Direct Tax Vista

GLOBAL MINIMUM TAX SERIES: 11 – Pillar Two Safe Harbours

Edn. 11

CA Amit Jalan


In this edition:

The safe harbours and penalty reliefs for the Pillar Two GloBE rules as issued by the OECD.


Rules 11 – Pillar Two Safe Harbours


Edn. 10

CA Amit Jalan


In this edition:

Key provisions within the GloBE Rules on Safe Harbour.


10 – GloBE Safe Harbour Rule

Direct Tax Vista – Your Weekly Direct Tax Recap + ITAT Order + CBDT Notification + RBI Report

Edn. 60 | Dated: 30.05.2023

CA Vivek Jalan


In this edition:

1. Angel Tax exemptions notified

Vide Notification No. 29/2023 dated 24th May, three categories of entities are notified to have been retrospectively exempted from Sec 56(viib) since 1st April 2023. These are those entities which are registered with Sebi…

2. Leave Encashment bonanza for retiring/ resigning/ super-annuating employees

The Union Budget 2023 did not have anything for those in the old regime in Income Tax. However, there is good news from CBDT for those retiring/ leaving job/ taking super-annuation…

3. Some relaxations for trusts after all

Provisions related to Trusts/NPOs/Charitable Institutions are the subject matter of constant changes over the past 3 years. The CBDT is bent on streamlining the Income Tax issues relating to trusts which are long pending…

4. Expenditure for re-export on grounds of commercial expediency are business expenses

An expenses incurred to rectify a violation under any other law, provided it is for business purpose cannot be disallowed u/s 37(1). What can be disallowed u/s 37(1) is the expenditure incurred by an assessee…

5. Vendor due diligence required for Income Tax also

Under GST, it is contended by recipients that they should not be held liable incase suppliers are defaulting payment of GST to the Govt. This has been an area of widespread litigation under the Indirect Taxes regimes…

6. Income Tax Compulsory scrutiny notices to start flowing now as guidelines are in place

Notices u/s 143(2) will be served for all the cases selected for Compulsory Scrutiny, by 30.06.2023 as the Guidelines for compulsory selection of returns for Complete Scrutiny during the Financial Year 2023-24…




Income Tax Act, 1961 – Sections 14A, 28(iv), 41(1), 80IA, 92CA(3), 143(3) and 144C(13) – Income Tax Rules, 1962 – Rule 8D – Transfer Pricing – Corporate guarantee – Transfer pricing adjustment – Appellant/assessee is one of largest integrated steel companies in India filed its return of income for year under consideration declaring Nil income – Pursuant to reference by AO, Transfer Pricing Officer (TPO) proposed transfer pricing adjustments vide order passed under Section 92CA(3) of the Act – AO passed draft assessment order after making various additions/disallowances – In conformity with directions issued by Dispute Resolution Panel (DRP), AO passed impugned final assessment order under Section 143(3) read with Section 144C(13) of the Act – Whether DRP has erred in confirming action of TPO/AO in making an upward adjustment on account of non-charging of arm’s length guarantee fee to associated enterprises (AEs) – HELD – Assessee had given guarantees to third-party lenders in order to enable overseas subsidiaries to borrow funds – Assessee selected “Other Method’ as the most appropriate method for benchmarking this international transaction of guarantee fee payable by AEs to assessee – Under Other Method applied by assessee, “Interest Saved Approach’ was adopted as a suitable method for determining arm’s length nature of guarantee fee payable by overseas entities to assessee – As per Interest Saved Approach, guarantee fee is quantified by analysing relative benefit conferred by guarantee upon borrower through reduction in lending rate achieved as a result of guarantee – In view of findings of jurisdictional High Court, there is no merits in TPO’s benchmarking of this transaction by applying guarantee fee rates charged by banks to Indian customers – Neither TPO nor DRP has examined benchmarking on basis of Interest Saving Approach as adopted by assessee in its TP Study Report – Issue remand back to file of TPO for de novo benchmarking of international transaction pertaining to corporate guarantee after considering benchmarking analysis as done by assessee in its TP Study Report – Appeal allowed.

Issue 2: Grant of loans – Short receipt of interest – Whether DRP has erred in confirming action of AO in making an upward adjustment on account of short receipt of interest on loans to AE – HELD – In case of sister concern of assessee, Coordinate bench of Tribunal rejected benchmarking analysis conducted by TPO by adopting rates available on Bloomberg database and converting same to a fixed rate of interest – Coordinate bench accepted alternative transfer pricing analysis made by taxpayer by applying data available on Reuter’s Dealscan Database, which is the methodology adopted by assessee in present case for benchmarking international transaction of receipt of interest on loans to AE – Respectfully following decision of coordinate bench of Tribunal in case of assessee’s sister concern, TPO/AO is directed to delete transfer pricing adjustment in respect of international transaction pertaining to interest received on loans given to AE.




Income Tax Act, 1961 – Sections 14A, 37(1), 40(a)(ia), 80IA, 115JB, 143(3), 144C(5) and 194C – Income Tax Rules, 1962 – Rule 8D – Assessment of income – Disallowance of deduction – Sustainability – Appeal by assessee is directed against assessment order passed by Assessing Officer under Section 143(3) read with Section 144C(5) of the Act for Assessment Year 2008-09 – Whether AO has erred in disallowing deduction claimed by assessee under Section 80IA of the Act – HELD – Co-ordinate Bench while deciding appeal of assessee for AY 2006-07 held that assessee started telecommunication services after 1-4-1995, hence, assessee is eligible to claim deduction under Section 80-IA(4) of the Act – Following the decision rendered in assessee’s own case for AY 2006-07, deduction claimed by assessee under Section 80IA of the Act is allowed – Assessee’s claim of deduction under Section 80IA in respect of interest income and miscellaneous income is also allowed – Appeal partly allowed.

Issue 2: Asset Restoration Cost – Disallowance of depreciation – Whether AO has erred in disallowing depreciation claimed on addition to fixed assets on account of Asset Restoration Cost – HELD – Essential condition for allowing provision as revenue is that it should be for purpose of business exclusively, provision is for present obligation and based on reliable estimates – Assessee has purportedly furnished working of provision before AO – Assessee’s method of determining provision was not examined by AO – AO has failed to examine issue in right perspective – Issue restored back to file of AO for fresh adjudication in accordance with law.

Issue 3: Sustainability of disallowance – Whether AO has erred in making disallowance under Section 14A of the Act – HELD – AO has made disallowance under Section 14A of the Act read with Rule 8D of the Rules – It is an undisputed fact that no exempt income was earned by assessee during period relevant to assessment year under appeal – Settled legal position is that no disallowance under Section 14A of the Act is to be made where assessee has not earned any exempt income during relevant period – Disallowance under Section 14A of the Act made by AO is deleted.




Income Tax Act, 1961 – Section 143(3) – Design & development expenditure – Adhoc disallowance – Sustainability – Appellant/assessee is a partnership firm engaged in business of manufacturing of ladies garments, filed its return of income for AY 2015-16 – Assessing Officer completed assessment under Section 143(3) of the Act by making certain additions to returned income – CIT(A) dismissed appeal of assessee – Whether CIT(A) has erred in confirming adhoc disallowance made by AO on account of design & development expenditure incurred by assessee by alleging 50% of expenditure incurred as non-genuine – HELD – It is an undisputed fact that assessee had incurred design & development expenses and AO had disallowed 50% of expenses on adhoc basis – Similar expenses were incurred by assessee in earlier and in subsequent years and amount was also paid to same parties in those years, but no disallowance of expenses have been made by AO while framing assessment under Section 143(3) of the Act in earlier and subsequent years – AO has not brought on record any material to demonstrate that payments made to parties who are stated to be related parties are in excess of amounts paid to other parties for similar service – Considering the totality of aforesaid facts, there is no justification for disallowing expenses on adhoc basis – Disallowance made by AO and upheld by CIT(A) set aside – Appeal allowed.

Issue 2: Estimation of scrap sales – Justifiability – Whether CIT(A)] has erred in confirming addition made by AO on account of suppressed income from sale of scrap material – HELD – It is an undisputed fact that assessee had shown income from scrap sales – According to AO, assessee has understated the scrap sales – AO had worked out sale value of scrap on basis of search conducted by AO on internet – AO has not brought any material on record to demonstrate that scrap sales found by him on internet by various other entities were engaged in dealing with similar business as of assessee – AO has also not stated the basis of selection of parties and name of parties on basis of which he has concluded the sale of scrap to be understated – Assessee has demonstrated the percentage of sale of scrap in various preceding and succeeding assessment years and percentage of waste to sale in year under consideration are in same range as that of earlier and subsequent years – AO has not brought on record any concrete material to demonstrate that sale of scrap recorded by assessee is understated – AO was not justified in making estimation of scrap sales – Addition made by AO and upheld by CIT(A) set aside.




Income Tax Act, 1961 – Sections 36(1)(ii), 143(3) and 145 – Estimation of profit – Deletion of addition – Respondent/assessee is engaged in business of Real Estate Developers and Construction – Assessee filed its return of income for AY 2015-16 – Assessing Officer completed assessment under Section 143(3) of the Act by making certain additions to returned income – CIT(A) deleted additions made by AO – Whether CIT(A) has erred in deleting addition made by AO to returned profit offered by assessee – HELD – Assessee had offered returned profit by accepting Percentage Completion Method (PCM) – AO estimated profit under Profit Margin Method (PMM) and accordingly made an addition – AO has not pointed out any defect or shortcoming in books of accounts maintained by assessee – It is also an undisputed fact that books of accounts have not been rejected as provided in Section 145 of the Act – AO has accepted correctness of books of accounts – Where no shortcomings or other defects are pointed out in books of accounts, AO is precluded from estimating the profit – In assessee’s own case for earlier AY 2014-15, Tribunal accepted PCM offered by assessee as correct method and directed AO to accept method of recognizing income as has been offered by assessee, since there is no defect or shortcoming in same, which is in consonance with Guidance Note issued by ICAI in respect of construction activity companies – Respectfully following the above decision of Tribunal, addition made by AO is liable to be deleted – Order passed by CIT(A) on this issue affirmed – Appeal dismissed.

Issue 2: Interest expenditure – Allowable deduction – Whether CIT(A) has erred in deleting disallowance of interest expenditure under Section 36(1)(ii) of the Act – HELD – Assessee had surplus interest free funds and this is far excess of interest free advances – When interest free funds available with assessee were far in excess of investments, it can be said that investments are made out of interest free funds, then disallowance made under Section 36(1)(iii) of the Act by AO is not justifiable – CIT(A) had rightly deleted disallowance made by AO.




Income Tax Act, 1961 – Sections 143(3), 153A and 153D – Grant of approval – Framing of search assessment – Validity – Pursuant to search & seizure action carried out on ‘Apple Group of Companies’ including Appellant/assessee, AO issued notice under Section 153A of the Act to assessee – In response to said notice, assessee filed return of income – AO completed assessment under Section 153A read with Section 143(3) of the Act with prior approval of Joint Commissioner accorded under Section 153D of the Act – Assessee challenged assessment order on ground that approval granted for framing assessment order is contrary to provision of Section 153D of the Act – CIT(A) dismissed appeal filed by assessee – Whether CIT(A) has erred in upholding order of assessment passed by AO under Section 153A read with Section 143(3) of the Act – HELD – For passing assessment order under Section 153A read with Section 143(3) of the Act, AO is governed by Section 153D of the Act, whereby AO should complete assessment proceedings and prepare a draft assessment order which needs to be placed before approving authority, i.e. Joint/Addl. Commissioner for his perusal and prior approval – Approving authority is necessarily required to objectively evaluate such draft assessment order with due application of mind on various issues contained in such order so as to derive his conclusive satisfaction that proposed action of AO is in conformity with subsisting law and with underlying factual matrix – AO is obligated is pass assessment order exactly, as per approval/directions of designated authority – JCIT admitted that approval granted is merely technical and without appraisal of evidences or enquiries – In backdrop of unequivocal observations made by JCIT, approval granted under Section 153D of the Act does not meet requirement of law – Assessment order passed in consequence of such non-est approval is a nullity in law and hence quashed – Appeal allowed




Income Tax Act, 1961 – Section 68 – Receipt of loan – Genuine transaction – Deletion of addition – Respondent/assessee is a company engaged in business of digital software development filed its return of income for AY 2012-13 – AO passed an ex-party assessment order by making certain additions to returned income – CIT(A) deleted additions made by AO – Whether CIT(A) has erred in deleting addition made by AO under Section 68 of the Act by treating unsecured loan received by assessee as unexplained cash credit – HELD – To prove genuineness of transaction, assessee has filed copy of Bank Statement, Income Tax Return, Ledger Account and Audited Annual Accounts before AO and same are confirmed by loan creditor – In response to notice issued by AO, loan creditor confirmed loan transaction with assessee with necessary evidences – AO has not found any contra evidence filed by either assessee or by loan creditor – Since assessee has proved identity, creditworthiness of loan creditor and genuineness of transactions, addition made by AO by invoking Section 68 of the Act is not warranted – Deletion made by CIT(A) confirmed – Appeal dismissed.

Issue 2: Entitlement of depreciation on computers – Whether CIT(A) has erred in deleting disallowance of depreciation on computers and holding that assessee is entitled to depreciation on licence @60% as part of block of computer – HELD – Co-ordinate Bench of this Tribunal in case of Voltamp Transformers Ltd. and Zydus Infrastructure Pvt. Ltd. held that assessee is entitled to depreciation on software @60% as part of block of computer – CIT(A) has not erred in deleting disallowance made by AO – Order passed by CIT(A) does not require any interference.


CBDT: Income-tax (Sixth Amendment) Rules, 2023 – Amendment to Rule 45, 46A & Form No. 35


CBDT: e-Appeals Scheme, 2023


RBI Annual Report for 2022-23












Direct Tax Vista – Your Weekly Direct Tax Recap

Edn. 59 | Dated: 23.05.2023

CA Vivek Jalan


In this edition:

1. TDS on online gaming from 1st April 2023. CBDT issues clarifications and machinery provisions

The battle for taxability of online gaming under GST may have been initially won by taxpayers in the Delhi High Court against the DGGI; however online gaming business remains on the radar of CBIC as well as the CBDT; And the CBDT seems to…

2. Relaxations for start-ups from “Angel Tax”

Extension of “Angel Tax” was a set-back of sorts for start Ups. Section 56(2)(viib) required that where a company, not being a company in which the public are substantially interested, receives, in any previous year, from any resident, any…

3. TCS on LRS continues to face questions and resistance… CBDT continues to evolve this aspect or roll back little

In order to apply TCS on foreign remittances and foreign spends under LRS, an amendment applicable from 1st July 2023 is made in Section 206C(1G) of the Income Tax Act wherein TCS @20% is leviable on remittances for foreign spends…

4. Apex Court lays down principles of what is a “valuable article” as per Sec 69A

Way back, a scam was reported in the West Bengal media. The scam consisted of transporters of bitumen, lifted from oil companies, misappropriating the bitumen and not delivering the quantity lifted to the various Divisions of the Road…

5. Reimbursement of Cost of Expenses for AE is not Business receipt. However even a free service maybe a Transaction International requiring benchmarking

Many times Associates send employees to their group companies and recover the cost of travel, salary costs and other actual costs from the AEs. This is also routed through an ‘advance ledger’ or similar other ledger and is not at all considered as a…

6. TDS u/s 195 only if Income is taxable in India

Section 40(a)(i) of the Income Tax Act ensures effective compliance of section 195 of the Act relating to tax deduction at source in respect of payments made outside India in respect of Royalties, Fees for Technical Services or other sums chargeable…


GLOBAL MINIMUM TAX SERIES: 9 – Rules on Corporate Restructurings and Holding Structures – Multi-Parented MNE Group

Edn. 09

CA Amit Jalan

In this edition:

Topics on corporate restructurings determining the application of GloBE Rules to MNE Groups particularly in case of mergers, demergers, acquisitions, joint ventures, etc. This edition is the last one in that series where we are discussing on special rules for Multi-Parented MNE Groups.




Global Min Tax Series (Part 9)

Direct Tax Vista – Your Weekly Direct Tax Recap

Edn. 58 | Dated: 16.05.2023

CA Vivek Jalan


In this edition:

1. PMLA further tightens the noose covering further activities carried out on behalf of business or profession

Vide Notification S.O. 2135(E) dated 08/05/23, The Ministry of Finance has notified an amendment to Section 2(1)(sa) of the Prevention of Money Laundering Act, 2002 (PMLA)…

2. Complete transition from LIBOR from 1st July 2023 – Opportunity for consulting firms

The use of LIBOR was called into question following the global financial crisis. The RBI had issued an advisory on ‘Roadmap for LIBOR Transition’ in July 2021 wherein banks/FIs, inter-alia, were encouraged to undertake transactions…

3. Subscription Fees for accessing standard online market research database is not Royalty

There are many online databases which set out the details of the modules that are required by the Customers and permitted to be accessed with applicable fees. For making these databases data is collected…

4. Tax Limits for Dept. to file appeals before ITAT/High Court/ Supreme Court

As per CBDT’s Circular No.17/2019, The department cannot file appeals before the ITAT/High Court/ Supreme Court incase the tax impact (except interest and penalty) of disputed issues exceed the following limits…

5. A difference of opinion cannot lead to invocation of penalty u/s 271(1)(c)

The invocation of Sec 271(1)(c) of The Income Tax Act has the following pre-requisites – 1. The officer must record his satisfaction in the notice invoking the said Section…


GLOBAL MINIMUM TAX SERIES: 8 – Rules on Corporate Restructurings & Holding Structures – Joint Ventures

Edn. 08

CA Amit Jalan


In this edition:

Detail on special rules that deal with corporate restructurings (including mergers, acquisitions, and demergers) and covered in detail Article 6.3 relating to the rules for treatment of transfers of assets and liabilities including as part of a reorganisation.



Global Min Tax Series (Part 8)

Direct Tax Vista – Your Weekly Direct Tax Recap

Edn. 57 | Dated: 09.05.2023

CA Vivek Jalan


In this edition:

1. Practicing CA/CS/CMAs under the scanner with new amendment in PMLA

The biggest development of the week is Notification No. S.O. 2036(E), dated 03.05.2023 amending Section 2 of the Prevention of Money Laundering Act (PMLA)…

2. FATCA reportable accounts may use TINs/specified Codes for calendar year 2022 (due by September 30, 2023)

CBDT has issued guidance for the Indian Reporting Financial Institutions (RFIs) to follow in respect of reporting of U.S. reportable accounts vide F. No. 500/107/2015-FT&TR-III…

3. Cross-border wire transfers shall be accompanied by accurate, complete, and meaningful originator and beneficiary information

The RBI Vide RBI/2023-24/25 has instructed banks and financial institutions to ensure that cross-border as well as domestic wire transfers contain complete information about the originator and beneficiary…

4. Disallowance u/s 36(1)(va) applicable to PF/ESIC but not to NPS

In recent times any news related to Adani generates interest. This time, in Income Tax the group is in news for a reason which will generate the interest of businesses which have been suffering post the judgement of The Apex Court…

5. Penalty notice u/s 271(1)(c) is distinct from the assessment

The assessment proceedings form the basis for the penalty proceedings, but they are not composite proceedings to draw strength from each other, nor can each cure the other’s defect…


GLOBAL MINIMUM TAX SERIES: 7 – Rules on Corporate Restructurings and Holding Structures

Edn. 07

CA Amit Jalan


In this edition:


Detail on special rules that deal with corporate restructurings (including mergers, acquisitions, and demergers) and covered in detail Article 6.2 relating to the rules that apply when a Constituent Entity enters or leaves an MNE Group during the Fiscal Year.



7-Rules on Corporate Restructurings and Holding Structures

Direct Tax Vista – Your Weekly Direct Tax Recap

Edn. 56 | Dated: 03.05.2023

CA Vivek Jalan


In this edition:

1.  Asian Countries Tax Data Exchange Treaty gains further ground

Data exchange is not only happening within India, but also globally now and it is increasingly gaining strength as Trade goes global. All 22 Asian members of the Global Forum on Transparency and…

2. Determining the ‘basis’ of share of revenue in a contracting state

There is always a question on what is the reasonable basis to determine the share of revenue of a contracting state. Lets understand the issue and the matter of law…

3. In an ‘unabated assessment order’, no addition u/s 153A can be made unless there is some incriminating material w.r.t. the addition made by the AO

The provisions of sec.153A of the Act provide for issuing of notice u/s 153A of the Act for 6 assessment years immediately preceding the year of search and thereafter, the AO shall assess or reassess the total income for the above said 6 years…

4. Exemption to trusts u/s 12A to continue on the basis of doctrine of ‘consistency’

Incase the Income Tax Act in the year of Registration did not mandate the requirement of issuance of a registration certificate, the same cannot be insisted upon and the application of registration itself should be considered to be due…

5. AO cannot accept the assessee’s method of accounting on the one hand and determine the value of stock on another method – ‘hybrid accounting method’ cannot be used

AOs can sometimes ask the work contractors to recast their Financial statement relying upon “project completion method” instead of “percentage completion method” or vice-versa. However they cannot use a ‘hybrid accounting method’…

6. “MESNE Profits” for capital asset is capital receipt

‘Mesne Profits’ is defined under section 2(12) of Code of Civil Procedure 1908. It takes within its scope any receipt against wrongful possession of property. The question is whether these receipts are capital receipts or revenue receipts…


GLOBAL MINIMUM TAX SERIES: 6 – Rules on Corporate Restructurings and Holding Structures

Edn. 06

CA Amit Jalan


In this edition:


Special rules that deal with corporate restructurings (including mergers, acquisitions, and demergers) and covered in detail Article 6.1 relating to application of Consolidated Revenue Threshold to Group Mergers and Demergers.



6 – Rules on Corporate Restructurings and Holding Structures

Direct Tax Vista – Your Weekly Direct Tax Recap

Edn. 55 | Dated: 25.04.2023.

CA Vivek Jalan


In this edition:

1. Transfer Pricing Cases can be taken up by High Court when it can be proved that a matter of fact gives rise to a question of law


ALP determination is an art and not a science. Transfer Pricing exercise is a valuation exercise. The question thus arises whether a Transfer Pricing case can be referred to the High Court……

2. Orders/Notices without DIN are liable to be quashed


Circular No. 19/2019 holds that no communication shall be issued by any income- tax authority unless a computer-generated DIN has been allotted and is duly quoted in the body or such communication……

3. Whether GST ITC balance can be added to Closing stock?


Many a times, a confusion is there in the minds of the AOs whether the ITC/CENVAT Balance at the year-end shall be added to the closing stock u/s 145A as unutilized balance of taxes……..

4. Interest on delayed payment of TDS/Income Tax/GST/Customs/Service Tax/Central Excise/Sales Tax – Allowed as a deduction?


It is now a settled principle that the payment of interest takes colour from the nature of the levy with reference to which such interest is paid. Incase interest is paid under Section 201(1A) of the IT Act……

5. For a Project Company, Director’s salary is a revenue expenditure and not a capital Expenditure


When a project is in process, the AOs contention is that the director’s is the epic centre of all the construction and development activities carried out by the assessee…….

6. Forex Fluctuation loss on account of loan taken for purchase of a capital asset is to be capitalized


Incase Machinery is imported with a loan obtained from foreign banks and which is repayable in foreign currency, the increased liability on account of fluctuation in the rate of foreign exchange…….


GLOBAL MINIMUM TAX SERIES – Guidance on Deemed Consolidation test in the GloBE Rules

Edn. 05

CA Amit Jalan

In this edition:

Special rules that deal with corporate restructurings (including mergers, acquisitions, and demergers) as well as Articles that address the application of the GloBE Rules to certain holding structures such as JV investments and Multi-Parented MNE Groups.



5-Rules on Corporate Restructurings and Holding Structures 20230421

Direct Tax Vista – Your Weekly Direct Tax Recap

Edn. 54 | Dated: 18.04.2023

CA Vivek Jalan

In this edition:

1. Test for treating Export Incentives/ State Incentive as being “derived from” the business of an undertaking or not

As per Sections 28(iiid) and (iiie) any profit on the transfer of the Duty Drawback and on transfer of DEPB Schemes, etc., shall be chargeable to income tax under the head “Profits and gains of business or profession”…

2. Circulars adverse to The IT Dept. are also binding on officers

A circular can be adverse to the Income Tax Department, but still are binding on the authorities of the IT Department, but cannot be binding on the assessee if they are adverse to the assessee…

3. No Capital Gains on Agricultural Land u/s 2(14) even incase the land is not used for earning agricultural income and is sold after purchasing

Section 2(14)(iii) of The Income tax Act provides that “Agricultural Land” would not be considered as a capital asset and states as under – “.. (iii) agricultural land in India, not being land situated-…

4. Benefit of tolerance limit of +/- 5% as contained in Section 92C(2) available even when one comparable remains in comparable set

Section 92C(2) of Income Tax Act states as follows – “92C(2) The most appropriate method referred to in sub-section (1) shall be applied, for determination of arm’s length price…

GLOBAL MINIMUM TAX SERIES – Guidance on Deemed Consolidation test in the GloBE Rules
Edn. 04
CA Amit Jalan

In this edition:

The guidance issued in relation to the deemed consolidation test under GloBE Rules requires the preparation of a set of Consolidated Financial Statements based on an Authorized Financial Accounting Standard in the Ultimate Parent Entity’s (“UPE”) location………………



4-Guidance on Deemed Consolidation test 20230414

Direct Tax Vista – Your Weekly Direct Tax Recap

Edn. 53 | Dated: 11.04.2023

CA Vivek Jalan


In this edition:

1. Every payment pursuant to a Court’s decree cannot be disallowed u/s 37

It is the right of every business to protect itself from financial liability. The mere fact that the result of going to a court is negative cannot make the payment towards a decree as being in violation of a law…

2. AOs cannot make ad-hoc additions without going into details…Assesses also cannot claim expenses without showing commercial expediency. However, AOs thereafter cannot question pure business decisions

Umpteen no. of times during assessments it is seen that AOs have made additions by disallowing purchases and the same is accepted by assesses. However, it is a good development that even SME businesses…

3. There is no transfer of stock-in-trade by landowner in the case of a JDA

In the case of land development agreement, the agreement in most cases is that after the construction of the housing complex on the said land, a percentage of the constructed area…

4. Employers to take declarations in April 2023 from employees whether they wish to enter into New Scheme/Old Scheme

A lot has already been discussed and deliberated in last 2 months on whether employees should opt for new scheme or old scheme of taxation. Now its action time for employers who have to start deduction TDS…

GLOBAL MINIMUM TAX SERIES – Guidance on Rebasing monetary thresholds in the Globe Rules

Edn. 02

CA Amit Jalan

In this edition

1. The GloBE Rules contain several monetary thresholds expressed in Euros (EUR)

2. To ensure consistency in the monetary thresholds used by different jurisdictions including those that are expressed in non-EUR currency, the Administrative Guidance provides for an annual rebasing of the non-EUR denominated thresholds based on:

3. The Administrative Guidance also provides that the foreign exchange rate for each individual year for the purposes of determining the relevant threshold translated into local currency will be based on the average foreign exchange rate for December of the calendar year immediately preceding the calendar year in which such Fiscal Year starts and not a single foreign exchange rate applied for the purposes of all the relevant Fiscal Years.


3-Guidance on Rebasing monetary thresholds 20230407

Direct Tax Vista – Your Weekly Direct Tax Recap

Edn. 52 | Dated: 04.04.2023

CA Vivek Jalan


In this edition:

1. New Foreign Trade Policy 2023 – Salient features

The New FTP is out after a gap of Eight years; three years after its initial end date. The most important and favourable Policy change is that the FTP is now dynamic and Industry can keep on suggesting and with dialogue with the CI Ministry…


2. CBDT eases doing business for Non-Residents and foreigners vide APAs and digitization of Form 15C and 15D

The CBDT has entered into records no. of APAs and digitized Form 15C and 15D, thus sending out message to Non Residents and foreigners that it wishes to usher an era of tax certainty and ease of doing business in India…


3. Finance Act 2023 notified

The Central Government has notified the Finance Act, 2023 as the Parliament has approved the amended Finance Bill, 2023 applicable with effect from 1st April. A total of around 125 amendments are proposed to the Income Tax Act, 1961…


4. No TDS on payments made to ‘advertising agencies’ for procuring and canvassing for advertisements

The issue of applicability of TDS provisions on payments made by television channels or media houses publishing newspapers or magazines to advertising agencies for procuring and canvassing for advertisements…


5. Unlinked PAN Cards would stop functioning from 1st July 2023

Every person who has been allotted a PAN as of 1st July 2017 and is eligible to obtain an Aadhaar Number, is required to intimate his Aadhaar to the prescribed authority…



Direct Tax Vista – Your Weekly Direct Tax Recap

Edn. 51 | Dated: 28.03.2023

CA Vivek Jalan


In this edition:

1. Sheen of Debt Mutual Funds vis-à-vis fixed assets now no more

From April 1, 2023 Debt Mutual fund schemes will be taxed at Income tax rates applicable to an Individuals Income tax slab. Section 50AA has been introduced to include specified mutual fund with not more than 35%…


2. Marginal Relief for assesses under the New Scheme for income between Rs.7 Lakhs and Rs.7.25 Lakhs

It has been proposed to provide marginal relief for taxpayers adopting new tax regime and having income exceeding Rs 7.00 lakhs. It had proposed to insert a proviso to Section 87A to allow a higher rebate…


3. Tax on Royalty / FTS rate under section 115A increases to 20% from 10%

The royalty or fee for technical services earned by a non-resident or a foreign company, not connected to PE or a fixed place in India, shall be charged to tax on a gross basis (without deduction for any expenditure)…


4. TDS on winnings from online games preponed

The Finance Bill 2023 (Lok Sabha) has revised the effective date from which TDS on winnings from online games will be deducted. The amendment was made at the time of passing of Finance Bill, 2023 from Lok Sabha today


5. TCS on LRS also on remittance within India and on Credit Card payments

Sub-section (1G) of Section 206C requires tax collection on foreign remittances made under the Liberalised Remittance Scheme (LRS) and on the sale of Overseas Tour Program Packages…


6. TCS rate in absence of PAN and for non-filers restricted to 20%

Under section 206CC, in absence of PAN, TCS is collectible at rate of 5% or twice the rate specified in the relevant provision. It has been proposed to restrict the higher rate of TCS collectible at 20%…


7. Changes to incentivize IFSC

No surcharge and cess on income earned by GIFT Category III from securities under section 115A(1)(a); Provision for tax neutral reallocation of any investment vehicle in which ADIA is sole direct or indirect shareholder…


8. Changes in relation InvITs / REITs (“Business Trust”)

SPV not required to withhold on payment of interest on debentures; Exemption to sovereign wealth funds / pension funds for debt repayment from Business Trust introduced [section (10(23FE)];…



Direct Tax Vista – Your Weekly Direct Tax Recap

Edn. 49 | Dated: 14.03.2023

CA Vivek Jalan


In this edition:

1. PMLA Act and Maintenance of records become more stringent

The Ministry of Finance has notified an amendment in Prevention of Money-Laundering Act, 2002. The amendment aims to expand the scope of the Act to cover a wide range of cryptocurrency or virtual digital assets (VDA)…


2. Draft Order is a mandatory Procedure u/s 144C for variation in original order

There has been a rise in the number of cases in the recent past wherein AOs have passed the final order without first issuing a draft order and more so in the new environment of faceless assessments…


3. Interest u/s 36(1)(iii) allowed as deduction even for purchase of Capital Asset

Section 36(1)(iii) of The IT Act provides as under- (iii) the amount of the interest paid in respect of capital borrowed for the purposes of the business or profession: Provided that any amount of the interest paid…


4. No case u/s 68 for shares held for very long periods

In cases of penny stocks the holding period of the shares is generally from 1 to 2 years and that too depending upon the price movement of the stock. An investor will not wait for more 15-20 years to get his black money converted…


5. Commission income for providing ‘bogus entries’ fixed at 0.5%

During the course of a proceeding the AO noticed that the Assessee was engaged in providing bogus accommodation entries in lieu of commission of 1-1.5% by providing entry through various shell companies…



Direct Tax Vista – Your Weekly Direct Tax Recap

Edn. 48 | Dated: 08.03.2023

CA Vivek Jalan


In this edition:

1. The AOs should take responsibility of Sec 154 cases so that these do not meet unfavourable judgements at the appellate stage

The legal contours of an error apparent on the face of the record cannot be exactly identified, but there has to be an application of mind by the AO while invoking Section 154, when a Revenue Audit objection is accepted by the department. Question is that what are “records” and what are…

2. TNM Method not appropriate in determining ALP in capital goods purchase transaction

Transfer pricing provisions kick in only when an income is charged to tax under other provisions of the IT Act. In the case of Vodafone India Services (P.) Ltd. V. UOI…

3. The Court may throw a meritorious case for latches if filing is an afterthought

In the case of Shiksha Foundation Vs DCIT CPC, Bangalore, The question of law framed is that incase the assessee acts on behalf of the professional advice, can he be held guilty for defiance of any provision of law…

4. Section 68 for unexplained credit before and after amendment by FA 2022

Section 68 of the Act provides that where any sum is found to be credited in the books of an assessee maintained for any previous year, and the assessee offers no explanation about the nature and source thereof or the explanation offered by him…

5. Where unexplained income cannot be entangled in the clutches of The Section 69 family

Sections 68, 69, 69A, 69B, 69C and 69D may be called as Section 68 & 69 Family. However, they differ in as far as Burden of Proof is concerned. In sec 68, the onus is wholly upon the Assessee to explain the source of the entry. But in cases falling…

6. IT Dept issues Instructions on dissemination of High-Risk transaction and High-Risk Non-PAN Transaction cases on Verification module of Insight portal

The Directorate of Income Tax (Systems) has issued Instructions vide F. No. DGIT(S)-ADG(S)-2 / High Risk Transaction (Pan and Non-PAN) cases/2022-23/11914 dated February 20, 2023 regarding the dissemination of High-Risk…



Direct Tax Vista – Your Weekly Direct Tax Recap

Edn. 45 | Dated: 14.02.2023

CA Vivek Jalan


In this edition:

1. Battle on Freebies to doctors before AY 2010-11: ‘Reason’ is the link between ‘conclusion’ and ‘evidence’ for reopening assessment; Law applicable in relevant AY to be applied only

While re-opening assessments, the reasons recorded should be clear and unambiguous and should not suffer from any vagueness. Reasons provide the link between evidence and conclusion…


2. Any ad-hoc determination of ALP by TPO de-hors Section 92C(1) of the Act cannot be sustained

Section 92C(1) of the Act, contemplates that the arms length price in relation to an international transaction shall be determined by comparable uncontrolled price method; resale price method; cost plus method; profit split method…


3. The Court may relax latches incase a professional misleads

The Doctrine of Laches emanates from the principle that the Courts will not help people who sleep over their rights and helps only those who are aware and vigilant about their rights…


4. Allowability of write off of CWIP expenses

A classic case followed by revenue where the question of law is regarding Allowability of write off of CWIP expenses is M/S. FAURECIA EMISSIONS CONTROL TECHNOLOGIES INDIA PRIVATE LTD. VERSUS DEPUTY COMMISSIONER OF INCOME TAX…


5. Section 206AA of the Act cannot have overriding effect on DTAA: TDS on payment made to NRI who did not furnish PAN can be made as per rate in DTAA

The issue is that in case of payments made by the assessee to non-residents, whether in the absence of PAN of the non-resident payees, the assessee is permitted to deduct taxes at the rate mentioned in the Tax Treaty…




Direct Tax Vista – Your Weekly Direct Tax Recap
Edn. 42 | Dated: 24.01.2023
CA Vivek Jalan


In this edition:

1. Global Minimum Tax to result in gains of 9% of Global Tax Revenues

To usher in a Tax mammoth tax reform, among all other considerations, the most important consideration is that it should lead to a gain which is worth the pains to implement it. Infact the machinery involved in the process have…

2. Applications of the theory that ‘Real Income’ is only liable to be taxed.

Even under the mercantile system, in order to put an income to tax, the same must become actually due no matter when it is received and that income cannot be said to have accrued to an assessee-company if it is based on a mere claim not backed…

3. Allowability of demurrage and wharfage expenses

Demurrage is paid to the Railways for not lifting the goods consigned to it in time to compensate it for keeping the goods of the assessed in its custody beyond a particular time. Similarly, the port authorities charge demurrage for delay in clearing…

4. Interest on delayed Income Tax/TDS/GST/any statutory payment: when allowed as a deduction

In claiming the deduction u/s. 37(1) for interest u/s. 201(1A), an issue arises as to whether such interest can be considered to be incurred wholly and exclusively for the purpose of business or profession. The issue is relevant for a large number of…

5. Cash payment to directors in violation of Section 40A(3) allowed

The intention behind introduction of provisions of section 40A(3) of the Act was two-fold…

6. Is CSR Expenditure allowable u/s 80G?

In the recent past a litigated issue is “Donations given towards CSR Expenses and its allowability as deduction U/s 80G”. The question whether contributions made under CSR are eligible for deduction u/s 80G of Income tax 1961 or not, is…


Direct Tax Vista – Your Weekly Direct Tax Recap
Edn. 41 | Dated: 17.01.2023
CA Vivek Jalan


In this edition:

1. Is Class Legislation possible in Taxation?

The Rule of Law cannot prevent a certain class of persons from being subject to special laws. The State has the power to make laws operating differently on different classes of people, in a way that the…

2. Satisfaction of “Make Available” Clause in “Cross Charge” of Managerial Expenses

Again and again the AOs dispute on Taxation of “Fees for Technical Services” and again and again the Courts keep on quashing demands on “Make Available” Clause. Now let us understand the ‘make available’ test on cross charge of managerial…

3. Expenses on Construction of Roads are Revenue in Nature

We have earlier dwelt with the debate on Revenue Expenditure Vs Capital Expenditure in detail. This time we will dwell on a specific expenditure which is generally needed to be incurred by almost all factories, warehouses…

4. How to prepare for Share Capital/Premium disputes

Incase of share capital / premiums addition, there is an obligation on the part of the assessee to prove three ingredients of the person from where the money is actually…

5. Allowability of ESOPs expenditure and preparation for its assessment

ESOPs are used by various companies as a measure to retain employees. The difference of value on a reporting date and the cost to the employee is debited to…


Direct Tax Vista – Your Weekly Direct Tax Recap

Edn. 40 | Dated: 10.01.2023

CA Vivek Jalan


In this edition:

1. TDS on year end provisions…When applicable, when not

The question which has arisen many a times is that how TDS Provisions can be applied where Payee is not known as TDS is deducted and deposited in payee’s name? At the year-end on accrual

2. No penalty for violation of 269SS when Test of Reasonable Cause is passed

Sec 273B provides that no penalty shall be imposable on an assessee, for a failure if he proves that there was reasonable cause for the said failure. Hence, while accepting Loans through Journal Entries would be a violation of Sec 269SS, yet

3. Payment/Refund of tax may keep the interest meter ticking

We have reported earlier that many a times, a question arises during business operations whether to stop the interest burden from accruing by making a payment of tax, even under dispute. Would it be a wise decision that the tax amount be paid

4. Certificates would be valid proof for claim of TDs even in absence of entry in Form 26AS

To ease compliance burden on the Tax Deductors, Industry bodies have approached the Ministry of Finance to dispense off with the requirement of issuance of TDS Certificate and reply on only Form 26AS. However these TDS Certificates act as a

5. FDI Compliance Rationalised of Reporting in Single Master Form (SMF) on FIRMS Portal

Various information is required to be filed with RBI to inform about FDI. RBI has taken all necessary steps to keep reporting simplified and sorted. Therefore, various changes have been made in the reporting requirement of FDI


Direct Tax Vista – Your Weekly Direct Tax Recap

Edn. 39 | Dated: 03.01.2023

CA Vivek Jalan


In this edition:

1. Cash received on various days to be not considered as “in relation to one event or occasion”

Section 269ST(c) provides that no person is allowed to receive a sum of Rs. 2,00,000 or more, from a person “in relation to one event or occasion”, in cash or an impermissible mode…

2. Demonetization declared legal

The Constitutionally Valid of Demonetization was upheld by The Apex Court in the case Vivek Narayan Sharma vs. Union of India (2023) (SC). Herein, the Constitutional validity of RBI Notification No. 3407(E) dt.08.11.2016…

3. Non-routine product promotion expenses cannot be considered as Service applying ‘Bright Line Test’

Transfer Pricing Litigation concerning Advertising marketing and sales promotion (AMP Expenses) and creation of Marketing Intangibles for the Foreign Associated Enterprise, has come to the fore in recent years…

4. DTAA would prevail over Section 206AA …even before the amendment

Finance Act 2016 has liberalized the provisions of S.206AA by inserting S.206AA(7)(ii) which provides that s.206AA shall not apply to payments to non-residents subject to conditions as may be prescribed…

5. Percentage Completion Method for Undisclosed Cash Receipts!

Is an Excel sheet found during search, corroborative evidence? Is a figure mentioned in such sheet reliable? Whether undated and unsigned details can be considered as ‘evidence’ on the basis of which tax can be levied?…

6. Forward Loss for Hedging allowable as expenditure

Can the loss on Forward Cover Purchase Contracts for foreign exchange be allowed as a deduction from the income chargeable to tax notwithstanding that the Forward Contracts have not closed?…

7. Payment pursuant to arbitration award is business expenditure

Explanation 1 to section 37 (1) of the Act reads that any expenditure incurred by an assessee for any purpose which is an offence or which is prohibited by law shall not be deemed to have been incurred…


Direct Tax Vista – Your Weekly Direct Tax Recap

Edn. 38 | Dated: 27.12.2022

CA Vivek Jalan


In this edition:

1. Global Minimum Tax & BEPS – Work in fast track

A year after the international community reached a landmark agreement on a two-pillar solution to reform the international tax rules…

2. Entries reflected in GSTR-2A lead to Income Tax Demands

We have witnessed various disputes under GST on account of GSTR2A Vs GSTR 3B mismatches wherein the ITC claimed in GSTR 3B does not appear in GSTR 2A…

3. Interior work in Rented Premises is Revenue Expenditure

We have discussed the tests to classify a particular expenditure as Capital or Revenue Expenditure in DTV Edn 36 as follows…

4. Payments more than 20K per day allowed even other than circumstances as per Rule 6DD

In some businesses, it is a practise that the suppliers insist on cash payment before delivery of the product and the payment is thus made as business cannot continue disregarding the said practise…

5. Is retention money taxable on accrual basis or receipt basis?

The question is whether the retention money has to offered for tax in the year in which it accrues and finds a place in Form 26AS and also shown the ledger account of the customer…


Direct Tax Vista – Your Weekly Direct Tax Recap

Edn. 37 | Dated: 20.12.2022

CA Vivek Jalan


In this edition:

1. A Ray of Hope for assesses incase of delayed payment of PF & ESIC

We discussed in our DTV Edn: 28 how The Hon’ble Apex Court checkmated the business houses which deduct provident fund and ESIC contribution from the salary of employees and then deposit to the authorities…


2. Assessees should not be punished for their bona fide mistakes or errors as ITR form is highly complicated

For Taxpayers and Tax Authorities, by far the most important Article of The Constitution is Article 265 which requires that no tax shall be levied or collected except by the authority of law…


3. Direct & Indirect Collections estimated to beat budget Estimates. Taxpayers to take note of effective use of technology by the MoF

The net direct tax collections so far this financial year are at ?7L Crore, an increase of 23% as compared to the same period of the corresponding financial year…


4. Interest on NPAs should be taxed on receipt basis. No point adding interest on NPAs first and then claiming as bad debts

Can a part of the books of account be on cash basis and a part on accrual basis. When a non-scheduled bank draws up its books on accrual basis, then can it recognize the interest on NPAs…


5. Depreciation expenses is allowed as deduction to a Charitable Organisation before amendment of Act, Manual Revised return to be considered

Charitable trusts or institutions are governed by the provisions of sections 11, 12, 12A, 12AA and 13 under Chapter III of the Income-tax Act. These sections constitute a complete code…


6. Are ‘Outstanding Receivables’ an International Transaction?

In our DTV Edn: 32 we discussed the decision of M/s INTEGRA SOFTWARE SERVICES P LTD Vs DCIT [2022-VIL-1433-ITAT-CHE]. It was held that Incase of a delay in realization of receivables from AE as well as Non-AEs…


Direct Tax Vista – Your Weekly Direct Tax Recap

Edn. 36 | Dated: 13.12.2022

CA Vivek Jalan

In this edition:

1.BEPS: Under India’s Leadership G20 and OECD takes step to finalise Amount “B” of Pillar One

2.Faceless Assessment E-Portal Closed without Notice… Steps ahead

3.Form 67 is directory and not mandatory to claim foreign tax credit

4.Indian Olympic Association gets a new President and a favourable decision

5.Can Discounts be considered as a service/benefit liable to TDS u/s 194H?

6.Interest on delayed payment liable to TDS u/s 194A?

7.Revenue Expenditure or Capital Expenditure – The Contest continues

8.Strict Time Limit fixed for AOs for response u/s 245 & u/s 241A



Direct Tax Vista – Your Weekly Direct Tax Recap

Edn. 34 | Dated: 29.11.2022

CA Vivek Jalan


In this edition:

It’s the start of the Budget Season. It is a season where The Ministry of Finance provides time to Trade, Industry & Professionals to represent before them on issues faced. Taxation issues as always take the centre stage. In this special Bulletin of The Direct Tax Vista for our readers we present the ‘asks’ from Trade & Industry in Income Tax and International Taxation. Incase readers have other issues too, they may please write to us for presenting before the concerned authorities:

1. Reducing Compliance burden by making the process of application for Lower/NIL TDS Certificates u/s 197 of The Act – every 5 years instead of yearly

2. Foreign tax credit (FTC) u/s 90 of the Act

3. Disallowance of expenses relating to exempt income under section 14A of the Act

4. Tax Deduction at Source under section 194R of the Act and Section 28(iv) of Income from Business/Profession

5. Requirement to issue and maintain tax deducted at source (‘TDS’) and Tax collected (‘TCS’) certificates

6. Linking of PAN and TAN

7. Disallowance of Expenditure incase payment is not made to Creditors within 180 Days

8. Taxation for Individuals

9. Valuation of Company Owned Accommodation provided to employees under section 17(2) of the Act

10. Taxing of Employee Stock Options (“ESOPs”) in the hands of the employees

11. Rationalization of tax rate for income of dividend earned by residents



Direct Tax Vista – Your Weekly Direct Tax Recap

Edn. 33 | Dated: 22.11.2022

CA Vivek Jalan


In this edition:

1. Lack of control on amounts earned by the deductee cannot form the legal basis for the deductors to avoid their liability to deduct TDS

2. No International Transaction incase of reimbursement of expenses received

3. No International Transaction for Interest on receivables from AEs in some cases

4. Commission Income Deduction u/s 37(1) – When sustainable, when not…

5. RBI paints a gloomy picture of global Economy but hails India



Direct Tax Vista – Your Weekly Direct Tax Recap

Edn. 32 | Dated: 16.11.2022

CA Vivek Jalan


In this edition:

1. OECD taking Giant Leaps in Global Data Sharing and Exchange of Information

2. Clearer understanding of “Make Available” Clause is needed

3. Credit of TDS should be given in the year in which Income is offered for Taxation

4. Statutory Audit Fees provision and Rent expenses allowed


Direct Tax Vista – Your Weekly Direct Tax Recap

Edn. 31 | Dated: 08.11.2022

CA Vivek Jalan


In this edition:

1. “One Nation One ITR” – Analysis of New Common ITR Form – The Next Big Reform in Income Tax

2. Employers cannot allow LTC Claim by “circuitous route”

3. Opportunity of Charitable Organisations to migrate into New Scheme till 25th November 2022 by Filing Form 10A

4. 2(15) Case Ratio would apply to future cases also as Revenue Starting to redo the assessments in accordance with the AHMEDABAD URBAN DEVELOPMENT AUTHORITY judgment


Direct Tax Vista – Your Weekly Direct Tax Recap

Edn. 30 | Dated: 01.11.2022

CA Vivek Jalan


In this edition:

1. TDS Deductor does not deposit the same – Recourse for the deductee?

2. With Second landmark Decision on Charitable Trust, the litigation landscape in this sector may see fresh offshoots

3. Taxing Angadias – Principles for determining the income will remain the same even though the source of income is illegal in nature

4. Income Tax and GST conundrum on Warranties

5. Receipt of termination of Trust is Capital Receipt


Direct Tax Vista – Your Weekly Direct Tax Recap

Edn. 28 | Dated: 18.10.2022

CA Vivek Jalan


In this edition:

1. Supreme Court Checkmates Businesses who will not be allowed deduction w.r.t. employees contribution even incase there is a single day of delay

2. Denial of exemption to trusts for participation in fairs ‘outside India’ – Is it application of income outside India

3. Proper Inquiry should be one by TPO to indicate that ‘receivables’ reflect in a benefit to the AE

4. U/s 194R Discount is a ‘Benefit’ and u/s 194H discount is a ‘commission’

5. Equalization Levy intention is to target audience in India


Direct Tax Vista – Your Weekly Direct Tax Recap
Edn. 26 | Dated: 04.10.2022
CA Vivek Jalan


In this edition:

1. Application for re-computation of income for ‘Surcharge deduction’ taken earlier

2. Exemption u/s 11 cannot be denied to surplus generated from activity sub-servient to the main object

3. Conundrum of Netting of Expenses with Income

4. LSF options available across

5. Interest on enhanced compensation is not ‘income from other sources’ but a capital receipt

6. RBI Reports show a rosy picture… in contrast to ground realities

7. Interest paid out of interest earned is allowable as a deduction


Direct Tax Vista – Your Weekly Direct Tax Recap

Edn. 24 | Dated: 20.09.2022

CA Vivek Jalan


In this edition

1. Effort to decriminalize Income Tax Laws – A Balm for taxpayers!

2. CBDT gives “benefit” to taxpayers by issuing Circular 18 of 2022 for TDS u/s 194R! Taxpayers need more!

3. NRIs can now directly make payments for bills on behalf of their families from abroad

4. Liaison office shall not be considered PE incase it is compliant with the RBI guidelines

5. How to prove a claim for ‘Bad Debt’

6. Shares of Holding Company granted as ESOP is an allowable claim u/s.37(1)


Direct Tax Vista – Your Weekly Direct Tax Recap
Edn. 23 | Dated: 13.09.2022

CA Vivek Jalan

In this edition:

1. Indian growth story continues – GST numbers also reflect on Income Tax numbers

2. OECD releases a practical guide to assist tax administrations in designing and carrying out tax capacity building programmes for developing countries

3. Puja Donation is business expenditure

4. Group Companies may work as ‘commissionaires’ of Holding Company which would remain the ‘service providing party’

5. Business expansion expenditure is Revenue in nature

6. Merely because the liability is barred by limitation, it does not cease to be a debt

7. Revised Return post 143(1) has to be accepted

8. RBI assigns Risk Weights for Exposures guaranteed by Credit Guarantee Schemes (CGS)


Direct Tax Vista – Your Weekly Direct Tax Recap

Edn. 22 | Dated: 06.09.2022

CA Vivek Jalan

In this edition:

1. Powers of the ED for search & seizure under PMLA

2. Doctrine of unjust enrichment applies even to the Revenue Authorities; Filing of ITR is a ‘deemed intimation’ incase ITR is not processed in time

3. RBI’s digital lending norms and data privacy concerns

4. The assessment made u/s 153A would only be made on the basis of seized material even though Section 153A does not say so specifically.

5. The delivery of a service via technological means does not make the service technical


Direct Tax Vista – Your Weekly Direct Tax Recap

Edn. 21 | Dated: 30.08.2022

CA Vivek Jalan

In this edition:

1. Deduction of writing off of an advance is available only incase write off is “on sound and reasonable basis”

2. Merely because an expense results in enduring benefit would not make it capital in nature

3. Penalty cannot be imposed without mentioning the specific charge/guilt

4. ‘Interest’ paid by assessee to the Dept. is a ‘debt’ in the hands of the department. Hence Interest on this debt needs to be paid and it cannot be coloured as ‘interest on interest’

5. Substantive law, no retrospective application

6. Big Changes made by RBI in Overseas Investment Rules and Regulations


Direct Tax Vista – Your Weekly Direct Tax Recap

Edn. 20 | Dated: 23.08.2022

CA Vivek Jalan

In this edition:

1. Investigation Units in both Income Tax and GST, Issue Instructions with mandate to field officers for ‘strict compliance’

2. Corporate Guarantee extended to an AE is an “International Transaction”

3. A decision on a debatable point of law is not a mistake apparent from the record and not subject to rectification u/s 154

4. Companies Be Alert! In addition to Income Tax & GST – Now ROC to Physically verify premises also

5. CBDT amends rule 128 and relaxes conditions for filing of form no. 67 for claiming Foreign Tax Credit vide Notification No. 100/2022-Income Tax

6. RBI clarifies that it is not against privatization of public sector banks

7. Marketing and Corporate Branding Expenditure – Allowable u/s 37

8. Non-residents having no PE in India exempted from section 206C(1G) TCS

9. New IT Rule 40G/ Form 29D for Refund u/s 239A of Incorrect TDS u/s 195

10. Rule 17/ Form 10 amended to allow accumulation of income by S. 10(23C) entities


Direct Tax Vista – Your Weekly Direct Tax Recap

Edn. 19 | Dated: 16.08.2022

CA Vivek Jalan

In this edition:

1. Statement by a data entry operator is not a ‘reason to believe’ for re-opening

2. Trusts, NGOs, NPOs, Schools/Colleges, Hospitals, etc to start maintaining extensive books of Accounts

3. There cannot be two different yardsticks for the same set of sale transaction made by five co-owners

4. Bilateral Netting of Qualified Financial Contracts – Amendments to Prudential Guidelines

5. If a particular relief is legitimately due to an assessee, the authorities cannot circumscribe it by creating such circumstances leading to its denial

6. Interest on refund mandatory even when it is on “interest deposit”

7. Site Eviction charges would fulfill the test laid down u/s 37(1)

8. Relatives as defined under the Senior Citizens Act is not to be treated at par with ‘relative’ under the Income Tax Act

9. No Personal hearing, no draft assessment along with show cause notice as required under section 144B(1) and section 144B(7): Faceless Assessment Order is invalid.


Direct Tax Vista – Your Weekly Direct Tax Recap

Edn. 18 | Dated: 09.08.2022

CA Vivek Jalan

In this edition:

1. Faceless assessment: Fresh SOPs issued to address taxpayers’ conflicts

2. Even NIL Income is disclosure of income

3. Cash payment for ‘business necessities’ cannot be disallowed arbitrarily

4. CBDT issues conditions, forms to get income tax exemption on covid 19 help money

5. No TDS u/s 195 for purchase of software product – There is a clear distinction between “Copyright” and “Copyrighted Article”

6. Transfer Pricing BLT as an approach is not permissible for undertaking any addition on account of AMP expenses

7. Premature redemption under Gold Monetisation Scheme payable only in rupees: RBI

8. 2022-23 looks bright for manufacturers as well as Service Companies as per RBI.