Mazars Tax Update | Edition 28.20
This newsletter is a weekly compilation of most interesting and recent news related to tax.
DIRECT TAX NEWS
Faceless I-T appeal system would be implemented from 25th September 2020
Finance Secretary in a webinar said that the income tax department is preparing to launch the faceless income tax appeals system from 25th September 2020. The department has already launched the pan-India faceless assessment facilities for all taxpayers from 13th August 2020. Finance Secretary is of the view that these faceless systems will ease compliance, lower cost of compliance, reduced litigation and widen the tax base while doing away with discretion and subjectivity at the hands of tax officers.
Central Board of Direct Taxes (“CBDT”) has issued refunds of over rupees one lakh crore during April 1 to September 8, 2020
On 9th September 2020, CBDT twitted that they have issued refunds of over Rs. 1,01,308 crores to more than 27.55 lakhs Personal and Corporate taxpayers during the period from 1st April 2020 to 8th September 2020. The personal refund of Rs. 30,768 crores have been issued to 25,83,507 cases whereas Corporate tax refund of Rs. 70,540 crores have been issued in 1,71,155 cases.
Central Board of Direct Taxes (“CBDT”) notifies area in Bellandur village of Bengaluru as industrial park under Section 80-IA of the I.T. Act
Notification No. 72/2020-Income Tax, 08th September 2020
CBDT has notified the undertaking which is being developed by M/s Softzone Tech Park Ltd. at Bellandur village, Varthur Hobli, Bangalore as an Industrial Undertaking u/s 80-IA of the Income-tax Act. Notification also contains terms and conditions on which the approval has been accorded for setting up of an industrial park by M/s Softzone Tech Park Ltd.
JUDICIAL PRONOUNCEMENTS
Amount received on cancellation of flat booking to be taxable as capital gains
Mukesh Sohanraj Vardhan v/s Income Tax Officer, ITA No. 4255/MUM/2018
The brief facts of the case are that assessee booked a flat and received allotment letter on 10/01/2005 and no purchase as well as sale agreement was entered by the assessee with the builder. During A.Y. 2012-13 the assessee cancelled the booking and received Rs.18.75 lakhs from builder as compensation against cancellation of the allotment of flat. As the assessee held the right in the said flat for more than 36 months, the profit was shown as long-term capital gains and the assessee claimed deduction u/s 54/54F of the I.T. Act as the amount was in purchase of new flat. However, the A.O. treated the same as income from other sources.
The Mumbai tribunal held that the assessee acquired the rights in the said flat on receiving of allotment letter and extinguishment of any rights in relation to a capital asset falls in the definition of transfer in view of the provisions of Section 47 of the Act and hence, result in capital gain chargeable under section 45 of the Act. Therefore, the compensation against cancellation of the allotment of flat should be chargeable to Capital gain and appeal of assessee is allowed.
ITAT Jaipur held that if AO is not satisfied with declared sale consideration u/s 50C he is duty bound to refer valuation to DVO
Satish Kumar Agarwal vs. PCIT ITA No. 280/JP/2020 dated 09/09/2020
The brief facts of the case are that the assessee and his co- owner sold agriculture land during the A.Y 2015-16 at a consideration of Rs. 4.92 crores whereas the stamp duty authority levied the stamp duty on arbitrary basis by assessing the value at Rs. 7.38 crores i.e. 1.5 time of value declared in the sale deed in view of circular F7(39) JAN/2013/Part-1/2845-3385 dated 14.07.2014 as per which the valuation of the agricultural land would be 1.5 time of normal value in case the purchaser is a company, firm or institution. The assessee offered his share (1/4th share) in the profit on such sale in his ITR taking sale consideration of Rs. 1.23 crores (Rs 4.92 Crores/ 4) . The CIT(A) in his order u/s 263 of the I.T. Act invoked the provisions of section 50C of I.T. Act and adopted the sale consideration at Rs. 1.845 crores (Rs. 7.38 Crores/ 4) based on value adopted by the stamp duty authority.
The Jaipur tribunal held that, as per provisions of Income Tax Act if AO does not agree with the explanation of the assessee with regard to consideration disclosed by him then AO should refer the matter to DVO for getting its market rate estimated as on date of the sale. This is a legal requirement which must be complied with by the AO.