The changes in domestic taxation at basic level need to be understood in seven parts namely Slab Rates Business Income & Capital Gain International Taxation Assessment procedures Set off carry forward Chapter VIA TDS (Tax deducted at source), TCS (Tax collected at source) Others
Impact of Supreme Court ruling in Finance Bill 2023
Scenario 1
Section 28 of the Act has now been amended that where benefit or perquisite is cash or kind in part then also will be taxed as Business Income. Due to this amendment a major Supreme court ruling has become redundant (Mahindra and Mahindra LTD vs CIT). This case in 2018 Supreme Court had upheld Bombay high court and held that cessation of loan is neither taxable under 41(1) nor 28(iv) and judgment was clear that perquisite in cash will be taxed. But now a major Supreme Court judgment gets redundant. This show that litigation can be minimised not erased.
Scenario 2
Recently the Supreme Court in case of Assistant Commissioner of Income-tax (Exemptions) vs Ahmedabad Urban development Society had held the word commercial has the same meaning as trade commerce business. It was held that in a open ended manner that where by services are rendered are done with cost plus nominal mark up will fall within the preview of commercial activity. This judgment impacts regulatory bodies like ICAI at large as how to define nominal mark up can never be understood mathematically. Supreme Court judgment are dramatic and even leads to further unsettled issues. Due to this Section 10(46) has now been modified by excluding Company.
Scenario 3
Section 170 A of the Act has now being modified that where by business reorganisation take place the successor shall now file modified returns within six months from the end of month in which reorganisation take place. Consequently Rule 12 AD has been notified the form and furnishing return by successor entities. The term Business reorganisation means demerger, insolvency, amalgamation, reconstruction. This provision arouse on account of multiple judgments and writ petition filed under Companies Act and taxation laws and in a case of Maruti Suzuki it was held that on a non existent entity notice cannot be issued as amalgamating entity legally ceases to exist. However in another case like PCIT vs Mahagun Realtors it was held by Supreme court based on appeal filed from the revenue that notice issued to a non existent entity is valid considering that amalgamating entity did not inform the income tax authorities about scheme of amalgamation as well was subject to search. Therefore facts and circumstances matters a lot.
