Tax LawBeat: Your Daily Tax Law Newsletter

  • Pankaj Bajpai
  • 11:06 PM, 05 Apr 2021

INCOME TAX CASES:

Pr.CIT Vs Moogambigai Charitable And Educational Trust [ITA No. 1 of 2017] – March 09, 2021

Karnataka HC (Bangalore Bench) held that from perusal of the Section 11(4A), it is evident that in order to claim benefit of the aforesaid provision, the assessee is required to comply with the twin conditions namely any Institution or Trust being profits and gains of business, unless such income is incidental to the attainment of the objective of the trust and maintenance of separate books of accounts by such Trust or Institution in respect of such business. However, rejection of such benefit is not sustainable if no reasons are recorded on as to whether or not the assessee complied with the twin provisions in Section 11(4A).

Lalit Nathmal Shah Vs ITO [ITA No. 4279/MUM/2019] – January 18, 2021

Mumbai ITAT held that there is no dispute that the assessee is a trader in ferrous and non-ferrous metals. It is also a fact that the genesis of the present disallowance is the information received from sales tax department indicating that certain entities from whom assessee claimed to have purchased goods have been identified as accommodation entry providers. However, the Assessing Officer has acknowledged the fact that the assessee has effected the corresponding sales and has also offered to tax the profit on such sales. In such circumstances, only the profit element embedded in the alleged non genuine purchase can be considered for addition.

USG Buildwell Pvt Ltd Vs Addl.CIT [ITA No.2155/Del/2015 and ITA No.1351/Del/2015] – March 12, 2021

Delhi ITAT while answering in favour of taxpayer, held that the search assessment u/s 153A is invalid if no material incriminating the assessee is found in course of Search operations. Further, expenses incurred by an assessee engaged in real estate, on account of additional payments made for acquisition of land, merit being allowed u/s 37.

ACIT Vs Gajalaxmi Steel Pvt Ltd [ITA No. 2519/Pun/2017] – March 24, 2021

Pune ITAT while answering in favour of taxpayer, held that the additions framed on the basis of excess electricity consumption, which is then made basis for estimating gross profit & net suppressed production, cannot be sustained.

Creative Fibre Products Ltd Vs DCIT [ITA No. 550/Ahd/2018] – March 22, 2021

Ahmedabad ITAT while answering in favour of taxpayer, held that the additions framed u/s 68 on account of assessee's failure to establish genuineness and creditworthiness of the loan creditors, cannot be sustained, when additional evidences filed by the assessee are not considered by the lower authorities.

 

INDIRECT TAX CASES:

Kalyan Jewellers India Ltd [AR Appeal No.01/2020/AAAR] – March 30, 2021

Tamil Nadu AAAR held that Voucher per se is neither a goods not a service, rather, it is a means for payment of consideration. It, therefore, follows that where a voucher identifies the goods or service that can be received on redeeming, the supply of the underlying goods or service takes place at the time of issue of the voucher. This is the case with vouchers issued by a metro rail company for monthly trip tickets. In such cases, it may not even be possible to know when vouchers would be redeemed for availing of train service and, therefore, the law provides for taxing of the service at the point of time of issue of voucher itself when the supply is clearly known at the time of issue. The supply of underlying goods or service, therefore, gets taxed only at the time of issue of voucher and not at the time of actual availing of service or time of redeeming the voucher. The same is true in the case of the gold voucher presently under our consideration.

AAAR held that since the gold voucher clearly indicates that the voucher can be redeemed for gold jewellery at a known rate of tax, gold voucher also falls under this category. Therefore, the gold voucher (representing the underlying future supply of gold jewellery) would be taxable at the time of issue of the voucher. It must be emphasised that this interpretation does not result in double taxation as transfer of gold subsequently will not be subject to tax at the time of redeeming the voucher for gold, as the supply is deemed to have been done at the time of issue of voucher itself (section 12(4)).

Further, Voucher, by GST law, is recognized as an instrument of consideration (non-monetary form) for future supply. Regarding classification of voucher, since voucher is only an instrument of consideration and not goods or services, the same is not classifiable separately but only the supply associated with the voucher is classifiable according to the nature of the goods or services supplied in exchange of the voucher earlier issued to the customer. The time of supply of the gift vouchers / gift cards by the applicant to the customers shall be the date of issue of such vouchers and the applicable rate of tax is that applicable to that of the goods.