Latest Blogs from SBS and Company LLP

    INTRODUCTION: 

    Our personal life is highly dependent on technology for various purposes such as purchase of goods, communication, travelling, knowledge learning etc. 

    As many persons are connected with technology, Government stepped aiming towards utilisation of technology in the Income tax department. 

    MEANING OF ASSESSMENT: 

    Every taxpayer must furnish details of Income to the Income tax department, by filing his return of Income. The return filed will be then processed by department. The process of examining the return of Income by department for confirming its correctness is called “Assessment”. 

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    Introduction: 

    Internal audit report includes audit findings, recommendations, and any responses or action plans from management. The contents of an internal audit report are influenced by various factors such as the nature of internal auditing, level of reporting, degree of management support and capabilities of internal audit staff. 

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    The judgment of apex court in the case of Formula One World Championship Limited vs Commissioner of Income-Tax (International Taxation)-3, Delhi reported in [2017] 80 taxmann.com 347 (SC) (FOWC)has far reaching implications not only the income tax, but also under the service tax laws or Good & Services Tax (GST) laws. In this article, we try to explore the judgment of the apex court in the said case from the perspective of GST laws. 

    The concept of ‘Permanent Establishment’ (PE) under the Income Tax laws is maturing day by day as the matters requiring interpretation of tax treaties are reaching the doors of apex court. The said concept of ‘Permanent Establishment’ even appears in the service tax laws or GST laws, the same was not used or tested by the indirect tax authorities, since the said concepts were brought into the statute book only from 01.07.2012, through place of provision of service rules or under GST laws through Section 2 read with Section 12 and Section 13 of Integrated Goods & Services Tax Act, 17 (IGST Act). Since, the concept of PE is attaining maturity under one law, it is only matter of time, when such concept would be used under the indirect tax laws to garner the revenue.

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    The term ‘income’ defined under Section 2(24) of Income Tax Act, 1961 (ITA/Act) is inclusive one. Charge of tax on income is subject to exemptions provided in Section 10 of ITA, 1961. The receipts mentioned in various clauses of Section 10 are not included in computing gross total income there by not part of taxable income for computing tax liability. 

    First receipt mentioned in Section 10, is income from agriculture. Sec 2(1A) has defined term ‘agricultural income’.Explanation 1 of this section provides that transfer of rural agricultural land is agriculture income. 

    Section 45 of Act provides that transfer of capital asset as defined under Section 2(14) is chargeable to tax in the year in which year in which transfer takes place. The definition of term ‘capital asset’ excludes rural agricultural land from its scope. Hence transfer of rural agricultural land is not subject to tax under Section 45 of Act. 

    Full value consideration arising from transfer of capital asset must be considered for the purpose of computing capital gain under Section 48 of Act. Sec 50C of Act provides that for the purpose of computing capital gains the value adopted or assessed or assessable by the Stamp Duty Authority or higher amount is deemed to be full value consideration for computing capital gains. 

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    1. Background 

    In keeping with India’s commitment to implement the recommendations of Action Plan 13 of Base Erosion and Profit Shifting (BEPS), the Finance Act, 2016 introduced Section 286 of Income-tax Act, 1961 (the Act) providing for furnishing of Country-by-Country Report (CbCR) in respect of an International Group. 

    Section 92D of the Act which contained provisions for preparing TP documentation was also amended to provide for keeping and maintaining of Master File. 

    In continuation with the amendment, the Central Board of Direct Taxes (CBDT) on 6 October 2017, released the draft rules and forms in relation to manner of preparation and furnishing of Master File and CbCR. It is commendable, on part of CBDT, to consistently follow an inclusive approach and seeking public comments when introducing a new and important regulation. 

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