I mportant Clause in TAR Vs ITR

S No.	Clause in TAR	Particulars	Schedule in ITR
1	Form 3CA	In Statutory Audit was carried out by other Audit Firm, mention statutory audit was conducted by "M/s" otherwise "US"	NA
2	3CD-9(b)	Change in Partners / Members	PartA-General 2
3	3CD-10	Nature of Business, Change in Business	PartA-General 2
4	3CD-12	Presumptive Profits	PartA-P&L, Schedule BP
5	3CD-13e	Adjustmemts to ICDS	Schedule ICDS
6	3CD-14	Valuation of Stock U/s 145A	Schedule Part A - OI
7	3CD-16	Amount not credited to P&L A/c a.  Items falling U/s 28 b.  Proforma Credits, drwbacks, refund c.  Escalation claims, Capital Receipts etc	Schedule Part A - OI
8	3CD-18	Depreciation U/s I T Act	Schedule BP, DPM, DOA (Compare last year closing WDV with TAR and ITR)
9	3CD-19	Amounts admissible U/s 32AC - 35E	Schedule BP, ESR, RA
10	3CD-20	Amounts admissible U/s 36(1)(va) (Employee contribution to PF, ESI)	Schedule Part A - OI
11	3CD-21(a)	In TAR, it is only a disclosure. Don’t try to link all disallowance U/s 37 in ITR	Schedule Part A - OI
12	3CD-21(b)	Details of payments on TDS not deducted, TDS unpaid Vs Clause 34(a) of TAR	Schedule Part A - OI
13	3CD-21(c)	Salary, commission, interest paid to partner U/s 40(b)	Schedule Part A - OI
14	3CD-21(d)	Disallowance U/s 40A(3)/(3A)	Schedule Part A - OI
15	3CD-21(e)	Disallowance U/s 40A(7)	Schedule Part A - OI
16	3CD-21(f)	Disallowance U/s 40A(9)	Schedule Part A - OI
17	3CD-21(h)	Disallowance U/s 14A	Schedule Part A - OI
18	3CD-21(i)	Disallowance U/s 36(1)(iii)	Schedule Part A - OI
19	3CD-23	Disclosure of PAYMENTS made to persons covered U/s 40A(2)(b) (Have to disclose all payments made to above parties and it is not limited to expenses)	PartA-BS, Schedule AL (Verify with Related Party Disclosures in Financials)
20	3CD-24	Deemed Profits U/s 32AC, 32AD, 33AB, 33AC, 33ABA	Schedule Part A - OI Schedule BP
21	3CD-25	Deemed Profits U/s 41	Schedule Part A - OI
22	3CD-26(i)(A)(a)	Disallowed U/s 43B in earlier years and paid in current year	Schedule Part A - OI
23	3CD-26(i)(A)(b)	Disclose amounts disallowed U/s 43B in earlier years and not paid in current year	Schedule Part A - OI
24	3CD-26(i)(B)(a)	Disclose payments related to current PY and paid in current PY - U/s 43B	Schedule Part A - OI
25	3CD-26(i)(B)(b)	Disclose payments related to current PY and UNPAID upto filing of ROI - U/s 43B	Schedule Part A - OI
26	3CD-26(i)(A)(a)	Disallowed in earlier years and paid in current year	Schedule Part A - OI
27	3CD-27(a)	Provide details of ITC as per books of accounts	NA
28	3CD-27(b)	Details of Prior Period Income / Expenses	Schedule Part A - OI
29	3CD-29B(a)	Income U/s 56(2)(x)	Schedule OS
30	3CD-30	Amounts borrowed / repaid U/s 69D	Schedule OS
31	3CD-32(a)	Details of Brought Forward Losses	Schedule CFL, UD
32	3CD-32(b)	Change in shareholding U/s 79	PartA-General 2
33	3CD-32(c)	Losses in Speculative Business U/s 73	Schedule BP, BFLA, CFL
34	3CD-32(d)	Losses in Specified Business U/s 73A	Schedule BP, BFLA, CFL
35	3CD-32(e)	Deemed Speculative Business U/s 73	Schedule CFL, UD
36	3CD-33	Deduction U/s Chapter VIA, Section 10A, 10AA	Schedule 10AA, 80G, 80GGA, 80, VIA
37	3CD-34a,b	Details of payments on TDS not deducted, TDS unpaid Vs Clause 34(a) of TAR (verify with Financials, TDS returns)	NA
38	3CD-34c	Interest paid U/s 201(1A), 206C(7)	Schedule Part A - OI
39	3CD-35	Quantitative details of Inventory	Schedule Part A - OD
40	3CD-36	Details of Distributed Profits U/s 115O	Schedule DDT
41	3CD-36A(a)	Details of deemed dividends U/s 2(22)e	Schedule AL
42	3CD- 40	Details of various ratios	PartA-Trading A/c, P&L

Three Imp Verdicts On Void Assessment Orders, Tax Recovery And S. 147 Reopening

Tata Communications Ltd vs. Addl CIT (ITAT Mumbai)

S. 2(7A)/ 120(4): Though, by virtue of the retrospective amendment to s. 2(7A), the Addl CIT is an "Assessing Officer", he can act as such only if there is a notification issued by the CBDT u/s 120(4)(b) or if there is an order u/s 127 transferring jurisdiction from the DCIT to the Addl CIT. In the absence of either, the assessment order is without jurisdiction and has to be quashed as null and void. The fact that the assessee co-operated is irrelevant because there is no estoppel. The argument of the Dept that as the order is passed by a higher officer, there is no prejudice to the assessee is not acceptable. The matter also cannot be remanded back (All imp judgements referred)

In view of the legal discussion made above and facts of the case, it is clear that impugned assessment order has been passed without authority of law in as much as Revenue has not been able to demonstrate that the Additional Commissioner of Income tax who had passed the assessment order had valid authority to perform and exercise the powers and functions of an Assessing Officer of the assessee and to pass the impugned assessment order. Under these circumstances, we have no other option but to hold the same as nullity and, therefore, the impugned assessment order is quashed having been passed with out authority of law

Restriction of Input Credit - A Blunder

IN the Goods and Services Tax regime, the major cause of disconnect in implementation and administration is that the law  as provided in the legislation is  not appropriately aligned with the respective procedures. The gravity  or  the  concerns further get enhanced by unthoughtful notifications  tweaking  the  procedures without appropriate alignment with the law.

Challenges due to limitation of GST input Credit.

Background

Notification No. 49/2019-Central Tax has been issued by CBIC last week carrying our various amendments in the CGST Rules. One of the important amendments in the Rules which was pronounced in the GST Council press release is to permit the credit to the recipient only if the corresponding supplies have been reported in the GSTR-1 by his suppliers. This amendment is in line with the new return format which is going to be effective w.e.f. 1.4.2020. The purpose is to reduce large number of instances of fake invoices where fraudulent credits have been availed to deceive exchequer. The amendment has been given effect to by inserting sub rule 4 in the Rule 36 of CGST Rule. The relevant extract of amendment is as under:

“(4) Input tax credit to be availed by a registered person in respect of invoices or debit notes, the details of which have not been uploaded by the suppliers under sub-section

(1)  of section 37, shall not exceed 20 per cent. of the eligible credit available in respect of invoices or debit notes the details of which have been uploaded by the suppliers under sub-section (1) of section 37.”.

We discuss the various aspects of the amendment in the below discussion.

E-Assessment Scheme (2019) 417 ITR(St.) 12

The E-Assessment scheme or the ‘Faceless Assessment’ involves creation of e-assessment centres at national and regional levels; auto-allocation of cases among these centres. The scheme marks a significant modification in the manner in which tax assessments will be undertaken.  

Imp Judgements

PCIT vs. Colour Roof (India) Ltd (Bombay High Court)

Taxability of loan waivers u/s 28(iv), 41(1): Argument of Revenue that loan taken from agents/ dealers is on revenue account or that on waiver of the loan, its character undergoes a change and it becomes on revenue account is not correct. S. 28(iv) & 41(1) cannot apply if the loan is on capital account and the assessee has never claimed any deduction therefor in the past (Solid Containers 308 ITR 417 (Bom) distinguished, Mahindra and Mahindra Ltd 404 ITR 1 (SC) followed)

Sine-qua-non for application of Section 41(1) of the Act, is that there should have been allowance or deduction claimed by the Assessee in any Assessment Year as a loss, expenditure or trading liability incurred by the Assessee. Subsequently, if any remission or waiver is granted in respect of which such an allowance/deduction has been claimed, then the Assessee is liable to pay t ax on the amount waived/ remitted under Section 41(1) of the Act. This, as the Court held is only to ensure that Assessee does not keep double benefit – one by way of deduction and another by waiver of the amount, which has already been deducted in computing the tax

PCIT vs. Pat Commodity Services Pvt. Ltd (Bombay High Court)

Bogus loss from Client Code Modification (CCM): Even if the Revenue's theory of the assessee having enabled the clients to claim contrived losses is correct, the Revenue had to bring on record some evidence of the income earned by the assessee in the process, be it in the nature of commission or otherwise. Adding the entire amount of doubtful transactions by way of assessee's additional income is wholly impermissible. The fate of the individual investors in whose cases the Revenue could have questioned the artificial losses is not known  

CBIC issues Notifications relating to filing of returns under GST

Central Board of Indirect Taxes and Customs has issued Notifications¹ dated 9 October 2019 relating to filing of returns under Goods and Services Tax (GST).   

Blocking large portion of unreconciled/mis-matched input credit

This is further to our previous post, we have tried to analyze the implication of new sub-rule 36(4) to block a large portion of unreconciled/mis-matched input credit .

SUMMARY OF NOTIFICATIONS ISSUED ON 09-10-2019

1.        Due dates:

FORM	Period	Due Date	Reference, if any
GSTR-3B	OCT 2019-Mar 2020	20th       of      succeeding month	44/2019-CT
GSTR-1 (Quarterly)	Next 2 quarters (OCT 19- MAR 20)	Last day of succeeding month of that quarter	45/2019-CT
GSTR-1 (Monthly)	OCT 2019-Mar 2020	11th day of succeeding month	46/2019-CT

2.        Annual Return for taxpayers having aggregate turnover up to Rs. 2 crore:

Filing of annual returns is optional for the registered persons having aggregate turnover up to Rs. 2 crore.

Very Important: Be noted that the return for these taxpayers is not scrapped. It is clearly mentioned in the notification that the return shall be deemed to be furnished if not furnished before the due date. So be ready ………………

Reference: Notification No. 47/2019-CT

3.        Registered person who has applied for cancellation shall not issue any tax invoice and not charge any tax on supplies made by him during the period of suspension of his registration. By any chance, if registration is not cancelled and the suspension is revoked, the taxpayer needs to issue revised invoice for all the invoices raise in the suspension period and declare the same in next return.

4.        Claiming of credit not available in GSTR-2A should not be more than 20% of eligible credit available in GSTR-2A. Time period to test the same is not clearly mentioned, but we believe it should be done on yearly parameters.

For example: Total eligible credit in GSTR-2A is Rs.5,00,000.

Then, scope of credit that can be claimed which are not available in GSTR-2A is Rs.1,00,000 (5,00,000*20%) subject to other conditions.

Another Example: Total Credit in GSTR-2A is Rs.5,00,000 out of which Rs.1,00,000 is ineligible.

Then, scope of credit that can be claimed which are not available in GSTR-2A is Rs.80,000 (4,00,000*20%) subject to other conditions.

5.        FORM GSTR-3B is now a return and luckily/unluckily this will have retrospective effect. (Gujarat High Court judgement in the case of AAP & Co. has lost it’s relevance in respect to the above subject.)

6.        Only The Central Government shall disburse the amount of refund based on consolidated payment advice for grant of provisional refunds.

7.        Missed TRAN-1 due to technical difficulties or fortunate enough to be in Council’s recommendation for such extension?? No worries. Please file it before 31^st December 2019. And due to that TRAN-1, missed TRAN-2?? No worries. Please file it before 31^st January 2020.

8.        A lifeline will be given before issuance of SCN under 73(1)/74(1) in the form of DRC-01A basically intimating the person of tax and applicable interest ascertained by the proper officer with proper grounds. If the person desires to file any submission against the proposed liability or intimate about partial payment of such ascertained value may do the same by filing PART-B of DRC-01A.

Reference (3-9): Notification No. 49/2019-CT

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Taxability of supplies made by Clubs to its members

3-Judge Bench of the Supreme Court has held that no sales tax or service tax is leviable  with respect to supplies made by incorporated clubs to its members.   

Taxation Laws (Amendment) Ordinance, 2019clarified by Circular No. 29 of 2019

The Taxation Laws (Amendment) Ordinance, 2019 (“the Ordinance”), promulgated by the President on 20.09.2019, had interalia introduced a new provision, viz., section 115BAA in the Income Tax Act, 1961 (“the Act”) providing for a lower rate of tax at 22% (plus applicable surcharge and cess) for domestic companies, subject to fulfilment of certain conditions. Simultaneously, section 115JB relating to payment of Minimum Alternate Tax (‘MAT’) on book profit was also amended to provide that companies opting for preferential rate of tax under section 115BAA of the Act will be exempt from MAT on book profit under the former section.   

Analysis of Section 115BAA

In Circular No. 29 dated 02.10.2019, the CBDT has expressed the view that the tax credit of MAT paid by a domestic company exercising option under the newly inserted Section 115BAA of the Act shall not be available on the ground that the charging provisions of Section 115JB are itself not applicable to such a company. CA S. Venkatraman has examined the correctness of this view in the light of several judgements of the Supreme Court and opined that the stand of the CBDT is not correct and requires reconsideration

Imp Judgements

Directorate of Elementary Education vs. Pramod Kumar Sahoo (Supreme Court)

A concession given by Counsel, if it is a concession in law and contrary to the statutory rules, is not binding on the litigant for the reason that there cannot be any estoppel against law (see also Himalayan Cooperative Group Housing Society Vs. Balwan Singh (2015) 7 SCC 373 Bharat Heavy Electricals Ltd vs. Mahendra Prasad Jakhmola & V. Ramesh vs. ACIT (Madras High Court)

The concession given by the learned State Counsel before the Tribunal was a concession in law and contrary to the statutory rules. Such concession is not binding on the State for the reason that there cannot be any estoppel against law. The rules provide for a specific Grade of Pay, therefore, the concession given by the learned State Counsel before the Tribunal is not binding on the appellant

SC rules application for refund of self-assessed duty without appeal is not maintainable

This Tax Alert summarizes a recent ruling of the Supreme Court (SC)^[1]. The issue before the court was that in absence of any challenge to the order of assessment under Customs and Central Excise, whether refund application against the assessed duty can be entertained.

Tax return and audit reports filing due date for tax year 2018-19 applicable to taxpayers liable for audit is extended to 31 October 2019

As per the Indian tax laws (ITL) ^[1], in case of taxpayers ^[2] being:

(a) company or
(b) other taxpayers whose accounts are required to be audited under the ITL or any other law for the time being in force or
(c) working partner of a firm whose accounts are required to be audited under the ITL or any other law for the time being in force,

the due date for submission of their tax returns for tax year 2018-19 is 30 September 2019. Further, if a taxpayer  furnishes tax return after the due date, but before 31 December of the following tax year, the taxpayer is liable for payment of late fee^[3] of INR 5,000. On further delay, the fee increases to INR 10,000.

The Central Board of Direct Taxes (CBDT) ^[4]  vide order dated 27 September 2019^[5] (Order) has extended the due date for filing tax return and various reports of audit in relation to tax year 2018-19 for aforesaid category of taxpayers who are liable to file their tax returns by 30 September 2019 to 31 October 2019. The extension is granted primarily due to difficulties being faced by taxpayers in furnishing the tax returns for various reasons including availability of limited time with tax professionals for completion of audits, floods in certain parts of the country, etc.

Further, since the time prescribed under the ITL for furnishing tax return itself is extended, fee for late filling of tax return may also not be leviable for the tax returns filed up to 31 October 2019.

While due date for filing tax return is extended, no relief is granted by the CBDT for the levy of interest for filing of tax return beyond 30 September 2019. As a consequence, if the taxpayer files his tax return on or after 1 October 2019 but before 31 October 2019 i.e., within the extended due date, he will be liable to pay an interest @ 1% for one month on the balance amount of tax payable. However, no interest will be leviable if no tax is payable by the taxpayer on account of pre-paid taxes or otherwise.

IS E Assessment is a Game Changes?

A. Introduction:

Through Finance Act, 2018, Central Government has intended to introduce new scheme of scrutiny assessment under the Income Tax Act, 1961 for improving effectiveness of tax administration. It has thus brought three new sections to the Income Tax Act viz. 143(3A) to prescribe new procedure by the Central Government, 143(3B) to enable Central Government to notify applications of provisions of the Income Tax Act with such modification, adaptions or exceptions as may be specified and 143(3C) to provide for laying every notification issued u/s 143(3A) or 143(3B) before each House of Parliament.  

Interest earned on unutillised funds kept in FDRs due to delay in completion of project held as capital receipt

Where assessee-company, incorporated for development and operation of multipurpose port terminal, raised certain share capital in form of foreign inward remittance, in view of fact that said project got delayed due to various reasons beyond assessee's control and, thus, assessee had to keep unutilised funds in banks in form of FDRs, interest income earned on said deposits being in nature of capital receipt, was not liable to tax

[2019] 109 taxmann.com 105 (Mumbai - Trib.)/[2019] 71 ITR(T) 390 (Mumbai - Trib.)