INCOME TAX REGULATORY UPDATES NOTIFICATION NO. S.O. 4592(E), DATED 02-11-2021
CBDT notifies ‘School Employee Retirement System of Ohio’ for Sec. 10(23FE) exemption
Editorial Note: The Central Board of Direct Taxes (CBDT) has notified pension fund, namely, the School Employees Retirement System of Ohio, for the purpose of exemption under section 10(23FE). The notified funds shall be eligible to claim exemption in respect of investment made in India on or before 31-03-2024 subject to prescribed conditions.
PRESS RELEASE, DATED 24-11-2021
India and USA agree on transitional approach on equalization levy on e-commerce operators:FinMin
Editorial Note: : On 21-10-2021, the United States AND Austria, France, Italy, Spain, and the United Kingdom reached an agreement on a transitional approach to existing Unilateral Measures while implementing Pillar 1. India and USA have agreed that the same terms that apply under that agreement shall apply between the USA and India with respect to India’s charge of 2% equalization levy on e-commerce supply of services and the USA’s trade action.
Income Tax Department has rolled out the new Annual Information Statement (AIS) and Taxpayer Information Summary (TIS) The Income Tax Department has rolled out new Annual Information Statement (AIS) on compliance portal which provides a comprehensive view of information to a taxpayer with a facility to capture online feedback.
The new AIS can be accessed by clicking on the link “Annual Information Statement (AIS)” under the “Services” tab on the new Income tax e-filing portal (https://www.incometax.gov.in). The display of Form 26AS on TRACES portal will also continue in parallel till the new AIS is validated and completely operational.
About “Annual Information Statement (AIS)”
The new AIS include additional information relating to interest, dividend, securities transactions, mutual fund transactions, foreign remittance information etc. The reported information has been processed to remove duplicate information. Taxpayer will be able to download AIS information in PDF, JSON, CSV formats.
If taxpayer feels that the information is incorrect relates to other person/year, duplicate etc. a facility has been provided to submit online feedback.
About “Taxpayer Information Summary (TIS)” For ease of filing return, simplified Taxpayer Information Summary (TIS) has been generated for each taxpayer that shows aggregated value for the taxpayer. TIS shows the processed value (i.e. the value generated after deduplication of information based on pre-defined rules) and derived value (i.e. the value derived after considering the taxpayer feedback and processed value)
If the taxpayer submits feedback on AIS, the derived information in TIS will be automatically updated in real time.
The derived information in TIS will be used for pre-filling of Return (pre-filling will be enabled in a phased manner).
Points to Remember:-The Annual Information Statement (AIS) includes only the information presently available with the Income Tax Department.
There could be other transactions which are not presently displayed in AIS. So, taxpayer should check all related information and report complete and accurate information in the Income Tax Return.
The taxpayers are requested to view the information shown in Annual Information Statement (AIS) and provide feedback if the information needs modification. The value shown in Taxpayer Information Summary (TIS) may be considered while filing the ITR. In case the ITR has already been filed and some information has not been included in the ITR, the return may be revised to reflect the correct
If any variation between the TDS/TCS information of details of tax displayed in Form26AS on Traces portal and TDS/TCS information or the information to tax payment displayed on AIS on Compliance Portal, rely on Traces portal for the purpose of filing of ITR and for other tax compliance purposes.
TRANSFER PRICING – CBDT CLARIFIES THE TOLERANCE LIMIT FOR ARM’S LENGTH PRICE OF AN INTERNATIONAL TRANSACTION / SPECIFIED DOMESTIC TRANSACTION FOR ASSESSMENT YEAR (AY) 2021-22
Section 92C of the Act prescribes the method for determination of the arm’s length price in relation to an international transaction or specified domestic transaction. The Government has notified that for AY 2021- 22, where the variation between the arm’s length price (determined u/s 92C) and the price at which the international transaction or specified domestic transaction has actually been undertaken does not exceed 1% of the latter (i.e., actual price) in respect of wholesale trading and 3% of the latter in all other cases, the actual price at which the international transaction or specified domestic transaction has been undertaken shall be considered to be the arm’s length price. ‘Wholesale trading’ for this purpose means an international transaction or specified domestic transaction of trading in goods which fulfils the following conditions, namely:
Purchasecostoffinishedgoods≥ 80% or more of the total cost pertaining to such trading activities and
Average monthly closing inventory of such goods ≤ 10% of sales pertaining to such trading activities
RECENT JUDICIAL RULINGS ON INCOME TAX
SECTION 6 OF THE INCOME-TAX ACT, 1961 – RESIDENTIAL STATUS
Where assessee-employee was treated as ‘Resident’ for having stayed in India for 182 days during relevant previous year as per section 6(1)(a) but assessee claimed that he was on foreign water for a total period of 184 days and his residential status should have been taken as ‘Non-Resident’, since assessee’s employer had calculated his stay in India for 182 days and had deducted tax at source under section 192, and assessee failed to produce certificate of his employer to justify his stay on foreign water for period in question, assessee was to be treated as resident – Tapas Kumar Basak v. Assistant Director of Income-tax, International Taxation-II – [2021] 132 taxmann.com 186 (Calcutta)
SECTIONS 12A OF THE INCOME-TAX ACT, 1961 – CHARITABLE OR RELIGIOUS TRUST – REGISTRATION OF
Declining registration under section 12AA to assessee-trust, established for medical research, on ground that medical research to be carried out in hospital of settler company would convert charitable activities into commercial activities was mere surmises, and hence, not sustainable in eyes of law – Artemis Education & Research Foundation v. Commissioner of Income-tax (Exemptions) – [2021] 132 taxmann.com 277 (Delhi – Trib.)
SECTION 43B OF THE INCOME-TAX ACT, 1961 – BUSINESS DISALLOWANCE – CERTAIN DEDUCTIONS TO BE ALLOWED ONLY ON ACTUAL PAYMENT
Taxes: Where assessee set-off/adjusted sales tax liability that arose at time of purchase of raw materials against sales tax collected at time of sale of finished goods, such amount of sales tax liability set off/adjusted, by legal fiction, was deemed to be an actual payment of tax liability and was deductible under section 43B – Merck Ltd. v. Dy. Commissioner of Income-tax, Range-3, Mumbai – [2021] 132 taxmann.com 174 (Bombay)
SECTION 92C OF THE INCOME TAX ACT, 1961 – TRANSFER PRICING – COMPUTATION OF ARM’S LENGTH PRICE
When finished goods are purchased by the assessee from its AE ready to be sold in market without any value addition, Resale Price Method (RPM) is the most appropriate method (MAM) to benchmark international transactions even if the assessee also performs certain additional functions including purchase order, warehousing and inventory control, quality control to purchasing and forecasting, pricing and sales and marketing services and assumes considerable risk in the form of market risk, credit risk, inventory risk, foreign exchange risk, contract risk, service liability risk and manpower risk – Fujitsu India (P.) Ltd. v. Assistant Commissioner of Income-tax, Circle-9(2) – [2021] 132 taxmann.com 279 (Delhi – Trib.)
ECTION 14A OF THE INCOME-TAX ACT, 1961 – EXPENDITURE INCURRED IN RELATION TO INCOME NOT INCLUDIBLE IN TOTAL INCOME
Revision: Where Commissioner invoked revision jurisdiction and set aside order of Assessing Officer with directions to frame a fresh assessment order on ground that Assessing Officer failed to make a disallowance of interest under provisions of section 14A read with rule 8D in view of fact that view taken
by Assessing Officer of not making disallowance of interest under section 14A on ground that same had been incurred for purpose of business, was a possible view, same could not have been interfered with under section 263 – Commissioner of Income-tax v. Future Corporate Resources Ltd. – [2021] 132 taxmann.com 173 (Bombay)
SECTION 45 OF THE INCOME-TAX ACT, 1961 – CAPITAL GAINS – CHARGEABLE AS
Business income v Capital gains: Dealing in shares: Where income/surplus arising from sale of shares (forming part of a lot purchased by assessee) had undisputedly been subjected to tax as STCG, then, by way of an implication it could safely be inferred that said entire lot of shares was purchased by assessee with an intention to hold same as a capital asset, hence, balance shares would also be given a similar treatment – Nalin V. Shah v. ACIT, 4(2) (1) Mum. – [2021] 132 taxmann.com 157 (Mumbai – Trib.)
SECTION 154 OF THE INCOME-TAX ACT, 1961 – RECTIFICATION OF MISTAKES – APPARENT FROM RECORDS
Scope of provision: Where Assessing Officer estimated income of assessee at rate of 12.5 per cent on contractual receipts and upon making such estimation, allowed
depreciation under section 32 but subsequently, by invoking powers under section 154, Assessing Officer added depreciation to income of assessee, since deduction of depreciation from gross income which is computed on basis of estimation on main contractual receipts is a debatable question of law and fact, invocation of jurisdiction under section 154 was not justified – Principal Commissioner of Income-tax v. Engineers Works – [2021] 132 taxmann.com 172 (Andhra Pradesh)
SECTION 245 OF THE INCOME-TAX ACT, 1961 – REFUNDS – SETTING OFF AGAINST TAX DUE
General: Where order was passed under section 245 for adjustment of refund in excess of 20 per cent of disputed outstanding demand but it did not give any special/particular reasons as to why amount in excess of 20 per cent was recovered from assessee, since said order was contrary to Instruction No. 1914, dated 21-3-1996 which stipulates pre-deposit of only 20 per cent of disputed demand, Asstt. Commissioner was directed to refund amount adjusted in excess of 20 per cent of disputed demand – Eko India Financial Services (P.) Ltd. v. Assistant Commissioner of Income-tax, Circle-7(1) – [2021] 132 taxmann.com 154 (Delhi)
Condition precedent : Where no order had been passed by Assessing Officer under section 245 for adjustments of refunds and moreover, there was no order by Assessing Officer giving any special/particular reason as to why any amount in excess of 20 per cent of outstanding demand should be recovered from assessee in accordance with paragraph 4(B) of office memorandum dated 29-2-2016, revenue would be entitled to seek pre-deposit of only 20 per cent of disputed demand during pendency of appeals in accordance with paragraph 4(A) of office memorandum dated 29-2-2016 – Skyline Engineering Contracts (India) (P.) Ltd. v. Deputy Commissioner of Income-tax, Circle 22(2), Delhi – [2021] 132 taxmann.com 158 (Delhi)
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