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• International Taxation
• FEMA
• Audit
• Income Tax
• Indirect Tax

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• Income Tax
• Companies Act, 2013
• Indirect Tax

This article is contributed by Partners of SBS and Company LLP - Chartered Accountant Company. You can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.

From the title of the article, it is clear that entire discussion is relating to understanding of ‘Governmental Authority’ prior and post to the judgment of Honourable High Court of Patna in the case of Shapoorji Paloonji and Company Pvt Limited. Before going into the discussion, let us try to understand the significance of the phrase ‘governmental authority’.

We all know that negative list has been introduced from 01.07.2012 and post its introduction, majority of the exemptions are clubbed under single notification 25/2012-ST dated which is colloquially referred as ‘Mega Exemption Notification’. The subject notification grants exemption from service tax on various activities and has quite a long list. One such entry is Entry 12 which deals with exemption provided in respect of construction activities if the service receiver is ‘government, governmental authority or local authority’.

Read more: Understanding 'Govermental Authority'

Legal Background:-

Section 50C of the Income Tax Act, 1961 was inserted by Finance Act (“FA”) 2002 w.e.f 01-04-2003. It provides that where the consideration received or accrued as a result of transfer of capital asset by the assesee being land or building or both is less that value adopted or assessed or assessable¹ by stamp valuation authority for the purpose of payment of stamp duty then the value adopted or assessed or assessable shall deemed to be full value consideration for the purpose of computing the capital gain.

The very purpose of introducing the section is to counter suppression of sale consideration on sale of immovable properties, being land or building or both. The section provides for rebuttable presumption that the value adopted for the purpose of computing stamp duty by the competent authorities fairly indicates the market value of the property sold.

The Provisions of section 50C are applicable in case of transfer of Capital Asset. Similar provisions are contained in section 43CA which was introduced by FA 2013 w.e.f 01-04-2014. The said section deals with the immovable property, being land or building or both, held as a stock in trade.

Read more: Rationalisation Of Section 50C

Definition of Fraud 

The term ‘fraud’ commonly includes activities such as theft, corruption, conspiracy, embezzlement, money laundering, bribery and extortion. 

Even in a rapidly changing business environment with emerging technologies and constant challenges, at the core of every organization is its employees — those carrying out operations, executives, administrative personnel, and even the board. Employees are faced with an increasing pressure to meet the bottom line at work and at home, and they can be exposed to a variety of ethical dilemmas. These dilemmas can tempt employees to commit fraud against their employer. 

The cost of occupational fraud can be minimized with fraud prevention. Depending on the size and complexity of an organization, internal audit can be called on to recommend improvements or evaluate an organization’s controls and commitment to fraud prevention. An organization’s internal controls are not always specifically designed to prevent fraud; however, often there are fraud prevention components inherent in internal controls related to the control environment, segregation of duties, and monitoring activities.

Read more: Fraud - Prevention, Detection & Control