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20.03.2020 - Voice of CA presents - Useful Updates
Friday, March 20, 2020

  I. Headlines Today:   

  1. The Direct Tax Vivad Se Vishwas Rules & Forms  (Click for detail)
  2. CBDT notifies procedure for furnishing declaration & undertaking under Vivad se Vishwas Rules  (Click for detail)
  3. National Company Law Tribunal to not accept any fresh filings till March 27  (Click for detail)
  4. Key highlights of the Companies (Amendment) Bill, 2020  (Click for detail)
  5. MCA specifies time frame for filing declaration in form NDH-4 by Nidhi Cos.  (Click for detail)
  6. MCA: Debt raised from Special window from affordable and Middle-Income Housing Investment Fund  (Click for detail)
  7. MCA: Now board can discuss ‘restricted matters’ through e - conferencing upto June 30, 2020  (Click for detail)
  8. SEBI eases LODR compliance norm for listed entities due to COVID-19 virus pandemic  (Click for detail)

II. Direct Taxes Case Laws: 

1.  Rajesh T. Shah and others Vs. Tax Recovery Officer, Writ Petition No. 1657 of 1998, Date of Pronouncement: 13.03.2020, Bombay High Court

Whether the Revenue is entitled to attach the properties belonging to a Private Trust to recover dues of the trustees, who was a director of a company which had allegedly defaulted in paying its tax dues.

Held: No

Brief Facts:
The trustees of Ramniklal r. Laliwala Famiy Benefit Trust (hereinafter referred to as ‘the trust’) have filed this Petition on behalf of the trust against the orders of attachment and garnishee notices issued u/s 226 (e) of the Income Tax Act, 1961. Smt.Sushila R. Laliwala during her lifetime settled the trust for the beneft of her grand children.  By Will deed dated 05-03-1985 Smt. Sushila R. Laliwala bequeathed all her properties in favour of the trust and appointed the original petitioner No.1 namely Harish R. Laliwala as the executor thereof. The original petitioner No.1, Harish R. Laliwala in the year 1986 joined M/s. Verma Extrusions Pvt. Ltd. (assessee company) as Managing Director and resigned from the company in the year 1993. The Revenue by order dated 15th December-12-1993 issued under Section 179 (1) of the Act held the original petitioner No.1 Harish R. Laliwala jointly and severally liable for payment of arrears of tax of Rs.1,78,00,750/- in the case M/s. Verma Extrusions Pvt. Ltd. of which he was the Managing Director. For realisation of the above liability, by separate attachment orders dated 27th August 1997, revenue attached the three properties belonging to the trust on the premise that the said three properties belonged to the original petitioner No.1 in his individual capacity. The contention of the Revenue appears to be that the property being attached does not belong to the Trust but is a property of one late Mrs. Sushila Laliwala- the mother of the defaulting trustee. Therefore, the properties could be attached to the extent it devolved upon the ex-director of the defaulting company as her legal heir.

In the present case, the Hon’ble High court held “it is evident that the subject properties belong to the trust which was settled by Smt. Sushila R. Laliwala’s Will before initiation of recovery proceedings by the Revenue against the original petitioner No.1.  The said properties did not belong to the original petitioner No. 1 or his legal heirs / representatives.  The trust being formed in the year 1978 and the Will of Smt. Sushila R. Laliwala made in 1985 much before initiation of recovery proceedings, there is no question of the said properties being diverted to the trust to evade payment of due tax.
Accordingly, the attachment orders and garnishee notices against the trust were quashed and the petition would also stand interfered with.

(Please click here for judgment)

2.  ITO vs. Shri Habib Khan, I.T.A. No. 655/JP/2019, Date of Pronouncement: 12.03.2020, ITAT - Jaipur

Whether intelligence wing of income tax department is part of income tax department and is not an ‘External Law Enforcement Agency’. Held: Yes

Where addition is based on the information received from the investigation wing, then it falls under the exception 10(e) of Circular 3/2018 dated 11.07.2018 for filing of appeals by the Department in case of low tax effect. Held: No

Brief Facts:
In the present case, the appeal was filed by the Department against the order dated 19.02.2019 of ld. CIT(A)-I, Jaipur for the assessment year 2009-10. As per the grounds of appeal, the tax effect calculated by the AO in respect of the relief granted by the ld. CIT (Appeals) which has been challenged in the present appeal is Rs. 1,43,924/-, which is not exceeding the monetary limit as specified by the CBDT for the purpose of filing of appeal by the department before the Income Tax Appellate Tribunal. However, the ld. DR submitted that the case falls under exception as per clause 10(e) of Circular no. 03 of 2018 as the case was reopened u/s 148 basis information received from Investigation Wing, Mumbai and therefore, the present appeal has been preferred by the Revenue and the same should therefore be heard on merits and not dismissed on account of low tax effect.

The Hon’ble ITAT held that “the exception 10(e) which has been referred by the ld DR relates to cases where addition is based on information received from external sources in the nature of law enforcement agencies such as CBI/ ED/ DRI/ SFIO/ Directorate General of GST Intelligence (DGGI). Both administratively and functionally, there cannot be any dispute that the Investigation Wing of Income Tax Department is part of Income Tax Department and is therefore clearly not an external law enforcement agency and that too, as specified in the aforesaid exception. Therefore, in the instant case, where the matter has been reopened based on information received from Investigation Wing and the assessment has been completed by the Assessing officer where the matter under appeal has tax effect less than the prescribed limit, it will continue to be governed by low tax effect circular issued by the CBDT which is binding on the Revenue.
Therefore, the appeal of the revenue is dismissed on account of low tax effect given the matter not covered by any exceptions so specified.

(Please click here for judgment)


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