NICAI update
CA Raj Chawla
Quotes of the day;
1. Listen to Everyone and Learn from Everyone.
Because: No body knows everything But Everyone knows Something.
2. LIFE is not a RACE, It's a JOURNEY. So Stop Believing & Thinking That Other People are Ahead of You. START ENJOYING THE JOURNEY.
NICAI update;
1. The Income Tax notices in property transactions below circle rate are increasing rapidly due to AI-based scrutiny, AIS reporting, and Section 50C & 56(2)(x) provisions. Both buyers and sellers may face taxation where property value is lower than stamp duty valuation. In recent years, Income Tax notices relating to property transactions have increased significantly, especially where properties are sold below the circle rate or stamp duty value. Such transactions are now under heavy scrutiny because the department considers them potential cases of undervaluation or undisclosed cash consideration.
2. Bombay High Court has quashed the GST demand of ₹1,524 crore raised against Tata Sons Pvt. Ltd. in relation to settlement payments made to NTT Docomo under an arbitral award. The Department had alleged that the payment amounted to “import of service” under Entry 5(e) of Schedule II of the CGST Act, treating it as consideration for “tolerating an act.
3. The Court held that damages awarded under an arbitral award are purely compensatory in nature and cannot be treated as consideration for any independent supply of service. Withdrawal of execution proceedings by Docomo was merely a legal consequence of satisfaction of the award and not a separate contractual obligation.
4. Relying upon CBIC Circular No. 178/10/2022-GST, the Court reaffirmed that compensation for breach of contract, whether liquidated or otherwise, does not attract GST in absence of an independent agreement to tolerate an act or refrain from doing something.
5. Accordingly, the DRC-01A intimation and subsequent show cause notice were quashed.
WRIT PETITION NO. 4914 OF 2022 WITH INTERIM APPLICATION (L) NO. 17868 OF 2023
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With best regards
CA (Dr) Raj Chawla
B.Com (Hons), FCA, FCS, FCMA, LLB
MIMA, DISA, MICA, Phd, ASA (Aust), CMP (USA)
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