CBDT NEW DELHI CIRCULAR NO 10/2023, Dated: June 30, 2023
The CBDT issued a circular dated 30.06.2023; to remove difficulty in the implementation of changes relating to Tax Collection at Source (TCS) on Liberalised Remittance Scheme (LRS) and on the purchase of overseas tour program package – reg.
CBDT NEW DELHI CIRCULAR NO 09/2023, Dated: June 28, 2023
Vide this circular the CBDT extended the time limit of filing of Statement of deduction of tax or collection of tax:-
(i) The statement of deduction of tax for the first quarter of the FY 2023-24, required to be furnished in Form No. 26Q or Form No. 27Q, on or before 31st July, 2023, may be furnished on or before 30 September, 2023.
(ii) The statement of collection of tax for the first quarter of the FY 2023-24, required to be furnished in Form No. 27EQ, on or before 15th July, 2023, may be furnished on or before 30th September, 2023.
Revision of exceptions to monetary limits for filing appeals deferred under provisions of Section 158AB – Circular No. 08/2023, dated 31-05-2023
Vide this Circular, CBDT has clarified that references to collegiums constituted u/s 158AB for deciding on the deferral of appeal(s)/grounds of appeal(s) would be made having regard to the extant monetary limits read along with the exceptions to the same, as specified in this Circular. Scenarios on the applicability of monetary limits has also been specified. If the judicial outcome in the ‘other case’ is not in favour of Revenue and is not accepted by the Department, appeal against the same may be contested on merits in the ‘other case’ irrespective of the extant monetary limits, to arrive at judicial finality.
Rule 11UAC prescribing class of persons to whom provisions of section 56(2)(x) not applicable amended w.e.f. AY 2023-24 vide the Income-tax (Eighth Amendment) Rules, 2023 – Notification No. 35/2023, dated 31-05-2023
Rule 11UAC(4) now provides that the provisions of section 56(2)(x) shall not apply to any movable property, being equity shares, of a public sector company or a company, received by a person from a public sector company or the Central Government or any State Government under strategic disinvestment. The Finance Act, 2023 has amended the meaning of ‘strategic disinvestment’ as assigned in clause (iii) of Explanation to section 72A(1)(d)
Rule 11AA amended to clarify that the provisional approval shall be effective from the AY relevant to the PY in which such application is made u/s 80G(5) – Notification No. 34/2023, dated 30-05-2023
The first proviso to section 80G(5) provides that application for provisional approval by a fund or institution is required to be made at least one month prior to the commencement of the PY relevant to the AY from which approval is sought. However, the fourth proviso to section 80G(5), inter-alia, provides that the provisional approval granted under the second proviso shall be applicable from the AY immediately following the FY in which the application for such registration is made. With a view to bring consistency, rule 11AA is being amended vide this notification.
Important Judicial Precedents
Anant Singhania HUF v. Income Tax Officer, 17(1)(1) _ [2023] 151 taxmann.com 389 (Mumbai – Trib.)[07-06-2023]
Where sale of property belonging to HUF was shown in books of HUF and capital gains on said sale was offered to tax in hands of assessee HUF but TDS deduction was reflected in 26AS of individual Anand as buyer deducted tax in his name for reason that he was registered owner of properties and an affidavit of Anand along with PAN number was filed to substantiate that TDS was not claimed in Anand’s return of income, A.O. cannot deny credit of TDS in assessee’s name when corresponding capital gain on said transaction was taxed in assessee HUF’s name
Whether income tax recovery against director of company u/s 179 merits to be quashed, if director proves lack of control on financial affairs – YES: HC
[2023-TIOL-712-HC-MUM-IT PRAKASH B KAMAT Vs. PCIT -10 Mum.]
The department proceeded mainly on the basis that the Assessee was Director during the assessment years; however, it failed to consider whether there was any gross neglect or misfeasance for breach of duty on his part in relation to the affairs of the company “in the context of non-recovery of tax dues”. The the Director has brought on record material to show a lack of financial control, a lack of decision-making power, and a very limited role in the assessee company even as a director. Thus, the income tax recovery against the Director of a company on the grounds that the Director has sufficiently discharged the burden cast upon him in terms of Section 179(1) of the Income Tax Act, stands quashed.
Whether when the assessee had made specific request to afford opportunity of personal hearing through video conference, then Revenue is required to grant same to assessee – YES: HC
[2023-TIOL-708-HC-AHM-IT _MAHESHKUMAR BHAGVANDAS PATEL Vs. ITO]
It emerges that by way of the show-cause notice, the assessee was asked to show-cause, as to why, the proposed variations should not be made, as mentioned in the said notice. Further, in the said notice, itself, it is stated that, if required, after filing the reply, the assessee may make a request for personal hearing, so as to make oral submissions or to present his case. It is also clearly stated in the said notice that such a request can only be made by clicking the Seek Video Conferencing button available against the SCN in the view notices of this proceeding in the e-proceedings tab on e-filing portal. It, further, transpires from the record that the assessee submitted his reply and specifically made a request for an opportunity of personal hearing through video conferencing. Similar request was also made on web port of the Revenue also, as mentioned in the show-cause notice. From a bare perusal of the provisions of the Act, it is clear that when the assessee had made a specific request to afford an opportunity of personal hearing through video conference, the Revenue is required to grant the same to the assessee. However, in the case on hand, admittedly, no such opportunity was granted to the assessee and thereby, the Revenue has committed the breach of the principles of natural justice.
Whether where there has been violation of principles of natural justice, then such matter has to be remanded back to AO for fresh decision – YES: HC
[2023-TIOL-683-HC-KOL-IT _RAJESH KUMAR AGARWAL Vs. Union of India and ORS]
It is admitted that no opportunity of personal hearing was granted to the assessee. In the order passed u/s 148A(d) there is a reference to certain transactions done by two companies, namely, M/s. Devyansh Dealcom Private Limited and M/s. Eastern Sales India. Admittedly, in the show cause notice there was no such allegation concerning these two companies qua the assessee. Furthermore, the hearing was not fixed by the AO. But the show cause notice states that the e-response should be filed by the assessee not later than Mar 29, 2022. Therefore, this is also an error committed by the AO, who states that the assessee did not submit documents in support of their claim. This finding also appears to be incorrect since there are enclosures along with the response submitted by the assessee. Thus, there has been violation of principles of natural justice and the matter has to be remanded back to the Assessing Officer for a fresh decision.
Whether CIT(A) erred in not giving credit to the assessee when he indeed did declare the cash under the head of “sundry miscellaneous income” – YES: ITAT
[2023-TIOL-773-ITAT-PUNE _ SHRI PRABHATCHANDRA SAWAILAL JAIN VATSALYA Vs. DEPUTY COMMISSIONER OF INCOME TAX]
We have given our thoughtful consideration to the foregoing vehement rival stands qua the issue of the alleged double addition of the assessee’s unexplained income of Rs. 50 lakhs. We find prima facie merit in the assessee’s arguments as it has come on record that he had indeed declared Rs. 50 lakhs under the head “sundry miscellaneous income” which is nowhere given credit or telescoping benefit in any assessment year. Faced with the situation, we deem it appropriate in larger interest of justice that the CIT(A) requires to adjudicate the instant issue afresh as per law preferably within three effective opportunities of hearing after getting necessary facts verified at the assessing authority’s end to this effect.
N.M. Rothchild & Sons Ltd. Vs. Deputy Commissioner of Income-tax, (IT) Circle-2(2)(2)_ [2023] 152 taxmann.com 18 (Delhi – Trib.)
Where assessee, a UK based company, provided services to its Indian AE pertaining to human resources, finance, legal and compliance and conducting of internal audit assurance work and received certain sum with respect to said services, since services provided by assessee were merely for enabling and assisting Indian AE in making correct decisions on certain aspects and did not result in transfer of technical knowledge, know-how, skill etc., ‘make available’ condition provided under Article 13(4)(c) remained non-compliant and receipts would not fall within definition of FTS as provided under article 13(4) of India – UK DTAA
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