Direct Tax Alert- September 2022
- CIRCULAR NO. 18/2022 [F.NO. 370142/27/2022-TPL], DATED 13-9-2022
Vide this circular the Central Board of Direct Taxes (CBDT) has issued additional guidelines for removal of difficulties under sub-section (2) of section 194R of the Income-Tax Act, 1961. Earlier, the CBDT had issued guidelines vide Circular no. 12 of 2022, dated 16th June, 2022.
- LETTER F.NO. 285/08/2014-IT(Inv.V)/196, DATED 16-9-2022
Vide this letter dated 16.09.2022 the Central Board of Direct Taxes (CBDT) has issued Guidelines on Compounding of Offences under the Income-tax Act, 1961 have been reviewed by the Board with a view to simplify and facilitate compounding of offences.
- NOTIFICATION G.S.R 709(E) [NO. 110/2022/F.NO. 370142/41/2022-TPL], DATED 19-9-2022
Vide this notification the CBDT makes amendment in form ITR-6; insertion of rule 12AD and form ITR-A. These rules may be called the Income-tax (31st Amendment) Rules, 2022. They shall come into force from the 1st day of November, 2022. Form ITR-A inserted for successor entities to furnish return of income under section 170A consequent to business reorganisation.
Important Judicial Precedents
- AO should follow HC decision in assessee’s favour in assessee’s own case , even if Department has filed SLP against the decision to SC
Judicial discipline demands AO and CIT(A) should follow HC decision in assessee’s favour in assessee’s own case even if Department has filed SLP in SC and SLP is pending.
[2022] 142 taxmann.com 520 (Delhi – Trib.) IN THE ITAT DELHI BENCH ‘D’ Sheraton International, LLC vs. JCIT, Circle 3(1)(2), International Taxation
The assessee-company claimed that due to the inaction of the Revenue, the assessee was deprived of substantial amount of refund along with interest u/s 244A of the Act and that demand had incorrectly been raised.
In writ, the High Court observes that this Court finds that CBDT instruction No. 2/2013 [F. No. 225/76/2013/ITA.II] dated 05th July, 2013 and Letter [F. No. 225/148/2015- ITA-II], dated 05th July, 2015 stipulates that the Assessing Officers must strictly follow the time limit of six months provided under Section 154(8) of the Act in disposing of the rectification applications. Hence the Court directs that the AO consider and dispose off the assessee’s applications within 6 months’ time.
2022-TIOL-1248-HC-DEL-IT _Delhi HC; NORTEL NETWORKS INDIA PVT LTD Vs. DCIT, CIRCLE 16(1), NEW DELHI
- AO can initiate reassessment without passing assessment order in commenced scrutiny assessment proceedings
AO is not statutorily barred from initiating reassessment u/s 147 without passing assessment order under scrutiny assessment commenced. Section 144C(4) nowhere states that where AO has commenced scrutiny assessment proceedings u/s 143(2), he can issue reassessment notice under section 148 only after passing an order u/s 143(3) r.w.s. 144C(4). AO can initiate reassessment without completing commenced scrutiny assessment proceedings provided he does so within the limitation period provided for issue of reassessment notice.
[2022] 142 taxmann.com 491 (Madras) MADRAS HC; Kone Elevator India (P.) Ltd. Vs. ACIT, Corporate Circle 4(2)
- Criteria for determining whether the profit on sale of shares is business income or capital gains?
The issue regarding the profit on sale of shares being business income or capital gains is an issue which has never been settled. The fight continues depending upon whichever way is beneficial for the assessee or department. In one such case, the petitioner in this case challenged the ITAT order where the gain was held to be business income solely on the basis of period of holding of shares. The assessee’s counsel argued on various grounds including the facts that the Government itself encouraged investment in shares by reducing the period of holding in shares to be eligible for long term to 1 year and also relied on CBDT Circular No 4 of 2007 dated 15.06.2007. The department on other hand argued that most of shares were purchased and sold during the year and were acquired from secondary market.
The Division bench while appreciating that an assessee can have both investment and business portfolio, observed that period of holding cannot be sole determinative criteria which can be as little as one day. It was noted that no single formula can be laid down and facts of each case have to be seen while holding one way or other. On the basis of the facts including that the assessee had separately maintained business and investment portfolio, made investment out of own funds held that the tribunal feel in error while holding the capital gains to be business income.
[ITA/48/2009 Gyan Traders Limited Vs CIT, Kolkata-II, CALCUTTA HC dated 30.09.2022 ]
- Foreign tax credit cannot be disallowed where assessee has filed Form No. 67 before completion of the assessment
Assessee is eligible for foreign tax credit where assessee has filed Form No. 67 before completion of the assessment, though not in accordance with (pre-amended) rule 128 (9) of the Income Tax Rules which required the same to be filed on or before the due date for filing ITR u/s 139(1).
- ITA No.338/2016 PCIT Vs. Linde India Limited; Calcutta High Court 05th Sept 2022
High Court upheld that no addition made under Section 40(a)(i) was rightly deleted by ITAT noting that amount paid by the Assessee to its German counterpart was neither debited in the P&L Account nor was it claimed as deduction in computing business; Revenue had made a disallowance of Rs.72.89 Crore and further enhanced the long term capital gain on sale of land in Chennai by invoking the provisions of Section 50C; ITAT had noted that assessee had paid amount to its counterpart as a capital work in progress, which was not charged to P&L account; Regarding addition u/s 50C, ITAT had directed the Revenue to rework the capital gains by adopting valuation as per DVO.