Income Tax Law Updates
Case Laws/Judgement:
ACIT Vs Credit Suisse AG (ITAT Mumbai) Date of Order 03/08/2022
Hon’ble ITAT held that provisions of section 115JB of the Income Tax Act cannot be made applicable to a foreign company. The Article 7(1) of the treaty prescribes that profits that were attributable to the PE would be taxable in India. The manner in which the ld. AO had applied the provisions has the effect of not only bringing to tax the profits that are not attributable to the PE but also has the effect of taxing the other items not in accordance with the provisions of other Articles of the treaty.
Hon’ble Supreme Court held in above Judgement that Bad debt not allowable if not satisfies ingredients of Section 36(1)(vii) & Section 36(2). The court is of the opinion that in the facts of this case, the judgment in Southern Technologies on this issue (where the claim of bad and doubtful debt was disallowed) is appropriate, and applicable. The relevant extract of the said judgment is as follows: “44. As stated above, Section 36(1)(vii) after 1.4.1989 draws a distinction between write off and provision for doubtful debt. The IT Act deals only with doubtful debt. It is for the assessee to establish that the provision is made as the loan is irrecoverable. However, in view of Explanation which keeps such a provision outside the scope of “written off” bad debt, Section 37 cannot come in. If an item falls under Sections 30 to 36, but is excluded by an Explanation to Section 36 (1) (vii) then Section 37 cannot come in. Section 37 applies only to items which do not fall in Section 30 to 36. If a provision for doubtful debt is expressly excluded from Section 36 (1) (vii) then such a provision cannot claim deduction under Section 37 of the IT Act even on the basis of “real income theory” as explained above.” In view of the foregoing discussion, the Revenue’s appeal has to succeed. The impugned judgement of the High Court and the order of ITAT are hereby set aside.
Hon’ble ITAT held that the PCIT cannot direct initiation of penalty proceedings because penalty proceedings are not part of assessment proceedings. Thus, the PCIT’s revisionary decision relating to non-initiation/incorrect initiation of penalty which without holding that assessment order passed by the AO as erroneous and prejudicial to the interest of revenue is vague and bad in law. 8. Respectfully, following the jurisdictional High Court in the case of “CIT Vs. Keshrimal Parasmal”, we hold that the PCIT is not entitled to direct the AO to initiate penalty proceedings. Accordingly, the order passed under s. 263 is quashed.
Hon’ble Supreme Court held that there was no valid satisfaction under section 151. The notices under section 148 of the Act, 1961 and the reassessment orders, if any, passed by the Assessing Officer and all consequential proceedings are hereby quashed. Writ petition is dismissed in as much as recording of satisfaction by the PCIT and issuance of notice under section 148 by the Assessing Officer are simultaneous.
Goods and Services Tax Law Updates:
Case Laws/Judgement:
CBIC Circular No.180/12/2022-GST dated 09-09-2022
Guidelines for filing/revising TRAN-1/TRAN-2 in terms of order dated 22.07.2022 & 02.09.2022 of Hon’ble Supreme Court in the case of Union of India vs. Filco Trade Centre Pvt. Ltd. -reg.
CBIC INSTRUCTION No. 04/2022-23 [GST – Investigation] dated 01-09-2022
Guidelines for launching of prosecution under the Central Goods & Services Tax Act, 2017
Hon’ble High Court held that the specific issue raised relates to the levy of interest u/s 50 of the Act in a situation where the petitioner has not filed its returns of turnover for a particular period and the remittance of taxes for the aforesaid periods is admittedly belated. The petitioner argues that no interest need be levied on the strength of the balances lying to its credit in the ECR and ECrR. This peculiar issue has not been decided in any of the decisions cited, and on the basis of the detailed discussion as above, I hold this issue, adverse to the petitioner.
Hon’ble High Court held that on due consideration and following the above, we are of the view that respondent No.1 i.e., Telangana State Authority for Advance Ruling was not justified in rejecting the application of the petitioner vide the order dated 03.06.2022. Accordingly the said order dated 03.06.2022 is set aside and quashed. Respondent No.1 is directed to take on board the application filed by the petitioner on 11.05.2019 and pass an appropriate order thereon under sub-section (4) of Section 98 of the CGST Act after giving due opportunity of hearing to the petitioner. The above exercise shall be carried out within a period of two months from the date of receipt of a copy of this order.
Updates from Other Laws:
Notification/Case Laws/Judgement:
RBI Press Release: 2022-2023/835 dated 07-09-2022
RBI issues Alert List of entities not authorised to deal in forex and to operate electronic trading platforms for forex transactions: The Reserve Bank of India (RBI), vide press release dated February 03, 2022, had cautioned the public not to undertake forex transactions on unauthorised electronic trading platforms (ETPs) or remit/deposit money for unauthorised forex transactions. The List of unauthorised forex trading platforms is here.
Weekly Newsletter Income Tax, GST and Other Law [1st Week, September 2022]
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