Category: Income Tax

Income tax Articles, Video updates, PPT

Gujarat High Court Rules on Deloitte’s Challenge to Income Tax Reassessment Notice

Posted on by Business So Simple in Court Room, Income Tax, Legal awareness, News Desk

Gujarat High Court Rules on Deloitte’s Challenge to Income Tax Reassessment Notice



Key Highlights:

Petitioner: M/s. Deloitte Haskins & Sells

Issue: Challenge to Section 148 notice under Income Tax Act, 1961

Allegation: Escaped income from foreign entities (Spain & Japan)

Claim: Reassessment initiated without new tangible material

Court’s View: Reassessment cannot be based on a mere “change of opinion”


Gujarat High Court is reviewing whether the Income Tax Department’s actions violated principles of natural justice.

The Gujarat High Court recently addressed a *writ petition filed under Article 226 of the Constitution by “M/s. Deloitte Haskins & Sells,”* a partnership firm practicing as chartered accountants. The firm challenged a notice issued under Section 148 of the Income Tax Act, 1961, seeking its quashing and an injunction against further proceedings by the Income Tax Department. The case centered on alleged escaped income from foreign entities, including payments received from Spain and Japan, and the department’s failure to address the petitioner’s objections before proceeding with reassessment.

*Key Points:*

*1. Challenge to Section 148 Notice:*

The petitioner contested the validity of the notice issued under Section 148, arguing that the reassessment was initiated based on a mere “change of opinion” without any new tangible material. The Gujarat High Court has previously held that reassessment cannot be initiated on a mere change of opinion for material already scrutinized in previous assessments.



*2. Alleged Escaped Income:*

The reassessment pertained to alleged escaped income from foreign entities, including payments received from Spain and Japan. The petitioner maintained that all relevant details were furnished during the original assessment, and no new information had surfaced to justify the reassessment.

*3. Non-Consideration of Objections:*

The petitioner asserted that the Income Tax Department proceeded with the reassessment without addressing the objections raised, violating principles of natural justice. The Gujarat High Court has previously invalidated assessment orders due to violations of procedural requirements under Section 144B, emphasizing the necessity of considering taxpayers’ objections.

*Court’s Decision:*

While the specific outcome of this particular case is not detailed in the available sources, the Gujarat High Court has consistently ruled that:

*Reassessment notices under Section 148 cannot be issued based on a mere change of opinion for material already scrutinized in previous assessments.*

*Procedural lapses, such as failing to consider taxpayers’ objections, can render assessment orders invalid.*


*These precedents suggest that the court may favor the petitioner’s stance if similar circumstances apply.*

CBDT notifies Tolerance Range for Transfer Pricing for A.Y 2024-25 as per proviso to sub-rule (7) of rule 10CA of the Income-tax Rules, 1962

Posted on by Business So Simple in Income Tax, International Taxation

CBDT notifies Tolerance Range for Transfer Pricing for A.Y 2024-25 as per proviso to sub-rule (7) of rule 10CA of the Income-tax Rules, 1962


Notification of tolerance range shall provide certainty to taxpayers and reduce the risk perception associated with pricing of a transaction in transfer pricing

The Central Board of Direct Taxes (CBDT) has issued notification no. 116/2024 dated October 18, 2024 notifying the tolerance range for AY 2024-25. The notification of tolerance range shall provide certainty to taxpayers and reduce the risk perception associated with pricing of a transaction in transfer pricing.

Proviso to sub-rule(7) of rule 10CA sub-rule(7) provides that, “if the variation between the arm’s length price so determined at which the international transaction or specified domestic transaction has actually been undertaken does not exceed such percentage not exceeding three percent of the latter, as may be notified by the Central Government in the Official Gazette in this behalf, the price at which the international transaction or specified domestic transaction has actually been undertaken shall be deemed to be the arm’s length price.”

The tolerance range for transfer pricing is as follows:

The tolerance range for transfer pricing is as follows:

1. The tolerance ranges shall be 1% for transactions in the nature of “wholesale trading” and 3% for others, respectively, as notified last year and
2. The term ‘wholesale trading’, shall be defined as an international transaction or specified domestic transaction of trading in goods which fulfil all the following conditions:


1. Purchase cost of finished goods is 80% or more of the total cost pertaining to such trading activities; and
2. Average monthly closing inventory of goods is 10% or less of sales pertaining to such trading activities.

New Form 12BAA to reduce TDS from salary (CBDT Notification dated 15 Oct 2024)

Posted on by Business So Simple in Financial Prudence, Income Tax

New Form 12BAA to reduce TDS from salary (CBDT Notification dated 15 Oct 2024)

https://youtu.be/LcNlgy1ut7g?si=N9fkmTLpLdJhj743

Central Board of Direct Taxes (CBDT) has notified amendments in income-tax rules for ease in claiming credit for TCS collected/TDS deducted for salaried employees and enabling claiming TCS credit of minors in the hands of parents. Sub-section (2B) of Section 192 of the Income-tax Act, 1961 (‘the Act’) was amended vide the Finance (No. 2) Act, 2024 (FA (No. 2)) to include any tax deducted or collected at source under the provisions of Chapter XVII-B or Chapter XVII-BB, as applicable, for the purpose of making tax deductions in the case of salaried employees.

Vide CBDT Notification No. 112/2024 dated 15.10.2024, the Income-tax Rules, 1962 (‘the Rules’) have been amended, introducing Form No. 12BAA as the prescribed statement of particulars required under sub-section (2B) of Section 192 of the Act. Employees must provide these particulars to their employers, who are responsible for making payments under sub-section (1) of Section 192. The employer, in turn, shall deduct TDS on salary after taking into account the furnished particulars.

Further, sub-section (4) of Section 206C of the Act was amended vide FA (No. 2) to allow the credit of TCS to a person other than the collectee—such as a parent in the case of a minor collectee—when the minor’s income is clubbed with that of the parent. Accordingly Vide CBDT Notification No. 114/2024 dated 16.10.2024 Rule 37-I of the Rules has been amended to allow credit of tax collected at Source to a person other than the collectee, in whose hands the income of the collectee  is assessable.

The said notifications are available at http://www.incometaxindia.gov.in

****

FAQs on new capital gains tax regime  w.e.f. 23 July 2024

Posted on by Business So Simple in Income Tax, Miscellaneous

Q1. What are the major changes brought about in the taxation of capital gains by the Finance (No.2) Bill, 2024?



Ans. The taxation of capital gains has been rationalised and simplified. There are 5 broad parameters to this rationalisation and simplification, namely:-



-Holding period has been simplified. There are only two holding periods now, viz. 1 year and 2 year.


-Rates have been rationalised and made uniform for majority of assets.


-Indexation has been done away with for ease of computation with simultaneous reduction of rate from 20% to 12.5%.


-Parity between Resident and Non-resident.


-No change in roll over benefits.


Q2. What is the date when the new taxation provisions comes into force?



Ans. The new provisions for taxation of capital gains come into force from 23.7.2024 and shall apply to any transfer made on or after 23.7.2024.



Q3. How has the holding period been simplified?



Ans. Earlier there were three holding period for considering an asset to be a long- term capital asset. Now the holding period has been simplified. There are only two holding periods,- for listed securities, it is one year, for all other assets, it is two years.



Q4. Who will benefit from the change in holding period?



Ans. The holding period of all listed assets will be now one year. Therefore, for listed units of business trusts (ReITs, InVITs) holding period is reduced from 36 months to 12 months. The holding period of gold, unlisted securities (other than unlisted shares) is also reduced from 36 months to 24 months.



Q5.      What about the holding period of immovable property and unlisted shares?



Ans. The holding period of immovable property and unlisted shares remains the same as earlier i.e. 24 months.



Q6. Please elaborate on change in the rate structure for STT paid capital assets?



Ans. Rate for short-term STT paid listed equity, Equity oriented mutual fund and units of business trust (Section 111A) has increased from 15 to 20%. Similarly the rate for these assets for long-term (S. 112A) has increased from 10 to 12.5%.



Q7. Is there any change in the exemption limit for long-term capital gains under section 112A which was earlier one lakh Rs.?



Ans. Yes. The exemption limit of 1 lakh for LTCG on these assets has also increased to 1.25 lakh Rs. This increased exemption limit will apply for FY 2024-25 and subsequent years.



Q8. Please elaborate on change in the rate structure for other long-term capital gains?



Ans. The rate for other long-term capital gains on all assets has been rationalized to 12.5% without indexation (Section 112). This rate was earlier 20% with indexation. This will ease in simplifying the taxation of capital gains and their easy computation.



Q9. Who will benefit by change in rate from 20% (with indexation) to 12.5% (without indexation)?



Ans. The reduction in the rate will benefit all category of assets. In most of the cases, the taxpayers will benefit substantially. But where the gain is limited vis-a vis inflation, the benefit will also be limited or absent in a few cases.



Q10. Can the taxpayer continue to avail the roll over benefits on capital gains?



Ans. Yes. The roll over benefits remain the same as earlier. There is no change in roll over benefits already available under the IT Act. Therefore, taxpayers who want to save on LTCG tax even with low rates, can continue to avail the roll over benefits on fulfillment of conditions as applicable.



Q11. In which assets, can the long-term capital gains be invested for roll over benefits?



Ans. For roll over benefits, taxpayers can invest their gains in house under section 54 or section 54F or in certain bonds under section 54EC. For complete details of all roll over benefits, please refer section 54, 54B, 54D, 54EC 54F, 54G of the IT Act.



Q12. What is amount upto which roll over benefit is available?



Ans. Investment of capital gain in 54EC bonds (up to Rs. 50 lakh) and in other cases, the capital gain is exempt from tax, subject to certain specified conditions.



Q13. What is the overall rationale for changes?



Ans. Simplification of any tax structure has benefits of ease of compliance viz computation, filing, maintenance of records. This also removes the differential rates for various classes of assets.


Press Release dated 24 July 2024
Release Id :-2036604

CBDT signs record number of 125 Advance Pricing Agreements (APAs) in FY 2023-24

Posted on by Business So Simple in Income Tax

CBDT signs record number of 125 Advance Pricing Agreements (APAs) in FY 2023-24


Total 641 APAs done since inception of the APA programme

Press Release Posted Date:- Apr 16, 2024


The Central Board of Direct Taxes (CBDT) has entered into a record 125 Advance Pricing Agreements (APAs) in FY 2023-24 with Indian taxpayers. This includes 86 Unilateral APAs (UAPAs) and 39 Bilateral APAs (BAPAs). This marks the highest ever APA signings in any financial year since the launch of the APA programme. The number of APAs signed in FY 2023-24 also represents a 31% increase compared to the 95 APAs signed during the preceding financial year. With this, the total number of APAs since inception of the APA programme has gone up to 641, comprising 506 UAPAs and 135 BAPAs.

During FY 2023-24 CBDT also signed the maximum number of BAPAs in any financial year till date. The BAPAs were signed as a consequence of entering into Mutual Agreements with India’s treaty partners namely Australia, Canada, Denmark, Japan, Singapore, the UK and the US.

The APA Scheme endeavours to provide certainty to taxpayers in the domain of transfer pricing by specifying the methods of pricing and determining the arm’s length price of international transactions in advance for a maximum of five future years. Further, the taxpayer has the option to rollback the APA for four preceding years, as a result of which, tax certainty is provided for nine years. The signing of bilateral APAs additionally provides the taxpayers with protection from any anticipated or actual double taxation.

The APA programme has contributed significantly to the Government of India’s mission of promoting ease of doing business, especially for Multi National Enterprises () which have a large number of cross-border transactions within their group entities.

****

NB/VM/KMN

Release Id :-2018085

Income Tax Department conducts search operations on Politically Exposed Person in Chhattisgarh (Press release 09 Feb 2024)

Posted on by Business So Simple in Income Tax

Income Tax Department initiated search and seizure operations in the case of a Politically Exposed Person (PEP), his close associates and few Government officials on 31/01/2024. One of the close associates of the PEP is engaged in the business of real estate. The search operation covered more than 25 premises spread across Raipur, Surguja, Sitapur and Raigarh districts of Chhattisgarh.

During the course of the search operation, numerous incriminating documents, loose sheets and digital evidences have been found and seized. These evidences reveal the modus-operandi of tax evasion and other dubious practices adopted by these persons.  Preliminary analysis suggests that these persons have received ill-gotten money in lieu of grant of undue favours to different persons in Government related works.

Incriminating documents recovered during the search, contain details of ill-gotten money of approximately Rs.13 crore, received in cash by the said PEP, through his close associates. Further, evidences seized suggest that this ill-gotten money has been invested in real estate through the associates of the PEP.  Similarly, evidence of payment of on-money in purchase of real estate to the tune of approximately Rs. 3 crore and evidence of unaccounted cash expenditure of more than Rs. 8 crore, made by the associates of the PEP, in the real estate business have also been found. The veracity of such evidences has also been buttressed by the statements of close associates of the PEP and their employees, wherein they have admitted the above malpractices.

Further, incriminating documents related to illegal grabbing of land by the close associates of the PEP have also been found. The farmers and the affected persons whose lands have been transferred in such manner, have also admitted in their statement(s) that the said land transactions were completed under the undue influence of the PEP. Similarly, undue influence of PEP was also utilized by his associates in getting the permission for purchase of ‘Punarwas Patta’.

Issues related to mismatch in turnover vis-à-vis bank credits have also been detected from the factory premises owned by the spouse of the PEP, who is running a manufacturing concern of Hume Pipes.

The search operation has resulted in seizure of unaccounted cash and jewellery exceeding Rs. 2.50 crore.

Further investigations are in progress.

****

NB/VM/KMN

Release Id :-2004271

Direct Tax collections at 80.61% of total Budget Estimates of Direct Taxes for F.Y. 2023-24 upto 10.01.2024

Posted on by Business So Simple in Income Tax

The provisional figures of Direct Tax collections up to 10th January, 2024 continue to register steady growth. Direct Tax collections up to 10th January, 2024 show that gross collections are at Rs. 17.18 lakh crore which is 16.77% higher than the gross collections for the corresponding period of last year. Direct Tax collection, net of refunds, stands at Rs. 14.70 lakh crore which is 19.41% higher than the net collections for the corresponding period of last year. This collection is 80.61% of the total Budget Estimates of Direct Taxes for F.Y. 2023-24.

So far as the growth rate for Corporate Income Tax (CIT) and Personal Income Tax (PIT) in terms of gross revenue collections is concerned, the growth rate for CIT is 8.32% while that for PIT is 26.11% (PIT only)/ 26.11% (PIT including STT). After adjustment of refunds, the net growth in CIT collections is 12.37% and that in PIT collections is 27.26% (PIT only)/ 27.22% (PIT including STT).

Refunds amounting to Rs. 2.48 lakh crore have been issued during 1st April, 2023 to 10th January, 2024.

Press Release 11th Jan 2024

Search operations in Mumbai- unaccounted cash sales 1000 cr., cash payments 400 cr.,non genuine expenses 100 cr. Etc.

Posted on by Business So Simple in Income Tax

Income Tax Department initiated search and seizure operations in the case of a group, engaged in the manufacturing of wires and cables and other electrical items on 22.12.2023. Some of the authorised distributors of the group were also covered in the search. The search action was conducted at more than 50 premises located in Mumbai, Pune, Aurangabad, Nasik, Daman, Halol and Delhi.

During the course of the search operation, a large number of incriminating evidences in the form of documents and digital data have been found & seized. These evidences reveal modus-operandi of tax evasion adopted by the group in connivance with some of the authorised distributors. Preliminary analysis suggests that the flagship company indulged in unaccounted cash sales, cash payments for unaccounted purchases, non-genuine transport and sub-contracting expenses, etc for suppression of its taxable income.

Credible evidences recovered during the search have established that the flagship company has made unaccounted cash sales of around Rs. 1,000 crore which are not recorded in the books of accounts. Evidences of unaccounted cash payments of more than Rs. 400 crore made by a distributor, on behalf of the flagship company towards purchases of raw materials, have also been seized. Further, non-genuine expenses in the nature of sub-contracting expenses, purchases and transport expenses, etc. aggregating to about Rs. 100 crore have also been identified in the seized evidences from the premises of the flagship company.

The search action also resulted in determination of unexplained transactions undertaken by the distributor for issuing bills without genuine supply of goods whereas such goods have been sold in open market in cash. Thus, the authorised distributor facilitated certain parties to inflate their purchase accounts, which aggregate to about Rs. 500 crore. This distributor exclusively sells products of the flagship company.

During the course of search operation, unaccounted cash exceeding Rs. 4 crore, has been seized and more than 25 bank lockers have been put on restraint.

Further investigations are in progress.

Press Release dated 10 Jan 2024

Record number of ITRs filed till 31st December, 2023!

Posted on by Business So Simple in Income Tax

Few highlights:

👉 8.18 crore ITRs filed for AY 2023-24 upto 31.12.2023 which is 9% higher y-o-y.
👉1.60 crore audit reports and other forms filed.
👉AIS facility was used extensively, resulting in smoother and faster filing of ITRs.
👉TIN 2.0, a digital e-pay tax payment platform, has enabled real-time credit of taxes to taxpayers which made ITR filing easier & faster.
👉Over 103.5 crore outreaches were made through targeted e-mails, SMS and other creative campaigns to encourage taxpayers to file their ITRs and Forms early.
👉e-filing helpdesk team handled approximately 27.37 lakh queries from taxpayers upto 31.12.2023.

Refer details



https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1992182&RegID=3&LID=1