Daily Tax & Corporate Law Digest
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Today’s newsletter analytically summarizes today’s top Tax & Corporate Law stories reported at taxmann.com, in a unique section-wise format.
INCOME TAX
SECTION 4 OF THE INCOME-TAX ACT, 1961 - ASSOCIATION OF PERSON - ASSESSABLE AS
Illustrations: Where assessee-AOP purchased a property and allotment letters were issued to its members who later sold said property, since assessee-AOP was fully funded by its members and assessee allowed right in the land to its members and they were real owners, income from the sale of the property was liable to be taxed in the hands of members and not in the hands of AOP - Assistant Commissioner of Income-tax v. Shree Ami Office Owner’s Association - [2023] 148 taxmann.com 130 (Ahmedabad - Trib.)
SECTION 9 OF THE INCOME-TAX ACT, 1961 - INCOME - DEEMED TO ACCRUE OR ARISE IN INDIA
Royalties/Fee for technical services - Marketing services: Payments received by the assessee, a foreign company, from its Indian customers on account of Centralized Services did not constitute a fee for technical services as defined under section 9(1)(vii) or fee for included services - Commissioner of Income-tax, (International Taxation) v. Starwood Hotel & Resorts Worldwide Inc. - [2023] 148 taxmann.com 131 (Delhi)
SECTION 23 OF THE INCOME-TAX ACT, 1961 - INCOME FROM HOUSE PROPERTY - ANNUAL VALUE
Deemed rent: Where assessee, real estate developer, held unsold flats as stock-in-trade for more than one year, and Principal Commissioner invoked revisionary jurisdiction holding that ALV of said flats was to be brought to tax as deemed rent under section 23, since AO in assessment order examined relevant facts of unsold flats and the decision not to determine ALV was in line with CBDT Circular No. 2/2018, dated 15-2-2018, Principal Commissioner erred in invoking revisionary jurisdiction - Dhirajlal Amichand Shah v. Principal Commissioner of Income-tax - [2023] 148 taxmann.com 330 (Mumbai - Trib.)
Unsold flat as stock-in-trade: Amendment to section 23 vide introduction of sub-section (5) by Finance Act, 2017 with effect from 1-4-2018 whereby property held as stock-in-trade was brought to tax, would be effective prospectively - Dhirajlal Amichand Shah v. Principal Commissioner of Income-tax - [2023] 148 taxmann.com 330 (Mumbai - Trib.)
SECTION 28(i) OF THE INCOME-TAX ACT, 1961 - BUSINESS INCOME - CHARGEABLE AS
Capital gain v. business income: Where assessee-AOP purchased a property and allotment letters were issued to its members who later sold said property, the mere fact that assessee-AOP purchased and made construction thereon itself would not be sufficient to hold that income earned on such sale of the property would qualify as 'business income and same would be taxable as capital gains - Assistant Commissioner of Income-tax v. Shree Ami Office Owner’s Association - [2023] 148 taxmann.com 130 (Ahmedabad - Trib.)
SECTION 37(1) OF THE INCOME-TAX ACT, 1961 - BUSINESS EXPENDITURE - ALLOWABILITY OF
Corporate social responsibility expenditure: Explanation 2 appended to section 37(1) by Finance Act, 2014 with effect from 1-4-2015 is applicable prospectively from the assessment year 2015-16; therefore, corporate social responsibility expenditure incurred by assessee-company on or before 31-3-2014 was to be allowed as deduction under section 37(1) - Principal Commissioner of Income-tax v. Steel Authority of India Ltd. - [2023] 148 taxmann.com 132 (Delhi)
Provision for expected loss: Where the assessee-company was awarded a project for offshore and onshore supply of supercritical turbines for a thermal power project, provision made for foreseeable loss as per Accounting Standard 7 could be allowed as a deduction if the assessee was able to justify cost escalation of contract - L&T MHPS Generators (P.) Ltd. v. Deputy Commissioner of Income-tax - [2023] 148 taxmann.com 129 (Mumbai - Trib.)
SECTION 45 OF THE INCOME-TAX ACT, 1961 - CAPITAL GAINS - YEAR IN WHICH ASSESSABLE
Illustrations: Where members of assessee-AOP had merely entered into an agreement of sale of the property on 10-1-2007 and final conveyance deed was entered into between parties on 22-5-2007 and thereafter complete payment was made, sale consideration of impugned property was taxable in the assessment year 2008-09 and not in the relevant assessment year 2007-08 - Assistant Commissioner of Income-tax v. Shree Ami Office Owner’s Association - [2023] 148 taxmann.com 130 (Ahmedabad - Trib.)
SECTION 68 OF THE INCOME-TAX ACT, 1961 - CASH CREDITS
The burden of proof: Where pursuant to a search, additions were made to the income of the assessee on account of unexplained cash credit received from certain company since additions were not based on any material found in the search and, moreover, the assessee had furnished all documents and had explained the source of credit in its original return, additions were to be deleted - Principal Commissioner of Income-tax v. Gangol Vincom (P.) Ltd. - [2023] 148 taxmann.com 126 (Orissa)
SECTION 158BC OF THE INCOME TAX ACT, 1961 - BLOCK ASSESSMENT IN SEARCH CASES - PROCEDURE FOR
The date of the panchnama last drawn is the starting point of limitation of 2 years u/s 158BE for completing block assessment - Anil Minda v. Commissioner of Income-tax - [2023] 148 taxmann.com 407 (SC)
SECTION 205 OF THE INCOME-TAX ACT, 1961 - DEDUCTION OF TAX AT SOURCE - BAR AGAINST DIRECT DEMAND ON ASSESSEE
Illustrations: Revenue cannot adjust withheld tax which has not been deposited by the deductor/employer in the Central Government Account, against the refund due and payable to assessee-employee - Sanjay Sudan v. Assistant Commissioner of Income-tax - [2023] 148 taxmann.com 329 (Delhi)
SECTION 276C OF THE INCOME-TAX ACT, 1961 - OFFENCE AND PROSECUTION - WILFUL ATTEMPT TO EVADE TAX
Tax Credit: Where self-assessment tax returns filed by the assessee had no element of concealment or any intention to evade tax which was liable to be paid, and the assessee had also paid an additional amount towards interest and other charges and explained that delayed payment of tax was due to financial difficulties beyond his control, a continuation of proceedings against assessee under section 276C(2) read with section 278B would amount to an abuse of process of Court - Sujata Electrical Infratech India (P.) Ltd. v. Deputy Commissioner of Income-tax - [2023] 148 taxmann.com 133 (Telangana)
GOODS AND SERVICES TAX LAWS
CLASSIFICATION OF GOODS
Hearing aids: Parts and accessories of hearing aids are classifiable under Tariff Item 9021 90 10 of the Customs Tariff Act, 1975 and liable to 18% GST in terms of Sl. No. 453 of Schedule III to Notification No. 1/2017-C.T. (Rate), dated 28-6-2017 - Sivantos India (P.) Ltd., In re - [2023] 148 taxmann.com 389 (AAR - KARNATAKA)
SECTION 54 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 - REFUND - TAX, REFUND OF
Where the appellate authority directed the respondents-department to disburse the refund claimed by the petitioner assessee, it would be debilitating to the rule of law if the respondents-department were permitted to withhold implementation of orders passed by the appellate authority merely on the ground that the respondents decided to file an appeal against appellate authority's order; therefore, respondents-department were directed to comply with orders passed by appellate authority - Brij Mohan Mangla v. Union of India - [2023] 148 taxmann.com 391 (Delhi)
SECTION 75 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 - DEMANDS AND RECOVERY - GENERAL
The opportunity of hearing is to be given to assessee where the adverse decision is contemplated - Sendhil Kumar v. State Tax Officer - [2023] 148 taxmann.com 394 (Madras)
SECTION 129 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 - DETENTION, SEIZURE AND RELEASE OF GOODS AND CONVEYANCES IN TRANSIT
Detention of goods and imposition of penalty while being transported with expired e-way bill is sustainable; High Court holds authority is not required to appreciate reasons for movement without valid e-way bill - Abinash Kumar Singh v. State of West Bengal - [2023] 148 taxmann.com 393 (Calcutta)
SECTION 132 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 - OFFENCES - PUNISHMENTS FOR CERTAIN OFFENCES
High Court rejects bail application on the ground of absence of change in circumstances when bail petition was rejected earlier and apprehension that witnesses may be threatened - Ashu Gupta v. State of Haryana - [2023] 148 taxmann.com 392 (Punjab & Haryana)
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FEMA BANKING AND INSURANCE LAWS
PUBLIC NOTICE NO. II/21022/23 (22)/2020-FCRA-III, DATED 24-03-2023
Govt. further extends the validity of FCRA registration certificates till 30.09.2023
Editorial Note: The Govt., in the public interest, has further extended the validity of FCRA registration certificates up to 30.09.2023 or till the date of disposal of the renewal application, whichever is earlier. The validity of certificates has also been extended for those entities whose validity was earlier extended till 31.03.2023. Also, validity of those FCRA entities whose 5 years validity period is expiring between 01.04.2023 to 30.09.2023 and who have applied for renewal stands extended to 30.09.2023.
PRESS RELEASE NO. 1898/2022-23, DATED 22-3-202
RBI Governor lays the foundation for a new ‘Greenfield Data Centre’ and Cybersecurity Training Institute’ in Bhubaneswar
Editorial Note: The Governor of RBI, Shri Shaktikanta Das, has laid the foundation stone for the establishment of a “Greenfield Data Centre’ and ‘Enterprise Computing & Cybersecurity Training Institute’ in Bhubaneswar, Odisha. The Governor highlighted the need for augmenting the existing computing infrastructure of RBI supported by cutting-edge facilities for research and capacity building in emerging areas straddling central banking, technology and cybersecurity for a future-ready RBI.
INSOLVENCY AND BANKRUPTCY CODE
SECTION 5(8) OF THE INSOLVENCY AND BANKRUPTCY CODE, 2016 - CORPORATE INSOLVENCY RESOLUTION PROCESS - FINANCIAL DEBT
Where the respondents-financial creditor submitted a reply of demand notice containing admission of loan by the corporate debtor, Form 16A and balance sheet, which clearly established that loan was granted by the financial creditor to the corporate debtor with interest, ingredients of financial debt were fully proved and, therefore, no error was found in order of NCLT admitting CIRP application against the corporate debtor - Pradeep Tayal v. Essbert Fashion (P.) Ltd. - [2023] 148 taxmann.com 135 (NCLAT- New Delhi)
OPINIONS
Excess Stock declared to bank attracts addition under section 69B of the Income Tax Act, 1961 - Amit Kumar Gupta, Advocate (Delhi High Court) - [2023] 148 taxmann.com 396 (Article)
That’s it from us for today! Stay Tuned for more updates from Taxmann.com.
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