Mazars Tax Update | Edition 33.20

DIRECT TAX NEWS

Income Tax raids 38 premises in Delhi, NCR and Haryana, seizes cash of Rs. 5.5 Crore.

The Income Tax Department has carried out a search and seizure action on 14.10.2020 in the case of a leading advocate practicing in the field of commercial arbitration and alternate dispute resolution. As per the department, in one case, the assessee had received Rs. 117 crore from a client in cash, whereas he had shown only Rs. 21 crore in his records, which was received through cheque. In another case, he received more than Rs. 100 crores in cash from an infrastructure and engineering company for its arbitration proceedings with a public sector company.

The unaccounted cash received, has been invested by the assessee in the purchase of residential and commercial properties and in taking over of trusts engaged in running of schools. Evidences recovered indicates an investment of more than Rs. 100 crore in cash in several properties in posh areas in the last two years. The assessee and his associates have also purchased several schools and properties, for which also more than Rs. 100 crore was paid in cash. He has also taken accommodation entries worth several crores. Further investigations are in progress.

I-T refund of Rs. 1,23,474 Crores is issued by I-T department during Covid-19 outbreak

The I-T department in its tweet dated 14/10/2020 declared that it had issued a total refund of Rs. 1,23,474 Crores to more than 38.11 lakh taxpayers between 1st April 2020 to 13th October 2020. The total refund comprises of Income-tax refunds of Rs. 33,442 Crore in 36,21,317 cases & corporate tax refunds of Rs. 90,032 Crore in 1,89,916 cases.

Salaried individuals are hoping for work from home deduction

The outbreak of Covid-19 has forced employees to work from home. The pandemic has made salaried employees move back to their hometown, vacating their rented houses and cutting back on spends. Due to the non-payment of rent and suspension in traveling, employees would not be able to claim any tax benefit on House Rent Allowance and Leave Travel Allowance. The tax laws do not include any special benefits for such taxpayers, though they had to spend more on higher utility bills, broadband connection, electricity consumption. They are investing in gadgets such as headphones, cameras, printers, monitors, ergonomic chairs, and laptop stands. These expenses are not eligible for deduction from their salary income.

JUDICIAL PRONOUNCEMENTS

ITAT Mumbai held that TDS is not applicable on rent payment if Accommodation Services were taken on Casual Basis

Dadiba kali Pundole Esplanade House Vs. ACIT – 08/10/2020

The ITAT Mumbai held that CBDT Circular No. 5 of 2002 dated 30th July 2002 has very clearly mentioned that the provisions of section 194I are applicable where the accommodation is taken on regular basis, which means that a specific accommodation is earmarked to be let out for a specified rate and for a specific period.  ITAT held that in the present case the facts were different wherein the assessee has hired rooms on as and when available basis corresponding to the dates of shooting and no TDS is not required to be made.

Madras High Court held that interest and additional expenditure incurred on account of exchange fluctuation for acquiring capital asset has to be considered as capital expenditure

M/s. Continuum Wind Energy (India) Pvt. Ltd. Vs DCIT - Tax Case Appeal No.171 of 2019 dated 05.10.2020
The assessee, M/s Continuum Wind Energy (India) Pvt. Ltd. is a company engaged in the generation of wind energy. The assessee filed a return of income admitting loss. The assessee had taken a foreign currency loan for the purchase of machinery and paid Rs.36,33,333/- towards the premium for hedging foreign exchange fluctuations on loans taken and claimed it as revenue expenditure. The court while answering against the assessee held that if any part of the loan was not used for the purchase of a capital asset, the corresponding loss had to be treated as a capital expenditure.