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.

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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CBDT Wants Restoration Of 4,000 De-Registered Shell Companies To Recover Unpaid Taxes

Amidst the government’s crackdown on numerous shell companies, the Central Board of Direct Taxes (CBDT) wants about 4,000 such firms to be restored to collect unpaid taxes, reports The Hindu BusinessLine.

This move finds its rationale in the development that owing to de-registration of a large number of shell companies over the past few years, the CBDT is left with no means to recover tax dues from many of the now de-registered shell firms.

“If there is no identity of the companies, whom do we chase to recover our dues from? So the applications are being filed for restoration,” a CBDT spokesperson said.

The CBDT which functions under the administrative control of the Ministry of Finance has built consensus with the Ministry of Corporate Affairs (MCA) over the issue, with the latter asking it to file the restoration application with the National Company Law Tribunal (NCLT).

As a result, the CBDT has directed its field formations across the nation to file applications with the NCLT for the restoration of shell companies.

The Union Government had struck off around 2.26 lakh shell companies in the first drive from FY14 to FY15, while another 1,00,150 companies were struck off between FY16 and FY17 in a bid to counter tax evasion, money laundering, obscuring ownership and benami properties.
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MCA brings more clarity on guidelines for reserving the name of the Company

The MCA has amended the Companies (Incorporation) Rules, 2014. In the revised Rule 8 for reservation of name of a company, the Ministry has elaborated the provision by inserting various illustrations. The Rule has been divided in to 2 parts - Rule 8A and Rule 8B.
Rule 8A deals with the undesirable names and Rule 8B limits use of words such as Board, commission, National, Republic etc. only after obtaining previous approval of Central Government.
While considering the application related to name approval the following illustrations must be considered otherwise the names shall be considered as undesirable and will not be approved. Some of the illustrations have been discussed hereunder:

1. Name should not be identical to singular or plural form of existing company;

User of plural or singular form of the words will be considered as undesirable and such name wouldn't be approved by authority on receipt of application for reservation of name of company. This can be better understood with the help of illustration as provided by MCA:

For e.g. Green Technology Limited shall be considered same as Greens Technology Limited and Greens Technologies Limited.

2. Change in Tense would be considered as Similar Name;

The department will reject the application for reservation of name of the company if someone use different tense in name of the company such as:

Ascend Solution ltd. is same as Ascended Solutions Ltd and Ascending Solutions Ltd.

3. Different use of phonetic spellings is treated as identical name;

Chemtech Ltd is same as Chemtec Ltd, Chemtek Ltd, Cemtek ltd, Kemtech Ltd and Kemteck Ltd.

4. Change in order of words of name and use of article before proposed name

The application for reservation of name will not be considered if an applicant just changes the order of words or use of article before any name of the existing company for e.g.:

  1. Ravi Builders and Contractors Ltd is same as Ravi Contractors and Builders Ltd
  2. Congenial Tours Ltd is same as A Congenial Tours Ltd. and The Congenial Tours Ltd.

5. Variation in spelling of two name;

Name including slightly variation in spelling of existing company name would be considered as resembling name and department will reject the application for reserving a name of the company. For example,
Color Technologies Ltd is similar as Colour Technologies Ltd.
6. Addition, deletion or modification of exiting name;

Addition, deletion or modification in any existing name of the company is not allowed and the concerned department will spare no time to reject the proposed name of the company. To instance,
  1. Salvage Technologies Ltd is an existing name and it is same as Salvage Technologies Delhi Ltd. and Salvage Delhi Technologies Ltd.
  2. Thunder Services Ltd is same as Thunder11 Services Ltd. and OneThunder Services Ltd.
7. Change in meaning either in Hindi or English;

Complete translation or transliteration or nay part of an existing name either in Hindi or English. For Example:
National Electricity Corporation Ltd is same as Rashtriya Vidyut Nigam Ltd.
Though, MCA has created a dedicated unit Central Registration Centre (CRC) to expedite the incorporation related activities including Name approval, yet the stakeholders were facing difficulty in getting the name approved due to lack clarity in the Rules for selection of desired name. This amendment may bring relief to the stakeholders while choosing the name of a company. Revised Rules with detailed illustration will serve as readymade guidance for both practicing professionals and CRC thereby further easing the incorporation process.
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Director’s DIN to be marked as ‘Director of ACTIVE non-compliant co.’ on his failure to file Co.’s KYC

The Ministry of Corporate Affairs (MCA) has amended the Companies (Appointment and Qualification of Directors) Rule, 2014 wherein new rule 12 B has been inserted. The amendment emphasis to file the ACTIVE e-form otherwise the existing director’s DIN will be marked as Director of ACTIVE non-compliant company’.

New Delhi, the 16th May, 2019 

G.S.R. 368(E).—In exercise of the powers conferred by the second proviso to sub-section (1), subsection (4), clause (f) of sub-section (6) of section 149, sub-sections (3) and (4) of section 150, section 151, sub-section (5) of section 152, section 153, section 154, section 157, section 160, sub-section (1) of section 168 and section 170 read with section 469 of the Companies Act, 2013 (18 of 2013), the Central Government hereby makes the following rules further to amend the Companies (Appointment and Qualification of Directors) Rules, 2014, namely:—

1. (1) These rules may be called the Companies (Appointment and Qualification of Directors) Second Amendment Rules, 2019.
    (2) They shall come into force on the date of their publication in the Official Gazette.

2. In the Companies (Appointment and Qualification of Directors) Rules, 2014, after rule 12A, the following rule shall be inserted, namely:-
12B. Directors of company required to file e-form ACTIVE.- (1) Where a company governed by Rule 25A of the Companies (Incorporation) Rules, 2014, fails to file the e-form ACTIVE within the period specified therein, the Director Identification Number (DIN) allotted to its existing directors, shall be marked as “Director of ACTIVE non-compliant company”.
   (2) Where the DIN of a director has been marked as “Director of ACTIVE non-compliant company”, such director shall take all necessary steps to ensure that all companies governed by rule 25A of the Companies (Incorporation) Rules, 2014, where such director has been so appointed, file e-form ACTIVE.
    (3) After all the companies referred to in sub-rule (2) file the e-form ACTIVE, the DIN of such director shall be marked as “Director of ACTIVE compliant company”.’.

[F. No. 1/22/2013-CL-V]
K. V. R. MURTY, Jt. Secy.
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GST:Simplified Single Return is ready to Rollout in July

In a move to ease the compliance burden on the taxpayers and to facilitate input tax credit in a fast manner, the Central Government has finally moved ahead with the single monthly return system under the Goods and Services Tax ( GST ) regime.

In last May, the Government announced a three-phase plan to address complaints about the difficulties in filing multiple returns according to which, for six months, in a transition phase, businesses would continue to file two returns, GSTR1 (for sales) and GSTR 3B, a summarised return form. After six months, they would move to a single filing on a to-be-introduced form. For consumer-facing businesses, the simplified form would be about total sales while for business-facing businesses, the form would incorporate invoice details.

However, the move was postponed due to lack of technical support in the Goods and Services Tax Network (GSTN). After revamping the web portal, the Government is now ready to roll out the system in July this year, soon after the new government takes over.

No further clearances are required because the GST Council already cleared the three-phase plan last May. The third phase will involve invoice matching.

According to reports, a trial will be there in July.

One of the major criticisms of GST was the compliance burden of filing returns. This was one of the reasons for the principal Opposition, the Congress party, to criticize the new tax regime. Traders, too, have been demanding a reduction in the number of returns to be filed.

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TDS not applicable on Sale of Property if Sale Consideration of each Co-owners does not exceed Rs. 50 Lakhs: ITAt

The Income Tax Appellate Tribunal (ITAT), Jodhpur has held that the provisions of TDS would not applicable on the sale of property if the sale consideration do not exceed Rs. 50 lakhs. 
The assessee-Company purchased a residential property for Rs. 60 lakhs from two people Shri Anant Ram Kumawat and Smt. Seema Kumawat who jointly owned the same. The sale was executed on behalf of the Joint Owners by Shri Vijay Kumawat who held Power of Attorney of the Joint Owners of the property to act on their behalf in relation to the property which was sold to the assessee. The Assessing Officer found that though the assessee company deducted TDS @ 1% of the sale consideration by quoting the PAN of Shri Vijay Kumawat, who was not the actual owner of the property and the owners of the property are Shri Anant Ram Kumawat and Smt. Seema Kumawat. According to him, TDS should have been deducted in the name of the actual owners and not in the name of the Power of Attorney holder. AO also found fault with the assessee not mentioning the PAN details of the joint owners so AO was of the view that the provisions of sec. 206AA of the Act was applicable and tax was deductible at source @ 20% of the purchase consideration. 

The Tribunal noted that the sub-section(2) of Section 194-IA of the Income Tax Act provides an exception from deducting tax of 1% of the sale consideration when the sale consideration for the transfer of immovable property is less than Rs. 50 lacs. 

“Therefore, in the instant case, we note that the total sale consideration is only Rs.60,12,000/- and the admitted fact as taken note by AO & Ld. CIT(A) is that Shri Anant Ram Kumawat and Smt. Seema Kumawat is the co-owners, and jointly owning the immovable property. So, the sale consideration has to be divided equally into two by virtue of sec. 46 of the Transfer of Property Act which prescribed that where the immovable property is transferred for consideration by persons having a distinct interest therein, the transferors are, in the absence of a contract to the contrary, entitled to share in the consideration equally. So, in this case, since there is no contract to the contrary could be pointed out by the Ld. DR for Revenue, in this case, consideration for each transferor comes to Rs.30,06,000/- each, which is below the prescribed limit of Rs.50 lacs given by the statute as aforesaid and, therefore, in the light of the same, we are of the opinion in the facts as discussed, supra, that the provisions of sec. 194- IA of the Act are not applicable in the instant case and, therefore, provisions of section 194-IA of the Act are not attracted,” The Tribunal said.

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I-T dept to fast track disposal of appeal cases; look into taxpayer concerns between May 16-31

The Board has decided to dedicate the second fortnight of May, 2019, -- May 16-31 -- to expeditious disposal of appeal effect and rectification claims of the taxpayers, the CBDT said in a statement

The income-tax department Monday said it will undertake expeditious disposal of appeal cases, and look into taxpayer concerns of adjustment of past tax demands with due refunds during the fortnight beginning May 16.

In a letter to field formations, the Central Board of Direct Taxes (CBDT) said that during May 16-31, all assessing officers would accord top priority to appeal cases and passing of rectification orders and would earmark the first half of the day to meet applicants/counsels who seek to have a hearing to explain their case.

With regard to rectification, the CBDT further said that special attention should be given to demands on account of TDS mismatch, and demands disputed by taxpayers in response to proceedings under section 245 "as these are creating widespread dissatisfaction among taxpayers".

Under section 245 of the I-T Act, the tax authorities can adjust the refund payable to the taxpayer against the past demand due from them.

"The Board has decided to dedicate the second fortnight of May, 2019, -- May 16-31 -- to expeditious disposal of appeal effect and rectification claims of the taxpayers," the CBDT said.

Nangia Advisors (Andersen Global) Managing Partner Rakesh Nangia said the move by the CBDT is also expected to result in huge amounts of pending refunds to be issued within the next one month.

"Aiming to redress taxpayer grievances, special attention has been accorded to the cases where the tax demand is on account of TDS mismatch and demands are in dispute under section 245. This shall go a long way in addressing the genuine concerns of taxpayers facing undue harassment on account of tax demand, without any fault on their part," Nangia said.

Ashok Maheshwary & Associates LLP Partner Amit Maheshwari said this CBDT directive shows the resolve and the intent of the tax department to provide a non-adversarial tax regime to the tax payers.

"Unnecessary delays in providing appeal effects and rectification lead to dissatisfaction amongst the tax payers and if the tax officers follow through with this directive, it is bound to give a much needed relief to the taxpayers," he said.

Similar grievance redressal fortnight was organised by the CBDT in May last year as well.

In July last year, in order to bring down litigation substantially, the government had hiked the threshold limit for tax departments, both the CBDT and Central Board of Indirect Taxes and Customs (CBIC) to file appeals in tribunals and courts.

Accordingly, the threshold limit for tax department to file appeals in ITAT/CESTAT was doubled to Rs 20 lakh or more, up from Rs 10 lakh. Also limit for filing appeals in the high courts was raised to where the tax amount involved in litigation is Rs 50 lakh, from Rs 20 lakh. For the Supreme Court, the threshold limit was hiked to Rs 1 crore, from Rs 25 lakh.

The government had decided to increase the threshold monetary limits for filing departmental appeals at various levels in order to reduce the long pending grievances of taxpayers, minimise litigations pertaining to tax matters and to facilitate the ease of doing business.

With the increase in threshold, 34 per cent of the total cases filed by the department in Income Tax Appellate Tribunal (ITAT) has been withdrawn. The same for the high courts is 48 per cent and in case of the Supreme Court, it is 54 per cent.

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CBDT further deferred furnishing of GST & GAAR details in Form 3CD till March 31, 2020

Section 44AB of the Income-tax Act, 1961 requires specified persons to furnish the tax audit report along with the prescribed details in Form no. 3CD. The existing Form 3CD was amended by the Central Board of Direct Taxes (CBDT) vide notification no. 666(E) dated 20-07-2018. Various clauses have been amended and a few new clauses have been inserted in the new Form 3CD. However, the reporting under clause 30C (pertaining to GAAR) & clause 44 (pertaining to GST) was kept in abeyance till March 31, 2019 vide Circular No. 6/2018 dated 17-08-2018.

Now, considering the representations with regards to further deferment of such reporting, the CBDT has decided that the reporting under clauses 30C & 44 of tax audit report shall be kept in abeyance till March 31, 2020.

Circular no. 09/2019, dated 14-05-2019
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Capital gain exemption shall be limited to actual sale consideration and not stamp duty value

Computation of capital gain and consequently computation of exemption under section 54EC, shall have to be worked out on basis of substituted deemed sale consideration of transfer of capital asset in terms of section 50C it could claim exemption only in relation to amount of investment made in specified bond and not qua entire capital gain computed as per section 50C

Refer:[2019] 104 208 (Bombay)
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Payment made by hospital to consultant doctors would attract TDS under sec. 194J and not u/s 192

Where in terms of agreement entered into between assessee-hospital and consultant doctors, those doctors were not entitled to benefits of leave encashment, gratuity, provident fund, superannuation benefits etc. it could be concluded that there did not exist an employer-employee relationship and, thus, assessee was required to deduct tax at source under section 194J while making payments to doctors

Refer:[2019] 104 212 (Bombay)
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