Income Tax Law Updates:

District Co-Operative Central Bank Ltd. v. Asstt. CIT [ITAT, BANGALORE dated 30-03-2021:

The Hon’ble ITAT, Bangalore held that all details regarding deduction claimed under section 36(1)(viia) were available with AO during the course of original assessment proceedings. Also reasons recorded for reopening of assessment suggested that there was no failure on part of assessee to fully and truly disclose all material facts necessary for assessment. Further, reasons recorded revealed that, there had been no new material available with AO which could justify reopening of a concluded assessment beyond period of 4 years. Accordingly, reopening was hit by proviso to section 147 and was, therefore, set aside.

 

Hothur Traders v. Asstt. CIT [ITAT, Bangalore dated 25-03-2021]

Hon’ble ITAT held that assessee had received the amount in the course of its business, which was originally treated as an advance. These deposits were neither claimed nor returned to the party concerned. There was no dispute that impugned amount was received in the normal course of business of assessee, the amount was written off by other party, who had given this to assessee and there was no necessity of fulfilment of contract which was originally entered by assessee as ILC Industries Limited had written it off. Though amount received originally was not of income nature, the amount remained with assessee for a long period unclaimed by the third parties, i.e., ILC Industries Limited and become definite trade surplus and was, therefore, to be treated as taxable income under section 41(1).

 

Hero Motocorp Ltd. v. Addl. CIT [ITAT, Delhi dated 13-01-2021]

Hon’ble Delhi ITAT held that there were three rates: (i) rate at which power was purchased from State Electricity Board, (ii) the cost of production of power by the eligible unit of assessee and mark up thereon (iii) the rate at which power was supplied by independent party to its ancillary unit. Accordingly, there were multiple basket of the market rates and where multiple options for the price of a product are available, then option which is most favourable to assessee needs to be adopted for the purposes of determining inter-unit transfer price under section 80-IA(8). Further, it is not the case of revenue that power cost incurred by assessee was inflated or incorrect. In that view of the matter, considering that three different prices for supply of power were available in the market, method adopted by assessee to compute inter-unit transfer price by imputing a reasonable mark-up on its cost of production, which was less than the rate charged by independent party, was quite reasonable for the purposes of computing deduction under section 80-IA.

 

Interworld Shipping Agency LLC v. Dy. CIT [ITAT, Mumbai dated 30-04-2021]

Hon’ble ITAT held that assessee company had its office in UAE, it was in business there since 2000, it had expatriate emloyees who were given a work permit to work in UAE for assessee company, the main driving force of the company and its director was an expatriate resident in UAE. Therefore, inferences drawn by AO were unsustainable in law, as there was reasonable material on record to substantiate stand of assessee that assessee company was incorporated in UAE, and was managed and controlled wholly in UAE. Accordingly, assessee company was a resident of UAE, in terms of requirements of article 4(1)(b) of Indo-UAE DTAA and, that the limitation on benefits of provisions of article 29 of Indo-UAE DTAA could not be pressed into service and that assessee was eligible for tax treaty protection, in respect of its income earned in India, under Indo-UAE DTAA. AO was directed accordingly.

 

ACIT VS PC Jewellers Ltd [ITAT Delhi dated 07-12-2021]

The Delhi Tribunal in case of ACIT VS PC Jewellers Ltd (decision dated 7 Dec 21) held that education cess is allowable as deduction u/s 37 of the Act being a statutory impost. Plea was raised by way of an additional ground before the Tribunal which was admitted and adjudicated by the Tribunal.

 

Delhi High Court quashed the reassessment notice U/s 148 issued after 01/04/2021

Hon’ble Delhi High Court held that Explanations A(a)(ii)/A(b) to Notifications dated 31st March, 2021 and 27th April, 2021 are declared to be ultra vires Relaxation Act, 2020 and are therefore bad in law and null and void. Consequently, impugned reassessment notices issued under Section 148 are quashed & Assessee’s petitions allowed.

 

Goods and Services Tax Law Updates:

CGST Circulars No.167/23/2021-CGST dated 17-12-2021

Clarification on GST on service supplied by restaurants through e-commerce operators.

 

CGST Circulars No.166/22/2021-CGST dated 17-11-2021

Clarification on certain refund related issues.

 

CGST Circulars No.165/21/2021-CGST dated 17-11-2021

Clarification in respect of applicability of Dynamic Quick Response (QR) Code on B2C invoices and compliance of notification 14/2020- Central Tax dated 21st March, 2020.

 

CGST Notification (C.T) No.39/2021–Central Tax dated 21-12-2021

In exercise of the powers conferred by clause (b) of sub-section (2) of section 1 of the Finance Act, 2021 (13 of 2021), the Central Government hereby appoints the 1st day of January, 2022, as the date on which the provisions of sections 108, 109 and 113, 114, 115, 116, 117, 118, 119, 120, 121 and 122 of the said Act shall come into force.

 

CGST Notification (C.T) No.38/2021–Central Tax dated 21-12-2021

Aadhaar authentication shall be mandatory w.e.f. 01.01.2022 for specified purposes. The Central Government, hereby notifies the 1st day of January, 2022, as the date from which the provisions of sub-rule (2), sub-rule (3), clause (i) of sub-rule (6) and sub-rule (7) of rule 2 of the said rules, shall come into force.

 

Nitin Bapusaheb Patil [MAHARASHTRA-AAR dated 22-12-2021]

The MAHARASHTRA-AAR has pronounced Ruling as under:

Question No.1: Whether the Turmeric (Turmeric in Whole form – not in powder form) is covered under the definition of Agriculture Produce and exempted from GST? If not, what is the HSN code of Turmeric and the rate of GST on the Turmeric?

Answer:- Dried and Polished Turmeric as in the instant case, is not covered under the definition of Agriculture Produce and is not exempted from GST. The HSN code of the impugned product is 0910 30 20 and the rate of GST is 5% (2.5% each of CGST and SGST)

Question No.2: Whether services rendered by Applicant as a Commission Agent in APMC, Sangli are liable to GST in terms of SI. 54 Heading 9986 of Notification No.12/2017 CT(R) dated 28.06.2017 read with SI. No. 24 of Notification No. 11/2017-C.T. (Rate) dated 28.06.2017?

Answer:- The impugned services rendered by the applicant are taxable under GST and not exempt terms of SI. 54 Heading 9986 of Notification No.12/2017 CT(R) dated 28.06.2017 read with SI. No. 24 of Notification No. 11/2017-C.T. (Rate) dated 28.06.2017

Question No.3: Whether the applicants required to be registered under the CGST Act, 2017 for his activities specified under Annexure-l? If yes, under which section of the GST Act, he is required to be registered?

Answer:- The applicant is required to be registered under the relevant provisions of the CGST Act, 2017 for his impugned activities.

 

MH Ecolife E-Mobility Pvt. Ltd. [MAHARASHTRA-AAR dated 22-12-2021]

The MAHARASHTRA-AAR has pronounced Ruling as under:

Question 1 : Whether services provided by the applicant to NMMT under the Agreement, by way of supplying, operating and maintaining air-conditioned electrically operated buses are ;taxable and subject to GST?

Answer: Answered in the affirmative, as discussed above.

Question 2: If the answer to (i) above is yes, what will be appropriate SAC (Services Accounting Code) for classifying the services provided by the applicant and applicable GST rate thereon?

Answer: As discussed above, the appropriate SAC (Services Accounting Code) for classifying the services provided by the applicant is Tariff Heading 9966. The rate of GST is 12% (with availment of ITC) or 5% (without availment of ITC), as discussed above.

Question 3: Whether Applicant shall be eligible to avail the input tax credit of tax paid on the procurement of input supplies used in supplying services to NMMT under the Agreement?

Answer: The Applicant shall be eligible to avail the input tax credit of tax paid on the procurement of input supplies used in supplying services to NMMT under the Agreement only if they pay tax @ of 12% on output service, as discussed above.

 

Bio-Rad Laboratories India Ltd.- [KARNATAKA-AAR dated 17-12-2021]

The KARNATAKA-AAR has pronounced Ruling as under:

The ‘diagnostic and laboratory reagents’ imported and supplied by the applicant and classified under heading 3822 of the Customs Tariff Act, 1975 are covered under Entry No. 80 of Schedule II to the Notification No.1/2017-Integrated Tax (Rate) dated 28.06.2017 attracting a levy of Integrated Tax at the rate of 12%, in terms of the clarification issued vide para No.10 of the Circular No. 163/19/2021-GS7’ dated 6th October, 2021.

 

Shapoorji Pallonji and Company Pvt. Ltd.- [KARNATAKA-AAR dated 17-12-2021]

The KARNATAKA-AAR has pronounced Ruling as under:

a) The combined service of setting up of Wet Limestone FGD plant and operation & maintenance of the said plant can’t be considered as a composite supply,

b) The question (a) above is answered in negative and hence this question is redundant.

c) The impugned supply is not considered as a composite supply and hence this question is also redundant.

d) The setting up of FGD plant merits classification under SAC 995429 and attracts GST at the rate of 12%, in terms of entry No.3(iv)(e) of the Notification No.11/2017-Central Tax (Rate) dated 28.06.2017. Further the Operation & Maintenance of the FGD plant merit classification under SAC 9985, as “Business Support” service and attracts GST at the rate of 18%, in terms of entry No.23(iii) of the Notification No.11/2017-Central Tax (Rate) dated 28.06.2017.

 

Indiana Engineering Works (Bombay) Pvt. Ltd.- [MAHARASHTRA-AAR dated 16-12-2021]

The MAHARASHTRA-AAR has pronounced Ruling as under:

Question 1: – Whether Electricity charges and Water charges paid by the Applicant as per meter reading and collected from the recipients at actual on reimbursement basis are liable to GST?

Answer:- Answered in the affirmative.

Question 2: – In the above scenario, whether the Appellant acts as a Pure Agent?

Answer:- Answered in the Negative.

Question 3: Is the Applicant liable to add value of Electricity and Water charges to the monthly License Fee if as per terms of the contract tenant user is paying for such utility services directly to the Service Provider i.e. Electricity Power Distributorl BMC, as the case may be, even though Electric and Water meters continue to remain in the name of the Applicant.

Answer:- As the facts of the case do not lead to or show or mention such a situation, therefore, a hypothetical question based on mere assumptions (without proper underlying facts) cannot be answered.

 

Integrated Decisions and Systems India Pvt. Ltd.- [MAHARASHTRA-AAR dated 16-12-2021]

The MAHARASHTRA-AAR has pronounced Ruling as under:

Question 1: – Whether part recovery of renting of motor vehicles services / cab services from employees in respect of the transport facility provided to them would be treated as supply as per provision of GST and whether GST is leviable on the same?

Answer:- Answered in the negative.

Question 2: – If answer to question no. 1 is yes, then how the value of said supply will be determined keeping in mind that employee and the applicant are related party as per provisions of GST law?

Answer:- Not answered in view of answer to Question No. 1 above.

Question 3: – Further also if the answer to question no 1 is yes, then whether Input Tax Credit is admissible in respect of GST paid on inward supply of renting of motor vehicles service which are used for employees?

Answer:- Not answered in view of answer to Question No. 1 above.