Direct Tax – January 2023
- CIRCULAR NO. 1 OF 2023 [F. NO. 225/49/2021-ITA-II] [06-01-2023]
Vide this circular the Central Board of Direct Taxes (CBDT) has further extended the time limit to 31st March, 2023 for compliance to be made for claiming any exemption under section 54 to 54GB of the Income Tax Act, 1961 (“the Act”) in view of the Covid-19 Pandemic. The period of investment for capital gain exemption which was earlier extended to 30th September 2021 by Circular No.12/2021.
2. NOTIFICATION NO. 1 OF 2023 [DGIT(S)/ADG(S)-2/REPORTING PORTAL/2021/180], DATED 05-01-2023.
Addendum to Notification No. 2 of 2021: format, procedure and guidelines for submission of statement of financial transactions (SFT) for interest income (abolishing of limit of Rs. 5000). Now the information in SFT is required to even include details of account holders earning interest income upto Rs. 5000/- except for ‘Jan Dhan Account’ holders.
3. NOTIFICATION S.O. 400(E) [NO. 2/2023/F. NO. 500/PF5/S10(23FE)/FT&TR-II-PART(1)] [25-01-2023]
The Central Government hereby specifies the pension fund, namely, the California Public Employees Retirement System (PAN: AAATC6038J), as the specified person for the purposes of the clause (23FE) of section 10 of the Act in respect of the eligible investment made by it in India on or after the date of publication of this notification in the Official Gazette but on or before the 31st day of March, 2024 subject to the fulfillment of the conditions mentioned therein.
Important Judicial Precedents
- Gujarat HC quashes reassessment notice as the same was based on mere change of opinion
Where the impugned order disposing off assessee’s objections to reassessment did not contain even a whisper that assessee had not fully and truly disclosed material facts during scrutiny assessment concluded u/s 143(3) and it was not possible for the Court to infer any such failure by assessee in reasons recorded by AO for reopening the assessment and it was clear from record that petitioner assessee had made adequate disclosures during scrutiny assessment proceedings and AO had considered the matter in detail during scrutiny assessment , it had to be held that reopening was based on mere change of opinion and the impugned reassessment notice and impugned order disposing off objections were to be quashed.
[2023] 146 taxmann.com 154 (Gujarat HC) Nila Infrastructures Ltd. vs. ACIT, Circle (3)(1)
2. Whether where taxes are shown to have been paid by the payee, disallowance u/s 40(a)(ia) of the Act called for in the hands of the payer for default in taxes deduction at source is payable- NO: ITAT
That the CIT(A) has noted that though the assessee had failed to deduct TDS on the impugned amount of Rs.1,97,194/-, the payee on other hand had paid taxes on the same and the assessee had filed the stipulated certificate as per Rule 31ACB of the Income Tax Rules certifying the fact of taxes have been paid by the payee on the impugned payment. In the case of CIT vs Ansal Landmark Township Ltd., it was held that in such circumstances, where taxes are shown to have been paid by the payee, no disallowance under section 40(a)(ia) of the Act was called for in the hands of the payer for default in taxes deduction at source, and the same position has been followed by CIT (A). In view of the above, we see no reason to interfere in the order of the .CIT(A) deleting disallowance of Rs.1,97,194/- by invoking provisions of section 40(a)(ia) of the Act. The ground raised by the Revenue is dismissed.
[2023-TIOL-117-ITAT-AHM_ ITA No. 1416/Ahd/2019 _ITO Vs. M/s Eminent Infracon Pvt Ltd]
3. No TDS on salary/commission paid to partners. No disallowance u/s 40(b) if ‘remuneration’ paid to working partners is within the limit u/s 40(b)(v)
Since salary, bonus, remuneration or commission are collectively termed by section 40(b)(i) as “remuneration” for section 40(b)(v) purposes, no disallowance is to be made by AO where the ‘remuneration'(aggregate of salary, bonus, commission and remuneration) paid to working partners during the year is within the permissible limit provided u/s.40(b)(v) of the Act. As such, no TDS is deductible u/s 194H from commission payable to partners. The contention of the AO that the provisions of section 194H of the Act, which is otherwise applicable in case any commission or brokerage (not being insurance commission referred to in section 194D of the Act) is paid, is also applicable in cases, where commission is paid by a partnership firm to its partners, authorized by the partnership deed, is incorrect.
[2023] 146 taxmann.com 81 (Gauhati – Trib.), ACIT, Cir. – Shillong Vs. Dhar Construction Company.
4. Overseas Consultancy Income of Foreign co from metro rail projects in India was rightly offered to tax u/s 115A as FTS and can’t be taxed u/s 44DA
Services rendered by the overseas employees of home office of the assessee from Hong Kong for the activities performed for the project Chennai Metro Rail Ltd/Kolkata East West Rail Ltd are not effectively connected to Project Office (PO)/Permanent Establishment (PE) in India and, therefore, the amount received for such services (Overseas Consultancy Income) were rightly offered to tax as FTS by assessee under concessional rate of tax u/s 115A. Thus, addition made under section 44DA of the Act is liable to be deleted .In the result; appeal filed by the Revenue is dismissed.
[2023] 146 taxmann.com 152 (Delhi – ITAT.) BENCH ‘D’ _DCIT vs. Aecom Asia Company Ltd.
5. Whether employees’ contribution deposited after respective due date cannot be allowed as deduction applicable in the case of an assessment farmed u/s 143(3), is equally applicable for the intimation framed u/s 143(1) of the Act – YES: ITAT
The Supreme Court has categorically held that the employees’ contribution deposited after respective due date cannot be allowed as deduction, and, therefore, it would be incorrect to say that the decision of the Supreme Court is applicable only in the case of an assessment farmed u/s 143(3) of the Act. In our considered view, the ratio decidendi is equally applicable for the intimation framed u/s 143(1) of the Act.
ITA No. 2249/Del/2022 AY: 2018-19;Delhi ITAT_ SAVLEEN KAUR Vs. ITO.
6. Whether order u/s 142 was required to be communicated to assessee, so as to know reasons, and, if required, assessee could choose to exercise option to challenge order – YES: SC
The Revenue accepted that order u/s 142(2A) was never communicated or even uploaded on portal. Therefore, present appeal is to be disposed of with a direction that purported order directing special audit under section 142(2A) will not be given effect to and will be treated as not passed, as it was never communicated to assessee. The Appeal is allowed in favour of Assessee.
SC; Civil Appeal No. Of 2023; RAJIV GANDHI PROUDYOGIKI VISHWAVIDYALAYA Vs. UOI AND OTHERS
7. Whether when recipient is eligible for benefit of DTAA then there is no scope for deduction of tax at rate of 20% u/s 206AA, and rate of taxation would be as dictated by provisions of treaty – YES: HC
It is not in dispute that the assessee has made payment towards technical services to various recipients in different countries as per DTAA with different countries. In the case of Danisco, the Delhi High Court has held that Section 206AA cannot be understood to override the charging Sections 4 and 5 of the Act. It has further held that the provision in Section 206AA has to be read down to mean that where the deductee, i.e., the overseas resident business concern conducts its operation from a territory, whose Government has entered into a DTAA with India, the rate of taxation would be as dictated by the provisions of the treaty. Thus, in respectful agreement with the view taken by the Delhi high Court, as per the DTAA, the maximum deduction shall not exceed 10% which the assessee has deducted. Any other interpretation to permit the taxing authority to raise a demand beyond 10% would be incongruous.
[2023-TIOL-92-HC-KAR-IT _ THE CIT (INTERNATIONAL TAXATION) Vs. M/s WIPRO LTD.]
8. Whether when issue is ‘considered and decided’ by appellate authority, then same cannot be revised u/s 263 – YES: ITAT
According to the provisions of Section 115BBC, on anonymous donation tax is required to be charged at the rate of 30% subject to certain deductions. The CIT did not invoke the provisions of Section 263 for this reason. The only reason stated by the PCIT is that the assessing officer has granted set off deficit of the assessee trust against the anonymous donation. Both these things are different. One is the manner of computation of total income and 2nd is manner of chargeability of tax on the total income. The 2nd aspect is not at all a reason stated by the CIT for upsetting the order of the AO. In view of this, there is no reason to uphold the order of the PCIT passed u/s 263 as there is no error which is prejudicial to the interest of the revenue. Hence same cannot be sustained and therefore, quashed.
[2023-TIOL-66-ITAT-MUM _ITA No. 1284/Mum/2021_VIGHNAHARATA TRUST Vs. CIT (EXEMPTION)]