Manthan Ruparelia & Associates

📌 ITAT Ahmedabad – Important Relief for Small Traders (Section 44AD)

A significant and practical ruling for small businesses and presumptive taxpayers 👇

Case: Babubhai Ramanbhai Patel vs ITO, Ward-3, Gandhinagar
ITA No.: 1593/Ahd/2024 | AY 2012-13 | ITAT Ahmedabad (SMC Bench)

Key takeaways from the ruling:

• 💡 Cash deposits cannot be treated as unexplained u/s 69 when they represent business turnover and follow a normal business banking pattern.

• 💡 Benefit of Section 44AD cannot be denied merely because the original return of income was not filed.

• 💡 Maintenance of books of account is NOT a pre-condition for availing Section 44AD.

• 💡 Production of VAT returns or purchase invoices is NOT mandatory for small traders under presumptive taxation.

• 💡 Treating turnover as unexplained income results in double taxation, which is impermissible.

Result:
Addition of ₹20.23 lakh deleted. Appeal allowed.

Why this matters:
This decision reinforces that substance prevails over procedure, offering much-needed protection to small traders opting for presumptive taxation under Section 44AD.

Sale of Shares of a Singapore Company by a Singapore Resident: Capital Gains Not Taxable in India under Article 13(5) of India–Singapore DTAA

EBay Singapore Services Pvt. Ltd. v. DCIT (IT), Mumbai (ITA No. 2378/Mum/2022)

ITAT Delhi Quashes Section 68 Addition Due to Lack of Cross-Examination

JSM OILFIELDS SERVICES PVT. LTD. v. DCIT (ITA 4093/DEL/2024)

Joint ownership of more than one house does not automatically defeat Sec 54F exemption: ITAT Delhi

Kusum Sahgal v. ACIT, ITAT Delhi, ITA No. 341/Del/2025

Facts:
1. The assessee, Ms. Kusum Sahgal, held 24.59% shares in Quality Needles Pvt. Ltd. During A.Y. 2016-17, she sold 21,50,000 shares of the company and earned long-term capital gains (LTCG).

2. Against this LTCG, she claimed Section 54F exemption by investing about ₹21.28 crore in a new residential property – an under-construction flat in “The Camellias”, DLF.

3. The Assessing Officer (AO) denied the Section 54F of the IT Act, exemption, on the ground that the assessee already owned more than one residential house on the date of transfer – including properties jointly owned with family members.

4. ITAT examined whether joint/co-ownership of other residential houses bars the assessee from claiming Section 54F exemption.

ITAT Delhi held as below:
1. Co-ownership does not automatically amount to owning a “residential house” for the purpose of the restrictive proviso under Section 54F.

2. There was no evidence that the assessee had exclusive ownership or that the other co-owned properties generated taxable “income from house property” in her hands.

3. When conflicting non-jurisdictional High Court decisions exist, the view favourable to the assessee should be adopted.

4. On this basis, it is held that the assessee did not own more than one residential house within the meaning of Section 54F proviso.

5. Consequently, the assessee is eligible for Section 54F exemption on her investment in the new residential property.

Reserve Bank of India (RBI) Governor Sanjay Malhotra announced a repo rate cut of 25 basis points to 6.25 percent on Friday,

TDS implications for NRIs selling immovable properties:

1. Background:
Compliance with Section 195 of the Income Tax Act requires the buyer to deduct TDS on the full sale consideration unless a lower deduction certificate is provided by the NRI seller.

2. New Rates:
Effective July 23, 2024, buyers of immovable property from Non-Resident Indians (NRIs) must deduct TDS at a revised rate of 12.5%, plus applicable surcharge (10% for sales consideration of Rs 50 L to Rs 1 Cr or 15% for above Rs 1 Cr) and 4% health and education cess, totalling an effective TDS rate of 14.3% or 14.95%.

3. Lower deduction:
As per the provisions of Sec 197 of the Income Tax Act, the seller may obtain a certificate for lower deduction (Form 13) from the Income Tax Department, in case it can be proved that the actual tax would be lower than the TDS deductible as above.

4. PAN has to be obtained by the NRI:
Obtaining a PAN (Permanent Account Number) is mandatory for NRIs who sell property in India for the purpose of TDS (Tax Deducted at Source) on the sale of the property.

5. TAN Number:
The buyer has to apply & get a TAN. In cases where two or more individuals jointly purchase the property, investing funds from their personal sources or through joint loans, each person involved must acquire a TAN.

Once the TAN is obtained, the buyer is required to deduct TDS on every occasion of making payment to the NRI Seller and deposit the TDS amount with the Income Tax Department through e-challan latest by the 7th day of the next month which the payment is made to the Seller.

6. Interest & Penalty:
Non-deduction, delayed deduction, or non-deposit of TDS attracts penalties under Sections 201(1A) and 271C.

Reversals required under Rule 37A are now availalbe in September's GSTR-2B

🟡 The table shows the amount of ITC to be reversed on account of non-filing of GSTR-3B by vendors for FY 2023-24.

↳ Next steps

→ Followup with vendors for filing pending GSTR-3B

→ In case GSTR-3B(s) of FY 2023-24 are not filed by vendors till you file GSTR-3B for the month of October, ITC shown in GSTR-2B (if availed) needs to be (temporarily) reversed through disclosure in 4B(2).

→ Such ITC can be reclaimed once the suppliers files their GSTR-3B for the relevant period.

🟡 ITC reversal amount under Rule 37A is calculated while considering all invoices (excluding RCM invoices), debit notes and their corresponding amendments (i.e. excluding credit notes and amendments to credit notes) pertaining to the tax period for which supplier has not filed GSTR-3B.

Some key amendments from the Union Budget 2024 that will take effect from October 1, 2024:

1. Direct Tax Vivad Se Vishwas Scheme (VSV) 2.0 :
This scheme helps settle tax disputes related to tax, interest, penalties, or fees pending as of July 22, 2024. If the tax department has filed an appeal, the taxpayer benefits from a reduced settlement amount of 50% of tax liability.

2. Share Buyback Taxation :
The government has modified taxation on share buybacks to be in line with dividends. Now, shareholders will be taxed according to their income tax slabs on buyback proceeds.
Companies must also withhold TDS at 10% for resident shareholders and 20% for non-residents.
The cost of the shares cannot be set off against the buyback proceeds but may be considered a capital loss.

3. TDS Rate Changes :
Multiple changes in TDS rates are to take effect:
Life Insurance Policy Payments (Section 194DA) : Reduced from 5% to 2%.
Commission on Lottery Tickets (Section 194G) : Reduced from 5% to 2%.
Payment of Commission/Brokerage (Section 194H) : Reduced from 5% to 2%.
Payment of Rent (Section 194-IB) : Reduced from 5% to 2%.
Payment by E-commerce Operators (Section 194-O) : Reduced from 1% to 0.1%.
Payments on Repurchase of Mutual Fund/UTI Units (Section 194F) : Omitted.

4. Black Money Act (BMA) Amendment :
Penalties under Sections 42 and 43 of the Black Money Act will no longer apply if the undisclosed foreign asset does not exceed Rs. 20 lakh, offering some relief for smaller undisclosed amounts.

5. Securities Transaction Tax (STT) :
For futures transactions, STT will increase from 0.0125% to 0.02% .
For options transactions, STT will rise from 0.0625% to 0.1%, applied to the premium amount.

6. Floating TDS Rate:
Effective October 1, 2024, TDS at 10% will apply to interest on central and state government bonds, including Floating Rate Savings Bonds.
No TDS will be deducted if the total interest income is less than Rs. 10,000 in a financial year.

7. Aadhar Card:
The provision allowing individuals to quote the Aadhaar Enrolment ID instead of the Aadhaar number in PAN applications and income tax returns will be discontinued from October 1, 2024.

*Tax Audit Due Date Extended to 07-October-2024*

https://incometaxindia.gov.in/news/circular-10-2024.pdf

*BIG RELIEF for GST Taxpayers*

Effective *September 27, 2024*, via *Notification No. 17/2024 - CT*, two key changes have been made to *Section 16* of the CGST Act:

1. *Section 16(5)*: Allows taxpayers to claim ITC for invoices/debit notes from FY 2017-18 to FY 2020-21 until *November 30, 2021*, overriding earlier deadlines.

2. *Section 16(6)*: Taxpayers with canceled but later reinstated registrations can now claim ITC for transactions during the cancellation period, up to *November 30* of the next financial year or the *revocation date*, whichever is *later*.