Mazars Tax Update | Edition 32.20

DIRECT TAX NEWS

I-T refund of Rs. 1,21,608 Crore have been issued during 1 April to October 6

In a tweet, the I-T department stated that the Income-tax refund of Rs. 1.21 lacs Crore has been issued electronically between April 1 to October 6. Tax refunds of Rs 33,238 crore have been issued in 34,09,246 cases and corporate tax refunds of Rs 88,370 crore have been issued in 1,83,773 cases.

Parliamentary Standing Committee on finance raised eyebrow on high interest payment on refunds due to vigorous advance tax collection

The Parliamentary Standing Committee on Finance stated that the Income-tax department may be pushing taxpayers to pay excess advance taxes to meet revenue targets. The committee observed that the interest components of the refunds distributed in the last financial years were high at over Rs 20,000 crore each.

In the period April-January of the financial year 2019-20, the I-T department had refunded Rs 1.71 lakh Crore, which included interest of Rs 22,856 Crore. Similarly, in the previous financial year, Rs 1.61 lakh Crore was returned to taxpayers as refund consisting of Rs 20,566 Crore as interest payment.

Income Tax Department froze Assets worth Rs. 2000 Crores of VK Sasikala Nataarajaan,  close aide of Tamilnadu Ex- Chief Minister J Jayalalithaa

I-T department froze assets worth Rs. 2000 Crores belonging to VK Sasikala Natarajan, who was a close associate of Late J Jayalalithaa (ex-chief minister of Tamilnadu). The IT Department has attached about 65 properties belonging to Sasikala and her associates in and around the Tamil Nadu capital which includes two properties valued at Rs 300 Crores in the name of Sasikala.
The I-T Department had also raided about 187 properties said to be linked to Sasikala and her relatives and unearthed alleged tax evasion of about Rs 1,430 crore in 2017.

The Income-tax departmentconducted raid in Bihar & UP

On 6^th October 2020, I-T department conducted search and seizure operation on the  chairman of large co-operative bank and on a businessman engaged in the business of hotel and mining in Patna, Sasaram, and Varanasi.
A sum of Rs. 75 lakh was also found in a car belonging to this businessman. During the search, incriminating documents with regard to unaccounted transactions and illegal mining of stones were  found. In total, cash of Rs. 1.25 Crore was seized, and FDRs of Rs. 6 Crore were placed under prohibitory orders.

JUDICIAL PRONOUNCEMENTS

Madras High Court held that Investor Financial Education Academy is entitled for exemption under the activities for charitable purpose

Investor Financial Education Academy Vs. ITO - T.C.A.No.900 of 2018 dated 04/09/2020

In the said case, the Madras High Court observed that it is clearly spelled out in the MOA that:

• surpluses cannot be distributed;
• income and profit of the company whatsoever, derived shall be applied solely for the promotion of its objects as set forth in the MOA and
• no remuneration or other benefit in money or money's worth shall be given by the company to any of its members.

The Hon’ble court held that the assessee, who is engaged in providing education and awareness to investors, entitled for registration under Section 12AA read with 2(15) of the Income Tax Act, 1961.

Karnataka High Court held that where banking facility are available, payment made in Cash to Agriculturists / Farmers for purchase of land should be disallowed u/s 40A(3)

Nam Estates Pvt. Ltd. vs The Income Tax Officer on 7 September 2020
The High Court held that the assessee has failed to prove the stand taken by him that the transaction took place at the place where there were no banking facilities, whereas, the assessing officer has found that the place at which the payment was made had a banking facility. Therefore, the Hon’ble court held that the assessee is not covered in the exception clause as provided under Section 40A(3) read with Rule 6DD.