CORPORATE AND PROFESSIONAL UPDATES 30TH JULY 2018

Direct Tax :

• Agra ITAT allows Sec. 89 relief to assessee-employee with respect to arrears received in lieu of employer’s contribution to an approved superannuation fund [taxable as perquisite u/s. 17(2)(vii)] during AY 2014-15; Rejects Revenue’s stand that the payments made by employer was perquisites u/s. 17(2), which cannot qualify for relief u/s. 89(1) as it covers salary arrears and arrears for profit in lieu of salary u/s. 17(3) only; [TS-408-ITAT-2018(AGR)]
• SC clarifies that CBDT’s office memorandum (‘OM’) dated July 31, 2017 regarding stay of demand does not interfere with AO’s power to grant stay on deposit of a lesser amount, pursuant to Revenue’s appeal challenging Delhi HC judgment in LG Electronics India Pvt. Ltd.’s (‘assessee’) case; SC gives credence to Additional Solicitor General Vikramjit Banerjee’s submission before it that the said administrative Circular of the CBDT will not operate as a ‘fetter’ on the Commissioner, since it is a quasi judicial authority; [TS-406-SC-2018]
• Calcutta HC upholds ITAT order, rejects Revenue’s stand that since possession of land owned by assessee-company was made over to developer pursuant to development agreement (‘DA’) dated February, 2007, capital gains arise in AY 2007-08 in view of Sec. 2(47)(v); HC rules that “it is only the kind of possession that is protected u/s. 53A of the Act of 1882 which is to be regarded as transfer and the mere handing over of possession of an immovable property for any other purpose may not fall within the scope of “transfer” in Section 2(47)(v);[TS-404- (HC-2018CAL)]
• Kolkata ITAT deletes Sec 68 addition for consideration on sale of shares, allows assessee-individual’s LTCG exemption claim; AO had made addition based on information from Investigation Wing that relevant scrip on which LTCG was earned was involved in bogus LTCG scam and assessee’s PAN was listed in beneficiaries identified by Investigation Wing;[TS-402-ITAT-2018(Kol)]
• Calcutta HC upholds ITAT order, rejects Revenue’s stand that since possession of land owned by assessee-company was made over to developer pursuant to development agreement (‘DA’) dated February, 2007, capital gains arise in AY 2007-08 in view of Sec. 2(47)(v); HC rules that “it is only the kind of possession that is protected u/s. 53A of the Act of 1882 which is to be regarded as transfer and the mere handing over of possession of an immovable property for any other purpose may not fall within the scope of “transfer” in Section 2(47)(v);[TS-404- (HC-2018CAL)]
• CBDT has extended the ‘Due Date’ of filling Income Tax Return from 31^st July 2018 to 31^stAugust 2018, Dated 26th July 2018 (F. No. 225/242/2018/ITA.II).
• CBDT: The date of Filing of Income tax return for A.Y 2018-19 ( Non Audit) is extended 31-08-2018 Vide Notification No . 225/242/248 dated 26-07-18.
• CBDT has revised the mandatory tax audit report Form 3CD, which is to be filed by certain taxpayers, to expand the scope of the exercise. An auditor will now have to furnish details related to GST sales, information on transactions covered by transfer pricing provisions, cash transactions and transaction involving TDS.
• The Delhi High Court directs Central Board of Direct Taxes to accept online filing of tax returns without furnishing Aadhaar number.

• The Income Tax Department is set to crack down on TDS defaul ts by government and private sector entities, especially e-retail portals, local bodies like panchayats, as the CBDT has directed its assessing officers (AOs) across the country to undertake at least 30 surveys or on-spot checks.
• The Securities Appellate Tribunal (SAT) on Thursday asked the income tax department to provide clarity on applicability of securities transaction tax (STT) on physically-settled derivative contracts.

More read:Taxation on Income from Equity and Debt Mutual Fund.

• Mumbai ITAT allows deduction for professional fees / merchant banking fees paid to PwC and other financial advisors for conducting financial and legal due diligence during AY 2008-09, observes that the very purpose of the expenditure was to raise funds to meet working capital requirements; Rejects Revenue’s stand that since the funds were raised through issue of rights shares, the payment incurred in connection therewith was capital in nature being incurred for the purpose of raising equity; [TS-413-ITAT-2018(Mum) ]
• Andhra Pradesh and Telangana HC confirms ITAT order to uphold Sec 68 addition for gifts received by assessee-invidual from his father-in-law for AY 2005-06, rejects assessee’s reliance on co-ordinate bench ruling in context of gift received by assessee from his maternal aunt; Clarifies that “this is not a case where we can import the principle ‘what is sauce for the goose is sauce for the gander'”, also points out that gift from maternal aunt which was held non-taxable in view of Sec 56(2)(v), was received after the amendment to Sec. 56(2) unlike gift from father in law which was received prior, refuses to apply spirit of said amendment to grant relief; [TS-411-HC-2018(AP)]
• Violation of principles of the natural justice by the lower authority – reliance on the statement of employees – the statement is stated to have been recorded at the time of inspection and one can easily perceive the mood in which the employee would have been – DXN Herbal Manufacturing (India) Pvt. Ltd. Vs. ITO (2018 (7) TMI 1733 – Madras HC).
• Income tax authorities to issue certificate u/s 195 or 197 within 30 days, a good step to help the charitable trust and societies to avoid harsh TDS provisions.
• Delhi ITAT allows deduction u/s. 37 for foreign exchange fluctuation losses arising to PE  (project office – PO)of assesses (a Spanish company) during AY 2014-15 on account of advance/loan received from the Head Office (‘HO’) in foreign currency towards meeting the working-capital requirement for project execution; Observes that the utilization of the amounts received from HO did not bring any capital asset into existence for the PO; Rejects AO’s contention that since PE is never assessed as an independent entity, investment/remittance by HO cannot be considered as loan, but should be treated as a capital contribution by someone in its own business; [TS-339-ITAT-2018(DEL)]
• Delhi ITAT confirms CIT(A)’s findings upholding FTS taxability on gross basis for professional fees received by assessee-individual (an NRI residing in UK) from Indian companies during AYs 2006-07 to 2009-10; Notes that assessee had returned these income on net basis in his returns of income and had also filed the TDS certificates issued by companies alongwith, rejects assessee’s stand that he mistakenly offered the receipts to tax and that these were commercial receipts for services rendered outside India, not taxable in India absent PE;  [TS-338-ITAT-2018(DEL)]
• CBDT launched the allotment of e-PAN. The facility will be available free of cost. This facility, open for a limited period of time, is available only for resident individuals holding a valid Aadhar. No physical document is required to be submitted and you simply need to fill your Aadhar and upload the signature.
• Due date to link Aadhaar with PAN extended till 31.03.2019.
• CBDT clarified that foreign companies that have their place of effective management (POEM) in India will be taxed at 40%, plus applicable surcharge and cess.
• Income Tax Due Date for Payment of TDS for the month of June, 2018 is 7th July, 2018.
• Furnishing of PAN by the transporters (GTA) – S.194C(6) and 194C(7) are independent of each other and cannot be read together to attract disallowance u/s.40(a)(ia) r.w.s.194C of the Act – ACIT Vs. Eagle Steel Industries Pvt. Ltd. (2018 (6) TMI 1509 – ITAT Ahd.)
• TODAY (31 JUL 2018)is the last date for filing Apr-Jun’18 Qtr Return in GSTR-1 for registered persons with aggregate turnover up to Rs.1.50 Crores & GSTR-6 for Jul’17-Jun’18).
• Levy of GST – Classification – composite supply – EPC Contract – standalone contract for transportation of Equipment for which separate consideration is received – same is liable to tax as a works contract as per provisions of section 2(119) of the GST Act – AAR, Maharashtra in Dinesh Kumar Agrawal (2018 (7) TMI 1691).
• Central Government has now given effect to the recommendations of GST Council vide various notifications dated July 26, 2018 and all such notifications, unless specifically mentioned, shall be effective from July 27, 2018.
• Union Finance minister said that the 28% category of goods in under GST is being phased out and the bracket currently covers mostly luxury items or sin goods. The tax on other items as cement, air-conditioners, large screen televisions and a handful of others could also be reduced as revenues rise.
• One of the significant changes proposed by the GST Council in its recently concluded 28th meeting on July 21, 2018 is inclusion of following transactions in Schedule III to the CGST Act, 2017 :Retrospective Application of Merchant Trading, In-bond sales and High sea sales covered in Schedule III.
• CBDT Notification No. 112/2024 (Issued October 15, 2024):
  • Rule 21AA: The marginal heading and all references to “section 89(1)” are updated to “section 89,” broadening the scope beyond section 89(1) and simplifying the rule’s language.
  • Rule 26B: Assessees can now submit information on non-salary income and tax deductions or collections at source for the financial year using a new Form No. 12BAA, enhancing transparency in declaring diverse income sources.

More read:Taxation on Income from Equity and Debt Mutual Fund

• FM Jaitley hints at rationalizing GST Rates as Revenue Surge to almost 1 Lac a month as India celebrates the 1^stAnniversary of GST launch, on 1^st July, 2018.
• E-commerce companies to face tax audit over GST refund issue: The anti-profiteering authority has ordered audit of major e-commerce companies like Flipkart, Amazon and Snapdeal, to find out whether they have refunded the excess GST collected from the consumers.
• Central Government has now given effect to the recommendations of GST Council vide various notifications dated July 26, 2018 and all such notifications, unless specifically mentioned, shall be effective from July 27, 2018.
• The Goods and Service Tax Council would exclusively consider issues related to micro, small and medium enterprises taxpayers at its 29th meeting scheduled for August 4, a finance ministry official said.
• GST Tribunal (GSTAT) will come into effect soon, providing a higher judicial forum for businesses to redress disputes under the new tax framework. The GST Council approved creation of the tribunal with a national bench in Delhi and three regional benches in Chennai, Kolkata and Mumbai.
• CBIC has notified that the services supplied by individual Direct Selling Agents (DSAs) to banks/ non-banking financial company (NBFCs) are taxable under Reverse Charge Mechanism (RCM). Notification No. 15/2018

FAQ on GST Audit:

• Query:Who will bear the cost of special audit?
• Answer:The expenses for examination and audit including the remuneration payable to the auditor will be determined and borne by the Commissioner.
• Query: When can a taxable person pay tax on a provisional basis?
• Answer:As a taxpayer has to pay tax on self-assessment basis, a request for paying tax on provisional basis has to come from the taxpayer which will then have to be permitted by the proper officer. In other words, no tax officer can suomoto order payment of tax on provisional basis. This is governed by section 44A of MGL. Tax can be paid on a provisional basis only after the proper officer has permitted it through an order passed by him.
• Query: Under what circumstances a best judgment assessment order issued under section 46 be withdrawn?
• Answer: The best judgment order passed by the Proper Officer under section 46 of MGL shall automatically stand  withdrawn if the taxable person furnishes a valid return for the default period (i.e. files the return and pays the tax as assessed by him), within thirty days of the receipt of the best judgment assessment order.

FAQ on E-WAY BILLS:

• Query: Which types of transactions that need the e-way bill?
• Answer:For transportation of goods in relation to all types of transactions such as outward supply whether within the State or interstate,  inward supply whether from within the State or  from interstate including from an unregistered persons or for reasons other than supply also e-way bill is mandatory.

MCA Update:

• Form DIR6 is likely to be revised on MCA21 Company Forms Download page w.e.f 26th JUL 2018. Stakeholders are advised to check the latest version before filing.
• Updating of Email ID and Mobile number in DIR-6 has been temporarily disabled till further notice. Stakeholders may kindly take note..
• MCA notified that Every Director (including Disqualified Director) who has been allotted DIN on or before 31st March, 2018 and whose DIN is in ‘Approved’ status, would be mandatorily required to file form DIR-3 KYC on or before 31st August, 2018.

• With an intent to update the registry, MCA would be conducting KYC of all Directors of all companies annually through a new eform viz. DIR-3 KYCto be notified and deployed shortly on the MCA portal.
• Updating of Email ID and Mobile number in DIR-6 has been temporarily disabled till further notice. Stakeholders may kindly take note.
• Nearly 5.90 Lac (34%) of the 17.90 Lac Companies registred in India are in-active.
• (Intimation of change in particulars of Director to be given to the Central Government)

RBI Update:

• Directions under Section 35A of the Banking Regulation Act, 1949 (AACS) – The Kapol Co-operative Bank Ltd, Mumbai, Maharashtra.

• The Monetary Policy Committee (MPC) will meet during July 30 to August 1, 2018 for the Third Bi-monthly Monetary Policy Statement for 2018-19. The resolution of the MPC will be placed on the website at 2.30 pm on August 1, 2018.
• The Reserve Bank of India has released the data on External Commercial Borrowings (ECB), Foreign Currency Convertible Bonds (FCCB) and Rupee Denominated Bonds (RDB)both, through Automatic Route and Approval Route, for the month of May 2018.
• RBI Enforcement action framework in respect of statutory auditors for the lapses in the statutory audit of commercial banks. – vide Press Release: 2017-2018/3425 – (29/06/2018)

SEBI UPDATES

• SEBI proposed Unified Payments Interface (UPI)-based payments for retail investors investing in IPO. The move will help cut down the time taken between closing of an IPO and listing of the security from current six days to just three days.
• SEBI proposed measures to provide promoters a say in the price offered to shareholders of companies that are planning to delist from stock exchanges. The proposal is aimed at plugging loopholes in the current delisting method for companies. Issuing a draft paper, Sebi has suggested for a price discovery as per reverse book building (RRB) method, along with considering counter offer of promoter .

For details refer to the circular:

SEBI has extended the date from 30 June to 15 Sept 2020 for the filing of financial results

• SEBI barred more than 30 entities from the securities market for at least ten years for alleged fraudulent transactions in the shares of SMS Techsoft.

OTHER UPDATES

• Parliament passed the Fugitive Economic Offenders Bill to prevent economic offenders from fleeing the country and evading the legal process. It also gives teeth to the Enforcement Directorate to confiscate the property of fugitive economic offenders.
• Cash-on-delivery (COD) method of payment option provided by online retailers such as Flipkart and Amazon may be a regulatory grey area as per the Reserve Bank of India’s (RBI’s)
• India will soon lay down the ground rules for professionals to assess the value of businesses, including those slipping into bankruptcy, according to Insolvency and Bankruptcy Board of India (IBBI) chairperson M.S. Sahoo.
• ICAI vide announcement dated July 25,2018 has requested the members to add/update their mobile number and email-id in the records of ICAI in order to enable the ICAI to send bio-data of candidates, important election related announcements, etc. to members.
• Cheque bounce law passed in lok sabha on 23.07.18. 20 % immediately to pay to party, 20 % to deposit in court, 100 % to pay with interest if found guilty within two month. Penalty will be charged 20% to 100% for guilty by court.
• North Delhi Municipal Corporation has extended the last date for payment of property tax and availing the rebate of 15% from June 30 to July 15.

KEY DUE DATES

31 July 2018 –

• Quarterly statement of TDS deposited for the quarter ending June 30, 2018
• Annual return of income for the assessment year 2018-19 for all assessee other than (a) corporate-assessee or (b) non-corporate assessee (whose books of account are required to be audited) or (c) working partner of a firm whose accounts are required to be audited or (d) an assessee who is required to furnish a report under section 92E.
• Quarterly return of non-deduction of tax at source by a banking company from interest on time deposit in respect of the quarter ending June 30, 2018
• Statement by scientific research association, university, college or other association or Indian scientific research company as required by rules 5D, 5E and 5F (if due date of submission of return of income is July 31, 2018)
• Application in Form 9A for exercising the option available under Explanation to section 11(1) to apply income of previous year in the next year or in future (if the assessee is required to submit return of income on or before July 31, 2018)
• Statement in Form no. 10 to be furnished to accumulate income for future application undersection 10(21) or 11(2) (if the assessee is required to submit return of income on or before July 31, 2018)
• GSTR-5A (Jun 2018)-Jul 20th, 2018Due date for claiming foreign tax credit, upload statement of foreign income offered for tax for the previous year 2017-18 and of foreign tax deducted or paid on such income in Form no. 67. (If the assessee is required to submit return of income on or before July 31, 2018.)
• GSTR-6 (Jul’17 – Jun’18)- Jul 31st, 2018
• GSTR-5 (Jun 2018)-Jul 20th, 2018
• GSTR-4 (Apr-Jun, 2018)-Jul 18th, 2018
• GSTR-3B (Jun 2018)-Jul 20th, 2018
• Quarterly return for registered persons with aggregate turnover up to Rs. 1.50 Crores- GSTR-1 (Apr-Jun, 2018)-Jul 31st, 2018
• Turnover exceeding Rs. 1.5 Crores or opted to file monthly Return GSTR-1 (Jun 2018)- Jul 10th, 2018

30 July 2018 –

• Quarterly TCS certificate in respect of tax collected by any person for the quarter ending June 30, 2018
• Due date for furnishing of challan-cum-statement in respect of tax deducted undersection 194-IA for the month of June, 2018
• Due date for issue of TDS Certificate for tax deducted under section 194-IB in the month of June, 2018