Bogus donation racket under section 35(1)(ii)- CBDT Advisory
F.No. 225/351/2018-ITA (II)
Government of India
Ministry of Finance Department of Revenue Central Board of Direct Taxes ****
Room N0. 245A, North Block
New Delhi, the 14th December, 2018
To
All Principal Chief Commissioners of Income Tax All Director Generals of Income Tax (Investigation)
Sir/Madam
Subject: Information regarding bogus donation racket under section 35(1)(ii) of Income-tax Act, 1961-reg.-
Kindly refer to the subject mentioned above.
2. In this connection, I am directed to state that Section 35(1)(ii) of the Income-tax Act,1961 (‘Act’) prescribes a weighted deduction @ 150% (175% before 01.04.2018) to a donor for any sum paid to an approved ‘research association having as its sole object the undertaking of scientific research or to a ‘university, college or other institution’ for carrying out scientific research. Very recently, Board has received several references from the field authorities for clarifying whether a Trust namely M/s Shri Arvindo Institute of Applied Scientific Research Trust (PAN:AAFTS7349D) (Hereinafter ‘the Trust’) having offices at Mumbai & Puducherry is an entity specified by the Central Government through a Notification for purposes of section 35(l)(ii} of the Act or not. Presently, the trust is assessed with CIT(Exemption), Mumbai.
3. In this regard, upon perusal of records,it emerges that the above Trust was earlier approved under section 35(1}(ii} of the Act which expired on 31.03.2006.
Thereafter ,this entity, being not recognized for purpose of section 35(1)(ii) of the Act, is not eligible to raise donations for undertaking scientific research however, the Trust has raised substantial donations over the last six years on the basis of a forged certificate while the donors have irregularly claimed weighted deduction u/s. 35(1)(ii) of the Act on donations made to the Trust.
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4. In view of above, I am directed to state that the pending scrutiny assessment cases of donors who have claimed irregular weighted deduction u/s 35(1)(ii) should be handled in light of above facts. In case of donors whose cases are presently not under scrutiny,the Board desires that a list of donors who had provided funds to the Trust u/s 35(1}(ii) of the Act should be drawn by CIT (Exemption}, Mumbai for the period from A.Y 2012-13 to 2018- 19 and circulated to the concerned field authorities expeditiously.
5. I am further directed to state that while handling investigations/ enquiries in these cases, the concerned Assessing Officer should examine the specific transactions related to the sum donated and cash trail should be clearly identified. Also, various provisions pertaining to enquiry and investigation under the Act should be effectively used and assessment orders should be passed under the monitoring of supervisory authorities.
6. This issues with approval of Member (IT&C), CBDT. Yours faithfully ,
(Rajarajeswari R.) Under Secretary (ITA.II)
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Capital Gain of Minor rightly Clubbed with Income of Mother: ITAT [Read Order]
Read more at: http://www.taxscan.in/capital-gain-minor-clubbed-mother-itat/31583/
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Wife eligible for Tax Benefit for Investment made in the Joint name of Husband: ITAT [Read Order]
Read more at: http://www.taxscan.in/wife-tax-investment-joint-husband-itat/31590/
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Delhi High Court asks Patanjali to Co-operate with Special Audit [Read Judgment]
Read more at: http://www.taxscan.in/delhi-high-court-patanjali-special-audit/31680/
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🏦 Capital Market Updates🏦
👍🏻 Keep a watch on Ircon International as it has big orders from the Railways. Buy it for long terms gains.
👍🏻 HCL Technologies is set to acquire select IBM software products for$1.8 billion (over Rs. 12,700 crore) in an all-cash deal. A big positive.
👍🏻 There are rumours that Uday Kotak will sell a part of his equity stake in Kotak Mahindra Bank to Warren Buffet’s Berkshire Hathaway. A big positive for the stock. Buy.
👍🏻 Jubiliant Life Sciences which has a very strong presence in the specialty pharma business is ramping up the production of Rubyfill and readying to launch other generic medicines. Buy.
👍🏻 Gujarat Gas, which controls 38% of market share in city gas distribution, is expected to deliver vastly improved results on the back of increase in CNG and PNG demand. A good long-term buy.
👍🏻 Minda Industries, a leading auto components maker, is ramping up the production of its premium products. Its alloy steel plant will also be operational in a few quarters and fuel growth. Buy.
👍🏻 L&T Finance Holdings is doing extremely well in the retail and housing sectors. A good buy in times of turmoil.
👍🏻 As the Union Budget nears, railway stocks will become attractive again. Buy Texmaco Rail Engineering, which is witnessing heavy volumes.
👍🏻 JSW Steel is in talks with foreign lenders to raise Rs.3500 crore to fund Bhushan Power & Steel. Accumulate.
👍🏻 The recent Supreme Court directive to state governments to modify the Power Purchase Agreement will benefit Tata Power and cut losses from its Mundra plant. Buy.
👍🏻 Kaya Ltd, the demerged entity of Marico, is reportedly doing well. New facilities and new products are likely to propel its growth in the next few quarters. A good buy.
👍🏻 Shiva Global Agro Industries has reported higher profits and guided for better times in the next few quarters. Investors willing to take a small risk may enter.
👍🏻 The tumbling market had prompted Indian Oil Corporation to plan a buy back. This high dividend-paying company is available below its book value and the impending buyback will also lift its price. Buy.
👍🏻 Oil & Natural Gas Corporation is available at record low valuations. Investors looking to create wealth and willing to wait for 2 years must buy.
👍🏻 Engineering and farm equipment maker, Escorts has formed a JV with Kubota of Japan to manufacture high-end technology tractors for domestic and export markets. An attractive buy.
👍🏻 Vedanta is witnessing growing volumes in its zinc and oil business. Its 1.2 MMTPA zinc expansion on the back of rising prices augurs well for the future. Buy.
👍🏻 Punjab National Bank has renewed its plan to sell its stake in PNB Housing and use the funds to augment its working capital. The stock may be bought with a horizon of three years.
👍🏻 Natco Pharma which has a strong line-up of products for the US market expects a continued rise in revenue. Its planned capex of Rs.500 crore in the next few years makes this stock an attractive buy.
👍🏻 After amassing 25.2 crore subscribers, Reliance Jio now intends to hive off its fibre and tower assets business into separate entities. Like in the past, shareholders may get shares of these new entities free of cost resulting in wealth creation. Buy Reliance Industries.
👍🏻 Power Grid Corporation of India has signed a loan pact with Sumitomo Mitsui Banking Corporation (Japan) for 22 billion yen (about Rs.1397 crore) to fund its expansion. A good buy at the current rate.
👍🏻 Cadila Healthcare through its subsidiary has received approval from the US health regulator to market Ranitidine injection, used in the treatment of stomach and intestine ailments. A positive for the company.
👍🏻 Vivimed Labs is trading at a trailing P/E multiple of less than 5x. Its JV with Strides Pharma has received several USFDA drug approvals recently. The stock is a steal at the current level.
👍🏻 Albert David has corrected more than 50% from its 52-week high of Rs.854. Its market cap of Rs.220 crore against its turnover of Rs.300 crore and cash in books of around Rs.100 crore makes it a potential takeover candidate. Buy for good returns.
👍🏻 State Trading Corporation of India has received Rs.2200 crore of dues, which were written-off from its book,thanks to the Supreme Court of India. Its market cap stands at Rs.692 crore. The stock can easily appreciate by 50%.
👍🏻 Thirumalia Chemicals is being accumulated by HNIs after its US plant commenced operations, which isexpected to benefit the company significantly.
👍🏻 Take Solutions posted 61% higher PAT for Q2FY19 and is likely to notch an EPS of Rs.16 for FY19. Buy for over 30% returns in the medium term.
👍🏻 Rico Auto Industries is weaving a strong three-pronged future growth strategy to achieve a turnover ofRs.2000 crore by 2020. It is expected to notch an EPS of Rs.6.5 in FY19 and Rs.9 in FY20. The stock is poised to
cross Rs.100.
👍🏻 Jindal Poly Films is the cheapest packaging stock trading a forward P/E of just 6x on FY19E EPS of Rs.45. Areasonable P/E of 10x will take its share price to Rs.450.
👍🏻 Talwalkars Lifestyles is expected to post an EPS of Rs.27 in FY19 based on its half yearly results. The share has the potential to rise by over 50%.
👍🏻 Meghmani Organics is expected to notch an EPS of Rs.10 in FY19 and Rs.12-14 in FY20 post expansion. Areasonable P/E of 10x against the industry P/E of 33x will take its share price to Rs.100 in the medium term and Rs.120 thereafter.
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GST Evasion: Steel Company Director arrested for Rs. 333 Crores
Read more at: http://www.taxscan.in/gst-evasion-director-arrested/31628/
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Sweet Shop Cum Restaurant
In the case of Sweet Shop cum restaurant, the services from the restaurant is a principle supply which provides a bundled supply of preparation & sale of food and serving the same and therefore it constitutes a composite supply. In the instant case the nature of restaurant services is such that lt may be treated as the main supply and the other supplies Combined with such main supply are in the nature of incidental or services.
Thus restaurant services get the character of predominant supply over other supplies. Therefore in the present case the supply shall be treated as supply of service and the sweet shop shall be extension of the restaurant. Thus supply of pure food, namkeen, cold drink and other edible items from a sweet Shop which also runs a restaurant is a transaction of supply of service.
This will fall under the HSN 9963 and a Rate Of 5% Shall be Applicable without any Input Credit.
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👉The Ministry of Finance releases the State-wise details of detection of GST Evasion cases where the State of Maharashtra is leading the list with Rs. 3898.72 crores of evasion in 418 cases followed by UP and Karnataka with Rs. 998.62 crores and Rs. 844.17 crores resp.
👉SEBI relaxesd guidelines pertaining to setting up cyber security operations centre for small market intermediaries as they lack knowledge in cyber security.
👉Public sector banks (PSBs) files more than 2,500 FIRs against wilful defaulters till September-end and have started the recovery process.
👉The Madras High Court dismisses petitions filed by AMMK leader TTV Dinakaran challenging the reassessment of his income tax for 1995-96 and 1996-97 by the ITD. Justice S M Subramaniam held that the petitions were devoid of merit and dismissed them based on searches made by the ED.
👉The Enforcement Directorate (ED) attaches properties worth Rs 73.26 crore of REI Agro Ltd and the beneficiary owners, in connection with bank fraud case to the tune of Rs 3,871.71 crore.
👉Modi government is set to ink a deal with France-based European Information Technology corporation Atos on Saturday to procure supercomputers worth Rs 4,500 crore for academic and research institutions across India.
👉The country's largest bank SBI orders a forensic audit of the Naresh Goyal promoted Jet Airways from April 1, 2014 to March 31, 2018 & EY has been appointed by SBI for the same and the forensic audit for these 4 FYs is already underway.
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Karnataka GST Amendment Bill passed: CM Hints at Low Revenue from Cess
Read more at: http://www.taxscan.in/karnataka-gst-amendment-bill-cess/31638/
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FM said the Council had been looking at the 28% tax slab and constantly rationalising items in it in lesser tax slabs. GST Council has decided to slash tax slabs for 178 items from 28 per cent to 18 per cent. It will be applicable from 15th of this month.
Sebi relaxed its norms for clubbing of investment limits by well regulated foreign investors. Currently, the foreign portfolio investors (FPIs) are treated as part of the same investor group and the investment limits of all such entities.
Shri Shaktikanta Das, IAS Retd., former Secretary, Department of Revenue and Department of Economic Affairs assumed charge as the 25th Governor of the Reserve Bank of India effective December 12, 2018.
MCA vide its notifications dated 13 December, 2018 has Extended the last date of filing of Form NFRA-1 to 30 days from the date of deployment of this form on the website of Ministry/ NFRA.
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Himachal Pradesh passes GST Amendment Bill
Read more at: http://www.taxscan.in/himachal-pradesh-gst-amendment-bill/31636/
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Supreme Court Upholds Tax Levy on Manufacturers for Possession of Chassis of Vehicles under Bihar Motor Vehicles Taxation Act [Read Judgment]
Read more at: http://www.taxscan.in/supreme-court-tax-manufacturers-possession-chasis/31652/
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Punjab Unanimously passes GST Amendment Bill
Read more at: http://www.taxscan.in/punjab-gst-amendment-bill/31656/
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California to introduce Texting Tax – A Tax on Text Messages
Read more at: http://www.taxscan.in/california-texting-tax-text-messages/31659/
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No Tax Relief for Sale of Old House If New One purchased in Wife & Daughters’ Name: ITAT [Read Order]
Read more at: http://www.taxscan.in/tax-relief-house-wife-daughters-itat/31663/
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GST Commissionerate, Coimbatore goes stringent against Tax Evasion
Read more at: http://www.taxscan.in/gst-coimbatore-tax-evasion/31678/
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💡Updates from Judiciary
Supreme Court has issued a notice in a writ petition challenging certain amendments made by state governments to the Right to fair Compensation and Transparency in Land Acquisition, Rehabilitation and Resettlement Act, 2013 and connected Rules.
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Supreme Court has said that there was “absolutely nothing” in the medical examination report to suggest that Brajesh Thakur, prime accused in the Muzaffarpur shelter home sexual abuse case, was physically or mentally tortured in Patiala jail.
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NCLAT has held that the pendency of the case under Section 138/441 of the Negotiable Instruments Act, 1881, even if accepted as recovery proceeding, it cannot be held to be a dispute pending before a court of law.
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Supreme Court has asked for a compilation of corruption allegations against Justice Ram Krishna Gautam, who was appointed judge of the Allahabad High Court.
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Supreme Court has held that for setting aside an arbitral award will not ordinarily require anything beyond the record that was before the Arbitrator and if there are matters not contained in such record, and are relevant to the determination of issues arising under Section 34(2)(a), they may be brought to the notice of the Court by way of affidavits filed by both parties.
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Supreme Court has said it would be unworkable and unachievable to seek unanimity in the multi-member high-powered selection committee tasked with choosing Lokpal, CBI director, central vigilance commissioner and chief information commissioner.
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Supreme Court has refused to entertain a petition challenging Jammu & Kashmir Governor Satyapal Malik’s recent decision to dissolve state assembly that was in suspended state since June when former Chief Minister Mehbooba Mufti resigned after the BJP withdrew support.
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Supreme Court has admitted for hearing a Maharashtra Government appeal challenging a Bombay High Court order commuting death sentence of Mirza Himayat Baig, convict in 2010 Pune German Bakery blast, which had claimed over a dozen lives.
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Rajasthan High Court has given a green signal to shifting of tigers from Ranthambore national park to Mukundra Hills tiger reserve by dismissing a petition filed by activist Ajay Shankar Dubey in this regard.
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