Chartered Accountants Association, Ahmedabad
49th Residential Refresher Course at Ananta Resort & Spa, Udaipur
15th July 2021 to 17th July 2021
RRC Committee Executive Committee
Chairman President
CA. Chintan M. Doshi CA. Monish S. Shah
Convener Vice President
CA. Ashish Sharma CA. Sarju Mehta
Ex – Officio Member Hon. Secretaries
CA. Monish Shah – President CA. Rushabh Shah
CA. Sarju Mehta – Vice President
CA. Rushabh Shah – Hon. Secretary CA. Jay Parekh
CA. Jay Parekh – Hon. Secretary
Members
Members CA. Abhishek Jain
CA. Abhishek Jain CA. Bharat Vashi
CA. Ashwin Shah CA. Harit Dhariwal
CA. Bharat Vashi CA. Jignesh Shah
CA. Devang Doctor CA. Kshitij Patel
CA. Maulik Desai CA. Mehul Shah
CA. Priyam Shah
CA. Monil Shah
CA. Shailesh Shah CA. Samir Shah
CA. Vartik Choksi
Immediate Past President
CA. Ketan Mistry
Co-Opted Members
CA. Ajit Shah
CA. Chandrakant Pamnani
CA. Chintan Doshi
Patrons of The Course
1 CA. Abhishek Jain 37 CA. Monil Shah
2 CA. Ajitkumar Shah 38 CA. Monish Shah
3 CA. Anand Sharma 39 CA. Mukesh Khandwala
4 CA. Aniket Talati 40 CA. Mukesh Parikh
5 CA. Anjali Choksi 41 CA. Narendra Japee
6 CA. Anuj Sharedalal 42 CA. Nirav Shah
7 CA. Arvind Doshi 43 CA. Nirav Choksi
8 CA. Ashish Sharma 44 CA. Nisha Patel
9 CA. Ashok Kataria 45 CA. Paresh Desai
10 CA. Ashwinkumar Shah 46 CA. Parth Gevaria
11 CA. Asutosh Nanavaty 47 CA. Prakash Sheth
12 CA. Atul Shah 48 CA. Pramodkumar Dad
13 CA. Bharat Vashi 49 CA. Pratik Trivedi
14 CA. Bijalkumar Gandhi 50 CA. Priyam Shah
15 CA. Bishan Shah 51 CA. Punit Prajapati
16 CA. Chandrakant Pamnani 52 CA. Rajkumar Bhagat
17 CA. Chintan Doshi 53 CA. Rajni Shah
18 CA. Darshan Shah 54 CA. Rakesh Lahoti
19 CA. Darshan Parikh 55 CA. Riya Khokhani
20 CA. Dhinal Shah 56 CA. Ronak Khandwala
21 CA. Dipesh Dixit 57 CA. Rujul Patel
22 CA. Gaurang Choksi 58 CA. Rushabh Shah
23 CA. Hem Chhajed 59 CA. Rutvij Shah
24 CA. Hirak Shah 60 CA. Sarju Mehta
25 CA. Hitesh Pomal 61 CA. Satyapal Sadhwani
26 CA. Jay Parekh 62 CA. Satyendra Jha
27 CA. Jay Sharma 63 CA. Saurabh Patel
28 CA. Jaymin Shah 64 CA. Shailesh Shah
29 CA. Jigen Shah 65 CA. Shaleen Patni
30 CA. Jignesh Shah 66 CA. Shivang Chokshi
31 CA. Jitesh Patel 67 CA. Sunit Shah
32 CA. Kaushal Patel 68 CA. Utsav Hirani
33 CA. Manthan Khokhani 69 CA. Vijay Patel
34 CA. Maulik Desai 70 CA. Vikashkumar Jain
35 CA. Mehul Shah 71 CA. Vinod Agrawal
36 CA. Mohmadrafik Sheikh
CONTENTS
To Begin With 1
Course Schedule
Introduction of Faculties and their Topic 4
CA. Jignesh Shah ‐ "Issues under Capital Gain" 5
7
CA. Jatin Harjai ‐ "GST ‐ Recent Issues" 8
9
CA. Dhinal Shah ‐ "Issues u/s. 56(2)(vii)/(Viib) & 56(2)(x)" 11
CA. Manthan Khokhani ‐ "Issues in Computation of Income under the head Business or 12
Profession" 14
CA. Vikash Jain ‐ "New Code of Ethics"
15
CA. Keshav Maloo ‐ "GST ‐ Input Tax Credit" 19
25
CA. Aniket Talati ‐ "Common Errors in Financial Statements and Audit Reports" 42
Sr. Advocate Saurabh Soparkar ‐ "Recent important judgements by Guj. High Court and 48
Ahmedabad Tribunal" 117
122
Papers and Posers
Issues under Capital Gain
GST ‐ Recent Issues
Issues u/s. 56(2)(vii)/(Viib) & 56(2)(x)
Issues in Computation of Income under the head Business or Profession
New Code of Ethics
Input Tax Credit under GST
Common Errors in Financial Statements and Audit Reports
Group wise list of Patrons
Group "A" Group "B" Group "C"
CA. Ahishek Jain CA. Ajitkumar Shah CA. Ashok Kataria
CA. Aniket Talati CA. Anand Sharma CA. Atul Shah
CA. Anjali Choksi CA. Anuj Sharedalal CA. Bharat Vashi
CA. Arvind Doshi CA. Ashish Sharma CA. Dhinal Shah
CA. Asutosh Nanavaty CA. Ashwinkumar Shah CA. Gaurang Choksi
CA. Darshan Shah CA. Jay Sharma CA. Hirak Shah
CA. Hem Chhajed CA. Bishan Shah CA. Hitesh Pomal
CA. Jigen Shah CA. Chandrakant Pamnani CA. Bijalkumar Gandhi
CA. Jignesh Shah CA. Chintan Doshi CA. Jaymin Shah
CA. Manthan Khokhani CA. Darshan Parikh CA. Kaushal Patel
CA. Mohmadrafik Sheikh CA. Dipesh Dixit CA. Mehul Shah
CA. Monil Shah CA. Jay Parekh CA. Mukesh Khandwala
CA. Narendra Japee CA. Jitesh Patel CA. Nirav Choksi
CA. Nirav Shah CA. Maulik Desai CA. Paresh Desai
CA. Prakash Sheth CA. Monish Shah CA. Priyam Shah
CA. Pramodkumar Dad CA. Pratik Trivedi CA. Rujul Patel
CA. Mukesh Parikh CA. Nisha Patel CA. Rushabh Shah
CA. Punit Prajapati CA. Parth Gevaria CA. Sarju Mehta
CA. Riya Khokhani CA. Rajkumar Bhagat CA. Satyapal Sadhwani
CA. Rutvij Shah CA. Rajni Shah CA. Shaleen Patni
CA. Shailesh Shah CA. Rakesh Lahoti CA. Vijay Patel
CA. Shivang Chokshi CA. Ronak Khandwala CA. Vikashkumar Jain
CA. Sunit Shah CA. Satyendra Jha CA. Vinod Agrawal
CA. Utsav Hirani CA. Saurabh Patel
Chartered Accountants Association, Ahmedabad
Course Schedule
Date: 12th July 2021 to 13th July 2021
Date: 12th July 2021, Monday
Time Particulars
04.00 pm to 05.00 pm Group Discussion on paper of CA. Jignesh Shah on "Issues
under Capital Gain" on Zoom Platform
Date: 13th July 2021, Tuesday
Time Particulars
Group Discussion on paper of CA. Manthan Khokhani on
04.00 pm to 05.00 pm "Issues in Computation of Income under the head Business
or Profession" on Zoom Platform
Date: 15th July 2021 to 17th July 2021
Time Date: 15th July 2021, Thursday
Particulars
02.00 pm to 03.00 pm Room Check in
02.30 pm to 03.00 pm Tea / Coffee with Cookies
03.00 pm to 04.30 pm Presentation of paper by CA. Jignesh Shah on "Issues under
Capital Gain"
Group Discussion on paper of CA. Jatin Harjai, Jaipur on
04.30 pm to 05.15 pm "GST - Recent Issues"
05.15 pm to 05.30 pm Tea / Coffee with cookies
05.30 pm to 07.00 pm Presentation of paper by CA. Jatin Harjai, Jaipur on
"GST - Recent Issues"
08.00 pm to 10.00 pm Dinner
Time Date: 16th July 2021, Friday
Particulars
08.00 am to 09.00 am Breakfast at Restaurant
09.00 am to 09.45 am Group Discussion on paper of
CA. Dhinal A. Shah - Issues u/s. 56(2)(vii)/(Viib) & 56(2)(x)
09.45 am to 10.00 am Tea / Coffee with cookies
Reporting by Group Leaders to the Faculty
10.00 am to 11.30 am Presentation of paper by CA. Dhinal Shah on " Issues u/s.
56(2)(vii)/(Viib) & 56(2)(x)"
Presentation of paper by CA. Manthan Khokhani on "Issues in
11.30 am to 01.00 pm Computation of Income under the head Business or
Profession"
01.00 pm Lunch
03.00 pm to 04.30 pm Presentation of paper by CA. Vikash Jain on "New Code of
Ethics"
04.30 pm to 04.45 pm Tea Coffee with cookies
04.45 pm to 06.15 pm Presentation of paper by CA. Keshav Maloo, Udaipur on "GST
- Input Tax Credit"
08.00 pm to 10.00 pm Dinner
49th RRC at The Ananta - Udaipur 1
Time Date: 17th July 2021, Saturday
Particulars
08.00 am to 09.30 am Breakfast at Restaurant
09.30 am to 11.00 am Presentation of paper by CA. Aniket S. Talati on "Common
Errors in Financial Statements and Audit Reports"
11.00 am to 11.30 am Check Out
11.30 am to 01.00 pm
Talk by Sr. Advocate Saurabh S. Soparkar on "Recent
01.30 pm important judgements by Guj. High Court and Ahmedabad
Tribunal"
Lunch
49th RRC at The Ananta - Udaipur 2
49th RRC at The Ananta - Udaipur 3
CA. Jignesh J. Shah
CA. Jignesh J. Shah is B. Com.; Grad. CWA; FCA; DISA (ICA). He is
practicing in the field of Audit, Direct Taxes and Indirect Taxes including
VAT/GST since 1991.
He is Rank holder in in Gujarat University in all three examinations of B.
Com. He is also placed in All India Merit list of C.A. Intermediate, C.A. Final
and ISA examination held by ICAI.
He has also served as member and chairman of various sub committees, as
a member of Executive Committee and also as Hon. Secretary of Chartered
Accountants Association, Ahmedabad.
49th RRC at The Ananta - Udaipur 4
Jatin Harjai Executive Profile
Introduction Jatin Harjai, Advocate
B.Com, FCA, LLB, DISA (ICA)
Founder & Leader: JHA Legal
Mentor: GST World
Contact:
+91 97994 94482
[email protected]
Mr. Jatin Harjai is practicing advocate. He practiced as chartered
accountant for more than fifteen years before starting legal practice. In
short span of time he has become recognized for his contribution and
expertise as a knowledgeable professional, advisor and consultant in the
field of financial consultancy and tax advisory.
With a core expertise in Indirect Taxes he has been serving
entrepreneurs and various corporates in varied areas like compliance,
consulting, structuring and litigation. There are many landmark
judgments to his credit, many are published in leading Tax Journals. He
is having vast industry experience including that of Infrastructure,
Mining, Real Estate, Construction, Hospitality, Online Gaming,
Broadcasting, Manufacturing, E-Commerce, Distribution, Logistics,
FMCG, Automobile, Exim Trade etc. Mr. Harjai served as consultant in
the world bank project for GST Implementation for Govt. of Rajasthan.
He is also guest faculty on various educational, professional & Industrial
platforms and shared his views on VAT, CST, Entry Tax, Works Tax &
GST. As a matter of GST awareness and preparedness, before and
after implementation of the biggest Indian tax reform, he has vastly
addressed to professionals, industry and government officers. He has
addressed more than six hundred seminars/ workshops as faculty/
speaker on Indirect taxes in almost all regions of the India. Apart from
India he shared his knowledge in international seminars/ workshops at
UAE, Thailand and Tashkent. He authored many articles on Indirect
taxes which were published in leading tax journals and contributed in
many publications of ICAI on GST and UAE VAT.
Mr. Harjai is actively engaged in representing Industry before
department at various levels. He has represented in the ‘Tax Advisory
Committee’ before Chief Minister of Rajasthan for giving
recommendation and suggestion before state budget(s). Apart from TAC
he has represented Institute of Chartered Accountants of India,
Rajasthan Tax Consultants Association, Tax Consultants Association
Jaipur before Commercial Taxes Department at various levels in relation
to modification in VAT laws of the state and development of GST.
49th RRC at The Ananta - Udaipur 5
Professional Attributes Jatin is accredited trainer of NACIN (National Academy of Customs &
Qualification Indirect Taxes, Government of India) for GST Training to be provided to
Trade and Industry as well as GST Officers of the Central Govt’s. Apart
from Central Tax Officers, he has given extensive training of GST to
State Tax officers of Rajasthan, West Bengal, Assam, New Delhi &
Telangana. Further he is on the panel of NSIC, an undertaking
established by Ministry of MSME Govt of India, for imparting training on
Indirect Taxes.
Apart from being Panelled GST Trainer of ICAI, Jatin was part of
‘Faculty Identification’ & ‘Train the Trainer’ Programs of Indian GST as
well as UAE VAT. Whereby he selected members of the institute, from
various parts of the country, and provided them training of Indian GST &
UAE VAT for being a Trainer.
Jatin is keen learner and is having deep interest in all academic
activities. He is actively participating and contributing in study groups
and workshops and is regular contributor in so many academic and
professional bodies in different capacities such as:
• Special invitee member of National Indirect Tax Committee of
ICAI (2017-18, 2018-19 & 2019-20)
• Co-opted member of national Indirect Tax Committee of PHD
Chamber of Commerce & Industries (2018-19 & 2019-20).
• Member of ‘Penal of GST Experts’ maintained by CIRC of ICAI.
• Member of ‘Penal of GST Experts’ maintained by EIRC of ICAI.
• Chairman of Technical Research (Indirect Taxes) Committee of
Tax Consultants Association of Jaipur (2018-19 & 2019-20).
• Founder Convener of the Study Group framed by the ICAI for
study, research and recommendations on GST (2016-17)
• Co-opted member of Direct Tax Committee of ICSI for the year
2018.
• Member, All India Federation of Tax Practitioners
• Member, The Chamber of Tax Consultants, Mumbai
• Member, Rajasthan Tax Consultants Association
• Member, Bombay Chartered Accountants Society
• Member, Tax Consultants Association Jaipur
• Member, Confederation of GST Professionals & Industry,
Mumbai
§ Articles Training from Kalani & Co., Jaipur.
§ Bachelor of Commerce in 2001 from RU.
§ Chartered Accountancy in Nov 2003.
§ Diploma in Information System Auditing from ICAI.
§ Certification Course on Indirect Taxes & FTP by ICAI.
§ LL.B. from University of Rajasthan
49th RRC at The Ananta - Udaipur 6
Dhinal is a Chartered A
than 25 years of experie
and regulatory issues.
Dhinal has been extens
multinationals on issues
optimizing tax credits et
implications, corporate t
Insolvency Professional
Dhinal is a former partn
Dhinal is a Executive Co
and Secretary of ITAT B
Dhinal was a Central Co
Accountants of India, D
Chairman of Direct Tax
Industries.
He has also addressed
conferences on internat
domestic taxation, Acco
Valuation Standards etc
and other professional j
49th RRC at The
Accountant and Lawyer by qualification and has more
ence in advising clients on taxation, exchange control
sively involved in advising Indian corporate and
s relating to double tax treaties (PE exposures,
tc), due diligence, transfer pricing, foreign tax systems
tax and accounting standards including IFRS,
l.
ner with EY.
ommittee Member of International Fiscal Association
Bar Association, Ahmedabad.
ouncil Member of The Institute of Chartered
Director of IPA and RVO formed by ICAI and was
Committee of Gujarat Chamber of Commerce and
and presented papers at various seminars and
tional taxation, non resident taxation, transfer pricing,
ounting Standards, Insolvency and Bankruptcy Code,
c. He is also a regular contributor of articles to Institute
journals. He has also co-authored book.
Ananta - Udaipur 7
CA. MANTHAN S. KHOKHANI
Mr. Manthan Khokhani is a fellow member of the Institute of Chartered Accountants
of India. He regularly writes articles for the journal of Chartered Accountant’s
Association. He endeavors to dedicate himself and excel in the profession,
particularly in the area of Domestic Taxation (Encompassing Litigation) coalescing
his knowledge of Income Tax to handle problems relating to direct tax matters.
He has secured the 8th rank in India at the final examination conducted by the Institute
of Chartered Accountants of India. He has also secured the 9th rank in the state in the
HSC examinations.
He has fine dominion over drafting Income Tax Appeals and has an excellent grasp
over interpreting Direct Tax Laws and applying the principles of accounting standards
to help resolving the queries of the clients.
He has been a member of several committees and sub-committees of Ahmedabad
Branch of ICAI as well as WIRC of ICAI. Currently, he is the member of the brain trust
committee and direct tax committee of CA Association, Ahmedabad.
He is currently a partner at Chartered Accountancy firm, Rajni Shah & Associates,
based at Ahmedabad.
49th RRC at The Ananta - Udaipur 8
CA Vikash Jain
Experience and Qualifications
Vikash Jain is practicing since 2003 in various areas
such as insolvency and liquidation matters, company
law and LLP matters, auditing, corporate social
responsibilities and management consultancy
services. He has conducted various seminars and
lectures at various forums including CPE study circles
of ICAI, ICSI, etc.
• He has done B.Com (Hons.) from Jai Narayan Vyas
University.
• He is a fellow member of ICAI.
• He is a registered Insolvency Professional.
• He has completed Diploma in Information Systems
Audit (DISA).
• He is also a Certified Arbitrator.
He has been a mentor and guide to young
professionals and helping them in setting up a good
career path.
49th RRC at The Ananta - Udaipur 9
CA Vikash Jain
Key positions held
At WIRC of ICAI
2019 – 20 | Regional Council Member
At Ahmedabad Branch of WIRC of ICAI
2017 – 19 | Managing Committee Member
2016 – 17 | Chairman
2015 – 16 | Vice Chairman
2014 – 15 | Secretary
2013 – 14 | Treasurer
2010 – 11 | Vice Chairman of GMCS committee
At Ahmedabad Branch of WICASA
2014 – 15 | Chairman
At Ahmedabad Branch of ICAI
2013 – 14 | Chairman CMII committee
2013 – 14 | Chairman CPE committee
2012 – 13 | Co-Chairman CPE committee
2011 – 12 | Convener CPE committee
At WIRC
2010 – 11 | Co-opted member of Corporate Governance
committee
At Rotary Club, Airport, Ahmedabad
2014 – 15 | Secretary
49th RRC at The Ananta - Udaipur 10
CA. Keshav Maloo
CA. Keshav Maloo is B. COM. (Gold Medalist), F.C.A. and D.I.S.A. He is partner in
Keshav Maloo & Associates
His major focus of practice is in the field of GST, Central Excise, Service Tax &
Customs.
He is having experience of more than 25 years in the field of Foreign Trade Policy,
Central Excise, Service Tax, Customs & now in GST.
He is faculty on GST in ICAI. He is advisor on Indirect Taxes for various listed
companies. He is actively involved in making representations to Finance Ministry on
behalf of various Industries and Associations.
He has been the speakers in in many Seminars on GST, Service Tax & Excise in
Mumbai, Ahmedabad, Indore and all over Rajasthan. His lot of articles are published in
Journals of All India repute like GST Law Times, TIOL, Excise Law Times, Service Tax
Journal, Service Tax Review etc.
49th RRC at The Ananta - Udaipur 11
CA. ANIKET S. TALATI
M.Com (F&T), FCA
Central Council Member of
The Institute of Chartered Accountants of India
(Set up by an Act of Parliament)
[email protected]
_____________________________________________________________________________________________________
A man of refined thought-process, quick understanding and sharp vision, CA. Aniket Sunil Talati is a
Central Council Member of The Institute of Chartered Accountants of India for the term 2019-22.
Having served the profession for about a decade, he had been elected to the Ahmedabad Branch
for the terms 2010-2013 & 2013-2016. He was elected to the Western India Regional Council of ICAI
for the term 2016-19. He has served as the Chairman of Ahmedabad Branch for the year 2014-15
and as Secretary, WIRC for the year 2017-18.
Respected for his strong organizational skills and deep insight in the affairs of profession, CA. Aniket
Talati has contributed to the cause of profession from various professional perspectives in his past
roles. He heads the Consulting vertical of his firm Talati & Talati LLP Chartered Accountants – one
of the largest firms of Gujarat. He has led Engagement teams to New York every year to work on
top real estate developers of USA for the past decade.
Being Bachelor of Commerce from Mumbai University and a Rank holder from Gujarat University,
Aniket further pursued Master of Commerce and articleship with Lovelock & Lewes (network firm
of PWC), Aniket has developed a unique perspective to look into the matter. He has led the cause
of profession through various committees of the Branch & Regional council. He is the Chairman of
Financial Reporting Review Board (FRRB), Vice Chairman of CSR Committee and Convenor of Digital
Re-Engineering & Learning Directorate. He is also the Director of ICAI Accounting Research
Foundation (ICAI ARF) and also the member of various other Committees, Boards and Directorates
which include Accounting Standards Board, Audit Committee, Banking Financial Services and
Insurance, Committee for Members in Practice, Direct Taxes, Indirect Taxes & GST, Infrastructure
Development, Corporate Laws & Corpo4r9tahtReRCGaot vTheerAnnaanntac-eU,dEaipduirtorial Board, Professional Dev1e2lopment
Committee, Internal Audit Standard Board, Committee for Members in Industry & Business,
Continuing Professional Education, Taxation Audits Quality Review Board, Digital Accounting
Assurance Board, UDIN amongst others.
Aniket Talati has been recently appointed as an advisor to the board of International Federation of
Accountants (IFAC). IFAC is the global organization for the accountancy profession. Founded in
1977, IFAC has more than 175 members and associates in more than 130 countries and jurisdictions,
representing more than 3 million accountants employed in public practice, industry and commerce,
government, and academe. He has served as Executive Committee Member of Gujarat Chamber of
Commerce & Industry (GCCI) and is currently member of the Direct Tax Committee of GCCI.
With a vision to patiently and clearly responding to the issue of image and identity of accountancy
profession in the country and abroad, CA. Aniket Talati has a very keen eye and understanding of
the matter. With his deep insight for the affairs of profession, he has always kept the profession on
priority. A man of grass-root understanding of the matters and respected for his down-to-earth
approach to the issues at hand among his professional colleagues, CA Aniket Talati has a surpassing
ability to deal with a variety of difficult situations.
Having an exceptional ability to bring out a range of alternative solutions on the table in any given
situation, he has to his credit successful closures of many a taskforce and time-bound non-standing
groups and teams. Being thoroughly conversant with the professional concerns and demands of his
times, Aniket has authored relevant books, including ‘Treatise on RERA’ recently published by CA
Association Ahmedabad.
An academic by temperament, Aniket has published numerous articles in newspapers, magazines
and professional newsletters, and delivered lectures in about 250 seminars and conferences. He
also serves on the board on the Governing Council and Executive Committee of HL College of
Commerce. Aniket Talati is also a trustee at the not for profit ‘Talati Charities’ which runs a reading
room/ Library for the benefit of students pursuing Chartered Accountancy and other professional
courses.
49th RRC at The Ananta - Udaipur 13
Sr. Adv. Saurabh Soparkar
Mr. Saurabh Soparkar is practicing as an advocate before the Gujarat High Court and the
Income Tax Appellate Tribunal, Ahmedabad since June 1981. Fields of interest: Tax laws,
Company law and Commercial laws. Designated as a Senior Advocate by the Gujarat High
Court.
He had been standing counsel for the income tax department for a period of three years
(1986‐89) for the state of Gujarat.
He has contributed papers at various residential seminars held at different places at the
invitation of:
1. Chartered Accountants Association, Ahmedabad
2. I.C.A.I., New Delhi.
3. B.C.A.S., Mumbai
4. Various branches of the I.C.A.I. & I.C.S.I.
5. Income Tax Bar Associations and the Tax Advocates Associations.
6. All India Federation of Tax Practitioners
He is also a Visiting Professor at I.I.M. Ahmedabad on the subject of ‘Corporate Tax Planning’
and ‘Legal Aspects of Business’.
49th RRC at The Ananta - Udaipur 14
Issues on Capital Gains Tax
‐ CA. Jignesh Shah
1. Kumble owned shares of RCB Ltd. (A listed entity since beginning) since 2007. Upon
demerger of RCB Ltd., Kumble got shares of MI Ltd. in addition to shares of RCB Ltd.
held by him. Mr. Kumble wants to understand the applicability of Grand fathering
benefit to the shares of MI Ltd.
Also discuss the manner of applying Grand fathering clause in case of a merger of listed
entity into unlisted entity and vice versa.
2. CSK Ltd. has sold the office premises owned by it on 26.01.2021. Over the years, the
depreciation has been claimed and allowed under Income Tax Act in respect of this
office premises. CSK Ltd. has been advised that they should bifurcate the sale
consideration into two parts. One for the Building and the Other for the Undivided
share in Land. By doing this, they can treat the Gain pertaining to undivided share of
land as LTCG. Pl. Discuss.
3. Mr. Saif owns a property which is inherited to him upon death of his father many years
back. His father had used this property for his business and claimed depreciation for
the same in his return of Income. However, after the death of his father, Mr. Saif had
given the property on Rent and has never claimed Depreciation. If Mr. Saif sells this
property, whether the resultant gain would be LTCG or STCG?
4. Kapil Dev sold a piece of Land owned by him during F.Y. 2020‐21. The said land was
acquired by him in 1995 as Agricultural Land. He got it converted to Non‐Agricultural
Land in 2007. He is puzzled about the FMV as on 01.04.2001. Should he consider FMV
of Agricultural Land or Non‐Agricultural Land for the purpose of computing LTCG? Pl.
advice.
49th RRC at The Ananta - Udaipur 15
5. Mr. Virat Sold his residential house on 01.06.2020. He also sold Shares and Securities
held by him during F.Y. 2020‐21. Out of the Sales proceeds he acquired a New
Residential Property in Joint names of himself and his wife. Discuss about the
applicability of section 54/54F in this case.
Would the answer be different is the property was purchased in joint names of Virat
and his daughter?
Whether Mr. Virat will be entitled to exemption u/s 54/54F on the amount spent by
him on renovation/extension of the house?
6. Rishabh had sold his ancestral house on 01.05.2017. He had worked out the capital
gains tax considering the FMV as at 01.04.2001 determined by the Approved Valuer.
The Assessing officer refers the case to DVO for determining FMV as at 01.04.2001.
Since the case was getting time barred, the AO passed the order u/s 143(3) by taking
an estimated value. Thereafter on receipt of the report from the DVO, the AO passed
the order u/s 154 enhancing the Income. Is the action of AO valid?
7. Mr. Rohit owns a plot of Land. His wife sold the residential property owned by her on
15.08.2020 and used the proceeds to construct the residential house on the land
owned by Mr. Rohit. She wants to avail the benefit of section 54. She seeks your
professional advice on the issue.
8. Mr. Shikhar has bought a huge piece of Agricultural Land and constructed a house on
the said land during F.Y. 2020‐21. As per the prevailing law, he has restricted the
construction to 5 % of the Total Land Area. However, he has not got the building plans
approved nor has obtained BU permission. He wants to avail the benefit of section
54/54F on the total amount spent on Land and Building. Pl. advise him.
49th RRC at The Ananta - Udaipur 16
9. KKR Ltd. acquired an Agricultural Land on 01.04.2020 from an Agriculturist for a
consideration of Rs. 500 Lacs. KKR Ltd. is required to obtain permission u/s 63AA of
the Gujrat Tenancy and Agricultural Lands Act, 1948 within the stipulated time by
paying the requisite premium which is estimated at Rs. 100 Lacs. The stamp authority
has recovered the stamp duty at the Jantri rate applicable to Non Agricultural Land
which is 550 Lacs. Discuss the applicability of section 50C.
10. Irfan sold an urban Land belonging to him to his brother Yusuf for a consideration of
Rs. 50 lacs on 31.12.2020. The Jantri value of the said land is Rs. 100 Lacs. Discuss the
applicability of section 50C and section 56(2)(X).
11. Sachin sold his Rural Agricultural Land on 09.11.2020 for a consideration of Rs. 100
Lacs as against the Jantri Value of Rs. 200 Lacs. Discuss the applicability of section 50C
and section 56(2)(X).
12. Mr. Atul is the owner of a flat of 100 sq. yard in a society. He had purchased the flat
on 25.05.1985 at a cost of Rs. 150000/‐. The society enters into a redevelopment
agreement with a builder under a registered redevelopment agreement on
01.04.2019 and handed over the possession of flat on the same date. The conditions
under the agreement are as under:
The developer will give cash of Rs. 25000/‐ p.m. as rent reimbursement till the
developer complete the project and hands over the new flat to the owner.
The developer will give Rs. 500000/‐ in cash for compensation of furniture and fixture.
The developer will give newly constructed flat of 120 sq. yard.
The developer has completed the project on 01.04.2021 and got the BU on the
15.06.2021. The developer has handed over the possession of newly constructed flats
to the original owner on 30.06.2021.
Other relevant details are as under:
49th RRC at The Ananta - Udaipur 17
1. Fair market value as per registered valuer as on 01.04.2001 of the original flat is Rs.
20,00,000/‐
2. Stamp Duty Value as on 01.04.2001 of the original flat is Rs. 15,00,000/‐
3. Stamp Duty Value as on 15.06.2021 of the original flat is Rs. 1,25,00,000/‐
4. Stamp Duty Value as on 15.06.2021 of the Newly constructed flat is Rs. 1,35,00,000/‐
5. Cost inflation index of 2001‐2002 is 100
6. Cost inflation index of 2019‐2020 is 289
7. Cost inflation index of 2021‐2022 is 317
Questions :
1. Calculate the capital gain.
2. Whether developer is required to deduct Income Tax at source from the payment of
Rent and compensation of furniture?
3. What is the taxability of the Rent and the compensation received in the hands of Mr.
A?
49th RRC at The Ananta - Udaipur 18
GST – Recent Issues
‐ CA. Jatin Harjai
1. XYZ hospital is providing medical services which are exempt from GST. But they are
also selling medicines to indoor as well outdoor patients, so they have taken
Registration under GST. They have purchased one machinery for surgery purposes,
on which ITC has not been claimed as it is to be used for exempted output services.
Now they want to sell said machinery to another hospital, whether GST is applicable
on such transaction?
2. XYZ limited had bought a Machine 4 years back for Rs. 500000/‐ and rate of VAT was
5%. However, the party in question had not taken VAT credit of the same. Now XYZ
limited wants to sale the said Machine. Whether it will be liable to pay output tax?
At what rate and what amount? Also suppose this Machine was sold at the time of
closure will it impact your decision?
3. ABC Traders, a partnership firm has registered themselves as composition dealer.
After 7 years, they want to close the business and dissolve the partnership. At the
time of dissolution, they decided to transfer all the fixed assets amongst the
partners. At what rate GST shall be applicable, whether on Composite rate or regular
rate?
4. A is a Principal who sends goods for Job‐work to B. B transfers this goods to C limited
for further processing. The said instruction was given by A then Now the question
arises as under
i) For transaction of B to C if EWB is required who will make it?
49th RRC at The Ananta - Udaipur 19
ii) Who will report this transaction in ITC 04?
iii) Assume A is not aware that B transfers goods for further processing to to C, will
your answer in (i) and (ii) change?
5. A Ltd company having its office in Ahmedabad acts as an agent of B of Bangladesh
and sales goods to D of Denmark.? Whether A Ltd will be liable for output tax for
GST? Will your answer differ if the same was service instead of goods? Will it change
if D is situated in Delhi and Not Denmark?
6. A, proprietor of Alphabet & Sons passed away. Now the legal heir is appointed,
however following opinion is asked for
a) How to report the Turnover between the date of death of proprietor and the
issuance of new number?
b) How to transfer stock if there is no credit?
c) What if the legal heir is not nominated and the matter is in Dispute?
7. A of Ahmedabad sends goods to B Ltd of Bhavnagar on the instructions of C Ltd. Of
Chennai. A of Ahmedabad is unregistered. A wants to know whether he needs to
compulsory apply for registration. The Goods are worth Rs. 10 lakhs.
49th RRC at The Ananta - Udaipur 20
8. A of Ahmedabad conducts audit of B Ltd of Bhavnagar on the instructions of C Of
Chennai. A of Ahmedabad is unregistered. A wants to know whether he needs to
compulsory apply for registration. The Services are worth Rs. 10 lakhs.
9. Facts
Registered person has filed GSTR 1 and 3B for July, August and September, 2017 and
has filed only GSTR 1 for October 17 to March 18, and has not filed GSTR 3B due to
shortage of funds.
Due to non filing of 3B DGGI has visited place of business in month of June 18, of
registered person and then after registered person has filed 3B and paid tax. But has
not paid interest on delay payment of tax. Now DGGI issued demand cum show
cause notice in August 20, registered person has replied to show cause notice in
October 20 and denied all allegation of DGGI.
Question:
Whether interest for delay payment of tax is required to be paid on net liability or on
gross liability? Can payment be consider as any proceedings under section 73 or 74?
If we read proviso to Sec 50 (1) which reads as under:
(Provided that the interest on tax payable in respect of supplies made during a tax
period and declared in the return for the said period furnished after the due date in
accordance with the provisions of section 39, except where such return is furnished
after commencement of any proceedings under section 73 or section 74 in respect of
the said period, shall be levied on that portion of the tax that is paid by debiting the
electronic cash ledger.)
10. M/s. Safalya Realities is engaged in development of Residential Plots. They acquire
land and divides it into small residential plots, develops common amenities like club
house, roads, boundary wall, drainage etc. They are developing a township and have
Phase 1 Project and Phase 2 Project. Both phases are separate independent projects
49th RRC at The Ananta - Udaipur 21
having separate registrations with RERA, separate Local Authority Approved Plans,
separate records etc.
Development of Phase 1 was completed before July, 2017 and completion certificate
from local authority/competent authority is availed in this regard. No expenditure for
development is there after July, 2017.
Development of Phase 2 is under process and for that land is acquired under a
development agreement dated 1st April, 2019 from the land owner. Rs. 3 Cr is paid to
landowner as upfront payment which is near to market value of the land and it is
agreed that landowner will be party to Sale Deed as and when plots will be sold by
M/s. Safalya Realties to their buyer.
Under this facts, they ask your opinion on following.
a) Is GST payable on sale of residential plots?
b) In Phase 2, they have sold Plot No. 35 and Sale Deed of Rs. 30 lacs is executed for
sale of land plus Rs. 5 Lacs is collated as Development Charges. If GST is payable,
what will be the GST liability?
c) In Phase 2, they have sold Plot No. 36 and single amount of Rs. 36 Lacs for entire
plot, including development charges are received and Sale Deed is executed
accordingly. If GST is payable, what will be the GST liability?
d) They are advised that for safer side, they should pay GST @5% or 1% as the case
may be on total value and should not avail any Input Tax Credit. However, they
have doubt as there is no “residential apartment” or “carpet area” of any building,
rate of 5% or 1% is not applicable (refer definition of “affordable residential
apartment” and Entry 3 in the Notification No. 11/2017‐CTR). Can they go for 5%
or 1% on gross amount?
e) Regarding Development Agreement;
a. Is Transfer of Development right by landowner to M/s. Safalya Realities are
subject to GST?
b. If yes, who is required to pay?
c. What will be the time of supply?
d. Are they entitled for exemption at Entry 41A of Notification No. 12/2017‐
CTR? (This entry exempts Transfer of Development Rights for construction
of residential apartments)
f) They have unsold units in Phase 1 which is completed before July, 2017. They want
to sale plots under Phase 1 in July 2021. They don’t want to pay any GST on such
plots as plots were developed before many years, even before implementation of
GST. Are they correct?
49th RRC at The Ananta - Udaipur 22
ENTRY 41A OF EXEMPTION NOTIFICATION. NO. 12/2017‐CTR
Service by way of transfer of development rights (herein refer TDR) or Floor Space Index (FSI)
(including additional FSI) on or after 1st April, 2019 for construction of residential apartments
by a promoter in a project, intended for sale to a buyer, wholly or partly, except where the
entire consideration has been received after issuance of completion certificate, where
required, by the competent authority or after its first occupation, whichever is earlier.
The amount of GST exemption available for construction of residential apartments in the
project under this notification shall be calculated as under:
[GST payable on TDR or FSI (including additional FSI) or both for construction of the project]
x (carpet area of the residential apartments in the project ÷ Total carpet area of the residential
and commercial apartments in the project)
ENTRY 3 OF NOTIFICATION NO. 11/2017‐CTR FOR RATE ON CONSTRUCTION SERVICES
Taxable @1%
(i) Construction of affordable residential apartments by a promoter in a Residential Real
Estate Project (herein after referred to as RREP) which commences on or after 1st April, 2019
or in an ongoing RREP in respect of which the promoter has not exercised option to pay
central tax on construction of apartments at the rates as specified for item (ie) or (if) below,
as the case may be, in the manner prescribed therein, intended for sale to a buyer, wholly or
partly, except where the entire consideration has been received after issuance of completion
certificate, where required, by the competent authority or after its first occupation,
whichever is earlier.
(Provisions of paragraph 2 of this notification shall apply for valuation of this service)
Taxable @5%
(ia) Construction of residential apartments other than affordable residential apartments by a
promoter in an RREP which commences on or after 1st April, 2019 or in an ongoing RREP in
respect of which the promoter has not exercised option to pay central tax on construction of
apartments at the rates as specified for item (ie) or (if) below, as the case may be, in the
manner prescribed therein, intended for sale to a buyer, wholly or partly, except where the
entire consideration has been received after issuance of completion certificate, where
required, by the competent authority or after its first occupation, whichever is earlier.
(Provisions of paragraph 2 of this notification shall apply for valuation of this service)
Taxable @1%
(ic) Construction of affordable residential apartments by a promoter in a Real Estate Project
(herein after referred to as REP) other than RREP, which commences on or after 1st April,
2019 or in an ongoing REP other than RREP in respect of which the promoter has not exercised
option to pay central tax on construction of apartments at the rates as specified for item (ie)
or (if) below, as the case may be, in the manner prescribed therein, intended for sale to a
buyer, wholly or partly, except where the entire consideration has been received after
49th RRC at The Ananta - Udaipur 23
issuance of completion certificate, where required, by the competent authority or after its
first occupation, whichever is earlier.
(Provisions of paragraph 2 of this notification shall apply for valuation of this service)
Taxable @5%
(id) Construction of residential apartments other than affordable residential apartments by a
promoter in a REP other than a RREP which commences on or after 1st April, 2019 or in an
ongoing REP other than RREP in respect of which the promoter has not exercised option to
pay central tax on construction of apartments at the rates as specified for item (ie) or (if)
below, as the case may be, in the manner prescribed therein, intended for sale to a buyer,
wholly or partly, except where the entire consideration has been received after issuance of
completion certificate, where required, by the competent authority or after its first
occupation, whichever is earlier.
(Provisions of paragraph 2 of this notification shall apply for valuation of this service)
Definition of Affordable Residential Apartment
(xvi) the term “affordable residential apartment” shall mean, ‐
(a) a residential apartment in a project which commences on or after 1st April, 2019, or in an
ongoing project in respect of which the promoter has not exercised option in the prescribed
form to pay central tax on construction of apartments at the rates as specified for item (ie) or
(if) against serial number 3, as the case may be, having carpet area not exceeding 60 square
meter in metropolitan cities or 90 square meter in cities or towns other than metropolitan
cities and for which the gross amount charged is not more than forty five lakhs rupees.
49th RRC at The Ananta - Udaipur 24
Issues u/s. 56(2)(vii)/(Viib) & 56(2)(x)
- CA. Dhinal Shah
Case Study 1: Taxability of fresh issue of shares u/s 56(2)(x)
Fact Pattern
• ABC Private Limited (existing company) has issued 1 Lakh fresh equity shares of 100 each,
for consideration of Rs. 200 per shares.
• The shares are to be issued to the non existing shareholders (i.e. new investors)
• The book value of shares is Rs. 300 per share.
Issues under consideration
• Whether fresh issue of shares by ABC Private Ltd for a consideration less than FMV would
attract the provisions of section 56(2)(x) in the hands of new investors?
Relevant Provisions and decisions
• Section 56(2)(x)
“(x) where any person receives, in any previous year, from any person or persons on or after
the 1st day of April, 2017,—
(c) any property, other than immovable property,—
(A) without consideration, the aggregate fair market value of which exceeds fifty
thousand rupees, the whole of the aggregate fair market value of such property;
(B) for a consideration which is less than the aggregate fair market value of the
property by an amount exceeding fifty thousand rupees, the aggregate fair market
value of such property as exceeds such consideration.”
• Khoday Distilleries Limited vs CIT (2008) 307 ITR 312
“One more aspect needs to be mentioned. As stated above, in this case, even according to
CIT(A), the right shares were allotted to the seven investment companies because the
other existing shareholders did not subscribe for the shares. According to CIT(A), the gift
tax proceedings ought to have been initiated against the existing shareholders, who had
renounced their rights. We are surprised that despite the orders passed by CIT(A), the
Department did not initiate proceedings under the Gift‐tax Act against the shareholders
who had renounced their rights, particularly when the CIT(A) has specifically said so in her
order. For the aforestated reasons, we hold that the word "allotment" indicates creation
of shares by appropriation out of the unappropriated share capital to a particular person
and that such creation did not amount to transfer. That, in any event, liability to pay gift
tax would be on the donor (shareholder) who exercises the option to renounce and not on
49th RRC at The Ananta - Udaipur 25
the appellant‐company. Accordingly, question no. 1 is answered in favour of the appellant
and against the Department.”
Case Study 2: Right / Bonus issue of shares
Fact Pattern
• ABC Private Limited is an Indian company whose entire shares are held by Mr. X and Mr.
Y in proportion of 60 percent and 40 percent respectively.
• The company has offered additional shares for subscription to existing shareholders by
way of right issue in the ratio of existing shareholding.
• The Fair market value (FMV) of the share is Rs.40/‐. The right issue is priced at face value
Rs.10/‐
Issues under consideration
• Whether issue of right shares made by ABC private limited for a consideration lesser than
FMV to existing shareholders would attract provisions of section 56(2)(x)?.
• Would your answer change in case instead of right issue, the company issued bonus
shares to Mr. X and Mr. Y?
Relevant provisions and Decisions
• Section 56(2)(x)
“(x) where any person receives, in any previous year, from any person or persons on or after
the 1st day of April, 2017 —
(c) any property, other than immovable property —
(A) without consideration, the aggregate fair market value of which exceeds fifty
thousand rupees, the whole of the aggregate fair market value of such property;
(B) for a consideration which is less than the aggregate fair market value of the
property by an amount exceeding fifty thousand rupees, the aggregate fair market
value of such property as exceeds such consideration.”
• Sudhir Menon [HUF] Vs. ACIT (ITAT Mumbai) [2014] 148 ITD 260
“A share does not exist prior to its allotment, and in that sense comes into existence only
on its allotment. Allotment of a share is only the appropriation of the authorized share
capital, being un‐appropriated, to a particular person. In nutshell, the difference between
49th RRC at The Ananta - Udaipur 26
the issue of a share to a subscriber and a purchase of a share from an existing shareholder
is the difference between the creation and transfer of a chose in action (refer pgs.865,
866). How could, therefore, purchase be equated with allotment? In fact, the purchase or
transfer implies existence of a property, while the shares, where out of un‐appropriated
capital, come into existence only on their allotment. It becomes, thus, in the context of the
provision, completely irrelevant and of no consequence that the shares in the issuing
company are not its property, and that it does not become, therefore, any poorer as a
result of the allotment of shares therein. 'Receipt' is a word or term of wide import, and
would include acquisition of the subject matter of receipt ‐ defined capital assets in the
present context, by modes other than by way of transfer as well. We find no reason to limit
or restrict the scope of the word 'receipt' in the provision to cases of 'transfer' only. Doing
so would not only amount to reading down the provision, which the tribunal is even
otherwise not competent to, being not a court of law, but reading it in a manner totally
inconsistent with the unambiguous language and the clear intent (of the Legislature)
conveyed thereby, but also its context as well as the drift of section, in complete violence
thereto.”
Case Study 3: Issuance of convertible instruments
Fact pattern
• XYZ Pvt. Ltd. is a joint venture between Indian Co. and PE Investor.
• XYZ Pvt. Ltd. issued compulsory convertible preference shares (CCPS) to shareholders for
agreed consideration.
• The CCPS are convertible in three possible scenarios based on EBDITA achieved by XYZ
Pvt. Ltd. after a period of two years.
Issue under consideration
Whether applicability of 56(2)(x) is to be seen at the time of issuance of CCPS or at the
time of conversion of CCPS.
Relevant extract of Section 56(2)(x) of the Act.
• “(x) where any person receives, in any previous year, from any person or persons on or
after the 1st day of April, 2017 —
(c) any property, other than immovable property —
(A) without consideration, the aggregate fair market value of which exceeds fifty
thousand rupees, the whole of the aggregate fair market value of such property;
49th RRC at The Ananta - Udaipur 27
(B) for a consideration which is less than the aggregate fair market value of the
property by an amount exceeding fifty thousand rupees, the aggregate fair market
value of such property as exceeds such consideration.”
• "property" means the following capital asset of the assessee, namely:—
(i) immovable property being land or building or both;
(ii) shares and securities;
(iii) jewellery;
(iv) archaeological collections;
(v) drawings;
(vi) paintings;
(vii) sculptures;
(viii) any work of art;
(ix) bullion
Case study 4: Gift of property to non‐resident
Fact Pattern
• Mrs. A is a resident in India during FY 2020‐21. Mrs. B is a close friend of Mrs. A is based
in Australia. Mrs. B qualifies as non‐resident of India for tax purpose during FY 2020‐21
• On the occasion of birthday of Mrs. B, Mrs. A contemplates to make gift to Mrs. B.
Accordingly, Mrs. A transferred specified amount of money from her Indian bank account
to her foreign bank account in Australia.
• The said amount is used to purchase jewellery outside India by Mrs. A. This is subject to
compliance of India FEMA regulations.
Issues under consideration
• Whether remitting the money outside India and then buying and gifting jewellery outside
India taxable under section 56(2)(x)?
• Would answer change in case where jewellery is directly gifted by Mrs. A to Mrs. B?
49th RRC at The Ananta - Udaipur 28
Relevant extract of amendment by Finance (No. 2) Act, 2019:
• Section 9(i)(viii):
“income arising outside India, being any sum of money referred to in sub‐clause (xviia) of
clause (24) of section 2, paid on or after the 5th day of July 2019 by a person resident in
India to a non‐resident, not being a company, or to a foreign company.”
• Section 2(24)(xviia):
“any sum of money or value of property referred to in clause (x) of sub‐section (2) of section
56”
Relevant extract of Article 22 of India‐Australia tax treaty:
“1. Items of income of a resident of one of the Contracting States which are not expressly
mentioned in the foregoing Articles of this Agreement shall be taxable only in that State.
2. However, any such income derived by a resident of one of the Contracting States from
sources in the other Contracting State may also be taxed in that other State.”
Case study 5: Gift of sum of money to non‐resident
Fact Pattern
• Mr. A is a resident in India during FY 2020‐21. Mr. B is a close friend of Mr. A is based in
UAE. Mr. B qualifies as non‐resident of India for tax purpose during FY 2020‐21
• Mr. A gifts INR 2 lakhs to Mr. B out of natural love and affection
• This gift is made by Mr. A while he is UAE. The gift is made by way of transfer of money
from the bank account of Mr. A to bank account of Mr. B situated in UAE
Issues under consideration
• Whether gift of INR 2 lakhs would be regarded as taxable in India under section 56(2)(x)
of the Act?
Relevant extract of amendment by Finance (No. 2) Act, 2019:
• Section 9(i)(viii):
49th RRC at The Ananta - Udaipur 29
“income arising outside India, being any sum of money referred to in sub‐clause (xviia) of
clause (24) of section 2, paid on or after the 5th day of July 2019 by a person resident in India
to a non‐resident, not being a company, or to a foreign company.”
• Section 2(xviia):
“any sum of money or value of property referred to in clause (x) of sub‐section (2) of section
56”
Relevant extract of Article 22 of India‐UAE tax treaty:
“1. Subject to the provisions of paragraph (2), items of income of a resident of a Contracting
State, wherever arising, which are not expressly dealt with in the foregoing articles of this
Agreement, shall be taxable only in that Contracting State.”
Case Study 6: Applicability of section 56(2)(x) on receipt of leasehold land for inadequate
consideration
Fact Pattern
• I Co has entered into a MOU with the Government of Gujarat for demolishment of existing
government hospital and construction of new hospitals.
• Under the MOU, I Co is required to erect the new hospital on the land leased from state
government. However, I Co is required to pay rent of Rs. 1 for lease of 30 years.
• I Co is required to operate and maintain the new hospital for a period of 30 years. I Co is
also required to comply with certain conditions say provision of certain specified
treatments / medical facility at free of cost or concessional rates to certain classes of
patients.
Issues under consideration
• Whether the provision of section 56(2)(x) of the Act would be attracted on receipt of such
leasehold hospital land for inadequate consideration?
Relevant extract of section 56(2) of the Act
• (x) where any person receives, in any previous year, from any person or persons on or
after the 1st day of April, 2017,—
(a) any sum of money, without consideration, the aggregate value of which exceeds
fifty thousand rupees, the whole of the aggregate value of such sum;
49th RRC at The Ananta - Udaipur 30
(b) any immovable property,—
(A) without consideration, the stamp duty value of which exceeds fifty
thousand rupees, the stamp duty value of such property;
(B) for a consideration, the stamp duty value of such property as exceeds such
consideration, if the amount of such excess is more than the higher of the
following amounts, namely:—
(i) the amount of fifty thousand rupees; and
(ii) the amount equal to [ten] per cent of the consideration:
Provided that where the date of agreement fixing the amount of consideration
for the transfer of immovable property and the date of registration are not the
same, the stamp duty value on the date of agreement may be taken for the
purposes of this sub‐clause:
Provided further that the provisions of the first proviso shall apply only in a case
where the amount of consideration referred to therein, or a part thereof, has
been paid by way of an account payee cheque or an account payee bank draft or
by use of electronic clearing system through a bank account [or through such
other electronic mode as may be prescribed], on or before the date of
agreement for transfer of such immovable property:
Provided also that where the stamp duty value of immovable property is
disputed by the assessee on grounds mentioned in sub‐section (2) of section
50C, the Assessing Officer may refer the valuation of such property to a Valuation
Officer, and the provisions of section 50C and sub‐section (15) of section
155 shall, as far as may be, apply in relation to the stamp duty value of such
property for the purpose of this sub‐clause as they apply for valuation of capital
asset under those sections:
[Provided also that in case of property being referred to in the second proviso to
sub‐section (1) of section 43CA, the provisions of sub‐item (ii) of item (B) shall
have effect as if for the words "ten per cent", the words "twenty per cent" had
been substituted;]
(c) any property, other than immovable property,—
(A) without consideration, the aggregate fair market value of which exceeds
fifty thousand rupees, the whole of the aggregate fair market value of such
property;
(B) for a consideration which is less than the aggregate fair market value of the
property by an amount exceeding fifty thousand rupees, the aggregate fair
market value of such property as exceeds such consideration.
49th RRC at The Ananta - Udaipur 31
Case Study 7: 56(2)(x) applicability on waiver of loan
Evaluate the applicability of section 56(2)(x) under following scenarios
1. Mr. A is gives loan to Mr. B in circumstances where it is clear that Mr. B does not have realistic
ability to return the repayment.
2. Mr. A has granted a loan to Mr. B at interest rate of 10%. The loan is utilised by Mr. B for the
purpose of its business. There is unilateral waiver granted by Mr. A to Mr. B where Mr. B is
financially sound and there are no commercial reasons why Mr. A would not insist on
repayment of loan by Mr. B.
3. Mr. A has granted a loan to Mr. B at interest rate of 10%. The loan is utilised by Mr. B for the
purpose of its business. Due to lockdown during spread of Covid‐19, Mr. B has become
financially distressed debtor. Mr. A and Mr. B bilaterally agree such that Mr. B has to pay 20%
of the overall debt being the sustainable debt Mr. A within the agreed time frame of two
years.
4. Mr. A has granted unsecured loan to Mr. B at interest rate of 10%. The loan is utilised by Mr.
B for the purpose of its business. Due to lockdown during spread of Covid‐19, Mr. B has
become financial distressed debtor. Mr. A has no ability to recover any amount from Mr. B
having regard to the financial position of Mr. B and claim of secured and preferential
creditors. A takes no steps of recovery.
5. Mr. A has granted unsecured loan to Mr. B at interest rate of 10%. The loan is utilised by Mr.
B for the purpose of its business. Due to lockdown during spread of Covid‐19, Mr. B has
become financially distressed debtor. Mr. A decides to unilaterally waive entire loan amount
given to Mr. B
Issues under consideration
• In the facts of the case, does waiver of loan amount to receiving of any sum of money
without consideration in the hands of Mr. B under section 56(2)(x)?
Relevant extract of section 56(2) Of the Act
• (x) where any person receives, in any previous year, from any person or persons on or
after the 1st day of April, 2017,—
(a) any sum of money, without consideration, the aggregate value of which exceeds
fifty thousand rupees, the whole of the aggregate value of such sum;
49th RRC at The Ananta - Udaipur 32
Para 11 of Supreme Court (SC) Ruling in the case of Mahindra & Mahindra (SC)/[2018] 404
ITR 1
“11. It is a well‐settled principle that creditor or his successor may exercise their "Right of
Waiver" unilaterally to absolve the debtor from his liability to repay. After such exercise, the
debtor is deemed to be absolved from the liability of repayment of loan subject to the
conditions of waiver. The waiver may be a partly waiver i.e., waiver of part of the principal or
interest repayable, or a complete waiver of both the loan as well as interest amounts. Hence,
waiver of loan by the creditor results in the debtor having extra cash in his hand. It is receipt
in the hands of the debtor/assessee. The short but cogent issue in the instant case arises
whether waiver of loan by the creditor is taxable as a perquisite under Section 28 (iv) of the IT
Act or taxable as a remission of liability under Section 41 (1) of the IT Act.”
Case Study 8: 56(2)(x) applicability on setting up of a discretionary trust where the
beneficiaries include sister’s children
Fact Pattern
• Mr A is the Settlor and trustee of a discretionary trust.
• In the trust, beneficiaries are – a) spouse of Mr A; b) His minor daughter; c) sister’s children
of Mr A.
• Mr A will make Initial contribution to the trust which would be used by the trust to invest
in Indian capital market.
• Settlor has been provided with wide powers including change in the trustee and
beneficiary, right to reassume control over Trust property
Issues under consideration
• Whether Section 56(2)(x) of the Act would be applicable at the time of settlement of the
trust?
• Whether the answer would change, if the discretionary trust is revocable in nature?
Relevant extract of section 56(2) of the Act
• (x) where any person receives, in any previous year, from any person or persons on or
after the 1st day of April, 2017,—
49th RRC at The Ananta - Udaipur 33
(a) any sum of money, without consideration, the aggregate value of which exceeds
fifty thousand rupees, the whole of the aggregate value of such sum;
(b) any immovable property,—
(A) without consideration, the stamp duty value of which exceeds fifty
thousand rupees, the stamp duty value of such property;
(B) for a consideration, the stamp duty value of such property as exceeds such
consideration, if the amount of such excess is more than the higher of the
following amounts, namely:—
(i) the amount of fifty thousand rupees; and
(ii) the amount equal to 68[ten] per cent of the consideration:
Provided that where the date of agreement fixing the amount of consideration
for the transfer of immovable property and the date of registration are not the
same, the stamp duty value on the date of agreement may be taken for the
purposes of this sub‐clause :
Provided further that the provisions of the first proviso shall apply only in a case
where the amount of consideration referred to therein, or a part thereof, has
been paid by way of an account payee cheque or an account payee bank draft or
by use of electronic clearing system through a bank account 69[or through such
other electronic mode as may be prescribed70], on or before the date of
agreement for transfer of such immovable property:
Provided also that where the stamp duty value of immovable property is
disputed by the assessee on grounds mentioned in sub‐section (2) of section
50C, the Assessing Officer may refer the valuation of such property to a Valuation
Officer, and the provisions of section 50C and sub‐section (15) of section
155 shall, as far as may be, apply in relation to the stamp duty value of such
property for the purpose of this sub‐clause as they apply for valuation of capital
asset under those sections:
[Provided also that in case of property being referred to in the second proviso to
sub‐section (1) of section 43CA, the provisions of sub‐item (ii) of item (B) shall
have effect as if for the words "ten per cent", the words "twenty per cent" had
been substituted;]
(c) any property, other than immovable property,—
(A) without consideration, the aggregate fair market value of which exceeds
fifty thousand rupees, the whole of the aggregate fair market value of such
property;
(B) for a consideration which is less than the aggregate fair market value of the
property by an amount exceeding fifty thousand rupees, the aggregate fair
market value of such property as exceeds such consideration.
• Provided that this clause shall not apply to any sum of money or any property received
(I) from any relative; or
(II) on the occasion of the marriage of the individual; or
49th RRC at The Ananta - Udaipur 34
(III) under a will or by way of inheritance; or
(IV) in contemplation of death of the payer or donor, as the case may be;
or
(V) from any local authority as defined in the Explanation to clause (20) of
section 10; or
(VI) from any fund or foundation or university or other educational
institution or hospital or other medical institution or any trust or
institution referred to in clause (23C) of section 10; or
(VII) from or by any trust or institution registered under section 12A or
section 12AA; or
(VIII) by any fund or trust or institution or any university or other
educational institution or any hospital or other medical institution
referred to in sub‐clause (iv) or sub‐clause (v) or sub‐clause (vi) or sub‐
clause (via) of clause (23C) of section 10; or
(IX) by way of transaction not regarded as transfer under clause (i) or
[clause (iv) or clause (v) or] clause (vi) or clause (via) or clause (viaa) or
clause (vib) or clause (vic) or clause (vica) or clause (vicb) or clause
(vid) or clause (vii) of section 47; or
(X) from an individual by a trust created or established solely for the
benefit of relative of the individual;
(XI) from such class of persons and subject to such conditions, as may be
prescribed
Definition of “Relative” for the purpose of section 56 of the Act
• "relative" means,—
1. in case of an individual—
i. spouse of the individual;
ii. brother or sister of the individual;
iii. brother or sister of the spouse of the individual;
iv. brother or sister of either of the parents of the individual;
v. any lineal ascendant or descendant of the individual;
vi. any lineal ascendant or descendant of the spouse of the individual;
vii. spouse of the person referred to in items (B) to (F)
49th RRC at The Ananta - Udaipur 35
Case Study 9: Taxability of payment by seller towards buyer's tax liability
Fact Pattern
• Mr. A & Mr. B are Non‐residents. Mr. A transfer’s shares of ICo to Mr. B for Rs. 100. As of
the date agreement, Rule 11UA value of ICo is Rs.100. However, agreement is subject to
due diligence. There is a time lag of 2 months between the date of agreement and date
of actual transfer.
• Rule 11UA value of shares of ICo as at the date of transfer / receipt by Mr. B is Rs. 120.
• In terms of agreement between Mr. A & Mr. B, Mr. A is expected to make payment
towards tax liability if any incurred by Mr. B u/s. 56(2)(x). Such payment has to be inclusive
of interest and tax liability.
• In terms of advice received by Mr. A & Mr. B, the tax liability which Mr. A has to reimburse
to Mr. B needs to be suitably grossed up. Accordingly, the expected payment after suitable
gross up is quantified at Rs. 15.
Issues under consideration
• Whether payment of Rs.15 is a receipt without consideration for Mr. B so as to get covered
by Section 56(2)(x) of the Act?
• Is the payment made pursuant to indemnity clause an income accruing or arising in India
so as to trigger tax in India even when the payment is made by A to B's agent outside
India?
Relevant extract of section 56(2)(x) of the Act
• (x) where any person receives, in any previous year, from any person or persons on or
after the 1st day of April, 2017,—
(a) any sum of money, without consideration, the aggregate value of which exceeds
fifty thousand rupees, the whole of the aggregate value of such sum;
Relevant extract of section 5 of the Act
• (2) Subject to the provisions of this Act, the total income of any previous year of a person
who is a non‐resident includes all income from whatever source derived which—
(a) is received or is deemed to be received in India in such year by or on behalf of such
person ; or
(b) accrues or arises or is deemed to accrue or arise to him in India during such year.
49th RRC at The Ananta - Udaipur 36
Case Study 10: Taxability of contribution of equity shares to a partnership firm at less than
Fair market value as capital contribution of partner
Fact Pattern
• A Co, a private limited company holds shares of another private limited company (cost of
acquisition Rs. 100)
• The Fair market value (FMV) of the shares held by A Co in the private limited company, as
calculated under Rule 11UA, is substantially higher than the cost of acquisition.
• A Co contributes these shares to a new partnership firm (the firm) as capital at cost. The
credit to the capital account of A Co in the books of the partnership firm is Rs. 100.
Issues under consideration
• Whether provisions of section 56(2)(x) apply in the hands of the firm on contribution of
shares held by A Co in a private limited to the firm as capital?
Relevant extract of section 56(2)(x) of the Act
(X) where any person receives, in any previous year, from any person or persons on or after
the 1st day of April, 2017,—
…
(C) any property, other than immovable property
‐ without consideration, the aggregate fair market value of which exceeds fifty thousand
rupees, the whole of the aggregate fair market value of such property;
‐ for a consideration which is less than the aggregate fair market value of the property by an
amount exceeding fifty thousand rupees, the aggregate fair market value of such property
as exceeds such consideration :
49th RRC at The Ananta - Udaipur 37
Case Study 11: Taxability u/s 56(2)(x) in case of gift received by granddaughter from her
grandmother
Diagram
Grandfather Mr.A Grandmother Mrs. A
Gift of Shares
Father Mr.P Mother Mrs.P
Daughter Ms.X
Fact Pattern
Mrs. A has acquired certain shares of an Indian company at a cost of Rs.100
Mrs.A, out of natural love and affection, gifts such shares to Ms.X, being the daughter of
her daughter, Mrs.P.
Issue under consideration
Whether the provisions of section 56(2)(x) of ITA apply in the hands of Ms.X upon
receipt of shares of Indian company from Mrs.A?
49th RRC at The Ananta - Udaipur 38
Relevant Provisions
Definition of Relative
[(e) "relative" means,—
(i) in case of an individual—
(A) spouse of the individual;
(B) brother or sister of the individual;
(C) brother or sister of the spouse of the individual;
(D) brother or sister of either of the parents of the
individual;
(E) any lineal ascendant or descendant of the
individual;
(F) any lineal ascendant or descendant of the
spouse of the individual;
(G) spouse of the person referred to in items (B) to
(F); and
(ii) in case of a Hindu undivided family, any member
thereof;]
Extract from judicial rulings on scope of “lineal descendants”
Byomkesh Chakravarty & Ors. v/s CIT (1960) 39 ITR 303 (PAT)
“The argument put forward on behalf of the IT Department is that Byomkesh is lineally
descended from Nidhubala and Samarendra is likewise lineally descended from
Gouribala.
It was, however, argued by learned counsel on behalf of the assessee that a female
member of the Hindu family like Nidhubala or Gouribala cannot be a source of lineal
descent within the meaning of the First Schedule. We do not accept this argument
of the assessee as correct. Even under the Hindu law a female can form a line of
descent with respect to her stridhan property. In our opinion there is no reason why
a son should not be "lineally descended" from his mother within the meaning of
condition (b) of clause (i) of the proviso to Part I of the First Schedule of the Finance
Act. This view is supported by the latter part of clause (b) wherein the words used are
"lineally descended" from any other living member of the family not entitled to claim
partition. The language of this clause clearly shows that lineal descent is possible
from female members who may not be entitled to claim partition of joint family
property. In Jowitt's Dictionary of English Law the expression "descent" is explained as
one of the two chief methods of acquiring an estate in lands before 1926. Descent is
what took place when land or some interest in land or other realty belonging to a
person passed on his death intestate to some one related to him by consanguinity,
either directly or by reference to some other person, according to certain rules of law.
The expression "lineal descent" is defined in the same treatise as "the descent of an
49th RRC at The Ananta - Udaipur 39
estate from ancestor to heir in a right line" (Co. Litt. 13b, 237a). When the law speaks
of "lineal descendant", the intention is that a person must be descended in a right line
without any deviation as from father to son, grandson, great grandson. Similarly, the
"descent" is lineal if the property goes from mother to son, grandson and great
grandson, because the descent is in the right line without any deviation. The view is
supported by a decision of the Full Bench of the Rajasthan High Court
in CIT v. Dhannalal Devilal [1956] 29 ITR 165 in which it was held that where a Hindu
undivided family consisted of two minor sons, their widowed mother and widowed
grandmother, the minors were "lineal descendants" of the mother, and, therefore, the
family was not entitled to the higher limit of exemption from tax provided in the limit
clause to the proviso of Part I(A) of Schedule I of the Finance Act of 1951. It was further
held in that case that a son or a grandson was a "lineal descendant" of his mother or
grandmother, respectively, irrespective of the question whether the mother or the
grandmother can form a line of succession in Hindu law. In our opinion, the principle
of this decision is correct…..”
CIT v/s Dhannalal Devilal (1956) 29 ITR 165 (RAJ)
“The idea of right line without any deviation seems to be absent from the dictionary
meaning of the word "descendant". So when the law speaks of "lineal descendant",
the intention is that a person must be descended in a right line without any deviation
as from father to son, grandson, great grandson and so on. Similarly, it seems to us
that the "descent" is lineal if it goes from mother to daughter, and grand‐daughter,
and great grand‐daughter, because here also it is in a right line without any deviation.
Section 25 of the Indian Succession Act defines "lineal consanguinity", while section 26
defines "collateral consanguinity". Where the descent is by lineal consanguinity, one
may call it a lineal descent, and the person so descending is a lineal descendant. But
where the relationship is by collateral consanguinity, one may be a descendant of the
other, but he cannot be said to be lineally descended. That is, to our mind, the
distinction between lineal descendant and descendant. It has nothing to do with the
ability or otherwise of a Hindu female to form a line of succession.
The same difference may be explained in other words. Lineal consanguinity is when
two persons are connected in one straight line, whether descending or ascending,
drawn from the propositus. Where the line is descending, the persons are lineal
descendants. Collateral consanguinity is when two persons are connected by a
descending line which is not a straight line.
Such persons may be descendants of each other, but will not be lineal descendants. In
this view of the matter, a son will be a lineal descendant of the mother as well as of his
grandmother irrespective of whether the mother or the grandmother can form a line
of succession under the Hindu law. These notions of Hindu law have not in our opinion
to be imported in interpreting the words "lineal descendant".
The view that we are taking is further confirmed by the provision of the First Schedule
to the Finance Act of 1955 dealing with the question of exemption. In the Finance Act
of 1955, the words used are "lineally descended from any other living member of the
49th RRC at The Ananta - Udaipur 40
family not entitled to claim partition." This would clearly show that lineal descent is
possible from female members who may not be entitled to claim partition.
Our answer, therefore, to the question put to us by the Division Bench is that a son or
a grandson can be said to be a lineal descendant of his mother or grandmother
respectively within the meaning of condition (b) of clause (i) of Part I (A) of Schedule I
of the Indian Finance Act (No. 23 of 1951) which prescribes Rs. 7,200 as an exemption
limit in the case of a Hindu undivided family…”
Case Study 12: Taxability of credit card reward points or cashbacks
Fact Pattern
• Mr. A is an Indian resident.
• He makes certain payments of personal nature using his credit card and earns credit card reward
points and cash back as incentive from the credit card company for use of the credit card.
• These credit card reward points and cash backs can be accumulated and redeemed or used for
making other purchases.
Issues under consideration
• Whether the cashbacks or credit card reward points would attract section 56(2)(x) in the hands of
Mr. A
Relevant extract of Section 56(2)(x) of the Act
• (x) where any person receives, in any previous year, from any person or persons on or after the 1st
day of April, 2017,—
(b) any sum of money, without consideration, the aggregate value of which exceeds fifty
thousand rupees, the whole of the aggregate value of such sum.
49th RRC at The Ananta - Udaipur 41
Issues in computation of income under the head business or
profession
– CA Manthan S. Khokhani
Disclaimer/Notes:
a. All references to “Act” in the paper shall mean reference to Income‐tax Act,
1961 unless specifically provided for.
b. An attempt has been made to cover real life synchronous issues along with
several issues which are open‐ended and on which more than two views are
possible.
1. Newly introduced provisions of section 9B and section 45(4)
M/s. ABC & Co. is a partnership firm having four partners, Mr. A, Mr. B and Mr. C. All
partners have equal profit/loss sharing ratio. The firm owns two landed properties
costing Rs. 15 Crores each and stock in trade amounting to Rs. 30 Crores. The same
was represented by the capital balance of the partners in the firm.
On 01st April, 2020 the firm had revalued its Land A and Land B to Rs. 25 Crores each
and also recognized self‐generated goodwill of Rs. 10 Crores in the books of accounts
in connection with the retirement of Mr. A who wished to no longer remain a partner
in the firm. The same was recognized by crediting the partners’ capital accounts in the
profit/loss sharing ratio i.e. equally.
The balance in his capital account on that day before revaluation stood at Rs. 20
Crores. After revaluation of assets and recognition of goodwill, the capital balance of
Mr. A in the firm stood at Rs. 30 Crores.
At the time of retirement, Mr. A was given the following in in lieu of his capital balance.
Asset Fair Market Value Actual Cost (Rs.) Indexed Cost
(Rs.) (Rs.)
Property A 25 Crores 15 Crores 20 Crores
Stock in trade 15 Crores 10 Crores NA
(1/3rd) – FMV Rs. 45
Crores
Money 3 Crores NA NA
49th RRC at The Ananta - Udaipur 42
Considering the above, please examine the below mentioned questions
a. What shall be the income under the head capital gains and business income in
the hands of the firm?
b. What will be the deduction u/s. 48(iii) at the time of sale of remaining
properties in the hands of the firm.
c. Whether the income under the head capital gains in the hands of the firm u/s.
45(4) shall be short term or long term in nature?
1A. Other issues in connection with the provisions of section 9B and 45(4)
d. What shall be the consequences if the firm is dissolved and assets are
transferred to the partners six months after the dissolution of the firm. Can the
assessing officer assess the dissolved firm for the tax payable u/s. 9B or 45(4)?
e. Whether any deduction shall be allowable u/s. 9B in case of transfer of stock
in trade?
f. What shall be the consequences of transfer of a rural agricultural land to the
partners?
g. Suppose in the above case, instead of transfer of money to the partners, only
a credit is given to the capital account, what shall be the tax consequences of
the same? Whether constructive credit is to be considered for taxation?
h. If in the above example, Mr. A dies and the firm transfers capital assets to his
legal heir. What shall be the tax consequences?
i. Suppose a firm has a huge business loss, can the firm use the provisions of
section 9B/45(4) to save tax?
j. Whether the provisions of section 50C become applicable to transfer of capital
asset by the firm to the partner?
k. In case the partnership firm is dealing in business of trading of bullion and the
firm transfers bullion to the partner on reconstitution, whether the same will
get covered u/s. 45(4) or u/s. 9B?
49th RRC at The Ananta - Udaipur 43
2. Business expenditure
Twister Limited is a company engaged in the business of software development. The
company seeks your opinion on admissibility of the claim of the following amounts u/s
30 to 37 of the Act while computing income under the head business or profession
1. Surcharge of Rs. 1.5 Crores and Education Cess of Rs. 1 Crore paid on the income
tax chargeable on the total income of the company. If the same is allowable, in
which year shall the deduction be available – whether in the same year or next
year?
2. Depreciation on WDV of Goodwill of Rs. 20 Crore created on amalgamation of the
company in the F.Y. 2017‐18
3. The company has made payment of Rs. 10 Crore to Koo Limited for non‐conducting
of business in India. Whether such expenditure is allowable as revenue expense or
whether the same should be capitalized? If the same is capitalized, whether
depreciation is available on the same?
3. Payment of profit as dividend
Growmore Limited is a company engaged in the business of trading of shares and
securities. During the year under consideration, the company earned a profit of Rs. 1
Crore out of which the company decided to pay Rs. 32 Lakhs each to the three
directors who were also the shareholders of the company as incentive payment. The
assessing officer disallowed the claim of the company on the ground that the company
had claimed deduction in respect of an amount which was otherwise payable by the
company as dividend. Whether the company can claim such amount as business
expenditure?
49th RRC at The Ananta - Udaipur 44
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