CA Rajendra Agiwal has provided valuable insights on the question whether a notice issued in the name of a deceased assessee is valid or not. He has also analyzed whether the “co-operation” of the legal representatives makes a difference to the legal position in the context of section 292BB of the Income-tax Act, 1961. All the relevant statutory provisions and important judgements of the Courts and Tribunal have been referred to by the ld. author
1. To challenge validity of notice/assessment proceedings is not very uncommon in the proceedings under the Income Tax Act.
2. In multiple cases of an individual and other entities these issues are coming up very frequently.
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Advocate Arjun Gupta has provided much needed clarity on the law relating to the levy of penalty under sections 271(1)(c), 270A and 270AA of the Income-tax Act, 1961. He has put the statutory provisions in their correct perspective and also dealt with all the important judgements of the Supreme Court and High Courts as well as Circulars issued by the CBDT. He has also opined on whether an assessee should be allowed to escape penalty on the ground that the default was by “inadvertence“
Introduction- Penalty under Section 271(1)(c) of the Act
When an assessment order is made under the Income Tax Act, 1961(the “Act”) certain additions and disallowances are made which enhances the total income of the assessee. In addition to the assessment order, the Act has made provision for the imposition of various penalties to be levied by the concerned authority so as to deter the assessee from repetitious blameworthy/contumacious conduct. This Article seeks to analyse the penalty leviable under Section 271(1)(c) of the Act. The basic essentials/requirements of a penalty under Section 271(1)(c) are listed herein below:
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Section 201 of the Income-tax Act, 1961 imposes strict consequences upon the payer of a sum for failure to deduct tax at source and/ or for failing to deposit the TDS with the Government. CA Manoj Kumar Mittal has explained the provision in the form of a FAQ. All important questions which are of day-to-day relevance have been asnwered by the learned author in the FAQ
Section 4 is the charging section. Under section 4(1), the total income for the previous year is chargeable to tax. Section 4(2), inter alia, provides that in respect of income chargeable under sub-section (1), income-tax shall be deducted at source where it is so deductible under any provision of the 1961 Act which, inter alia, brings in the TDS provisions contained in Chapter XVII-B. In fact, if a particular income falls outside the section 4(1), then TDS provisions cannot come into it.
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Advocate Aditya Ajgaonkar has vehemently argued that section 194N of the Income-tax Act, 1961, which creates an obligation to deduct tax at source at the time of withdrawal of cash, violates Articles 21, 265 and 300A of the Constitution. He has put forth his arguments in a logical and persuasive manner and has made extensive reference to several landmark judgements
Privacy, Deprivation Of Property And Errant Public Policy. Ruminating Upon The Constitutionality Of Section 194N With Regard To Articles 21, 265, 300A Of The Constitution Of India After The Amendment By The Finance Act, 2020
The Finance Act (No.2), 2019, introduced Section 194N into the Income-tax Act, 1961 (herein after referred to as ‘the Act’). Amended already without discussion, or without even a mention in either the budget speech or the memorandum or in the Finance Bill, 2020, the Section has managed to spread its tentacles and become more onerous without ever being on a sound constitutional footing. Though there is a lot of literation already on the subject, this article seeks to revisit the Section and weigh the possible challenges that this Section could face when it’s constitutionality is concerned with regard to its raison d’être (claimed reason for existence) and its possible conflict with important Constitutional rights such as Right to Property and Right to Privacyqua Right to Life. Considering the fact that the deck for the triggering of the Section has been lowered to cash withdrawal of rupees Twenty lakh only as opposed to the earlier deck of Rupees one crore and the fact that it could possibly fall foul of Article 21 of the Constitution of India, even in the case of those persons who are regular filers of Income tax Returns upon hitting the revised cash withdrawal limit for which no tax need be deducted at source for non-filers of Income Tax Returns.
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CA Vinay V. Kawdia has explained the entire law, relating to the taxation of a slump sale under sections 2(42C) and 50B of the Income-tax Act, 1961, in the format of a FAQ. He has answered all conceivable questions and also referred to all the important judgements on the subject. The implications under the GST have also been briefly referred to
1) What is slump sale under The Income Tax Act?
The concept of slump sale was incorporated in the Income Tax Act [The IT Act] by the Finance Act, 1999 by way of section 50B. Section 2(42C) was also inserted defining the term ‘Slump Sale’ as transfer of one or more undertakings as a result of the sale for a lump-sum consideration without values being assigned to the individual assets and liabilities.
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Advocate P. C. Yadav has pointed out there is presently a conflict of opinion amongst the various Benches of the Tribunal as to the correct interpretation of the term “tested party” in the Transfer Pricing regulations read with the OECD Guidelines. The ld. author has explained the genesis of the conflict and requested that it should be resolved speedily, preferably by a judgement of the Special Bench
1. In my earlier Article, I have deliberated on the selection of most appropriate method for computing the ALP of an international transaction or international transactions. Now upon the huge demand of my followers and loved ones I am making this Article, which is the next step in Transfer pricing and plays an important role in studying the Transfer Pricing law. This is known as selection of the tested party in an international transaction.
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CA Naresh Kumar Kabra has provided interesting insights into the provisions of The Micro, Small and Medium Enterprises Development (MSMED) Act, 2006. He has pointed out that certain important changes in the definition of MSME have been incorporated under the “Atmanirbhar Bharat Package” and a new procedure of Udyam Registration has also been introduced. All of these important aspects have been explained by the ld. author in a succinct manner
Micro, Small and Medium Enterprises (MSME) sector has emerged as a highly growing and dynamic sector of the Indian economy over the last decade. India has more than 6 crore units falling under MSME categories which contribute approximately 29% to the country’s GDP. These enterprises not only play crucial role in providing large employment opportunities at comparatively lower capital cost than large industries but also help in industrialization of rural & backward areas, thereby, reducing regional imbalances, assuring more equitable distribution of national income and wealth. MSMEs are complementary to large industries as ancillary units and this sector contributes enormously to the socio-economic development of the country.
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Advocate Sashank Dundu has explained in detail the entire law under sections 28(iv) and 41(1) of the Income-tax Act, 1961 relating to the taxability of waiver of loans, given for capital purposes and for trading purposes. The learned author has referred to all the important judgements on the issue and explained precisely their implications. He has also offered valuable practical guidance on the documentation that assessees should maintain to ensure that the waiver of their loans is taxed correctly and as per the law
Sr. No. Particulars
1.4 Recent Bombay High Court Decision
2 Taxability of waiver of loans: Judicial analysis
3.1 Taxability u/s 28(iv)
3.2 Taxability u/s 41(1)
4 Definition of ‘Trading liability’
5 Liability considered non-taxable
6 Cases where cessation of trading liability was held to be taxable
7 Law laid down by apex Court in Mahindra and Mahindra Ltd.
8 Facts of Mahindra & Mahindra Case
9 Cases where deductionu/s 36(1)(iii) is claimed
10 Situation where Loan is taken for one purpose but utilised for another purpose
11 Interplay between s.41(1), s.28(iv) and s.56(2)(x)
12 Other Issues
12.1 Depreciation and its effect
12.2 MAT provisions
13 Practical Guidance
1.1. Impact of Covid -19 pandemic may affect a number of Assessees and their businesses. A large number of Assessees may not be able to repay their loan or interest or both. Most of the Assessees may approach the banks or other financial institutions for waiver of loans and interest. What will be the consequence of waiver of loan and the interest thereon, from the tax angle, though seemingly settled by the recent judgement of the Apex Court in the case of Mahindra& Mahindra, various rulings of other high courts by following or referring to another decision of Supreme Court in the case of TVS Sundaram Iyengar makes it a debatable issue. Recently,however, the Honourable Bombay High Court, in a land mark judgement, in Essar Shipping Ltd v .CIT (Bom) (HC) www.itatonline.org dt.5/March/2020, held that waiver of loan cannot be assessed as benefit or perquisite. Considering the importance of the subject I am revising my earlier article on the subject “The law on taxability of loan waiver“ (Posted on May 2018 ) www.itatonline.org for the benefit of readers.
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In Ramnath & Co. vs. CIT, the Supreme Court has taken the view that a beneficial provision has to be interpreted ‘strictly’ and the benefit of an ambiguity in its interpretation should go to the Revenue. Advocates Harsh M. Kapadia and Ravi Sawana have argued that this view is erroneous and runs counter to the law laid down by the Supreme Court itself in several earlier judgements. The ld. authors have backed up their submission with a detailed discussion and given persuasive reasoning
Under tax laws, the ever persistent rule of interpretation relating to a beneficial provision has been that in case of ambiguity, always favour the taxpayer by reading the provision ‘liberally’, so as to further the objective of incentive beneficial provision. This rule has recently been revisited and, to an extent, digressed by a division bench of the Hon’ble Supreme Court in Ramnath & Co. v. CIT (2020) 116 taxmann.com 885. The Hon’ble Court held that the ‘principles of liberalism’for interpreting an ‘incentive based deduction provision’ is not a ‘sound statement of law’, rather, such a provision must be interpreted ‘strictly’ and any ambiguity in interpretation of such a provision would be tipped in favour of the Revenue. The burning question that now arises is whether the Hon’ble Supreme Court has departed from the well-established principle of interpretation and unsettled the law? Do incentive based deduction provisions no longer require a ‘liberal’ reading?
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CA Pranshu Singhal has prepared a useful guide in which he has explained the various amendments ushered in by the Finance Act, 2020 to the law on registration of charitable trusts and institutions under the Income Tax Act, 1961. He has highlighted the problems that the entities are likely to face and also offered suggestions on the remedies available. The recent amendments announced by the Finance Minister in the wake of COVID-19 pandemic, as applicable to charitable entities, have been duly referred to by the ld. author
Charity or philanthropy has always been virtue of the mankind. In the Indian tax jurisprudence, the entities engaged in charitable activities have always enjoyed benefits in the form of exemptions and deductions.
Charitable trusts or institutions can avail the exemptions, specially that of section 11, provided under Income Tax Act, 1961 only if they are registered under this Act by virtue of provisions of Section 12A/12AA of the Act (now Section 12AB).
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