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October 2019

Direct Tax Amicus: August 2019


Keeping the cash in check
by Shashank Sharma

The article in this issue of Direct Tax Amicus focusses on how various government policies are being formulated to encourage a less cash economy in India. Earlier the government introduced Section 269ST, which placed a restriction on acceptance of cash equal to or more than Rs.2 lakh for any transaction. Recently, by introducing Section 194N, which mandates banking institutions to withhold 2% on cash withdrawal in excess of Rs.1 crore, the government is further discouraging people from undertaking cash transactions. The author in this regard points out various situations where the person would not be liable for such withholding though effectively he withdraws more than Rs.1 crore. According to the author, in the presence of operational challenges, it is yet to be seen if present steps discourage people from bringing money in the banking stream. Further, question regarding the validity of the provision would persist, as, a sum in the nature of income tax is being withheld, on the withdrawal of the money placed in a bank, which may or may not have the character of ‘income’…

Notifications and Circulars

  • Quoting of Document Identification Number (DIN) in communication to assesses and others from 1-10-2019
  • Monetary limits for appeal by department raised
  • Relief for start-ups from proceedings on account of premium received on subscription
  • India notifies provisions of Multilateral Convention to implement tax treaty related measure to prevent base erosion and profit shifting

Ratio decidendi

  • Trust implementing welfare scheme of government is not engaged in charitable activity – ITAT Kerala
  • Salary paid in advance to CEO by non-resident and reimbursed by Indian entity, is not income of non-resident – ITAT Pune
  • Interest (notional) which is part of purchase price is business income – ITAT Delhi
  • Costs incurred to provide services contracted for is an expense even if reimbursed by AE – ITAT Delhi
  • Business expenditure of professionals – Allowability to be judged from mindset of assessee – ITAT Delhi

August, 2019/Issue-59 August, 2019/Issue-59

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