Understanding Unregulated deposit Scheme

Deposit: an amount of money received by way of an advance or loan or in any other form, by any deposit taker with a promise to return whether after a specified period or otherwise, either in cash or in kind or in the form of a specified service, with or without any benefit in the form of interest, bonus, profit or in any other form, but does not include:  

Tax Due Date- March 2019.

Sr No	Due Date	Related to	Compliance to be made
1	11.03.2019	GST	Filing of GSTR 1 for the month of February, 2019

2

20.03.2019

GST

Payment of GST for the month of February, 2019 Filing of GSTR 3B for the month of February, 2019

3	07.03.2019	TDS/TCS (Income Tax)	· Deposit TDS for payments of Salary, Interest, Commission or Brokerage, Rent, Professional fee, payment to Contractors, etc. during the month of February 2019. · Deposit TDS from Salaries deducted during the month of February 2019 • Deposit TCS for collections made under section 206C including sale of scrap during the month of February 2019, if any
4	15.03.2019	Income Tax	Payment of Advance Tax

Karnataka Karasamadhana Scheme 2019 | Tax settlement scheme

This is with reference to the Karasamadhana Scheme, 2019 announced by the Hon’ble Chief Minister of Karnataka in his Budget Speech on 08 February 2019.  A copy of the Comprehensive Karasamadhana Scheme, 2019 has been placed in the public domain today. As per the said Scheme, waiver of 100% of arrears of penalty and interest payable under the KVAT Act, 2003 and CST Act, 1956 relating to the assessments / re-assessments already completed and to be completed or before 30 June 2019 shall be provided. Apart from the above, assessments / reassessments under the Entry Tax, Professional Tax Act etc. shall also be eligible for the benefit under the scheme. For ease of reference, we are briefly providing herein below the procedure and timeline involved for applying under the Scheme:

►      Full payment of arrears of taxes shall be required to be made on or before 30 September 2019 for waiver of 100% arrears of penalty and interest;

►      All the appeals currently pending before the respective appellate forum is required to be withdrawn in order to apply for benefit under the scheme;

►      An application in the prescribed format to be filed electronically within 30 September 2019.  This has to be followed by a hard copy submission with the concerned assessing authority;

►      The concerned authority shall scrutinize the application and workout the actual arrears of tax, penalty and interest payable upto the date of filing of application and shall inform within 15 days from the date of filing the application about discrepancies, if any;

►      The authority, based on his satisfaction about the eligibility of the scheme to the dealer, shall pass the order within 30 days from the date of making the payment.

SC to decide on extension of time-limit for installment payment under IDS, 2016

SC issues notice to Revenue upon SLP filed by assessee against HC's denial to grant extension of time for payment of third installment under the Income Tax Declaration Scheme, 2016 [IDS,2016]; The assessee had filed declaration of undisclosed income under the IDS, 2016 but was unable to pay the third instalment of tax, surcharge and penalty within the stipulated time and had sought extension of time before HC by way of a writ petition, which was rejected;HC had ruled that mere involvement in office work and marketing activities cannot be a good justification and ground to seek and ask for extension of time; HC had further held that “the petitioners have not made out an extraordinary case which would have justified invoking writ jurisdiction and grant of further time beyond the time, even assuming that the time stipulated under the Scheme could be extended by the Board u/s. 119(2) of the Income Tax Act, 1961.”;SC lists the matter after two weeks from the date of this order and in the interim, directs assessee to deposit the tax under third instalment with interest @ 12%p.a. till date. 

CBDT: Forms Committees to examine suggestions/issues on litigation management including International Good practices

CBDT constitutes a 5-member Committee to examine suggestions / issues on litigation management emerging out of the Judicial conference on Litigation Management held in January, 2019 and to report on the solutions / way forward; Committee to also - i) examine the cases where ITAT has passed perverse or irregular orders, ii) examine feasibility of creation of separate bench of ITAT for International tax at places where the pendency of such cases is high, iii) examine suggestion of reviving institution of Junior DRs in view of shortage of DRs in ITAT; CBDT also constitutes a 4-member Committee to examine International good practices on Tax Litigation management; Requires both the committees to submit their report within a month’s time 

HC : Expense disallowance u/s. 40(a)(ia) for TDS default cannot be invoked in Trust’s case pre-April’19

Karnataka HC upholds ITAT order, rules that expense disallowance u/s. 40(a)(ia) for TDS default cannot be invoked in assessee-Trust’s case for AY 2006-07;  Assessee-Trust was running a hospital, during subject AY, assessee had failed to deduct TDS u/s. 194J on certain doctors payments and therefore AO had invoked Sec. 40(a)(ia); HC observes that insertion of Explanation 3 to Sec. 11 vide Finance Act, 2018 “clearly indicates that the same would stand applicable only from 01.04.2019”; Thus, HC upholds ITAT order that Sec. 40(a)(ia) cannot be invoked in present case; Separately, applying the same analogy, HC holds that amendment to Sec. 11(6) vide Finance (No. 2) Act, 2014  [restricting depreciation deduction where cost of assets has already been allowed as application of income] is prospective in nature.  :HC 

Inadmissible Input Tax Credits (ITC) Under GST

Section 17(5) of CGST Act 2017 has been amended by CGST (Amendment) Act 2018. Below is the summary of Inadmissible / Blocked Input Tax credits under GST Act, as per amended Section 17(5):

Summary of Inadmissible / Blocked Input Tax credits under GST

FAQ ON Secretarial Audit

The SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 have been amended to include the following Regulation:

Every  listed  entity  and  its  material  unlisted  subsidiaries  incorporated  in  India  shall  undertake  secretarial  audit  and  shall  annex  with  its  annual  report, a secretarial audit report, given by a company secretary in practice, in such form as may be prescribed with effect from the year ended March 31, 2019.

NEW PROCEDURE AND FAQs TO FILE AN APPEAL BEFORE CIT (A)

As you are aware, Income Tax Scrutiny cases related to A.Y-2016-17 has been over on 31st December. Some assessees are happy with the decision given by Assessing officer and some are not happy or not satisfied by their decision. To deal with such situation, Income Tax Law provide another opportunity to assessee that, if they are not satisfied by the decision given by Assessing Officer related to their Income Tax Liability they can approach higher authority known as CIT (A) to represent their case again and if eligible, then get relief from CIT (A).

Imp Verdicts On Core Issues

PCIT vs. NDR Promoters Pvt. Ltd (Delhi High Court)

S. 68 Bogus share capital in form of accommodation entries: The transactions are clearly sham and make-believe with excellent paper work to camouflage their bogus nature. The reasoning is contrary to human probabilities. In the normal course of conduct, no one will make investment of such huge amounts without being concerned about the return and safety of such investment. The Tribunal's order is clearly superficial and adopts a perfunctory approach and ignores evidence and material referred to in the assessment order

NEW GST INPUT SET OFF RULES.

SET OFF RULES WEF 01.02.2019.

As per CGST Amendment act 2018, the set off rules has been changed the updated rules are presented with examples as follows:

Section 49(2),5(c),5(d)

Amended proviso 5(c)

“Provided that the input tax credit on account of State tax shall be utilised towards payment of integrated tax only where the balance of the input tax credit on account of central tax is not available for payment of integrated tax;”;

Section 80-IAC: Tax Incentives for Startups

To initiate the development of startups in India and provide a competitive platform, Section 80-IAC states that an eligible startup shall be allowed a deduction of an amount equal to 100 per cent of the profits and gains. With the intention to promote job-creators, this Section was introduced in the Finance Act of 2016 and was later amended in the Finance Bill of 2018. To be avail these deductions, a startup should engage in eligible business for three consecutive assessment years out of seven years (five years assessment year 2017-18) beginning from the year in which such qualified startup is incorporated. This article talks about Section 80-IAC that offers tax incentives for startups in India.

WHAT IS ANGEL TAX ISSUE?

·         Angel investors (also called informal investors, angel funders, private investors, seed investors or business angels) are affluent individuals who inject capital for startups in exchange for ownership equity or convertible debt

·         These investors invest their money in an entrepreneurial company unlike institutional venture capitalists, who invest other people’s money.

·         Unlike venture capitalists and bankers, many angel investors are not motivated solely by profit. They may be motivated as such by the enjoyment of helping a young business succeed as by the money they stand to gain.

Recovery of parent’s health insurance expenses from employee is not supply of services – AAR, Maharashtra

Authority for Advance Ruling, Maharashtra in case of Posco India Pune Processing Centre Pvt. Ltd. have recently held that since the applicant is not in the business of providing insurance services and accordingly the reimbursement of expenses attributable to the health insurance of parents is not a supply of services.

Further, the ruling also held that input tax credit of the GST paid on hotel accommodation for providing residential accommodation of the Managing Director / General Manager shall not be available as the same is used for personal consumption

CBDT circular revising appeal-filing monetary limits applicable ‘mutatis mutandis’ to wealth-tax appeals

CBDT directs that monetary limits for filing of appeals in income tax cases as prescribed in Para 3 of Circular 3 of 2018, “shall also apply to Wealth Tax appeals through extension of the Circular to Wealth tax matters in a mutatis mutandis manner,” with certain modifications; Prescribes modification with respect to the definition of ‘tax effect’ for the purpose of wealth tax appeals; Also states that the monetary limits specified in para 3 shall not apply to writ matters; Lastly, CBDT clarifies that “The said extension of the Circular to wealth tax appeals shall come into effect from the date of issue of this Circular.” 

HC : Upholds ITAT order; Transfer of subsidiary's shares, not 'slump-sale' of undertaking

Bombay HC upholds ITAT order, rules that assessee company’s transfer of entire shareholding in its subsidiary to third party doesn’t constitute slump sale u/s 2(42C) r.w. Sec 50B, cites distinction between transfer of shares and transfer of undertaking; Revenue had treated the transaction as a slump sale u/s 2(42C) on the ground that sale of 100% shares of any company would lead to a change of ownership and management which is similar to a slump sale and had thus invoked Sec 50B as against long term capital gains claimed by assessee u/s 48; Rejecting Revenue’s stand, HC observes that “what has been transferred are mere shares” of subsidiary company and there has been no transfer of an undertaking; HC remarks that “Only there has been change in pattern of its share holdings which would not make it slump sale” which is evident from the statutory definition of slump sale and the term 'undertaking' as defined in the Act read with the binding decision of the Apex Court in Bacha F. Guzdar; Upholding ITAT order, HC holds that “Tribunal invoked the correct principle of law to draw a distinction between transfer of shares and transfer of undertaking” and concludes that no substantial question of law arises.:HC 

Recovery of parent’s health insurance expenses from employee is not supply of services – AAR, Maharashtra

Authority for Advance Ruling, Maharashtra in case of Posco India Pune Processing Centre Pvt. Ltd. have recently held that since the applicant is not in the business of providing insurance services and accordingly the reimbursement of expenses attributable to the health insurance of parents is not a supply of services.

Further, the ruling also held that input tax credit of the GST paid on hotel accommodation for providing residential accommodation of the Managing Director / General Manager shall not be available as the same is used for personal consumption.

ITAT : Denies presumptive taxation benefit u/s. 44AD to partner on remuneration & interest from firm

Chennai ITAT denies assessee-partner’s claim of estimating income on presumptive basis u/s. 44AD with respect to interest and remuneration earned from the partnership firms during AY 2012-13; While filing return of income, assessee had applied presumptive rate @ 8% u/s 44AD on interest and remuneration received from various  partnership firms, however, AO had denied the claim on the ground that assessee was not doing any business independently but was only a partner in the firms; Referring to Sec. 28(v) read with Section 40(b), ITAT acknowledges that remuneration and interest received from a firm, to the extent eligible u/s 40(b), would be considered as ‘profits and gains from business or profession’ of the recipient partner; However, ITAT clarifies that “This by itself…would not translate such remuneration and interest, to gross receipts or turnover …of a business independently carried on by a partner.”; ITAT opines that the intention of insertion of Sec. 44AD was to help small business to comply with the taxation provisions and that the “Intention was not at all to construe a partner’s remuneration or interest as business income.”:ITAT 

HC : Condones delay in seeking TDS refund; Accepts plea of 'inadvertent omission’ by CA

Delhi HC condones assessee company’s delay in filing application u/s. 119(2)(b) seeking refund of TDS amount for AY 2013-14; Takes note of assessee’s submission that its Chartered Accountant / auditor had inadvertently overlooked the TDS amount while filing the return, holds assessee’s reasons as being ‘bonafide’;  On Revenue’s stand that the auditor’s omission was not substantiated, HC remarks that, “This court has difficulty to understand what more plea or proof any assessee could have brought on record, to substantiate the inadvertence of its advisor.”; Noting that the assessee did not urge any other grounds such as illness of someone etc., which could have reasonably been substantiated by independent material, HC remarks that, “there cannot necessarily be independent proof or material to establish that the auditor in fact acted without diligence.”; Moreover, HC observes that the amount was reflected on the TDS portal of IT Dept. at the relevant time, thus permits assessee to make refund claim and directs AO to remit the amount due within three weeks time after due verification, cites co-ordinate bench ruling in Indglonal Investment & Finance Ltd.:HC 

HC : Allows Sec. 10B benefit to manufacturer of diamond studded ‘handmade’ jewellery sans machinery

Bombay HC dismisses Revenue’s appeal against ITAT’s order allowing Sec. 10B benefit to assessee-firm (a 100% EOU), engaged in manufacturing of diamond studded gold jewellery, rules that absence of plant and machinery would not lead to a conclusion that there was no ‘manufacturing’ activity; During subject AY 2010-11, AO had denied  deduction on the ground that no manufacturing activity was carried out by assessee as there was no machinery available at its premises, as also a small amount of labour charges were incurred as against the large turnover; HC notes that as per ITAT’s findings, the Government had granted permission to assessee to manufacture handmade jewellery, and that the process of making diamond studded jewellery does not require machinery; Also on the quantum of labour charges and wages being the basis of disallowance, HC refers to ITAT’s finding that the Revenue had not carried out any examination / enquiry to ascertain what would be the fair market value of the labour charges and wages in this sort of activity; Thus, HC holds that view taken by the Tribunal is one of finding of fact and is a possible view, which does not give rise to any substantial question of law.:HC