MARCH 2020 VOL.

TAX BULLETIN
VMCA Monthly Newsletter

TABLE OF CONTENTS
Insight
Vivad se Vishwas, -2 by C. Muthu Palaniappan
The world economy was largely impacted due to COVID-19.
Due date extension
India too went under lock down from the last week of March
to J&K and Ladakh  2020. S&P Global Ratings cut its estimate for India’s GDP
growth to 3.5% from its earlier estimate of 5.2%, as it expects

Finance bill passed, - 3 the damages to the economy from the COVID-19 pandemic for
the Asia-Pacific region to be as severe as the one during the
Statutory relief Asian financial crisis of 1997-98.
measures
The Government has announced relaxation in statutory
compliance, and have also announced a relief package. RBI
Transaction not has taken various steps to improve liquidity and ease the
regards transfer, -4 situation. The Government also made sure that assent of the

Make available President was obtained for Vivad se Vishwas and the Finance
Act.

Service utilised
VMCA brings you the significant developments in taxation.
We would be glad to receive feedback from our readers, to
in India -5 make it more insightful.
Unusual tax saving

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 MARCH 2020 - VOL. 3 CORPORATE TAX

Direct Tax Vivad se Vishwas Lower Deduction

Act: Notification No. 18/2020 dt. 18th Mar'20
Forms: Notification No. 12/2020 dt. 19th Mar'20 Certificate Validity
FAQ: Circular No. 7/2020 dt. 4th Mar'20 Press: F.No.275/25 dt. 31st Mar'20
The demand pending in litigation is around 9.32 lakh Due to outbreak of COVID-19 there is a
crore from 4.83 lakh cases. In this scenario the scheme severe disruption of functioning of
of Vivad se Vishwas ('VsV') was announced in Budget Income-tax Department. Considering

2020 with intention of reducing litigation and in turn that the applications for no/ lower
deduction of TDS have not been
meet tax collection targets. The VsV was passed on 18th
attended on a timely manner.
Mar'20 and the Rules were notified on 19th Mar'20.
Further, various clarifications were addressed as FAQ
Hence, validity of existing certificates
vide a circular on 4th Mar'20.
shall continue to be valid till 30th
Jun'20. For payments to non-residents
having PE in India who do not hold
certificates, tax shall be deducted at 10%
till 30th Jun'20 or application is
disposed, whichever is earlier,

First time applicants have been

requested to mail the required
Disputed tax shall be the tax the assessee ought to have particulars by mail. Such certificates
paid had he had lost the appeal/ objections/ revision. shall be issued upto 30th Jun'20.

The assesse must file a declaration with the designated

Due date extension
authority, who will determine the tax arrear and the to J&K, Ladakh
amount payable and issue the particulars in a certificate Press: F.No.25 dt. 23rd Mar'20
within 15 days from the date of declaration. The assessee
On consideration of reports of
is liable to pay and intimate the particulars within 15 days disturbances in internet facility in
from the date of receipt of certificate. certain areas of Jammu & Kashmir,
CBDT has extended the due date of
The taxpayer cannot pick and choose the issues in a year. filing Income-tax returns and tax audit
VsV will provide immunity only in respect of issues in reports for AY 2019-20 to 31st March
declaration. However, settlement under VsV will not set a 2020, in respect of all income-tax

precedence for either parties. assessee in the Union Territory of

Jammu & Kashmir and Ladakh.

VsV is not applicable for cases where prosecution is

Returns and reports filed between 31st
initiated, assessee has undisclosed income or asset outside
January 2020 and this date shall be
India, assessment on information received under DTAA,
deemed to have been filed within due
or detention under Foreign Exchange Laws. date specified u/s 139(1) of the Act.

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 MARCH 2020 - VOL. 3 CORPORATE TAX

Finance Bill passed with Statutory Relief

changes Measures
President assent dated 27th March 2020 Press Release dt. 24th Mar'20
The Finance Bill, 2020 was presented on 1st February Due to outbreak of COVID-19 there is a
2020. The Finance Bill went through 59 cuts - some new complete lockdown. The Government
provisions, additions and deletions to the proposal were has announced series of relief measures

made. Due to COVID-19 outbreak, the Finance Bill was to address the concerns arising due to
difficulty in doing the statutory and
passed early on 23rd March 2020. Subsequently, the
regulatory compliances. Some of the
Finance Bill got the assent of the President on 27th March
key measures are:
2020.

Waive of additional 10% of disputed

We will look at key changes: tax till 30th Jun'20
Changes in provisions relating to residential status. The due date for filing return for AY
Equalisation levy on e-commerce operators. 2018-19 extended to 30th Jun'20
TDS on cash withdrawal exceeding 1 crore now The due date for linking Aadhaar
applicable for cash withdrawal exceeding 20 lakhs for number with PAN extended to 30th
persons who have not filed returns for last 3 years. Jun'20
Due dates for notice, intimation,
New TCS provisions deferred to 1st Oct'20
order and any compliance for capital
TCS requirement on sale of goods exceeding 50 lakhs is
gain, VsV, or equalisation where the
only on domestic sales
time limit expiring between 23rd
Royalty income arising to a person by way of sale,
Mar'20 to 29th Jun'20 is now
distribution or exhibition of cinematographic films @ extended to 30th Jun'20.
2% u/s 194J All delayed payment of taxes -
Scope of 80M extended to dividends from foreign advance tax, self-assessment tax,
companies and trust. TDS, TCS, equalisation levy, etc. paid
Deduction u/s 80M for companies opting new tax between 23rd Mar'20 to 29th Jun'20
regime u/s 115BAA or 115BAB shall be available from shall be charged at reduced interest

AY 2021-22. rate of 9%.

No late fee or penalty shall be
Corpus donations received from specified institutions
charged for delay relating to this
will now be exempt from tax. On the other hand, corpus
period.
donations from trust to specified institution shall not
be treated as application of income.
Similar relief measures are announced
Dividend received from 1st Apr'20 shall not be taxable for GST, Companies Act, Insolvency &
if DDT is already paid by the Company. Bankruptcy Code, and Banking laws.
The person earning profession income is now at par
with persons earning business income. They shall have Most of the measures are related to
one time option to opt new tax regime u/s 115BAC. reduced interest rates or extended

Finance Act vis-a-vis Finance Bill

deadlines for compliance.

Union Budget 2020-21

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 MARCH 2020 - VOL. 3 INTERNATIONAL TAX

Transactions not regards India - Brunei:

transfer - Capital Asset Exchange
Notification No. 16/2020 dt. 5th Mar'20 Information
Transfer of notified securities made by a non-resident on a Notification No. 14/2020 dt. 4th Mar'20
recognised stock exchange located in any International The Central Government hereby notifies
Financial Services Centre and where the consideration for that all the provisions of the agreement
such transaction is paid or payable in foreign currency between India and Brunei Darussalam
will not be regarded as transfer. - Amendment in Finance for the exchange of information and
assistance in collection with respect of
Act (No. 2) 2019
taxes shall have effect in the India.

The following securities has been notified:(i) foreign

currency denominated bond; (ii) unit of a Mutual Make Available
Fund; (iii) unit of a business trust;(iv) foreign currency General Motors Overseas Corporation v.
denominated equity share of a company;(v) unit of ACIT [ITAT Mum - 2020 - 115
Alternative Investment Fund. taxmann.com 129]

The Company is engaged in the business

of providing management and

Notified Foreign consulting services solely to the group

entities worldwide. The Company

Institutional Investor entered into a management agreement

with GM India. GM India has a separate
Notification No. 17/2020 dt. 13rd Mar'20]
technical service agreement with M/s.
Tax on income of Foreign Institutional Investors ('FII') Adam Opel AG, Germany. AAR have
from securities or capital gains arising from their transfer already concluded that services
is taxable u/s 115AD. Explanation to Section 115AD rendered to GM India are technical
provides the Central Government shall notify the FII. services as there is no make available.

Held: The Company sent its employees

In this regard, Central Government has issued a
in India having technical expertise, who
notification specifying the FII.
were not only managing affairs but also
ensuring due adherence to standards of
A nonresident being an Eligible Foreign Investor which Company, by continuously monitoring
operates in accordance with the Securities and Exchange and mentoring production of GM India,
Board of India, circular IMD/HO/FPIC/CIR/P/2017/003 it could be concluded that they made
dated 04th January, 2017, shall be deemed as Foreign available technical knowledge and
Institutional Investor for the purposes of transactions in expertise to GM India and, thus, said
securities made on a recognised stock exchange located in services was chargeable to tax in India

any International Financial Services Centre, where the as 'fee for technical services'. Ruling of
AAR was not absolute and unqualified,
consideration for such transaction is paid or payable in
also not binding on Tribunal.
foreign currency.

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 MARCH 2020 - VOL. 3 INTERNATIONAL TAX
PERSONAL TAX

Service utilised in India

Shriram Capital Ltd. v. DIT (Intl. Tax)
[HC Mad - 2020 - 115 taxmann.com 388]

Shriram Capital ('Shriram') had engaged the service of a

law firm in Indonesia for acquiring an insurance business
in Indonesia.

If the service utilized by the petitioner abroad was for

preexisting business in Indonesia, the petitioner could have
legitimately stated that the service provided was utilized
for a business of profession carried out outside India or
for the purpose of making or earning any income from any
source from outside India. There is no source that is
existing in Indonesia.

it is not open for the petitioner to state that the said

service fell within exception provided in Section 9(1)(vii)(b)
of the Income-tax Act, 1961 or outside the Explanation 2 to
said Section.

Tax Saving v. Tax Evasion

Md. Hussain Habib Pathan v. ACIT
[ITAT Mum - 2020 - 115 taxmann.com 179]

Assessee was charging rent from his own son and daughter
and claimed interest on borrowed capital against rental
income from house property. AO treated the house property
as self occupied and restricted the interest claim.

Held: A genuine arrangement cannot be disregarded as the

same results or operates to minimize the assessee's tax
liability. We are, accordingly, in principle, in agreement
with the assessee's claim inasmuch as, as afore-noted,
there is nothing on record to further the Revenue's case of
the arrangement being not a genuine
arrangement, i.e., apart from being unusual.

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