Category: Miscellaneous

Mere execution of Power of Attorney not to be treated as ‘transfer’ if no sale deed was executed

Posted on by Business So Simple in Miscellaneous

Where assessee had merely executed a Power of Attorney in respect of a immovable property but neither executed any agreement for sale nor handed over possession of property, there would be no transfer.

Refer full judgement:
[2017] 81 taxmann.com 70 (Chennai – Trib.)
IN THE ITAT CHENNAI BENCH ‘C’
Smt. Mithra Ram
v.
Income Tax Officer, Non-Corporate Ward – 3(4), Chennai
M. BALAGANESH, ACCOUNTANT MEMBER
AND DUVVURU RL REDDY, JUDICIAL MEMBER
IT APPEAL NO. 3160 (MDS) OF 2016
[ASSESSMENT YEAR 2007-08]
FEBRUARY  17, 2017 
Section 2(47) of the Income-tax Act, 1961 – Capital gains – Transfer (Immovable property) – Assessment year 2007-08 – Whether transfer of immovable property by way of sale can only be made by deed of conveyance and execution of POA cannot be considered as transfer – Held, yes – Assessee, an individual, executed a Power of Attorney in favour of one ‘K’ in financial year 2006-07 – No possession of property was handed over – No agreement of sale was executed – Sale deed was executed by assessee through Power of Attorney holder in favour of 4 purchasers in financial years 2007-08 and 2008-09 – Purchasers were placed in possession – Whether there was no transfer in favour of K in year when Power of Attorney was made, but it took place in year when sale deed was made in favour of 4 persons – Held, yes [Para 5][In favour of assessee]
FACTS
■   During the subject assessment year 2007-08, the assessee executed a Power of Attorney in favour of K2 Engineers (P.) Ltd. for sale of property against which an advance was received by the assessee from K2 Engineers (P.) Ltd. the assessee did not enter into any agreement of sale in writing pursuant to execution of Power of Attorney on 15-12-2006 and no possession of the property was handed over during the assessment year 2007-08. The assessee represented by her POA holder K2 Engineers (P.) Ltd., sold the property to four different persons during financial years 2007-08 and 2008-09.
■   The assessee did not file her original return of income for the assessment year 2007-08. In response to notice under section 148, the assessee filed return of income disclosing capital gains among other incomes and also claimed exemption under section 54F in respect of reinvestment in property.
■   Reassessment was completed for assessment year 2007-08 by the Assessing Officer denying the claim of exemption under section 54F by assessing the capital gains in respect of the sale of property.
■   On appeal the Tribunal:
HELD
■   The assessee had filed the return of income in pursuant to notice issued under section 148 offering capital gain on sale of the subject mentioned property and claiming exemption under section 54F, in respect of the re-investment of entire property of Kodaikanal. On 15-12-2016, the assessee had merely executed the POA in favour of K2 Engineers (P.) Ltd. Admittedly, the possession of the property was not handed over by the assessee to the POA holder based on the POA. Though, the various clauses in the POA confers various powers on the POA holder even for execution of sale deed in connection with the subject mentioned property. The said clauses are only general clauses as would be normally found in general POA. Admittedly, no agreement in writing in the form of agreement of sale was executed by the assessee in favour of POA holder. The provisions of section 53A of Transfer of Property Act are very clear that in order to construe the Transfer of Property, it could be made based on part performance of the contract by way of a valid agreement in writing. Since, in the instant case, there is no agreement in writing executed by the assessee in favour of POA holder, the provisions of implicating part performance of the contract within the provisions of section 53A of Transfer of Property Act cannot be invoked on the assessee. Once the applicability of provisions of section 53A of the Transfer of Property Act fails, there cannot be no transfer of capital asset within the provisions of section 2(47)(v) and, accordingly, no capital gains could arise for the assessee in assessment year 2007-08. Admittedly, the sale deeds were executed by the assessee in favour of four purchasers on 31-10-2007 and 30-5-2008 on which date only, the purchasers were placed in possession of the property by the assessee. In these facts and circumstances, the capital gains, if any, could arose only in assessment years 2008-09 and 2009-10 as the case may be and not in the year under appeal, i.e., assessment year 2007-08. [Para 5]
■   The Assessing Officer assuming jurisdiction based on the erroneous reasons recorded by him has to be declared void ab initio and, accordingly, re-assessment notice under section 148 is not sustainable in law and requires to be quashed. [Para 5.1]
■   Merely because the assessee had erroneously admitted the capital gains in assessment year 2007-08 and had claimed exemption under section 54F in respect of reinvestment in property at Kodaikanal and had filed a return in response to notice under section 148, this very action alone would not strengthen the reasons recorded by the Assessing Officer and confer him power to frame the reassessment. Though the assessee based on mistaken understanding of provision of Income-tax Act had filed the return in response to notice under section 148 disclosing capital gains and claiming exemption under section 54F for the assessment year 2007-08, that mere act along could not be treated as a reason fastening unwarranted tax liability by the assessee for the year under appeal. It is well settled that there is no estopple against the statute. In view of the aforesaid findings, the additional grounds raised by the assessee is to be admitted as it goes into the root of the matter and does not involve any investigation of facts. [Para 5.2]
■   Accordingly, in view of above findings in the facts and circumstances of the case and respectfully following the judicial precedents relied upon herein above, the additional grounds raised by the assessee is to be allowed and it is to be held that the re-assessment framed by the Assessing Officer for the assessment year 2007-08 is not sustainable in law. Accordingly, the grounds raised by the assessee are allowed. [Para 5.3]
■   In the result, the appeal of the assessee is allowed. [Para 6]
CASE REVIEW
Pr. CIT v. Lincoln Pharmaceutical Ltd. [2015] 375 ITR 561/[2016] 66 taxmann.com 355 (Guj.); Dr. Ajit Gupta v. Asstt. CIT [2016] 383 ITR 361/[2017] 79 taxmann.com 316 (Delhi) (para 5.1); Maynak Poddar (HUF) v. WTO [2003] 262 ITR 633/130 Taxman 500 (Cal.) (para 5.2) and National Thermal Power Corpn. Ltd. v. CIT [1998] 229 ITR 383 (SC) (para 5.2)followed.
CASES REFERRED TO
Suraj Lamp & Industries (P.) Ltd. v. State of Haryana [2012] 340 ITR 1/[2011] 202 Taxman 607/14 taxmann.com 103 (SC) (para 2), Maynak Poddar (HUF) v. WTO [2003] 262 ITR 633/130 Taxman 500 (Cal.) (para 3), Pr. CIT v. Lincoln Pharmaceuticals Ltd. [2015] 375 ITR 561/[2016] 66 taxmann.com 355 (Guj.) (para 5.1), Dr. Ajit Gupta v. Asstt. CIT [2016] 383 ITR 361/[2017] 79 taxmann.com 316 (Delhi) (para 5.1) and National Thermal Power Corpn. v. CIT [1998] 229 ITR 383 (SC) (para 5.2).
Philp George and M.P. Senthil Kumar, Advs. for the Appellant.A.V. Sreekanth, JCIT for the Respondent.
ORDER
M. Balaganesh, Accountant Member – At the outset we find that the assesse has raised certain additional grounds of appeal challenging the validity of assumption of jurisdiction u/s. 147 of the Act for re-opening the assessment for the assessment year 2007-08. We find that the adjudication of this additional grounds of appeal would have to be addressed at the first instance.
” 2.   Additional Grounds:
2.1.   Jurisdiction u/s. 147 :
2.1.1   The Assessing Officer has no jurisdiction xx] s. 147 to reopen the assessment.
2.1.2   The reason for reopening the assessment provided by the Assessing Officer that the Appellant had sold property at Sri Kapaleeswarar Nagar to M/s. K2 Engineers Pvt. Ltd. for Rs.1,60,00,000/- during the assessment year under consideration is not correct.
2.1.3   The Commissioner of Income Tax (Appeals) ought to have appreciated that the Assessing Officer had no reason to believe that income had escaped assessment to exercise jurisdiction u/s. 147.
2.1.4   The Commissioner of Income Tax (Appeals) ought to have appreciated that the reopening of assessment was only on mere suspicion, which is against the mandate of the provisions of Income Tax Act, 1961.
2.1.5   The Commissioner of Income Tax (Appeals) ought to have exercised the power u/s. 251 and annulled the reassessment, which is passed by the Assessing Officer without having jurisdiction u/s. 147 of the Income Tax Act, 1961.
2.1.6   The Commissioner of Income Tax (Appeals) ought to have held that Assessing Officer has no jurisdiction to reopen the assessment u/s. 147 to assess the Capital Gains arising out of transfer of property held by the Appellant.”
In order to admit the additional ground the basic facts that are required to be presented would have to be gone into. The basic facts are as follows:
The assessee did not file her original return of income for the assessment year 2007-08. Based on an information obtained from the Registration Department regarding the sale of property by the assessee, the Ld. AO issued notice u/s. 148 of the Act after recording reasons for re-opening the assessment. In response to said notice, the assessee filed return of income disclosing capital gain among other incomes and also claiming exemption u/s. 54F of the Act in respect of re-investment in entire property. Re-assessment was completed by the Ld. AO denying the claim of exemption u/s. 54F of the Act thereon by assessing the capital gains in respect of the sale of property. The primary facts in the instant case are that the assessee purchased the property measuring about 2 grounds and 1412 sq.ft. at Sri Kapaleswar Nagar, No. 145, Shrotium Neelankarai Village, Tambaram Taluk, Kancheepuram District bearing Survey No. 92/2A vide sale deed dated 31.08.1994 registered as document No. 3655/1994. The assessee executed Power Of Attorney (POA) in favour of M/s. K2 Engineers Pvt. Ltd., on 15.12.2006. The copy of the said POA was placed on record vide page 25 of the paper book. The assessee received the sum of Rs. 1,60,00,000/- as advance from M/s. K2 Engineers Pvt. Ltd., in December, 2006. The assessee did not enter into any agreement of sale in writing pursuant to execution of POA on 15.12.2006. From the perusal of various clauses of the registered POA, we are able to understand that no possession of the subject mentioned property was handed over by the assessee in favour of the POA holder. Ultimately, the assessee represented by her POA holder M/s. K2 Engineers Pvt. Ltd., sold the property to four different persons as below:-
Date Doc. No. Area Purchased by Consideration
31.10.2007 5532/2007 1389 Sq.Ft. Saswati Misra 2083500
31.10.2007 5538/2007 1930 Sq.Ft. Anshuman Mishra 2895000
30.05.2008 2230/2008 1348 Sq.Ft. Rameshram Mishra 2422356
30.05.2008 2231/2008 1545 Sq.Ft. Rajalakshmi Mishra 2776365
2. The Ld. AR before us argued that the Ld. AO could not have formed a belief that income has escaped assessment in the hands of the assessee for the assessment year 2007-08 for the simple reason on 15.12.2006 what was executed was only a registered POA by the assessee, which admittedly did not mention any consideration amount and admittedly no possession was handed over to the POA holder by the assessee pursuant to the said registered POA. In these circumstances, the provisions of section 2(47)(v) r.w.s. 53A of the Transfer of Property Act would not come into play stating that the assessee had made transfer by way of part performance of the contract, thereby inviting him with the levy of capital gains. It was only in the assessment year 2008-09 and in 2009-10, the assessee through her POA agent had executed sale deeds and the capital gains, if any, would arose only in those two years and definitely not in assessment year 2007-08. He also referred to the reasons recorded by the Ld. AO wherein it has been stated that assessee has sold the subject mentioned property for Rs. 1,60,00,000/- on 15.12.2006 to M/s. K2 Engineers Private Ltd. He argued at the cost of repetition that the documents which were executed on 15.12.2006 was only POA which admittedly do not contain any consideration amount. Apart from this no other document was executed in the form of agreement of sale in writing and by handing over possession of the subject mentioned property so as to fall within the ambit of provisions of section 53A of Transfer of Property Act. He also placed reliance on the decision of the Hon’ble Supreme Court in the case of Suraj Lamp and Industries (P.) Ltd. v. State of Haryana [2012] 340 ITR 1/[2011] 202 Taxman 607/14 taxmann.com 103, wherein after analysing the relevant provisions viz. section 5 and section 53A, 54 and 55 of Transfer of Property Act, together with section 17 of Registration Act, 1908 had held as follows:
“It is thus clear that a transfer of immoveable property by way of sale can only be by a deed of conveyance (sale deed). In the absence of a deed of conveyance (duly stamped and registered as required by law), no right, title or interest in an immoveable property can be transferred.
12. Any contract of sale (agreement to sell) which is not a registered deed of conveyance (deed of sale) would fall short of the requirements of sections 54 and 55 of TP Act and will not confer any title nor transfer any interest in an immovable property (except to the limited right granted under section 53A of TP Act). According to TP Act, an agreement of sale, whether with possession or without possession, is not a conveyance. Section 54 of TP Act enacts that sale of immoveable property can be made only by a registered instrument and an agreement of sale does not create any interest or charge on its subject matter.
Scope of Power of Attorney
13. A power of attorney is not an instrument of transfer in regard to any right, title or interest in an immovable property. The power of attorney is creation of an agency whereby the grantor authorizes the grantee to do the acts specified therein, on behalf of grantor, which when executed will be binding on the grantor as if done by him (see section 1A and section 2 of the Powers of Attorney Act, 1882). It is revocable or terminable at any time unless it is made irrevocable in a manner known to law. Even an irrevocable attorney does not have the effect of transferring title to the grantee.
An attorney holder may however execute a deed of conveyance in exercise of the power granted under the power of attorney and convey title on behalf of the grantor.
15. Therefore, a SA/GPA/WILL transaction does not convey any title nor create any interest in an immovable property. The observations by the Delhi High Court, in Asha M. Jain v. Canara Bank – 94 (2001) DLT 841, that the “concept of power of attorney sales have been recognized as a mode of transaction” when dealing with transactions by way of SA/GPA/WILL are unwarranted and not justified, unintendedly misleading the general public into thinking that SA/GPA/WILL transactions are some kind of a recognized or accepted mode of transfer and that it can be a valid substitute for a sale deed. Such decisions to the extent they recognize or accept SA/GPA/WILL transactions as concluded transfers, as contrasted from an agreement to transfer, are not good law.
16. We therefore reiterate that immovable property can be legally and lawfully transferred/conveyed only by a registered deed of conveyance.
Transactions of the nature of ‘GP A sales’ or ‘SA/GP A/WILL transfers’ do not convey title and do not amount to transfer, nor can they be recognized or valid mode of transfer of immoveable property. The courts will not treat such transactions as completed or concluded transfers or as conveyances as they neither convey title nor create any interest in an immovable property.
They cannot be recognized as deeds of title, except to the limited extent of section 53A of the TP Act. Such transactions cannot be relied upon or made the basis for mutations in Municipal or Revenue Records. What is stated above will apply not only to deeds of conveyance in regard to freehold property but also to transfer of leasehold property. A lease can be validly transferred only under a registered Assignment of Lease. It is time that an end is put to the pernicious practice of SA/GPA/WILL transactions known as GPA sale/s .
17. It has been submitted that making declaration that GPA sales and SA/GP A/WILL transfers are not legally valid modes of transfer is likely to create hardship to a large number of persons who have entered into such transactions and they should be given sufficient time to regularize the transactions by obtaining deeds of conveyance. It is also submitted that this decision should be made applicable prospectively to avoid hardship.
18. We have merely drawn attention to and reiterated the well- settled legal position that SA/GPA/WILL transactions are not ‘transfers’ or ‘sales’ and that such transactions cannot be treated as completed transfers or conveyances. They can continue to be treated as existing agreement of sale.
Nothing prevents affected parties from getting registered Deeds of Conveyance to complete their title. The said SA/GPA/WILL transactions’ may also be used to obtain specific performance or to defend possession under section 53A of TP Act. If they are entered before this day, they may be relied upon to apply for regularization of allotments/leases by Development Authorities. We make it clear that if the documents relating to ‘SA/GPA/WILL transactions’ has been accepted acted upon by DDA or other developmental authorities or by the Municipal or revenue authorities to effect mutation, they need not be disturbed, merely on account of this decision.”
3. The Ld. AR also drew the attention of the bench that the possession was actually handed over by the assessee to the aforesaid buyers of the property on 31.10.2007 for first two purchasers, on 30.05.2008 for last two purchasers (being the date of execution of independent sale deeds in favour of four purchasers). This fact is also mentioned in the respective sale deed enclosed vide page 54, 71, 87 and 104 of paper book. He also argued that though, the assessee initially thought that the transfer had taken place in assessment year 2007-08, which is pursuant to the execution of POA and as per the advice given to him by his tax consultants, merely because the assessee has erroneously offered sum receipt/income in the returns, that alone would not enable the Ld. AO to take advantage of the ignorance of the assessee with regard to the provisions of law. He further argued that there is no estoppel against the statute. In support of this, he placed reliance on the decision of Hon’ble Calcutta High Court in the case of Maynak Poddar (HUF) v. WTO [2003] 262 ITR 633/130 Taxman 500. He further argued that it is the earnest duty of the Ld. AO to teach the assessee of his various tax obligations and the revenue should not get unjustly enriched by the ignorance of provisions of the Income Tax Act on the part of the assessee.
Based on these arguments, the Ld. AR argued that the Ld. AO could not have had reason to believe by having tangible material representing some benefit in facts and figures in Asst Year 2007-08 stating that income had escaped assessment and accordingly, the re-opening of assessment is bad in law.
4. In response to this, the Ld. DR argued that admittedly the re-opening in this case had happened pursuant to the information received by the ld. AO from the Registration Department. In the instant case, both POA as well as the sale deeds were duly registered with the Registration Department though on different dates filed in two different assessment years and accordingly he argued that income in the hands of the assessee had escaped assessment. He argued that it is already well settled with sufficiency of reason need not be taken into account at the time of recording the reasons for assessment. He further argued that the decision rendered by the Hon’ble Supreme Court in the case of Suraj Lamp Industries (P.) Ltd. (supra) is only in the context of general law and could not be made applicable for income tax proceedings.
5. We have heard the rival submissions and perused the materials available on record including the paper book filed by the assessee. We find that the assessee had filed the return of income in pursuant to notice issued u/s. 148 offering capital gain on sale of the subject mentioned property and claiming exemption u/s. 54F of the Act, in respect of the re-investment of entire property of Kodaikanal. We find that on 15.12.2016, the assessee had merely executed the POA in favour of M/s. K2 Engineers Private Ltd. Admittedly, the possession of the property was not handed over by the assessee to the POA holder based on the POA. Though, the various clauses in the POA confers various powers on the POA holder even for execution of sale deed in connection with the subject mentioned property, we feel that the said clauses are only general clauses as would be normally found in general POA. Admittedly, no agreement in writing in the form of agreement of sale was executed by the assessee in favour of POA holder. The provisions of section 53A of Transfer of Property Act are very clear that in order to construe the Transfer of Property, it could be made based on part performance of the contract by way of a valid agreement in writing. Since, in the instant case, there is no agreement in writing executed by the assessee in favour of POA holder, the provisions of implicating part performance of the contract within the provisions of section 53A of Transfer of Property Act cannot be invoked on the assessee. We find that the Hon’ble Supreme Court in Suraj Lamp & Industries (P.) Ltd. (supra) has elaborately discussed this issue as to at what point of time the Transfer of Property happens. The same are not reiterated herein for the sake of brevity. Once the applicability of provisions of section 53A of the Transfer of Property Act fails, there cannot be no transfer of capital asset within the provisions of section 2(47)(v) of the Act and accordingly no capital gains could arise for the assessee in assessment year 2007-08. Admittedly, the sale deeds were executed by the assessee in favour of four purchasers on 31.10.2007 and 30.05.2008 on which date only, the purchasers were placed in possession of the property by the assessee. In these facts and circumstances, the capital gains, if any, could arose only in assessment years 2008-09 and 2009-10 as the case may be and not in the year under appeal i.e., assessment year 2007-08.
5.1 Now let us go into the reasons recorded by the Ld. AO which are enclosed in page 133 of the paper book of the assessee. The reasons recorded by the Ld. AO for re-opening the assessment for the assessment year 2007-08 are as under:—
“The assessee Mrs. Mithra Ram has sold property measuring about two grounds and 1412 sq.ft. at Sri Kapaleeswarar Nagar, No. 145, Shrotrium Neelankarai Village, Tambaram Taluk, Kancheepuram District, bearing survey No. 91/2A for a sale consideration of Rs. 1,60,00,000/- on 15.12.2006 to M/s. K2 Engineers P. Ltd., Chenna-41. The assessee has not disclosed the capital gains arising out of the sale of the above said property made to M/s. K2 Engineers P. Ltd. “
We have already seen based on the arguments of the Ld. DR that re-opening admittedly in this case had happened based on AIR information obtained by the Assessing Officer from the Registration Department. It would be pertinent to look as to what information could have been provided by the Registration Department in the instant case. The Registration Department could have at best provided only the POA executed by the assessee on 15.12.2006 registered as Doc. No. 2537/2006 at book -IV in the office of Sub-Registrar, Neelangarai and copies of registered sale deeds executed by the assessee in favour of four different invoices on 31.10.2007 and 30.05.2008 registered as Doc. No. 5532/2007; 5538/2007; 2230/2008 and 2231/2008. Admittedly, no consideration figure has been mentioned in the registered POA. Admittedly, no agreement of sale in writing has been entered into by the assessee in favour of the POA. We find that the Ld. AO had linked both the information (AIR information) received by him on two different dates representing completely two different documents and recorded the reasons for re-opening the assessment by stating that assessee had sold the property for Rs. 1,60,00,000/- on 15.12.2006 itself, whereas, the documents executed on 15.12.2006 was only registered POA are admittedly did not contain any consideration figure. In these facts and circumstances and in view of the decision of the Hon’ble Supreme Court (Supra) we hold that the Ld. AO has led himself to record the erroneous reasons for re- opening the assessment for the assessment year 2007-08. Now, the next question have to be addressed is as to whether the assessment be re-opened by an erroneous reason. We find that this issue has been duly considered in the following decisions :-
Pr. CIT v. Lincoln Pharmaceuticals Ltd. [2015] 375 ITR 561/[2016] 66 taxmann.com 355 (Guj.), wherein it was held as under:—
“16. In this regard, the findings recorded by the Commissioner (Appeals) on the merits of the order passed by the Assessing Officer show that various notifications were issued by the Ministry of Industry (Department of Industrial Policy and Promotion) from time to time increasing the limit of investment in plant and machinery for treating the undertaking as a small scale industrial unit. The Commissioner (Appeals) has recorded a finding to the effect that the investment made by the assessee at all times was within the limit for plant and machinery for the assessment years under consideration. A perusal of the table showing the calculation of plant and machinery as on the 31st March of each year which has been reproduced in the order of the Commissioner (Appeals) as well as the impugned order passed by the Tribunal, clearly shows that the investment made in plant and machinery was within the limit prescribed for an SSI unit. As pointed out by the learned counsel for the respondent assessee, certain assets are exempted from the computation of the exemption limit under the relevant notification. The Assessing Officer, however, had taken into consideration even the exempted assets and come to the conclusion that the assessee had crossed the limit. Moreover, the Assessing Officer has failed to take into consideration that as per notification No.857(E) the limit for investment in plant and machinery for SSI units manufacturing drugs and pharmaceutical products was Rs.3.00 crore and as per notification No.655(E) with effect from 5th June, 2003 such limit has been increased to Rs.5.00 crore. Therefore, the assessee remained an SSI Unit for the years under consideration. In the aforesaid premises, it is evident that the Assessing Officer has proceeded on an erroneous assumption that the respondent assessee does not meet with the requirement of an SSI unit when the record clearly points out to the contrary. Under the circumstances, it is manifest that based upon the material on record on the basis of which the Assessing Officer sought to reopen the assessment, he could not have formed the belief that the assessee did not meet with the requirements of an SSI unit and consequently could not have formed the requisite belief that income chargeable to tax has escaped assessment. In the absence of having any reason to believe that income chargeable to tax has escaped assessment for the assessment years under consideration, the assumption of jurisdiction on the part of the Assessing Officer under section 147 of the Act by issuing notice under section 148 of the Act is clearly without any authority of law.”
Dr. Ajit Gupta v. Asstt. CIT [2016] 383 ITR 361/[2017] 79 taxmann.com 316 (Delhi), wherein it was held that:—
” Since the action of the Revenue was based on a factually erroneous premise, the Court is of the view that the re-opening of the assessments for the said AYs is not sustainable in law. The Court is also satisfied that the requirement of the law, as explained by the Court in Commissioner of Income Tax V. Kelvinator of India Limited (2010) 320 ITR 561 (SC), and reiterated in the later decisions, has not been fulfilled in the present case.
24. Accordingly the impugned notices under section 148 of the Act dated 25th March, 2013 (for AY 2006-07), 28th March, 2013 (for AY 2008-09), 5th March 2014 (for AY 2007-08) and 7th March, 2014 (for AY 2009-10) and the corresponding orders dated 13th December, 2013 and 11th March, 2015 rejecting the objections of the Assessee to the said notices, are hereby quashed.
25. The writ petitions are allowed but in the circumstances with no order as to costs. The pending applications are also disposed of.”
Respectfully following the aforesaid decision of Hon’ble Gujarat High Court and Delhi High Court (Supra), we held that the Ld. AO assuming jurisdiction based on the erroneous reasons recorded by him has to be declared void abinitio and accordingly re-assessment notice issued u/s. 148 of the Act is not sustainable in law and requires to be quashed.
5.2 We also find that merely because the assessee had erroneously admitted the capital gains in Asst Year 2007-08 and had claimed exemption u/s 54F of the Act in respect of reinvestment in property at Kodaikanal and had filed a return in response to notice u/s 148 of the Act, this very action alone would not strengthen the reasons recorded by the ld AO and confer him power to frame the reassessment. We find that though the assessee based on mistaken understanding of provision of Income Tax Act had filed the return in response to notice u/s. 148 of the Act disclosing capital gains and claiming exemption us 54F of the Act for the assessment year 2007-08, that mere act alone could not be treated as a reason fastening unwarranted tax liability by the assessee for the year under appeal. It is well settled that there is no estoppel against the statute and reliance in this regard placed on the decision of the Hon’ble Calcutta High Court in the case of Maynak Poddar (HUF) (supra) is very well founded. In view of the aforesaid findings, we deem it fit and appropriate to admit the additional grounds raised by the assessee as it goes into the root of the matter and does not involve any investigation of facts in the light of the decision of the Hon’ble Supreme Court in the case of National Thermal Power Corporation Ltd. v. CIT [1998] 229 ITR 383 (SC).
5.3 Accordingly, in view of our findings in the facts and circumstances of the case and respectfully following the judicial precedents relied upon herein above, we allow the additional grounds raised by the assessee and hold that the re-assessment framed by the Ld. AO for the assessment year 2007-08 is not sustainable in law. Accordingly, the grounds raised by the assessee are allowed.
6. In the result, the appeal of the assessee is allowed.

SB

*In favour of assessee.

Ashtavakra Gita : Peace

Posted on by Business So Simple in Miscellaneous

Ashtavakra Gita : Peace

Ashtavakra Said:

18.21

Like a leaf in the wind
the liberated one
is untethered from life–
desireless, independent, free.

18.22

For one who has transcended the world
there is no joy or sorrow.
With a stilled mind,
he lives on with no body.

18.23

One who knows Self,
whose mind is serene and spotless,
does not desire to give up anything,
nor does he miss what is not there.

18.24

His mind being in a natural state
of emptiness,
the wise one knows nothing
of honor and dishonor.
He does what comes to be done.

18.25

One who acts knowing
“This is done by the body, not by I, pure Self,”
indeed does nothing–
no matter how much acting takes place.

Series continue….

Tax Planning Series 2 : Capital Gain (Exemption under Capital Gain)

Posted on by Business So Simple in Miscellaneous


Particulars
Section 54
Section 54F
Eligible taxpayers
Individual and HUF
Individual and HUF
Capital gains eligible for exemption
Long-term
Long-term
Capital gains arising from transfer of
Residential House property
Any long term asset (other than a residential house property) provided on date of transfer taxpayer does not own more than one residential house property (except the new house)
Assets to be acquired for exemption
One residential house property
One residential house property
Time limit for acquiring the new assets
Purchase: within 1 year before or 2 years after date of transfer
Purchase: within 1 year before or within 2 years after date of transfer
Construction: within 3 years after date of transfer
Construction: within 3 years after date of transfer
Exemption Amount
Investment in new assets or capital gain, whichever is lower
Investment in new assets X capital gain/net consideration
Withdrawal of exemption
If new asset is transferred within 3 years of its acquisition
a) If new asset is transferred within 3 years of acquisition,
b) if another residential house is purchased within 2 years of transfer of original asset;
c) if another house is constructed within 3 years of transfer of original asset
Deposit in Capital gains deposit scheme before due date under Sec. 139(1)
Yes
Yes


Particulars
Section 54B
Section 54D
Section 54EC
Section 54EE
Section 54G
Section 54GA
Eligible taxpayers
Individual and HUF
Any person
Any person
Any Person
Any person
Any person
Capital gains eligible for exemption
Short-term or Long-term
Short-term or Long-term
Long-term
Long-term
Short-term or Long-term
Short-term or Long-term
Capital gains arising from transfer of
Agriculture land used by taxpayer or by his parents or HUF for agriculture purposes in last 2 years before its transfer
Compulsory acquisition of land or building forming part of industrial undertaking (which was used for industrial purposes for at least 2 years before its acquisition).
Any long-term capital asset
Any long-term capital asset
Land, building, plant or machinery, in order to shift industrial undertaking from urban area to rural area.
Land, building, plant or machinery, in order to shift industrial undertaking from urban area to SEZ.
Assets to be acquired for exemption
Agricultural land (may be in urban area or rural area)
Land or building for shifting or reestablishing said industrial undertaking
Bond of NHAI or REC, etc.
Units of such fund as may be notified by Central Government to finance start-ups
Land, building, plant or machinery, in order to shift industrial undertaking to rural area.
Land, building, plant or machinery, in order to shift industrial undertaking to SEZ.
Time limit for acquiring the new assets
Within 2 years after date of transfer
Within 3 years from date of receipt of compensation
Within 6 months from date of transfer
Within 6 months after the date of transfer of original asset
within 1 year before or 3 years after date of transfer
Within 1 year before or within 3 years after date of transfer
Exemption Amount
Investment in agricultural land or capital gain, whichever is lower
Investment in new assets or capital gain, whichever is lower
Investment in new assets or capital gains, whichever is lower, however, subject to Rs. 50 lakhs.
Investment in new assets or capital gains, whichever is lower, however, subject to Rs. 50 lakhs.
Investment in new assets or capital gain, whichever is lower
Investment in new assets or capital gain, whichever is lower
Withdrawal of exemption
If new asset is transferred within 3 years of its acquisition
If new asset is transferred within 3 years of its acquisition
If new asset is transferred or it is converted into money or a loan is taken on its security
If new asset is transferred within a period of 3 years from the date of its acquisition.
If new asset is transferred within 3 years of acquisition
If new asset is transferred within 3 years of acquisition
within 3 years of its acquisition
Note: 
Where assessee takes loans or advance on security of such specified asset, he shall be deemed to have transferred such asset on the date on which such loan or advance is taken.
Deposit in Capital gains deposit scheme before due date under Sec. 139(1)
Yes
Yes
No
No
Yes
Yes


Ashtavakra Gita: Peace

Posted on by Business So Simple in Miscellaneous

Ashtavakra Gita: Peace





Ashtavakra said:

18.11

Heaven or poverty,
gain or loss,
society or solitude,
to the yogi free of conditioning
there is no difference.

18.12

Religious merit,
sensory pleasure,
worldly prosperity,
discrimination between this and that—
these have no significance
to the yogi free of opposites
such as “I do this”
and “this I do not.”

18.13

The yogi who is liberated while living
has no duties in this world,
no attachments in his heart.
His life proceeds without him.

18.14

For the great soul
who abides beyond desire,
where is illusion?
Where is the universe?
Where is meditation on That?
Where even is liberation from them?

18.15

He who sees the world
may try to renounce it.
But what can the desireless one do?

He sees there is nothing to see.

18.16

He who has seen the Supreme Brahma
thinks, “I am Brahma.”
But he who has transcended all thought,
what can he think?
He knows no other than Self.

18.17

He achieves self-control
who sees his own distraction.
But the great soul is not distracted.
He has nothing to achieve.
He has nothing to do.

18.18

The man of Knowledge
may live as an ordinary man,
but he is not.
He sees he is neither
focused nor distracted,

and finds no fault with himself.

18.19

He who is beyond existence and non-existence–
who is wise, satisfied, free of desire–
does nothing,
though the world may see him in motion.

18.20

The wise one
is not troubled by action or inactivity.
He lives happily,

doing whatever gets done.


Series continue…..

GST: FAQs Series 11 (Registration)

Posted on by Business So Simple in Miscellaneous
Registration …continue




Q 41. What is the process of refusal of registration?
Ans. In case registration is refused, the applicant will be informed about the reasons for such refusal through a speaking order. The applicant shall have the right to appeal against the decision of the Authority. As per sub-section (2) of section 26 of the CGST Act, any rejection of application for registration by one authority (i.e. under the CGST Act / SGST Act) shall be deemed to be a rejection of application for registration by the other tax authority (i.e. under the SGST Act / UTGST Act/ CGST Act).
Q 42. Will there be any communication related to the application disposal?
Ans. The applicant shall be informed of the fact of grant or rejection of his registration application through an e-mail and SMS by the GST common portal. Jurisdictional details would be intimated to the applicant at this stage.
Q 43. Can the registration certificate be downloaded from the GSTN portal?
Ans. In case registration is granted; applicant can download the Registration Certificate from the GST common portal.
Q 44. Can cancellation of registration order be revoked?
Ans. Yes, but only in cases where the initial cancellation has been done by the proper officer suo moto, and not on the request of the taxable person or his legal heirs. A person whose registration has been cancelled suo moto can apply to the proper officer for revocation of cancellation of registration within 30 days from the date of communication of the cancellation order. The proper officer may within a period of 30 days from the date of receipt of application for revocation of cancellation or receipt of information/clarification, either revoke the cancellation or reject the application for revocation of cancellation of registration.
Q 45. Does cancellation of registration impose any tax obligations on the person whose registration isso cancelled?
Ans. Yes, as per Section 29(5) of the CGST/SGST Act, every registered taxable person whose registration is cancelled shall pay an amount, by way of debit in the electronic cash ledger, equivalent to the credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock or capital goods or plant and machinery on the day immediately preceding the date of such cancellation or the output tax payable on such goods, whichever is higher.
Q 46. What is the difference between casual and nonresident taxable persons?
Ans. Casual and Non-resident taxable persons are separately defined in the CGST/SGST Act in Sections 2(20) and 2(77) respectively. Some of the differences are outlined below:

Casual Taxable Person
Non-resident Taxable Person
Occasional undertakes transactions involving supply of goods or services in a state or UT where he has no fixed place of business.
Occasional undertakes transactions involving supply of goods or services but has no fixed place of business residence in India.
Has a PAN Number
Do not have a PAN Number; A nonresident person, if having PAN number may take registration as a casual taxable person
Same application form for registration as for normal taxable persons viz GST REG- 01
Separate application form for registration by non-resident taxable person viz GST REG-10
Has to undertake transactions in the course or furtherance of business
Business test absent in the definition
Has to file normal GSTR-1, GSTR-2 and GSTR-3 returns
Has to file a separate simplified return in the format GSTR-5
Can claim ITC of all inward supplies
Can get ITC only in respect of import of goods and /or services.
Disclaimer:

This FAQ on GST compiled by NACEN and vetted by the Source Trainers is based on the CGST/SGST/UTGST/IGSTAct(s). This FAQ is for training and academic purposes only.

The information in this blogger is reproduced from FAQ on GST publised by CBEC updated on 31 March 2017 and is not intended to be treated as legal ad vice or opinion. For greater details, you are requested to refer to the respective CGST/SGST/UTGST/IGST Acts.

The FAQs refer to CGST and SGST Acts as CGST/SGST as CGST Act and SGST Act are identical in most of the provisions. CGST Act has been introduced in the Parliament. The SGST Acts will be passed by respective state legislatures. A few provisions may be specific to state and may not be in CGST Act.

Ashtavakra Gita: Peace

Posted on by Business So Simple in Miscellaneous

Ashtavakra Gita: Peace




Ashtavakra said:

18.1

Praise That,
which is Bliss itself,
which is by nature stillness and light,
and which by Its knowing
reveals the world as a dream.


18.2

One may enjoy the abundant pleasures of the world,
but will never be happy
until giving them up.


18.3

How can one whose innermost heart
has been scorched by the sun of sorrow
that comes from duty
be happy until the sweet rain
of torrential stillness?

18.4

The universe is but a thought
in Consciousness.
In Reality it is nothing.
One who sees the true nature
of existence and non-existence
never ceases to exist.

18.5

The Self–which is
absolute, effortless, timeless, immaculate–
is without limits
and at no distance from you.
You are forever It.

18.6

For those whose vision becomes unclouded,
illusion evaporates
and the Self becomes known.
All sorrow is instantly dispelled.

18.7

Seeing everything is imagination,
knowing the Self as timelessly free,
the sage lives as a child.

18.8

Knowing himself as Absolute,
knowing existence and non-existence
to be imagination only,
what is there for the desireless one
to learn, say or do?

18.9

Knowing for certain that all is Self,
the sage has no trace of thoughts
such as “I am this” or “I am not that.”

18.10

The yogi who finds stillness
is neither distracted nor focused.
He knows neither pleasure nor pain.
Ignorance dispelled,
he is free of knowing.


Series continue…..

LTA is exempt only if employee undertakes journey to any place in India (Not foreign travel)

Posted on by Business So Simple in Miscellaneous



Leave travel concession is exempt only if assessee-employee undertakes journey to any place in India (Not foreign travel)




IT : As per provisions of section 10(5), only that reimbursement of travel concession or assistance to an employee is exempted which was incurred for travel of the individual employee or his family members to any place in India. Section 10(5), read with rule 2B no way provides that assessee is at liberty to claim exemption out of his total ticket package spent on his overseas travel and part of journey within India. Therefore, LTC paid by assessee to employees involving foreign travel as well would not qualify for exemption under section 10(5) and, accordingly, assessee was liable to deduct TDS on such payment of LTC

Refer full judgement: 


[2017] 81 taxmann.com 192 (Jaipur – Trib.)
IN THE ITAT JAIPUR BENCH
State Bank of India
v.
Assistant Commissioner of Income-tax
KUL BHARAT, JUDICIAL MEMBER
AND VIKRAM SINGH YADAV, ACCOUNTANT MEMBER
IT APPEAL NOS. 145 AND 146 (JP) OF 2017 AND OTHERS
[ASSESSMENT YEARS 2013-14 AND 2014-15]
MARCH  28, 2017 
Smt. Neelam Ashok, CA for the Appellant. Prem Prakash Meena, JCIT for the Respondent.
ORDER
Vikram Singh Yadav, Accountant Member – These are two appeals filed by the assessee against the order of the Ld. CIT(A)-5, Jaipur dated 11.11.2016 for A.Y. 2013-14 & 2014-15 respectively. The assessee has also filed two stay petitions in respect of demand raised by the Assessing Officer of Rs.7,76,365/- for A.Y. 2013-14 & Rs.12,10,074/- for A.Y. 2014-15. Since common issues are involved in these appeals and stay petitions, the same were heard together and disposed off by this consolidated order. For the purpose of discussion, we take up the appeal for A.Y. 2013-14 wherein the following grounds of appeal have been taken:
“1.   The order of the learned CIT, on aspects agitated in this appeal, is bad in law, contrary to the provisions of law and facts of the case and without appreciation of the facts and circumstances of the case in their right perspective.
2.   The learned CIT erred in passing an order under section 201(1)/ 201(1A) and in raising demand of Rs.7,76,365/- (i.e. tax of Rs.5,95,675/- and interest of Rs.1,80,690/-) on the basis that tax was not deducted at source on payment of Leave Travel Concession.
3.   The learned CIT erred in not appreciating that the benefit of Leave Travel Concession is available to the Bank’s employee even in cases where the journey undertaken by an employee involves a foreign leg but the employee’s designated place is in India and he actually visits the place as designated.
4.   The learned CIT erred in making the following observation, holding as under:
  “I have carefully considered the arguments put forth by the appellant. Regarding the argument of the Assessee that exemption u/s 10(5) is not limited to travel only within India and is applicable to a case involving foreign leg in the tour. It is seen that section 10(5) read with Rule 2B is very clear in intent that the said provisions are applicable in connection with proceeding on leave to any place in India. The appellant has in fact bent the interpretation of the said provisions in such a way which goes totally against the intent and spirit of these provisions. In all the cases involving foreign travel one designated place in India is just covered for name sake, otherwise almost entire journey is foreign travel for all practical purposes. In these circumstances, exemption u/s 10(5) would not be available.”
  The above observations are without any basis and are contrary to the facts of the case. The appellant objects to these observations/conclusions.
5.   Without prejudice to the above, the learned CIT erred in not appreciating the bona fide belief of the bank in granting benefit of Leave Travel Concession paid to the Bank’s employees who travelled out of India and held the Bank to be an assessee in default.
6.   Without prejudice to the above, the learned CIT erred in not appreciating that the employee is entitled to exemption under section 10(5) to the extent of expenses incurred for travel in India where the employee’s designated place is in India and he actually visits the place as designated even in cases where the journey undertaken by an employee involves a foreign leg.
7.   Without prejudice to the above, the learned CIT erred in applying a flat rate of 30% for computation of TDS instead of applying the actual income-tax rate applicable in case of each employee.
8.   Without prejudice to the above, the learned CIT erred in computing interest for a period of 35 months (i.e. from 1 April 2011 to 28 February 2014) instead of considering the actual date of payment of the LTC in case of each employee.
9.   The learned CIT erred in not appreciating the submissions made by the Bank in the correct perspective.
2. All these grounds primarily relates to the benefit of leave travel concession granted by the assessee bank to its employees and non-deduction of TDS on the payment of leave travel concession by the assessee to its employees and the corresponding interest thereon.
3. Briefly the facts of the case are that the assessee bank provides the benefit of leave travel concession (LTC) to its employees. On 19.02.2014 & 22.03.2014, a spot verification was conducted by the Asst. Commissioner of Income-tax (TDS) Jaipur at the Zonal Office of the bank in Jaipur. In this connection, a show cause notice dated 16.12.2014 and then another show-cause dated 08.01.2015 was served upon the Assessee to provide details of amounts used to travel out of India. In response to the Show Cause Notice, the Bank filed its reply on 02.02.2015 as under:
S.No. Name of Employee F.Y. 2012-13
Amount used to travel out of India TDS deducted and deposited on the amount
1 Shri K.M. Sharma 169026 0
2 Ashok Kumar Goyal 188607 0
3 Narendra Kumar 259815 0
4 Naveen Khanna 104483 0
5 Alok Nepaliya 108782 0
6 Saroj Vasan 274689 0
7 P.K. Gupta 424000 0
8 Sushil Kumar Jain 113386 0
9 Rajendra Kumar Dubey 342791 0
TOTAL 19,85,579 0
4. On perusal of the details submitted during the TDS assessment proceedings, the ACIT was of the view that LTC benefit under section 10(5) is not available as foreign destination is involved i.e, the places of travel are not situated in India, it cannot be termed as the shortest route to the designation in India, and the National carrier is not involved/used for purposes of the air travel. Thereafter, ACIT passed an order dated 19.02.2015 under section 201(1) read with section 201(1A) treating the entire LTC payments made to employees of corporate office during financial year 2012-13 and 2013-14 as taxable and has treated the assessee bank as an assessee in default for purpose of section 201 and raised the following demand:
Financial Year Amount used outside India (Rs.) Non/Short Deduction (Rs.) Interest (Rs.) Total (Rs.)
2012-13 19,85,579 5,95,675 1,80,690 7,76,365
5. Being aggrieved, an appeal was filed before the ld CIT(A), Jaipur which was dismissed and hence, the present appeal before us.
6. Before we advert to the ld AR’s contentions, it would be relevant to refer to the findings of the ld CIT(A) which are under challenge before us:
“3.3 I have considered the facts of the case, the assessment order and the submissions of the appellant. The brief facts of the case are that the AO observed that the appellant had not deducted TDS on the amount of reimbursement of Leave Travel Concession (LTX)/Leave Fare Concession (LFC) given to the employees even in the cases where a foreign destination was included in the itinerary of their journey. Section 10(5) of the Income Tax Act, 1961 clearly stipulates that exemption under section 10(5) of the Act is available only for travel to any place in India and restricted to the amount of expenses actually incurred for the purpose of such travel read with conditions as per rule 2B of the Income Tax Rule, 1962. The Assessing Officer accordingly issued notice under section 201(1)/(201(1A) of the Act to the assessee requiring to explain as to why TDS was not deducted on the amount of reimbursement of LFC. Since the said amount cannot be treated as exempt under section 10(5) of the Act, as a foreign destination was included in the journey, the assessee was treated as assessee in default for not deducting TDS on the said amount of LFC reimbursement. Interest under section 201(1A) of the Act was also charged. The appellant has contended that there is no bar u/s 10(5) or Rule 2B on travel outside India as long as there is a designated place of travel within India. It is contended that Rule 2B refers to grant of exemption for travel by shortest route and envisages that a person can travel by a circuitous route to the designated place in India. However, in such cases the exemption u/s 10(5) is restricted to travel within India. It is further contended that conditions of travel by economy class, air fare of the national carrier, restriction of exemption to the amount actually incurred etc. are also complied with. Moreover, the assessee has claimed that it was under bonafide belief that TDS is not deductible on the impugned payments. The assessee has also cited the interim order of Hon’ble Madras High Court dated 16-02-2015 directing the assessee not to deduct TDS on LFC payments till final decision of Writ Petition.
3.4 I have carefully considered the arguments put forth by the appellant. Regarding the argument of the assessee that exemption u/s 10(5) is not limited to travel only within India and is applicable to a case involving foreign leg in the tour, it is seen that section 10(5) read with Rule 2B is very clear in intent that the said provisions are applicable in connection with proceeding on leave to any place in India. The appellant has in fact bent the interpretation of the said provisions in such a way which goes totally against the intent and spirit of these provisions. In all the cases involving foreign travel, one designated place in India is just covered for namesake, otherwise almost entire journey is a foreign travel for all practical purposes. In these circumstances, exemption u/s 10(5) would not be available. This view finds support from the decision of Hon’ble ITAT, Chandigarh Bench in the case of Sh. Om Prakash Gupta v. ITO in ITA No.938/Chd/2011 dated 29-04-2013.
3.5 As far as the claim of bonafide belief is concerned, no doubt, the assessee may not be aware with the ultimate plan of travel of its employees, but at the time of settlement of LTC/LFC bills, complete facts are available before the assessee as to where the employees have travelled, for which he has raised a claim; meaning thereby that the assessee was aware of the fact that its employees have travelled in foreign countries for which he is not entitled to exemption u/s 10(5). In fact, the way the reimbursements have been made, indicates the complicity of the assessee. For example, in the case of Sh. Navin Khanna, who has travelled from Jaipur to Delhi to Port Blair via Singapore and Malaysia in the month of June, 2012 and has raised a claim of Rs.3,90,163, an amount of Rs.3,76,131 (almost equal claim in most of the cases) has been calculated as his eligibility by taking notional to & fro air-fare of Air India from Delhi to Port Blair at Rs.1,04,341 per head, which is much in excess of actual fares as reflected in the Air India website, which shows maximum air fare of Rs.8,840/- for the same sector for the said month. In fact, from the claim papers of another employee, Sh. Narendra Kumar, submitted during appellate proceedings, it is seen that the air fare shown by him for Delhi-Portblair sector on 24-06-2012 is Rs.6,131 per head. It is thus inferred that the notional airfare adopted by the assessee is inflated and is far in excess of that shown for the same destinations and same month in the website of Air India. The inescapable conclusion is that the assessee has acted in complicity of such fraudulent claims made by its employees, which was also widely reported in the media. The further plea of the assessee regarding interim order of Hon’ble Madras High Court dated 16-02-2015 directing non-deduction of tax is also of no avail, since it applies to TDS deduction after 16-02-2015 and the cases under consideration pertain to F.Y. 2012-13 and 2013-14. Thus the directions of the said court were not available at the relevant time and the assessee was duty bound to deduct TDS on the impugned payments. This view is supported by the decision in the case of State Bank of India, Kanpur v. DCIT in ITA No.138 to 140/LKW/2015 dated 04-03-2016 of ITAT, Lucknow Bench.
3.6 Respectfully following the above judgments of ITAT, Lucknow Bench and ITAT, Chandigarh Bench, it is held that there is no exemption available u/s 10(5) in case of travel outside India, and consequently the assessee is in default for not deducting TDS on LTC/LFC payments. Ground nos. 2 to 7 are accordingly dismissed.”
7. We now refer to the contentions raised by the ld AR. The ld. AR of the assessee has submitted as under:-
7.1 The provisions of LTC are governed by the industry level settlement viz. ‘joint Notes’, signed by the Indian Banks’ Association [IBA] on behalf of the member banks and the representatives of Officers’ Organizations after industry level settlement.
7.2 Administrative and operating guidelines, issued by the Bank, are based on the clarifications issued by the Indian Banks’ Association i.e. IBA letter Nos.PLI/Set/25 dated 18 September 1982 and CIR/HR&R/2012-13/665/F/6245 dated 12 July 2012.
7.3 The Bank reimburses the LTC claim made by the employees only where the employee’s designated place is anywhere in India and he actually visits the place as designated. In case an employee travels outside India during the course of his visit to a place in India, reimbursement is made to him for his entire journey by the circuitous route provided the reimbursement made to him is limited to the actual fare/hire charges for the entire journey or the cost of fare to his home town/designated place, by the shortest route, by the entitled class whichever is lower. The Bank has issued Circular No.ADM/037239 dated 20 August 1981 in this regard.
7.4 An employee undertaking journey under LTC is eligible for reimbursement of travelling expenses i.e. air/rail/steamer/road fare by the entitled class for the permissible distance, or the actual cost of travelling for the entire journey, whichever is lower. Further, only travel expenses are reimbursable. The Bank has issued Circular No.CDO/P&HRD-PM/41/2013-14 dated 29 October 2013 in this regard. For example, where there is a single itinerary for India and overseas travel is also involved, say, Mumbai-Kolkata-Singapore-Mumbai, and where the designated place in India is Kolkata, the economy class fare by national carrier for journey within India (i.e. Mumbai-Kolkata and Kolkata-Mumbai) is considered as exempt, for the purpose of section 10(5) by the Bank, within the monetary ceiling to which the employee is eligible.
7.5 It is submitted that the Bank’s framework for provision of LTC benefit to employees and the administrative and operating guidelines issued by the IBA are framed taking into account the provisions of the Income-tax Act, 1961 and the Income-tax Rules, 1962.
7.6 Section 10(5) requires that the exemption is available for proceeding on leave to any place in India. In this connection, the Bank has granted the benefit of exemption under section 10(5) to the employees only in cases where the designated place of travel of the employee has been a place in India. In other words, the Bank in no case has granted the benefit of exemption under section 10(5) to employees where the designated place of travel is outside India. Similarly, the benefit is granted only when the employee actually visits the designated place in India.
7.7 It was further submitted that Section 10(5) does not place a bar on travel to a foreign destination during the course of travel to a place in India. Similarly, detailed guidelines have been framed for the purpose of grant of exemption in terms of rule 2B – these guidelines do not restrict overseas travel while proceeding on leave to a place in India. In other words, if the intention of the legislature or the Central Board of Direct Taxes was to not allow exemption under section 10(5) in case a foreign leg was involved in the journey, it would have explicitly provided so.
7.8 Rule 2B(1) of the Income-tax Rules, 1962 which deals with LTC are reproduced below for ready reference.
“(1) The amount exempted under clause (5) of section 10 in respect of the value of travel concession or assistance received by or due to the individual from his employer or former employer for himself and his family, in connection with his proceeding,-
(a)   On leave to any place in India;
(b)   To any place in India after retirement from service or after the termination of his service.
Shall be the amount actually incurred on the performance of such travel subject to the following conditions, namely:-
(i)   Where the journey is performed on or after the 1st day of October, 1997, by air, an amount not exceeding the air economy fare of the national carrier by the shortest route to the place of destination;
(ii)   Where places of origin of journey and destination are connected by rail and the journey is performed on or after the 1st day of October, 1997, by any mode of transport other than by air, an amount not exceeding the air-conditioned first class rail fare by the shortest route to the place of destination; and
(iii)   Where the places of origin of journey and destination or part thereof are not connected by rail and the journey is performed on or after the 1st day of October, 1997, between such places, the amount eligible for exemption shall be:-
(A)   Where a recognized public transport system exists, an amount not exceeding the 1st class or deluxe class fare, as the case may be, on such transport by the shortest route to the place of destination; and
(B)   Where no recognised public transport system exists, an amount equivalent to the air-conditioned first class rail fare, for the distance of the journey by the shortest route, as if the journey had been performed by rail.”
7.9 It was submitted that at various places in the rules, as highlighted above, there is a reference to the fact that the benefit of exemption under section 10(5) is restricted to expenditure by the shortest route from the place of origin to the destination. This clearly means that Rule 2B envisages that a person can travel by a circuitous route to the designated place in India. In other words, Rule 2B supports the stand that an employee can travel to various places during the course of his travel to his ultimate destination in India. As discussed earlier, there is no requirement that such places travelled should be within India i.e. they can be outside India as well.
7.10 The annual Circular on TDS from salaries for financial year 2013-14 (CBDT Circular No.8/2013 dated 10 October 2013) clarifies that where the journey is performed in a circuitous route, the exemption is limited to what is admissible by the shortest route. Likewise, where the journey is performed in a circular form touching different places, the exemption is limited to what is admissible for the journey from the place of origin to the farthest point reached in India, by the shortest route. This also appears to indicate that circuitous travel involving a foreign destination is permissible.
7.11 It may be noted that even in cases where the employee travels outside India during the course of his travel to a place in India, the exemption under section 10(5) is restricted for travel within India. In other words, where the designated place in India is Kolkata and the travel itinerary is Mumbai-Kolkata-Singapore-Kolkata-Mumbai, exemption is granted only for travel between Mumbai and Kolkata. In terms of the requirements of rule 2B, the following other conditions are also satisfied:
♦   The exemption is granted only for travel by economy class.
♦   The air fare of the national carrier i.e. Air India is considered for the purpose of granting exemption.
♦   The exemption is restricted to the actual amount incurred by the employee.
7.12 It was accordingly submitted that the Bank provides the LTC exemption only where the employee’s designated place is in India and he actually visits the place as designated. There is no bar under section 10(5) or rule 2B on travel outside India if designated place is in India. Rule 2B refers to grant of exemption for travel by the shortest route and envisages that a person can travel by a circuitous route to the designated place in India. Even in cases where the employee travels outside India during the course of his travel to a place in India, the exemption under section 10(5) is restricted for travel within India. The conditions of travel by economy class, air fare of the national carrier, restriction of exemption to the amount actually incurred, etc. are also complied with. In other words, where the employee has designated a place of travel in India and travels to such a place in India, the benefit of exemption under section 10(5) cannot be denied merely on the ground that a foreign leg is also involved. In view of the above, the Bank is of the view that it has correctly granted exemption under section 10(5) to its employees at the time of deduction of tax at source.
7.13 In respect of findings of the ld CIT(A) that Rule 2B is very clear in intent that that the said provisions are applicable in connection with proceeding on leave to any place in India and the appellant has in fact bent the interpretation of the said provisions in such a way which goes totally against the intent and spirit of these provisions. In this regard, it was submitted that had the intention of law been to disallow exemption in LTC Rules in case of foreign travel the same should have been specifically mentioned, but that is not so, nowhere in the entire section any such proviso/point appears. Also, it would be wrong to say that they have bent the interpretation intentionally against the intent and spirit of these provisions as:
(1)   The two basic conditions of section 10(5) read with Rule 2B are satisfied viz.
(a)   On leave to any place in India;
(b)   the air economy fare of the national carrier by the shortest route to the place of destination;
(2)   The actual Bills have been submitted by employees with documentary proofs.
(3)   The actual reimbursement of Bill does not exceed the Lowest air fare of National Airlines (Air India) of two destinations by shortest route.
We would like to submit that in fact the intent of law has been misinterpreted and the department is unduly denying the benefit of LTC to bona fide employees who are in fact complying with the law with true spirit and intent.
7.14 It was further submitted that the payments of LTC Bills are made by the bank after rigorous checking of Bills at three levels. The payment is made on reimbursement basis after submission of original bills supporting and claim forms. The bills are paid only when the Employee visits the destination points and in none of the case the payment has been made by treating the notional expenses on shortest route in India even though the employees did not travel there at all. This statement of the Ld. CIT (Appeals) is totally untrue and not based on true facts. The Bank reimburses the LTC claim made by the employees only where the employee’s designated place is anywhere in India and he actually visits the place as designated.
7.15 Without prejudice to the position that the Bank has correctly granted exemption under section 10(5) to its employees at the time of deduction of tax at source, it was further submitted that the Bank is under a bona fide belief that even where the journey undertaken by an employee involves a foreign leg, the employee is entitled to exemption under section 10(5) when the employee’s designated place is in India and he actually visits the place as designated. The Bank’s view is based on, inter alia, the following:
♦   The Bank’s framework for provision of LTC benefit to employees and the administrative and operating guidelines issued by the IBA are framed taking into account the provisions of the Income-tax Act, 1961 and the Income-tax Rules, 1962.
♦   The provisions of LTC are governed by the industry level settlement viz. ‘joint Notes’, signed by the IBA and the representatives of Officers’ Organizations after industry level settlement.
♦   This is the normal industry practice that has been followed by all public sector banks for several years and it has not been challenged till date.
♦   It may be noted that in around approximately 20-25% of the cases of LTC, a foreign leg is involved. In other words, in around 75-80% of cases, there is no foreign leg involved.
♦   From a legal perspective as well, as explained above, the bank is of the view that exemption under section 10(5) cannot be denied to employees of a foreign leg is involved as long as the designated place of journey is in India.
7.16 It was further submitted that Section 192(1) of the Income-tax Act, 1961 provides that any person responsible for paying any income chargeable as salaries shall at the time of payment, deduct income-tax at the rates in force on the estimated income of the assessee. The Bank had honestly and fairly formed an opinion and arrived at the estimated income of the employees. As discussed above, the Bank was under the bona fide belief that LTC claim for travel within India cannot be denied just because the journey also includes visit outside India. Accordingly, without prejudice to the position adopted by the Bank that the Bank has correctly granted exemption under section 10(5) to its employees at the time of deduction of tax at source, it is submitted that in the present circumstances and facts of the case, the Bank cannot be treated as an assessee in default in terms of section 201.
7.17 There are a large number of decisions of various Courts, wherein it has been held that where the employer makes a bona fide estimate of the income of the employee and deducts tax at thereon, he cannot be held to be an assessee in default under section 201.In this regard, the Bank relies on, inter alia, the following judicial precedents:
♦   Gwalior Rayon Silk Co. Ltd. v. CIT (140 ITR 832) (Madhya Pradesh High Court)
♦   CIT v. Nestle India Ltd. (243 ITR 435) (Delhi High Court)
♦   CIT v. HCL Infor System Ltd. (282 ITR 263) (Delhi High Court)
♦   LIC of India v. ACIT (Writ Tax No. 619 to 621 of 2009) (Allahabad High Court)
♦   CIT v. Oil & Natural Gas Corporation Ltd. (254 ITR 121) (Gujarat High Court)
♦   CIT v. I.T.C. Ltd. (220 Taxman 414) (Allahabad High Court)
♦   Lintas India Ltd. v. ACIT (5 SOT 310) (Mumbai ITAT).
7.18 The Bank also places reliance on the following judicial precedents which have upheld that where the employer has made a bona fide estimate regarding deduction of tax at source, it cannot be regarded as an assessee in default in terms of section 201:
♦   HCL Info System Ltd (95 TTJ 109) (Delhi ITAT)
♦   Associated Cements Co. Ltd. (74 ITD 369) (Mumbai ITAT).
♦   Mahindra & Mahindra (ITA No. 9869 to 9871/Bom/69) (Mumbai ITAT).
♦   CIT v. Nestle India Ltd. (61 ITD 444) (Delhi ITAT)
♦   G.D. Goenka Public School (117 ITD 101) (Delhi ITAT)
♦   Indian Airlines Ltd. (59 ITD 353) (Mumbai ITAT).
♦   Eicher Goodearth Ltd. (ITA 1305/Del/1991) (Delhi ITAT).
♦   KLM Royal Dutch Airlines (62 ITJ 268) (Delhi ITAT).
7.19 It was reiterated that it was the bona fide belief of the Bank that it was not liable to deduct tax at source in respect of LTC provided to employees. In other words, the Bank had deducted appropriate tax at source on the basis of the prevalent law and there was no default on the part of the Bank in deducting tax at source. Accordingly, the Bank cannot be held to be an assessee in default within the meaning of section 201.
7.20 Without prejudice to the above, it was submitted that if at all the LTC payments involving a foreign leg are to be held as taxable, the employee is entitled for exemption under section 10(5) to the extent of expenses incurred for travel in India where the employee’s designated place is in India and he actually visits the place as designated.
7.21 Without prejudice to the above, the Bank submits that if at all the LTC payments are to be held as taxable, the TDS liability of the bank should be computed by applying the actual income-tax rate applicable in case of each employee and not at a flat rate of 30% as considered by the leaned ACIT.
7.22 Without prejudice to the above, it was submitted that if at all the LTC payments are to be held as taxable and TDS liability is to be computed, the interest on the same should be computed on the basis of actual date of payment of LTC to the employees and not for entire period of 35 months (i.e. from 1 April 2011 to 28 February 2014) as done by the learned ACIT.
8. The ld DR is heard who has vehemently argued the matter and submitted that the matter is squarely covered by the decisions of the Tribunal as referred in the ld CIT(A)’s order.
9. We have heard the rival submissions and perused the material available on record. The facts of the case are pari-materia with the decision of the Coordinate Bench in case of SBI v. DCIT, TDS, Kanpur (supra) wherein the relevant findings are as under:
“8. Having carefully examined the orders of the lower authorities in the light of the rival submissions and the documents placed on record, we find that as per provisions of section 10(5) of the Act, only that reimbursement of travel concession or assistance to an employee is exempted which was incurred for travel of the individual employee or his family members to any place in India. Nowhere in this clause it has been stated that even if the employee travels to foreign countries, exemption would be limited to the expenditure incurred to the last destination in India. For the sake of reference, we extract the provisions of section 10(5) of the Act as under:—
10. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included—
[(5) in the case of an individual, the value of any travel concession or assistance received by, or due to, him,—
(a)   from his employer for himself and his family, in connection with his proceeding on leave to any place in India ;
(b)   from his employer or former employer for himself and his family, in connection with his proceeding to any place in India after retirement from service or after the termination of his service,
subject to such conditions as may be prescribed (including conditions as to number of journeys and the amount which shall be exempt per head) having regard to the travel concession or assistance granted to the employees of the Central Government:
9. On perusal of this section, we are of the view that this provision was introduced in order to motivate the employees and also to encourage tourism in India and, therefore, the reimbursement of LTC/LFC was exempted, but there was no intention of the Legislature to allow the employees to travel abroad under the garb of benefit of LTC available by virtue of section 10(5) of the Act. Undisputedly, in the instant case the employees of the assessee have travelled outside India in different foreign countries and raised claim of their expenditure incurred therein. No doubt, the assessee may not be aware with the ultimate plan of travel of its employees, but at the time of settlement of the LTC/LFC bills, complete facts are available before the assessee as to where the employees have travelled, for which he has raised the claim; meaning thereby the assessee was aware of the fact that its employees have travelled in foreign countries, for which he is not entitled for exemption under section 10(5) of the Act. Thus, the payment made to its employees is chargeable to tax and in that situation, the assessee is under obligation to deduct TDS on such payment, but the assessee did not do so for the reasons best known to it. We have also carefully examined the Circular placed by the ld. counsel for the assessee during the course of hearing, in which a reference was made to the interim order of the Hon’ble Madras High Court dated 16.2.2015. Through the interim order, the Hon’ble Madras High Court has permitted the bankers not to deduct TDS on or after 16.2.2015 on the amount paid/reimbursed to the employees of the bank in respect of LTC/HTC availed where the employee has visited a foreign city/country, irrespective of the fact whether the LFC bills were submitted and paid prior to 16.2.2015; meaning thereby this Circular was passed consequent to the interim order of the Hon’ble Madras High Court. But in the present case, the journey was undertaken in the year 2012 and the bills were settled during that year; meaning thereby at the relevant point of time when the bills were settled, there was no order of the Hon’ble Madras High Court and the assessee was under obligation to deduct TDS on the reimbursement of expenditure incurred by the assessee on foreign travel. In the light of these facts, we are of the considered opinion that the Revenue has rightly held the assessee to be in default, as the assessee has not deducted TDS intentionally on the reimbursement of expenditure incurred on LTC/LFC. Moreover, the ld. CIT(A) has directed the Assessing Officer to recalculate the liability of TDS at 10%. We, therefore, find no infirmity in the order of the ld. CIT(A) and we confirm the same.”
10. Similarly, the decision of the Coordinate Bench in case of Om Prakash Gupta v. ITO (supra) also supports the case of the Revenue wherein the Coordinate Bench has held as under:
“12. The said sub-section provides that where an individual had received travel concession or assistance from his employer for proceeding on leave to any place in India, both for himself and his family, then such concession received by the employee is not taxable in the hands of the employee. Similar exemption is allowed to an employee proceeding to any place in India after retirement of service or after the termination of his service. The provisions of the Act are in relation to the travel concession/assistance given for proceeding on leave to any place in India and the said concession is thus exempt only where the employee has utilized the travel concession for travel within India. Further under Rule 2B of the Income Tax Rules the condition for allowing exemption under section 10(5) of the Act are laid down. The conditions are in respect of various modes of transport. However, the basic condition is that the employee is to utilize the travel concession in connection with his proceeding to leave to any place within India, either during the course of employment or even after retirement of service or after termination of service. Reading of section 10(5) of the Act and Rule 2B of the Rules in conjunction lays down the guidelines for claiming exemption in relations to the travel concession received by an employee from his employer or former employer, for proceeding on leave to any place in India. The person is to undertake the journey to any place in India and thereafter return to the place of employment and is entitled to reimbursement of expenditure on such travel between the place of employment and destination in India. Rule 2B of the Rules further lays down the conditions that the amount to be allowed as concession is not to exceed the air economy fair of the National Carrier by the shortest route to the destination in India. The said condition in no way provides that the assessee is at liberty to claim exemption out of his total ticket package spent on his overseas travel and part of the journey being within India. We find no merit in the claim of the assessee in the present case and we are in conformity with the observation of the CIT (Appeals) in this regard, which has been reproduced by us in the paras hereinabove. In view thereof, we reject the claim of the assessee of exemption under section 10(5) of the Act. The ground of appeal No. 3 raised by the assessee is thus dismissed.”
11. No contrary authority has been brought to the notice of the Bench. We, therefore, donot see any reason to deviate from the said view taken by the Coordinate Benches. In the result, the grounds no. 1-6 of the assessee’s appeal are dismissed.
12. Regarding ground no. 7, it is noted that the ld CIT(A) has already held that flat rate of 30% applied by AO in each case for computation of TDS liabilityis not in accordance with the provisions of section 192 and the AO has been directed to compute TDS in case of each employee according to the tax slab in which each employee falls. This ground is thus infructuous and is hereby dismissed.
13. Regarding ground no. 8, the ld CIT(A) has already the AO to compute interest u/s 201(1A) with reference to the actual date of payment of LTC in each case. This ground is thus infructuous and is hereby dismissed.
14. In the result, we confirm the findings of the ld CIT(A) and the appeal of the assessee is dismissed.
The facts of the case are pari-materia with the facts as noted in ITA No. 145/JP/17 and our findings contained therein shall mutatis-mutandis in this appeal as well. In the result, the appeal of the assessee is dismissed.
In terms of quantum of tax demand raised in both the years under considerations, we direct the AO to give effect to the directions as contained in the ld CIT(A) order, if its not done already, regarding applying the correct rate of tax for determining the TDS liability as well as the period for which interest is payable on such TDS liability and recompute the tax and interest demand for both the years under consideration and serve the revised demand notice to the assessee for both the years under consideration. In the interim, no coercive steps shall be undertaken by the Department. With above directions, the stay petitions are disposed off.
In the result the appeals filed by the assessee for the both the years are dismissed and the stay petitions are disposed off with above directions.

Ashtavakra Gita…The True Knower

Posted on by Business So Simple in Miscellaneous

Ashtavakra said:

17.18

The sage is not conflicted by
states of stillness and thought.
His mind is empty.
His home is absolute.

17.19

Though he may perform actions,
the man of Knowledge 
does not act.
Desires extinguished, 
free of thoughts of “I” and “mine,”
he knows with absolute certainty  that nothing exists.

17.20

The sage is free.
His empty mind no longer projects delusion, dreaming, dullness.
This state is indescribable.

TDS on payment under joint development agreement w.e.f. 01 April 2017

Posted on by Business So Simple in Miscellaneous


TDS on payment under joint development agreement w.e.f. 01 April 2017

As per Section 194-IC of Income Tax Act, 1961 (Inserted by the Finance Act, 2017, w.e.f. 1-4-2017 ) Any person responsible for paying to a resident any sum by way of consideration (not being consideration in kind) under a joint development agreement, is responsible for tax deduction under section 194-IC.



1. Who is responsible for tax deduction : Any person responsible for paying to a resident any sum by way of consideration (not being consideration in kind) under a joint development agreement, is responsible for tax deduction under section 194-IC.

·    2.Time of tax deduction– Tax is deductible at the time of credit of such sum to the account payee or at the time of payment thereof in cash or by issue a cheque/draft or any other mode, whichever is earlier.

·   3. Rate of deduction– Tax is deductible at the rate of 10 per cent. If PAN of recipient is not available, tax is deductible at the rate of 20 percent.

·    4. Threshold limit – NIL

·   5. Meaning of joint development agreement- It is a registered agreement in which a land owner (i.e, a person who owns land or building or both) agrees to allow another person to develop a real estate project on such land or building or both, in consideration of a share (being  land or building or both) in such project, whether with or without payment of part of the consideration in cash. 


Extract of section 194-IC of Income Tax Act, 1961 is given below for reference: 

Payment under specified agreement.

194-IC. Notwithstanding anything contained in section 194-IA, any person responsible for paying to a resident any sum by way of consideration, not being consideration in kind, under the agreement referred to in sub-section (5A) of section 45, shall at the time of credit of such sum to the account of the payee or at the time of payment thereof in cash or by issue of a cheque or draft or by any other mode, whichever is earlier, deduct an amount equal to ten per cent of such sum as income-tax thereon. ]

GST: FAQs Series 10 (Registration)

Posted on by Business So Simple in Miscellaneous

Registration …continue


Q 31. Can a tax payer have multiple ISDs?

Ans. Yes. Different offices of a tax payer can apply for ISD registration.

Q 32. What could be the liabilities (in so far as registration is concerned) on transfer of a business?

Ans. The transferee or the successor shall be liable to be registered with effect from such transfer or succession and he will have to obtain a fresh registration with effect from the date of such transfer or succession. (Section 22(3)).

Q 33. Whether all assesses / dealers who are already registered under existing central excise/service tax/ vat laws will have to obtain fresh registration?

Ans. No, GSTN shall migrate all such assessees/dealers to the GSTN network and shall issue a provisional registration certificate with GSTIN number on the appointed day, which after due verification by the departmental officers within six months, will be converted into final registration certificate. For converting the provisional registration to final registration the registrants will be asked to submit all requisite documents and information required for registration in a prescribed period of time. Failure to do so will result in cancellation of the provisional GSTIN number.

The service tax assesses having centralized registration will have to apply afresh in the respective states wherever they have their businesses.


Q 34. Whether the job worker will have to be compulsorily registered?

Ans. No, a Job worker is a supplier of services and will be obliged to take registration only when his turnover crosses the prescribed threshold of 20/10 Lakhs.


Q 35. Whether the goods will be permitted to be supplied from the place of business of a job worker?

Ans. Yes. But only in cases where the job worker is registered, or if not, the principal declares the place of business of the job worker as his additional place of business.


Q 36. At the time of registration will the assessee have to declare all his places of business?

Ans. Yes. The principal place of business and place of business have been separately defined under section 2(89) & 2(85) of the CGST/SGST Act respectively. The taxpayer will have to declare the principal place of business as well as the details of additional places of business in the registration form.


Q 37. Is there any system to facilitate smaller dealers or dealers having no IT infrastructure?

Ans. In order to cater to the needs of tax payers who are not IT savvy, following facilities shall be made available: –

Tax Return Preparer(TRP): A taxable person may prepare his registration application /returns himself or can approach the TRP for assistance. TRP will prepare the said
registration document / return in prescribed format on the basis of the information furnished to him by the taxable person. The legal responsibility of the correctness of
information contained in the forms prepared by the TRP will rest with the taxable person only and the TRP shall not be liable for any errors or incorrect information.

Facilitation Centre (FC): shall be responsible for the digitization and/or uploading of the forms and documents including summary sheet duly signed by the Authorized
Signatory and given to it by the taxable person. After uploading the data on common portal using the ID and Password of FC, a print-out of acknowledgement will be taken and signed by the FC and handed over to the taxable person for his records. The FC will scan and upload the summary sheet duly signed by the Authorized Signatory

Q 38. Is there any facility for digital signature in the GSTN registration?

Ans. Tax payers would have the option to sign the submitted application using valid digital signatures. There will be two options for electronically signing the application or other submissions- by e-signing through Aadhar number, or through DSC i.e. by registering the tax payer’s digital signature certificate with GST portal. However, companies or limited liability partnership entities will have to sign mandatorily through DSC only. Only level 2 and level 3 DSC certificates will be acceptable for signature purpose.


Q 39. What will be the time limit for the decision on the on line registration application?

Ans. If the information and the uploaded documents are found in order, the State and the Central authorities shall have to respond to the application within three common
working days. If they communicate any deficiency or discrepancy in the application within such time, then the applicant will have to remove the discrepancy / deficiency
within 7 days of such communication. Thereafter, for either approving the application or rejecting it, the State and the Central authorities will have 7 days from the date when the taxable person communicates removal of deficiencies. In case no response is given by the departmental authorities within the said time line, the portal shall automatically generate the registration.


Q 40. What will be the time of response by the applicant if any query is raised in the onlineapplication?

Ans. If during the process of verification, one of the tax authorities raises some query or notices some error, the same shall be communicated to the applicant and to the
other tax authority through the GST Common Portal within 3 common working days. 

The applicant will reply to the query/rectify the error/ answer the query within a period of seven days from the date of receipt of deficiency intimation. On receipt of additional document or clarification, the relevant tax authority will respond within seven common working days from the date of receipt of clarification.

Disclaimer:

This FAQ on GST compiled by NACEN and vetted by the Source Trainers is based on the CGST/SGST/UTGST/IGSTAct(s). This FAQ is for training and academic purposes only.

The information in this blogger is reproduced from FAQ on GST publised by CBEC updated on 31 March 2017 and is not intended to be treated as legal ad vice or opinion. For greater details, you are requested to refer to the respective CGST/SGST/UTGST/IGST Acts.

The FAQs refer to CGST and SGST Acts as CGST/SGST as CGST Act and SGST Act are identical in most of the provisions. CGST Act has been introduced in the Parliament. The SGST Acts will be passed by respective state legislatures. A few provisions may be specific to state and may not be in CGST Act.