TMI Tax Updates - e-Newsletter
February 1, 2021

Case Laws in this Newsletter:

TMI SMS

• Valuation - GST - Independent transaction of purchase of land and construction contract for construction on such land - Interim relief granted - HC

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• The activity of job work of fabrication with bullet proof work done on chassis provided by the Principal is a supply of Service - GST @ 18% - AAR

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News

1. Module wise new functionalities deployed on the GST Portal for taxpayers.

2. The Insolvency and Bankruptcy Board of India organises a Workshop on “Committee of Creditors: An Institution of Public Trust”.

3. Telangana gets additional ₹ 179 crore for capital expenditure ; Additional amount is given as incentive for completing reforms in three out of four citizen-centric areas

4. Sovereign Gold Bond Scheme 2020-21 (Series XI) – Issue Price

Notifications

Customs

1. 04/2021 - dated 30-1-2021 - ADD

Seeks to impose anti-dumping duty on import of ‘Front Axle Beam’ and ‘Steering Knuckles’ originating in or exported from China for a period of thirty months

2. 08/2021 - dated 29-1-2021 - Cus (NT)

Tariff Notification in respect of Fixation of Tariff Value of Edible Oils, Brass Scrap, Poppy Seed, Areca nut, Gold & Silver

3. 12/2021-Customs (N.T./CAA/DRI) - dated 27-1-2021 - Cus (NT)

Seeks to amendment in Notification No. 19/2017-Customs (N.T./CAA/DRI) dated 24.11.2017

4. 11/2021-Customs (N.T./CAA/DRI) - dated 27-1-2021 - Cus (NT)

Seeks to amendment in Notification No. 12/2017-Customs (N.T./CAA/DRI) dated 24.10.2017

5. 10/2021-Customs (N.T./CAA/DRI) - dated 27-1-2021 - Cus (NT)

Seeks to amendment in Notification No. 4/2017-Customs (N.T./CAA/DRI) dated 30.01.2017

GST - States

6. CCST Ref. No.CCW/GST/74/2015 - dated 28-1-2021 - Andhra Pradesh SGST

Extension of the time limit for furnishing of the annual return specified under section 44 of APGST Act, 2017 for the financial year 2019-20 till 28.02.2021

7. G.O.MS. No. 6 - dated 7-1-2021 - Andhra Pradesh SGST

Andhra Pradesh Goods and Services Tax (Twelfth Amendment) Rules, 2020.

8. CCST Ref.No.CCW/GST/74/2015 - dated 29-12-2020 - Andhra Pradesh SGST

Amendment to proceedings of CCT’s Ref. No.CCW/GST/74/2015-A-1, dated 30-6-2017

9. CCST Ref. No. CCW/GST/74/2015 - dated 29-12-2020 - Andhra Pradesh SGST

Rescind of Proceedings issued in CCST Ref.No.CCW/GST/74/2015, dated 04-11-2020

10. 87/2020 – State Tax - dated 27-1-2021 - Delhi SGST

Extend the due date for furnishing of FORM ITC-04 for the period July- September 2020 till 30th November, 2020

11. 79/2020-State Tax - dated 11-1-2021 - Jharkhand SGST

Jharkhand Goods and Services Tax (Twelveth Amendment) Rules, 2020.

12. FIN/REV-3/GST/1/08(Pt-1)(Vol.II)/26 - dated 1-12-2020 - Nagaland SGST

Amendment in Notification No. F. No. FIN/REV-3/GST/1/08(Pt-1)/452 dated the 13th September 2017

13. FIN/REV-3/GST/1/08(Pt-1)(Vol.II)/25 - dated 29-11-2020 - Nagaland SGST

Seeks to waive penalty payable for non compliance

14. FIN/REV-3/GST/1/08(Pt-1)(Vol.II)/24 - dated 10-11-2020 - Nagaland SGST

Amendment in Notification No. FIN/REV-3/GST/1/08(Pt-1)(Vol.1)/65 dated 21st March 2020

15. FIN/REV-3/GST/1/08(Pt-1)(Vol.II)/20 - dated 10-11-2020 - Nagaland SGST

Seeks to bring in force Section 7 of the Nagaland Goods and Services Tax (Amendment) Act, 2019

Highlights / Catch Notes

GST

• Greenfield Public Street Lighting classified as 'supply of goods,' not 'works contract' under applicable regulations.

  Case-Laws - AAR : Classification of supply - Works Contract Services or not - activities of supply installation, operation and maintenance of Greenfield Public Street Lighting System (GPSLS) carried out by the Applicant - The primary activity of the applicant is therefore, ‘supply of goods’ and not ‘supply of services’. Further, the said activity performed by the applicant is not related to the immovable property at any point of the time and hence the said activity does not qualify to be a ‘works contract’. - AAR
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• Odisha Government's Capital Subsidy for Street Lighting Considered GST Consideration u/s 2(31) CGST Act.

  Case-Laws - AAR : Levy of GST - Capital Subsidy (90 per cent of Project Capital Expenditure) received by the Applicant as per SIOM Agreement and Escrow Agreement from Odisha Government /ULBs for the Green Field Public Street Lighting System in the State of Odisha - The so called ‘capital subsidy’ cannot be a ‘subsidy’ by any stretch of the imagination, rather the same is a consideration as defined in Section 2(31) of the CGST Act in relation to the supply of goods and therefore, the said ‘capital subsidy’ shall certainly be liable to be included in the Transaction Value - AAR
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• Bulletproof Vehicle Modifications Classified as Service; Subject to 18% GST Under Fabrication and Bulletproofing Rules.

  Case-Laws - AAR : Classification of supply of service - activity of bullet proof body building (in addition to fixing bullet proof windshield glass, bullet proofing of engine and fuel tank on the motor vehicles (2.5 Ton capacity) having Tarpaulin cover in the cargo compartment - the activity of job work consisting of fabrication including of bullet proof work done on chassis provided by the Principal (ownership of which always remains with Principal) is a supply of Service attracting GST @ 18%. - AAR
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• Court Allows Interim Relief in Land Purchase and Bungalow Construction Case; Applicant to Deposit Tax Amount Pending Writ Outcome.

  Case-Laws - HC : Valuation - Independent transaction of purchase of land and construction contract for construction of bungalow on such land - Interim relief granted - We permit the writ applicant to deposit the amount of tax as raised under the invoice without prejudice to his rights and contentions as raised in this writ application. - HC
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• High Court Overturns Order Due to Lack of Evidence on E-way Bill Reuse Allegations; Jurisdictional Overreach Noted.

  Case-Laws - HC : Seizure of Goods - allegation of reuse of E-way bills - The appeal authority had no jurisdiction to examine fresh evidence at the behest of the revenue or record fresh reasons to support original order. The proper authority, had not recorded any reason to establish evasion of tax or attempt to evade tax or even reuse of the documents by the petitioner. Though he raised that issue in the seizure proceedings, he did not record any finding that effect in the final order - No useful purpose would be served to remand the proceeding now as that would amount to giving the revenue a second inning to built a fresh case - Order set aside - HC
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Income Tax

• High Court Clarifies Tax Treatment of Carbon Credit Receipts u/s 115BBG, Allowing Assessees to Benefit Despite Past Uncertainty.

  Case-Laws - HC : Deduction u/s 80IA - Treatment to carbon credit receipt - Section 115BBG of the Act was introduced by Finance Act, 2017 with effect from 01.04.2018, prior to which, there was no such provision - assessees were under utter confusion as to under which provision of the Act, they should make a claim for deduction and having left with no other option, had been making the claim u/s 80IA - merely because the assessee due to uncertainty in the legal position, had made a claim under Section 80IA of the Act that cannot be a reason to deny a benefit granted in favour of the assessee. - HC
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• Income Tax Commissioner correctly removes addition by Assessing Officer; foreign commission expenses not technical service fees.

  Case-Laws - AT : TDS u/s 195 - foreign commission expenses - CIT (A) has rightly deleted the addition made by the AO u/s 40(a)(ia) of the Act treating the same being not covered under the ambit of fee for technical services u/s 9 or 195 of the Act. - AT
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• Section 80IAB: Lease rental income from SEZ development qualifies for deduction as business profits under Income Tax Act.

  Case-Laws - AT : Deduction u/s. 80IAB - developing SEZ by itself is the business contemplated u/s. 80 IAB of the Act and the SEZ itself provides that the lease rental income generated in the hands of a developer engaged in setting up of the SEZ, is the profits and gains derived from the business of developing a SEZ. - AT
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• Section 115JB Book Profits: Compute Independently from Section 14A and Rule 8D for Correct Tax Adjustments.

  Case-Laws - AT : Adjustment to the book profits on section 115 JB on Addition made u/s 14A - the computation under clause (f) of explanation 1 to section 115 JB (2) of the Act has to be made without resorting to the computation as contemplated under section 14A of the Act read with Rule 8D of the Rules. - AT
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• Section 68 Income Tax Case: Unexplained Income Additions Deleted to Avoid Double Taxation in Share Application Money.

  Case-Laws - AT : Unexplained Income - addition u/s 68 - Receipt of share application money from group companies - group companies invest in each other - Double additions - In this case huge additions were made in the hands of the share allottee companies in their scrutiny assessment u/s 143(3) of the Act. Again making the addition in the case of the assessee company would tantamount to double addition. - Additions deleted - AT
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• Long-term capital loss calculation affirmed after flat cancellation u/s 2(47)(vi); assessee's rights extinguished.

  Case-Laws - AT : Long term capital loss/gain - loss on cancellation of flat booked - provisions of section 2(47) clause (vi) - extinguishment of assessee’s right in flat - the assessee has rightly calculated the long term capital loss upon the cancellation of letter of intent - AT
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• Assessing Officer Must Use Reasonable Criteria for Best Judgment Assessment; Partial Bank Deposit Additions Unsustainable.

  Case-Laws - AT : Addition u/s 69A - It is settled law that when assessing officer is rejecting the books of account and return of income filed by the assessee the best judgement assessment has to be based upon some reasonable criteria. The same has to be on the basis of rates applicable for earlier income shown by the assessee in the past or that operating in the concerned business. By not adopting any fair rate or estimate of income and adding the bank deposits partly only as undisclosed income or investment is not at all sustainable. - AT
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• AO Denied Section 35AC Deduction Without Allowing Cross-Examination of Trustee; No Substantial Evidence Against Assessee.

  Case-Laws - AT : Denial of deduction u/s 35AC on the basis of statement of Trustee - AO ought to have provided material used against the assessee apart from providing an opportunity to cross examine deponent whose statement was used against the assessee. Besides the said statement there is no substantive material to disbelieve the claim of assessee. - AT
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• Commercial Crops Still Qualify as Agricultural Income if Fundamental Farming Operations Are Conducted, Rules Commissioner.

  Case-Laws - AT : Agricultural income - The finding of the CIT (A) is that the crops grown are commercial in nature. The definition of ‘Agricultural Income’ does not limit its application to any particular crops/produce. The only requirement is that the basic agricultural operations are to be carried out. The nature of the crop being commercial in nature will not therefore, disentitle the assessee from claiming the income as ‘agricultural income’. - AT
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• Foreign Office Expenses Disallowed Without New Evidence; Reassessment Beyond Four Years Lacks Proof of Assessee's Fault.

  Case-Laws - AT : Disallowance of running and maintenance expenses of foreign office - This amount has been duly disclosed in the audited financial statements and no fresh material on the issue has been brought on record by the Assessing Officer. Undisputedly, the reassessment is beyond the period of four years and, therefore, it was incumbent upon the Assessing Officer to point out specifically as to how the escapement of income from tax on this issue could be attributed to any fault on the part of the assessee. - AT
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• Court Denies Direct Refund Claim; Petitioner Must Use Statutory Remedy Under Income Tax Act Section 244A.

  Case-Laws - HC : Refunds claim along with interest accrued thereon u/s 244A - statutory alternate remedy - the Petitioner must only avail the remedy as provided for by the statute. The fact that we have a wide jurisdiction under Article 226 of the Constitution does not mean that we can disregard the substantive provisions of the statute and the mechanism provided thereunder. - HC
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• High Court Upholds RTI Rejection on Tax Evasion Inquiry to Protect Confidentiality of Income Tax Processes.

  Case-Laws - HC : RTI Application seeking information against Private Parties - Allegation of tax evasion - Public interest - The provisions of the RTI Act are not meant to allow the parties to collect evidence from such Departments or Public Authorities to sub­serve their private interest - The sanctity of the Income Tax Assessment, filing of Returns, investigation and inquiry under the Act would be thrown open to third parties, if such 'information' was to be disclosed to third parties casually or carelessly. - RTI application was rightly rejected - HC
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• Petitioner may seek CBDT's special order under Sec 119(2)(b) to condone 31-day delay for tax exemption application.

  Case-Laws - HC : Condone delay in fling the application for exemption u/s 10(23C)(vi) - We feel that even at this stage petitioner may approach CBDT under section 119(2)(b) seeking a special order to respondent No.1 to condone the delay in fling the application for exemption under section 10(23C)(vi) of the Act for the assessment year 2019-20, there being admitted delay of 31 days in fling the application for the said assessment year, and thereafter to deal with the said application/ claim on merit in accordance with law. - HC
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IBC

• Corporate Insolvency Resolution Process Begins: Deposit Recognized as Financial Debt, Appellant Classified as Financial Creditor u/ss 5(7) & 5(8).

  Case-Laws - AT : Initiation of CIRP - A deposit is something more than a mere loan of money - the Appellant’s status is that of a ‘Financial Creditor’ as per Section 5(7) read with Section 5(8) of the Code and that there is a default in payment of the accepted amounts by the Respondent/CD and in short, the Respondent / Corporate Debtor comes within the purview of the definition of ‘Financial Debt’ - AT
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