- CBDT notifies enhanced exemption limit of Rs. 25 Lakh for leave encashment u/s 10(10AA) :
NOTIFICATION S.O. 2276(E) [NO. 31/2023/F. NO. 200/3/2023-ITA-I], DATED 24-5-2023
In exercise of the powers conferred by sub-clause (ii) of clause (10AA) of section 10 of the Income-tax Act, 1961 (43 of 1961), the Central Government, having regard to the maximum amount receivable by its employees as cash equivalent of leave salary in respect of the period of earned leave at their credit at the time of their retirement, whether superannuation or otherwise, hereby specifies the amount of Rs. 25,00,000 (twenty-five lakhs rupees only) as the limit in relation to employees mentioned in that sub-clause who retire, whether on superannuation or otherwise.
Leave encashment exemption claimed in prior years to be reduced from threshold limit of Rs. 25 lakh.
- CBDT issues guidelines on taxability of winnings from online games
Guidelines For Removal Of Difficulties Under Sub-Section (3) Of Section 194BA Of The Income-Tax Act, 1961 – CIRCULAR NO. 5 OF 2023 [F. NO. 370142/12/2023-TPL], DATED 22-5-2023
The new section mandates a person, who is responsible for paying to any person any income by way of winnings from any online game during the financial year to deduct income-tax on the net winnings in the person’s user account. Tax is required to be deducted at the time of withdrawal as well as at the end of the financial year. Net winning is required to be computed in the manner as may be prescribed. The manner of computation of net winning has now been prescribed in Rule 133 of the Income-tax Rules, 1962, vide notification no. 28/2023, dated 22nd May, 2023.
- CBDT issues clarifications on various provisions relating to charitable and religious trusts – Circular No. 6 of 2023 [F. NO.370133/06/2023-TPL], DATED 24-5-2023
- Clarification regarding application of section 115TD for failure to apply to registration/approval
Finance Act, 2023 has, inter-alia, amended section 115TD of the Act, so as to provide that the accreted income of the trusts not applying for registration/approval, within the specified time, shall be made liable to tax in accordance with the provisions of section 115TD of the Act. This amendment has come into effect from 1-4-2023 and therefore applies to assessment year 2023-24 and subsequent assessment years.
In order to mitigate genuine hardship, the Board, in the exercise of the power under section 119 of the Act, extends the due date of making an application in Form-10A and Form 10AB till 30.09.2023.
The provisions of clause (iii) of sub-section (3) of section 115TD of the Act shall not apply on account of delay in making application in accordance with the provisions of clause (i) or (iii) of the first proviso to clause (23C) of section 10 or sub-clause (i) or (iii) of clause (ac) of sub-section (1) of section 12A of the Act.
- Extension of due date for furnishing of Form No. 10BD
In view of extension provided to funds or institutions seeking approval under sub-section (5) of section 80G of the Act, in the exercise of the power under section 119 of the Act, the Board also extends the due date for furnishing of statement of donation in Form No. 10BD and the certificate of donation in Form No. 10BE in respect of the donations received during the financial year 2022-23 to 30.06.2023.
- CBDT releases draft Rule 11UA incorporating 5 new valuation methods – invites public comments
The Finance Act 2023 enhanced the scope of section 56(2)(viib) to make it applicable to share application money/premium received from any person, regardless of residential status. Rule 11UA provides the method for computation of the FMV of unquoted equity shares for said section. To implement the FA 2023 amendment, the CBDT released draft notification with proposed amendment to Rule 11UA incorporating 5 new valuation methods
- Amended provisions of ‘Angel Tax’ not applicable to start-ups recognized by DPIIT: CBDT .
[NOTIFICATION S.O. 2275(E) [NO. 30/2023/F.NO. 370142/9/2023-TPL (PART-I)], DATED 24-5-2023]
The Central Government, hereby notifies that the provisions of clause (viib) of sub-section (2) of section 56 of the said Act shall not apply to consideration received by a company for issue of shares that exceeds the face value of such shares, if the said consideration has been received from any person, by a company which fulfills the conditions specified in para 4 of the notification number G.S.R. 127(E), dated the 19th February, 2019 issued by the Ministry of Commerce and Industry in the Department for Promotion of Industry and Internal Trade and published in the Gazette of India
Important Judicial Precedents
- Roshan Lal Sanchiti Vs. PCIT – SC [452 ITR 229]
SLP dismissed against order of High Court that retraction of statement recorded under section 132(4) has to be made within reasonable time or immediately after statement of assessee is recorded and, hence, where retraction of statement recorded under section 132(4) and later confirmed in statement recorded under section 131 had been made by assessee after almost eight months, same was to be discarded.
- CIT Vs. Siemens Nixdorf Information System Gmbh –SC [2023-TII-03-SC-INTL]
Right of a non-resident holding company to recover the money advanced by it to its Indian subsidiary, is a capital asset u/s 2(14) and that the transfer of right to recover such amount, to another non-resident entity qualifies as transfer of capital asset.
- D. N. Singh Vs. CIT – SC [150 taxmann.com 301]
Transporter misappropriating bitumen entrusted for delivery is thief & can’t be treated as ‘owner’ u/s 69A; Bitumen is not ‘Valuable article’ u/s 69A
Whether in case of an entrustment to carrier otherwise than under a contract of sale of goods, possession of carrier would not convert it into owner of goods – YES: SC
Whether an ordinary ‘article’ cannot be bracketed in same category as other high-priced articles like bullion, gold, jewellery mentioned u/s 69A by attributing high value to the run-of-the-mill article, only on the strength of its bulk quantity – YES: SC
Whether it is not ownership of huge volume of some low cost ordinary article but the precious gold and the like, that would attract the implication of deemed income u/s 69A – YES: SC
- PCIT Vs. S S Con. Build Pvt. Ltd. [223-TIOL-65- SC-IT]
Foundation for making search assessments u/s 153A/153C can be said to be existence of incriminating material showing undisclosed income detected as a result of search.
The issue involved in the present petitions is squarely covered against the Revenue in view of the decision of this Court in the case of Principal Commissioner of Income Tax, Central -3 Vs. Abhisar Buildwell P. Ltd – 2023-TIOL-41-SC-IT. Hence, the present Special Leave Petitions stand dismissed.
- DIT Vs. Travelport Inc. – SC [149 taxmann.com 470]
The Supreme Court upheld the approach of the Tribunal and the High Court, stating that the question as to what proportion of profits arose or accrued in India is essentially one of facts.
- Krishna Kumar Chaudhary Vs. DCIT – Kol. Trib. [113/Kol/2023]
Filing of Form-67 is procedural in nature and the assessee should not be denied the benefit of foreign tax credit for such delay.
We find that it has consistently held that filing of Form 67 is procedural in nature and the assessee should not be denied the benefit of foreign tax credit for such delay. We find support from the decision of this Tribunal in the case of Satreena Consultants Pvt. Limited wherein similar issue was decided in favour of the assesese, wherein also Form 67 was filed after the due date of filing of the return of income but the claim of the assessee was allowed by this Tribunal.
- CIT Vs. Prakash Chand Lunia (D) [SC – 149 taxmann.com 416]
Term “any expenditure” in Section 37 includes losses incurred in the course of business and incidental to it. Any loss incurred by an assessee for an unlawful purpose or prohibited by law cannot be deducted as an expenditure under Explanation 1 to Section 37. If an expenditure/loss is incurred for an illegal purpose, it is not deemed to have been incurred for the purpose of business/profession, and no deduction can be made. Losses resulting from penalties or confiscation cannot be claimed as a deduction as they are not incidental to any business.
A penalty or a confiscation is a proceeding in rem, and therefore, a loss in pursuance to the same is not available for deduction regardless of the nature of business, as a penalty or confiscation cannot be said to be incidental to any business.
- US Technologies International (P.) Ltd. Vs. CIT [SC – 149 taxmann.com 144]
Where assessee-company, engaged in software development, had remitted tax deducted at source in respect of salaries, contract payments etc. belatedly, it was not a case of non-deduction of TDS at all and thus assessee was not liable to pay penalty under section 271C.
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