Insights

Tax INFORM- January 2022

The thirteenth issue of our monthly tax newsletter – Tax Inform is out. Through these newsletters, we provide a compilation of key tax-related case laws, circulars, notifications, etc. issued by the authorities in the previous month impacting entities & individuals operating in India.

The highlights of the current issue are:

Direct Tax – 

Domestic Tax Rulings:

  • Tribunal disallows depreciation on enhanced goodwill resulting from revaluation of assets pursuant to slump sale.
  • Tribunal allows payment of business development expenditure to overseas entity on account of business / commercial expediency.
  • Tribunal allows deduction for distribution of free samples to medical practitioners.

International Tax Rulings:

  • Engineering Analysis decision not applicable on Payment of IT support services to Associated Enterprise (AE); payment taxable as royalty.

Personal Tax Ruling

  • Issues not covered under limited scrutiny not subjected to revisionary power of Commissioner.

Foreign Tax Rulings:

  • Tribunal Tax residency certificate (‘TRC’) not conclusive evidence for determining beneficial ownership.
  • Tribunal allows payment of business development expenditure to overseas entity on account of business / commercial expediency

Notifications/Circulars:

  • Central Board of Direct Taxes (CBDT) extends timelines for filing of income-tax returns and various audit reports.
  • Circular No. 02/2022 dated 19 January 2022.
  • Notification No. 08/2022 dated 18 January 2022.
  • Notification No. 07/2022 dated 18 January 2022.
  • Notification No. 139/2021 dated 28 December 2021.
  •  

Indirect Tax – 

  • Goods & Services Tax

    Case Laws:

    • Assessee is eligible for a refund regardless of whether the error is discovered by the taxpayer or the tax officer.
    • High Court disposes writ petition and remands case as an opportunity for being heard was not provided.
    • Applications falling within 15/03/2020 to 02/10/2021 were eligible for extension due to the Covid-19 second wave.
    • Assessees allowed to claim unutilized credit lying in TRAN-1 through GSTR-3B.
    • High Court ruled that due to absence of TDF-1 Form during transit without allegation of tax evasion if not a ground for levy of penalty.
    • Advance for undertaking ‘Deposit Work’ not deposit; taxable at time of receipt.
    • Trading in vouchers is taxable as supply of goods.
    • AAAR reversed the ruling passed by AAR stating that body-building on chassis supplied by Tata Motors is taxable at 18% as it is job-work.
    • OMR/Answer Sheets supply printed with logo of educational institute taxable at 18%.
    • AAR held that services for members by a multi-specialty hospital is exempt from GST.
    • Crushing and packaging of whole wheat atta a ‘composite supply’ eligible for conditional exemption.
    • ITC is available on services procured for operation and maintenance of support vessels for running port & terminal facility. 
    • Ongoing “Residential Real Estate Project” is taxable at 1.5%.

     

    Circulars:

    • Central Tax Notification No.38/2021 dated 21.12.2021.
    • Central Tax Notification No.40/2021 dated 29.12.2021.