Understand best judgment assessment under section 144.

§  This is an assessment carried out as per the best judgment of the Assessing Officer on the basis of all relevant material he has gathered. This assessment is carried out in cases where the taxpayer fails to comply with the requirements specified in section 144.

Whether intimation U/S 143(1) can be revised U/S 264 by the commissioner?

 Ø  

·         From the various judicial pronouncements, it is settled that the powers conferred under section 264 of the Act are very wide. 

·         Under this section, the Principal Commissioner is mandated not to revise any order in two situations: first where an appeal that lies to the Commissioner (Appeals) but has not been made and the time within which such appeal may be made has not expired or second, where the assessee has not waived his right of appeal.

·         Bombay HC in the case of Aafreen Fatima Fazal Abbas Sayed v. ACIT AND PCIT (WRIT PETITION (L) NO. 6096 OF 2021) has held that since section 264 uses the expression “any order”, it would imply that the section does not limit the power to correct errors committed by the subordinate authorities but could even be exercised where errors are committed by assessees.

·         Article 265 of the Constitution of India imposes an embargo on imposition and collection of tax if the same is without authority of law.

·         Thus, The powers given to Commissioner of Income Tax under section 264 are very wide and he can revise any order including intimation under section 143(1)

CBDT notifies e-settlement scheme, 2021- Overview

The Board of Direct Taxes (Income Tax Department) vide Notification No. 129/2021/ F.No. 370142/52/2021-TPL (Part IV) dated 01.11.2021, in exercise of its power under section 245D (11) & 245D (12) of the Income-tax Act, 1961 (hereinafter referred to as “the Act”) has issued a Scheme may be called the e-Settlement Scheme, 2021 to settle pending income-tax settlement applications transferred to a settlement commission.

TYPES OF AUDIT AND THEIR LEGAL REQUIREMENT

 

 

 

 

PARTICULARS	LEGAL REQUIREMENT
FORENSIC AUDIT
By banks on loans and advances	1)     The RBI has mandated forensic audits for loan accounts above a particular exposure which have turned non- performing by issuing Master Directions on Frauds – Classification and Reporting by commercial banks and select FIs via Circular No. DBS.CO.CFMC.BC.No.1/23.04.001/2016-17 Dated July 01, 2016.   2)     SEBI in Schedule III, in Part A, under the Clause A, sub- clause 17 of SEBI LODR Regulations] has now mandated the following disclosures shall be made to the stock exchanges by listed entities: a)     The fact of initiation of forensic audit along-with name of entity initiating the audit and reasons for the same, if available; b)     Final forensic audit report (other than for forensic audit initiated by regulatory / enforcement agencies) on receipt by the listed entity along with comments of the management, if any.”
STATUTARY AUDIT/ EXTERNAL  AUDIT
For Private/Public Company	Section 139 to 147 of Companies Act, 2013 along with Companies (Audit & Auditors) Rules, 2014.   Mandatory: Irrespective of Turnover, profits etc., even in case of losses.
For LLP	Section 34(4) of LLP Act, 2008 and Rule 24(8) of LLP Rules, 2009.   LLP audit is mandatory where the turnover exceeds ₹40 lakhs in a F.Y. OR where the contribution exceeds ₹25 lakhs in a F.Y.

INTERNAL AUDIT
For listed company	Section 138 of Companies Act, 2013 and Rule 13 of Companies (Accounts) Rules, 2014: Mandatory
For Unlisted public company	Section 138 of Companies Act, 2013 and Rule 13 of Companies (Accounts) Rules, 2014.   If during the preceding F.Y. : (i)    paid up share capital – Rs. 50 crore or more, OR (ii)    turnover – Rs. 200 crore or more, OR (iii)    O/s loans or borrowings from banks or public financial institutions exceeding Rs. 100 crore or more at any point of time; OR (iv)     O/s deposits – Rs. 25 crore or more at any point of time.
For Every Private company	If during the preceding F.Y.: (i)    Turnover – Rs. 200 crore or more OR (ii)    O/s loans or borrowings from banks or public financial institutions exceeding Rs. 100 crore or more at any point of time.
TAX AUDIT
For Individual, HUF, Firm, Company, AOP & BOI, Local authority etc.	Section 44 AB of Income Tax Act, 1961.   Tax audit is mandatory where the turnover or gross receipts exceeds ₹1 crore (10 crores) in a P.Y. in case of business OR where the Gross receipts exceeds ₹50 lakhs in the P.Y. in case of profession.
COST AUDIT
For Companies	Section 148 of Companies Act, 2013 and Rule 3 & Rule 4 of Companies (Cost Records and Audit) Rules, 2014   Every company whose turnover exceeds 50 crores for regulated Sectors & 100 crores for Non-regulated sector during immediately preceding financial year.

ALP tolerance range extended to fiscal year 2020-21

 

Indian Transfer Pricing regulations provide methods for determining arm's-length price (‘ALP’) of transactions that qualify as International Transaction/Specified Domestic Transaction(‘SDT’). The regulations also provide for the tolerance range for the variation between the ALP and the transaction price.

Under the transfer pricing methodologies, the computation of ALP is based on a set of comparable companies’ margins. When the dataset constructed for determining ALP consists of 6 or more comparable companies, ALP shall be determined on the basis of the range concept (i.e., 35th percentile and 65th percentile of the dataset).

Transfer Pricing & Covid 19.

  

The Covid-19 pandemic has dramatically disrupted business operations and financial markets, leaving many companies scrambling to adjust to ever-changing economic circumstances. Many companies are still managing business emergencies or reorganizing operations on the fly, but as organizations begin to stabilize and plan for 2021 (and beyond), transfer pricing is one area that companies should be thinking about.

 

Different Forms under TDS provisions

 

 

Form Name	Description
Form 15CA	This is the form for providing information to be furnished under Sub-section (6) of Section 195 of Income Tax Act, 1961 relating to remittance of payments to a non-resident or to a foreign company

Income Tax Implications on ESOP at time of exercise and sale

 

Income tax implications for Employees who have been granted shares under Employee Stock Options Scheme (ESOP's) and this is mostly at a per-share price which is significantly lower compared to the prevailing price at which the company share is traded.

The mistake did while filing ITR make the tax department hound you with notices under Black Money Act

 

One may wonder that Black Money Act is for people having black money in Foreign banks and not for the common taxpayer. But beware of such a notion! One may get sleepless nights and may get hound with notices under Black Money Act for mere forgetting to disclose the details of foreign assets and bank accounts in their Income Tax Returns (ITR) which might be the simple clerical error of you or your tax advisor while filing ITR. 

The benefit of the creation of creating a trust for children

 

When it comes to securing generational wealth and our children’s future, there is nothing more important than succession and estate planning. At its heart, estate planning is the simple act of preparing for the transfer of a person’s wealth and assets during and/or after their death. One of the most important tools in estate planning is a Family Trust (“Trust”). While Wills are hygiene documents put in place to take care of inheritances in a simpler manner, they have their own set of limitations:

CBIC specifies the mechanism for issuance of RoDTEP scrips

 

In the recent Circular No. 23/2021-Customs dated September 30, 2021, wherein the Central Board of Indirect Taxes and Customs (‘CBIC’) has specified the mechanism for issuance of e-scrips under RoDTEP scheme.

New Reengineered Form 15CA & 15CB submission process:

 

Income Tax Department is introducing a completely new reengineered Form 15CA and Form 15CB submission process based on various feedbacks provided by numerous corporates and professionals all over India. These transformations will simplify the preparation, assignment, submission, and verification process involved in the entire filing cycle of the Form.

RESTRICTIONS ON RECEIPT AND PAYMENT OF CASH IN INCOME TAX ACT

 

Note discusses implications under Income Tax Act on any company, firm, individual who pays or receives cash beyond certain limits.

I)            Business Receipts – Sec 269ST, Sec 271DA (Penalty) and Sec 37

 

Interest Subsidy and Excise Duty Refund are Capital Receipts, rules ITAT

In a major relief to JMW India, the Income Tax Appellate Tribunal (ITAT), Delhi bench has held that the interest subsidy and the excise duty refund shall be treated as capital receipts and therefore, not subject to income tax while computing book profit under the provisions of the Income Tax Act, 1961. Theassessee, a company engaged in the business of trading and manufacturing of copper products, filed its income tax return declaring total income at Rs.1,23,71,780/-. The Assessing Officer, while completing the proceedings, observed thatthe assessee, had received an amount of Rs.30,01,143/- representing interest subsidy and an amount of Rs.4,98,49,144/- representing Excise Duty refund which are subject to income tax. Before ethe Tribunal, the assessee contended that the interest subsidy of Rs.30,01,143/- and Excise Duty refund of Rs.4,98,49,144/- shall be excluded for the purpose of computing book profit u/s 115JB. While allowing the plea of the assessee, Judicial Member Vijay Pal Rao and Accountant Member R K Panda held that “since, in the instant case, the Revenue has accepted the order of the CIT(A) in holding that interest subsidy and Excise Duty refund are capital receipts, therefore, respectfully following the decision of the Hon’ble Calcutta High Court in the case of Ankit Metal & Power Ltd., cited (supra) and in absence of any contrary material brought to our notice, we hold that the above two receipts being not in the nature of income cannot be included for the purpose of computation u/s 115JB of the IT Act. We, therefore, set aside the order of the ld.CIT(A) on this issue and allow the grounds raised by the assessee.”

GST Import of service from overseas branches.

 

Facts:

·        Company A registered in India  providing software services to its global customers.

·        To serve its Global customers, Company A opened foreign branches in different parts of the world.

·        These overseas branches provide onsite service and sales & marketing services to the clients of the Company A. For these onsite services rendered by the branches, the concerned branch of the Company A would raise the invoice directly on the clients/customers. However, the amounts are collected or received directly into the Indian banks of the Company A. The Company A would transfer funds to its overseas branches to meet the expenses of the respective branch

India Tax Administration extends applicability of transfer pricing safe harbor rules to financial year 2020-21

 A “safe harbor” is defined in the Indian Income Tax Law (ITL) as circumstances under which the tax authorities will accept the transfer price declared by the taxpayer. India’s Central Board of Direct Taxes (CBDT), the apex Indian tax administration body, first issued transfer pricing (TP) safe harbor rules (SHR) on 18 September 2013, applicable for five years from financial year (FY) 2012-13 to FY 2016-17. The CBDT through notification dated 7 June 2017 amended the SHR, which were applicable for three FYs from FY 2016-17 through FY 2018-19. For FY 2016-17, taxpayers had the option to elect the rule which was more beneficial. On 20 May 2020, the CBDT issued a notification amending the SHR to extend the applicability to FY 2019-20, without any modifications.

On 24 September 2021, the CBDT issued a new notification extending the applicability of SHR to FY 2020-21, without any further modifications. Taxpayers opting for SHR for FY 2020-21 would need to file the return of income for the year on or before the date of furnishing the prescribed Form 3CEFA for opting for the SHR. The due date for filing is 28 February 2022.

Further, the CBDT has yet to prescribe SHR for attribution of profits to a business connection or permanent establishment (PE) of a nonresident, which was introduced under Finance Act 2020.

Income Tax Act related provisions for Buyers of Immovable property

 

The note discusses few aspects to be checked by the Buyer of Immovable property. We will focus on the purchase of Flat or Office space or Land (Non-Agricultural)