Saturday, April 29, 2017

Apex Court accepts Rs 2,000 crore post-dated cheques from Subrata Roy

The Apex Court has accepted Sahara India Pariwar Chief, Subrata Roy’s undertaking to deposit two post - dated cheques for a sum of Rs. 1500 crores and Rs. 552 crores, respectively, both drawn in favour of SEBI-Sahara refund account. Further, it has also warned him that if the cheques cannot encashed, then he will be sent to Tihar Jail. -[2017] 80 370 (SC)

SEBI proposes to make mandatory appointment of monitoring agency for IPOs above Rs. 100 crore

SEBI in its board meeting held on April 26, 2017 has taken various decisions towards development of derivative market in India. Following are the major steps to give boost to the primary market:

a. Mandatory appointment of monitoring agency: SEBI has proposed to make mandatory appointment of monitory agency where the issue size is more than Rs. 100 crore.

b. E-wallets for mutual funds: To promote digitalization in mutual funds, SEBI has proposed to allow investment up to Rs. 50, 000 per year in mutual fund schemes through e-wallets. However, redemption of such investment can be made only through bank account of the unit holder.

c. Amendments to Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012: To enable the Commodity Derivatives Exchanges to organize trading of ‘options', SEBI has approved of a proposal to amend the relevant provisions of the Securities Contracts (Regulation) (Stock Exchanges and Clearing Corporations) Regulations, 2012.

d. Inclusion of RBI registered systemically important NBFCs in the category of QIBs: SEBI has approved of the proposal of inclusion of systemically important NBFCs registered with RBI having a net worth of more than Rs. 500 crore in the category of QIBs.

Thursday, April 27, 2017

SC upholds HC’s ruling on Formula One Championship; Budh International Circuit treated as PE


a) Formula One World Championship Limited (FOWC) granted Jaypee Sports International Ltd. (Jaypee) right to host, stage and promote F-1 Grand Prix of India event for a consideration of US$ 40 millions.

b) Authority for Advance Ruling (AAR) held that consideration paid to FOWC wasn’t taxable in India as FOWC did not have any PE in India. However, High Court of Delhi reversed the findings of AAR and treated Buddh International Circuit as PE for FOWC. 

The issue before the Supreme Court was as under:

Whether FOWC was having any 'Permanent Establishment' (PE) in India in terms of Article 5 of DTAA?

The Supreme Court held as under:

1) As per Article 5 of the DTAA, the PE has to be a fixed place of business ‘through’ which business of an enterprise is wholly or partly carried on.

2) During the event and as well as two weeks prior to it and a week succeeding it, FOWC had full access through its personnel to the Buddh International Circuit.

3) Such access or right to access was not permanent but was for a period up to six weeks at a time during the F-1 Championship season. Further, as the tenure of contract was for five years, it meant that such an access for the period in question was of repetitive nature.

4) Since FOWC carried on business in India through a fixed place of business, namely, the Buddh International Circuit, It couldn’t be denied that Buddh International Circuit was not a PE for FOWC. - [2017] 80 347 (SC)

Debtor can’t raise dispute on existence of debt to avoid initiation of insolvency process by creditor

Disputes raised by Debtor in reply to demand notice from operational creditor were not sustainable as corporate debtor didn’t raise any objection for disputing existence of debt against operational creditor before issuance of statutory notice under section 8 of the Insolvency and Bankruptcy Code, 2016.

Merely mentioning dispute in reply to the notice u/s 8 will not amount to dispute being in existence. Therefore, petition for initiation of Corporate Insolvency Resolution process by Operational Creditor was to be admitted - [2017] 80 320 (NCLT - Mum.)

Payment for Usage of Marks/Logos - Whether Royalty?

How crucial marks/logos/designs (collectively hereinafter referred to as "marks") are for an enterprise is a well acknowledged fact. In the current dynamic business scenario an entity's identity and existence are dependent on how well it is able to establish itself in the minds of the people. To achieve this objective, organisations constantly undertake extensive advertisements and promotional activities. With businesses being carried on across the borders, multinationals join hands to increase their global presence.

Taxation in India, being based on "source based taxation" principles, revenue authorities perceive every cross border transaction with suspicion and attempt to levy tax on the premise that the source (accrual) of a payment is based in India. Accordingly, revenue has always regarded the payment for use of marks as Royalty, both in terms of section 9 of the Income-tax Act, 1961 (hereinafter referred to as "Act") and under the provisions of the Double Taxation Avoidance Agreement ('DTAA').

In this article, an endeavour has been made to touch upon the sensitive issue of taxability of consideration received by the foreign companies with respect to use of their marks in India.

Click here to view full article

Sale proceeds of land appurtenant to residential house is entitled to section 54 relief: ITAT

The issue before the Tribunal was as under:

Whether sale proceeds of land appurtenant to the building areentitled to deduction under section 54?

Tribunal held in favour of assessee as under

1) The land sold by the assessee was forming part of the residence and all the property was duly assessed to house-tax and was self-occupied by the occupants, viz., the assessee and his family members. Under section 54, the legislature has used the expression "being buildings or lands appurtenant thereto and being a residential house’.

2) The Karnataka High Court had examined these expressions while construing the provision of section 54in the case of C.N. Anantharam v. Asstt. CIT [2015] 55 282/230 Taxman 34 (Kar.)and had held that the deduction under section 54 is available even if the land, which is appurtenant to the residential house is sold. It is not necessary that the whole of the residential house should be sold because the legislature
has used the words "or" which is distinctive in nature.

3) In the instant case, it was not the case of Assessing Officer (AO) and CIT(A) that the land was not appurtenant to the residential house. Here assessee had sold only the land appurtenant to the house and not residential house which, according to the Karnataka High Court, was not a requirement under the law and exemption under section 54 was also available to the land which was appurtenant to the house.

4) The sale deed itself showed that the land was part of residential house. Therefore, the exemption claimed under Sec. 54 had to be allowed to assessee. - [2017] 80 223 (Delhi - Trib.)

Salary deduction for not serving during notice period couldn’t be taxed: ITAT

Facts :

a) Assessee declared salary income after deducting amount for not serving during notice period with two of his employers.

b) During the course of reassessment proceedings, Assessing Officer (AO) added the salary amount deducted by the employers for not serving during notice period to the income of assessee.

c) On appeal, CIT(A) upheld order of AO that no such deduction is available under Section 16 of the Act and the salary income is taxable on due basis or on paid basis. Aggrieved-assessee filed the instant appeal before Tribunal.

Tribunal held in favour of assessee as under:-

1) Employers had made deduction from the salary which was paid to the assessee during the year under consideration because of leaving the services as per agreement made between the assessee and the respective employer.

2) This was a case of recovery of the salary which was already made to the assessee for which Section 16 of the Act couldn’t be referred to.

3) Assessee had actually received the salary from his previous employers after deducting the notice period amount as per the job agreement with them.

4) Therefore, salary received by the assessee could only be taxed in the hands of assessee. - [2017] 80 297 (Ahmedabad - Trib.)

Friday, April 21, 2017

Govt. extends due date for deposit under PMGKY to April 30, 2017

Government has extended date for making interest-free deposits for declarants who have paid tax and penalty under the Pradhan Mantri Garib Kalyan Yojna (PMGKY).

Under the PMGKY scheme, declarants had to deposit 25% of amount declared, in a bank for 4 years without interest. Due date for deposit such amount was March 31, 2017 which has now been extended till April 30, 2017.

Earlier, CBDT had also notified that if an assessee had made payment of tax, surcharge, penalty and deposit in the banks by the closing hours of 31st March, 2017, he shall be allowed to file declaration under the Scheme by the 10th of April, 2017.

Sec. 69A additions upheld as assessee failed to prove that bedroom from where cash was seized belonged to his sister


a) Search action was carried out at the residence of the assessee. During search, some unexplained cash was found and seized from bedroom of assessee's sister.

b) Assessee contended that cash received from the bedroom of sister belonged to his sister who came to stay with him few days back and, therefore, the same could not be included as unexplained cash in the hands of the assessee.

c) Assessing Officer (AO) did not accept the contention of the assessee and added entire amount of cash found as unexplained under section 69A.

d) CIT(A) and ITAT confirmed the order of AO. Aggrieved-assessee filed instant appeal before the High Court.

High Court held in favour of revenue as under:

1) Assessee failed to bring on any record that the bedroom was in exclusive possession of the sister. Even, there were contradiction in the statement of assessee recorded under section 132(4) and the affidavit of the sister.

2) Assessee had stated that out of amount found in cash, Rs. 2,50,000 lakh belonged to his sister whereas sister in her affidavit stated to had cash possession of Rs. 6,38,800 which was received by her from in-laws being Stridhan.

3) There were material contradiction in the statement of assessee and his sister with respect to ownership of actual amount in cash. Further no evidence was produced with respect to any share received from her in laws.

4) Therefore, seized cash was rightly included in income of assessee as unexplained money under section 69A. - [2017] 80 175 (Gujarat) 

AO's participation in raid doesn’t make reassessment void when he isn’t biased against assessee

The issue before the High Court was as under:

Whether ITAT fell into error in concluding that there was no infirmity in the framing of the assessment by an Officer who was involved in the search and seizure operations?

High Court held in favour of revenue as under:

1) Assessing Officer (AO) has been given the power under the Act to gather information for the purposes of assessment. The mode of gathering such information may vary from the mere issuance of a notice under Section 142 to the more intrusive method of entry and search/seizure envisaged under Section 133A, Section 133B and Section 132.

2) There is nothing inherently unconstitutional in permitting AOto gather the information and to assess the value of the information himself. It was not open to the High Court to have disabled AO from discharging his statutory functions.

3) If the assessee would establish that AO was in fact biased in the sense that he was involved in his personal capacity in the outcome of the assessment, it would be a good ground for setting aside the assessment order.

4) But to hold that bias was established only because the authorised officer under Section 132 and AO were the same person was an incorrect approach.

5) Assessee has, in addition to relying on the circumstance that the AO was a participant in the raiding party, not placed any other material to substantiate the allegation of bias.

6) No personal bias or malice or past history with the said official was alleged, much less proved. Thus, the argument that assessment was void on account of bias was unsustainable and had to be rejected. - [2017] 80 257 (Delhi)

Grant of scholarship to deserving students to pursue higher studies was charitable in nature: HC


a) The assessee was a society registered under Societies Registration Act, 1860 and was running several educational institutions in the State of U.P.

b) Assessing Officer (AO) disallowed payment of scholarship to the incumbent on the ground that it was not for charitable purpose and it would be considered as income of assessee.

c) On appeal, CIT (Appeals) deleted additions made by AO which was affirmed by the Tribunal on further appeal. Revenue filed instant appeal before the High Court

High Court held in favour of assessee as under:-

1) Scholarship to the incumbent was granted for pursuing Engineering course from University of California, Los Angeles, USA. The candidate was selected after a thorough process of selection and finding him most deserving candidate, scholarship was granted to the said incumbent.

2) This was in the process of charitable object of assessee Society for advancement of higher technical education to deserving students. It could not be doubted that advancement of education was a 'charitable purpose'.

3) The candidate, beneficiary, was directly or indirectly not related to Members of Society nor otherwise had any bearing or connection with the Society Members. Financial status of the said student or other things were immaterial so far as purpose for which scholarship to said incumbent was concerned.

4) Therefore, CIT (Appeals) was justified that grant of scholarship to deserving students to pursue higher studies was charitable in nature. [2017] 80 96 (Allahabad) 

Monday, April 17, 2017

AO rightly treated bank as an assessee -in-default for allowing LTA claim to its employee travelling abroad


a) A survey was conducted on nationalized bank under section 133A to verify the TDS compliance in the case of salary and perquisite payments made to its employees. 

b) Assessing Officer (AO) noticed that bank had allowed LTC exemption to its employeesfor the foreign travel. AO treated bank as an 'assessee-in-default' under section 201(1) for making short-deduction of tax.

c) CIT(A) confirmed the order of AO, aggrieved-assessee filed instant appeal before the Tribunal.

Tribunal held in favour of revenue as under:

1) As per the provisions of section 10(5), only the reimbursement of expenses which are incurred on travel of employees and their families to any place in India are exempt. Since the employees of the Bank had travelled to foreign countries, the benefit of exemption available under section 10(5) should not have been granted.

2) Though bank may not have been aware of the details of the employees' places visited or destination at the time of advancement of LTC amounts. Yet, at the final settlement of the claims of the employees under LTC, bank should have obtained all the relevant details, such as the places of visits (destinations), etc.

3) Thus, the bank was aware of the fact that its employees had visited foreign countries by availing of LTC concession. So they were not entitled for to reimbursement of LTC.Thus, bank was under an obligation to deduct tax at source treating such an amount as not exempt.

4) Since the bank had failed to enforce its duty to deduct tax at source under section 192, AO correctly treated Bank as an 'assessee-in-default'. - [2017] 80 179 (Bangalore - Trib.)

‘Taxmann’ invites taxpayers to submit their practical difficulties faced in case of ITRs and TDS matters

‘All Gujarat Federation of Tax Consultants’ felt an urgent need for effective resolution of practical issues being faced by the taxpayers. Thus, it is organizing an open house at Ahmedabad to have meaningful interactions with concerned CPC authorities with a view to achieve effective resolution of several practical difficulties being faced by the taxpayers in relation to following activities:

A) Filing of e-returns, processing of ITRs and rectifications, issue of tax refunds, computation of interest, adjustment of tax demands against refunds, etc., handled by CPC (ITD) Bengaluru.

B) Filing and processing of TDS returns, grant of due credit and reconciliation of TDS or TCS and related issues dealt with by CPC (TRACES) Ghaziabad. 

The taxpayers and tax practitioners are requested to send their practical difficulties faced by April 17, 2017 at which can be placed before CPC authorities at the open house.

Following departmental authorities will deal with such practical difficulties at the open house:

DGIT (System) – Shri S.S. Rathor

CIT-CPC (ITR) – Shri R. K. Mishra

CIT-CPC (TDS) – Shri Sunil C. Sharma

Delay in payment under IDS due to demonetization unacceptable- HC dismisses writ


a) The petitioner had filed a declaration under the Income Declaration Scheme, 2016 (IDS) declaring total undisclosed income of Rs.11.59 crores.

b) He was unable to deposit the amount of Rs.1.19 crores being 25% of income declared which he was required to deposit before 30th November, 2016 under IDS in view of the demonetization of Rs.500/- and Rs.1000/-currency notes on 8th November, 2016.

c) Thus, he filed writ before the High Court seeking a direction to the Revenue to accept Rs.1.19 crores which he was unable to deposit on or before 30th November, 2016.

High Court held as under:

1) There was no provision under the IDS or in the rules made there under which would permit the revenue to accept payment of tax after due date.

2) High Court couldn’t issue any such directions as the revenue authorities were obliged to act in accordance with the Income Declaration Scheme, 2016 which was a part of the Finance Act, 2016

3) It must be borne in mind that the IDS was optional and the dates of payment were known at the time of filing the declaration. Therefore, filing writ seeking direction to accept payment of tax after due date wasn’t maintainable. [2017] 80 167 (Bombay)

CBDT introduces digitally signed E-PAN card for applicants

Central Board of Direct Taxes (CBDT) has introduced the electronic PAN Card (E-PAN) which would be sent by email to all applicants in addition to issue of the physical PAN Card.

E-PAN would be digitally-signed which can be submitted by applicant as a proof of identity to other agency electronically directly or by storing in the government's Digital Locker.

Further, in order to improve the Ease of Doing Business for newly incorporated companies, CBDT has tied up with Ministry of Corporate Affairs (MCA) to issue PAN and TAN in one day.

Applicant companies have to submit a common application form SPICe (INC 32) on MCA portal. Once the data of incorporation is sent to CBDT by MCA, the PAN and TAN would be issued immediately without any further intervention of the applicant. Till 31st March 2017, 19,704 newly incorporated Companies were allotted PAN in this manner. During March, 2017, out of the 10,894 newly incorporated companies, PAN was allotted within 4 hrs in 95.63% cases and within 1 day in all cases. Similarly, TAN was allotted to all such companies within 4 hrs in 94.7 % cases and within 1 day in 99.73% cases, CBDT clarified.

Press Release dated 11-08-2017

Power of attorney holder can also file a complaint for dishonoring of cheque: HC

In general, a person who is entitled to prefer a complaint for dishonoring of cheque under the Negotiable Instrument Act, 1881 must be a “payee or a holder in due course” but law does not insist on that payee or holder in due course should personally file a complaint. His duly authorized power of attorney can also file a complaint on his behalf if cheque is issued in discharge of a legally enforceable debt.

Therefore, filing of complaint in respect of an offence under section 138 of the Negotiable Instrument Act is permissible through holder of power of attorney. - [2017] 80 72 (Madras)

Bar Council of India can’t remand disciplinary proceedings transferred to it from State Bar Council: SC

The Disciplinary Committee of Gujarat Bar Council of India (BCI) could not complete its proceedings within a year as mandated under the provision of the Advocacy Act, 1961, as a consequence of which disciplinary proceeding had been transferred to the Bar Council of India. However, the BCI’s Disciplinary Committee got back the case to the State Bar Council with a direction to dispose of the matter within a stipulated period of time.

Being aggrieved by the action of Bar Council of India, Appellant filed a case before the Apex Court. It was held that when a disciplinary proceeding before a State Bar Council gets transferred to Bar Council of India (BCI) under the provision of the Advocates Act, 1961, the BCI cannot send it back to the State Bar Council with a direction to decide it within a stipulated time. - [2017] 80 54 (SC)

‘Quasi-capital’ loan not to be compared with ‘loan’ for ALP computation


a) Assessee had advanced an optionally convertible loan to its associated enterprise (AE). The tenure of loan was five years and the lender had the option for repayment or for conversion of loan into equity at par with the company at any time during the tenure of the loan.

b) Assessee did not provide for any interest on said loan. TPO was of the view that merely because loan was convertible into equity, it did not alter its character as loan at the relevant point of time, and once that was so, the benchmarking of loan was to be done as per the prevailing market rate.

c) TPO made addition to assessee's ALP in respect of interest on loan to AE. 

d) The DRP confirmed said addition. Aggrieved-assessee filed the instant appeal before the Tribunal.

Tribunal held in favour of assessee as under:-

1) The transaction in question was not of the transaction of lending money to AE. Amount advanced to the AE was attached with the obligation of the AE to issue share capital, in case the assessee exercised option for the same, on certain conditions, which were admittedly more favourable, and at an agreed price, which was admittedly much lower, vis-à-vis the conditions and price which independent enterprise would normally agree to accept.

2) The lending was thus in the nature of quasi-capital in the sense that substantive reward, or true consideration, for such a loan transaction was not interest simplictor on amount advanced but opportunity to own capital on certain favourable terms. 

3) Usually loan transactions are benchmarked on the basis of interest rate applicable on the loan transactions simplictor which, under the transfer pricing regulations, cannot be compared with a transaction which is something materially different than a loan simplictor. For example, a non-refundable loan which is to be converted into equity. It is in this context that the loans, which are in the nature of quasi-capital, are treated differently than the normal loan transactions.

4) However, what the authorities had held that a quasi-capital transaction can be compared with a simple loan transaction where sole motivation and consideration for the lender is the interest on such loan.

5) Keeping in mind these factors, as also entirety of the case, it was fit and proper to delete the arm's length price adjustment in respect of interest which, according to the revenue authorities, assessee should have charged on the optionally convertible loan granted to the AEs. - [2017] 80 24 (Ahmedabad - Trib.)

Thursday, April 6, 2017

Unutilized Foreign Tax Credit isn’t a tax deductible expenditure: Ahmedabad ITAT


a) Assessee pointed out that in terms of the Explanation 1 to Section 40(a)(ii), bar on deduction under section 40(a)(ii) is confined to only such income tax paid abroad in respect of which tax credit is granted under section 90 or 91. There is no bar on deduction under section 40(a)(ii) in respect of foreign tax for which no tax credit is available.

b) The issue before the Tribunal was as under:

‘Whether deduction under section 37(1) could be allowed in respect of foreign tax credit for which only partial credit was allowed in the current year?’ 

Tribunal held in favour of revenue as under:-

1) As per Explanation 1 to section 40(a)(ii), any sum paid on account of any rate or tax levied includes and shall be deemed always to have included any sum eligible for relief of tax under section 90 or, as the case may be, deduction from the Indian income-tax payable under section 91 and as per Explanation 1 to section 40(a)(ii) any sum paid on account of any rate or tax levied includes any sum eligible for relief of tax under section 90A;

2) The scope of Explanations to Section 40(a)(ii), on which assessee had relied upon so much, it may be noticed that if the main provision does not cover the taxes paid abroad, there cannot be any occasion to include under Explanations to Section 40(a)(ii), taxes in respect of which relief under section 90 and 91 is not admissible. 

3) These Explanations do not extend the scope of the Section 40(a)(ii) but rather explain the scope of the said section. If something is covered by the Explanation, it cannot be said that it is not covered by the main provision. If taxes in respect of which tax credit under section 90 or 91 are covered by the proviso, these are covered by the scope of Section 40(a)(ii) as well. And if these taxes are covered by Section 40(a)(ii), the theory that meaning of 'tax' under section 40(a)(ii) must remain confined to the taxes levied under Income Tax Act, 1961 comes to a naught since the taxes in respect of which credits are available under section 90 or 91 cannot be, under any circumstances, imposed under the Indian Income Tax Act.

4) Therefore, in the event of assessee being allowed only partial tax credit in respect of taxes withheld abroad, he could not be allowed any deduction in respect of the balance of the taxes so withheld abroad under section 37(1). - [2017] 80 6 (Ahmedabad - Trib.)

CA could demand higher remuneration if he produced good quality audit report


a) Petitioner-Chartered Accountant (CA) was engaged by the revenue authorities to conduct a special audit of a company. Audit Report was submitted and a huge addition of Rs. 720 crore was made.

b) CA submitted bill to the revenue for his professional services detailing 1315 man hours spent by his team. A total bill of more than Rs. 1 crore was raised taking average rate of manhour at Rs. 7500 per hour.

c) AO was of the view that time spent on lunch, refreshments, etc. should have been proportionately discounted from the bill. 85 per cent of the billed hours were considered by him as reasonable and accordingly reduced the average rate from Rs. 7500/hour to Rs. 4000/hour.

d) CIT(A) upheld the order of the AO. CA filed writ before the High Court: 

High Court held as under:-

1) Unlike employees, professionals do spend 9 to 10 hours a day on their work, even at odd hours, and attend to their basic necessities in the remaining hours of the day. Exclusion of such necessary recess for consumption of food and refreshment, etc. for a person to render quality work was illogical.

2) It was noteworthy that the quality of the report had been assessed as 'very good' by the AO.

3) Audit work was rendered by the CA’s four partners, Chartered Accountants and other personnel i.e. by qualified assistants and semi-qualified assistants. 

4) Notably, the work experience of the partners ranged from 3 to 27 years while the range permissible billing rate was between Rs. 3,500/- to Rs. 7,500/- and the rate of sitting could be correspondingly adjusted as per their regular sitting hours; instead it had arbitrarily been reduced to an average rate of Rs. 4,000/- per hour.

5) What the revenue was to assess was whether the special audit report was (i) within time, (ii) of the desired quality (iii) the billing was commensurate with the nature of inquiry and the quantum of the records to be looked into; etc.

6) If the audit report was of good quality and, inter alia, authored by a qualified professional having a fair number of years of experience then he/she might well be entitled to ask for the highest prescribed billing rate. [2017] 79 415 (Delhi) 

No Sec. 195 TDS on crediting income to payee when it is taxable on receipt basis under treaty: ITAT


a) The assessee was liable to make royalty payment, to Saira Europe SPA, Italy. Liability was duly accounted for in the books of account, though payment was made a bit later.

b) Assessing Officer (AO) raised demand on the assessee by treating the due date for depositing tax deductible at source as being 7 days from the end of the month in which amount was credited in the books of account.

c) Assessee contended before AO that as per article 12(3) of India Italy DTAA, royalty payment was taxable only at the point of time when it was actually paid and not at the point of time of credit. AO, on the contrary rejected the contention of assessee.

d) On appeal, CIT(A) upheld order of AO. Aggrieved-assessee filed instant appeal before tribunal:-

Tribunal held in favour of assessee as under:-

1) It is only elementary that the TDS liability under Section 195 is a vicarious liability in the sense that it's survival in the hands of tax-deductor is wholly dependent on existence of tax liability in the hands of recipient of income.

2) When a credit or a payment made by an Indian resident to a non-resident does not trigger the taxability of that income in the hands of recipient, the tax deduction liability does not come into play at all.

3) The provisions of Section 195 are to be read in conjunction with the charging provisions under the statue, as also in conjunction with the relevant double taxation avoidance agreements which override these charging provisions.

4) Section 195(1) states that any person responsible for paying to a non-resident any sum chargeable under the provisions of this Act, shall, at the time of credit of such income to the account of the payee or at the time of payment deduct tax at source.

5) As per Article 13 of India-Italy DTAA, the term "royalties" means payments of any kind “received”. Therefore, royalty payment was not liable to be taxed at the point of time when account of the non-resident was credited, in view of the fact that under the related DTAA, tax liability can only arise at the point of a subsequent event, i.e., payment.

6) Since, income embedded in the payment was not taxable at that point of time of crediting the amount, there could not be any occasion for deduction of withholding of the tax on such income. – [2017] 79 460 (Ahmedabad - Trib.)

Saturday, April 1, 2017

New ITR forms for AY 2017-18: Which ITR form you should opt for?

Every year CBDT notifies new income-tax return (ITR) forms. In 2016 the CBDT hadnotified the ITR Forms at the end of March, 2016 and it deviated from its past practice ofnotifying ITR Forms in the month of May or June. This time also the CBDT has notifiedthe ITR forms in the month of March, 2017.

As per the assurance given by the Finance Minister in his Budget Speech the CBDT had finally prescribed simplified ITR 1 Form with fewer columns. However, such ITR 1 is applicable only for individuals having income up to Rs 50 lakhs. Further, Individual taxpayers either having dividend income above 10 lakhs or having unexplained credit (taxable at 60% under Section 115BBE) can't opt for ITR-1.

The CBDT has scrapped ITR- 2A. Now all assessees (other than those earning salary income and business income) would be required to file ITR-2 only. Earlier taxpayers opting for presumptive taxation were required to file ITR-4S. But now they are required to file 'ITR-4 SUGAM' for presumptive income. Taxpayer earning income from business or profession are now required to file ITR-3 instead of old ITR-4.