Income Tax Dept warns public against cash dealings of Rs 2 lakh or more saying that the receiver of the amount will have to cough up an equal amount as penalty.

CBDT eyes 20% jump in tax kitty

Sets target of ₹13.80 lakh crore for current fiscal year

Close on heels of the Modi government winning a thumping victory in the Parliamentary elections, the Central Board of Direct Taxes (CBDT) sprang into activity on Friday and set a fresh income-tax revenue collection target for the current fiscal year, aiming to garner 20 per cent more than in the previous year.

The target for the current fiscal has been set at ₹13.80 lakh crore. For 2018-19, the target was ₹11.50 lakh crore. The CBDT, in consultation with the Department of Revenue, North Block, has set the new target.

The principal chief commissioners of income tax in 18 major revenue regions have been updated about the target.

Target for Mumbai

For the Mumbai region, which is the highest revenue earner in the whole country, the total targeted tax collection has been set at ₹4,39,773 crore, which is 18.60 per cent higher than the ₹3,70,800 crore target set in the previous fiscal year.

The Finance Ministry believes that the Mumbai region should chase a higher tax collection from the corporate sector.Therefore, the corporate tax collection target has been upped by 16.4 per cent to ₹2,76,671 crore against ₹2,37,666 crore in the previous fiscal year.

The target for personal tax collection has been set even higher at 22.92 per cent to ₹1,50,302 crore, while in the previous fiscal the target was ₹1,22,268 crore.

On the other hand, security transaction tax target has been enhanced by 17.80 per cent to ₹12,800 crore against the previous year’s ₹10,865 crore.

A communication from the Department of Revenue, which has been reviewed by BusinessLine, said that the targets have been fixed keeping in mind the revenue potential, which is based on the weighted average growth rate of net collection of the last three years.

The highest importance has been given to the net collection of the 2018-19 fiscal year. Factors significantly affecting the revenue potential of a particular region has been taken into account while setting the targets, to make the process reasonable and equitable, the communication said.

For New Delhi

For the New Delhi region, which is the second-highest IT revenue earner, the total target has been increased by a whopping 31.32 per cent to ₹1,97,891 crore. In fiscal year 2018-19, the target was ₹1,50,686 crore.

A senior I-T official told BusinessLine that the target for the National Capital has been set higher given its potential for more revenue collection.
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‘Blocked Credits’ under GST: Delhi High Court issues Notice to Centre, State

The Delhi High Court, on Monday issued a notice to the Centre and the State Governments while admitting a petition praying to resolve the issues relating to ‘blocked credits’ under the Goods & Services Tax (GST) regime, which is affecting hotels and malls. 

Under section 16 of the GST Act, credit is allowable on inputs at the time of paying tax on output, thus lowering the tax paid in cash. However, this Section is subject to certain restrictions as laid down under Section 17 of the Act. These restrictions are also referred to as ‘blocked credits’. 

The petitioner, a five-star hotel approached the High Court. It has been procuring multiple goods and services, including works contract services, for use in the construction of the property. 

The petitioner contended that by virtue of provisions under the Act, the input tax credit available on the procurement of goods and services or both, including works contract services used for the construction of the immovable property, is denied to the petitioner. 

The petition specifically talks about two provisions related with ‘blocked credits’. Section 17(5)(c) ITC shall not be available in respect of the “works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service”. 

Similarly, Section 17(5)(d) says ITC will not be available for “…goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account, including when such goods or services or both are used in the course or furtherance of business.” 

The petitioner prayed before the court to quash and declare both the provisions as violating the fundamental right of the petitioner and, therefore, violation of the right to equality before the law.

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No reassessment could be made merely on basis of information received from investigation wing

Where after expiry of four years from end of relevant year, Assessing Officer initiated reassessment proceedings on basis of information received from Investigation wing that 'N' Ltd. was a penny stock listed in BSE which used to facilitate introduction of unaccounted income of members in form of share capital and, assessee was one of those beneficiaries, in view of fact that there was no company by name of 'N' Ltd. which was in existence at relevant time period, impugned reassessment proceedings deserved to be quashed


South Yarra Holdings


Income Tax Officer, 16(1)(1)(4), Mumbai*

Section 69A, read with section 147 of the Income-tax Act, 1961 - Unexplained money (Shares) - Assessment years 2011-12 - For relevant year, assessee filed its return declaring certain taxable income - Assessing Officer completed assessment under section 143(3) - After expiry of four years from end of relevant year, Assessing Officer received Information from Investigation wing that 'N' Ltd. was a penny stock listed in BSE which used to facilitate introduction of unaccounted income of members in form of share capital and, assessee was one of those beneficiaries - On basis of said information, Assessing Officer initiated reassessment proceedings in case of assessee - It was noted that at relevant time period, there was no company by name of 'N' Ltd. was in existence and, thus, Assessing Officer had initiated reassessment proceedings merely on basis of information received from Investigation Wing without conducting any independent enquiries - Even otherwise, there was no failure on part of assessee to disclose all material facts at time of assessment and, thus, reassessment proceedings were hit by proviso to section 147 - Whether in view of aforesaid, impugned reassessment proceedings deserved to be quashed - Held, yes [Para 8] [In favour of assessee]
Refer:[2019] 104 216 (Bombay)
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Cash Loan from Parents and Brother for purchasing House for whole Family do not attract Penalty: ITAT

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has ruled that the cash loan received from the parents and brother of the assessee for the purchase of the house for the whole family cannot be penalized under Section 271D of the Income Tax Act.

The assessee is an individual deriving income from salary and other sources. The Assessing Officer completed the assessment determining the total income at Rs.34,12,062/- wherein he disallowed an apart of the long-term capital gain claimed by the assessee u/s 54F of the Income Tax Act apart from making the addition of Rs.57,538/- on account of interest and Rs.8,160/- under the head ‘Salary.’ The officer further levied penalty under section 271D on the ground that the assessee had taken cash loan of Rs.1,25,000/- from Shri Darshan Singh Gujral, Rs.1,00,000/- from Smt. Joginder Kaur and Rs1 lakh from Shri Gurdeep Singh Gujral and, therefore, she has violated the provisions of section 269SS.

The tribunal accepted the contentions of the assessee and held that the transaction took place between the assessee and her parents and brother. Their creditworthiness is not in dispute.

The Tribunal further noticed the decision of the Punjab & Haryana High Court in the case of CIT vs. Sunil Kumar Goel wherein it was held that ‘a family transaction, between two independent assessees, based on an act of casualness, specially in a case where the disclosure thereof was contained in the compilation of accounts, and which had no tax effect, established ‘reasonable cause’ under section 273 B of the Act’ and, therefore, the provisions of section 271D are not applicable.

“Various other decisions relied on by the assessee in the synopsis also supports her case wherein under identical circumstances where the assessees had received loans in cash from close family relations, the penalty levied u/s 271D was deleted. Since the assessee, in the instant case, has received cash loan from her parents and brother to meet the stamp duty cost for purchase of a house property for her own living, therefore, I am of the considered opinion that it is not a fit case for levy of penalty u/s 271D of the Act and the provisions of section 273B will come to the rescue of the assessee as a reasonable cause,” the Tribunal said.

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Form 15H can be furnished if no tax payable on income after sec. 87A rebate

Since the section 87A was amended by the Finance Act, 2019, to provide full tax rebate to taxpayers earning total income up to Rs. 5 lakhs, the CBDT made the consequent amendment in Form 15H used for furnishing declaration for nil deduction of tax in case of senior citizens. Now, rebate u/s 87A shall be allowed while furnishing Form 15H declaration.


(Department of Revenue)



New Delhi, the 22nd May, 2019


G.S.R. 375(E),— In exercise of the powers conferred by sub-section (1C) of section 197A read with section 295 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby makes the following rules further to amend the Income-tax Rules, 1962, namely:___

1. Short title and commencement.—

(i) This rule may be called the Income-tax (4th Amendment) Rules, 2019.

(ii) It shall come into force from the date of its publication in the Official Gazette.

2. In the Income-tax Rules, 1962, in Appendix II, in Form No. 15H in Part II, in note 10, the following proviso shall be inserted, namely:— “Provided that such person shall accept the declaration in a case where income of the assessee, who is eligible for rebate of income-tax under section 87A, is higher than the income for which declaration can be accepted as per this note, but his tax liability shall be nil after taking into account the rebate available to him under the said section 87A.”.

[Notification No. 41/2019/F. No. 370142/5/2019-TPL]

SAURABH GUPTA, Under Secy. (Tax Policy & Legislation)
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GST paid on Construction of Immovable Property intending to Let Out eligible for Input Tax Credit: Odisha HC

The Odisha High Court, in a significant ruling, held that input tax credit is available in respect of GST paid while constructing the immovable property intending to let out for rent. 

The petitioner contrasted an immovable property intending to let out the same for rent. The petitioner claimed that input tax credit can be availed on the same since they are mainly carrying on the business activity of constructing shopping malls for the purpose of letting out the same to numerous tenants and lessees. It was further contended that huge quantities of materials and other inputs in the form of Cement, Sand, Steel, Aluminium, Wires, plywood, paint, lifts, escalators, Air-conditioning plant, chillers, electrical equipment, special fa├žade, DG sets, Transformers, building automation systems and also services in the form of Consultancy, Architecture, legal and professional, engineering etc. are required for the aforesaid construction purpose 

However, the revenue department rejected the claim. 

The bench comprising Chief Justice K S Jhaveri and Justice K R Mohapatra has observed that the very purpose of the Act is to make uniform provision for the levy, collection of tax, the intrastate supply of goods and services, both Central or State and to prevent multi-taxation.

“Keeping in mind the provisions of Section 16 (1) (2) where the restriction has been put forward by the legislation for claiming eligibility for input credit has been described in Section 16(1) and the benefit of apportionment is subject to Section 17(1) and (2). While considering the provisions of Section 17(5)(d), the narrow construction of interpretation put forward by the Department is frustrating the very objective of the Act, inasmuch as the petitioner, in that case, has to pay the huge amount without any basis. Further, the petitioner would have paid GST if it disposed of the property after the completion certificate is granted and in case the property is sold prior to completion certificate, he would not be required to pay GST. But here he is retaining the property and is not using for his own purpose but he is letting out the property on which he is covered under the GST, but still he has to pay huge amount of GST, to which he is not liable,” the bench said. 

“In that view, of the matter, in our considered opinion the provision of Section 17(5)(d) is to be read down and the narrow restriction as imposed, reading of the provision by the Department, is not required to be accepted, inasmuch as keeping in mind the language used in (1999) 2 SCC 361 (supra), the very purpose of the credit is to give benefit to the assessee. In that view of the matter, if the assessee is required to pay GST on the rental income arising out of the investment on which he has paid GST, it is required to have the input credit on the GST, which is required to pay under Section 17(5)(d) of the CGST Act.”

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CBDT releases draft notification proposing new audit report for Trust/Institution

A trust or institution is required to get its account audited if the total income of the trust or institution, computed without giving effect to sections 11 and 12, exceeds the maximum amount not chargeable to income-tax in any previous year. Rule 17B of the Income-tax Rules, 1962 provide that said report of audit of the accounts of a trust or institution shall be in Form No. 10B. The Form No. 10B besides providing the Audit Report provides for filing of "Statement of particulars" as Annexure.

Said rule & form were notified long ago in the year 1973. Thus, Central Board of Direct Taxes (CBDT) has released draft notification proposing amendment to Rule 17B & Form 10B in order to rationalise them to align with the requirements of the present times.

The stakeholders and general public are requested to provide inputs on draft Form no. 10B electronically at by June 5, 2019.

Notification F No 370142/6/2019-TPL, dated 21-05-2019
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Ministry of Corporate Affairs plans to tighten audit reporting standards

MCA plans to propose changes to the Companies (Auditor’s Report) Order or CARO as soon as the next government assumes office.

India is set to strengthen audit reporting standards with the role of auditors coming under cloud after a number of corporate frauds.

The ministry of corporate affairs plans to propose changes to the Companies (Auditor’s Report) Order or CARO as soon as the next government assumes office. “We will further strengthen the Companies (Auditor's Report) Order. We will make it even sharper,” a senior government official told ET.

The move comes at a time when questions have been raised on the role of auditors in several of the recent financial scams, particularly the loan repayment defaults of Infrastructure Leasing and Financial Services, which is being investigated by the Serious Fraud Investigations Office of the ministry of corporate affairs. The official said even the current standards were “good enough”, and auditors would not be alowed to use the fact of a revision of rules as an excuse for poor or negligent audit reporting under current standards. The auditing standards, which were last revised in 2016, dictate the disclosures that auditors must make when filing auditor’s reports.
CARO applies to most large companies in India other than financial and charitable institutions. The last revision of these rules added the requirement that managerial remunerations and related party transactions be included in the auditor’s report.

Experts say CARO has progressed along with international standards but could possible benefit from the inclusion of more evaluations by auditors of the company’s status in the place of multiple smaller disclosures.

“CARO should include, whether the company in the view of the auditor is a going concern or not. Is there something in the accounts of the company which can impact its ability to be a going concern?” said Dinesh Kanabar, CEO of Dhruva Advisors.

The auditor would then have to do a test and justify why he reached a conclusion that the company continues to be a going concern, Kanabar added.

Kanabar also suggested that CARO could include an evaluation of the basis of the valuation of the assets of a company and remove items that do not impact a true and fair view of the books such as whether a company has paid statutory dues on time.

The ministry is also looking to operationalise the recently formed National Financial Reporting Authority. NFRA is set to take charge of oversight of audits of larger corporates including listed companies from the Institute of Chartered Accountants of India (ICAI).

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ICAI Chief enumerates Influence of ICAI in Recent Developments in GST

The Goods and Services Tax (GST) was rolled out in July 2017. The complex and not so ‘simple’ tax is now running without many glitches due to the active participation of compliance professionals. Recently, the President of the Institute of Chartered Accountants of India ( ICAI ), CA. Prafulla P. Chhajed has enumerated the recent developments in the Goods and Services Tax (GST) influenced by the involvement of the Institute.

The following are the recent developments where the Institute had a major role in contributing,

Testing of Software for Taxpayers: GST Council has mandated the Goods and Services Tax Network (GSTN) to provide free software to taxpayers having a turnover of less than 1.5 crores, with features of invoicing, accounting, trial balance and return filing. Responding to their request, ICAI has helped the GSTN in testing the software for the aforesaid application.

GST Portal: Based on GSTN’s request for suggestions for improving the GST portal, ICAI submitted 38 suggestions to improve various forms/ interfaces available on the Portal including filing the return, making payment and login.

Taxation in Infrastructure: GST Council had proposed to impose tax at the rate of 1% and 5% on affordable housing properties and for the residential properties outside the affordable segment respectively, at its 33rd meeting. Now, favourably responding to ICAI’s eight suggestions in that regard, the GST Council at its 34th meeting held on 19th March 2019 has decided that these new rates would be mandatory only for new projects that would start from 1st April 2019 and taxpayers have been given freedom to opt for the new scheme in the running project, if they so desired.

Updated e-Learning Modules on Customs and FTP: ICAI has come up with an updated series of e-Learning on Customs and foreign trade policy (FTP) comprising recorded video sessions, which cover almost all relevant topics in that regard.

7th Edition of Background Material on GST: Seventh edition of the Background Material on GST has been published, which is in line with the changes brought about in the month of April 2019. Containing clause-by-clause analysis of the GST laws, this explains with the help of flowcharts, diagrams, MCQs and FAQs. The publication may be downloaded from

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Loss arising from speculative transactions couldn’t be set off against profit from trading in futures & options

Where the assessee, a non-banking financial company, whose principal business activity was of trading in shares and securities, incurred loss (speculative loss) as a result of its activity of trading in shares, said loss was not capable of being set off against the profits which it had earned against the business of futures and options since the latter did not constitute profits and gains of a speculative business

REFER:[2019] 105 282 (SC)
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