More than 6.2 crore Income Tax Returns(ITRs) and about 21 lakh major Tax Audit Reports (TARs) have been filed on the new e-Filing portal of the Income Tax Department as on 10th February 2022.
Out of 6.2 crore ITRs filed for AY 2021-22, 48% of these are ITR-1 (2.97 crore), 9% is ITR-2 (56 lakh), 13% is ITR-3 (83 lakh), 27% are ITR-4 (1.66 crore), ITR-5 (11.3 lakh), ITR-6 (5.2 lakh) and ITR-7 (1.41 lakh).
Over 1.91 lakh Form 3CA-3CD and 17.26 lakh Form 3CB-3CD have been filed in FY 21-22. More than 1.84 lakh other Tax Audit Reports (Form 10B, 29B, 29C, 3CEB, 10CCB, 10 BB) have been filed till 10.02.2022.
The Department has been issuing reminders to taxpayers through emails, SMS and Twitter encouraging taxpayers and Chartered Accountants not to wait till the last minute and file their TARs/ITRs without further delay. Further, to assist the filers for resolution of any grievance related to e-filing, two new email ids- TAR.helpdesk@incometax.gov.in and ITR.helpdesk@incometax.gov.in have been provided. All taxpayers/tax professionals who are yet to file their Tax Audit Reports or Income Tax Returns for AY 2021-22 are requested to file their TARs/Returns immediately to avoid last minute rush.
ITAT Kolkata directs service of notice to Assessee’s Lawyer via email as same could not delivered to Assessee
Massive Infrastructure Pvt. Ltd. Vs ITO (ITAT Kolkata) dated 02/02/2022
Revaluation of Land by firm after conversion of inventory into fixed asset – colourable device?
PCIT Vs Orchid Griha Nirman Pvt. Ltd. (Calcutta High Court) dated 31/01/2022
*Tribunal agreed with CIT(A) that after conversion of inventory into fixed asset the firm revalued the developed land including construction thereon in order to bring it in line with the current market value to justify the business assistance secured by the firm from the banks to extent of nearly Rs. 250 crores. Therefore, on facts the tribunal concluded that the revaluation was not a colourable. Confirmed by HC.
Failure to issue section 143(2) notice prior to finalising reassessment order makes reassessment proceedings a nullity
ACIT Vs P & R Infraprojects Ltd. (ITAT Delhi) dated 07/01/2022
ITAT deletes Addition of Profits from Suppressed of Sales belonging to Firm of director of Appellant Company
ITO Vs Super Hospitality Services Pvt. Ltd. (ITAT Ahmedabad) dated 31/01/2022
Interest on Investment made to acquire controlling interest allowable
Gujarat Nippon Enterprises Pvt. Ltd. Vs ITO (ITAT Ahmedabad) dated 01/02/2022
ESIC & PF paid before due date of filing income tax return allowable till AY 2020-21
Dr. B. Lal Clinical Laboratory Private Limited Vs ACIT (ITAT Jaipur) dated 20/01/2022
Filing of appeal in criminal court against Civil dispute amounts to abuse of process of Court: SC
Jayahari Vs State of Kerala (Supreme Court of India) dated 25/01/2022
CIT(E) Order passed without hearing Assessee during COVID-19 violates Principal of Natural Justice
Madhavi Raksha Sankalpa Vs CIT (Exemptions) (ITAT Mumbai) dated 28/01/2022
GST Evasion Case: Accused cannot be Detained in Custody Indefinitely- SC
Paresh Nathalal Chauhan Vs State of Gujarat (Supreme Court of India) dated 01/02/2022
The Hon’ble Supreme Court of India in Paresh Nathalal Chauhan v. The State of Gujarat & Anr. [SLP (Crl) No. 009458 – 009459/2021, Criminal Appeal Nos.164-165/2022 dated February 01, 2022] granted bail to a person accused of tax evasion. Held that, assessee cannot be detained for indefinite period of time when the maximum sentence for such offence is 5 years and investigation w.r.t. the same is still pending.
GST Appellate Authority can provisionally release goods & vehicle- HC
A K Enterprise Vs State of Gujarat (Gujarat High Court) dated 03/02/2022
ITC available on GST paid under RCM on hiring of buses for transportation of employees
In re Maanicare System India Private Limited (GST AAR Maharashtra) dated 01/02/2022
Matter pending before Competent Jurisdiction cannot be transferred for mere Temporary Shift In Residence
Silpa Shaji Vs Satheesh K.S. (Kerala High Court) dated 01/02/2022
Bar of Section 69(2) of Indian Partnership Act, 1932 not applicable to Transactions not in the course of business: SC
Shiv Developers Vs Aksharay Developers (Supreme Court) dated 31/01/2022
International Financial Services Centres Authority(IFSCA), in its endeavour to develop a comprehensive and consistent regulatory framework for Investment Funds based on global best practices with a special focus on ease of doing business, had constituted an Expert Committee on Investment Funds to recommend to IFSCA on the road map for the funds industry in the IFSCs. The Committee was constituted under the Chairmanship of Mr. Nilesh Shah, MD, Kotak Mahindra Asset Management Co. Ltd. and Member, Economic Advisory Council to the Prime Minister. The Committee comprises of leaders from the Fund Management ecosystem including from areas such as technology, distribution, legal, compliance, and operations.
The Committee had in turn constituted three working groups to examine different issues related to Fund industry in IFSC. The working groups over various meetings interacted with various market participants from India and overseas, examined best global practices and made detailed recommendations. After examination of the recommendations of the working groups, the Expert Committee submitted its report to Chairman, IFSCA on January 31, 2022 and the same is available at the following link:
Upon examination of the Committee Report, IFSCA proposes to issue IFSCA (Fund Management) Regulations, 2022 and invites comments from public on the same. The salient features of the proposed regulations are as under:
Single registration for multiple activities: A fund manager intending to undertake host of activities related to fund management viz. manage retail schemes (including Exchange Traded Funds), non-retail schemes (alternative investment funds), undertake portfolio management services or operate as manager to various investment trusts (REIT and InvIT) can do so by seeking a single unified registration from IFSCA. A fund manager intending to manage funds or activities for non-retail investors only shall have lower eligibility requirements. Further, a special registration with light touch requirements shall be accorded to a fund manager intending to invest in unlisted securities of start-ups, emerging or early-stage companies mainly involved in new products, new services, and technology through a venture capital scheme in IFSC.
The detailed eligibility and regulatory requirements for fund managers, retail schemes, non-retail schemes, venture capital schemes, portfolio management services and investment trusts have been prescribed. Substance requirements in terms of minimum Key Management Personnel (KMPs) with experience, infrastructure requirements, key activities such as investment management from IFSC, etc., have also been prescribed in the draft regulations.
Green Channel: Venture Capital Schemes or non-retail schemes soliciting money from accredited investors only shall qualify for a green channel i.e. the schemes filed can open for subscription by investors immediately upon filing with IFSCA. The requirements on scheme size, number of investors, permissible investments, etc. have been detailed in the draft regulations.
Exchange Traded Funds (ETFs): Considering that ETFs offer a means to gain exposure to specific markets or asset classes at a low cost, registered fund managers in IFSC shall be able to launch not just Index based ETFs but also Active ETFs and Commodity based ETFs. Fund Managers for Gold and Silver ETFs shall also be able to invest directly in Bullion Depository Receipts with underlying bullion thereby dispensing away the need to invest in physical bullion and worrying about quality or storage. Innovative structures for ETFs shall be considered with prior approval of IFSCA and the concerned stock exchanges. To ensure sufficient liquidity in ETFs, stock exchanges in IFSC shall prescribe a framework for market makers.
Stressed Assets: Realising the important role of IFSC in the Government initiative of addressing the issue of NPAs faced by banks, a framework has been prescribed for special situation funds to be launched by fund managers in IFSC.
Environment Social Governance (ESG): Growing number of investors expect fund managers to make ESG issues integral to their investment strategies. With the intent of making IFSC as a hub for host of activities related to sustainable finance, disclosures have been proposed to be mandated at entity level and scheme level.
Family Office: Globally, there is an increasing need for having a formal structure for managing and preserving the wealth of the HNIs and Ultra HNIs and their families. This has paved a need for conceptualisation of a regime for family offices in India. Accordingly, a framework to facilitate self-managed investment fund of a family office has been proposed. Further, a fund manager has also been permitted to undertake portfolio management for multi-family office.
To support various innovations in a controlled way, the following has also been included in the draft regulations:
Fund Lab: A platform shall be provided to aspirational fund managers to try new strategies in a controlled manner.
Special purpose vehicle (SPV) as a co-investment structure: Similar to international jurisdictions, fund managers shall be permitted to create SPVs under the main scheme to enable undertake co-investment or leverage along with the Fund/ scheme subject to certain conditions.
Retail participation in private markets: There has been growing need to facilitate investors at large invest in private markets. Accordingly, it is proposed to facilitate retail close ended schemes to invest in unlisted securities subject to certain conditions.
In addition to above, the draft regulations detail the role of various entities, prescribes code of conduct, advertisement code, investment valuation norms and important governance requirements. The consultation paper along with the draft regulations are available on IFSCA’s website https://ifsca.gov.in/PublicConsultation. Comments / suggestions are invited from the general public and stakeholders on the draft regulations on or before February 28, 2022.
Company Law Adjudication & Appeal Series -05th Feb 2022
Delhi ROC Penalty Order for violation of Section 56(4) of CA 2013 (Non issuance of share certificate to subscriber to MOA within 2 months) in the matter of Raspberry PI Educational Servicrs Pvt. Ltd.
Delhi ROC adjudication order for violation of Section 173(1) for not holding minimum 4 BM in a year & Section 118(10) for non compliances of Secretariat Standard 1 (BM) issued by ICSI in the matter of Midland Credit Management India Pvt. Ltd.
Section 37 of the Act provides for allowability of revenue and non-personal expenditure (other than those failing under sections 30 to 36) laid out or expended wholly and exclusively for the purposes of business or profession.
Explanation 1 of sub section (1) of section 37 of the Act provides that if any expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred for the purpose of business or profession and no deduction or allowance shall be made in respect of such expenditure.
However, it is s een that certain taxpayers are claiming deductions on expenditure incurred in offering certain benefits or perquisite to a person which are not intended to be allowed under this section, like meeting his expenditure related to travel, hospitality, conferen ce etc. In perquisite by these cases acceptance of such benefit or such person is in violation of a law or rule or regulation or guidelines, as the case may be, governing the conduct of such person.
In order to make the intention of the legislation clear and to make it free from any misinterpretation, it is proposed to insert another Explanation 3 to subsection (1) of section 37 to further clarify that the expression “expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law”, under Explanation 1, shall include and shall be deemed to have always included the expenditure incurred by an assessee, —
i. for any purpose which is an offence under, or which is prohibited by, any law for the time being in force, in India or outside India; or
ii. to provide any benefit or perquisite, in whatever form, to a person, whether or not carrying on a business or exercising a profession, and acceptance of such benefit or perquisite by such person is in violation of any law or rule or regulation or guidelines, as the case may be, for the time being in force, governing the conduct of such person; or
iii. to compound an offence under any law for the time being in force, in India or outside India.
The Reserve Bank of India (RBI) has noticed misleading advertisements of unauthorised Electronic Trading Platforms (ETPs) offering forex trading facilities to Indian residents, including on social media platforms, search engines, Over The Top (OTT) platforms, gaming apps and the like. There have also been reports of such ETPs engaging agents who personally contact gullible people to undertake forex trading/investment schemes and entice them with promises of disproportionate/exorbitant returns. Further, there have been reports of frauds committed by such unauthorised ETPs / portals and many residents losing money through such trading / schemes.
It is clarified that resident persons can undertake forex transactions only with authorised persons and for permitted purposes, in terms of the Foreign Exchange Management Act, 1999 (FEMA). While permitted forex transactions can be executed electronically, they should be undertaken only on ETPs authorised for the purpose by the RBI or on recognised stock exchanges (National Stock Exchange of India Ltd., BSE Ltd. and Metropolitan Stock Exchange of India Ltd.) as per the terms and conditions specified by the RBI from time to time. It is also clarified that remittances for margins to overseas exchanges / overseas counterparties are not permitted under the Liberalised Remittance Scheme (LRS) framed under the FEMA.
The RBI cautions the public not to undertake forex transactions on unauthorised ETPs or remit/deposit money for such unauthorised transactions. Resident persons undertaking forex transactions for purposes other than those permitted under the FEMA or on ETPs not authorised by the RBI shall render themselves liable for penal action under the FEMA.
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