News Archives - Taxmann Blog (2024)

Case Details: Gagan Infraenergy Ltd. v. Deputy Director Directorate of Enforcement - [2024] 164 taxmann.com 415 (HC - Delhi)

Judiciary and Counsel Details

• Dr Sudhir Kumar Jain, J.
• Anirudh Sharma,Hemant Shah,Gurpreet Singh Parwanda,Akshay Rana & Pallav Srivastava, Advs.for the Petitioner.
• Anurag Ahluwaliafor the Respondent.

Facts of the Case

In the instant case, the petitioner (earlier GSIPL) was a promoter company of ‘JSPL’ besides a promoter of other companies of JSPL Group. It was engaged in the business of investment and finance operations by Inter Corporate Deposits and investment in equity shares/preference shares/debentures/mutual fund.

Respondent No.1/ED attached shares of JSPL held by the petitioner vide impugned the Provisional Attachment Order (POA) by claiming that GSIPL had acquired proceeds of crime through the sale of shares of JSPL.

The petitioner filed a writ petition to quash the POA. He also argued that physical attachment was not required to complete the trial and that shares could be restored to the petitioner by substituting a bank guarantee/FDR/Indemnity Bond or any other security.

High Court Held

The High Court noted that the Court may not order substitution of the attached property in the case of attachment due to proceeds of crime. However, the Court may allow substitution of the attached property if the attachment is an equivalent value of proceeds of crime.

The High Court held that since the petitioner was engaged in the business of investment and finance operations by Inter Corporate Deposits and investment in equity shares/preference shares/debentures/mutual funds and shares of JSPL lying with the petitioner were attached not as proceeds of crime but being the equivalent value of proceeds of crime, the impugned shares were to be released in favour of petitioner on furnishing interest bearing FDR equivalent to the value of impugned shares.

The post HC Orders Release of Attached Shares Under PMLA on Furnishing ‘Fixed Deposit Receipts’ Equivalent to Proceeds of Crime appeared first on Taxmann Blog.

General Circular No. 07/2024, Dated 17.07.2024

To ease the compliance burden and simplify filings, the MCA has merged Form IEPF-3 with Form IEPF-4 and Form IEPF-7 with IEPF-1 in MCA Version 3. The revised forms will be made STP (straight-through process).

Further, various amounts that need to be transferred to the IEPF Authority as due on shares transferred by companies will be paid online via MCA 21 through the “Pay Miscellaneous Fee” service after selecting the option “Investor Education and Protection Fund.”

Click Here To Read The Full Circular

The post MCA Merges Form IEPF-3 with IEPF-4 and Form IEPF-7 with IEPF-1 in MCA V3 Portal appeared first on Taxmann Blog.

General Circular No. 06/2024, Dated: 16.07.2024

In view of the transition of forms from MCA 21 V2 to MCA 21 V3, the MCA has waived additional fees on the filing of various IEPF e-forms (IEPF -1, IEPF-1A, IEPF-2, IEPF-4) and e-verification of claims filed in e-form IEPF-5 till August 16, 2024. Similarly, a one-time relaxation for filing e-verification under the third proviso to rule 7(3) of the IEPFA (Accounting, Audit, Transfer and Refund) Rules has also been provided till August 16, 2024.

Click Here To Read The Full Circular

The post MCA Waives of Additional Fees on Filing of IEPF E-forms Due to Migration to MCA V3 Portal Until 16.08.2024 appeared first on Taxmann Blog.

Dr. T.P. Ghosh – [2024] 164 taxmann.com 430 (Article)

1. Introduction of IFRS 18 and IFRS 19

1.1 Executive Summary

International Accounting Standards Board has issued two new standards during April-May 2024 and amended classification and measurement principle of financial instruments. IFRS 18 will be effective for annual reporting periods beginning on or after 1st January 2027 with permission to earlier application by disclosure. This standard will supersede IAS 1 Presentation of Financial Statements. IFRS 18 intends to improve communication in the financial statements providing new profit measures and introducing five categories for classifying income and expenses.

IFRS 19 grants exemption to an entity which is a subsidiary without public accountability from full disclosure requirements of IFRS. These entities are allowed to apply limited disclosures specified in IFRS 19. This standard will be effective for annual reporting periods beginning on or after 1 January 2027 with permission to earlier application by disclosure.

2. IFRS 18 Presentation and Disclosures in Financial Statements

IFRS 18 introduces the principle of classified statement of profit and loss and presentation of operating profit. For this purpose, this standard sets out policies regarding categorisation of income and expenses into:

• the operating category
• the investing category
• the financing category
• the income taxes category
• the discontinued operations category.

Also, categorisation of foreign exchange differences, the gain or loss on the net monetary position, and gains and losses on derivatives and designated hedging instruments has been explained. This would enhance the usefulness of performance measures communicated through financial statements.

By this classification along with the identification of main business activity, an entity would be able to present operating profit with clarity. IFRS 18 emphasises on presenting operating profit in the Statement of Comprehensive Income which is expected to enhance usefulness of the financial statements as most of the users focus on operating profit as a performance measure. This standard guides categorization of income and expenses. IFRS 18 facilitates the presentation of operating profit even when an entity classified expenses by nature.

Identifying the main business activity of the entity is critical in determining income and expenses from the operating category. An entity would assess whether it has specified main business activity:

2.1 Investing in assets

Examples are –

1. investment entities as defined by IFRS 10 Consolidated Financial Statements;
2. investment property companies,
3. insurers.

2.2 Providing finance to customers

Examples are –

1. banks and other lending institutions;
2. entities that provide financing to customers to enable those customers to buy the entity’s products; and
3. lessors that provide financing to customers in finance leases.

An entity may have manufacturing and rendering of services as main business activities along with investing in assets and/or providing finance to customers. The categorisation of operating income and expenses by these entities whose main business activities include investing in assets and/or providing finance to customers is little different from other entities.

Click Here To Read The Full Article

The post [Opinion] Developments in IFRS appeared first on Taxmann Blog.

World Tax News provides a weekly snippet of tax news from around the globe. Here is a glimpse of the tax happening in the world this week.

1. Ukraine publishes guidance on Residence Certificate Requirements for Tax Treaty relief

The State Tax Service of Ukraine recently issued guidance on the requirements for residence certificates when claiming a withholding tax exemption or reduction under a tax treaty. If income payments are made to a non-resident who is the beneficial owner of the income and a resident of a country with which Ukraine has a tax treaty, the tax agent (person paying the income) can apply a withholding tax exemption or reduction directly, provided the treaty conditions are met.

The non-resident has to submit a certificate confirming his residence in the relevant treaty country. These certificates, issued by the competent authority of the treaty country, must be legalised, translated, and notarized in accordance with Ukrainian law. If a non-resident does not provide a qualifying certificate, the income must be taxed under the Ukraine Tax Code.

There is no standardised form for issuing the certificate of non-resident’s tax status. However, each such certificate (certification, etc.) usually contains the following elements:

• Taxpayer’s name.
• Tax year for which certificate (certification, etc.) was issued.
• Issuance date of document.
• Signature of the authorized person who is authorized to issue a certificate (certification, etc.).
• Notification that the specified taxpayers are residents within the meaning of the relevant agreement on avoidance of double taxation.

The guidance also details the simplified procedures for legalising residence certificates under specific agreements. Lastly, regardless of any agreements that simplify certification requirements, a translated and notarised copy of the document is still required.

Source: Guidance dated 05 July 2024

2. Turkey submitted tax reforms to Parliament, including Global Minimum Tax implementation

On 16 July 2024, tax reform legislation was submitted to the Turkish parliament. The legislation includes provisions for implementing the Pillar 2 global minimum tax. This tax, aligned with the GloBE rules approved by the BEPS Inclusive Framework, will apply to fiscal years starting on or after 1 January 2024, with the first returns due in 2025.

The draft legislation also proposes a 10% minimum tax on domestic companies and an increased corporate tax rate of 30% for companies involved in public-private projects, such as infrastructure projects.

Source: Bill of Law on Amendments to Tax Laws and Certain Laws

Click Here To Read The Full Article

The post [World Tax News] Ukraine Publishes Guidance on Residence Certificate Requirements for Tax Treaty Relief and More appeared first on Taxmann Blog.

Case Details: BlackLine Systems Inc. vs. ACIT - [2024] 164 taxmann.com 408 (Delhi - Trib.)

Judiciary and Counsel Details

• Dr B.R.R. Kumar, Accountant Member & Anubhav Sharma, Judicial Member
• Nageshwar Rao & Anshika, Advs. for the Appellant.
• Vizay B. Vasanta, CIT-DRfor the Respondent.

Facts of the Case

The assessee, a foreign company, provided Software on the cloud under SaaS model directly to end-users and through BPO partners. The services were fully automated and did not involve human intervention. The only human involvement was during the provision of implementation services and in providing user training services to a minimal/limited extent (in web-based user trainings/instructor-led trainings).

ITAT Held

The Tribunal held that the meaning of the term “make available” has been explained as per the Memorandum of Understanding of the India-USA DTAA concerning FIS in Article 12 (‘MOU’). It provides that technology will be considered “made available” when the person acquiring the service is enabled to apply the technology. The fact that the provision of the service may require technical input by the person providing the service does not per se mean that technical knowledge, skills, etc., are made available to the person purchasing the service. Similarly, the use of a product that embodies technology shall not per se be considered to “make the technology available”.

The concept of ‘make available’ has been interpreted as transmitting the technical knowledge so that the recipient of service can derive an enduring benefit and utilize the technical knowledge or skill in the future on his own without the aid of the service provider. In other words, to fit into the terminology “make available”, the technical knowledge, skills etc. must remain with the person receiving the services even after the particular contract comes to an end.

Various judicial precedents have also dealt with the issue of what constitutes make available, especially in light of the provisions of the India-USA DTAA and the MOU to the India-USA DTAA.

In the instant case, the services provided by the assessee were fully automated and did not involve human intervention. The only human involvement was during the provision of implementation services and in providing user training services to a minimal/limited extent (in web-based user trainings/instructor-led trainings). Thus, relying upon the decision of the Supreme Court in case of Engineering Analysis Centre of Excellence Private Limited v. CIT [2021] 125 taxmann.com 42 (SC), it was concluded that the assessee did not “make available” any technical knowledge, experience, skill, know-how or processes to group companies which may enable them to apply any technology contained therein without recourse to the assessee.

Hence, it was held that the receipt from subscription of cloud-based services was not taxable under article 12(4)(b) of India-US DTAA.

List of Cases Reviewed

• (2012) 346 ITR 504 (Delhi) (para 17),
• Engineering Analysis Centre of Excellence Private Limited. v. CIT (CA Nos. 8733-8734 of 2018) (para 20) followed.

List of Cases Referred to

• [2012] 20 taxmann.com 807/207 Taxman 121/346 ITR 504 (Delhi) (para 17),
• Rackspace, US Inc v. Dy. CIT (International Taxation) [2020] 113 taxmann.com 382 (Mumbai) (para 21),
• Racksapce, US Inc. v. Dy. CIT [2021] 124 taxmann.com 92 (Mumbai – Trib.) (para 21)
• Rackspace v. DCIT ITA No. 1634/Mum/2016 (para 21).

The post appeared first on Taxmann Blog.

Case Details: Natarajan Patchirajan v. State Tax Officer - [2024] 164 taxmann.com 102 (Madras)

Judiciary and Counsel Details

• C. Saravanan, J.
• S. Karunakarfor the Petitioner.
• J.K. Jayaseelan, Govt. Adv.for the Respondent.

Facts of the Case

The petitioner didn’t participate in the show cause proceeding and filed appeal in time. It filed writ petition against the demand order and contended that taxable amount under TNVAT Act, 2006 had been included for the purpose of determining tax liability under GST Act, 2017 with effect from 01.07.2017. It was also submitted that the petitioner had handed over the papers to the Sale Tax Practitioner/GST Practitioner to file an appeal, but was not filed.

High Court Held

The Honorable High Court noted that the petitioner didn’t participate in the show cause proceeding and filed appeal in time. The Court also noted that the petitioner’s GST turnover was calculated merely by making a comparison with the returns filed by the Department, namely Andipatti Panchayat. Therefore, it was held that the impugned order was to be set aside and matter was to be remitted to pass fresh order on merits.

The post HC Remanded Matter Since VAT Turnover Had Been Considered for Purpose of Determining Tax Liability Under GST appeared first on Taxmann Blog.

Case Details: Hajabandenawas v. State Tax Officer - [2024] 162 taxmann.com 920 (Madras)

Judiciary and Counsel Details

• N. Senthilkumar, J.
• S. Shamilifor the Petitioner.
• C. Harsha Raj, Addl. Govt. Pleader (Tax)for the Respondent.

Facts of the Case

The petitioner is a registered person under GST and received notice for demand of tax, interest and penalty under Section 73 of CGST Act, 2017. It filed writ petition and contended that no opportunity was given to the petitioner to put forth their defence. It was also contended that there was a mismatch with regard to the GSTR-1 and the GSTR-3B returns filed by the petitioner.

High Court Held

The Honorable High Court noted that the impugned order was issued confirming the proposal of tax, interest and penalty. However, the petitioner was not given opportunity to submit explanation and documents regarding discrepancies. The Court also noted that if an opportunity of personal hearing is granted, the petitioner will demonstrate with documentary evidence with regard to the discrepancies between the GSTR-1 statement and the GSTR-3B returns.

Therefore, the Court held that the impugned order was liable to be set aside and matter was remanded back to the department for fresh consideration.

The post Order Passed Without Giving Opportunity to Explain Discrepancies Between GSTR-1 and GSTR-3B Returns to Be Set Aside | HC appeared first on Taxmann Blog.

Case Details: Sanjay Raghunath Piplani v. National Buildings Construction Corporation - [2024] 164 taxmann.com 389 (HC-Delhi)

Judiciary and Counsel Details

• Subramonium Prasad, J.
• Raghav Vij,G.S. Rana &Saurabh Kaushal, Advs.for the Petitioner.& Others.
• Arvind Minocha, Sr. Adv.Ray Vikram Nath,Akshat Chaudhary,Harshvardhan Jha,Ravi Kiran Sriramoju,Ms Neeti Dutt Sharma,Chiranjiv Kumar,Mukesh Sachdeva &Ms Neelima, Advs.for the Respondent.

Facts of the Case

In the instant case, in 2012, the petitioner booked an apartment in a project launched by the respondent (i.e. a government undertaking) and paid the total consideration for the flat, i.e. Rs.76.85 lakh, in a timely manner.

Despite paying the entire sales cost, the flat was never handed over to the petitioner. Further, neither an alternate flat was given to the petitioner nor was a refund, with appropriate interest, offered by the respondent.

Further, the material on record indicated structural defects in construction after certain persons started occupying flats. The petitioner thus filed the instant writ petition.

It was a case of the respondent that the writ petition ought not to have been entertained since the petitioner had approached various forums for the same relief, and he could not be permitted to do forum shopping.

It was noted that the petitioner had been deprived of his money for the last ten years, and thus, he and several other persons had been left in the lurch and forced to knock on the doors of various forums.

High Court Held

The High Court observed that even though it was clear that the petitioner approached various forums for redressal while seeking legal recourse, such an act stems from desperation rather than a strategic pursuit of a favourable dictate. The petitioner’s behaviour arises out of a sense of frustration, helplessness, and lack of legal knowledge.

Therefore, the instant writ petition was to be allowed, directing the respondent to return the entire amount of money paid by the petitioner within a period of six weeks with interest at the rate of 12%.

The High Court held that since, the petitioner had been forced to shift accommodation and fend for himself in the last seven years and had been put to extreme mental agony, the respondent was directed to pay a sum of Rs.5 lakh to the petitioner.

The post HC Allows Writ Petition Filed by Home-Buyer as Govt. Undertaking Failed to Deliver or Refund Flat Despite Full Payment appeared first on Taxmann Blog.

Global Financial Insights is a weekly feature for the Accounts and Audit Module subscribers of Taxmann.com. It provides you with the latest updates on financial reporting and auditing practices from across the globe. Here is this week’s financial update.

1. IAASB issues guidance on audit reporting for audit of financial statements of less complex entities

The International Auditing and Assurance Standards Board (IAASB) has issued guidance on audit reporting relating to the International Standard on Auditing for Audits of Financial Statements of Less Complex Entities. This guidance shall assist the auditor in issuing the modified audit report and also while including the Emphasis of Matter paragraph (EOM) or Other Matter (OM) paragraph in the auditor’s report. Further, it shall also guide the auditor in reporting material uncertainty related to going concern.

The guidance includes eight illustrative audit reports explaining the different scenarios of adverse opinion, disclaimer of opinion, and opinion where there is a material uncertainty related to going concern. However, it is important to note that this guidance shall complement the previously released resources and shall not amend or override previously issued International Standard on Auditing for Less Complex Entities. Thus, this guidance shall not be the substitute for the previously issued standard. This new guidance can be accessed from IAASB official website.

Source: IAASB News

2. IFRS releases the meeting report of emerging economies group and International Sustainability Standard Board

The meeting held at IFRS foundation provides a platform to discuss several topics in financial reporting. These meetings play a pivotal role in developing IFRS Accounting Standards that brings transparency, accountability, and efficiency to the financial markets worldwide. Recently, IFRS foundation held a meeting with the Emerging Economies Group and International Sustainability Standard Board wherein they discussed power purchase agreements, uncertainties in the financial statements, enhancement of the Sustainability Standard, and various other topics. The report of the aforementioned meeting has now been published on the IFRS official website.

Source: IFRS Foundation

Click Here To Read The Full Article

The post [Global Financial Insights] IAASB Issues Guidance on Audit Reporting for Audit of Financial Statements of Less Complex Entities and More appeared first on Taxmann Blog.