ITAT e-filing Portal to go live on 21 June 2021

Priya kejriwal
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ITAT e-filing Portal to go live on 21 June 2021

ITAT has announced that e-filing portal will be launched for filing of appeal before the Income tax appellate tribunal.It has been mentioned that e-filing portal shall be live from 21.06.2021 but same shall be available in a phased manner and same shall be available for all the benches within 4 week from the initial launch.

As we know one files an appeal before Income tax appellate tribunal if the assessee it is not satisfied with the appellate order passed by the CIT(A) or order passed by CIT.

Appeal before ITAT is filed in Form 36 wherein under the physical filing one had to submit 4 copies of the appeal before the ITAT but now with e-filing we hope that this will stop and lot of paper would be saved. Thus, now you can file Form 36 online like you can file Form 35 online.

Further, as of now online hearing of appeal’s is going on in ITAT and we hope that even after pandemic it continues in the same fashion and it does become faceless as was proposed earlier.

This facility is expected to help in quick communication to assessee about their appeals, fixation for hearing, adjournments, pronouncements and disposals.

Details mentioned by the President of ITAT in his announcement about e-filing of ITAT appeal is as under:

“Whilst the outbreak of COVID-19 Pandemic has posed significant challenges all over the world causing mass disruptions in all sectors, including the justice delivery systems, the Income Tax Appellate Tribunal has responded to such challenges in its own humble way, by rapidly adopting the supportive technologies that enabled continuation of functioning of Courts through the mode of Video Conferencing and, at times, exchange of documentation using web-based platforms in the pandemic period. In this way, we have transitioned from being primarily traditional face-to-face proceedings to online court proceedings also, an experiment which has been very successful and, I am happy to share that the ITAT has adapted to this new landscape quickly.

In furtherance to the spirit of the motto of the ITAT, i.e., ‘Nishpaksh Sulabh Satvar Nyay’ meaning, Impartial, Easy and Speedy justice, we, at ITAT, are pleased to announce for the benefit of all our stakeholders the launch of e-Filing Portal, which has been developed consequent upon the revision of Memoranda of Appeal and Cross objection under the Income-tax Act, 1961 and has been extensively tested by in-house as well as by pre-identified external users and, the user-acceptance has been reported of a satisfactory level. The e-Filing Portal shall be initially soft-commissioned at Delhi Zone Headquarter with effect from 21st June, 2021, and would be gradually rolled out at all other Zonal Headquarters and other subordinate Benches across the country within a period of 4 (four) weeks thereafter.

The Practice Note regarding launch of the Portal, the detailed Standard Operating Procedures (SOPs) and Frequently Asked Questions (FAQs) for the guidance and understanding of the end users shall soon be available in public domain.”

Click here to download the notification – https://itat.gov.in/files/uploads/categoryImage/1622804670-notice%20-%20launching%20of%20e-filing%20portal%20of%20itat.pdf

A guide to depreciation rates for AY 2021-22

Priya kejriwal
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A guide to depreciation rates for AY 2021-22

Depreciation is allowed as a deduction under section 32 of the Income Tax Act, 1961. In the computation of taxable income, the depreciation rate as per income tax act will be allowed as deduction while depreciation as per book profit is added back. Depreciation rate chart for FY 2020-21 / AY 2021-22 as produced in the table below:

Depreciation Rates as per the Income Tax Act

Part A Tangible Assets:

Building depreciation rates

1Buildings used primarily for residential reasons (excluding boarding houses and hotels) 5%
2Buildings apart from those used primarily for residential reasons and not covered by sub-items 1 (above) and 3 (below) 100%
3Buildings procured on or after September 1, 2002, for installing plant and machinery forming part of water treatment system or water supply project and which is used for the purpose of the business of providing infrastructure facilities under clause (i) of subsection (4) of section 80-IA 100%
4Purely temporary erections like wooden structures 100%

Furniture and Fittings depreciation rates

1 Furniture and fittings including electrical fittings 10%

Ships depreciation rates

4(i)Ocean-going ships including tugs, survey launches, dredgers, barges, and other similar ships used primarily for dredging purposes and sighing vessels with a wooden hull
4(ii)Vessels ordinarily operating on inland waters, not covered by sub-item (iii) below20%
4(iii)Vessels ordinarily operating on inland waters being speed boats 20%

Plant and Machinery depreciation rates

1Plant and machinery excluding those covered by sub-items (2), (3), and (8) below15.00%
2Motor cars, excluding those used in a business of running them on hire, procured or put to use on or after April 1, 199015.00%
3(i)Aeroplanes, Aero Engines40.00%
3(ii)Motor taxis, motor buses and motor lorries used in a business of running them on hire30.00%
3(iii)A commercial vehicle which is procured by the assessee on or after October 1, 1998, but before April 1, 1999, and is used for any period of time prior to April 1, 1999, for the purpose of profession or business in agreement with the third proviso to clause (ii) of sub-section (1) of section 3240.00%
3(iv)New commercial vehicle procured on or after October 1, 1998, but prior to April 1, 1999, in replacement of condemned vehicle of more than 15 years of age and is used for any period of time prior to April 1, 1999, for the purpose of profession or business in agreement with the third proviso to clause (ii) of sub-section (1) of section 3260.00%
3(v)New commercial vehicle procured on or after April 1, 1999, but before April 1, 2000, in replacement of condemned vehicle of more than 15 years of age and is put to use prior to April 1, 2000, for the purposes of profession or business in agreement with the second proviso to clause (ii) of sub-section (1) of section 3260.00%
3(vi)New commercial vehicle procured on or after April 1, 2001, but before April 1, 2002, and is put to use before April 1, 2002, for the purpose of profession or business50.00%
3(vii)Molds used in plastic and rubber goods factories30.00%
3(viii)Air pollution control equipmentFeltfilter systemElectrostatic precipitation systemsScrubbercounter current / packedbed / venture / cyclonic scrubbersDust collector systemsEvacuation system and ash handling system100.00%
3(ix)Water pollution control equipmentAerated detritus chambers (including air compressor)Mechanical screen systemsMechanically skimmed grease and oil removal systemsFlash mixing equipment and chemical feed systemsMechanical reactors and mechanical flocculatorsMechanically aerated activated sludge / diffused air systemsBiofiltersAerated lagoon systemsAir floatation systemsMethanerecovery anaerobic digester systemsSteam/air stripping systemsMarine outfall systemsUrea Hydrolysis systemsActivated carbon columnBiodisc or rotating biological contractorMarine outfall systemsIon exchange resin columnCentrifuge for dewatering sludge30.00%
3(x)(a) Solid waste, control equipment Cryolite / mineral / lime / caustic / chrome recovery system (b) Resource recovery and solid waste recycling systems100.00%
3(xi)Plant and machinery used in semi-conductor industry covering all integrated circuits (ICs) (not including hybrid integrated circuits) ranging from small scale integration (SSI) to large scale integration / very large scale integration (LSI/VLSI) as also discrete semiconductor devices like diodes, triacs, thyristors, transistors, etc., except those covered by entries (viii), (ix), (x) of this sub-item and sub-item (8) below30.00%
3(xi)aLife Saving medical equipmentD.C Defibrillators for pacemakers and internal useColour DopplerHaemodialysisCobalt therapy unitVascular Angiography System including Digital subtraction AngiographyHeart lung machineSpect Gamma CameraMagnetic Resonance Imaging SystemVentilator used with anaesthesia apparatusVentilator except those used with anaesthesiaSurgical laserGamma knifeFibreoptic endoscopes including audit resectoscope/paediatric resectoscope, arthoscope, peritoneoscopes, fibreoptic flexible nasal pharyngo, microaryngoscope, video laryngo, fiberoptic flexible laryngo bronchoscope.Bronchoscope, video oescophago gastroscope, video oescopghago bronchoscope, fibreoptic flexible oesophago gastroscope40.00%
4Containers made of plastic or glass used as refills50.00%
5Computers including computer software60.00%
6Plant and machinery, used in processing, weaving and garment sector of textile industry, which is bought under TUFS on or after April 1, 2001, but prior to April 1, 2004, and is put to use prior to April 1, 200450.00%
7Plant and machinery procured and installed on or after September 1, 2002, in a water treatment system or a water supply project and put to use for the purpose of the business of providing infrastructure facility under clause (i) of sub-section (4) of section 80-IA100.00%
81. Wooden parts used in artificial silk manufacturing machinery100.00%
2. Match factories, wooden match frames
3. Cinematograph films, bulbs of studio lights100.00%
4. Saltworks, condensers, reservoirs, salt pans, etc., made of clayey, sandy, or earthy material, or any other similar material100.00%
5. Quarries and mines100.00%
Sand stowing pipes, winding ropes, tubs, and haulage ropes
Safety lamps
6. Flour mills, rollers
7. Sugar works, rollers80.00%
8. Steel and iron industry, rolling mill rolls80.00%
9. Energy saving devices80.00%
(A) Furnaces and specialised boilers
(i) Fluidized bed boilers / ignifluid80.00%
(ii) Continuous pusher type furnaces and flameless furnaces
(iii) High efficiency boilers
(iv) Fluidized bed type heat treatment
(B) Instrumentation and monitoring system for monitoring energy flows80.00%
(i) Digital heat loss meters
(ii) Automatic electrical load monitoring systems
(iii) Infrared thermography
(iv) Microprocessor based control systems
(v) Meters for measuring heat losses, steam flow, furnace oil flow, power factor and electric energy meters
(vi) Exhaust gas analysers
(vii) Maximum demand indicator and clamp on power meters
(viii) Fuel oil pump test bench
(C) Waste heat recovery equipment80.00%
(i) Air pre-heaters and recuperators
(ii) Feed water heaters and economisers
(iii) Thermal energy wheel for low and high temperature heat recovery
(iv) Heat pumps
(D) Co-generation systems80.00%
(i) Controlled extraction, back pressure pass out, extraction cum condensing turbines for cogeneration along with pressure boilers
(ii) Organic rankine cycle power systems
(iii) Vapour absorption refrigeration systems
(iv) Low inlet pressure small steam turbines
(E) Electrical equipment80.00%
(i) Synchronous condenser systems and shunt capacitors
(ii) Relays (automatic power cut off devices)
(iii) Power factor controller for AC motors
(iv) Automatic voltage controller
(v) Solid state devices for controlling motor speeds
(vi) FACT (Flexible AC Transmission) devices, Thyristor controlled series compensation equipment
(vii) Thermally energy-efficient stenters
(viii) Series compensation equipment
(ix) TOD (Time of Day) energy meters
(x) Intelligent electronic devices/remote terminal units, computer software/hardware, bridges/router, other required equipment and associated communication systems for data acquisition systems and supervisory control, distribution management systems and energy management systems for power transmission systems
(xi) Special energy meters for ABT (Availability Based Tariff)
(F) Burners80.00%
(i) Zero to ten per cent excess air burners
(ii) Burners using air with high preheat temperature (above 300 degrees Celsius)
(iii) Emulsion burners
(G) Other equipment80.00%
(i) Mechanical vapour recompressors
(ii) Wet air oxidation equipment for recovery of heat and chemicals
(iii) Automatic microprocessor based load demand controllers
(iv) Thin film evaporators
(v) Fluid couplings and fluid drives
(vi) Coal based producer gas plants
(vii) Super-charges/turbo charges
(viii) Sealed radiation sources for radiation processing plants
10. Gas cylinders including regulators and valves60.00%
11. Glass manufacturing concerns, Direct fire glass melting furnaces60.00%
12. Mineral oil concerns60.00%
(i) Plant used in field operations (above ground) distribution, returnable packages
(ii) Plant used in field operations (below ground), but not including kerbside pumps including fittings and tanks used in field operations (distribution) by mineral oil concerns
13. Renewable energy devices60.00%
(i) Pipe type and concentrating solar collectors
(ii) Flat plate solar collectors
(iii) Solar cookers
(iv) Air/fluid/gas heating systems
(v) Solar water heaters and systems
(vi) Solar crop drivers and systems
(vii) Solar steels and desalination systems
(viii) Solar refrigeration, air conditioning systems and cold storages
(ix) Solar pumps based on solar-photovoltaic and solar-thermal conversion
(x) Solar power generating systems
(xi) Solar-photovoltaic panels and modules for water pumping and other applications
14. Wind mills and any other specially designed devices that operate on wind mills (installed on or after April 1, 2014)80.00%
15. Any special devices including electric pumps and generators operating on wind energy (installed on or after April 1, 2014)80.00%
16. Books owned by assessees carrying on a profession
(i) Books, being annual publications100.00%
(ii) Books, excluding those covered by entry (i) above60.00%
(iii) Books owned by assessees carrying on business in running lending libraries100.00%

Part B Intangible Assets:

Patents, know-how, trademarks, franchises, copyrights, licenses, or any other commercial or business right of similar nature25%

Do check various depreciation rates before charging it to your assets!

Did you know the CBDT has extended various due dates to provide relief to taxpayers in view of COVID – 19, get the full coverage here.

Is Stock Broking Company is a Financial Service Provider Under IBC? | NCLAT to Examine

Priya kejriwal
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Is Stock Broking Company is a Financial Service Provider Under IBC? | NCLAT to Examine

The National Company Appellate Tribunal (NCLAT), New Delhi has recently agreed to examine a serious question of law i.e. whether a stock broking company should be considered as a Financial Service Provider under Section 3(16) of the Insolvency and Bankruptcy Code, 2016 and should be kept out of the purview of the Insolvency and Bankruptcy Code, 2016 (“IBC”)?

The development came while the NCLAT stayed the Committee of Creditor’s formation of Corporate Debtor i.e. Simandhar Broking Ltd. if not constituted yet, till the next date of hearing, in an appeal filed by its Suspended Director under sec. 61 of the IBC challenging the order of NCLT, Ahmadabad Bench.

A petition under Section 7 of the IBC was filed in NCLT, Ahmedabad by the client of the Stock Broker, against his trading of shares in the Futures & Options Segment of the NSE (National Stock Exchange).

It was thus, the case of the Appellant that NCLT, Ahmedabad had taken a “contrary view” to the earlier decided judgments rendered by the NCLAT and other benches of the NCLT.

In appeal, the Suspended Director had submitted that the Corporate Debtor is a Financial Service Provider, therefore, given Section 3 (7) of the IBC and given this, it does not come within the definition of Corporate Person and the alleged debt is not Financial Debt within the meaning of Section 5 (8) of the IBC.

Counsel appearing on behalf of the Appellant had placed reliance on NCLT, Hyderabad Bench judgment passed in the matter Praveen Kumar Mundra v. CIL Securities Ltd wherein it was held that the Stoking Broking Company is a financial service provider as it is regulated by SEBI, it deals with financial products i.e. securities and imparts financial services under Section 3(16) of the IBC.

Hence, it should not be considered as the Corporate Person as stated under Section 3(7) of the IBC. Thus, the insolvency proceedings of a stock broking company are not covered under the purview of IBC.

It was also submitted that Respondent No. 1 (Financial Creditor) has suppressed the vital fact that the investor grievance resolution panel of NSE has rejected his claim and the admissible claim of the Financial Creditors is NIL. While issuing notice to the Respondents, the bench headed by the grant of two weeks to file their reply in the matter.

“The Respondent No. 1 seeks and is granted two weeks to file Reply Affidavit. Rejoinder, if any, may be filed one week thereafter. It is ordered that if the CoC has not been constituted it be put on hold till next date of hearing.” the bench ordered.

For more updates on the verdict, do follow the ITAT Orders blog.

Draft Model Tenancy Act – 2020: A major step to streamline the property renting process in India.

Sourabh Agarwal
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Draft Model Tenancy Act – 2020: A major step to streamline the property renting process in India.

After releasing the draft in 2019, the Union Cabinet on 2nd June 2021 approved the Model Tenancy Act (MTA) to streamline the process of renting a property in India and aid the rent economy in the estate sector

Why was the Model Tenancy Act needed?

As per Census 2011 around 110 lakh houses were lying vacant in urban areas and one of the main reasons for the non-availability of these houses for rental purposes is the existing rental laws of the States/UTs, which discourage renting.

There is a segment of the population especially migrants, who prefer rented accommodation as it offers affordability and flexibility with low entry and exit cost with the option to live near their ‘place of work’. The share of the urban population has increased to 31.16% in 2011 as compared to 27.82% in 2001 and further urban population is projected to be >50% by 2050.

A significant portion of this increase can be attributed to the migration to urban areas for various purposes such as education, employment, business, healthcare, and better quality of life. People also migrate from one area of the city to another area.

Considering the above situation and for the benefit of citizens, The Ministry of Housing and Urban Affairs (MoHUA) has prepared a Draft Model Tenancy Act, 2020 intending to balance the interests and rights of both the landlord and tenant; and to create an accountable and transparent ecosystem for renting the premises in a disciplined and efficient manner.

Further, States can adopt the Act as it is with fresh legislation, since it is a state subject, or they can amend their existing rent acts to factor in the new MTA.

States and Union Territories have MoUs with the Centre under the Pradhan Mantri Awas Yojana-Urban which has this provision.

This article provides a brief description of the Model Tenancy Act,2020

Major Objectives of Model Tenancy Act, 2020:

  • It will enable the creation of adequate rental housing stock for various income segments of society including migrants, formal and informal sector workers, professionals, students, etc.; increase access to quality rented accommodation, and enable gradual formalization of the rental housing market.
  • It will help overhaul the legal framework concerning rental housing across the country. It is expected to give a fillip to private participation in the rental housing sector thereby addressing the huge housing shortage.
  • MTA will enable the unlocking of vacant premises for rental purposes and create a vibrant, sustainable, and inclusive rental market.
  • MTA will promote the growth of the rental market thereby attracting investment and promote entrepreneurial opportunities in the rental housing sector.

Most Important Features of Model Tenancy Act, 2020

  • After commencement of MTA, no premises to be rented except by an agreement in writing on mutually agreed terms;
  • MTA to be applicable to residential and commercial tenancies;
  • MTA to be applicable to the whole of the State/UT i.e. urban and rural areas;
  • Rent to be fixed by mutual agreement between the landlord (lessor) and tenant (lessee);
  • MTA to be applied prospectively and the existing tenancies shall continue to be governed by the respective extant rental laws of the States/UTs;
  • MTA to provide for a fast-track quasi-judicial mechanism for adjudication of disputes;
  • MTA to be applicable to all tenancies with no monetary threshold;
  • The terms of the agreement shall be binding upon successors of the landlord as well as a tenant for the remaining period of the tenancy agreement.
  • Sub-letting is not permitted without the execution of a supplementary agreement between landlord and tenant.
  • If the term of the tenancy ends at the time when locality (where rented premises is situated) experiences any force majeure event, the landlord shall allow the tenant to continue possession of premises for one month from the cessation of such force majeure event on the same terms of the prevailing tenancy agreement.
  • Security deposit for residential premises shall not exceed two months’ rent and in case of non-residential premises, it shall be as per the terms of tenancy agreement subject to a maximum of six months’ rent. The security deposit shall be refunded by the landlord at the time of taking over vacant possession of the premises, after making due deductions, if any. Recovery of possession of premises by the Landlord on certain grounds.
  • The landlord is entitled to double the monthly rent for the first two months and thereafter, four times the monthly rent in case of default by the tenant to vacate the premises after termination of tenancy.

It is expected by the Ministry of Housing and Urban Affairs that State tenancy laws based on the draft Model Tenancy Act will be beneficial for both landlords and tenants, thus providing a win-win situation.

The provisions of MTA emphasize the supremacy of rent agreement, executed between the parties on mutually agreed terms, which will minimize the possibility of disputes, and in case of any dispute, same shall be resolved quickly through the speedy dispute redressal mechanism prescribed in the proposed legislation.

And because people at large do not enter into written agreements or that landlord-tenant disputes which are quite common often lead to lengthy litigation, the guidelines proposed by the MTA would help in ensuring the speedy redressal of tenancy disputes and transparency in the system.

The draft Model Tenancy Act can be accessed at MoHUA’s official Website.

Check out the ITAT’s Blog for more news and articles related to finance and law.

Guidelines for compulsory selection of IT Returns for complete scrutiny during the FY 2021-22

Priya kejriwal
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Guidelines for compulsory selection of IT Returns for complete scrutiny during the FY 2021-22

The Central Board of Direct Taxes (CBDT) on Thursday issued the Guidelines for compulsory selection of returns for Complete scrutiny during the Financial Year 2021-22.

In the case pertaining to Survey under Section 133A after the issue of notice u/s 143(2) of the Act by the Jurisdictional Assessing Officer for compulsory selection, cases selected for re compulsory scrutiny which has impounded material, shall have to be transferred to Central Charges u/s 127 of Ot the Act within 15 days of issue of notice u/s 143(2) of the Act. After the issue of notice u/s 143(2) of the Act by the Jurisdictional Assessing Officer ed for compulsory selection, assessment proceedings in respect of cases selected for compulsory scrutiny and where there is no impounded material will be conducted by National Assessment Centre (NaFAC). The Assessing Officer shall upload the Survey Report in the ITBA at the time of issue of notice u/s 143(2) of the Act. In cases of  search and seizure if the case is falling u/s 153C, if lying outside Central Charges, the Jurisdictional Assessing Officer is required to issue notice u/s 143(2) in cases where return is furnished u/s 153C or 142(1) calling for information in cases where no return is furnished u/s 153C. Such cases shall be transferred to Central Charges u/s 127 of the Act within 15 days of issue of notice u/s 143(2) or 142(1) of the Act. In cases where no return has been furnished in response to a notice u/s 142(1) of the Act, these cases will be taken up for compulsory scrutiny by NaFAC. Cases where return has been furnished in response to notice u/s 142(1) of the Act and where notice u/s 142(1) of the Act was issued due to the information contained in NMS Cycle/AIR information/information received from Directorate of 1&CI. These cases will not be taken up for ice u/s compulsory scrutiny and the selection of such cases for scrutiny will be through CASS mation cycle. Cases where return has been furnished in response to notice u/s 142(1) of the Act and where notice u/s 142(1) of the Act was issued due to the specific information received from Law Enforcement Agencies, including Investigation the Wing; Intelligence/Regulatory Authority/Agency; Audit Objection; etc. After the issue of notice u/s 143(2) of the Act by the Jurisdictional Assessing Officer specific for compulsory selection, assessment proceedings in such cases will be conducted by NaFAC. Cases where no return has been furnished in response to notice u/s 148 of the Act, Jurisdictional Assessing shall issue notice u/s 142(1) of the Act, calling for information regarding the issues on the basis of which notice u/s 148 was issued, subsequent to which, assessment proceedings in such cases will be conducted by NaFAC. Cases where return is furnished in response to notice u/s 148 of the Act, after the issue of notice u/s 143(2) of the Act by the Jurisdictional Assessing Officer for compulsory selection, assessment proceedings in such cases will be conducted by NaFAC. In the cases related to registration/approval under various sections of the Act, such as 12A, 35(1)(ii) or (iia) or (iii), 10(23C), etc. after the issue of notice u/s 143(2) of the Act by the Jurisdictional Assessing Officer for compulsory selection, assessment proceedings in such cases will be conducted by NaFAC. “The exercise of selection of cases for compulsory scrutiny on the basis of the above parameters and service of notice u/s 143(2) of the Act will have to be completed by 30.06.2021. As per the amendments brought vide Finance Act, 2021, the time limit for service of notice u/s 143(2) of the Act is been reduced to three months from the month of the end of the Financial Year in which the return is filed,” the CBDT said.

The notification can be accessed at https://www.incometaxindia.gov.in/Lists/Latest%20News/Attachments/451/Guidelines_for_compulsory_selection_MiscComm_10_6_21.pdf

Is RBI’s latest circular on Crypto currencies a green signal for Legalization/Regularization of crypto currency trading in India?

Sourabh Agarwal
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Is RBI’s latest circular on Crypto currencies a green signal for Legalization/Regularization of crypto currency trading in India?

Recently, on 31.05.2021 Reserve Bank of India vide its Circular No. DOR. AML.REC 18 /14.01.001/2021-22 came clear on its stance about Crypto trading in India.

It was noticed that many Banks in India were warning their customers about trading in crypto currencies or flagging the customer’s transactions related to crypto currency trading on the basis of  RBI’s circular in the year 2018 about the legality of crypto currency trading in India. And this demotivated many people to start or continue investing or trading in crypto currencies.

So, RBI through this latest Circular gave a clear guidance to the Banks and other regulated banking institutions about dealing with the customers investing or trading in Crypto currencies in India.

The detailed circular is as follows 

“All Commercial and Co-operative Banks / Payments Banks/ Small Finance Banks /NBFCs / Payment System Providers

Dear Madam / Sir ,

Customer Due Diligence for transactions in Virtual Currencies (VC)

It has come to our attention through media reports that certain banks/ regulated entities have cautioned their customers against dealing in virtual currencies by making a reference to the RBI circular DBR.No.BP.BC.104/08.13.102/2017-18 dated April 06, 2018. Such references to the above circular by banks/ regulated entities are not in order as this  circular was set aside by the Hon’ble Supreme Court on March 04, 2020 in the matter of Writ Petition (Civil) No.528 of 2018 (Internet and Mobile Association of India v. Reserve Bank of India). As such, in view of the order of the Hon’ble Supreme Court, the circular is no longer valid from the date of the Supreme Court judgement, and therefore cannot be cited or quoted from.

2. Banks, as well as other entities addressed above, may, however, continue to carry out customer due diligence processes in line with regulations governing standards for Know Your Customer (KYC), Anti-Money Laundering (AML), Combating of Financing of Terrorism (CFT) and obligations of regulated entities under Prevention of Money Laundering Act, (PMLA), 2002 in addition to ensuring compliance with relevant provisions under Foreign Exchange Management Act (FEMA) for overseas remittances.

Yours faithfully,

(Shrimohan Yadav)

Chief General Manager”

As it is very much clear from the above circular that the RBI’s 2018 circular was set aside by the Hon’ble Supreme Court of India vide Writ Petition (Civil) No.528 of 2018 (Internet and Mobile Association of India v. Reserve Bank of India) on 04th march 2020, and hence citing the said circular by banks and other institutions to warn their customers about the Cryptocurrency trading is invalid.

However, the RBI has asked banks to continue to carry on customer Due Diligence through KYC’s and other modes.

The Catchnote of the Supreme Court’s Judgement as cited supra :  

…… The position as on date is that VCs are not banned, but the trading in VCs and the functioning of VC exchanges are sent to comatose by the impugned Circular by disconnecting their lifeline namely, the interface with the regular banking sector. What is worse is that this has been done (i) despite RBI not finding anything wrong about the way in which these exchanges function and (ii) despite the fact that VCs are not banned. 6.172. As we have pointed out earlier, the concern of RBI is and it ought to be, about the entities regulated by it. Till date, RBI has not come out with a stand that any of the entities regulated by it namely, the nationalized banks/scheduled commercial banks/cooperative banks/NBFCs has suffered any loss or adverse effect directly or indirectly, on account of the interface that the VC exchanges had with any of them. there must have been at least some empirical data about the degree of harm suffered by the regulated entities (after establishing that they were harmed). It is not the case of RBI that any of the entities regulated by it has suffered on account of the provision of banking services to the online platforms running VC exchanges. When the consistent stand of RBI is that they have not banned VCs and when the Government of India is unable to take a call despite several committees coming up with several proposals including two draft bills, both of which advocated exactly opposite positions, it is not possible for us to hold that the impugned measure is proportionate. Therefore, in the light of the above discussion, the petitioners are entitled to succeed and the impugned Circular dated 06-04-2018 is liable to be set aside on the ground of proportionality…..

Thus with the above circular and judgement of RBI and Supreme Court Of India respectively the people investing or trading in cryptocurrencies have got a great sigh of relief.

The circular has thrown some light on the Central Govt’s / RBI’s intention for Legalisation and regularisation of trading or investing in Crypto Currencies in India.

A time barred order u/s 263 is bad in law.

Anjali Garg
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A time barred order u/s 263 is bad in law.

Begani Dyeing Mills Pvt.Ltd., Surat v. The Pr.CIT., Surat [ITA 404/SRT/2019]

Facts of the case
The case of the assessee was selected for scrutiny through CASS and accordingly original assessment in case of assessee was completed u/s. 143(3) of the Income Tax Act, 1961. Subsequently, the case of the assessee was reopened u/s 147 of the Act by issuing notice u/s 148 on the ground that assessee has claimed deduction u/s. 80IA of the Act.
Further, the assessee preferred an appeal before CIT-(A), Surat against the re-assessment proceedings where Ld. CIT(A) dismissed the assessee’s appeal. Thereafter, assessee had filed an appeal before Honorable Tribunal, Surat bench. In the result, appeal of the assessee was allowed.
Assessee’s Contention
The ld. Counsel for the assessee contented that the issue was of section 14A of the Act was examined by AO in the assessment order passed under section 143(3) of the Act on 30.01.2015. Later, the assessment was reopened under section 147 on the issue of deduction under section 80IA and there was no issue with regard to the disallowance of 14A of the Act. Thereafter, the order under section 263 of the Act was passed on 07.12.2018, which is beyond the prescribed period of limitation of 2 years from the end of relevant assessment year when the assessment order was passed i.e. upto 31.03.2017. Another contention the learned AR of the assessee submitted that the assessee earned exempt income of Rs.2,02,337/- which the AO already disallowed more than the exempt income i.e. Rs.2,35,039/-. Therefore, the order passed by the AO was not erroneous as per the settled law that disallowance under section 14A of the Act should not exceed the exempt income.
Crux of the case
The Ld. Tribunal held that the issue of section 14A of the Act was discussed and disallowance was made by the AO in the assessment order dated 30.01.2015 and the case was reopened under section 147 on the issue of deduction under section 80IA of the Act. The ld. PCIT passed order under section 263(1) of the Act on 07.12.2018, which is beyond the 2 years period of limitation, therefore, the order passed by the ld. PCIT is barred by limitation. Even on merit, it was observed that the Ld. PCIT instead of accepting the contention of assessee proceeded to direct the AO to frame the de-novo assessment. Considering the fact that it is settled law that disallowance under section 14A of the Act should not exceed the exempt income. The assessee has earned total exempt income of Rs.2,02,337/- and the maximum disallowance do not exceed to the exempt income. Thus, the assessee succeeded on merit also.
Reliance Placed upon
CIT Vs. Alagendran Finance Lt. [162 Taxmann 465] (SC) and
CIT Vs. ICICI Bank Ld., [19 taxmann.com 142] (Bombay HC)
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https://www.itatorders.in/appeal/ita-404-srt-2019-14-begani-dyeing-mills-pvt-ltd-surat-the-pr-cit-circle-1-surat

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When Assessing Officer admitted the genuineness of transaction in his Remand report, addition cannot be confirmed by CIT(A)

Khushi Surana
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0
When Assessing Officer admitted the genuineness of transaction in his Remand report, addition cannot be confirmed by CIT(A)

Sh. Mukesh Nanubhai Desai vs ACIT [ITA No. 781/SRT/2018]

Facts of the case

Assessee has  earned exempt income of Rs. 8,67,79,658/- on account of Long term capital gain on which STT was paid exempt u/s 10(38) of Rs. 8,66,13,252/- and profit share from firm of Rs. 1,66,406/- exempt u/s 10(2A).

Assessee submitted that the transactions were genuine and that all the details were furnished to the assessing officer such as books of accounts of assessee and details of various scrips of shares with their date of purchase and its sales.

The Assessing Officer also stated that out of the directors of the companies “Nimbus Industries Ltd’ and Regency Trust Ltd in which assessee has invested were banned from trading by SEBI.

CIT (A) directed the Assessing Officer to furnish a factual report confirming if the aforesaid details were filed or not. Assessing Officer in his remand report admitted before the Ld. CIT (A)  that the transactions were genuine.

The Ld. CIT (A) was of the view that although the basis of making the addition did not survive, there existed a prearranged scheme to bring unaccounted income back into the books by claiming exempt Long term capital gain.

Assessee’s Contention

The Ld. AR of assessee contented that Assessing Officer made addition on account of the transactions not being genuine but later the assessing officer admitted by way of his remand report that the transactions were genuine.

Ld. CIT (A) cannot confirm addition merely on the basis of probability, surmises, suspicion or conjectures that the Assessing Officer didn’t conduct any verification of the documents.

The director who was banned was only one of the common directors and price rigging (the reason for which the director was banned) didn’t take place in Nimbus Industries (the company in which assessee has invested. Both the companies in which assessee transacted were not alleged to be involved in price rigging or manipulation.

Additions  in  this  case  is  not  based  on  investigation report of either income tax department or other authority  or  on  the  statement  of  entry  provider.  Further, SEBI has not taken any action against alleged two companies or their directors or concern brokers for any manipulation of prices prevailing in the stock exchange.

Once the department accepts the purchases, the sales of similar shares cannot be doubted.

Crux of the case

When the assessee furnishes complete details of purchase and sales of the shares were provided to the assessing officer and these details are able to prove the genuineness of transaction, the addition cannot be made by a higher authority merely on the basis of probability, surmises, suspicion or conjectures. 

The genuineness of the transactions was proved and also admitted by the Assessing officer in his Remand report and Also, since addition in this case was not based on any investigation report of either income tax department or other authority or on the statement of entry provider, the addition cannot sustain.

Reliance placed on:

  • CIT Vs Mahesh Chandra G. Vakil [220 Taxman 166 (Gujarat HC)]
  • CIT  Vs Himani M. Vakil [10 taxmann.com 326 (Guj HC)]
  • PCIT  Vs  Dhwani  M.  Shah  [Tax  Appeal  No.  674  of  2017  ] (Gujarat HC )

ITAT ruled in favour of assesse.

Download full judgment at https://www.itatorders.in/appeal/ita-781-srt-2018-14-shri-mukesh-nanubhai-desai-surat-the-assistant-commissioner-of-income-tax-circle-1-1-2-surat

Revision u/s 263 cannot be made on a issue which was never a part of the assessment order to be revised.

Shyam Mangukiya
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0
Revision u/s 263 cannot be made on a issue which was never a part of the assessment order to be revised.

Nilkanth Developers vs PCIT – 3 [ITA No.95/ SRT/2020]

Facts of the case

Assessment order u/s. 143(3) was passed 26.03.2013  for A.Y.2010-11 disallowing deduction claimed u/s. 80IB(10) of Rs.1,25,78,872/-. The same was confirmed by CIT(A) but on further appeal before ITAT, the same was allowed in favour of assessee.

Notice u/s. 148 was issued and order u/s. 143(3) r.w.s 147 was passed on 22.09.2017 for A.Y. 2010-11 proposing to reduce the deduction claimed by the amount of interest and remuneration payable to partners on notional basis.

PCIT passed order u/s. 263 on 16.03.2020 revising the assessment made u/s. 147  on 22.09.2017 disallowing the deduction claimed u/s.80IB(10).

Assessee’s Contention

The subject matter of revision u/s.263 being unconnected with the issues which were subject matter of the assessment under 143(3) r.w.s 147, the order passed by the Ld. PCIT was proposing to revise the original assessment made u/s. 143(3) for which the action has become time barred.

Crux of the case

  • Revision cannot be made on a issue which was not part of the Order to be revised.
  • No order under section 263(1) after the expiry of 2 years from the  end  of  the  financial  year  in  which  the  order  sought  to  be  revised  was passed.

Reliance placed on

Malabar Industries Ltd. vs. CIT (243 ITR83)

Alagendran Finance Ltd. (2007) 162 Taxman 465 (SC)

H.P. Cotton Textile Mills Ltd (311 ITR 436)

ITAT ruled in favour of assesse.

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