RNM Tax Alert – Direct Tax Part for July 2024
The table below shows the proposed changes to Tax Deducted at Source (TDS) rates by the Finance (No. 2) Bill 2024 compared to the existing rates.
| Section | Nature of Income | Payer | Payee | TDS Rates | |
| Existing | Proposed | ||||
| (a) | (b) | (c) | (d) | (e) | (f) |
| 194DA | Payment in respect of Life Insurance Policy | Every Payer | Resident Person | 5% | 2% |
| 194F | Repurchase of Units by Mutual Fund or UTI | Every Payer | Any Individual or HUF | 20% | Omitted |
| 194G | Commission and other payments on sale of lottery tickets | Every Payer | Any person (resident or non-resident) engaged in business of stocking, distributing, purchasing or selling of lottery tickets. | 5% | 2% |
| 194H | Commission and Brokerage | Any person (Refer note 3) | Resident Person | 5% | 2% |
| 194-IB | Payment of Rent by Certain Individuals or HUF | Any Individual or HUF (not covered under Section 194-I) | Resident Person | 5% | 2% |
| 194M | Payment to contractor, commission agent, broker or professional by certain Individuals or HUF | Individual or HUF not liable for deduction under section 194C, 194H and 194J | Resident person | 5% | 2% |
| 194-O | Payment by e-commerce operator to e-commerce participant | E-commerce operator | Resident e-commerce participant | 1% | 0.1% |
| 194T | Payment in the nature of salary, remuneration, commission, bonus or interest to partners of the firm | Any Person | Resident Person | – | 10% |
| 195 | Long-term Capital Gains exceeding Rs. 1.25 lakh from transfer of listed equity shares, units of equity oriented mutual fund or business trust as referred to in Section 112A | Any Person | Non-resident person or foreign company | 10% | 12.5% |
| 195 | Long-term capital gain from transfer of unlisted shares or shares of a closely held company | Any Person | Non-resident person or foreign company | 10% | 12.5% |
| 195 | Long-term Capital Gains from transfer of specified assets by a non-resident Indian | Any Person | Non-resident Indian | 10% | 12.5% |
| 195 | Long-term Capital Gains from transfer of any other capital asset | Any Person | Non-resident person or foreign company | 20% | 12.5% |
| 195 | Short-term Capital Gains from transfer of listed equity shares, units of equity oriented mutual fund or business trust on which Securities Transaction Tax (STT) is paid | Any Person | Non-resident person or foreign company | 15% | 20% |
Important Judicial Precedents
1. Granting a license to developer for land development is not transfer of land; SLP dismissed
[2024] 164 taxmann.com 665 (SC) _DCIT vs. Darshana Anand Damle
SLP dismissed against High Court ruling that where assessee had only granted a licence to Developer to enter into assessee’s land for purpose of development, same did not amount to ‘allowing possession of land’ as contemplated under section 53A of Transfer of Property Act, 1882 and, therefore, section 2(47)(v) would not apply.
2. HC set-asides order passed by AO who didn’t hear assessee as it violates principle of natural justice
[2024] 164 taxmann.com 672 (Kerala -HC)_Johnson Koomullil Thomas vs. Income-tax Officer
Assessing Officer of assessee issued a show cause notice under section 148A(b) stating that income chargeable to tax for relevant assessment year had escaped assessment and passed order under section 148A(d) – Assessee filed instant petition contending that order passed under section 148A(d) was without jurisdiction as impugned order was not passed by person who had heard assessee – Whether since order under section 148A(d) was not passed by Officer who had heard assessee, same was to be set aside – Held, yes [Para 6] [In favour of assessee]
3. No additions on account of sundry creditors if outstanding amount was written off in books of account: HC
[2024] 164 taxmann.com 264 (Delhi -HC)_ PCIT vs. Topline Buildtech (P.) Ltd
Where Assessing Officer in relation to assessment year 2013-14 made additions to assessee’s income on account of a credit standing in name of a sundry creditor, since impugned credit was outstanding as on 31-3-2013 which was written off on 31-3-2014 and addition of credit amount would be double addition for amount had been written off and was offered to tax, impugned addition was to be deleted.
4. AO can’t deny Sec. 54 relief to non-resident merely on ground that she didn’t file ITR claiming deduction: ITAT
[2024] 164 taxmann.com 329 (Mumbai – Trib.)_ Seema Heera vs. ACIT (OSD) (IT)
Where assessee, a non-resident, furnished all details and documentary evidences in respect of sale of immovable property by her as well as in respect of new residential flat purchased by her, for claiming deduction under section 54, benefit under section 54 could not be denied to assessee on ground that she did not furnish return of income claiming such deduction
5. Whether the addition should be restricted to the extent of bringing the gross profit rate on alleged bogus purchases at the same rate of other genuine purchases – YES: ITAT
[2024-TIOL-871-ITAT-MUM _ITA No. 106/M/2024 _ M/s R RAMESH & COMPANY Vs. ACIT]
We have carefully considered the rival contention and perused the orders of the lower authorities. We find that the facts of this case are identical to the facts of the case of the assessee for assessment year 2011 – 12. In this case also the assessee is found to have obtained the bogus purchase invoices from 4 different parties amounting to Rs. 19,403,736/–. Before AO, assessee failed to prove the genuineness of such purchases and therefore, they hundred percent addition was made by AO. Same was confirmed by CIT – A. We find that the assessee has produced to prove the genuineness of the purchases the various evidence in the form of the income tax return, the audited financial statements, account confirmation, purchase invoices, bank statement and affidavit of the sellers. Over and above the assessee has also demonstrated that the goods purchased from these four different parties have been exported and the sales realization is Rs. 20,253,868/– which resulted into the gross profit of 5.42%. this cross profit has already been offered for taxation. Therefore, with similar direction we also direct the assessee to show the gross profit earned by it from untainted purchase and the gross profit earned by the assessee on these alleged bogus purchases, AO on verification is directed to restrict the addition to the extent of difference of gross profit from untainted purchases.
6. Whether case can be remanded back in interest of justice and for non-affording reasonable opportunity of being heard by subordinate authorities – YES : ITAT
[2024-TIOL-864-ITAT-DEL_ITA No.41/Del/2024_ CONARCH ASSOCIATES Vs. ACIT]
It is evident from the CIT(A)’s order that there is delay in filing the appeal. However, the CIT(A) has neither condoned the delay nor has rejected the appeal being belated. He has decided the appeal on merit. The CIT(A) has condoned the delay and thereafter he has decided the case on merit. The AO had not examined the case properly. Therefore, in the interest of justice and non-affording reasonable opportunity of being heard by the subordinate authorities, it was held that this case needs to be restored back to AO and not to the CIT(A). The AO should provide reasonable opportunities of being heard to the assessee to file the relevant details and represent its case on merits. After all, the AO has to pass the order as per law and therefore, she/he is free to examine and verify all documentary evidences furnished by the assessee and do needful as per the law. Therefore, deem it fit to set aside the impugned order and remit the matter back to the file of the AO for de-novo consideration and accordingly ordered so. The assessee should ensure compliances during the set-aside proceeding before the AO who is also required to provide reasonable opportunities of being heard to the assessee before deciding the case on merit. In view of same appeal is allowed for statistical purposes.