Tuesday, June 6, 2017

GST Council clears remaining two rules and all States agreeing for roll out of GST from July 1, 2017

The 15th GST council meeting held in New Delhi has cleared the two remaining rules, pertaining to transitions and returns. All the States has also agreed for roll-out of Goods and Service Tax (GST) from July 1, 2017. The Council has released the copy of return rules, return formats, mismatch formats and practitioner formats. Following are the download links:-




ITAT allowed sec. 54F relief to trust created for sole beneficiary of individual

The issue before the Tribunal was:

Whether a trust which was for the sole benefit of an individual was entitled to deduction under section 54F or not, when its status was that of AOP?

The Tribunal held in favour of trust as under:

1) As per section 54F the benefit of this section is available to individual or Hindu undivided family (HUF).The jurisdictional High Court in the case of Mrs. Amy F. Cama v. CIT [1994] 237 ITR 82 (Bom.) had elaborately considered the same issue. The High Court was dealing with trust's claim for deduction of purchase price of the flat from capital gain as per section 54. It was held that the trust was entitled to the same.

2) The High Court had held that section 161, makes a representative assessee subject to the same duties, responsibilities and liabilities as if the income was received by him beneficially. The fiction was created as it was never the object or intention of the Act to charge tax upon persons other than the beneficial owner of the income. Whatever benefits the beneficiary will get in the said assessment must be made available to the trustee while assessing him under section 161.

3) The above decision of the High Court would squarely apply in the present case, when one was concerned with the issue of exemption under section 54F as Section 54 was also applicable to individuals and HUF.

4) In the instant case, the issue was benefit of investment made in purchase of flat for deduction under section 54F by the trustees and the sole beneficiary of the trust was the individual 'V'. Hence, the ratio emanating from the above jurisdictional High Courts decision was squarely applicable to the facts of the case.

5) Hence, It was clear that it was only by virtue of section 161 that trust had been assessed for the income that was for benefit of sole beneficiary. Accordingly, following the precedent, trust was principally entitled to deduction under section 54F. - [2017] 81 taxmann.com 367 (Mumbai - Trib.)

Trust not hit by proviso to sec. 2(15) due to selling cow's milk if main object of trust was to take care of cows

DIT (Exemptions) v. Shree Nashik Panchvati Panjrapole [2017] 81 taxmann.com 375 (Bombay)

Facts:

a) The object of assessee-trust was to run, inter alia, a Panjrapole, i.e., protection of cow and oxen. It also used to sell mil procured from the cows to the general public at nominal rate.

b) DIT (E) cancelled assessee-trust's registration by invoking section 12AA(3) on the ground that its income by way of sale of milk, interest and dividend was in excess of Rs. 10 lakhs and, therefore, would casese to be a charitable trust.

c) The Tribunal held that the activity of selling milk by a Panjarapole would not by itself make the proviso to section 2(15) applicable. Further, it held that selling milk would be incidental in running a Panjarapole.

d) Aggrieved-revenue filed the instant appeal before the High Court.

The High Court held in favour of assessee as under:-

1. The dominant function of the Trust was to provide an asylum to old, maimed, sick and stray cows. Further, only 25 per cent of the cows being looked after yielded milk and if the milk was not procured, it could be detrimental to the health of the cows. Therefore, the milk obtained and sold by the trust was an activity incidental to its primary/principal activity.

2. In the instant case, the activity of milking the cows and selling the milk was almost binding on the trust, in the process of giving asylum to the cows. The activity to be considered in the nature of trade, commerce or business would in most cases have to be carried out on a regular basis with a view to earn the profit.

3. The presence of the profit intent would normally be a sine qua non for the activity to be considered as trade, commerce or business. Therefore, in the present facts, it was not as though the keeping of the cows and milking them was with a view to carry out an activity in the nature of trade, commerce or business to earn profits.

4. Admittedly, the dominant activity carried out by the trust was to take care of old, sick and disabled cows. In these circumstances, an incidental activity of selling milk which might have resulted in receipt of money, by itself would not make it trade, commerce or business nor an activity in the nature of trade, commerce or business to be hit by the proviso to section 2(15) - [2017] 81 taxmann.com 375 (Bombay)

Form 15G/15H to be filed once in a year and not every time when payment is due; CBDT clarifies

Section 197A of the Income-tax Act provides that tax shall not be deducted, if the recipient of certain payment on which tax is deductible furnishes to the payer a selfdeclaration in Form No. 15G/15H in accordance with provisions of the said section. The manner of filing such declarations and the particulars have been given in Rule 29C of the Income-tax Rules, 1962.

The Central Board of Direct Taxes (CBDT) had received various representations seeking clarifications on the issue as to whether a depositor should submit only one declaration in respect of the income each year or whether Form 15G/15H has to be submitted each time the payment is due to be received from the deductor.
CBDT has now settled the issue and clarified that it will be sufficient if only one declaration is made in respect of the income each year before each deductor.

Notification no. 6 of 2017, dated 30-05-2017

Black money in third party bank account can be subject to search and seizure: Delhi HC

The issue before the High Court was:

Whether the undisclosed money in third party bank account can be subject to search and seizure?

Delhi High Court held as under:

1) Section 132(1)(c) permits search to be under taken by the Department if there is reason to believe that a person is in possession "of any money, bullion, jewellery or other valuable article or thing and such money, bullion, jewellery or other valuable article or thing represents either wholly or partly income or property which has not been, or would not be, disclosed" for the purposes of the Act, referred to as "the undisclosed income or property".

2) The second proviso to Section 132(1) read with Section 132(3) permits the Department to ask bank to freeze bank account that is subject to search and seizure since it may not be possible "to take physical possession" immediately of such "valuable article or thing and remove it to a safe place.

3) Therefore, a sum in a bank account is not outside ambit of section 132(1) and can be subject to search and seizure as a person can be in possession of undisclosed income not only in his or her own account but in someone else's account. [2017] 81 taxmann.com 408 (Delhi)

ITAT condoned delay in filing of appeal as delay occurred due to death of assessee’s counsels

Facts:

a) Assessee filed his appeal before the ITAT with a considerable delay beyond the time limit prescribed under section 253(3).

b) He requested for condonation of delay on ground that there were various casualties/deaths and medical contingencies of the persons connected with the him to represent his case.

Tribunal held in favour of assessee as under:

1) The relevant averments of the assessee as contained in application for condonation of delay duly supported by an affidavit that the CA who was representing the Income-tax matters unfortunately got expired. Then the matter was being looked after by assessee's younger brother.

2) Unfortunately even his younger brother got expired. Subsequently, the papers were handed over to an advocate who he did not file the appeals and at the same time he also got expired. Besides, during the aforesaid period the assessee was suffering from heart diseases and ultimately he underwent angiography, in-between, the assessee's mother got expired.

3) Then assessee appointed a new CA in November 2016, unfortunately he met with an accident and was bedridden for three months. He was able to walk only sometime in February, 2017 end and then the matter was pursued by him and the appeal was ultimately filed.

4) Assessee had sufficiently explained that the he was prevented by sufficient and bona fide cause in filing this appeal within time prescribed by law. 

5) Since delay in filing appeal took place due to consecutive casualties/deaths and medical contingencies of assessee's counsels, delay was to be condoned. [2017] 81 taxmann.com 298 (Mumbai - Trib.)