Jun 292021

The existing process for approving institutions u./s 80G

Section 80G allows a deduction for the donation made to certain funds and institutions. The deduction for such donation is allowed to the donor only if donee (receiving end) fund or institution is approved by the Principal Commissioner or Commissioner, and fulfills other conditions. Hitherto, the institution or fund had to be approved by the CIT in accordance with the rules made on this behalf. Such approval was valid for perpetuity till it was withdrawn/canceled.

Need of change in process

  1. Procedure relating to approval under section 80G is changed with effect from 01-06-2020,
  2. Due to the crisis caused by COVID-19, the CBDT announced to defer the implementation of the new procedure for registration under the aforesaid sections.
  3. Thus, the Amendment Act, 2020 deferred the date of enforcement of the new procedure to 01-04-2021.

Issues in new process:


New Form 10A and 10AB have a category of charitable cum religious organization which settles the confusion of whether an organization can be both charitable as well as religious simultaneously.

The Forms separately require reporting of expenditure on religious activities which will be considered for eligibility of 80G approval.

Normally the religious trusts are not allowed to be approved under section 80G. However, Section 80G(5B) allows for a charitable organization to have a religious activity not exceeding 5% of the total income in that previous year.

The organizations having 80G approval and going for revalidation of this approval should ensure that they are complied with the provisions of section 80G(5B) before making such an application for revalidation.



With Finance Act, 2020 deduction on account of the donation under section 80G shall be allowed to the donor only on the basis of the statement filed by the donee trust or institution. Hence, if a statement is not filed, the donor will not get a deduction for the donation.

In case of delay in filing such a statement, a late fee of Rs. 200 per day shall be applicable under newly inserted Section 234G of the Income-tax Act.

Further, a penalty under Section 271K, which shall not be less than Rs. 10,000 and which may extend up to Rs. 1 lakh, shall be leviable if the trustor institution fails to file such statement or fails to issue a certificate of donation.

2.1. Due date of filing of Statement and Issuing Certificate

The newly inserted Rule 18AB provides that the statement in Form 10BD shall be filed on or before the 31st of May, immediately following the financial year in which the donation is received. The donee is also required to issue the certificate in Form 10BE which is also required to be issued on or before the 31st of May, immediately following the financial year in which the donation is received.

Hence, if the certificate in form number 10BE is to be generated and downloaded from the web portal then furnishing the certificate by 31st May as provided in the rule may create practical difficulty as a statement of donations is also required to be submitted by 31st May.

2.2. Filing of Correction Statement

One may need to wait for the relevant procedure to be laid down to submit the correction statement for correcting clerical errors such as wrong name, PAN, amount, etc.

2.3. Filing of NIL Statement of Donations

Rule 18AB doesn’t contain any provision to clarify whether a reporting entity is required to submit a nil statement of donation.

2.4. Accounting Challenge

Form 10BD provides that, while reporting the aggregate amount of donation received from any person donation type should be reported on the basis of nature of donation i.e. (Corpus, specific grant, others).

Hence NGOs need to adjust the present accounting framework to get the above information at year-end.



The trusts or institutions which have been granted perpetuity of approval under section 80G are required to make an application again under the amended provision of section 80G within 3 months from the date on which the new provisions shall come into force i.e. application has to be filed on or before 30th June 2021.

Now, the question arises if an organization collects donations but does not apply for renewal or if the approval application is canceled.

Jun 272021

Based on PRESS RELEASE, DATED 1-5-2021

In view of the adverse circumstances arising due to the severe Covid-19 pandemic and also in view of the several requests received from taxpayers, tax consultants & other stakeholders from across the country, requesting that various compliance dates may be relaxed, the Government has extended certain timelines on 1st May 2021:

Action to be taken under the income tax act Existing deadline Revised deadline
Payment of tax deducted under section 194-IA, i.e., TDS on purchase of immovable property 30th April 2021 on or before 31st May 2021
Payment of tax deducted under section 194-IB, i.e., tax deducted at source on payment of rent 30th April 2021 on or before 31st May 2021
Payment of tax deducted under section 194-M – regarding tax deduction at source from any money paid by an individual or HUF to a resident contractor when the services are provided for personal use 30th April 2021 on or before 31st May 2021
Filing of challan-cum-statement for TDS deducted u/s 194-IA 30th April 2021 on or before 31st May 2021
Filing of challan-cum-statement for TDS deducted u/s 194-IB 30th April 2021 on or before 31st May 2021
Filing of challan-cum-statement for TDS deducted u/s 194-M 30th April 2021 on or before 31st May 2021
Statement in Form No. 61, containing particulars of declarations received in Form No. 60 on or before 30th April 2021 on or before 31st May 2021
Revised return for Assessment Year 2020-21 on or before 31st March 2021 on or before 31st May 2021
Belated return for Assessment Year 2020-21 on or before 31st March 2021 on or before 31st May 2021
Income-tax return in response to notice under section 148 1st April 2021 or thereafter Time allowed under that notice or by 31st May 2021, whichever is later
Appeal to Commissioner (Appeals) 1st April 2021 or thereafter Last date as provided under respective section or 31st May 2021, whichever is later
Objections to Dispute Resolution Panel (DRP) under section 144C 1st April 2021 or thereafter Last date as provided under respective section or 31st May 2021, whichever is later


Jun 252021

Meaning – Bitcoin mining process

Bitcoin mining refers to the process whereby verified bitcoin transaction records are added to a blockchain. Bitcoin miners validate all transactions involving Bitcoins and thereby, add blocks to the blockchain system. Bitcoin miners have to go through a fixed amount of transactions, measured at 1 MB (Megabytes), consequent to which they become eligible for receiving block rewards. These transactions are validated by solving a numerical problem where each miner must strive to be the first one to arrive at the correct answer or the nearest correct answer, so as to receive the block reward.

Taxability under different heads of income

  1. Income under another source:

It is a known fact that the Income Tax Act, 1961 places any income within 5 heads, where the 5th and last head, ‘Income from Other Sources‘ acts as a residual one, which denotes that any income which is not placed under any of the other 4 preceding income heads will be placed under the same. Here taxable income could be calculated in two manners

  1. First, the income earned from the Bitcoin reward could be considered as the value of Bitcoin on the day such reward is received and
  2. The second, that if Bitcoin is declared as a legal tender, any profits made on the exchange of the same for real goods/services could be taxable under this head.

In India, since Bitcoins are not legal tender and hence most appropriate tax treatment under this head will be to treat the value of Bitcoin on the date they were mined as the income of the date on which they were received as rewards.

  1. Income from Capital Gains

It is often considered that Bitcoin, being a self-generated asset, should be taken to be a capital asset. Any capital assets can generate income under section 45 taxable under the income tax act only when they were transferred or exchange etc.


However, any assessee in India can merely hold on to these bitcoins and cannot exchange the same for actual currency/goods/services, despite its widespread and increasing acceptance in the world which inhibits the transfer of such bitcoins, and there fewer chances of having such capital gain from Bitcoins.


Moreover, income under capital head mandates the cost of acquisition of the capital asset, which is unknown in the present case.


  1. Income under ‘Profits and Gains of Business & Profession’

A proposal, presently under the consideration of the Central Board of Indirect Taxes and Customs proposes to treat cryptocurrency mining as a ‘Supply of service’ since it generates cryptocurrency and involves rewards and transaction fees. Here, tax is proposed to be collected on the basis of the transaction fees or rewards received by the crypto-miners.

Hence, by application of the abovementioned proposal, it can be safely said that any income earned by such an individual miner or a company (ex. Riot Blockchain, Hive Blockchain, and Marathon Patent Group, etc.) could be coming under the ‘Profits and Gains from Business & Profession’.

Here, the primary requirement would be that the miner or mining company makes profits in this process, especially since getting the reward is not a surety and instead, depends on the skills of the miner. Second, the assessee must fulfill the requisite conditions to be liable for paying taxes in India for the relevant financial year. Third, this income head is appropriate for income earned from bitcoin mining.


Hence, it becomes clear that the taxability of bitcoin mining under the aforementioned heads can be done. Here, if this activity is carried on in a regular manner, it could be taxed under profits and gains from business and if carried on merely as a hobby or for investment purposes alone, it could be taxed under income from capital gains. However, under both the heads if any loss is incurred, then the same could be allowed to be carried forward, in accordance with the existing provisions regulating the same.

Jun 232021

Most of the new ITR form changes are consequential to the amendments made by the Finance Act, 2020 to the Income-tax Act. We have scrutinized the new ITR Forms and have identified the key changes in new ITR forms viz-a-viz last year’s ITR Forms. These changes have been explained below.


  1. No option to carry forward TDS deducted under Section 194N [ITRs 2 to 7]

In case of tax deducted under Section 194N, credit for tax deducted shall be allowed in the assessment year relevant to the previous year in which such tax has been deducted. The corresponding amendment has been made in ITR-2 to ITR-7 to restrict the carry forward of TDS deducted under Section 194N.


  1. Consequential changes due to change in taxability of dividend Income [ITRs 1 to 7]

The Finance Act, 2020 reverts to taxation of dividends in the hands of the recipient shareholders instead of payment of dividend distribution tax (DDT) on the declaration, distribution, or payment of dividend by the domestic company. The new ITR forms notified for the Assessment Year 2021-22 have been amended to incorporate these changes.

2.1. Schedule OS (other sources)

Dividend income earned by a person is taxable as ‘income from other sources’ under section 56(2)(i). Up to the Assessment Year 2020-21, Schedule OS required disclosure of that dividend income only which is not exempt in hands of the taxpayer. In the new ITR forms, Schedule OS has been amended to include disclosure of all dividend income earned by the taxpayers.

(a) Deduction of expenses from dividend income
A new row has been inserted in Schedule OS to allow deduction of interest expenses. However, the deduction is available only if the dividend income is offered to tax in Schedule OS.
(b) Dividend income chargeable to tax at a special rate
The Finance Act, 2020, has abolished the DDT. Consequently, provisions of section 115BBDA are not applicable on dividends distributed, declared, or paid by companies on or after 01-04-2020. Thus, reference of section 115BBDA has been removed from Schedule OS in the new ITR forms
(c) Dividend Income of non-resident unitholders

A new row has been inserted under the column ‘any other income chargeable at special rate’ of Schedule OS to seek details of dividend income taxable in the hands of the unitholders of the Business trust.

2.2. Schedule SI (Special Income)

Schedule SI contains a list of incomes that are chargeable to tax at a special rate (long-term capital gains, winning from lotteries, games, etc.). Since Section 115BBDA has become redundant, corresponding changes have been made to Schedule SI.

2.3. Schedule EI (Exempt Income)

Now the entire dividend income is taxable in the hands of the shareholders, hence the reference of ‘Dividend income from the domestic company (amount not exceeding Rs. 10 lakh)’ has been removed from Schedule EI.

2.4. Schedule PTI (Pass-through Income)

‘Schedule PTI’ seeks details of Pass-through Income from business trust or investment fund as per Section 115UA and Section 115UB.


  1. Clause-wise disclosure in respect of interest taxable under Section 115A read with Section 194LC [ITR 2, 3, 5, 6 & 7]

The Finance Act, 2020 has amended Section 194LC to provide for deduction of tax shall be done at 5% except in case the interest is payable in respect of monies borrowed from a source outside India by way of issue of any long-term bond or rupee-denominated bond, TDS is required to be deducted at the rate of 4%, subject to fulfillment of certain conditions.

Since two different rates have been prescribed under Section 194LC (4% and 5%), ITR forms have been amended to require separate disclosure in respect of the income taxable at the rate of 4% and 5%.


  1. Reference of Form 16D has been inserted in Schedule of Tax payments [ITR 3 to 7]

ITR forms require details of tax deducted at source as per the certificate issued by the Deductor. The ITR Forms for Assessment Year 2021-2022 have included a reference to Form 16D.


Form 16D is a TDS Certificate issued by a Payer for payment of a commission, brokerage, contractual fee, the professional fee under section 194M. It contains details of the nature of payment and TDS deducted from it. Section 194M has been applicable from the 1st of September 2019. Thus, Form 16D can be downloaded from FY 2019-20 onwards. The taxpayer can download Form 16 from the TRACES portal.

Jun 212021

The role of government is inevitable in today’s business environment. The government affects the manner of doing business by controlling and ensuring the process of business is good for society. Here is the list of government approvals required on the corporatization of business:

Government approvals Impact of corporatization
ROC approval A fresh approval is required for the registration of the company, person company, and LLP.
Local authority approval – pollution/municipal licenses and other govt licenses (related to factories and boilers act) After incorporation of new LLP/Company, a business transfer agreement would be made to transfer all assets, liabilities, licenses, permits, contracts, etc., from the old entity. Based on this all the licenses and permits may be transferred.

If there is practical difficulty in interacting with concerned local authorities a clause in the business transfer agreement to be incorporated to run the business in old license name until the things get stabilized.

This is a purely a liasioning issue with the local authorities and may be negotiated through a consultant in case of difficulty.

Trade certificate Application for new/revised Trade certificate generally costs Rs 1,000/-. Additional costs may be incurred in case a consultant is employed to file the application.
MSME certificates Yes MSME certificate needs to apply freshly. MSME benefits are available to all types of businesses.

The only condition is that the Turnover/investments are within the monetary limits specified by the government in this regard.

GST certificate Yes needs to be freshly applied and also old stock and ITC shall be transferred to new GSTN so obtained.
Industrial registration, Registration under shop act, PF & ESI, etc Fresh registrations are required in all such cases in the name of a new company or LLP so constituted. All existing staff and employees would require fresh registrations with same UAN.
PAN TAN professional tax registrations Fresh application for allotment of new PAN is not required as an amendment in existing PAN would suffice the purpose. For amendment in old PAN correction in PAN application would require to be applied for.


Application of allotment of new TAN number and professional tax registrations is required in the new name.


However, there is no need to file any separate form. Details in relation to Area Code and other details shall be mention in the form INC-32 itself and PAN & TAN shall be generating with Certificate of Incorporation. Thus, a new PAN will be generated with the incorporation process of the company and all assets and liabilities of the old PAN shall be transferred to the new PAN so allotted.

Import Export license number In case of change in the constitution of business new Import Export number


Jun 142021

Who is minor?

Section 3 of the majority act provides that – “

Every person domiciled in India shall attain the age of majority on his completing the age of eighteen years and not before.”

In computing the age of any person, the day on which he was born is to be included as a whole day and he shall be deemed to have attained majority at the beginning of the eighteenth anniversary. (w.e.f. 16-12-1999).

Role of minor in business:

  1. Section 11 of Indian contract act – who are competent to contract – Every person is competent to contract who is of the age of majority according to the law to which he is subject, and who is of sound mind and is not disqualified from contracting by any law to which he is subject. Thus, a minor is not capable of entering into a contract. This principle is based on –
    1. Law must protect minor against their own inexperience – thus, agreement with minors are void and unoperational.
    2. Law should not cause hardship to an adult who deals fairly with minors.

Effect of a contract done with minor:

  • A minor can not make an agreement operational after attaining majority.
  • However, a minor can be a beneficiary under the contract.
  • A minor can not be held liable under the contract even when the minor has misrepresented his age to induce other parties to enter into the contract.
  • There can not be specific performance of the contract against the minor.
  • A contract entered into by guardian or manager on the minor’s behalf can be specifically enforced if – the contract is within his authority and the same for the benefit of a minor.


  1. Section – 184 of Indian Contract Act – minor as an agent – As between the principal and third persons, any person may become an agent, but no person who is not of the age of majority and of sound mind can become agent, so as to be responsible to his principal according to the provisions in that behalf therein contained.

Thus, An agent merely a connecting link, a minor can be appointed as an agent. But he can not personally liable for any acts done as an agent. However, the principle will be liable to the third persons for the acts of the minor’s agent which he does in the ordinary course of dealings.


  1. Section – 30 of Indian Partnership Act – minor as a partner – A person who is a minor according to the law to which he is subject may not be a partner in a firm, but, with the consent of all the partners, for the time being, he may be admitted to the benefits of a partnership.

Thus, a minor can be admitted only for the benefits of the firm with the consent of all others partners.


  1. Section – 21 of Trade Unions Act – Any person who has attained the age of fifteen years may be a member of a registered Trade Union subject to any rules of the Trade Union to the contrary, and may, subject as aforesaid, enjoy all the rights of a member and execute all instruments and give all acquittances necessary to be executed or given under the rules.


  1. Minor as director of a company – For being appointed as a director in any company that person should possess a valid DIN (Director Identification Number) and for obtaining DIN, he/she shall have obtained majority. Therefore a minor can neither hold DIN nor can be a director in an Indian Company.


  1. Minor as a shareholder of a company – The company act 2013 however permits for holding the shares by the minor subject to the consent of his/ her guardian. Also, the shares in a company can be held by the minor if such shares are gifted to him by other persons.

Thus, minors may be admitted as partners/Shareholders with the parent acting as the guardian. However they may not be admitted as Directors/designated partners as for becoming Director/Designated partner, DIN is required and DIN is not given to Minors.

Jun 122021

Between corporate form of business and other:

The advantage of the corporate form of business over traditional business is that it discriminates the executive wing from the investor of the fund. The corporate form of business is more flexible, transparent, and user-friendly. An investor may come in or go out as per his option and opportunities available without impacting the normal operation of the business. The advantages to the business to a corporate form of a business are:

  1. Expansion of business: Expansion of business in the case of the corporate form of business is easier as the introduction of and/or exit of a new investor or existing investor is done by simply transaction in shares. Any introduction of capital losses its individual identity and clubbed under the head “SHARE CAPITAL”. Thus, the opening of the new branch, new franchisee, or new department, or new line of business is done by expanding the capital base without impacting the existing operation of the business.
  2. Trademark and copyrights: In the case of a traditional form of the business name is co-exiting with the name of the owner. In the case of the corporate form, these rights are assets of a company tradable like any other form of business.
  3. Loans and other bank dealings: The risk appetite of the bank is different for a company than its owner. Owner liability is limited to the shares held and unpaid by him and thus in applying for a loan with banks and other financial institutions profit and loss of the company become significant and more relevant as the owner will take out any left after being paid as interest.
  4. Business life not impacted by investor: A corporate form of business is always more advantageous with features like perpetual succession. Therefore there is assurance that the business operations can be continued even after the passing of the owner and there is the ease of sale/transfer of business by way of transfer/sale of shares.
  5. Between LLP & company: There is no simple rule of thumb in deciding between the two forms. For example, the LLP form has the advantage with regard to lesser compliances as compared to a Company.
  6. However, w.e.f FY 2019-20, Companies now have the option of paying tax at 22%  as against the tax rate of 30% for LLPs. A cost-benefit analysis would need to be carried out on a case-to-case basis.

How the exiting proprietorship or partnership business may be transferred to a corporate form?

For Incorporating and running either form of business namely, LLPs or Private Limited Companies a minimum of two persons is required.

  • 2 Partners in case of LLPs and
  • 2 Directors and 2 Shareholders(Shareholders and directors can be the same persons).

There can be two possible solutions:

  1. a) The Dealer may include any of his/her family members/close friends to make up the number.
  2. b) Another alternative is including any of the employees as Director and the Shareholder. With regard to Shareholding, a majority of the shares may be held by the existing proprietor in his/her own name and a few (Insignificant number say 1%) shares may be held by the proprietor jointly with the employee.

How to proceed in case the existing name is not available in case of applying for company registration?

In such a case the suggested course of action could be as follows:

  • Apply for Trademark with Trademark Registry and local authorities for the desired name, let’s say – “ Swastik Enterprises”, to display on the premises.
  • Apply for a name with the ROC for some other name. This is permissible.
  • A live example of this is that the Company selling Dominos Pizza uses the Trade Name Dominos Pizza for display in its premises but is registered with the ROC with the name Jubilant Food Works Limited. In such a case “Dominos Pizza” become a trading name in the pizza industry which is also tradable like any other assets.
Jun 102021

Corporatization of business:

The conversion of a traditional form of business into neo corporate form is commonly known as corporatization. The concept of the corporate form of business can be explained as below:

Point Traditional business Cooperate form of business
Form of business ·         Proprietorship

·         Partnership

·         Firm

·         Hindu undivided family

·         Artificial judicial person

– Company


– Society

– Trust

–  Association and /or body of individuals

Manner of doing business The person investing the fund is also doing the business. Thus, income is taxable directly on investors qua taxing the business. Income is taxed directly on the business as business is done by a group where investors may be a part or may not.


Transfer of assets and/or liabilities in case of corporatization:

  1. Manner of transfer of business (i.e. Business Transfer Agreement): A sale or transfer, as the case may be, the agreement may be entered into. You may transfer only those assets and liabilities. This may be done at book value as per the balance sheet prepared on the date of transfer. Stamp duty for this purpose differs from state to state and ranging between Rs.200/- to Rs.500/- for Business Transfer Agreement (BTA)
  2. Transfer of OD and/or loan a/c: The loan can be shifted from proprietor/Partnership to LLP/Company. In the case of family operated business, the same person/persons will become the person–in–charge of the new entity, this is administrative work may be communicated to the bank for fresh documentation. No stamp duty is required to an existing collateral mortgage if any. Only a guarantee deed in favor of a new entity would be enough to shift the loan. However, banks may negotiate the loan freshly if the risk factor in case of corporatization increases to the bank.
  3. Transfer of input tax credit: -We have to apply to the GST department in case of business transfer for transferring the input tax credit. This can be done by methods:
    1. Electronic Transfer (Form GST ITC-02): As per Section 18(3) of the CGST and SGST Acts, where there is a change in the constitution of a registered person on account of the sale, merger, demerger, amalgamation, lease, or transfer of the business with the specific provisions for transfer of liabilities, the said registered person shall be allowed to transfer the input tax credit which remains un-utilized in his electronic credit ledger to such sold, merged, demerged, amalgamated, leased or transferred business in the manner prescribed in the CGST / SGST Rules, 2017 by declaring the same, electronically, on the common portal in Form GST ITC-02.
    2. Transfer by invoice: Alternatively a tax invoice from the existing GSTIN can be made for the sale of the stock available with the dealer to the new GSTIN. This may do in case there is no specific provision of transfer of liabilities. This will be unfavorable in case of GST rates in recent times are revised downward as an invoice in the E-way portal is possible only with the latest applicable GST rates and not at the rates at which items are purchased with. However, this method may have some practical difficulties while preparing E way for the transfer of stock.
  4. Income tax calculation in case of corporatization:

As per Section 47(xiv) of the Income-tax Act, the following transaction is not regarded as transfer and hence not subject to capital gains:

Sole Proprietor converted to corporate business:

Where a sole proprietary concern is succeeded by a company in the business carried on by it as a result of which the sole proprietary concern sells or otherwise transfers any capital asset or intangible asset to the company :

Provided that—

(a)   all the assets and liabilities of the sole proprietary concern relating to the business immediately before the succession become the assets and liabilities of the company;

(b)   the shareholding of the sole proprietor in the company is not less than fifty percent of the total voting power in the company and his shareholding continues to remain as such for a period of five years from the date of the succession; and

(c)   the sole proprietor does not receive any consideration or benefit, directly or indirectly, in any form or manner, other than by way of allotment of shares in the company;


(xiii) Partnership Firm converted to the corporate organization:

Any transfer of a capital asset or intangible asset by a firm to a company as a result of a succession of the firm by a company in the business carried on by the firm,

Provided that—

(a)  all the assets and liabilities of the firm or of the association of persons or body of individuals relating to the business immediately before the succession become the assets and liabilities of the company;

(b)  all the partners of the firm immediately before the succession become the shareholders of the company in the same proportion in which their capital accounts stood in the books of the firm on the date of the succession;

(c)   the partners of the firm do not receive any consideration or benefit, directly or indirectly, in any form or manner, other than by way of allotment of shares in the company; and

(d)   the aggregate of the shareholding in the company of the partners of the firm is not less than fifty percent of the total voting power in the company and their shareholding continues to be as such for a period of five years from the date of the succession;

Jun 082021

Facts of the case:

Measurement Consideration
Total area purchase in FY 2003-2004 36 Acres or

1559123 Sq Ft

Rs. 14,19,99,602/-
Transfer to Bangalore Development Authority in FY 2005-2006 326635.30 Sq Ft
Area retain by the assessee 1232771 Sq Ft

The assessee entered into a JDA (Joint Development Agreement) with M/s Brigade Enterprises Private Limited on 8-01-2004 and retained land measuring 1232771 Sq.ft which was put to development as per the covenants of JDA.

The cost of acquisition includes a sum of Rs. 1 crore paid to M/s Bentley Investment as commission. The Commission paid was with respect to the purchase of aforesaid land. The assessee though had an obligation to pay the commission amount immediately after the purchase of land, had to defer the payment due to negotiation differences. The assessee has paid the commission amount of Rs. 1 crore in the FY 2007-2008 and details of the same are under:-

(a) Rs. 83,30,000/-paid from Vijaya Bank Ch.No 674658 dtd 10-1-2008
(b) Rs. 16,70,000/- paid from Axis Bank Ch.No 462924 dtd 17-3-2008.

The assessee had a confirmation letter from M/s Bentley Investment for having acknowledged the commission amount.

Now the issue is whether the above commission ought to be paid after deduction of commission and/or the above commission is allowable in computing the cost of acquisition of property?

Analysis of facts:

Can commission paid to be treated as a cost of improvement? No, the commission claimed to have been paid for the services rendered in acquiring the property by the assessee, but not for anything done to improve the value of the property after its acquisition.
Can the above transaction be a business transaction? Assessee is not engaged in any business activity in real-estate but has only transferred his property to the Developer for the purpose of development and hence receipts arising out the transaction can not be treated as business receipts, but only as capital receipts; and

Also, he agreed to make certain payments as commission not at the time of the acquiring the property, but only after he starts receiving the fruits of his subsequent transfer to the Developer meaning thereby a capital transaction.

The commission is paid almost after 4 years? There is no time limit is prescribed by the provisions of section 48(1) and 55(1)(b) of the Income-tax Act, 1961.
Cash system or mercantile system of accounting? Method of accounting is relevant for computing profits and gains from business.
The written agreement of dealings? Even if the assessee does not have an agreement with the payee but payment has been made through the banking channel and the same was offered for tax in payee partnership profits also. Thus, it can not be said that that commission paid to a partnership firm is a means to reduce the tax bill.


The party who has received the commission payment confirmed that they have received the commission and payment has been made by cheque. Therefore, no one cannot doubt the genuineness of this payment.


These payments are inextricably linked to the acquisition of the impugned property and it should be considered as the cost of acquisition while determining the capital gain on entering into JDA.

Jun 042021

Due dates for the Month of June 2021
– TDS Payment for May.
– Return of authorities deducting tax at source – GSTR 7 for May.
– Details of supplies effected through e-commerce operator and the amount of tax collected – GSTR 8 for May.
– Details of outward supplies of taxable goods and/or services effected – GSTR 1 for May.
– Return for Input Service Distributor – GSTR 6 for May.
Providend Fund
– PF Payment for May.
– ESIC Payment for May.
– Monthly return on the basis of finalization of details of outward supplies and inward supplies along with the payment of the amount of tax – GSTR 3B for May.
– Return for Non-Resident foreign taxable person – GSTR 5 for May.
– GSTR 3B for May if turnover below Rs. 5 Crore for Gujrat, Madhya Pradesh, Chattisgarh, Maharashtra, Telangana. Andhra Pradesh, Karnataka, Goa, Kerala, Tamil Nadu, Puducherry, Dadra & Nagar Haveli.
– GSTR 3B for May if turnover below Rs. 5 Crore for the Rest of India.
– Details of Inward Supplies to be furnished by a person having UIN and claiming refund – GSR 11 for May
– Monthly Return for Tax Liability of Rs. 100,000 & above.
– TDS Quarterly Statements (Other than Government Deductor) for January to March
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