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Digest Of Important Judgements On Transfer Pricing, International Tax And Domestic Tax (Jan To March 2017)

Sunil-Lala

Shri Sunil Moti Lala, Advocate has prepared a compilation of 562 important judgments (transfer pricing (375 cases), International Tax (32 cases) and Domestic Tax (155 cases) reported in January to March 2017. The author has meticulously and systematically classified the judgments into various categories to enable ease of reference. A PDF copy of the digest is available for download. He has also given the appeal numbers in some cases so as to enable the judgements to be retrieved from the website of the respective Court or Tribunal. The digest will prove invaluable to all practitioners of taxation law.

The Digest comprises of all the important judgements dealing with transfer pricing, international taxes and domestic taxation laws. A brief head note is given for each case. The Digests for the earlier periods are available here

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Understanding General Anti-Avoidance Rules (‘GAAR’): Part 2

Paras-Dawar

In Part I, CA Paras Dawar explained the legal aspects of GAAR’s applicability and its consequences. In Part II, he has explained the procedural aspects with respect to the implementation of GAAR with particular reference to the safeguards prescribed by the Shome Committee which curtail the unfettered power of the AO to challenge aggressive tax avoidance arrangements by tax payers

1. Introduction

In my previous article under the title ‘Understanding General Anti-Avoidance Rule (‘GAAR’) – Part 1’, I had thrown light on the legal aspects of GAAR’s applicability and its consequences.GAAR gives the tax department unfettered power to challenge aggressive tax avoidance arrangements by tax payers. Recognising this situation, Dr.Shome Committee prescribed various safeguards while invocation of GAAR provision. The Parliament in its wisdom duly incorporated these safeguards under the Income Tax Act, 1961 (‘Act’).

In this article, I wish to discuss the procedural aspects with respect to implementation of GAAR.

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S. 14A: Exempt Income Vs. Expenses For Exempt Income

CA Jyoti Gupta has considered the controversial question as to whether a disallowance under section 14A and Rule 8D can be made in respect of securities which are held by an assessee as stock-in-trade. She has referred to the latest judgements on the issue and explained the issue in the proper perspective

As could be discerned from the heading itself, vide this article we would be discussing the provisions of Sec.14A of the Income-tax Act.

The heading of Sec.14A, reads ‘Expenditure incurred in relation to income not includible in total income’.

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Income Computation And Disclosure Standards (ICDS) – An Update

There have been a spate of amendments to the various Income Computation and Disclosure Standards (ICDS) prescribed by the Central Government under section 145 (2) of the Income-tax Act, 1961. CA Dhaval Desai has systematically analyzed all the ICDS issued up to date and explained their implications in a concise manner

Section (S.) 145 of the Income Tax Act, 1961 (ITA) provides that taxable income of an assessee falling under the heads “Profits and gains of business or profession” or “Income from other sources”, shall be computed in accordance with either cash or mercantile system of accounting which is regularly employed by the assessee. It further provides that the Central Government (CG) may notify, from time to time, Income Computation & Disclosure Standards (ICDS) to be followed by any class of taxpayers or in respect of any class of income.

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Section 14A: Scope Of Disallowance Explained

CA Dev Kumar Kothari has considered the interesting question whether disallowance under section 14A of the Income-tax Act, 1961 can be made in a case where tax is paid by the assessee by way of dividend distribution tax or securities transaction tax or where shares are bought by him not with a view to earn dividends but to obtain a strategic controlling interest in the Company or to earn capital gains

Section 14A is applicable only when income does not form part of total income that is taxable income under the entire income tax Act and not when taxed under simplified scheme of taxation etc.

In view of tax imposed under simplified taxation scheme by way of DDT u/s 115 O and 115R and STT on transactions levied in lieu of income-tax, any income is not an income not chargeable to tax under the Act.

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Understanding General Anti-Avoidance Rules (‘GAAR’): Part 1

Paras-Dawar

The provisions of Chapter X-A of the Income-tax Act, 1961, which prescribe General Anti-Avoidance Rules (‘GAAR’), have been made applicable to all transactions entered into on and from 1st April 2017. The provisions are complicated and are likely to lead to numerous controversies and litigation between the taxpayer and the income-tax department. CA Paras Dawar has explained the salient aspects of the legal provisions in a simple and easy-to-understand format

1. Introduction

Parliament by Finance Act, 2012 inserted Chapter X-A under Income Tax Act, 1961 (‘Act’) which provided General Anti-Avoidance Rules (‘GAAR’) to be applicable from April 1, 2012. However, the protest from industry which feared arbitrary usage of power by tax officers forced the government to defer its implementation and to constitute an Expert Committee under the chairmanship of Dr.Parthasarathi Shome to frame guidelines for GAAR after consultations with all the stakeholders. Following the report of Dr.Shome Committee, various amendments were carried out under the tax law and clarifications were provided by CBDT through issue of Circular. With effect from April 1, 2017, GAAR have finally become effective.

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Surgical Strike On Cash Transactions (Analysis Of Sections 269ST & 271DA Of The Income-tax Act, 1961)

The numerous amendments made by the Finance Act 2017 to curb the usage of cash in business transactions has serious implications for taxpayers. CA Jyoti Gupta has conducted a systematic analysis of these provisions with special emphasis on sections 269ST and 271DA and explained all of their nuances

Cash forms the base for any business or profession. There is always continuous cash cycle to keep a business moving and enter all daily transaction. However, cash transactions many times becomes means for tax evasion or generation of black money.

NDA government to curb cash transaction & to push digital payments to make India a cashless economy has made superabundant amendments in Finance Act 2017. Example: Limit under Sec.40A(3), reduced to Rs.10,000/- from Rs.20,000/-; U/s 44AD, on the total turnover which is received via banking channel, the rate of presumptive tax rate is reduced from 8% to 6% etc…

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Digest Of Important Judgements On Transfer Pricing, International Tax And Domestic Tax (Nov & Dec 2016)

Sunil-Lala

Shri Sunil Moti Lala, Advocate has prepared a compilation of 300 important judgments (transfer pricing (155 cases), International Tax (10 cases) and Domestic Tax (135 cases) reported in November & December 2016. The author has meticulously and systematically classified the judgments into various categories to enable ease of reference. A PDF copy of the digest is available for download. He has also given the appeal numbers in all cases so as to enable the judgements to be retrieved from the website of the respective Court or Tribunal. The digest will prove invaluable to all practitioners of taxation law.

The Digest comprises of all the important judgements dealing with transfer pricing, international taxes and domestic taxation laws. A brief head note is given for each case. The Digests for the earlier periods are available here

Read more ›

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Some Proposals In The Finance Bill 2017 Need Urgent Reconsideration

k_c_singhal

Shri. K. C. Singhal, former Vice President of the ITAT, has opined that certain provisions in the Finance Bill 2017 are unjustified and have the potential to cause immense hardhip to taxpayers. The learned author has explained with examples as to how the provisions not only defeat the legislative intent but also put onerous burden on the taxpayer. He has urged the Government to reconsider its decision to enact these provisions into law

Finance Bill 2017 contains huge proposals to amend the Income Tax Act 1961 having great impact. Some of the proposals are beneficial to the taxpayers while some of these are to curb the misuse of the existing provisions. Apart from this, certain proposals, in my opinion, need urgent reconsideration by the Government.

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Amnesty Under Taxation Laws (Second Amendment) Act 2016: A Study

k_c_singhal

Shri. K. C. Singhal, former Vice President of the ITAT, has conducted an expert analysis of the Pradhan Mantri Garib Kalyan Yojna 2016, inserted by the Taxation Laws (Second Amendment) Act 2016, to provide amnesty to persons offering their undisclosed cash holdings to tax. The analysis covers all the important aspects of the Scheme and provides succinct answers to frequently asked questions by taxpayers and tax professionals

Introduction

After demonetization of high denomination notes, the Central Govt. has introduced a fresh Amnesty Scheme whereby any person, having undisclosed income in the form of cash or deposits with specified entity, can declare the same before the specified authority within the specified time subject to fulfillment of the conditions specified in the provisions of Sections 199A to 199R of Finance Act 2016. Before analyzing the aforesaid relevant provisions, it would be appropriate to refer to the salient features of the scheme.

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