Allowability of Sec. 54 exemption if amount spent towards residential house after due date prescribed in Sec. 139(1)

 

Section 54 of the Income-tax Act, 1961 ("Act") provides for exemption of capital gains arising to a specified assessee from transfer of a long- term   capital   asset   to   the   extent   capital   gains   are   invested   in   a residential  house  within  a  prescribed  period.  The  said  exemption  is available if the residential house is purchased or constructed within the prescribed  period  of  one  year  before  or  two  years  after  (in  case  of purchase);  or  three  years  after  (in  case  of  construction)  the  date  of transfer of the long-term capital asset.

Invariably, a person is not able to utilize the entire amount of capital gains on or before the due date of filing of return for the year in respect of which such capital gains arose. Such a situation is addressed by sub- section  (2)  by  providing  for  deposit  of  unutilized  funds  in  a  Capital Gains Account Scheme before the prescribed date so that an assessee may  not  lose  upon  the  exemption  of  unutilized  funds.  Section  54(2) reads as under:

Government invites data from exporters for RoDTEP scheme

 

The Union Cabinet had approved a scheme for Remission of Duties and Taxes on Exported Products (RoDTEP) to boost exports and employment generation in various sectors in March 2020. It was announced that as and when the rates under the RoDTEP scheme were announced for a tariff line/item, the benefits under the Merchandise Export from India Scheme (MEIS) on such tariff line/item shall be discontinued.

GST on Legal Services Provided by Advocates

 

Meaning of Legal Services Prior to Corrigendum dated 25th Sep 2017, "Services supplied by an individual advocate including a senior advocate by way of representational services before any court, tribunal or authority, directly or indirectly, to any business entity located in the taxable territory, including where contract for provision of such service has been entered through another advocate or a firm of advocates, or by a firm of advocates, by way of legal services, to a business entity."

TDS on Rent of Casual Accommodation

 

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The Income Tax Appellate Tribunal (ITAT), Mumbai Bench held that TDS cannot be deducted on the rent if the accommodation services were taken on a casual basis. The assessee, Dadiba kali Pundole Esplanade House is engaged in the business of auctioning fine and decorative arts, promoting, publishing, documenting, executing, and selling arts. The assessee filed its return of income declaring his total income, which was processed under section 143(1) of the Act. Thereafter, the case of the assessee was selected under scrutiny and statutory notices were issued and served upon the assessee. During the course of assessment proceedings, the Assessing Officer noticed that the assessee has paid Rs.4,68,543 towards rent of hotel accommodation to Royal Bombay Yacht Club on which no TDS was deducted. Accordingly, a show cause was given to the assessee as to why the same should not be disallowed under section 40(a)(ia) of the Act for non- deduction of Tax Deducted at Source. The assessee also submitted that no single payment was made in excess of Rs.1,80,000 at any point in time. The assessee also referred to Circular No.5 dated July 30, 2020, issued by CBDT, wherein it has clarified the provisions relating to tax deduction at source regarding changes introduced through Finance Act, 1995. The assessee also submitted that in the said Circular the Board clarified that the TDS is applicable to the payments made by persons other than individual and HUF for hotel accommodation taken on a regular basis which will be in the nature of rent would be subject to TDS under section 194-I of the Act. The AO disallowed and added the same under section 40(a)(ia) of the Act for non-deduction of TDS. The CIT(A) confirmed the addition by holding that the assessee has paid accommodation charges for the hotel accommodation which is on a regular basis from the club without deduction of TDS at source. The two-member bench headed by the Vice- President, Mahavir Singh observed that the accommodation was booked by the assessee in the club not on a regular basis but on casually and occasionally as and when the foreign consultants visited the assessee in connection with the assessee’s business. “We are quite convinced with the arguments of the learned Counsel that this accommodation is occasional/ casual as no specific accommodation is earmarked and the same is made available to the assessee on the availability basis,” the tribunal noted. Therefore, the tribunal while setting aside the order passed by CIT(A) held that the Circular has very clearly mentioned that the provision of section 194(I) is applicable where the accommodation is taken on a regular basis, which means that a specific accommodation is earmarked to be let out for the specific period but in the present case the facts are different

Government prescribes measures for timely faceless assessment under Customs

 

This tax alert summarizes a recent circular issued by the Central Board of Indirect Taxes and Customs (CBIC) prescribing measures to resolve issues impacting the pace of faceless assessments

Bangalore Tribunal explains approach for domestic transfer pricing in case of profit-linked tax holiday qualifying units

 

 

This Tax Alert summarizes a decision of the Bangalore Income Tax Appellate Tribunal (Tribunal), dated 5 October 2020, in the case of Wipro Limited (Taxpayer) on the issue of application of domestic transfer pricing (TP) provisions while computing profits of eligible units qualifying for profit-linked tax holiday under the Income Tax Act, 1961 (ITA).

Key takeaway from the Companies (Amendment) Act, 2020

 

The Government had introduced the Companies (Amendment) Bill 2020 in the Lok Sabha on March 17, 2020 and now the bill has been passed in the both houses of the Parliament. The key objective of the Amendment Act, 2020 is to decriminalise various offences, to declog National Company Law Tribunal (NCLT) Act and to provide further ease of doing business for corporates. The amendment legislation was approved by the Union Cabinet on March 4, 2020 and President passed it on Sept 28, 2020. The provisions in the Act will become effective from time to time after the issue a notification/s. The key amendments proposed in the Act are discussed hereunder:

CBIC relaxes applicability of e-invoice and defers dynamic QR code for B2C invoices under GST

 

 

This Tax Alert summarizes recent notifications and a Press Release^[1] issued by the Central Board of Indirect Taxes and Customs (CBIC).

 

The key changes are:

·         Invoice issued by a person during October 2020 without obtaining Invoice Reference Number (IRN) shall be deemed to be valid if IRN for such invoice is obtained within 30 days from the date of invoice. Further, penalty in such cases shall be waived.

·         Requirement of dynamic Quick Response (QR) Code on an invoice issued to an unregistered person (B2C invoice) has been deferred till 1 December 2020.

·         If the aggregate turnover of the person in any of the preceding financial year from FY 2017-18 onwards exceeds INR500 crores, they are required to issue e-invoice for B2B transaction or provide dynamic QR code on invoice for B2C transaction.

·         E-invoicing will be required for export transactions. Earlier, it was required only in respect of supply of goods or services made to a registered person.

·         Central Goods and Services Tax Rules, 2017 have been amended to provide that:

o    In case a registered person is required to issue e-invoice, the invoice shall contain QR code (having embedded IRN in it).

o    The Commissioner may exempt a person from issuance of e-invoice for a specified period subject to such conditions and restrictions as may be specified.

o    For verification by proper officer, invoice with QR code (and embedded IRN) can be produced electronically in lieu of physical copy of such invoice.