Tax INFORM- June 2023

The thirtieth issue of our monthly tax newsletter – Tax Inform, is out. Through these newsletters, we provide a compilation of key tax-related case laws, circulars, notifications, etc. issued by the authorities in the previous month, impacting entities and individuals operating in India.

The highlights of the current issue are:

Direct Tax – 

Domestic Tax Rulings:

• Supreme Court held that the assessee was a carrier and not the owner of bitumen and accordingly, overturned the additions made under Section 69A of the Income-tax Act, 1961.
• Hyderabad ITAT determined that the company is obligated to pay taxes if the assets transferred from the merging companies were undervalued compared to their fair market value.
• ITAT ruled that the calculation of capital gains from the sale of unlisted shares by a non-resident should be determined solely based on Section 112(1)(c)(iii) of the Income-tax Act, 1961, without considering Section 48 of the Act.

Circulars and Notifications:

• CBDT circular proposes changes to Rule 11UA of the Income Tax Rules, 1962 thereby suggesting five more valuation methodologies for non-resident investors in addition to NAV and DCF.
• CBDT notifies proposed amendment in relation to the exclusion of startup entities and Government organisations from the purview of section 56(2)(viib) of the Income Tax Act, 1961.

Indirect Tax – 

Goods & Services Tax

Case Laws:

• Supreme Court holds that development fees collected u/s 22A of the AAI Act are statutory exactions and hence, are not subject to service tax.
• Games such as rummy are games of skill regardless of whether they’re played online or offline, and with or without stakes, says the Karnataka High Court.
• Delhi High Court confirms that an order provisionally attaching a bank account ceases to be operative after the expiry of one year from the date of the order.