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2021-06-08
Issue No. 234 / June 8th, 2021
Dear Professionals,
“Taxsutra Database”, a true Income-tax research tool, is an archive of over 112115+ Income Tax Rulings reported across ITR, CTR, Taxman, DTR, ITD, TTJ, and ITR (Trib) and also includes recent ‘unreported handpicked rulings of SC, HC & ITAT’. It is a completely integrated service with the following features:
· Comprehensive coverage of all latest cases powered by an advanced search engine to provide a seamless user experience;
· Effective search results supported by active filters around Court Level, Location, Case Numbers and Citation;
· Enhanced search feature, using the Unique Bulls Eye Application, by including "Exact words", "Any of these", "none of these" options.
· Judicial “forward & backward reference”
We are glad to present to you the 234th edition of ‘Taxsutra Database Bulletin’, where we keep you updated with current trends in the tax arena!
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Expert Column
The complex nature of taxation laws, coupled with their progressive & high rates of taxes and long drawn litigations have negatively impacted India's popularity in terms of "ease of doing business". The Government in recent times has taken several measures to make tax legislation and administration simple and hassle-free, including introducing concessional tax regimes, Taxpayers Charter etc. Despite these endeavours, certain provisions under the Income-tax Act are still considered to be draconian given the ambiguity surrounding them, and the Revenue's discretion involved in their application.
Mr Siddesh Nagaraj Gaddi and Mr Ravi Garg (Chartered Accountants) in this article have analysed the provisions of Sec. 68 to 69D of the Income-tax Act and brought about several issues with regards to their applicability to the forefront. They have lucidly skirted around the controversy surrounding the taxability of undisclosed income under relevant head of income or under the aforesaid provisions, more so in the context of section 115BBE which has significantly higher rates of tax for such income. Referring to several judicial precedents they have balanced out both the views and shared their insights on it.Click Here to read the article titled “Undisclosed and Disclosed Income Taxation”
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It is not uncommon for Companies to engage in complex restructuring arrangements to leverage their tax positions and make some tax savings by the side. Slump sale has always been one such popular restructuring route sought by corporates, usually looking for partial hive-offs from existing businesses. The Finance Act, 2021 has brought in significant amendments as regards the scope of “slump sale”. Further, the newly notified rule 11UAE has provided the valuation mechanism to give effect to the relevant amendments.
Author, Ms. Yutika Lohia (Manager, Vinod Kothari Consultants Pvt. Ltd.) in this article, discusses the amendments to Slump sale provisions in the context of possible tax evasions corporates indulge in through such restructuring transactions, and the Revenue's endeavour to plug related loopholes. She further discusses the implication of the newly inserted Rule 11UAE for determination of fair market value of capital assets in computation of capital gains.Click here to read the article titled Gov’s attempt to make Slump Sale ‘Fair’
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Key Takeaways from Handpicked Rulings
1) SC: Admits Assessee's SLP; Stays operation of HC-order that the assessing authority would be free to make substantive assessments in the hands of the assessees – SC admits Assessee's SLP challenging HC-order upholding the land which is in possession of assessees, shall be chargeable to wealth tax for AYs 1999-2000 to 2004-05, holds that the lands ‘belonged to’ the assessees; Notes that by virtue of the...........Click here to read and download SC Stay order
2) SC: Dismisses Assessee's SLP against Sec. 271D/E penalties for accepting / repaying loans in cash - SC dismisses assessee-company SLP challenging HC order which affirmed ITAT finding that amount borrowed by Director of assessee from financier (Mr J D) in cash exceeding prescribed limit and deposited in assessee bank account and this transaction remained unexplained. HC took note of ITAT's findings that the assessee have been used as custodian of the unaccounted cash of Mr. J.D. by depositing it in the bank accounts of the assessee by their Director............... Click here to read and download SC order
3) SC: Dismisses Revenue's SLP; Waiver of loan capital receipt not taxable u/s 41(1) - SC dismisses Revenue’s appeal against HC holding that waiver of principle amount of loan under One Time Settlement Scheme (OTS) does not constitute trading receipt, as such amount was never claimed by the assessee as deduction in past. Therefore, even though such an amount is written off by the concerned bank, it does not give rise to the profit chargeable to tax under Section 41(1) of the Act.............. Click here to read and download SC order
4) SC: Dismisses Revenue's SLP; Income from operation of commercial complex as business income - SC dismisses Revenue’s appeal against HC order holding assessee's income from operation of shopping mall is assessable as business income and not income from house property; Notes that the object of the assessee-company was to acquire, develop, let-out the commercial complex and to derive income from running and maintaining the shopping mall; Opines that, “All the factors cumulatively taken demonstrate that the assessee had intended to enter into a Business of renting out commercial space to interested parties.”.....................
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