Quote for the Day

"If a Drop of Water falls on Lake , it looses Identity.
If it falls on Lotus, it Shines.
If on a Shell, it becomes a Pearl.
The Drop is same, but Company Matters"

Webinar:

Topic: Learn the Art of Drafting using ChatGPT & know other AI Tools that can help you in Practice

Date:  Wednesday, 19.06.2024

Time:  5:30PM - 6:30PM

Speaker: CA. Arpit Taneja (Semi-Finalist at ICAI AI Hackathon)

[ Few Seats left ]

Important Case Laws:

[Contributions by CA. A. K. Srivastava]

• Applicability of section 194A, 194H and 194J:

State Bank of India V. DCIT (TDS) [(2024) 163Taxmann.com266 (Mumbai Tribunal)]

NBFCs in order to meet their liquidity needs entered into transactions involving sale of loan portfolios to other lending entities / Banks through assignment or conversion of their loan assets into marketable securities, known as asset based securitisation.

State Bank of India, a public sector bank, purchased loans under different sectors via the direct assignment route from NBFCs. Bank purchased 90% of underlying assets but did not receive total interest relating to 90% share. A part of interest was retained by the NBFCs.

The issue that came up was that the interest that belongs to the assessee and is retained by originating NBFC, in terms of agreement, the assessee should deduct TDS u/s 194A of the Act on the amount retained by NBFCs.

The issue that arose was whether the interest retained by NBFC falls in the category of interest for the purpose of section 194A of the Act or within section 194J “Fee for professional/ technical services” or within the category of commission/brokerage under section 194H.

After analysing the definition of “interest “ as given in section 2(28A), the ITAT observed that there was no material available on record to show that the Bank borrowed any funds or incurred any debt from NBFC, the question of payment or crediting of interest by assessee in favour of NBFC does not arise and part interest allowed to be retained back by the originating NBFC cannot be said to be interest within the meaning of interest u/s 2(28A) of the Act and held that section 194A is not applicable.

Under a separate agreement fee was paid to NBFC for services rendered for which payment was made separately, the liability to deduct TDS on interest retained cannot be covered under section 194J.

The ITAT also held that the NBFC was not acting as an agent of Bank and therefore section 194H was also not applicable.

• Deduction u/s 54 - Purchase of an under construction Flat

Sheela Ramchandrapuram Uttamchandani v. ITO [(2024) 163taxman.com265 (Mumbai-Trib.)]

LTCG of Rs. 99,35,840/- earned by assessee on 31.07.2012, utilised Rs. 50,86,472/- on 10.09.2014 towards purchase of under construction flat.

Construction was to be completed within 30 months but for reasons beyond the control of the assessee construction could not be completed.

Following the circulars issued by CBDT it was held that booking a flat with a builder amounts to construction . It held that purchase of an under construction house tantamount to investing money in construction of a residential house for purposes of section 54.

Assessee did not utilise the balance LTCG.

Mumbai ITAT held that the amount not utilised was chargeable to tax u/s 45.

Job Vacancy of the Week

Click on the button below for this week's collated job vacancies.

Connect with us on Social Media by clicking on the links below: