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March 2020

Direct Tax Amicus: January 2020

Article

Tax laws seeking to regulate NBFCs whether resulting in unintended hardships?
By Bharathi Krishnaprasad

The article in this issue of Direct Tax Amicus intends to discuss few crucial aspects concerning claim of and computing deduction under Section 36(1)(viia) of the Income Tax Act. Until 2017, only specified categories of banks were permitted to claim deduction qua provision for bad and doubtful debts. However, to bring parity with the banking sector, the benefit of claiming such deduction was extended to NBFCs by the Finance Act, 2016. According to the author, the intent of the statute not seems to be to give deduction for provisions created in books in line with the norms framed by the RBI, but to restrict the deduction to a percentage of taxable profits. The article in this regard discusses various aspects like, capping the deduction to total income, what should be claimed first and how, how to reconcile both the provisions, and provisions debited in books vs. provisions allowed as deduction. The author also draws attention to the fact that the provisions of Income Tax Act and the RBI Guidelines are at variance, resulting in further hardship to the assesses... 

Notification and Circular

  • Electronic payments - Installation of facility to accept payments electronically, clarified

Ratio decidendi

  • Intimation under Section 143(1) imposing liability is an appealable order – ITAT Agra
  • Draft assessment order cannot be subject to revision under Section 263 – ITAT Delhi
  • Tax is to be deducted on provisions made for ascertained expenses – ITAT Delhi
  • Buyback of shares from parent holding 99.99% shares not exempt in terms of Section 47(iv) – ITAT Bangalore
  • Consideration for offshore supply made under a separate contract not taxable – ITAT Delhi
  • Credit of TDS deducted in subsequent year can be availed in relevant assessment year in which income is assessed – ITAT Mumbai
  • Refund of tax wrongly withheld by employer - Employee can claim interest on delayed refund – Madras High Court
  • Attribution of percentage of gross revenue as per revenue sharing agreement diversion at source – ITAT Delhi
  • Negotiation on price does not alter character of acquisition as non-compulsory – ITAT Ahmedabad

January, 2020/Issue-64 January, 2020/Issue-64

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