Recent News : There is a difference between "issue" of notice and "service" of notice. Service of notice is a pre-condition for assuming jurisdiction to frame the assessment. Under Rule 127, service at the PAN address is valid even if it is different from the address in the Return. If a notice is issued but is returned unserved by the postal authorities and thereafter no effort is made to serve another notice before the deadline, it shall be deemed to be a case of "non-service" and the assessment order will have to be quashed. [Anil Kisanlal Marda vs. ITO-(ITAT Pune)]||MCA extended due date of filing e-form BEN-2 till Sept 30, 2019.||CBDT has given an option to taxpayers to either enter the scrip-wise details of long term capital gains (LTCG) in Schedule 112A and 115AD(1)(iii) OR enter the self-calculated aggregate value of LTCG directly under respective items in schedule CG in terms with Sec 112A or 115AD(1)(iii) without entering scrip wise details. (Clarification dated 19 July 2019)||If Income tax Act provides assessee to get valuation done from a prescribed expert as per prescribed method, then same cannot be rejected because neither Assessing Officer nor assessee have been recognized as expert under law [Cinestaan Entertainment (P.) Ltd. vs. ITO, Delhi ITAT]||• The form ACTIVE has been made available by the MCA on 21st June, 2019 for filing purpose with a fee of INR 10,000. • MCA vide its letter dated 24/06/19 to the ICAI has clarified that Auditors’ certificate is mandatory only in case of Return of Deposits &no need of audited financial statements as on 31st March, 2019 for filing form DPT-3 for reporting of particulars of transactions not considered as deposits.|| The benefit of standard deduction u/s 24 of the Act under the head Income from house property, is not allowable on rental income earned by charitable trust. [Nandlal Tolani Charitable Trust vs. ITO (ITAT - Mumbai)]|| “Interest Payment to creditors on their outstanding balance cannot be disallowed on a premise that no interest was being charged by the assessee from its debtors” [Aditya Medisales Ltd. Vs. Dy. CIT [Ahmedabad ITAT])||CBDT condones the delay in filing of audit report in Form 10B by the trusts or institutions for the AYs 2016-17 and 2017-18. The condonation shall be granted subject to fulfillment of conditions prescribed by the CBDT.||On 13th May, 2019, MCA has clarified that companies which had filed form ADT-1 as an attachment through form GNL-2 for appointment of auditors are required to file e-form ADT-1 up to June 15, 2019.||Even after the decision of Maxopp Investment 402 ITR 640 (SC) which upholds the applicability of Section 14A disallowance on "strategic investments", the assessee is entitled to contend that the investments are "legacy" or "one-time" and that there is in fact no expenditure incurred to earn the tax-free income. [CIT vs. Alpha G. Corp Development Ltd., Delhi HC (ITA 599, 648, 655/2018)]|| The fact that the company is loss-making does not mean that shares cannot be allotted at premium. The DCF method is a recognised method though it is not an exact science & can never be done with arithmetic precision. The fact that future projections of various factors made by applying hindsight view cannot be matched with actual performance does not mean that the DCF method is not correct. [India Today Online Pvt. Ltd vs. ITO (ITAT Delhi)]||MCA extended due date of filing e-form INC-22 A (Active) till June 15,2019.|| • Clarification has been issued in respect of utilization of Input Tax credit in accordance with old provision till the new order of utilization as per newly inserted rule 88A is implemented on the GST common portal|| • High court has confirmed action of department for charging interest in GST on gross amount without giving benefit of ITC available despite of council meeting wherein they have recommended interest to be paid on net tax liability||As per settled law, notice for reopening of assessment against a dead person is invalid. The fact that the AO was not informed of the death before issue of notice is irrelevant. Consequently, the s. 148 notice is set aside and order of assessment stands annulled (Alamelu Veerappan 257 TM 72 (Mad) followed). (Rupa Shyamsundar Dhumatkar vs. ACIT [HC-Bombay])||Linkage of PAN with Aadhar card is mandatory from A.Y. 2019-20 [Union of India vs. Shreya Sen (SC)].||The judgement in PCIT vs. NRA Iron & Steel 103 TM.com 48 (SC) is distinguishable on facts & does not apply to a case where the assessee has discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants by producing the PAN details, bank account statements, audited financial statements, Income tax return acknowledgments and the investors have shown the source of source & personally appeared before the AO in response to summon issued u/s 131 of the Act. [ITAT Kolkata in case of M/s Baba Bhootnath Trade & Commerce Ltd. vs. ITO]||“Assessing Officer has to mandatorily dispose off the objection filed by an assessee, in response reassessment notice u/s 148, via speaking order. [HC of Karnataka in Mphasis Ltd. vs. ACIT]”]||Payment gateway charges paid to a bank for swiping credit cards are in the nature of fees for banking services and not "commission" or "brokerage". Accordingly, no TDS is deductible u/s 194H on the aforesaid charges [PCIT vs. Make My Trip India Pvt. Ltd.]||In the absence of any exempt income, disallowance u/s 14A & Rule 8D of the Act of any amount is not permissible (Essar Teleholdings 401 ITR 445 (SC) followed, Cheminvest 378 ITR 33 (Del) approved). [PCIT vs. Oil Industry Development Board-(SC)]||Merely because the High Court has admitted the Appeal and framed substantial questions of law, it cannot be said that the entire issue is debatable one and under no circumstances, penalty could be imposed (CIT vs. Dharamshi B. Shah 366 ITR 140 (Guj) followed). [PCIT vs. Rasiklal M. Parikh (Bombay HC)]||The ‘trinity’ of prima facie case, financial stringency & balance of convenience are basic tents which are indispensable in consideration of a stay petition. The CBDT's Circulars & Instructions are in the nature of guidelines & cannot substitute or override the basic tenets. The AO is required to assist a taxpayer in every reasonable way. Even if the assessee has not specifically invoked the three parameters for grant of stay, it is incumbent upon the AO to do so & pass a speaking order. [Mrs. Kannammal vs. ITO / Jayanthi Seeman vs. PCIT- Madras High Court]||If the interest free funds available to the assessee are sufficient to meet its investments, it could be presumed that the investments are made from the interest free funds available with the assessee and not from funds [CIT Vs. Reliance Industries Ltd. [SC])||The practice of conversion of un-accounted money through cloak of Share Capital/Premium must be subjected to careful scrutiny especially in private placement of shares. Filing primary evidence is not sufficient. The onus to establish credit worthiness of the investor companies is on the assessee. The Assessee is under legal obligation to prove the receipt of share capital/premium to the satisfaction of the AO, failure of which, would justify addition of the said amount to the income of the Assessee. [PCIT vs. NRA Iron & Steel Pvt. Ltd- Supreme Court] || The AO cannot impose pre-condition to deposit the minimum amount (15/20%) of disputed demand in accordance with CBDT circular in order to stay the remaining demand. The AO has to apply his mind to the application of stay of demand and should have pass appropriate order. [Turner General Entertainment Networks India Pvt. Ltd vs. ITO (HC-Delhi)] || MCA vide circular dated 21/02/19 clarified that period of 30 days for filing initial return in MSME Form I shall be reckoned from the deployment of form on MCA portal.

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RECENT NEWS

No disallowance for TDS remaining 'unpaid' at year-end, if paid before due date of filing return of Income, despite assessee following cash system of accounting. [Associated Law Advisers Vs. ACIT (Delhi ITAT) --------------------------------------------------------------
• GST Council waived the requirement of filing FORM GSTR-9A for Composition Taxpayers for the FY 2017-18 and FY 2018-19
• The requirement of filing of FORM GSTR-9 for those taxpayers who (are required to file the said the return but) have aggregate turnover up to Rs.2 crores have been made optional for the FY 2017-18 and FY 2018-19
• New return system now to be introduced from April, 2020 (earlier proposed from October, 2019)
• GST Council has reduced GST rate on Hotel accommodation with Transaction value/unit/day till Rs.7,500/- at 12%
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Ministry of Law and Justice has noticed an ordinance to amend the Income-tax Act, 1961 and the Finance (No.2) Act, 2019. Corporate tax rates slashed to 22% for existing domestic companies and 15% for new domestic manufacturing companies subject to certain conditions. --------------------------------------------------------------
Show cause notice u/s 271(1)(c ) of Income Tax Act, 1961 would be bad in law if it didn’t specify the correct limb of Section 271(1)(c) under which penalty proceedings has been initiated i.e. whether for concealment of particulars of income or for furnishing of inaccurate particulars of income [PCIT vs. Sahara India Life Insurance Company Ltd (Delhi HC). ITA 475,426 to 429/2019] --------------------------------------------------------------
There is a difference between "issue" of notice and "service" of notice. Service of notice is a pre-condition for assuming jurisdiction to frame the assessment. Under Rule 127, service at the PAN address is valid even if it is different from the address in the Return. If a notice is issued but is returned unserved by the postal authorities and thereafter no effort is made to serve another notice before the deadline, it shall be deemed to be a case of "non-service" and the assessment order will have to be quashed. [Anil Kisanlal Marda vs. ITO-(ITAT Pune)]
--------------------------------------------------------------
MCA extended due date of filing e-form BEN-2 till Sept 30, 2019.
--------------------------------------------------------------
CBDT extends due date for filing return of Income for AY 2019-20 to August 31, 2019 for the assessees, who are required to file the return of Income by 31 July 2019.
--------------------------------------------------------------
CBDT has given an option to taxpayers to either enter the scrip-wise details of long term capital gains (LTCG) in Schedule 112A and 115AD(1)(iii) OR enter the self-calculated aggregate value of LTCG directly under respective items in schedule CG in terms with Sec 112A or 115AD(1)(iii) without entering scrip wise details. (Clarification dated 19 July 2019)
--------------------------------------------------------------
Where HC upheld addition made by authorities below relying upon statement made in course of search proceedings by director of assessee-company, since assessee failed to discharge its burden that admission made by director in his statement was wrong and said statement was recorded under duress and coercion, SLP filed against decision of High Court was to be dismissed. [Bannalal Jat Constructions (P.) Ltd. v ACIT- SC]
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SC dismissed SLP against High Court’s ruling that no disallowance u/s 14A of Income-tax Act, 1961 can be made in absence of exempt income earned during the year. [PCIT vs. GVK Project and Technical Services Ltd (SC)]
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If Income tax Act provides assessee to get valuation done from a prescribed expert as per prescribed method, then same cannot be rejected because neither Assessing Officer nor assessee have been recognized as expert under law [Cinestaan Entertainment (P.) Ltd. vs. ITO, Delhi ITAT]
--------------------------------------------------------------
• The form ACTIVE has been made available by the MCA on 21st June, 2019 for filing purpose with a fee of INR 10,000.
• MCA vide its letter dated 24/06/19 to the ICAI has clarified that Auditors’ certificate is mandatory only in case of Return of Deposits &no need of audited financial statements as on 31st March, 2019 for filing form DPT-3 for reporting of particulars of transactions not considered as deposits.
--------------------------------------------------------------
The benefit of standard deduction u/s 24 of the Act under the head Income from house property, is not allowable on rental income earned by charitable trust. [Nandlal Tolani Charitable Trust vs. ITO (ITAT - Mumbai)]
--------------------------------------------------------------
“Interest Payment to creditors on their outstanding balance cannot be disallowed on a premise that no interest was being charged by the assessee from its debtors” [Aditya Medisales Ltd. Vs. Dy. CIT [Ahmedabad ITAT])
--------------------------------------------------------------
CBDT extends terms of task force to draft a new direct tax law by another 2 monnths to July 31, 2019.
--------------------------------------------------------------
CBDT condones the delay in filing of audit report in Form 10B by the trusts or institutions for the AYs 2016-17 and 2017-18. The condonation shall be granted subject to fulfillment of conditions prescribed by the CBDT.
--------------------------------------------------------------
On 13th May, 2019, MCA has clarified that companies which had filed form ADT-1 as an attachment through form GNL-2 for appointment of auditors are required to file e-form ADT-1 up to June 15, 2019.
--------------------------------------------------------------
Even after the decision of Maxopp Investment 402 ITR 640 (SC) which upholds the applicability of Section 14A disallowance on "strategic investments", the assessee is entitled to contend that the investments are "legacy" or "one-time" and that there is in fact no expenditure incurred to earn the tax-free income. [CIT vs. Alpha G. Corp Development Ltd., Delhi HC (ITA 599, 648, 655/2018)]
--------------------------------------------------------------
The fact that the company is loss-making does not mean that shares cannot be allotted at premium. The DCF method is a recognised method though it is not an exact science & can never be done with arithmetic precision. The fact that future projections of various factors made by applying hindsight view cannot be matched with actual performance does not mean that the DCF method is not correct. [India Today Online Pvt. Ltd vs. ITO (ITAT Delhi)]
--------------------------------------------------------------
MCA extended due date of filing e-form INC-22 A (Active) till June 15,2019.
--------------------------------------------------------------
• Clarification has been issued in respect of utilization of Input Tax credit in accordance with old provision till the new order of utilization as per newly inserted rule 88A is implemented on the GST common portal
--------------------------------------------------------------
• High court has confirmed action of department for charging interest in GST on gross amount without giving benefit of ITC available despite of council meeting wherein they have recommended interest to be paid on net tax liability
--------------------------------------------------------------
As per settled law, notice for reopening of assessment against a dead person is invalid. The fact that the AO was not informed of the death before issue of notice is irrelevant. Consequently, the s. 148 notice is set aside and order of assessment stands annulled (Alamelu Veerappan 257 TM 72 (Mad) followed). (Rupa Shyamsundar Dhumatkar vs. ACIT [HC-Bombay])
--------------------------------------------------------------
Linkage of PAN with Aadhar card is mandatory from A.Y. 2019-20 [Union of India vs. Shreya Sen (SC)].
--------------------------------------------------------------
The judgement in PCIT vs. NRA Iron & Steel 103 TM.com 48 (SC) is distinguishable on facts & does not apply to a case where the assessee has discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants by producing the PAN details, bank account statements, audited financial statements, Income tax return acknowledgments and the investors have shown the source of source & personally appeared before the AO in response to summon issued u/s 131 of the Act. [ITAT Kolkata in case of M/s Baba Bhootnath Trade & Commerce Ltd. vs. ITO]
--------------------------------------------------------------
“Assessing Officer has to mandatorily dispose off the objection filed by an assessee, in response reassessment notice u/s 148, via speaking order. [HC of Karnataka in Mphasis Ltd. vs. ACIT]”
--------------------------------------------------------------
Payment gateway charges paid to a bank for swiping credit cards are in the nature of fees for banking services and not "commission" or "brokerage". Accordingly, no TDS is deductible u/s 194H on the aforesaid charges [PCIT vs. Make My Trip India Pvt. Ltd.]
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