Tax due date – October 2018

S. No	Due Date	Related to	Compliance to be made
1	11.10.2018	GST	Filing of GSTR 1 for the month of September, 2018
2	19.10.2018	GST	-Payment of GST for the month of September, 2018 -Filing of GSTR 3B for the month of September, 2018
3	05.10.2017	TDS/TCS (Income Tax)	· Deposit TDS for payments of Salary, Interest, Commission or Brokerage, Rent, Professional fee, payment to Contractors, etc. during the month of September 2018. · Deposit TDS from Salaries deducted during the month of September 2018 • Deposit TCS for collections made under section 206C including sale of scrap during the month of September 2018, if any • Deliver a copy of Form 15G/15H, if any to CCIT or CIT for declarations received in the month of September 2018, if any
4	31.10.2018	TDS Return	·         Filing of 2nd Quarter (1st July to 31st September) TDS return.
5	15.10.2018	TCS Return	·         Filing of 2nd Quarter (1st July to 31st September) TCS return.

Exemption on Imports by EOU/STPI/EHTP

This is to update you that Directorate General of Foreign Trade has made amendments in Foreign trade policy vide Notification No. 35/2015-20 dated 26 September 2018  to give effect to notification released by Central Board of Indirect taxes and Customs  (‘CBIC’) for extension of benefit of IGST and compensation cess exemption to Advance Authorization/EPCG/ EOU scheme till 31 March 2019.

 

ITAT : Grants pro-rata Sec. 80IB benefit as conditions violated only with respect to 2 flats

Pune ITAT allows Sec 80IB(10) deduction to assessee-developer for AY 2012-13 on pro-rata basis, considering violation of Sec 80IB(10)(f) conditions only in respect of 2 residential flats in the housing project; Rejects Revenue’s stand that Sec. 80IB benefit be denied in entirety to assessee in respect of ‘Leelawati Greens’ project for multiple allotments of the flats to family members in violation to Sec. 80IB(10)(f); Notes that assessee violated clause (f) condition  in respect of two units by allotting flats to spouses of individual; Upholds CIT(A)’s view that assessee was entitled to claim prorata deduction on the profits of balance project excluding two flats in view of Madras HC rulings in Arun Excello Foundation (P) Ltd. and Viswas Promoters Private Limited; Separately, ITAT allows assessee’s pro-rata claim in respect of profits from Club house in the project ‘Leelawati Greens’ , rules that “merely because the completion certificate has not been issued by the State Authorities would not disentitle the assessee to its claim of deduction…”:ITAT

SC : Dismisses SLP against Manjula Shah ruling on indexation benefit, cites low tax effect

SC dismisses Revenue’s SLP against Bombay HC ruling in Manjula J. Shah on account of low tax effect; HC had upheld ITAT Special Bench ruling to hold that while computing long term capital gains on transfer of asset acquired by way of gift, ‘cost inflation index’ of the first year, in which ‘previous owner’ acquired the asset, to be considered & not the year in which asset was gifted; However, while dismissing SLP, SC clarifies that “it will be open to the IT Dept. to seek revival if the Department finds that these cases are covered under any exception of the said Circular.”:SC

Canadian Tax Court : Rejects GAAR invocation, allows capital-gains exemption under Canada- Luxembourg treaty

Tax Court of Canada allows capital gains exemption to appellant (a resident of Luxembourg) under Article 13(5) of the Canada-Luxembourg DTAA in respect of sale of shares of its wholly-owned Canadian subsidiary (‘Alta Canada’ engaged in shale oil business), rules that GAAR does not apply to preclude the appellant from claiming Treaty benefit; Noting that the shares derived their value principally from Alta Canada’s right to explore, drill and extract hydrocarbons (working interest) from the Duvernay shale oil Formation, Revenue had argued that the gains shall be taxable under Article 13(4) of the DTAA, further Revenue had invoked GAAR to deny treaty benefit claiming that the appellant was created only for the purpose of avoiding Canadian income tax on disposition of shares; Court grants benefit of carve out under Article 13(4) which excludes properties in which business is carried on, rejects Canada Revenue Authority’s (CRA) contention that working interest which was set aside for future drilling would not be covered in ‘carve out’; On GAAR front, Court notes that excluded property carve out was departure from OECD Model tax treaty which was agreed by Canadian treaty negotiator despite being aware that Luxembourg generally do not tax capital gains, remarks that Court cannot disturb such bargain struck by treaty partners; Rejects CRA’s contention that appellant was mere ‘conduit’ to pass tax benefit to its shareholders noting that CRA had accepted that appellant was ‘beneficial owner’ of shares, observes that there was nothing in treaty to indicate that single purpose holding corporation resident in Luxembourg cannot avail treaty benefit; Also rejects CRA’s ‘treaty shopping’ contention noting that Canada hasn’t adopted comprehensive anti-treaty shopping rules similar to USA-Canada treaty in treaty under consideration, also remarks that CRA seeks to achieve same result under GAAR as intended in domestic anti-treating shopping rule (which is proposed in 2013 Federal Budget to address the unintended gap in treaty)

If income is generated out of liquor trade, it has to be first taxed in hands of Excise Licencee, and distribution of surplus between conglomerates will take place only after payment of Income tax: HC

THE Issue – Whether ‘distributable surplus’ arising to an excise licencee out of manufacture & sale of liquor, which is liable to be compensated to a liquor conglomerate is only an ‘application of income’ and not a ‘diversion of income at source by over riding title’ in favour of such conglomerate. YES IS THE VERDICT.  

If additional relief claimed on basis of judicial precedents brings assessed income below returned income, appellate authority has jurisdiction to allow such deduction even if revised return was not filed: ITAT

 THE ISSUE IS – Whether if additional relief claimed by the assessee on the basis of judicial precedents brings the assessed income below the returned income, an appellate authority has the jurisdiction to allow such deductions whether revised return was filed or not. YES IS THE ANSWER. 

General share purchase transaction should not be construed as bogus, simply because such transaction has resulted in huge capital gains to investor: ITAT

THE ISSUE BEFORE THE TRIBUNAL IS – Whether increment in market price of shares at the time of sale in comparison to the purchase, is no reason to doubt genuineness of transaction, when sale price was in confirmity with the prevailing market price. YES IS THE ANSWER.

Facts of the case:

The assessee is a private limited company engaged in manufacturing of nutrition food to be supplied in various Government schemes. For the relevant A.Y, it had filed the return declaring loss of Rs. 4,36,62,802/- and long term capital gain of Rs. 2,65,27,020/- which was claimed as exempt u/s 10(38). This long term capital gain claimed by assessee was arising from sale of 98,000 shares of M/s. Well Pack Papers & Containers Ltd. The AO however disallowed such claim by treating the same as bogus and holding that the assessee had introduced its unaccounted income in the shape of long term capital gain.

Three Imp Verdicts On ‘Diversion Of Income’, S, 147 Reopening And S. 263 Revision

PCIT vs. M/s. Chamundi Winery and Distillery (Karnataka High Court)

Entire law on “real income theory” and distinction between “application of income” vs. “diversion of income by overriding title” explained with reference to case laws. Law on whether if an amount is not treated as “diversion of income”, it can be allowed as “business expenditure” u/s 37(1) or as a “trading loss” u/s 29 also explained. Issue of “Base Erosion and Profit Shifting” (BEPS) also raised in the context of “tax avoidance vs. tax evasion” and diversion of income by a MNC   

SC Constitution Bench: Sec. 139AA meets ‘triple test’ of right to privacy; Upholds constitutional validity

SC Constitution Bench (majority view) upholds constitutional validity of Sec.139AA of the Income Tax Act, that makes Aadhaar mandatory for I-T returns and PAN cards; Examines validity of Section 139AA in the context of right to privacy, being held as a fundamental right (though not an absolute right) by the nine Judge Bench; Refers to the triple tests laid down by the earlier constitution bench for judging the permissible limits for invasion of privacy while testing the validity of any legislation, viz. a) the existence of a law (b) a “legitimate State interest” and (c) such law should pass the “test of proportionality”; While the first requirement stands satisfied as Sec. 139AA is a statutory provision, SC constitution bench (majority view) finds force in ASG Tushar Mehta’s arguments that other two requirements are also satisfied and specifically dealt with by the Division Bench in Binoy Viswam case; Stating that Sec. 139A (dealing with PAN) has been in existence since 1989, SC Constitution bench (majority view) holds that “The Parliament, considering the “legitimate State interest” as well as the “larger public interest” has now introduced Sect 139AA which is only an extension of Section 139A which requires linking of PAN number with Aadhaar number …for the purpose of eliminating duplicate PANs from the system with the help of a robust technology solution.”; Therefore, rules that “those who have PAN number and have already provided the information required to get PAN number cannot claim to have any legitimate expectation of withholding any data required for Aadhaar under the ground of “privacy””; Highlighting that ITD PAN database identified 1.65 crore non-PAN transactions totaling around Rs. 33,000 crore of undisclosed transactions, SC constitution bench (majority view) elucidates that this amount of undisclosed high value transaction would have gone undetected had it not been for Aadhaar linkage, opines that linking of PAN with Aadhaar will significantly enhance legitimate collection of country’s revenue; However, Justice Chandrachud gives dissenting judgment, noting that Sec 139AA is based on the premise that the Aadhaar Act itself is a valid legislation, Justice Chandrachud opines that “Since the Aadhaar Act itself is now held to be unconstitutional for having been enacted as a Money Bill and on the touchstone of proportionality, the seeding of Aadhaar to PAN under Article 139AA does not stand independently”      :SC