here.

Delhi HC upholds ICAI’s decision not to entertain complaint filed against Auditor after 7 years of Signing Audit Report [Read Judgment]

The Delhi High Court has upheld the Institute of Chartered Accountants of India ( ICAI’s) decision to not to entertain the complaint filed against the Auditor after seven years of signing Audit Report.

The petitioner has filed the present petition impugning an order dated 1st February, 2019 passed by respondent no.2. By the said order, the Board of Discipline had concurred with the prima facie opinion of the Director (Discipline), recorded under Rule 9(1) of the Chartered Accountants (Procedure of Investigations of Professional and Other Misconduct and Conduct of Cases) Rules, 2007 and the petitioner was informed of the same.

JMG is a member of ICAI and is a practising Chartered Accountant. The petitioner has alleged that the accounts and audit report in respect of seven separate companies mentioned in the complaint had not been prepared in compliance with the provisions of the Companies Act, 1956 and directions issued by the Reserve Bank of India (RBI) in respect of a non-banking financial company.

The issue whether the petitioner company is permitted to carry on the activity of filing complaints against various Chartered Accountants was considered by this Court in the decision rendered today in W.P. (C) 8071/2019.

The Court rejected the contention that the activity of the petitioner in pursuing complaints against various Chartered Accountants was otherwise permitted under its Memorandum of Association. This Court also observed that the use of a corporate façade of the petitioner by its directors/promoters for pursuing complaints against various Chartered Accountants, unconnected with its business, cannot be countenanced.

Justice Vibhu Bakhru observed that, “A plain reading of the aforesaid Rule indicates that there are several grounds on which the Director (Discipline) would refrain from entertaining any complaint made more than seven years after the same is alleged to have been committed. The Director (Discipline) would reject the complaint if he is satisfied that it would be difficult for securing proper evidence of the alleged misconduct. The second ground for doing so is if the member, against whom such allegation is made, would find it difficult to lead evidence to defend himself. And, the third is on account of changes, rendering the inquiry to be procedurally inconvenient or difficult”.

In the present case, JMG had clearly stated in his response that he had retired from the firm of Chartered Accountants that was appointed to conduct the audit in view of disputes inter se the partners of the firm. He had also pointed out that the complaint had been made beyond the period of seven years and the Chartered Accountants were not required to maintain audit records for more than seven years..

Keeping aforesaid in view, the Director (Discipline) accepted JMG’s plea for invoking Rule 12 of the Rules. He declined to entertain the complaint and forwarded his prima facie opinion that JMG was not guilty of the alleged misconduct.

The Court also said that, no infirmity with the Director’s (Discipline) opinion. Plainly, no interference with the opinion of the Board of Discipline is called for in proceedings under Article 226 of the Constitution of India, unless the same is perverse or so unreasonable that no sensible person could possibly arrive at such a view. The contention that since JMG had responded to the allegations after securing the audit papers, the same would preclude recourse to Rule 12 of the Rules, is unmerited.

The Court also said that, the decision of the Director Discipline to not to entertain the complaint and the decision of the Board of Discipline to concur with the aforementioned opinion cannot be faulted.

While dismissing the petition, the Court also said that, “This Court is of the view that the present petition is a frivolous one and the filing of such petitions ought to be discouraged, as it takes up considerable judicial time at the cost of bona fide litigants who are in urgent need of relief. The Court also imposes the Cost Rs. 1,00,000 (One Lakh only) against the petitioner”.

GST: Registration of Taxpayers who are Non-Filers of GSTR-3B will be cancelled before 25.11.2019, says CBIC [Read Letter]

In a letter by Office of the Principal Chief Commissioner of GST and Central Excise, Mumbai said that, Registration of Taxpayers who are Non-Filers of GSTR-3B will be cancelled before 25.11.2019.

The Principal Chief Commissioner directed all Principal Commissioners and Commissioners to take proactive action against Non-Filers under GST.

In the video conference with the Principal Chief Commissioners / Chief Commissioner of GST and Custorns held on 13.11.2019, the Chairman, CBIC has expressed his displeasure in the progress of cancellation of registration of Non-filers who have not filed GSTR 3-B returns for 06 or more than 06 return periods arid are liable for action under Section 29 of CGST Act.

The Chief Principal Commissioner also directed the task of cancellation of registration of such non-filers of GST Returns should be taken on priority basis and should be finished by 25.11.2019.

A daily report in this regard in the attached format be sent to this office by 1600 hrs, the letter also added.

Recently, CBIC has enabled a new feature in the E-Way Bill system of blocking/unblocking of the taxpayers from next month, as per the rule. That is, if the GST taxpayer has not filed Return 3B for GST the last two successive months in GST Common portal, then that GSTIN will be blocked for the generation of the e-way bill either as consignor or consignee.

The CBIC had said that, the taxpayer will be alerted with a cautionary message while generating the E-Way Bills, in case GST for the past 2 successive months of the consignor/consignee GSTIN has not been filed. However, from next month onwards, such GSTINs will be blocked.

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Company Secretary vacancy in Chennai Petroleum Corporation Limited

The Chennai Petroleum Corporation Limited has invited applications from Company Secretaries for the post of Deputy Company Secretary in Grade D (Senior Manager).

Chennai Petroleum Corporation Limited (CPCL), is a leading profit making Public Sector Organization and a Group Company of Indian Oil Corporation Ltd., in the field of Hydro-carbon processing with a refining capacity of 11.5 MMTPA, having Refineries located in Chennai and Nagapattinam, in Tamil Nadu.

Name of the Post & Vacancy: Deputy Company Secretary & 1 (One) post for unreserved (UR) category.

Essential Qualifications: (As on 30.09.2019)

Candidates should have acquired Associate Membership of Institute of Company Secretaries of India (ACS). Candidates must have secured minimum 50% of marks (or equivalent CGPA and above) in the final examination of ICSI. Additional qualification in Law from a recognized university is a must.

Experience: (As on 30.09.2019)

Minimum 10 years of work experience in a Company Secretarial set-up of Private/ Public Sector or a reputed Listed Company with exposure detailed as below:

• Candidate should have an in-depth understanding and knowledge of the new Companies Act, Rules and Regulations, Listing Requirements, etc.
• (ii) Candidate should possess knowledge of formalities for Public issue/Right issue/Bonus issue, etc.
• Candidate should have hands-on experience in coordinating and anchoring meetings of the Shareholders, Board and Committees in accordance with the Companies Act.
• Candidate should have also dealt with matters relating to legal matters of the Company.

Age Limit: Not exceeding 45 years as on 30.09.2019

For Further Information Click here.

Circulars issued Contrary to Tribunal Rulings for Consignments pending Clearance is Impermissible: Delhi HC [Read Judgment]

The Delhi High Court has ruled in a writ petition that all Administrative, executive and adjudicatory authorities are bound by the Tribunal rulings of Customs, Excise and Service Tax Appellate Tribunal ( CESTAT ) in the absence of a ruling to the contrary by a higher authority.

The issuance of contrary Circulars by the CBIC was censured by the High Court.

The division bench comprising of Chief Justice Dhirubhai Naranbhai Patel and Justice C. Hari Shankar made this observation in the combined judgement of Khandwala Enterprise Private Limited v. Union of India and Ors, and Credence Commodities Exports v. Union of India and Ors.

The grounds of the case is that the petitioners imported gold coins from South Korea and the Revenue challenged the classification as inappropriate. The Revenue issued circular pointing two cases of similar facts, i.e., Sri Export versus Commissioner of Customs, Hyderabad [Final Order No.A/31494/2018, dated 27.11.201 8 in Appeal No. C/30812/2018] and Sri Export Versus CC Bangalore Cus [arising out of No. 344/2018 dated 12.10.2018 passed by Commissioner of Customs, Bangalore-1]. The Circular issued clarified that the Order passed in the previous cases were not being legal and proper. The discussion arose as to whether the Circulars and Show-cause issued contradicting the Orders of the commission were valid and proper.

The court, in strong language, criticised the act of the CBIC in issuing circulars and show cause to supersede the orders of the Tribunal.  The court further stressed that such rulings are not only ex facie unsustainable but is also contemptuous of the Tribunal.

The court also clarified that it is completely impermissible for the CBIC to direct field formations to deal with consignments pending clearance at airports in accordance with the view of the CBIC, rather than the orders of the Tribunal. The court stated that “dealing with consignments pending clearance at ports and airports involves a process of adjudication, and that it was not open to any such authority, dealing with such consignments, to act in violation of binding decisions of the Tribunal”. The court ruled that such actions from the CBIC are in direct and conscious violation of the proviso to Section 151A of the Customs Act.

The Court stressed that the powers of the CBIC, as conferred by Section 151A of the Customs Act, cannot extend to issuance of executive instructions, or Office Memoranda, pronouncing on the merits of issues which are pending before adjudicating authorities. The court hence ruled that all gold coins are to be, therefore, classifiable under Sub-Heading 7118 9000, of the Tariff, as well as of the ITC (HS).

The court held that, “it is completely impermissible for the Revenue to issue a Show Cause Notice and, thereafter, seek to support, or even supplement, the recitals in the Show Cause Notice by way of Office Memoranda, or executive instructions”.

Marketing and Pre-sales Technical Support Services will be Classified as Intermediary Services: AAR [Read Order]

The Authority on Advance Rulings in Karnataka has ruled that the Marketing and Pre-sales Technical Support Services will be classified as Intermediary services under the Section 2(13) of the Integrated Goods and Services Tax Act, 2017. The Authority also ruled that Post-Sales Technical Support Services provided will be classified as Information Technology Support Services falling under Service Code 998313.

The peculiar ruling was pronounced by a bench constituting of Hanish Dharnia and Dr. Ravi Prasad M.P. in an application filed by M/s ANSYS Software Pvt. Ltd under Section 97 of the CGST Act 2017 and KGST Act 2017.

In the particular case the applicant company was engaged in an agreement with its parent company, Ansys US, to provide Marketing, Pre-Sales and Post- Sales Technical Support Services for a fixed percentage of the Sales Order Value or on basis of any other mutually agreed mechanism.

The Authority noted that activities such as, understanding of the customer’s requirements, showcasing of the product to the customer and helping the customer to understand the functionality of product and its relevance, exploring new business opportunities with the existing customers, coordinating with the customer and parent company for signing of related documentation and collecting of Invoice value would amount to facilitation of the supply.

The Authority ruled that as it is mere facilitation of supply the applicant would be covered under the definition of an “intermediary. The Authority also ruled that the above activities would also come under the provision of Distributive trade services under Heading 996111.

In ruling the matter of Post-sale Technical Support Services, the Authority noted that “contract is between the end customers and the parent company in the US and the applicant is providing the services to the end-customers on behalf of the parent company and charging the parent company for the services provided. The consideration is also fixed as a percentage of the sales order value for the customer.” Hence the Authority ruled that  the services provided are in providing support to the software supplied earlier and it would amount to provision of information technology services which is covered under Heading 9983 – Other professional, technical and business services and Group 99831 – Management Consulting and Management Services; Information Technology Services and Service Code 998313 – Information Technology consulting and support services.

Foreign Exchange Loss to be allowed as Revenue Expenditure and is to be charged into the Profit and Loss Account: ITAT [Read Order]

The Cochin Bench of the Income Tax Appellate Tribunal in the case of M/s Baby Memorial Hospital v. The Assistant Commissioner of Income Tax ruling in favour of the assessee held that Foreign Exchange Loss to be allowed as revenue expenditure and is to be charged into the Profit and Loss account.

The Principal Commissioner of Income Tax found that the assessee had claimed an amount being foreign exchange loss on account of foreign currency loan taken for the construction of a new building and additional equipment. According to the Pr. CIT, the loss on the devaluation of rupees on account of loan utilized for fixed capital was not deductible under Section 37(1) since the expenditure is capital in nature. Therefore the Pr. CIT set aside the assessment and invoked the provision of Section 263 for the limited purpose of verifying whether the foreign exchange loss qualifies for being revenue expenditure.

It has been contended by the assessee that the loss arising on account of fluctuation of the exchange rate with regard to loan availed for the acquisition of fixed assets is a revenue loss and not a capital loss.

The Bench constituting of members George George K and Chandra Poojari held that Foreign Exchange Loss is to be allowed as revenue expenditure and is to be charged into the Profit and Loss account in conferment to Accounting Standard 11 (AS 11).

It was analyzed that Schedule VI of Companies Act suggests treatment of the ‘gain/loss’ as capital in nature and should be adjusted to the cost of the relevant asset, whereas Accounting Standards 11 suggests that treatment of ‘gain/loss’ attributable to foreign borrowings should be reflected in profit and loss account. The same was clarified by way of a Circular by MCA so as to be made as per AS 11 and the exchange difference is required to be recognized in profit and loss account.

GST: Gujarat High Court issues notices to Centre, State on limiting Input Tax Credit [Read Order]

The division bench of the Gujarat High Court has issued notices to Centre and the State Government on limiting the input tax credit to assessees in case the details have not been uploaded by the supplier.

Society of Tax Analysis and Research has moved to High Court through the Counsel Advocate Avinash Poddar.

Recently CBIC had issued a clarification on Restriction in availing of the input tax credit in terms of sub-rule (4) of rule 36 of CGST Rules, 2017.

The said sub-rule provides a restriction in availing of input tax credit (ITC) in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers under sub-section (1) of section 37of the Central Goods and Services Tax Act, 2017.

This section has been challenged in the High Court of Gujarat. After the first hearing, the Court issued notices to five respondents, including the GST Council, the CBIC and the Goods and Services Tax Network (GSTN), and fixed December 18 as the next date of hearing.

The CBIC had clarified that, The restriction imposed is not supplier wise. The credit available under sub-rule (4) of rule 36 is linked to total eligible credit from all suppliers against all supplies whose details have been uploaded by the suppliers. Further, the calculation would be based on only those invoices which are otherwise eligible for ITC. Accordingly, those invoices on which ITC is not available under any of the provision (say under sub-section (5) of section 17) would not be considered for calculating 20 per cent. of the eligible credit available.

The amount of input tax credit in respect of the invoices/debit notes whose details have not been uploaded by the suppliers shall not exceed 20% of the eligible input tax credit available to the recipient in respect of invoices or debit notes the details of which have been uploaded by the suppliers under subsection (1) of section 37 as on the due date of filing of the returns in FORM GSTR-1 of the suppliers for the said tax period. The taxpayer may have to ascertain the same from his auto-populated FORM GSTR-2A as available on the due date of filing of FORM GSTR-1 under sub-section (1) of section 37.

Same Income cannot be Taxed in Two Assessment Years Simultaneously as per the Scheme of Taxation: ITAT [Read Order]

The Income Tax Appellate Tribunal ( ITAT ) Ahmedabad while considering an appeal held that “The same income cannot be taxed in two assessment years simultaneously as per the scheme of taxation. Thus, while the assessee may not be permitted to defer the tax liability of income of the present year to the next year, the Revenue at the same time cannot sit over the taxes wrongly paid for the income already assessed in the preceding assessment year AY 2011-12 and refusing to refund the same in AY 2012-13.”

The statement was made in the appeal hearing of Shri Keyur D Gandhi HUF v. ACIT. The tribunal was headed by Shri Pradip Kumar Kedia, & Shri Mahavir Prasad. The brief facts of the case were that the sale transactions of two properties happened in AY 2011-12 was wrongly accounted for and offered to taxation in AY 2012-13. However, upon confrontation by AO, the assessee duly paid tax incorrect AY 2011-12. The dispute arose when the authorities failed to refund the tax collected on the income in AY 2012-13 while simultaneously collecting the taxes in AY 2011-12.

The tribunal considered whether the Commissioner of Income Tax Appellate erred in law and on facts by confirming disallowance of interest expense paid to Kotak Mahindra Prime Ltd made u/s 40(a) (ia) of the Act for non-deduction of tax at source and other grievances. The tribunal quoting the ratio in ITO vs. Arvind Lifestyle Brands Ltd. in ITA No.3461/Ahd/2015 restored the file to AO. The tribunal further stated that it shall be open to the assessee to furnish necessary evidence to show that payee has filed returns and has included the receipt from the assessee for the purposes of taxation.

The tribunal has further directed the AO to refund the taxes collected in AY 2012-13 in accordance with law after ascertaining the fact of the taxes recovered on the same income in AY 2011-12.

The tribunal, however, dismissed additional ground challenging the disallowance of estimated disallowance of 20% of interest expenditure incurred of car loan as personal in nature. The tribunal clarified that the additional ground cannot be permitted to be raised at this stage where necessary evidence is not available on record. The tribunal further asserted that the assessee cannot raise additional ground without good reason at a belated stage without showing its bonafide.

Transaction between Family Members for Bonafide Purpose not Loan or Deposit under section 269SS: ITAT [Read Order]

In a recent order of the Income Tax Appellate Tribunal, Cuttack held that the transaction between the relatives of family members for giving support and help does not amount to loan or deposit under section 269SS of the Income Tax Act.

The dispute arose during the assessment processes under the Income Tax Act. The accessing officer  noticed that the assessee has accepted cash amounts totalling to Rs.14,00,000/- in contravention of the provisions of section 269SS of the Act. Dissatisfied with the explanation of the assessee the assessing officer observed that the assessee has received the sums in contravention of section 269SS of the Act and liable to pay penalty under section 271 D of the Act. This was upheld by the Commissioner of Tax (Appellate).

Section 269 SS of the Act requires that no person shall take or accept any loan or deposit, above Rs. 20,000/- in cash. Further Section 271D provides that a person who takes or accepts any loan or deposit in contravention of the provisions of section 269SS of the Act, would be liable to pay by way of penalty a sum equal to the amount of the loan or deposit so taken or accepted.

The tribunal while considering the appeal stated that, “The object of introducing section 269SS of the Act was to ensure that a taxpayer was not allowed to give a false explanation for his unaccounted money or if the taxpayer made some false entries, he would not escape by giving a false explanation for the same”. The tribunal further pointed out that section 273B of the Act was introduced to provide exceptions to the genuine and bonafide transaction, despite the transaction not being through an account payee cheque or demand draft transaction. The tribunal reasserted that such transactions must be for some bonafide reason and the authority in the peculiar circumstances had a discretion not to levy the penalty.

The tribunal has further categorically stated that simple transaction of transfer of money from one family members to another family members to support him during the medical emergency period cannot be treated as loan or advance and transaction falling under the ambit of section 269SS of the Act. Further, the tribunal also observed that in case of acting as a trustee of money, till it is deposited in bank account in the name of the trust, the transactions cannot be termed as loan or advance in cash which attracts penalty \u./s.271D of the Act.

Kerala High Court stays Section 276C(1) Proceedings until Final disposal of Appeal before CIT [Read Order]

The single bench of Kerala High Court has held in the case of M/S.Beaver Estates PVT.LTD and Another v. The Assistant Commissioner of Income Tax and Others, that the criminal proceedings under question must be stalled till the disposal of the appeal filed in the matter before the Commissioner of Income Tax.

The petitioners in the above cased moved to the High court of Kerala praying for stay of criminal proceedings until the disposal of appeals before the Commissioner of Income Tax. The petitioners argued that the Section 276(c)(1) of the Income Tax Act that criminalizes the wilful evasion of tax, interest etc payable under the Act is only applicable once the evasion is finalized. The petitioners further pointed out the current evasion is questionable and under consideration before the Commissioner. The petitioners relied on K.C. Builders v. Assistant Commissioner of Income Tax : (2004) 2 SCC 731 and Commissioner of Income Tax v. Bhupen Champak Lal Dalal: AIR 2001 SC 1096 to assert their point.

On the contrary, the respondents, quoted the judgments in the Sasi Enterprises v. Assistant Commissioner of Income Tax : (2014) 5 SCC 139, to point that pendency of the appellate proceedings is a not relevant factor for not initiating prosecution proceedings under Section 276CC of the Act. The learned judge, however, disallowed the contentions. The learned judge stated that “The decision in Sasi Enterprises (supra) has got no application to the present case because the prosecution against the petitioners is for committing the offence under Section 276C of the Act and not for the offence under Section 276CC of the Act”

Justice Narayana Pisharadi relying on the judgment of Bhupen Champak Lal Dalal allowed the petitioner and directed the Additional Chief Judicial Magistrate (Economic Offences), Ernakulam to keep in abeyance all further proceedings against the petitioners till the disposal of appeals before the commissioner.

Information System Audit Assessment Test will be held at 63 cities on December 28th: ICAI [Read Announcement]

The Information System Audi AT (December – 2019) is proposed to be held at 63 cities only on December 28th, 2019 (Saturday) from 9.00 AM to 1.00 PM (IST).

In an announcement the ICAI said that, “the next Information Systems Audit (ISA) Course Assessment Test which is open to the members of the Institute, will be held on 28th December, 2019 (Saturday) from 9.00 AM to 1.00 PM (IST) at the following cities provided that sufficient number of candidates offer themselves to appear therefrom”.

The ICAI also said that, The Council reserves the right to withdraw any centre at any stage without assigning any reason. The above Test is open only to the Members of the Institute who are already registered with the Institute for the ISA course and fulfil the eligibility criterion laid down. The fee payable for the above Assessment Test is ₹ 2000/-.

“An application for admission to the Assessment Test is required to be submitted online by visiting http://isaat.icaiexam.icai.org and the sum of ₹ 2100/- (₹ 2000/- as examination fees and ₹ 100/- towards the examination form) has to be paid online using Master / Visa / Maestro Credit or Debit Card on or from 25th November 2019. Alternatively, the format of application form can be downloaded from the website of the Institute viz. www.icai.org and the cost of the application form of ₹100/- can be added to the Assessment Test fee of ₹ 2000/- and the Demand Draft for ₹ 2100/- of any Scheduled Bank drawn in favour of “The Secretary, The Institute of Chartered Accountants of India”, payable at New Delhi only has to be sent to the Additional Secretary (Exams), The Institute of Chartered Accountants of India, ICAI Bhawan, Indraprastha Marg, New Delhi – 110002 so as to reach him on or before 9th December, 2019. The applications received after 9th December 2019 will not be entertained under any circumstances”, the ICAI also added.

EY Hiring CA, CA Inter, ICWA Inter

The Ernst & Young has invited applications from CA, MBA, M.Com, CA Inter, ICWA Inter for the post of Accounting Controller.

The Assistant Accounting Controller will report into the Accounting Controller. This role will represent the respective accounting function in various leadership forums. The Assistant Accounting Controller is a member of the Global Controlling organization. The Global Controlling organization enables our business management to make better business decisions and satisfy our regulatory requirements by creating and maintaining globally aligned accounting policies, efficient and rationalized processes and tools, and actionable, forward-looking, consistent reporting.

The purpose of this role is to ensure overall accounting control over EYGS LLP, ESL, EYGS Ltd. and other legal entities (“the entities”) which form a major part of the Executive Layer (EL) / Global. This includes ensuring that the integrity of accounting entries and supporting accounting processes and controls are robust and that the books and records accurately reflect underlying transactions on a timely basis. The role will be responsible for ensuring the completeness, accuracy and validity of management accounts for the entities and managing the monthly, quarterly and year-end close processes. This will include the monthly reconciliation of the entities management accounts based on the General ledger with the EL management accounts produced from MyReports.

Responsibilities 

• Take key operational decisions on all accounting related matters
• Ensure overall accounting control over the Singapore Data Centre, Executive Layer or EYG Services, and managing the monthly, quarterly and year-end accounting close process
• Review monthly management accounts for the entities responsible
• Ensure integrity of accounting entries in conjunction with FROs and GDS service delivery teams to ensure financial transactions are properly reflected in books
• Ensure reconciliations between MyReports and General ledger are completed on a monthly basis and that reconciling item are followed up and resolved in a timely manner
• Ensure all balance sheet reconciliations are completed in accordance with timetable and items followed up with respective owners on a timely basis.
• Provide accounting advice and guidance to various groups who are not supported by the FRO network e.g. Global IT, Service Lines, L&D, etc. and act as a contact point and finance support
• Manage the accounting for MDS and investments, liaising with relevant parties to ensure accuracy and timeliness of accounting, invoicing and settlement of these transactions
• Review, understand and account for one off or unusual transactions in the Executive Layer or EYG Services such as acquisitions, legal claims and other deals
• In conjunction with FROs ensure accruals and prepayments are properly supported, released and accounted
• Liaise with VAT and tax teams to ensure taxes are properly accounted and managed
• Review and own the Financial Packs (Income Statement and Balance Sheet) of the assigned entity on a monthly basis.
• Coordinate with other entities in Executive Layer (e.g. Asia Pac to ensure a consistent approach and appropriate accounting)
• Ensure timely and accurate consolidation of the management/ statutory accounts and production of all necessary year-end analysis
• Ensure EYGF compliance requirements in relation to the entities are met
• Prepare/ review periodic reports (e.g. Highlights report, Debtors and creditors report, etc.)
• Support Accounting Controller & Global Accounting Leader in taking decisions on accounting matters for Global entities on key projects like SAP implementation.
• Synthesize, provide insight and communicate a clear and concise view of Executive Layer or EYG Services and its financial controls

Knowledge and Skill requirements

Business acumen and process insights

• Ability to learn and demonstrates expert knowledge of EY financial priorities, processes, budgeting and accounting cycle
• Ability to learn and hold a deep understanding of Vision 2020+ strategy, financial objectives and plans
• Ability to learn and demonstrate a strong awareness of all major EY initiatives and their impacts on SL financial performance
• Operates successfully on controlling and accounting engagements crossing multiple sub-functions within Global Finance team

Strategic thinking and continuous improvement

• Demonstrate executive presence while discussing, refining and finalizing issue definitions with decision-makers, where necessary achieving consensus between differing viewpoints.
• Define business problems and apply a structured approach to gather data and conduct financial analysis that drives strategic decision making
• Lead the storyboarding to explain complex issues and present solution options and implications simply and clearly
• Help transform data effectively and efficiently into meaningful insights that underpin the strategic objectives of the Accounting organisation

Leadership and coaching

• Able to work in a self-sufficient manner, controlling activities across multiple entities and priorities
• A successful track record of implementing and leading key business change initiatives
• Demonstrates the ability to challenge assumptions and decisions in an appropriate manner

Client focused

• Drives interactions that build trust
• Ability to operate and influence at a global level, across cultures and locations
• Operate effectively in a matrix management structure
• Collaborates and teams with finance colleagues and other functions to enhance service to clients, and to leverage leading practices.
• Able to embed ECS (Exceptional Client Service)

Job requirements

To qualify, candidates must have:

• A professional accountant qualification (Chartered Accountant)
• 13+ years of experience working at a similar position and dealing with senior leadership level
• Experience of working in a variety of finance roles is highly desirable
• Excellent communication and presentation skills
• Willingness and ability to travel, when necessary

For Further Information Click here.

E-Court System launched in ITAT Chennai

The E-Court system has launched in Chennai bench of the Income Tax Appellate Tribunal ( ITAT). Justice P. P. Bhatt, President ITAT officially launched e-court at Chennai on Friday.

A fully-equipped separate courtroom with seamless conferencing facilities has been set up at the Chennai bench of ITAT. Delhi, Mumbai, Nagpur and Ahmedabad benches of ITAT already have the e-court facility.

“This is aimed at delivering justice at the doorstep. Cases from places like Madurai and Coimbatore can be heard sitting in Chennai through video-conferencing,” Justice P.P. Bhatt said.

He also said that overall there are 9,000 pending cases, out of which Tamil Nadu and Puducherry region have 5,200 pending cases.

G.S. Pannu, vice president of the Tribunal said this was a step towards ease of living and would help in faster disposal of cases. N.V. Vasudevan, vice president of the Tribunal and members of ITAT, Chennai were present on the occasion.

ITAT was set up on 25 January 1941, and it was the first experiment in tribunalisation in the history of India. It is a second appellate authority under the direct taxes and first independent forum in its appellate hierarchy. The orders passed by the ITAT can be subjected to appellate challenge, on substantial questions of law, before the respective High Court.

The appeals before the Income Tax Appellate Tribunal are generally heard by a division bench- consisting of one judicial member and one accountant member.

Anyone Member, though with a work experience of minimum five years in the Tribunal, can decide the appeals in a single-member bench as well.

In case of conflict of opinions by the division benches on the issues involved in an appeal, the appeals are sometimes heard by the special benches consisting of three or more members- at least one of which must be a judicial member and at least one of which must be an accountant member.

GSTIN will be blocked for Generation of E-Way Bill If GST Taxpayer has not filed GSTR-3B for last Two Successive Months: CBIC [Read Advisory]

The Central Board of Indirect Taxes and Customs ( CBIC ) has enabled a new feature in the E-Way Bill system of blocking/unblocking of the taxpayers from next month, as per the rule. That is, if the GST taxpayer has not filed Return 3B for GST the last two successive months in GST Common portal, then that GSTIN will be blocked for the generation of the e-way bill either as consignor or consignee.

The CBIC said that, the taxpayer will be alerted with a cautionary message while generating the E-Way Bills, in case GST for the past 2 successive months of the consignor/consignee GSTIN has not been filed. However, from next month onwards, such GSTINs will be blocked.

On Filing of the Return-3B in the GST Common Portal, the GSTIN will get automatically updated as ‘Unblock’ within a day in the e-Waybill system and the taxpayer can continue with e-way bill generation without any cautionary message.

However, if the status is not updated in e-waybill system, then the taxpayer can do it by going to the e-Waybill portal and clicking on option Search-> Update Block Status. Enter the GSTIN, followed by the CAPTCHA and click on GO.

In case the user hasn’t filed the Returns for the last two successive months and clicked on the update button, a pop-up message as shown below will appear, the CBIC also added.

Chennai Metro hiring Chartered Accountant / Cost Accountant

The Chennai Metro Rail Limited has invited application from qualified Chartered Accountant or Cost Accountant for the post of Asst. Manager (Finance & Accounts) / Dy. Manager (Finance & Accounts) / Manager (Finance & Accounts).

Chennai Metro Rail Limited entrusted with the implementation of Chennai Metro Rail Project requires efficient, experienced and competent person for the under mentioned post on contract. The engagement on contract will not entail anyone to claim for any regular employment in CMRL.

Required Qualification and Experience:

Must be a Chartered Accountant and member of the Institute of Chartered Accountant of India or Cost Accountant and member of Institute of Cost Accountant of India with minimum 2 to 7 years of postqualification executive experience in Finance and Accounts department in a PSU or Govt Sector or in a private company or reputed Chartered Accountant firm. The candidate should have sound knowledge and experience in Accounting, MIS, Indirect Taxes and Direct Taxes.

How to Apply:

1. Applications must be in response to our advertisement quoting Employment Notification No. and Post on the application form.
2. Applications should be submitted strictly as per the prescribed format.
3. Name of the post applied for should be superscribed on the envelope containing the application.
4. Prescribed applications must be forwarded to CMRL through Post/Courier Service only. Applications forwarded through any other means including by Fax or e-mail will not be entertained.
5. Candidates who fulfill the above requirement may apply in hardcopy along with duly filled in application form (application form available in page no.5 to 7) and prescribed application fee (DD) supported by Bio-Data and one set of self-attested copies of certificate of educational qualifications, age, experience, community and latest passport size photograph to the following address on or before 21-11-2019.

CHIEF GENERAL MANAGER (HR) CHENNAI METRO RAIL LIMITED CMRL DEPOT, ADMIN BUILDING, POONAMALLEE HIGH ROAD, KOYAMBEDU, CHENNAI – 600 107.

For Further Information Click here.

No TDS on Agreement for Bulk Sale of Advertisement Space: Karnataka HC [Read Judgment]

In a recent case, the Karnataka High Court held that an agreement for bulk sale of advertisement space does not amount to contract for work as applicable under Section 194 C of the Income Tax Act.

The issue was discussed by the Karnataka HC in the case of Times VPL Limited v. The Commissioner of Income Tax. The moot point was whether the agreement for bulk sale of advertisement space amount to contract of sale or contract to work as applicable under Section 194 C of the Income Tax Act.

Section 194C provides that any person making payment to a resident person, who is carrying out any ‘work’ in terms of the contract between the ‘specified person’ and the resident contractor, is required to deduct TDS.

The facts that gave rise to the current case was that Times VPL Ltd. entered into an agreement for bulk sale of advertising space with Bennett, Coleman and Co. Ltd. The agreement was for the purchase of bulk advertisement space in the daily newspaper ‘The Times of India’ in Kannada language on a principal-to-principal (P2P) basis by transfer of the rights. The assessee while filing an income tax return, declared the income as ‘nil’. This was taken up on scrutiny and after two scrutiny by Assessing Officers, who recorded findings in favour of the assessee, the case reached before the Commissioner of Income Tax, Hubballi. The commissioner issued a notice stating that since the tax has not been deducted at source under Section 194C of the Act on the cost of advertisement space, the amount requires to be disallowed under Section 40(a) (ia) of the Act. The assessee however submitted that the contract in question was a contract for the sale of space and was not contract for the supply of goods and hence not liable for TDS.

The Commissioner set aside the orders of the assessing officers held that contract was a contract for advertising and the provision of Section 194C of the Act applies to the case of the assessee. The aggrieved assessee preferred an appeal before the Income Tax Appellate Tribunal, Bengaluru who upheld the validity of the order of the Commissioner.

The appellants submitted in the appeal before the High Court that the findings recorded by the assessing officers were in favour of the assessee,  that the contract in question is a contract for sale. The respondent argued that the officers had not examined the issue involved in the instant case while passing the order of assessment and the commissioner has exercised revisional powers under Section 263(1) of the Act. The respondent further argued that the commissioner had directed fresh assessment after giving an opportunity of hearing to the assessee. The court, however, upheld the revisional powers of the commissioner and moved to the discussions of nature of the contract.

The division bench comprising of Justice Alok Aradhe and Justice P.G.M Patil while considering the case noted that the intention and object of parties and the terms of the contract must be taken into consideration for determining the question of whether a contract constitutes one for work or is a contract for sale. Further analyzing the case, the court pointed out that by the purchase of advertisement space the appellant exercises control over such space with the right to either sell it to others or retain it for itself. Stating this the court concluded that contract in question is a contract for sale and is not a contract for work and hence not liable for TDS.

The court, apart from the order passed by the Commissioner, relied on Circular No.13 of 2006 issued by the Central Board of Direct Taxes for deciding the case.

ITAT cancels Section 12AA Registration of Young India [Read Order]

The Delhi bench of the Income Tax Appellate Tribunal ( ITAT ) has cancelled Young India ’s Registration under Section 12AA of the Income Tax Act, 1961.

The appellant, Young Indian was incorporated as a company applied for registration u/s. 12A r/w section 12AA on 31.03.2010. It was granted registration by then DIT (Exemption), New Delhi vide order/certificate dated 09.05.2011 w.e.f. the assessment year 2011-12. As a prelude, certain vital events precursor to grant of registration u/s. 12AA and antecedent to the application for registration us 12AA need to be elaborated which are germane to the issue involved.

The assessee had filed an application for incorporation of a company u/s. 25 of the Companies Act, 1956 on 14.10.2010. Memorandum of Association was subscribed by two Directors, namely, Mr. Suman Dubey, having 550 equity shares, and Mr. Satyan Gangaram Pitroda (Sam Pitroda) with 550 equity shares. License u/s. 25 of the Companies Act, 1956 was granted to YI on 23.11.2010.

Later on, both the Directors transferred their shares to Mr. Oscar Fernandes and Mrs. Sonia Gandhi; and Mr. Sam Pitroda and Suman Dubey were appointed as Directors of a company, M/s Associated Journals Limited ( AJL ) on 21.12.2010. On 13.12.2010, Mr. Rahul Gandhi was appointed as Director of YI, who acquired 1900 shares resulting in 36% stake in YI; and later on, Mrs. Sonia Gandhi became the director on 22.01.2011 having 36% of stakes with 1900 shares.

Another relevant fact to this chain of events is that various loans were advanced by All India Congress Committee [‘The AICC”] to AJL from time to time and as on 31.03.2010, there was outstanding of Rs. 88,86,68,976/- . Further loan of Rs. 1,35,000/- was received during the period 01.04.2010 to 16.12.2010. On 16.12.2010, AICC, who had given loan to AJL over the period of around Rs. 90 crores, transferred the entire loan of Rs. 90 crores due from AJL in favour of YI for a consideration of Rs. 50 lakhs. Thus, AICC assigned loan of Rs. 90 crores outstanding as payable in books of AJL to YI at Rs. 50 lakhs. Since YI did not have funds to pay consideration of Rs. 50 lakhs, it took loan of Rs. 1,00,00,000/- (one crore) from M/s. Dotex Merchandise Pvt. Ltd., Kolkata. Out of said loan, Rs. 50 lakhs were paid to AICC on 01.03.2011. However, before the payment of Rs. 50 lakhs to AICC, AJL had allotted 9,02,16,898 shares (almost 99.99% of the holding) to YI in lieu of loan of Rs. 90 crores by increasing the share capital from Rs. 1 crore to Rs. 10 crores. Thus, almost the entire shareholding of AJL went to YI. Certain additional shares of AJL were also purchased by Mrs. Sonia Gandhi, Mr. Rahul Gandhi and Mrs. Priyanka Gandhi to gain full control of AJL. At the time of making an application for registration u/s. 12AA, the assessee company disclosed the list of shareholders and directors of Young Indian during the assessment year 2011-12.

The Tribunal bench comprising of Judicial Member Amit Shukla and Accountant Member Prashant Maharishi observed that, “none of these documents proves that acquisition of AJL by the assessee company was for carrying out any charitable activities in pursuance of its objects nor any such activity was carried during the relevant period. Accordingly, this additional evidence, as filed by the assessee, though are taken on record, we do not deem fit to adjudicate on each and every document for the reasons given in the foregoing paragraphs”.

The ITAT rejected the contention of the appellant that, CIT(E) does not have the power to cancel the registration from the retrospective date and any such cancellation can only be prospective, i.e., from the date of passing of the order and in support of which certain decisions have also been relied upon.

The Tribunal said that, “From a bare reading of Section 12AA (3) it is seen that, section provides that where a trust or an institution has been granted registration and if subsequently, Pr. CIT or CIT is satisfied that the activities of the trust are not genuine or are not carried out in accordance with the objects of the trust, he may cancel the registration by way of an order in writing. Consequently, if there is a violation of any such conditions, then the registration so granted can be cancelled by the CIT”.

“The statute also provides that the Commissioner has statutory powers to cancel the registration u/s. 12A/12AA if he finds a reason to believe that the activities of the assessee are not in line with its objects or the activities carried out by the assessee is not genuine in nature. If from the date when registration has been granted, the assessee has not carried out any activity in line with its objects or the activities carried out are not genuine, then from that date itself, the registration can be cancelled because it is only when the knowledge of such breach comes to the notice of the Commissioner, then he has the power to cancel the registration from the date the notices the infringement. The cancellation of registration, whether with retrospective effect or prospective, depends upon the facts and circumstances of the case and the Commissioner has the power to cancel the registration from the time when such breach has occurred”, the Tribunal also said.

While upholding the decision CIT, the Tribunal also observed that, “even after granting of registration u/s. 12AA, no genuine activities have been carried out by the assessee either in furtherance of its objects or otherwise, which can be held to be for charitable purpose because one of the so-called purpose of acquiring AJL was not carried out at all”.

Dismissing the appeal filed by Young India, the Tribunal also added that, “CIT (E) was justified in cancelling the registration from the assessment year 2011-12, because none of the activities of the assessee was carried out in accordance with its objects nor its activities can be held to be genuine”.