S O C I A LD I S T A N C I N G

C O V I D - 1 9

ANDHRA CHAMBER OF COMMERCE

Vol. LXXV

May 2020

INFORMATION BULLETIN

PROGRESS THROUGH COMMERCE AND INDUSTRY

www.andhrachamber.com

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Bulletin Advisory BoArd

Shri Ch. Venkateswara RaoVice-President

Shri R.R. PadmanabhanChairman, Foreign Trade and Skill Development Sub-Committees

Shri V.V. Sampath KumarChairman, Indirect Taxes Sub-Committee

Shri K.n. Suresh BabuChairman, Public Relations Sub-Committee

Shri M.K. AnandChairman Information Technology Computerisation Telecom and MSME, Subcommittees

Shri V.S. Prasanth KumarCo-Chairman MSME Subcommittee

Editor And Publisher

Andhra Chamber of Commerce, Chennai

President Desk 03

“Webinar on Post Covid-19 Impact on MSMEs - Pros and Cons - An Interactive Panel Discussion”

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INDIA’S FOREIGN TRADE 06

Recent Judgements in VAT CST GST by Mr. V.V. Sampath Kumar 10

Article on Amendments to Indian Stamp Act, 1899 by Mr. G Ramachandran 13

COVID 19 Times - Business Opportunities Sessions for MSMEs by Mrs. Rama Venugopal

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Doctrine of Mutuality The burden of proof under Income Tax Act by Mr. Abhiramula Moksha Kalyanram

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The Top Ten Ways to Gain 2 Hours A Day Or More by Mr. S. Prakash 22

Companies Fresh Start Scheme, 2020 By CS.U.Siddharth 25

Taxability of Real Income and Income Diverted at Source by Mr. P.S. Kumar 27

Consumer Price Index 32

Updation of Membership Details 35

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Dear Members,

While the cases of Corona has been constantly on the increase in various States of India including Tamil Nadu and Telangana, the Government is taking various steps to control the virus spread.

On the other side Government is also announcing various measures to the industries and MSMEs which were closed for more than forty days now, due to the Pandemic.

The Finance Minister Nirmala Sitharaman, on May 13, announced a tranche of six measures for the MSME sector. According to the Finance minister, the first of the six measures deals with standard MSMEs.

Low threshold in MSME definition have created a fear among MSMEs to graduate out of the benefits and killing the urge to grow. Hence, the definition of MSMEs is changed now. The turn over is also included in the new definition of MSMEs.

“In a major initiative, the Government of India announced ` 3 lakh crores collateral-free automatic loans for businesses, including SMEs. Borrowers with up ` 25 crore outstanding and ` 100 crore turnover are eligible. This will enable 45 lakh MSME units to resume business activity and also safeguard jobs.

Another important measure that the government has taken would deal with e-market linkage across the board for MSMEs, which is again the need of the hour.

The Chamber has already started the training programmes on Digital Marketing and ecommerce during 2019 with the support of Friedrich Naumann Stiftung for Freedom and planning to continue through online this year also.

As governments make significant interventions in response to the coronavirus, industry members should rapidly adjust to the changing needs of their people, their customers and suppliers, and also be prepared to face the financial and operational challenges.

Stay home and stay safe!Dr. V.L. INDIRA DUTT

President

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“Webinar on Post Covid-19 imPaCt on msmes - Pros and Cons - an interaCtive Panel disCussion”The Chamber is also gearing to new normal and

started organising Webinars for the benefit of its

members.

The first webinar on “Post Covid 19 – impact on

MSMEs” was organised on the 21st April 2020 by

the MSME Sub-committee of the Chamber and

received a positive response from the members.

Dr V.L.Indira Dutt, President of the Chamber

welcomed the participants to the webinar.

Mr M.K.Anand, who was the Moderator of this

webinar in his introduction said that we are

adapting to the new normal scenario where we are

celebrating the medicos, health workers, media

using drone to capture the scenario in the market.

Felicitation

dr. v.l. indira dutt

On behalf of the Members of Andhra Chamber of Commerce, we convey our felicitation

and congratulation to Dr. V.L. Indira Dutt, President, Andhra Chamber of Commerce on her being appointed as Chairman & Managing

Director of The KCP Ltd.

The panelists of the session were Dr Raja

Amarnath, Senior Consultant & Pulmonologist,

Apollo Hospital, Vanagaram, Mr.Rajesh

Srinivasan,Marketing Strategiest & Chief

Marketing Officer, who authored many books, Mr

Gopalakrishnan Natesan, Chartered Accountant.

Dr Raja Amarnath mentioned that India is much

ahead to handle the situation of corona compared

to the other developed countries.If there are any

symptoms, it is better to have an early screening,

early diagnosis which will help in proper treatment.

Mr M.K.Anand, Chairman of the MSME Sub-

committee well moderated the webinar with

questions on what sort health hazards are expected

after Covid 19 by the MSMEs/Shops have to

keep in mind and how they can cope up with

the situation and how the marketing has to be

planned by the MSMEs and what sort of financial

challenges that will be faced by them etc., which

were well answered by the panelists.

Mr.Rajesh Srinivasan, the Marketing consultant

in his presentation said that there are NRIs who

are interested to invest in India in real Estate and

some small start ups.

Mr.Gopalakrishnan Natesan in his presentation

said that RBI has allocated 50000 crores to lending

institutions like NABARD & SIDBI. 15000 crores

to SIDBI is a biggest boon for the MSME Sector.

He also suggested that MSMEs should use their

emergency fund saved, to pay the salaries for the

staff during these lockdown period.

Dr Raja Amarnath while answering the question

from the participants informed that we can sanitise

the products like Newspaper by keeping it under

the sun for few hours. As far as the vegetables and

fruits it can be washed with salt water and dry it

and use the same.

The webinar was attended by more than 80

participants from Tamil Nadu, Telangana and

Andhra Pradesh.

The participants very much appreciated the efforts

of the Chamber and found the session very much

useful.

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INDIA’S FOREIGN TRADE: April 2020

FOreiGn trAdestAtistiCs

India’s overall exports (Merchandise and Services combined) in April 2020* are estimated to be USD 27.96 billion, exhibiting a negative growth of (-) 36.65 per cent over the same period last year. Overall imports in April 2020* are estimated to be USD 27.80 billion, exhibiting a negative growth of (-) 47.36 per cent over the same period last year.

*Note: The latest data for services sector released by RBI is for March 2020. The data for April 2020 is an estimation, which will be revised based on RBI’s subsequent release.

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I. MERCHANDISE TRADEEXPORTS (including re-exports)

Exports in April 2020 were USD 10.36 billion, as compared to USD 26.07 billion in April 2019, exhibiting a negative growth of (-)60.28 per cent. In Rupee terms, exports were ` 78,951.41 crore in April 2020, as compared to ` 1,81,021.34 crore in April 2019, registering a negative growth of (-)56.39 per cent. The decline in exports has been mainly due to the ongoing global slowdown, which got aggravated due to the current Covid-19 crisis. The latter resulted in large scale disruptions in supply chainsand demand resulting in cancellation of orders.

Except for Iron Ore and Drugs & Pharmaceuticals which registered a growth of 17.53% and 0.25% respectively, all other commodity/commodity groups have registered negative growth in April 2020 vis-a-vis April 2019.

Major commodity groups which have recorded negative export growth during April 2020 vis-à-vis April 2019 are Gems & jewellery (-98.74%), Leather & leather products (-93.28%), Handicrafts excl. hand made carpet (-91.84%), Carpet (-91.67%), RMG of all textiles (-91.04%), Jute mfg. including floor covering (-90.61%), Man-made yarn/fabs./made-ups etc. (-84.11%), Cotton yarn/fabs./made-

ups, handloom products etc. (-82.46%), Ceramic products & glassware (-76.72%), Electronic goods (-71.04%), Tea (-68.89%), Tobacco (-68.47%), Cashew (-67.55%), Petroleum products (-66.22%), Engineering goods (-64.76%), Oil seeds (-62.33%), Mica, Coal & other ores, minerals including processed minerals (-60.41%), Meat, dairy & poultry products (-60.34%), Oil meals (-50.6%), Cereal preparations & miscellaneous processed items (-48.28%), Coffee (-44.22%), Marine products (-43.94%), Organic & inorganic chemicals (-41.93%), Other cereals (-40.86%), Spices (-32.18%), Plastic & Linoleum (-25.35%), Fruits & vegetables (-9.29%) and Rice (-7.04%).

Non-petroleum and Non-Gems and Jewellery exports in April 2020 were USD 9.08 billion, as compared to USD 19.54 billion in April 2019, exhibiting a negative growth of (-) 53.54per cent.

IMPORTS

Imports in April 2020 were USD 17.12 billion (` 1,30,525.08 crore), which was 58.65 per cent lower in Dollar terms and 54.59 per cent lower in Rupee terms over imports of USD 41.40 billion (` 2,87,432.93 crore) in April 2019.

Major commodity groups of import showing negative growth in April 2020 over the corresponding month of last year are:

CRUDE OIL AND NON-OIL IMPORTS:

Oil imports in April 2020 were USD 4.66 billion

(` 35,537.22 crore), which was 59.03 per cent lower in Dollar terms (55.01 per cent lower in Rupee terms), compared to USD 11.38 billion

(` 78,989.46 crore) in April2019.

In this connection it is mentioned that the global Brent price ($/bbl) has decreased by 67.22% in April 2020 vis-à-vis April 2019 as per data available from World Bank.

Non-oil imports in April 2020 were estimated at

USD 12.46 billion (` 94,987.86 crore) which was

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58.50 per cent lower in Dollar terms (54.43 per cent lower in Rupee terms), compared to USD

30.02 billion (` 2,08,443.47 crore) in April 2019.

Non-Oil and Non-Gold imports were USD 12.46 billion in April 2020, recording a negative growth of (-)52.18 per cent, as compared to Non-Oil and Non-Gold imports of USD 26.05 billion in April 2019.

II. TRADE IN SERVICES EXPORTS (Receipts)

As per the latest press release by RBI dated 15th May 2020, exports in March 2020 were USD 18.16

billion (` 1,35,043.18 crore) registering a positive growth of 1.22 per cent in dollar terms, vis-à-vis March 2019. The estimated value of services export for April 2020* is USD 17.60 billion.

IMPORTS (Payments)

As per the latest press release by RBI dated 15th May 2020, imports in March 2020 were USD 11.11

billion (` 82,618.50 crore) registering a negative growth of (-) 2.23 per cent in dollar terms, vis-à-vis March2019. The estimated value of service import for April 2020* is USD 10.68 billion.

III. TRADE BALANCE MERCHANDISE

The trade deficit for April 2020 was estimated at USD 6.76 billion as against the deficit of USD 15.33 billion in April 2019.

SERVICES

As per RBI’s Press Release dated 15th May 2020, the trade balance in Services (i.e. Net Services export) for March 2020 is estimated at USD 7.05 billion.

OVERALL TRADE BALANCE

Taking merchandise and services together, overall trade surplus for April 2020* is estimated at USD 0.16 billion as compared to the deficit of USD 8.67 billion in April 2019.

* Note: The latest data for services sector released by RBI is for March 2020. The data for April 2020 is an estimation, which will be revised based on RBI’s subsequent release.

MERCHANDISE TRADE

EXPORTS & IMPORTS : (US $ Billion)(PROVISIONAL)

APRIL EXPORTS (including re-exports)2019-20 26.072020-21 10.36%Growth 2020-21/ 2019-20 -60.28IMPORTS2019-20 41.402020-21 17.12%Growth 2020-21/ 2019-20 -58.65TRADE BALANCE 2019-20 -15.332020-21 -6.76

EXPORTS & IMPORTS: (Rs. Crore)(PROVISIONAL)

APRILEXPORTS (including re-exports)2019-20 1,81,021.342020-21 78,951.41%Growth 2020-21/ 2019-20 -56.39IMPORTS2019-20 2,87,432.932020-21 1,30,525.08%Growth 2020-21/ 2019-20 -54.59TRADE BALANCE2019-20 -1,06,411.592020-21 -51,573.67

SERVICES TRADE

EXPORTS & IMPORTS(SERVICES) : (US $ Billion)

(PROVISIONAL)March 2020

April-March 2019-20

EXPORTS (Receipts) 18.16 214.61IMPORTS (Payments) 11.11 131.56TRADE BALANCE 7.05 83.05

EXPORTS & IMPORTS (SERVICES): (Rs. Crore)

(PROVISIONAL)March 2020

April-March 2019-20

EXPORTS (Receipts) 1,35,043.18 15,21,939.15IMPORTS (Payments) 82,618.50 9,32,981.07TRADE BALANCE 52,424.68 5,88,958.08Source: RBI Press Release dated 15th May 2020

*Note: The latest data for services sector released by RBI is for March 2020. The data for April 2020 is an estimation, which will be revised based on RBI’s subsequent release.

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VATCST Articles from members

GST

reCent Judgements in

VAt Cst GstDENIAL Of ITC: Petitioner has not preferred any appeal.Impugned distraint notice for the Assessment Years 2009-2010, 2010-2011, 2011-2012 and 2012-2013 were served .Considering the forceful submission of the Petitioner on merits insofar as the demand u/s 19(9) of the TNVAT Act, 2006 (Denial of ITC), granted to liberty to the Petitioner to file a statutory appeal before the Appellate Deputy Commissioner P.M. GovindarajiVsAC(CT)Dharmapuri–W.P.\No.30705of 2016 DATED : 27.01.2020

APPEAL: Due to passing of the Counsel and the accident met by the petitioner, only when there was a demand for tax and penalty in December, 2019, the petitioner came to know about the passing of the order by the first appeal e authority. This Court proposed to put the petitioner on terms if at all he were to be permitted to file a statutory appeal before the TNSTAT and directed to remit the entirety of the demand, i.e., tax along with penalty and file an appeal before the TNSTAT within a period of two (2) weeks from date of receipt of a copy of this order. M/s.Vaskal Engineers, Vs.The AC (CT), Vadapalani- II Assessment Circle, W P No.6548 of 2020 DATED: 13.03.2020

MISMATCh: The only issue involved is mismatch of transactions as per the returns of the petitioner when compared with the returns of the selling dealers. The Court stated that the issue on merits, prima facie, stands covered by a decision of this Court in 99 VST 343 and the Circular bearing No.3 of 2019 dated 18.01.2019. In the light of the discussion aforesaid, the impugned orders are set aside and the AO is directed to take up the assessments to be re-done de novo Tvl.Balakrishna Enterprises Vs.The AC (ST), Krishnagiri Assessment Circle – I, W P Nos.6476 and 6477 of 2020 DATED: 13.03.2020

NATURAL JUSTICE: The petitioner states that his objection dated 20.03.2015 though received on the same date by the respondent has not been taken into account in passing the impugned order and thus there is violation of principles of natural justice. The matter is remitted to the file of the respondent. The exercise of de novo assessment shall be completed by the AO within a period of four weeks from date of first hearing of the petitioner. P.BanumathiVs. AC (CT), Brough Road, Erode W.P.No.33794 of 2019 DATED: 12.03.2020

Shri V.V. Sampathkumar Chairman, Indirect Taxes Sub-Committee, ACC

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REVISION PETITION: The writ petitions have been filed challenging an order of assessment as well as an order passed in Section 84 application,.The impugned orders are dated 31.07.2017 and 20.12.2018 and both writ petitions are thus hit by laches. There was some difficulty in approaching this Court earlier or in filing a revision petition. The appropriate remedy in the present matters is in terms of Section 54 of the Act, by way of a revision petition and there being no objection expressed to the suggestion of the Court that the petitioner be permitted to avail of the said remedy, the petitioner is permitted to file a revision petition before the JC, in terms of Section 54 of the Act within a period of four (4) weeks from today and the Registry of the JC will, upon providing proof of remittance of a sum of ` 4,00,000/-(four lakhs only), , entertain such revision petition without reference to limitation but subject to any/all other statutory condition that may be applicable. A.R. Construction vsAC (CT) Kelambakkam Circle Writ Petition No.5842 & 5845 of 2020 DATED: 05.03.2020

OPPORTUNITy: The impugned orders are assailed on the sole ground of violation of the principles of the natural justice. In response to a personal hearing notice dated 21.10.2019, the petitioner, vide e-mail dated 22.10.2019 requested two weeks’ time to appear as the counsel was not in station. The request for e-mail has been referred to by the Officer in internal page 11 of the order, where the Officer states that though the petitioner had sought only two weeks’ time, even after lapse of five weeks, they have neither appeared in person nor filed any reply. In the interests of substantial justice, the impugned orders are set aside solely to afford another opportunity of personal hearing to the petitioner. Tvl. SAR ISPAT PVT. LTD., VsSTO, Group I, Inspection, Intelligence-I, Chennai W.P. Nos.5668 and 5670 of 2020 Dated: 04.03.2020 Dated: 04.03.2020

C fORM : C form can be used for the purchase

of HSD and Petrol if it is otherwise eligible as per the CST Act. Due its denial, WritPetition filed praying for the issuance of Writ of Mandamus to direct the respondent to issue “C” forms to the petitioner for the purchases of High Speed Diesel from the suppliers in other States in view of the judgment in M/s.Ramco Cements Ltd’s case As there is complete identity on facts and in law in the matter, this Court has reiterated the view taken earlier in the above matter and stating so, this writ petition is allowed. M/s.Prabath Mills, Vs. STO, Palladam Assessment Circle, WP No.5293 of 2020 DATED: 02.03.2020

PERSONAL hEARING: When it was also incumbent upon the AO to have granted an effective opportunity of personal hearing, the Officer cannot merely called upon the petitioner to appear on any working day at office hours within 15 days of the notice as the Officer cannot be expected to be at his desk at all time to entertain the petitioner/authorised representative and conduct the hearing. It is thus necessary that the personal hearing be fixed by date and time for mutual convenience of the attending parties as well as the officials of the Department. M/s.Ram E & I Systems Private Limited, Vs STO, Alwarpet Assessment Circle, WP No.3631 of 2020 DATED: 17.02.2020

RECOVERy NOTICE: The challenge is to a recovery notice dated 08.04.2019, which calls upon the petitioner to remit the disputed demands of tax and penalty. These disputed demands of tax and penalty arose from orders of assessment passed dated 14.12.2017.There is no infirmity in the efforts for recovery. After receipt of the impugned notice, petitioner has been in correspondence with the Department and also appears to have filed a police complaint against various employees for misuse of TIN number. Considering these facts, the Court held that the petitioner is permitted to file statutory appeals within a period of two (2) weeks from today, the same shall be received by

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the Registry of the first appellate authority without reference to limitation only but after ensuring that all other requirements including statutory deposit are complied with. SIGNATURES EXTERIOR SOLUTIONS,.Vs AC (ST, Namakkal, Rural, Namakkal. WP No.4269 of 2020 DATED: 21.02.2020

APPEAL: There has been substantial delay in the petitioner approaching this Court. The petitioner today produces a certificate of “no-dues” as regards the disputed taxes from the AO. The Ld Additional Government Pleader fairly does not object to the suggestion of the Court that the petitioner may file statutory appeal challenging the impugned order and such appeals, if filed within a period of two weeks from today, be accepted by the Registry of the first appellate authority without reference to limitation. M/s.Samy Traders, Vs. The DCTO Villupuram II Circle, W.P.Nos.3937 & 3942 of 2020 DATED: 25.02.2020

NOTICE: The petitioner challenges notice dated 10.12.2019 calling upon it to produce various records in support of its returns of turnover filed in terms of the Puducherry Value Added Tax Act, 2007, for the periods 2015-16 and 2016-17. Though the petitioner apprehended that the matter may not be appreciated or approached in a fair manner by the officer, for whatever reason(s) the petitioner, for its part, could also have been more responsive in terms of producing the books of accounts as sought for and in a timely fashion as this seems to have been done in full only on 11.02.2020. Stating so, this writ petition is closed as premature and made clear that the proceedings will continue with the full co-operation of the petitioner and the officer shall conclude the same in accordance with law, approaching the matter without prejudging issues, and in an open, fair and transparent manner. Padmesh Cashew Company, Mahe Vs. CTO, Mahe. W.P.Nos.5031 & 5034 of 2020 DATED: 27.02.2020

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Article on Amendments to Indian Stamp Act, 1899

Shri. G Ramachandran Chairman, Company Law Sub-Committee, ACC

The Government of India through Finance Act 2019 had interalia proposed to amend Indian Stamp Act, 1899(‘Act’)to take reform measures for levy and administration of stamp duty on securities market instruments by the states, at one place through one agency - through stock exchanges or Clearing Corporation or depositories, and for appropriately sharing the same with respective state governments based on state of domicile of the ultimate buying client.

The Central Government vide its Notification S.O 4419(E) dated 10th December, 2019, had originally appointed 9th January, 2020 as the date for bringing into force the Chapter IV of the Finance Act, 2019 to the Indian Stamp Act, 1899. Subsequently, vide Notification S.O.115(E) dated 8th January, 2020, the said date has been revised as 1st April, 2020. In continuation to the same, the Central Government vide its notification S.O 1226(E) dated 30th March, 2020, had now extended the effective date as 1st July, 2020.

Accordingly, the proposed amendment to the Indian Stamp Act, 1899 along with the Indian Stamp (Collection of Stamp Duty through Stock Exchanges, Clearing Corporations, and

Depositories) Rules 2019 (Rules) (“Amended Act’)shall be enacted and set to come into force from 1st July, 2020.

Key reforms of the Amended Stamp Act and the Rules are as follows;

1. Jurisdictional arbitrage: All financial securities and its transactions are now brought under the union list and the Central Government is alone empowered to levy stamp duties. All such transactions will be chargeable with a uniform rate of stamp duty across India. No stamp duty shall be charged or collected by the State Government on any note or memorandum or any other document, electronic or otherwise, associated with these transactions.

2. Definitions: The amendmenthas introduced some new definitions such as “debenture”, “market value” and “securities”. The new definition of “securities” is extensive and has the net effect of extending the list of instruments liable to stamp duty, whether marketable or not.

a) Debenture includes—

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(i) debenture stock, bonds or any other instrument of a company evidencing a debt, whether constituting a charge on the assets of the company or not;

(ii) bonds in the nature of debenture issued by any incorporated company or body corporate;

(iii) certificate of deposit, commercial usance bill, commercial paper and such other debt instrument of original or initial maturity up to one year as the Reserve Bank of India may specify from time to time;

(iv) securitised debt instruments; and

(v) any other debt instruments specified by the Securities and Exchange Board of India from time to time;

b) Securities includes—

(i) securities as defined in clause (h) of section 2 of the Securities Contracts (Regulation) Act, 1956;

(ii) a "derivative" as defined in clause (a) of section 45U of the Reserve Bank of India Act, 1934;

(iii) a certificate of deposit, commercial usance bill, commercial paper, repo on corporate bonds and such other debt instrument of original or initial maturity up to one year as the Reserve Bank of India may specify from time to time; and

(iv) any other instrument declared by the Central Government, by notification in the Official Gazette, to be securities for the purposes of this Act;

3. Dispensation of exemption to transfer of securities: Under the erstwhile regime, transfer of securities in physical form was subject to the payment of stamp duty and

transfer of securities in dematerialized form was exempted. This exemption has been done away with, and stamp duty is now payable on transfer of securities (with consideration) in dematerialised form.

4. Stamp Duty on principal instrument only: In order to avoid multiplicity of payments of stamp duty on such transactions, the Amended Stamp Act provides that stamp duty is payable only on the principal instrument and no stamp duty shall be charged on any instrument (other than the principal instrument) on a single transaction. For example, if stamp duty is paid on letter of allotment of securities, then no stamp duty is payable on actual allotment of securities in pursuance to letter of allotment issued.

5. Onus of payment of stamp duty: The amendment specifies the persons liable to pay stamp duty in case of different transactions.

6. Valuation of securities: Under the erstwhile Act, the stamp duty is calculated on the value of the security according to the average price or the value thereof as on the date of the instrument. Whereas in the proposed Amendment, the stamp duty shall be calculated on the market value of the security. This will ensure that in case of listed securities, the stamp duty is levied on the exact price on which it is transacted and not on the average price of the day.

7. Revised Stamp duties: Prior to the introduction of the Amended Stamp Act, stamp duty was payable at a flat rate of 0.25% of the consideration on a transfer of shares. There was no stamp duty prescribed on the issue of shares (apart from the share certificate issued to the shareholder). The Amended Stamp Act specifies the following rates of stamp duty for different kinds of transactions involving securities:

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Instruments Rate of Stamp Duty

Issuance of debenture 0.005%

Transfer or re-issuance of debentures 0.0001%

Issue of security other than debenture 0.005%

Transfer of security other than debenture on delivery basis 0.015%

Transfer of security other than debenture on non-delivery basis 0.003%

Futures derivates (equity and commodity) 0.002%

Options derivatives 0.003%

Currency and interest rate derivatives 0.001%

Other derivatives 0.002%

Government Securities 0%

Repo on corporate bonds 0.00001%

8. Mechanism for collection of stamp duty: The Amendment prescribes the agencies who shall be responsible for collection of stamp duty on behalf of State Government.

Nature of transactionAgency responsible for collection

of stamp duty

sale of any securities, whether delivery based or otherwise, made through a stock exchange(Sec 9A(1)(a))

By Stock Exchange / Clearing corporation

any transfer of securities for a consideration, whether delivery based or otherwise, made by a depository (Sec 9A(1)(b))

By Depository

pursuant to issue of securities, any creation or change in the records of a depository is made (Sec 9A(1)(c))

Note: Procedure for payment of stamp duty with applicable agencies is yet to be notified

(The views expressed are solely of the author)

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COVID 19 Times - Business Opportunities Sessions for MSMEs

Mrs. Rama Venugopal Chairman of Start up Business, Entrepreneurship

and Co Chairman of Quality Systems & Productivity Sub-committees of the Chamber.

Global Markets are grappling with sudden onslaught of Covid 19 which has taken the world by surprise. This pandemic time is throwing the global economy out of control too.

Human race is suffering and healthcare professionals, workers are struggling to get basic safety gear to protect themselves and to protect the humans from this infection.

Global Healthcare sector is struggling to get PPEs, severe shortage of Critical Care Equipments like Ventilators and many other medical devices during this crisis period.

Indian scenario is no exception and we are struggling to get even Masks for Healthcare workers In our country. Many Medical Professionals are dying due to lack of protective gear and so is the

population too.

Govt of India has taken immediate steps to ramp up production of PPE and other medical devices on a fast track mode. Ministry of Health has appointed PSU organisations like HLL, BEL as procurement agencies to ramp up the supplies.

MSME and GeM Portal have joined hands in this journey to rope in as many MSME manufacturers as possible to get into the production lines or to scale up their existing production lines for some of the Medical Devices or Medical Textiles segments.

Ministry of Micro, Small and Medium Enterprises, Government of India is reaching out to Manufacturers who are in the field of manufacturing or supply of following items related to use in COVID-19 (Coronavirus).

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Items List :

A. MEDICAL SUPPLIES (39 ITEMS).

1. Ventilators 2. Alcohol based hand-rub 3. Face shield (eye, nose & mouth protection) 4. N95 Masks 5. Latex single use gloves (clinical) 6. Reusable vinyl / rubber gloves (cleaning) 7. Eye protection (visor / goggles) 8. Protective Gowns / Aprons 9. Disposable thermometers 10. UV tube light for sterilization 11. Medical masks (surgical / procedure) 12. Detergent / Disinfectant 13. Single use towels 14. Biohazard bags 15. Wheel Chair 16. Glucometer with strips 17. Medicine 18. IV Fluid - DNS 19. IV Fluid - Dextrose 20. Hard-frozen Gel Packs 21. Sample Collection Kit 22. Thermocool box / Ice-box 23. Stretcher 24. Thermal scanners 25. Batteries for thermal scanners 26. BP apparatus 27. IV Sets 28. IV Cannula 29. IV Stand 30. Ambulance 31. First aid 32. Medical Waste Incinerator 33. ICU Beds 34. Cardiac monitors 35. Syringe pumps 36. Portable x ray machines 37. Endotracheal tube 38. Suction tube 39. Oxygen cylinders

B. AUXILLARy SUPPLIES (62 ITEMS)

1. Soap 2. Rubb Hall Tents 3. Chairs/Benches 4. Tables/Desks 5. Printer 6. Computer 7. Extension Boards 8. Matches 9. Candles 10. ID for Patients 11. ID for volunteers 12. Flyer - information booklet 13. White board + markers 14. Rooms for Volunteers 15. Garbage bags, bins 16. Drinking Water+ Dispenser (4) 17. Cleaning items (Brooms) 18. Cleaning items (Mop) 19. Fire extinguisher 20. E Toilet 21. Genset / Back up 22. Whistle 23. Tool set - basic 24. Registration details - sticker/printer 25. Mattresses 26. Foldable Cots / Beds 27. Bed sheets 28. Pillows 29. Pillow Covers 30. Towels 31. Rubber Sheets 32. Blankets 33. Emergency Lamp 34. Food 35. Food Waste 36. Other Waste 37. Laundry (Detergents) 38. Refrigerator - smallest 39. Electrician / Plumber 40. Entertainment for inmates 41. Internet access 42. Tokens with number 43. Mosquito Repellent

44. Sanitary Pads 45. Diapers - kids 46. Steel Plates 47. Steel Glasses 48. Spoons 49. Jugs 50. Stove - Big 51. Large vessels 52. Buckets 53. Mugs 54. Tissue paper 55. Smaller bins 56. Paper 57. Pen 58. Stapler 59. Stapler Pins 60. Box file 61. Official Seal.

Manufacturers of above items are requested to follow below mentioned steps :

1. Inform State Government/UT of your State/UT.

2. Register as supplier in Government e Market Place (GeM) at https://gem.gov.in

3. Download list of items related to use in COVID-19 (Coronavirus)

MSMEs struggle with funding and cash flow problems. To help them tide over this crisis to scale up production of various items listed in the category, SIDBI has stepped in to offer finance schemes to MSMEs during this crisis period.

To help the country in fight against COVID19, SIDBI has launched a special scheme named SAFE (SIDBI Assistance to Facilitate Emergency response against Corona Virus) for all MSMEs (whether SIDBI's existing clients or new to SIDBI), who are producing/providing any goods or services (like Sanitisers, Masks, Gloves, Aprons, Medicines, Ventilators, etc. etc.) which are directly related to fighting COVID19/corona virus. Assistance is available at interest rate of 5% p.a. (reducing balance) without any processing fee or collateral requirement.

MSMEs are encouraged to avail assistance under SAFE which is especially designed for the purpose. This may enable to augment the production of such goods and services and help the nation in fight against COVID19.

SIDBI stands with MSMEs at this crucial hour of national importance.

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Regional offices of SIDBI, MSME Cells can be contacted for more details if needed.

for more infrmation about SIDBI Program, log onto :

https://www.sidbi.in/en

for more information about MSME program for Manufacturers, log onto :

http://jan-sampark.nic.in/campaigns/2020/26-Mar/MSME/index.html

(The views expressed are solely of the author)

19

Doctrine of MutualityThe burden of proof under Income Tax acT

Shri. Abhiramula Moksha Kalyanram Hyderabad

It’s a well-known fact that the income earned by a person or an entity comes into the purview of the Income Tax Act, 1961. Section 2(24) of the said act says thatany kind of receipt, by whatever name attributable, qualifies to be an income, unless proved contrary. Such income is taxable.

However, money pooled through contributions from individuals or entities to formnot-for-profitrecreational or societal organizations, can be immune to taxation, if it falls within the ambit of Doctrine of Mutuality.

Doctrine of Mutuality is based on the principle of natural justice, which enumerates that no one can make profit from himself or trade with himself.

The Doctrine of Mutuality is invoked when the surplus money that is left after all the intended activities are completed using the common pool of funds, is distributed back to the contributors/participants in the ratio of contributions or utilised for their benefit only.

In order to qualify for the exemption under this special status, the Assessee has to prove the existence of mutuality between the entities.

Establishing Doctrine of Mutuality

The principle of doctrine of mutuality is established when the common identity, oneness

of identity, non-profiteering, and obedience to mandate is established between the contributors and the entity. All these four conditions must be adhered jointly.

Let us review the following three scenarios to understand the applicability of doctrine of mutuality in each case followed by the corresponding precedents laid by the Supreme Court of India:

1. Interest earned from FDs of surplus from common pool fund

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2. Deemed letting out value on club house maintained through the common pool fund

3. Surplus of a common pool fund, wherein non-members also contribute.

Scenario 1: Interest Earned from fDs of Surplus from Common Pool fund

Surplus arising out of income over expenditure, the sole source of income being contributions from registered members only, is exempted when doctrine of mutuality is applied. However, interest earned from such Fixed deposits made from the surplus funds are taxable.

Supreme Court Ruling

Let’s see the Hon’ble Supreme Court’s ruling on interest earned by a club on FDs made from Common Funds.

In the case of Banglore Club Vs. Commissioner of Income Tax & Another (2013) 3 SCC509, it was observed by the Hon’ble Supreme Court that the concept of mutuality was extendable to the defined group of people who contributed to a common fund, controlled by the group, for a common benefit. Hence, any small increase in the common pool fund couldn’t be treated as income.

However, their Lordships observed that the ‘privity of mutuality’ was violated when the funds were placed by the club in the fixed deposits of a member’s bank. The member’s bank used the deposits in their ordinary course of banking business, thus violated the common pool as well as common identity principle.

As a result, interest earned by the Assessee-club from the fixed deposits made through the surplus funds were pronounced as TAXABLE under the head “Income from other Sources”.

Scenario 2: Deemed Letting Out Value ofClub house Maintained through the common pool fund

The purpose of club house is to provide recreational and refreshment facilities exclusively to its members and their guests.It runs on no-profit-no-loss basis. Members pay for all their expenses and they aren’t entitled to share any surplus accrued. Surplus is utilised only in maintenance and developmental activities, to provide better facilities to its members.

Supreme Court Ruling

Let’s see the Hon’ble Supreme Court’s rulings ondeemed letting out value of club house maintained through the common pool fund.

In the case of Chelmsford Club Vs. Commissioner of Income Tax (2000) 3 SCC 214 it was heldby the Hon’ble Supreme Court that even the deemed income from the property owned and maintained by the Club in the form of ‘Club House’ is governed by the principle of mutuality and the Annual Letting Value is not assessable as per the provisions of section 22 of Income Tax Act, 1961.

Delhi High Court Ruling

In the case of Commissioner of Income Tax, Delhi-II Vs. Delhi Gymkhana Club Ltd., (1985) 155ITR 373 it was heldby the Hon’ble Delhi High Court that letting out of the premises is merely a provision of a facility for members. The principle of mutuality clearly applied to the surplus earned as a result of such activities. The receipts of the club were not for the mere use of the rooms by way of rent. The receipts of the club were in the nature of payments made to the club for various kinds of facilities and services provided by it. The levy of a composite charge for such provision of facilities of residence and other incidentals shouldn’t be equated to the charging of a house rent or a rent for occupation of a residential building. Hence, the amounts received as a composite charge were not assessable as per the provisions of section 22 of Income Tax Act, 1961.

As a result, the notional value of rent also termed as Annual Letting Value that aroused based on

ownership of the ‘Club House’ by the Assessee-club is NOTTAXABLE under the head “Income from House Property”.

Scenario 3: Surplus of a common pool fund, wherein non-members also contribute

An entity incorporated exclusively for economisation of cost receives contributes for a common pool fund/Brand Fund from the franchisees/members qualifies under Doctrine of Mutuality, but when it receives contributions from non-members, though the said contributions are utilised for the only for the benefit the members of the common pool fund/Brand Fund, it will get independent status and thereby becomes taxable.

Supreme Court Ruling

Let’s see the Hon’ble Supreme Court’s rulings on surplus of a common pool fund, wherein non-members also contribute.

In the case of yUM! Restaurants (Marketing) Private Limited Vs. Commissioner of Income Tax, Delhi [Civil Appeal No. 2847 of 2020], the Supreme Court has observed that any entity that receives contributions, the contributors must be the sole beneficiary, whereby the concept of mutuality is applicable, YUM! Restaurants (Marketing) Private Limited(YRMPL) is a wholly owned subsidiary of YRIPL exclusively for the purpose of economisation of the cost of advertising and promotion of the franchisees. As per the Tripartite Operating Agreementall the franchisees of YRIPL would contribute 5% of their gross sales for the proper conduct of the advertising, marketing and promotional activities for the mutual benefit of the parent company, Tricon India or TRIM and the franchisees. Since the entity and the said arrangement of cost management was made for no

profit basis the concept of mutuality was invoked for, however based on the following specific conditions in the agreement:

1. Funds are contributed by franchisees only, Tricon India/TRIM does not make any contribution

2. The executive committee of Tricon India/TRIM rather than the contributing franchisees allocate the Advertising contribution, which possess sole and absolute discretion.

3. Surplus or unspent amount is refundable to the contributing franchisees subject to the approval of the board.

4. Pepsi Food Ltd, Pizza Hut as well as KFC made contributions for the Fund, fact being they were not franchisee of YRIPL or Tricon India or TRIM.

The impact of the above conditions, results in identification of each entity separately and violates the concept of mutuality, since contributors and the entity must have common identity and non-member cannot be a contributor, third party entity cannot have voting rights.

In result, the concept of mutuality is not applicable and the surplus is brought to tax under the head “Profits and Gains from Business or Profession”.

Conclusion

The burden of proof for adherence to concept of mutuality rests on the Assessee, who is under an obligation to produce cogent documentary evidence that establishesDoctrine of Mutuality beyond any reasonable doubt.The Assessee must also ensure zero contribution as well as executive powers from non-members.

(The views expressed are solely of the author)

21

When you gain 2 hours a day that is 14 hours a week and a whopping 728 hours a year or 18.2 workweeks!

Take a look at the list below and implement a few - if not all - of them and see how much time you gain this week and how much more you accomplish! (Note: The time saved listed is per day! They are also very conservative estimates.)

Article by Mr. S. Prakash

The Top Ten Ways to Gain 2 Hours A Day Or More

TURN Off ThE TVWe may as well start at the easy one. The average person watches 3 hours a day. So turn it off for one of those hours. Do something else instead. Read a book. Better yet, start writing YOUR book! Time saved - One hour.

GROUP yOUR PROJECTS TOGEThER

Do all you email at once or make all your calls at once. Starting and stopping wastes a lot of time. Time saved - 15 minutes.

22

DON’T ANSWER ThE PhONE

Let it go to voice mail. Then, at a set time, listen to the voice mail, delete liberally, and write down the info on a pad to call back when it is best for you. Talk to them only about the issue at hand. Time saved - 30 minutes. Another 30 if you count the telemarketers you avoid.

GET UP 15 MINUTES

EARLIERGo to bed 15 minutes later. If your alarm goes

off every day at 6 am, make it 5:45. You don’t

need that much sleep anyway! Time saved -

30 minutes!

ENROL IN WhAT IS KNOWN AS “AUTOMOBILE UNIVERSITy.”

I have a friend that uses his library card like nobody’s business and always has the best MP3 files with him. And it costs him nothing. He listens to close to ten hours of great material a week. All while in the car. Time saved - 1 hour.

CUT yOUR LUNCh ShORT

No matter how much you take, shave 15 minutes off of it. Side benefit: You’ll lose weight without the dessert! Time saved - 15 minutes.

23

hIRE AN ASSISTANT

Let him or her do the smaller tasks like answering email, copying, screening calls, and filing. Time saved - one hour.

fOCUSDifferent people are distracted by different things. Whatever it is that distracts you, cut it out. Tune it out and lock in like a laser on your work. You will save time and your work will be better! Time saved - 30 minutes.

ShIfT yOU WORK hOURS TO INCLUDE TIME WhEN OThERS AREN’T AT ThE OffICE.Being there alone will help you stay on task and you will be shocked at how much you get done - Time saved - 15 minutes.

Total if you do them all: 6 hours a day of time saved, improved focus and a dramatic increase in productivity!

If you will just implement a few of these - those that work best for you - you will see a dramatic improvement in your time management and productivity - I guarantee it!

(The views expressed are solely of the author)

24

PLANSpend 15 minutes a day planning your day to work on the most important tasks in the most efficient way. You will lose 15 minutes but gain an hour. Total saved - 45 minutes.

25

CompaniesFresh Start Scheme, 2020

Article by CS.U.Siddharth

Ministry of Corporate Affairs has launched a scheme known as “Companies Fresh Start Scheme, 2020” condoning the delay of filing the documents with Registrar of Companies (ROC). It relates to waiver of additional fees and granting of immunity from launching of prosecution or proceedings for imposing penalty on account of delay associated with certain filings.

Important aspects of the Scheme:

Any Company which has failed to file any mandatory form with ROC may avail this scheme.

The scheme can be availed by defaulting companies only. The officer in default CANNOT avail the scheme.

Scheme is introduced with the motive of reducing compliance burden. The aim is to provide defaulting companies a chance to make their compliances good.

“Inactive Company” means a company which has not been carrying on any business or operation, OR has not made any significant accounting

transaction during the last two financial years, OR has not filed financial statements and annual returns during the last two financial years.”

Defaulting Company means a Company defined under Companies Act, 2013 and which has made a default in filling of:

- Any Documents,

- Any Statements,

- Any Returns etc.

- Including Annual Statutory Document

Defaulting Companies will be able to make their compliances good and there will be no prosecution/ penalty for the Companies which file their pending forms till 30th September, 2020 provided such prosecution/ penalty is associated with the filing related default. No immunity is available for any default other than filing related default.

The forms which are subject to additional fee under section 403 of Companies Act, 2013 are eligible

26

for filing under CFSS, 2020 and are divided into

Annual Based:

Annual Return- Form MGT-7

Financial statement- Form AOC-4

Event Based

Other forms required to be filed with ROC like – PAS-3 – MGT-14 – ADT-1 – Any other form

Except two forms.

– SH-7- Increase in Authorized Capital

– Charge related form (CHG-1, CHG-4, CHG-8 or CHG-9)

The Scheme came into force with effect from 01.04.2020 and shall remain in force till 30.09.2020. Therefore companies will be able to file remaining forms, compliances till 30th September, 2020.

This scheme shall not apply in the following cases:-

• Final notice for striking off the name of the company under section 248 of the Companies Act, 2013 already issued by the ROCs;

• The company has made an application for striking off the name of the company to ROCs;

• Companies amalgamated under the scheme of compromise & arrangement;

• The company applied for dormant status under section 455 of the Companies Act, 2013 before the introduction of the scheme

• Vanishing Companies.

A company would be deemed to be a vanishing company, if it is found to have:

a) Failed to file returns with Registrar of Companies (ROC) for a period of two years;

b) Failed to file returns with Stock Exchange (SE) for a period of two years (if it continues to be a listed company);

c) It is not maintaining its registered office at the address notified with the Registrar of Companies/ Stock Exchange; and

d) None of its Directors are traceable.

Procedure to avail the Scheme is as follows:

• To file all pending documents and forms before 30th of September, 2020.

• Yes there is an E-form CFSS – 2020, which should be filed within six months of the closure of the said scheme.

This CfSS, 2020 scheme does not provide immunity in following matters:

(i) Matters where appeal is pending before any Court;

(ii) Where any management dispute is pending before the Court or NCLT;

(iii) Where an order of conviction has been issued by the Court & no appeal preferred against such order as on 01st April, 2020;

(iv) Where an order imposing penalty has been made by the Adjudicating Authority & no appeal preferred against such order as on 01st April, 2020;

No need to pay any additional fee if we take the benefit under this scheme. We will have to pay the normal fee only. However, we have to file the E-Form CFSS- 2020 for availing the benefits under this scheme.

The consequences faced by companies if they do not avail this scheme are as follows:

1. Normal fee payable on the forms;

2. Additional Fee which can go in Lakhs;

3. Action for Strike Off by the Registrar;

4. Prosecution/ Heavy Penalty for the Directors & other Officers in default.

This scheme benefits Defaulting companies but at the same time this scheme also encourages Inactive companies to start fresh by filing all their pending forms at Normal Fee by:

(i) either to apply for voluntary strike off by filing e-form STK-2; OR

(ii) apply for the status of Dormant Company by filing e-form MSC-1.

(The views expressed are solely of the author)

27

Taxability of Real Income and Income Diverted at Source

Mr. P.S.Kumar Former President of ACC

INTRODUCTION

Real income theory and Diversion of income by overriding title

There are situations in the commercial world about taxability of ‘income’ which is waived by the party entitled to receive it. For those uninitiated in the ways of the administration of income tax laws, there is no issue since the recipient never received the money, no ‘income’ has been received and hence no tax need be paid. However, as income tax law stands, this would not be the correct stance.

There are two important principles of income tax law that are at variance with each other and yet complimentary to each other. First of all, the theory of ‘real income’ states that in order for tax to be levied, there should be real income and not imagined or illusory income. Therefore,

the question that arises is, in cases of waiver, has the income accrued to the recipient and become ‘income’ even if the recipient has not received it? or simply put, since nothing has been received, there is no ‘real’ income.

The second principle that becomes relevant in such cases is that, is there a diversion of income by overriding title at the point at which income arose. In other words the question that becomes important is whether the income had accrued and then waived or whether income was stopped from accruing i.e. whether waiver took place before income accrued.

There are some definite pointers to when income accrues in commercial dealings. For example, wages and salary accrue at the end of the period when they are paid i.e. as per the terms of engagement. On the other hand commission which is payable

28

on profits of an enterprise can only accrue when the statement of profit and loss is drawn up and profits are determined or based on some other pre-fixed benchmark.

Revenue’s stand and tax implications

Generally, the Revenue Dept. takes the stand that where income was waived after it had accrued, the waiver amounts to application of income i.e. income had arisen and the recipient had handed it over back to the payer constructively. Consequently, the income is taxable and worse still the act of waiver may attract section 56(2)(b) of The Income Tax Act, 1961 as well. Technically speaking, for income not to be taxable, the act of waiver should have taken place before income accruing.

Income waived following COVID-19

As we have been witnessing, as a result of COVID-19 there have been many cases where income has been waived especially in the corporate sector immediately after the magnitude of COVID-19 has been assessed. This issue will particularly be felt for the Assessment Year 2020-21 being the first assessment year after COVID-19 has struck and this is when most of waivers of income will have taken place. Putting a context to this in terms of a time-frame, COVID-19 came to be recognized a pandemic from around March 2020 onwards whereas most of the waivers of salary and other income under contracts have started appearing in the press from May, 2020 onwards. Going by the above principle of interpretation, there is a huge risk of tax demands arising on income that had arisen in this interregnum notwithstanding the waivers. The same logic will apply to other contracts where, for example, landlords waive rentals and other cases where rights under contracts have been waived by the parties concerned even in business dealings. Therefore what is contained in this article is not salary specific.

Real income theory in substance

In order to put the above in proper perspective since it is likely to be met with disbelief, we need to consider the theory of real income in some detail. There is a substantial amount of judicial decisions on the subject of how tax can only be levied on real income. Hence even if the amount has been accounted in the books of account, the same is not taxable in the hands of the assessee. For precedents one can refer to Godhra Electricity Co Ltd v CIT 225 ITR 746 (SC). The Bombay High Court in the case of CIT v. Shoorji Vallabhdas & Co. [1959] 36 ITR 25 (Bombay), pointed out that the question whether the income accrued or not is not a mere matter of cogency of the entries made in the account books of the assessee but is essentially one of substance and of the real nature of what happened; a mere book entry is not conclusive of the question whether the assessee had become entitled to the sums or not. This view of the Bombay High Court was affirmed by the Supreme Court in CIT v. Shoorji Vallabhdas & Co. [1962] 46 ITR 144 (The Supreme Court.

Real Income Theory (where income had not accrued) vs. Income accrued and surrendered

[Reproduced from Poysha Oxygen (P.) Ltd. v. Deputy Commissioner of Income-tax [2004] 91 ITD 616 (Delhi)/[2005] 92 TTJ 315 (Delhi)] [Although the following is from an ITAT decision and an old one at that, the legal position remains the same even today. The decision was rendered after considering a plethora of decisions on the subject and explains the correct legal position.]

“19. From the combined reading of the above case law, the following legal position emerges:

(1) If the income does not result at all to the assessee then it cannot be taxed even though (i) such income might have hypothetically accrued; or (ii) entries are made in the books of account of such hypothetical income.

29

(2) If the income, on mutual understanding is given up or surrendered by the assessee before its accrual then the income surrendered cannot be taxed on the principle of real income theory. However, if such surrender is made after the accrual of such income then such income would be taxable though the assessee may be entitled to claim bad debt on the basis of evidence.

(3) If the income has accrued or arisen from the transactions, then its taxability cannot be postponed on the ground of improbability of recovery.

(4) The issue, whether income has resulted or not to the assessee, should be decided after considering all the facts and circumstances of the case including the subsequent events.

(5) Considering the genuine hardship of the assessee, if the Board exercise its option under section 119 and issues a circular to mitigate the hardship then the above legal position shall not be applied and the assessee would be entitled to relief in terms of the circular/ instructions of the Board".

Union of India v. Society of Mary Immaculate (Tamil Nadu), Madras, 103 taxmann.com 333 (Madras)/[2019] 262 Taxman 496 (Madras)/[2019] 412 ITR 545 (Madras).

One decision of recent origin that one should consider and read in full for a clear understanding is the one cited above. There were two significant issues involved in this decision and in order to understand them one needs to understand the facts of the case.

The first issue

The crux of controversy is that Nuns, Sisters, Priests or Fathers, who also render their services as Teachers in these schools which receive Grant-in-aid from the State Government under the Grant-in-Aid Schemes formulated by the State are bound by the Canon Law and the receipt of salary in their hands entirely belongs to the Institution, Church. Having surrendered their income, whether they

can be subjected to deduction of tax at source as stipulated in Section 192 of the Income Tax Act, 1961.

The High Court of Madras after considering all matters including Central Board of Direct Taxes (CBDT) Circulars and a very detailed analysis of the income tax law came to the conclusion that the income tax is a-religious and a-political except to the extent specified and cited section 11 in regard to Charities and the Special Provisions relating to Incomes of political parties in section 13A, while section 13B provided for special provisions relating to voluntary contributions received by Electoral Trust. In other words, the Canon Law in the absence of a special provision cannot override the Act.

The second issue

The second issue is whether the concept of real income is satisfied for the waived salaries to come under The Income Tax Act, 1961 and be taxed which is the subject matter of this Blog. The following is extracted from paragraph 31 of the judgement in summary. Clearly, the taxability of the receipt as Salary from the State Government is not effected at all. At best, it can only amount to application of their income by way of salary under that obligation towards that Religion, after they discharge their tax obligation under the Income Tax Law, out of such receipt of salary by them. Such application of salary income cannot be said to be diverted at source by overriding title and the salary as such, cannot be said to be earned by the Institution or the Religion, Church or Diocese as such. It is the individuals, be that Nuns or Missionaries or any other person who are working as Teachers, depending on their personal knowledge of subject, training and skill, for which they get the Grant-in-Aid in the form of salary from the State Government under the enactments and Schemes announced by the State Government and therefore, the character of such

30

receipt taxable as salary in their hands cannot be disputed and denied. The Institution, Church or Diocese does not have any legal right to directly receive that payment from the State Government, but for working of such individuals as the Teachers in those Schools.

Conclusion

The judgment is a very lengthy one having considered the applicable precedents in detail on the subject. As such, for a better understanding of the subject, one should read it thoroughly.

The author of the Blog wishes to make the following important points:

(1) For corporate managers, there is an urgent need to immediately restructure agreements and other documents in order to ensure that they do not run afoul of the principle of income tax law discussed above. The author

suggests that wherever necessary those in charge of these matters in business entities should immediately seek expert guidance in order to maintain their tax neutrality.

(2) At a very fundamental level, one hopes that the CBDT, will take a pragmatic approach and will issue guidelines to the assessing officers to disregard the taxability of such waivers. After all, an act of public mindedness on the part of those who were generous enough to waive should not result in an unintended tax burden especially when they are not even aware of the consequences.

Disclaimer

[The views expressed herein are solely of the author and publication in the Bulletin does not amount to endorsement by Andhra Chamber of Commerce. Readers are advised to consult professionals before acting on this.]

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CondolenCe

Shri R. Ramakrishna RajaChairman, Indian Reinforcing Co. (Welded Mesh) P. Ltd.and former Vice-President of Andhra Chamber of Commerce

With deep sense of sorrow, we regret to inform you about the demise of Shri R. Ramakrishna Raja, former Vice- President of Andhra Chamber of Commerce on March 24, 2020. Shri R. Ramakrishna Raja was associated with Andhra Chamber of Commerce representing Indian Reinforcing Co. (Welded Mesh) P. Ltd from 1959. He was the former Vice-President of the Chamber.

He was associated with many Charitable, Social, Educational and Cultural organizations in Chennai.

The Chamber lost a well-wisher and Guide.

On behalf of the Members of the Executive Committee of the Andhra Chamber of Commerce, we convey our heartfelt condolences to the Members of the bereaved family.

May his Noble Soul rest in peace!

Shri V.R. BakthavatsalamManaging Partner, Curzon & Company.and former President of Andhra Chamber of Commerce

With deep sense of sorrow, we regret to inform you about the demise of Shri V.R. Bakthavatsalam, former President of Andhra Chamber of Commerce and father of Shri B. Gautham, EC Member on Tuesday, May 5, 2020 at his residence.

The Chamber lost a well-wisher and Guide.

Shri V.R. Bakthavatsalam was associated with Andhra Chamber of Commerce representing Curzon & Company from 1944. He was the President of the Chamber during the years 1975-1976.

He was associated with many Charitable, Social, Educational and Cultural organizations in Chennai.

On behalf of the Members of the Executive Committee of the Andhra Chamber of Commerce, we convey our heartfelt condolences to Shri B. Gautham and through him to the other Members of the bereaved family.

May his Noble Soul rest in peace!

32

Sl. No CentreMar2020

ALL INDIA 326

ANDHRA PRADESH:

1. Guntur 298

2. Vijayawada 304

3. Visakhapatnam 304

ASSAM:

4. Doom Dooma Tinsukia 296

5. Guwahati 291

6. Labac-Silchar 277

7. Mariani Jorhat 271

8. Rangapara Tezpur 261

BIHAR:

9. Munger Jamalpur 361

10 CHANDIGARH 323

CHHATTISGARH

11 Bhilai 335

12 DELHI 311

GOA:

13 Goa 343

GUJARAT:

14 Ahmedabad 293

15 Bhavnagar 309

16 Rajkot 315

17 Surat 277

Sl. No CentreMar2020

18 Vadodara 284

HARAYANA:

19 Faridabad 289

20 Yamunanagar 314

HIMACHAL PRADESH:

21 Himachal Pradesh 281

JAMMU & KASHMIR:

22 Srinagar 298

JARKHAND

23 Bokaro 311

24 Giridih 359

25 Jamshedpur 378

26 Jharia 374

27 Kodarma 407

28 Ranchi Hatia 409

KARANATAKA:

29 Belgaum 319

30 Bengluru 300

31 Hubli-Dharwar 345

32 Mercara 314

33 Mysore 319

KERALA:

34 Ernakulam 329

35 Mundakayam 332

CONSUMER PRICE INDEXNUMBERS FOR INDUSTRIAL WORKERS

(BASE 2001=100)

33

Sl. No CentreMar2020

36 Quilon 375

MADHYAPRADESH:

37 Bhopal 339

38 Chhindwara 324

39 Indore 297

40 Jabalpur 335

MAHARASHTRA:

41 Mumbai 319

42 Nagpur 402

43 Nasik 377

44 Pune 360

45 Sholapur 348

ORISSA:

46 Angul Talcher 346

47 Rourkela 329

48 PUDUCHERRY 324

PUNJAB:

49 Amritsar 354

50 Jalandhar 334

51 Ludhiana 312

RAJASTHAN:

52 Ajmer 299

53 Bhilwara 305

54 Jaipur 325

TAMILNADU:

55 Chennai 285

56 Coimbatore 295

57 Coonoor 342

58 Madurai 313

59 Salem 298

60 Tiruchirapally 317

Sl. No CentreMar2020

TEL

61 Godavarikhani 343

62 Hyderabad 272

63 Warangal 327

TRIPURA:

64 Tripura 271

UTTAR PADESH:

65 Agra 379

66 Ghaziabad 349

67 Kanpur 360

68 Lucknow 362

69 Varanasi 351

WEST BENGAL:

70 Asansol 349

71 Darjeeling 280

72 Durgapur 335

73 Haldia 400

74 Howrah 300

75 Jalpaiguri 289

76 Kolkata 295

77 Raniganj 308

78 Siliguri 292

Source: Labour Bureau, Shimla

Our other ChaptersSECUNDERABAD OFFICE:

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Phone: 040-27840844, Fax: 040-27840767;Email : andhrachamber@gmail.com | Shri G. Ramanjaneyulu, Deputy Secretary.

VISAKHAPATNAM OFFICE:Door No. 43-19-30, Venkataraju Nagar, Dondaparthy,

Near T.S.N. Colony, Visakhapatnam – 530 016, Andhra Pradesh.Phone: 0891-2792220, Fax: 0891-2792221,

Email: andhrachamberofcommercevizag@gmail.com | Shri V. THRINADHA RAO, Deputy Secretary.

VIJAYAWADA OFFICE:Siddhartha Hotel Management College Premises, Pinnameneni Poly Clinic Road,

Technical Nagar, Vijayawada – 520 010 (A.P). Phone: 0866-2472500,Email: andhrachambervijayawada@gmail.com | Shri N. RAJA RAO, Joint Secretary

Please contact

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First come first serve basis the space will be allotted. Member organisations will be give first preference. We welcome your support to have more reach out and more viewing for your Advt and Business.

Mr. N. Ravikumar, Joint Secretary, Andhra Chamber of Commerce Tel : + 91 44 24315277 +91 9840248688Email : andhrachamber1@gmail.com

Edited, Published and Printed by Andhra Chamber of Commerce at“Velagapudi Ramakrishna Building”,

#23, Third Cross Street, West C.I.T. Nagar, Nandanam, P.B. No.3368, Chennai-600 035. Phones : 044 - 2431 5277 / 2431 5278 / 2431 5279

Email : andhrachamber@airtelmail.in / andhrachamber1@gmail.com / secretary@andhrachamber.com

34

Our other ChaptersSECUNDERABAD OFFICE:

“T.G. Venkatesh Bhavan”, 602 & 603, Chenoy Trade Centre,116, Park Lane, VI Floor, P.B. No. 1716, Secunderabad – 500 003, Telangana State.

Phone: 040-27840844, Fax: 040-27840767;Email : andhrachamber@gmail.com | Shri G. Ramanjaneyulu, Deputy Secretary.

VISAKHAPATNAM OFFICE:Door No. 43-19-30, Venkataraju Nagar, Dondaparthy,

Near T.S.N. Colony, Visakhapatnam – 530 016, Andhra Pradesh.Phone: 0891-2792220, Fax: 0891-2792221,

Email: andhrachamberofcommercevizag@gmail.com | Shri V. THRINADHA RAO, Deputy Secretary.

VIJAYAWADA OFFICE:Siddhartha Hotel Management College Premises, Pinnameneni Poly Clinic Road,

Technical Nagar, Vijayawada – 520 010 (A.P). Phone: 0866-2472500,Email: andhrachambervijayawada@gmail.com | Shri N. RAJA RAO, Joint Secretary

Please contact

ACC Bulletin - Advt Tariff12 Issues of each 1/2 page will be ` 12500/- per annum plus GST

12 Issues of full page will be ` 20,000/- per annum plus GST

First come first serve basis the space will be allotted. Member organisations will be give first preference. We welcome your support to have more reach out and more viewing for your Advt and Business.

Mr. N. Ravikumar, Joint Secretary, Andhra Chamber of Commerce Tel : + 91 44 24315277 +91 9840248688Email : andhrachamber1@gmail.com

Edited, Published and Printed by Andhra Chamber of Commerce at“Velagapudi Ramakrishna Building”,

#23, Third Cross Street, West C.I.T. Nagar, Nandanam, P.B. No.3368, Chennai-600 035. Phones : 044 - 2431 5277 / 2431 5278 / 2431 5279

Email : andhrachamber@airtelmail.in / andhrachamber1@gmail.com / secretary@andhrachamber.com

UPDATATION OF MEMBERSHIP DETAILS

Kind Attn: Members

Dear Sir/Madam;

We are updating the database – Members business details in our records. We request you to kindly

inform the Chamber if there are any changes in your mailing list – Address, contact details, Name of

the representative, change in the Email-ids and Telephone numbers in the below mentioned format.

Please forward the same to the Chamber by Email: andhrachamber1@gmail.com duly filled in

for making necessary changes in our records. Please extend your cooperation support in this regard

without delay.

Name of the company / individual

postal Address

Telephone

Fax

Mob

Email

Est.

Website

GST No

Name of the representative –

Designation in the company

Bank

Manufactures of

Exporters of

Importers of

35

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In the service of Public for more than 56 years  

Winning client’s trust with unmatched professionalism

Investigation •   Pre  &  Post  Matrimonial •   Pre  &  Post  Employment •   Industrial  Theft  &  Fraud •   Undercover  Operation

FOR TOTAL SECURITY SOLUTIONS IN INDIA

GLOBE DETECTIVE AGENCY

Security •   Consultation •   Trained  Man  Power •   24  x  7  Control  Room •   Client  Support

Facility •   House  Keeping •   Pantry  Services •   Guest  House  Mgmt •   Garden  Member

Electronics •   Access  Control •   Burglar  Alarm •   Fire  Alarm •   CCTV

Chennai No.152, Agurchand Mansion , Mount Road, Chennai-600 002. Tel: +91–44–42919500–599; E-mail: chennai@globedetective.com Bengaluru Tel: +91-80-25717905/06;

E-mail: bangalore@globedetective.com; Delhi Tel: +91–11–26432221/26432681; E-mail: delhi@globedetective.com Mumbai Tel: +91-22-22028751/22023578; Email: mumbai@globedetective.com Ahmedabad, Ambur, Coimbatore, Jamshedpur, Kochi, Kolkata, Lucknow, Madurai, Mysore, Puducherry, Pune, Secunderabad, Sriperumbudur, Vapi, Vizag.

www.globedetective.com

37

               

In the service of Public for more than 56 years  

Winning client’s trust with unmatched professionalism

Investigation •   Pre  &  Post  Matrimonial •   Pre  &  Post  Employment •   Industrial  Theft  &  Fraud •   Undercover  Operation

FOR TOTAL SECURITY SOLUTIONS IN INDIA

GLOBE DETECTIVE AGENCY

Security •   Consultation •   Trained  Man  Power •   24  x  7  Control  Room •   Client  Support

Facility •   House  Keeping •   Pantry  Services •   Guest  House  Mgmt •   Garden  Member

Electronics •   Access  Control •   Burglar  Alarm •   Fire  Alarm •   CCTV

Chennai No.152, Agurchand Mansion , Mount Road, Chennai-600 002. Tel: +91–44–42919500–599; E-mail: chennai@globedetective.com Bengaluru Tel: +91-80-25717905/06;

E-mail: bangalore@globedetective.com; Delhi Tel: +91–11–26432221/26432681; E-mail: delhi@globedetective.com Mumbai Tel: +91-22-22028751/22023578; Email: mumbai@globedetective.com Ahmedabad, Ambur, Coimbatore, Jamshedpur, Kochi, Kolkata, Lucknow, Madurai, Mysore, Puducherry, Pune, Secunderabad, Sriperumbudur, Vapi, Vizag.

www.globedetective.com

38

THE KCP LIMITED

CEMENT PLANT MUKTYALA CEMENT PLANT MACHERLA

SUGAR INDUSTRY

VIETNAM

HEAVY ENGINEERING

CHENNAI

POLAVARAM PROJECT

SRISAILAM DAM NAGARJUNA SAGAR DAM

SRI KANAKADURGAMMA VARADHI

Registered Office: “Ramakrishna Buildings” No. 2 Dr. P.V. Cherian Crescent, Egmore, Chennai- 600008 Tel: +9144-66772600 / 66772667, Fax: 66772620 CIN65991TN1941PLC001128

Cement Marketing Head Quarter: Plot No. 10, Gayatri Hills, MP & MLA’s Colony Road No. 10 C, Jubilee Hills, Hyderabad - 500033 Tel: 040 2325 3503 to 3505, Cell: +91 9866305145 / 9989597775, E-mail: ramakrishna.k@kcp.co.in

THE KCP LIMITED

CEMENT PLANT MUKTYALA CEMENT PLANT MACHERLA

SUGAR INDUSTRY

VIETNAM

HEAVY ENGINEERING

CHENNAI

POLAVARAM PROJECT

SRISAILAM DAM NAGARJUNA SAGAR DAM

SRI KANAKADURGAMMA VARADHI

Registered Office: “Ramakrishna Buildings” No. 2 Dr. P.V. Cherian Crescent, Egmore, Chennai- 600008 Tel: +9144-66772600 / 66772667, Fax: 66772620 CIN65991TN1941PLC001128

Cement Marketing Head Quarter: Plot No. 10, Gayatri Hills, MP & MLA’s Colony Road No. 10 C, Jubilee Hills, Hyderabad - 500033 Tel: 040 2325 3503 to 3505, Cell: +91 9866305145 / 9989597775, E-mail: ramakrishna.k@kcp.co.in

39