Taxation of Intangible assets acquired through business restructuring.

1.    Background   

1.1        When a company aims to acquire another company's business through amalgamation or demerger, assets or liabilities may be acquired at fair value or book value, contingent upon the application of Indian Accounting Standards (Ind AS) or accounting standards. During business acquisition, intangible assets can be acquired or recognized in three ways:   

All about Form 10AB in the context of Charitable Trusts:

1. Introduction:

Every trust/charitable society/ NGO that wishes to claim the tax exemption benefits has to file Form 10A to seek fresh registration under 80G and 12A and this form can be filed by the assessee once in their whole lifetime to obtain a registration or approval order.
Finance Act 2000 introduced the concept of permanent and provisional registrations, so the Form 10AB has come into play for subsequent compliance with the Income Tax Department, i.e., for renewal or permanent registration.
Charitable trusts, institutions, NPOs/ NGOs that are exempted under the Sections 10 (23C), 12A, 12AA, 35 or 80G of the Income-tax Act, 1961 are required to reapply for the same and obtain a registration under a new Section 12AB.

2. Applicability:
All trusts and institutions with permanent registration or approval must make an application in Form 10AB after five years, which is the approval period of initial registration.
All trusts and institutions with provisional registration for a period of three years will have to apply with Form 10AB within 6 months after the commencement of their activities. These organisations can get permanent registration only after making an application with Form 10AB.
In case of modification in Memorandum of the Society/Trust Deed, Form 10AB has to be filed within a period of 30 days from the date of such modification.
In case of activation of inoperative registration, Form 10AB has to be filed at least six months prior to the commencement of the assessment year from which the said registration is sought to be made operative.

3. Documents required:
Self-certified copy of the Memorandum of the Society/ Trust Deed.
The latest Audited financial statements of trusts/charitable societies/ NGO of last 3 years.
KYC of all the trustees or members, as the case may be.
Details of the activities of the trust/charitable societies/ NGO.
Self-certified copy of an existing order granting registration or approval under Section 12A or 80G of the Income-tax Act.
Self-certified copy of the documents evidencing adoption or modification of the objects.

4. Process of filing:
Log on to the official e-filing portal of the Income Tax Department through its websites
Check the e-file tab to access ‘File Income Tax Forms’ and choose ‘Form 10AB’ and the relevant assessment year
Fill in the requisite details in the form and attach the necessary documents (which are similar to that of Form No. 10A)
Provide digital signatures or EVC as required during the furnishing of the return and submit the form

Department of Commerce issues clarification on newly inserted Rule 11B of SEZ Rules

 This Tax Alert summarizes a recent instruction issued by the SEZ Division, Department of Commerce, clarifying various concerns relating to Rule 11B of the Special Economic Zone (SEZ) Rules, 2006. The said rule provides for setting up of non-SEZ Information Technology (IT)/ IT Enabled Services (ITES) units in IT/ITES SEZs.

HC upholds validity of provisions restricting ITC where supplies are taxed under RCM

 This Tax Alert summarizes a recent judgement of the Delhi High Court (HC) ^[1] dealing with the issue of denial of input tax credit (ITC) where supplies are taxed on reverse charge basis under both Service tax and Goods and Services Tax (GST).

SEBI’s circular on Standardization of Private Placement Memorandum (PPM) Audit Report

Vide recent circular dated April 18, 2024, the Securities and Exchange Board of India (SEBI) mandates Alternative investment Funds (AIFs) to carry out an annual audit with the PPM and submit the audit report to the Trustee, Board of Directors and the Designated Partners of the AIF and SEBI within six months from the end of the financial year.

Understand Slump Sale

1. What is slump sale?

Slump sale also referred as business transfer is where the assessee transfers the entire undertaking/ division for lumpsum consideration without assigning value/ selling price of individual asset.

CBDT Circular on TDS Demand due to PAN Aadhar Linking.

The recent initiative by the Income Tax Department is a commendable step forward. It entails that no demands will be made in instances where the Tax Deducted at Source (TDS) was under-deducted by the deductor due to the non-linkage of PAN (Permanent Account Number) and Aadhar by the deductee. Moreover, if the transaction is recorded by March 31, 2024, and the PAN of the payee becomes active by May 31, 2024, then there will be no obligation to deduct TDS at a higher rate.

Amendment of BE on Payment of IGST for Advance Authorisation Default

 This is to update you about an important decision by Kerala Hon’ble High Court (HC) in the case of Travancore Cocotuft Private Limited v. DC,DGGI ,2024-VIL-344-KER-CU. The Court held that where IGST along with interest is paid on Advance Authorisation (‘AA’) default, customs must amend Bill of Entry (‘BE’) thereafter.

Taxability of online games

Introduction:

1. Taxability of online winnings before the introduction of section 115BBJ of the Income Tax Act and section 194BA of the Income Tax Act, was governed by section 115BB of the Income Tax Act – taxability of income from lottery, crossword puzzles, etc. and section 194B of the Income Tax Act– TDS on income from lottery, crossword puzzles, etc.

Impact of Supreme Court Judgement on Political Contributions

1. The Supreme Court had delivered a seminal judgement in the case of Association for Democratic Reforms & Anr v/s Union of India & Ors. declaring Section 182(3) of the Companies Act (as amended by Section 154 of the Finance Act 2017) violative of Article 19(1)(a) and unconstitutional.

RBI CIRCULAR ON AIF

 On December 19, 2023, the Reserve Bank of India (“RBI”) issued a circular (“Original Circular”) on investment in AIFs to address regulatory concerns w.r.t. investments made by banks, financial institutions, nonbanking financial companies (“Regulated Entities”/“REs”) in units of AIFs, during its regular investment operations. In order to address concerns on the possible evergreening through AIF route, the Original Circular aimed at clarifying that REs shall not invest in any scheme of AIF which has downstream investments either directly or indirectly in a debtor company of RE, and accordingly introduced further clarifications. However, many businesses in the industry raised concerns regarding difficulties in implementation of the Original Circular. Resultantly, some RE’s felt compelled to sell their interests in AIFs prematurely.

Know Form 10-IEA.

 Form 10-IEA is now available for filing, giving taxpayers the opportunity to choose the old tax regime for the financial year 2023-24. This is a significant decision that can impact your tax liabilities, so it's essential to understand the process and act promptly.

Here's what you need to know:

What is Form 10-IEA: Form 10-IEA provides taxpayers with the option to choose between the new and old tax regimes. The default regime is the New Tax Regime, but taxpayers who prefer the old regime must file Form 10-IEA to exercise this choice.

Mauritius tax treaty amended - Principal Purpose Test introduced

 Earlier this year, the Mauritius Government approved the amendment to the India – Mauritius tax treaty, aligning it with the proposal of the Organization for Economic Co-operation and Development (OECD) on the minimum standards of Base Erosion and Profit Shifting. Although the Protocol amending the tax treaty was signed on March 7, 2024, the text of the Protocol has now been made public (a copy of the same is attached herewith for your ready reference). An official notification in this respect is anticipated to be issued shortly.

Eligibility for GST Input Tax Credit (ITC) related to expenses on IPO/Bonus/Right Issues:

An eminent concern within the GST framework pertains to the entitlement of Input Tax Credit (ITC) concerning expenditures associated with Initial Public Offerings (IPOs), Bonus Issues, or Right Issues by either Listed Companies or those endeavoring to secure listing.

Electronic Furnishing of APA, MAP and Safe Harbor applications

 Central Board of Direct Taxes (CBDT) vide its notification no. 01/2024, dated 26^th Feb 2024 (Notification) has provided for the electronic filing of the applications for APA, MAP and Safe harbor. As per the Notification, following forms shall be filed online, on the Income tax portal, with effect from April 1, 2024. All the forms filed prior to 01^st April 24 shall not be impacted.

 

Sr No.	Form	Description
	3CED	Application for an Advance Pricing Agreement
	3CEE	Application for withdrawal of APA request
	34F	Form of application for an assessee, resident in India, seeking to invoke mutual agreement procedure provided for in agreements with other countries or specified territories.
	3CEFA	Application for opting for Safe Harbour

 

These forms are appearing on Income Tax portal under the tab “Income Tax Forms”. Accordingly, please make sure to electronically file the above Forms as per the updated guidelines.

 

Multiple representations were made to the government, for many years, to allow electronic filing of these applications so as to reduce the paperwork and for efficient processing of the applications. Thus, electronic filing is expected to assist in expediting the filing process.    

ITAT RECENT JUDGEMENTS

 ·       Mumbai ITAT in the case of Mukesh Harilal Mehta held that Exemption U/S 54 cannot be denied merely due to mistake by the developer.

Is the LRS a Good Option for Overseas Portfolio Investments?

This article aims to explain (a) why Indians send money abroad for specific purposes, (b) how they can invest the remaining funds, and (c) recent FEMA changes leading to notices for many individuals to bring back unused funds from accounts overseas.

 

Taxation of unexplained income or investment:

1. Sec .68 of Income Tax Act– Cash Credits

Where any sum is found credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the sum so credited may be charged to income- tax as the income of the assessee of that previous year.

Reply Disregarded

This issue has frequently been raised by numerous businessmen and tax professionals, expressing that orders have been issued without due consideration of their responses. When appealing against such orders, the following case laws can be referenced:

Note on overseas Inter-Company transactions.

Facts

·       India company has overseas subsidiary companies and there may arise requirement wherein customer execution requires the involvement of both Indian company & overseas company. In such cases, the customer will receive an invoice from one of the group companies.  Consequently, there is a requirement to raise intercompany invoices, where one group companies’ invoice to another group company who is raising final invoice to customers. 

 

• Madras HC holds proceedings initiated by more than one tax authority ultra-vires in absence of notification providing for cross-empowerment

 This Tax Alert summarizes a recent judgement of the Madras High Court (HC). The issue involved was whether taxpayers who have been assigned either to the Central tax authorities or the State tax authorities under the respective Goods and Services Tax (GST) enactments can be subjected to investigation and proceedings by their counterparts.

Salaried Person's Tax Deductions: A Complete Guide

 

Introduction

It's important for taxpayers to have a clear understanding of the available allowances and deductions, as they can greatly reduce tax liabilities. Throughout this article, we aim to provide you with all the necessary details on income tax allowances and deductions, empowering you to make informed decisions when filing your tax returns

TAX DUE DATE - APRIL 2024.

 

1

11.04.2024

GST

Filing of GSTR1 for the month of March, 2024

2

20.04.2024

GST

Payment of GST for the month of March, 2024 Filing of GSTR 3B for the month of March, 2024

3

30.04.2024

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 March 2024. · Deposit TDS from Salaries deducted during the month of March 2024 • Deposit TCS for collections made under section 206C including sale of scrap during the month of March 2024, if any

Pre-GST taxes cannot be refunded if paid pursuant to an inquiry

 This is to update you about an important decision by Tribunal in the case of Filatex India Limited vs. CCE & ST, EA No. 10231 of 2020, wherein the Tribunal held that refund of Service Tax (‘ST’) is not allowed under GST transitional provisions where such ST was paid in pursuant to an inquiry by Authorities.

How to condone GST appeal

When is a delay of over 1 month acceptable (condone) for filing GST's First Appeal?

20% Pre deposit is not a precondition for graining a stay on demand

 Observations of the Hon Delhi HC while rejecting the precondition of 20% Pre deposit for granting stay on demand:

1. The Revenue erred in proceeding with a premise that the Assessee was obliged to tender or place evidence of having deposited 20% of the disputed demand before its application for stay under Section 220(6) could have been considered.

2. The deposit which an Assessee may be called upon to make will have to be examined and answered bearing in mind factors such as prima facie case, undue hardship and likelihood of success.

3. The circular dated 31/07/2017 would not operate as a fetter upon the power otherwise conferred on a quasi-judicial authority and that it would be wholly incorrect to view the same as mandating the deposit of 20%.

4. The respondents have clearly erred in proceeding on the assumption that the application for consideration of outstanding demands being placed in abeyance could not have even been entertained without a 20% pre-deposit.

National Association Of Software And Services Companies (NASSCOM) (TS-195-HC-2024(DEL))

How to handle errors in GST returns.

Errors in filing returns should be permitted if they meet these two conditions:
1. It was a clerical error made without any intention to evade taxes.
2. Revenue Neutral: The error resulted in no change to the overall revenue.