In Doshi Accounting Services vs. DCIT, the Special Bench of the ITAT has held that the transfer pricing provisions are applicable even to a case in which the income of the assessee is eligible for 100% tax exemption and is not chargeable to tax in India. Advocate Shashi Bekal has conducted an in-depth analysis of the judgement and explained its nuances. He has also argued that the judgement may require reconsideration
Recently, the Hon’ble President of the Income Tax Appellate tribunal (ITAT) on a reference made by a Division Bench constituted a Special Bench to decide the following question of law (1) :
“Whether or not the provisions of Section 92 can be invoked in a situation in which income of the assessee is eligible for tax exemption or tax holiday and thus not actually chargeable to tax in India, or in a situation in which there cannot be any motive in manipulating the prices at which international transactions have been entered into?”
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Advocate Arjun Gupta has examined the taxability of gains arising from penny stocks in the light of the recent amendment to section 68 of the Income-tax Act and judgements of various Courts. He has argued that the amendment imposes an impossible burden upon taxpayers and is unworkable. He has also argued that certain judgements of the High Courts require reconsideration
The term ‘Penny Stock’ has hitherto not been defined under any Indian enactment currently in force but has often been made the subject of extensive tax litigation currently in process. The term could be defined as ‘a stock traded at a price which is unusually low’ thereby deriving its identity.
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CA Sunil Maloo has explained the provisions of section 270A, which levies penalty for “underreporting” and “misreporting” of income, in a detailed manner. He has referred to important judicial precedents to support his contentions. He has argued that Sections 270A and 270AA serve two purposes of the Legislation, namely, that of punishing the wrongdoers and also providing immunity to occasional and unintentional defaulters
Penalty u/s 271(1)(c) of the Act has been probably one of the most litigated provision of the Income Tax Act. However, to rationalize the same, Legislation has revamped the entire penalty provisions from shifting the defaults of ‘concealment or furnishing inaccurate particulars of income’ to new concepts of ‘Underreporting or Misreporting of the Income’ vide newly inserted Section 270A with effect from 01/04/2017. As the new penalty provisions is applicable from AY 2017-18 onwards, for which the Assessments are presently ongoing, it is important to analyse the new provisions at this juncture.
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Sh. Krishna Mohan Prasad, the Pr. DGIT, has argued with conviction that the Department should accept the orders of the CsIT(A) which are in favour of the taxpayer and not file appeals against them. He has explained that if the Government is reconciled to trusting taxpayers and accepting 99% of the returns without any scrutiny, there is no reason why a judicial decision given in favour of the taxpayer by a senior official of the Department should not be accepted
Article in the “Taxalogue” titled “Reduction of Income Tax Litigation”
Sh. Krishna Mohan Prasad is an IRS officer of the 1984 batch.
He is currently posted as the Principal Director General of Income Tax, Directorate of Legal & Research, New Delhi.
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Firoze B. Andiyarujina, Senior Advocate and Sashank Dundu, Advocate, have provided a masterful explanation of the precise manner in which e-assessment will work in practice. The authors have referred to all the statutory provisions and circulars issued by the CBDT. They have also identified several issues and controversies that are likely to arise during e-assessment and provided a clear-cut explanation for each of these
E-Assessment Scheme (2019) 417 ITR(St.) 12
The E-Assessment scheme or the ‘Faceless Assessment’ involves creation of e-assessment centres at national and regional levels; auto-allocation of cases among these centres. The scheme marks a significant modification in the manner in which tax assessments will be undertaken.
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Snehal Kanzarkar and Sara Jain, both 5th year law students at MNLU Mumbai, have examined the extent of coverage of e-commerce transactions under the Income-tax and GST and explained the various advantages and disadvantages of the respective legislation. The authors have also offered valuable suggestions on how the present law and practices can be made to be in consonance with the prevailing international standards so as to achieve better compliance and and prevent tax evasion, especially by non-resident enterprises
1. Domestic Taxation
1.1. The digitalization of every aspect of life has led to an exponential growth of e-commerce transactions in the recent years, which necessitates the need to regulate and tax these transactions. This paper discusses the taxation of e-commerce transactions under the GST Act,2017 and the Income-tax Act, 1961. It is divided in two parts. The first part deals with the taxation of e-commerce transactions within the country i.e. domestic taxation and the second part deals with the taxation of international e-commerce transactions i.e. international taxation. The domestic aspects of taxation are discussed here in reference to the GST Act, 2017. This part is sub-divided in various sections, which elaborate on the challenges in taxation of the e-commerce under the earlier indirect tax regime [i] and the need for the GST Act and its advantages over the earlier regime. [ii] Further, it explains the taxation of e-commerce taxation in two parts i.e. taxation of the e-commerce operators under the CGST Act, IGST Act and the SGST Act [iii] the taxation of intermediaries under IGST Act [iv].
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CA Pratik Sandbhor has dealt with the important questions (i) whether unabsorbed depreciation can be set off against any head of income and (ii) whether unabsorbed depreciation can be carried forward in perpetuity. He has answered the questions with reference to the statutory provisions, Circulars issued by the CBDT and the judgements on the point
With the decision of Hon’ble Supreme Court in case of Tasgaon Taluka SSK Ltd. – 412 ITR 420 holding that Excess Cane Price(ECP) contains element of profit distribution and the said profit element embedded in such ECP shall be disallowed, the SSK’s shall be facing huge tax demands. In such circumstances the SSK’s seek some sigh of relief form the set off losses carried forward over the years to reduce the mounting tax burden. Substantial portion of such losses includes Unabsorbed Depreciation which has popularity of being carried forward in perpetuity. But can it be actually carried forward perpetually and be set off against any head of income. Lets take a further dive to decipher the true position in respect of the following two issues:-
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In Circular No. 29 dated 02.10.2019, the CBDT has expressed the view that the tax credit of MAT paid by a domestic company exercising option under the newly inserted Section 115BAA of the Act shall not be available on the ground that the charging provisions of Section 115JB are itself not applicable to such a company. CA S. Venkatraman has examined the correctness of this view in the light of several judgements of the Supreme Court and opined that the stand of the CBDT is not correct and requires reconsideration
1) The Taxation Law (Amendment) Ordinance 2019 (the Ordinance) promulgated by the President of India on September 20, 2019, inserted a new provision, viz. Section 115BAA in the Income Tax Act (the Act) with effect from Assessment Year 2020-21, giving an option to a domestic company to pay Income Tax at a lower rate at 22% (plus surcharge and Cess, as applicable) for any assessment year, beginning from A.Y.2020-21, subject to certain conditions enumerated in sub-section (2) of Section 115BAA.
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Firoze B. Andiyarujina, Senior Advocate and Sashank Dundu, Advocate, have conducted a detailed analysis of Circular dated 09.09.2019 issued by the CBDT on the subject of identification and processing of cases for prosecution of offenses under Direct Tax laws. The learned authors have raised important issues regarding the setting of the “collegium” and the concept of a “habitual defaulter“. They have also questioned whether the “administrative approval” by the collegium can be challenged by the alleged offender. The authors have also offered valuable suggestions on how the objective of the CBDT, to spare spare occasional defaulters from harassment, can be better achieved
1.1. Central Board of Direct Taxes, CBDT, in an attempt to limit initiation of prosecution to deserving cases and also to provide an opportunity to the assessees to file a compounding application beyond the period of limitation as a one-time measure till 31.12.2019, issued two circulars on 09.09.2019.These circulars have been analysed for the benefit of tax professionals and public at large in the following write-up.
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CA Ashish Chadha has provided a lucid commentary on the issue of whether a resident is entitled to claim credit for the foreign tax paid by him against the tax payable in the contracting state. The author has analyzed the judgements of the foreign courts on the subject and explained them in the context of the Indian law and judgements of Indian courts
The Federal Court of Australia, very recently, dealt with a fascinating question: whether a taxpayer (resident of Australia) claim excessive Foreign Tax Credit (‘FTC’). The question before the Court was that though only 50% of the capital gain derived from sale of investments in the United States (‘US’) was taxable in Australia, could the taxpayer claim FTC in Australia for the tax paid in US on the entire amount of capital gain. In that context, the Australian Court examined Article 22(2) of the tax treaty between Australia and the US regarding ‘Relief from double taxation’.
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