ACCOUNTING, REGULATORY & Vol 43

August, 2020
www.bdo.in
TAX NEWSLETTER

TABLE OF CONTENTS

Accounting Updates 01

Regulatory Updates 03

Tax Updates

Direct Tax 07

Transfer Pricing 11

Indirect Tax 12

BDO India Newsletter

01 BDO India Newsletter

ACCOUNTING UPDATES
INSTITUTE OF CHARTERED ACCOUNTANTS OF INDIA (ICAI) disclosure of the grant may be necessary for a proper
understanding of the financial statements. Ind AS 20
Presentation of the Grant Receivable from the Government
permits the grant related to income to be presented as
of India (Under SEIS) in the Statement of Profit and Loss
part of Statement of Profit and Loss either separately or
Facts of the case under a general heading such as ‘Other Income’ or as a
A company was incorporated under the Companies Act, deduction in reporting the related expense.
1956 and governed by the Ministry of Railways (MOR). The However, this view was not accepted by authorities who
objective of the Company is to serve as a catalyst in were of the view that SEIS grants should be shown under
promoting and giving a boost in India’s International and ‘Other Income’.
Internal Trade & Commerce by organizing multimodal Query
logistics support. As these services are related to EXIM (i.e.
The opinion of the expert committee is sought on
Export & Import) trade of the country and are provided to
whether the income recognized on accounting for grant
foreign shipping lines or their Indian agents, the company is
receivable from the government of India (under SEIS) has
entitled to claim Service Export from India Scheme (SEIS)
been correctly presented by the company as ‘Export
benefit on the same under Foreign Trade Policy (FTP) 2015
Incentive’ under ‘Revenue from Operations’ sub-head
-20.
‘Other operating Income’ in the statement of profit and
SEIS benefit being claimed by the company from the loss or whether, it has to be disclosed under ‘Other
Authorities i.e. Directorate General of Foreign Trade Income’.
(DGFT) is granted in the form of scrips (which are tradable)
issued for a value arrived at a specified percentage of the Points taken into consideration
elements of revenue from operations. As the SEIS income is Regarding the presentation of the duty credit
derived out of the operations of the company, the same has scrips/entitlement received from the Government of
been considered as part of revenue from operations. This India under SEIS in the Statement of Profit and Loss, the
income clearly arises as a result of the company’s ordinary Committee notes the following paragraphs of IND AS 20’:
business comprising services for export or import related to “29 Grants related to income are presented as part of
containers/cargo. Had the company not performed EXIM profit or loss, either separately or under a general
operations, such income would not have accrued. As such,
heading such as ‘Other income’; alternatively, they are
there is a direct nexus between EXIM operations of the
deducted in reporting the related expense.
company and SEIS benefit accruing from it. The company
has recognised the SEIS benefit in its books of account in 30 Supporters of the first method claim that it is
the period in which the right to receive the same is inappropriate to net income and expense items and that
established, i.e., the year during which the services for separation of the grant from the expense facilitates
grant of SEIS benefit are performed. Hence, SEIS income comparison with other expenses not affected by a grant.
has been classified as ‘export incentives’ under ‘Revenue For the second method it is argued that the expenses
from Operations’, sub-head ‘other operating income’ in the might well not have been incurred by the entity if the
statement of profit and loss. grant had not been available and presentation of the
expense without offsetting the grant may therefore be
SEIS benefit is a kind of Government grant, the accounting
misleading.
treatment and presentation of which has been laid down
under Indian Accounting Standard (Ind AS) 20, ‘Accounting 31 Both methods are regarded as acceptable for the
for Government Grants and Disclosure of Government presentation of grants related to income. Disclosure of
Assistance’. Ind AS 20 gives three options for presentation the grant may be necessary for a proper understanding
of Government grants related to income in statement of of the financial statements. Disclosure of the effect of
profit and loss, which are – the grants on any item of income or expense which is
required to be separately disclosed is usually
▪ either separately; or
appropriate.”
▪ under a general heading such as ‘Other income’; or
The Committee notes that as per the requirements of Ind
▪ they are deducted in reporting the related expense. AS 20, the grant related to income should be presented
SEIS income is relates to the grant earned on the operating either separately or under a general heading such as
revenue accordingly it has been shown separately as ‘Other income’. Alternatively, it can also be deducted in
export incentives in the note to the Statement of profit and reporting the related expense.
loss under ‘Income from Operations’, sub-head ‘other Considering the activities of the company in the extant
operating income’, which is in compliance of the above case, the duty credit scrips/entitlement can be
provisions of Ind AS 20 as it has been shown separately. considered to arise in the course of revenue generating
Further, paragraph 31 of Ind AS 20, inter alia, states that activities of the company. Accordingly, considering the
02 BDO India Newsletter

ACCOUNTING UPDATES
requirements of the Guidance Note on Division II- Ind AS
Schedule III to the Companies Act, 2013 (revised July,
2019), issued by the ICAI (hereinafter referred to as the
‘Guidance Note’), the Committee is of the view that it may
be appropriate to disclose the duty credit
scrips/entitlement under SEIS as ‘other operating revenue’
under ‘revenue from operations’ in the statement of profit
and loss. Further, in this connection, the Committee notes
paragraph 113 of Ind AS 115, ‘Revenue from Contracts with
Customers’, which states as follows:
“113 An entity shall disclose all of the following amounts
for the reporting period unless those amounts are
presented separately in the statement of profit and loss in
accordance with other Standards
▪ revenue recognised from contracts with customers, are
to be disclosed separately from its other sources of
revenue; and
▪ any impairment losses recognised (in accordance with
Ind AS 109) on any receivables or contract assets arising
from an entity’s contracts with customers, are to be
disclose separately from impairment losses from other
contracts.”
The Committee notes from the above that Ind AS 115
recognises that ‘revenue’ could arise from sources other
than contracts with customers also, which should be
presented separately from ‘revenue recognised from
contracts with customers’. Since in the extant case, duty
credit scrips/entitlement under SEIS is not in the nature of
revenue received from contracts with customers, the
former should be presented separately from the latter as
‘other operating revenue’. The company should also give
adequate disclosures (including the accounting policy for
recognition of such income) so as to appropriately explain
the nature of the item.
Opinion
The committee is of the opinion that considering the
activities of the company, it may be appropriate to present
the duty credit scrips/entitlement under Service Export
from India scheme (SEIS) as ‘Other Operating Revenue’
under ‘Revenue from Operations’ in the Statement of Profit
and Loss. Further the company should also give adequate
disclosures (Including the accounting policy for recognition
of such income) so as to appropriately explain the nature of
item.
03 BDO India Newsletter

REGULATORY UPDATES
SECURITIES AND EXCHANGE BOARD OF INDIA (SEBI)
Circular dated 1st July 2020: SEBI (Infrastructure
Investment Trusts) Regulations, 2014 (‘InvIT Regulations’)
and SEBI (Real Estate Investment Trusts) Regulations, 2014
(‘REIT Regulations’)
SEBI vide its circular dated 23rd March 2020 had extended
the due date for all regulatory filings and compliances for
REIT and InvIT for the period ending 31st March 2020 by a
month over and above the timelines prescribed under InvIT
Regulations and REIT Regulations.
SEBI, vide this circular, has decided to extend the due date
for regulatory filings and compliances for REIT and InvIT,
for the period ending 31st March 2020 by a month over and
above the timelines specified vide circular dated 23rd
March 2020.
▪ ASBA facility
Circular dated 17th July 2020: Manner and mechanism of
providing exit option to dissenting unit holders pursuant to ▪ Physical Shareholders (whose details of Demat accounts not
SEBI (InvIT) Regulations and SEBI (REIT) Regulations available to company)
SEBI vide two separate circulars dated 17th July 2020 has ▪ Authentication in form of e-signatures
issued procedural guidelines for providing exit options to Based on the various representations received from market
dissenting unitholders of REITs and InvITs. participants, SEBI vide this circular has further extended the
The dissenting unitholders means those who have not voted validity of relaxations granted through the circular dated 6th
in favour of the resolution under regulation 22(6A) and May 2020 for the Right Issues opening up to 31st December
22(8) of the SEBI (REIT) Regulations or Regulation 22(5C) 2020
and Regulation 22(7) of the SEBI (InvIT) Regulations. These Circular dated 27th July 2020: Relaxations relating to
sub regulations pertain to obtaining approval of the unit procedural matters – Takeovers and Buy-back
holders for change in manager and /or change of sponsor /
SEBI vide its circular dated 14th May 2020 had granted one-
designated sponsor /change in control of sponsor or
time relaxation from strict enforcement of certain regulations
designated sponsor
of SEBI (Substantial Acquisition of Shares and Takeovers)
The procedural guidelines provide for exit option Regulations, 2011 and SEBI (Buy-back of Securities)
mechanism to be followed including the following: Regulations, 2018 pertaining to open offers and buy-back
▪ Definitions like acquirer, person acting in concert, through tender offers opening up to 31st July 2020
dissenting unitholders etc. In the said circular, the relaxations mainly pertained to service
of the letter of offer and/or tender form and other offer
▪ Detailed manner and mechanism of exit option
related material to shareholders though electronic mode. The
▪ Determination of the exit price said circular also provided for:
▪ Maintenance of minimum public shareholding ▪ uploading the letter of offer on website of company,
▪ Contents of letter of offer and certificate by Merchant registrar, stock exchanges and the manager(s),
Banker ▪ taking steps to reach shareholders and other concerned
Circular dated 24th July 2020: Relaxations relating to parties by way of advertisements, SMS, audio-visual
procedural matters – Issues and Listing mechanisms, etc.
SEBI vide its circular dated 6th May 2020 had granted one- ▪ publishing advertisement in additional newspapers over and
time relaxation from enforcement of certain requirements above those required under regulation
of SEBI (Issue of Capital and Disclosure Requirements)
▪ using print and digital advertisements in television
Regulations, 2018 (‘ICDR Regulations’) for the Rights Issues
opening up to 31st July 2020 channels, radio, internet etc. to disseminate information
The relaxation mainly pertained to provisions relating to: regarding the transaction, letter of offer etc.

▪ Service of the abridged letter of offer, application form Based on various representations received from market
participants, SEBI vide this circular, dated 27th July 2020, has
and other issue material to shareholders
further extended the validity of above mentioned relaxations
▪ Publishing advertisement and the same shall be applicable to all open offers and buy-
04 BDO India Newsletter

REGULATORY UPDATES
back through tender offers opening upto 31st December MINISTRY OF CORPORATE AFFAIRS (MCA)
2020
Extension of the last date of filing of Form NFRA-2
Circular dated 29th July 2020: Extension of time for
submission of financial results for the quarter /half year/ The MCA vide circular dated July 06, 2020 has extended the
financial year ended 30th June 2020 due date of filling form NFRA -2. The last date of filing of
SEBI (Listing Obligations and Disclosure Requirements) NFRA-2 (Annual Return to Be Filed By Auditor) for the
Regulations, 2015 (‘LODR Regulations’) requires a listed Financial Year 2018-19 will be 270 days (Earlier the
entity to submit its quarterly / half year / annual financial extension was given for 210 days) from the date of
results within forty-five days or sixty days, as applicable, deployment of the form on the website of National Financial
from the end of each quarter/half year/financial year. Reporting Authority (NFRA). i.e. September 4, 2020.
Accordingly, listed entities are required to submit the
financial results for the quarter/half year ended 30th June Companies (Indian Accounting standards) Amendment Rules,
2020, on or before 14th August 2020. 2020
The timeline for submission of financial results under the MCA vide notification dated July 24, 2020 has notified
LODR Regulations, for the quarter/half year/financial year Companies (Indian Accounting standards) Amendment Rules,
ended 30th June 2020 has now been extended from 14th
2020. The same shall come into force on the date of their
August 2020 to 15th September 2020
publication in the Official Gazette i.e. July 24, 2020.
Circular dated 31st July 2020: Clarity on applicability of
40(1) of LODR Regulations to open offers, buybacks and Various amendment has been introduced to the Indian
delisting of securities of listed entities Accounting Standards, some of them are as follows:

SEBI vide its circular dated 31st July 2020 has provided ▪ Ind AS-116 Leases: Additional paragraphs with regard to
clarity on applicability of Regulation 40(1) of LODR accounting for ‘Covid -19 related rent concessions for
Regulations pertaining to transfer of securities. Proviso to lessees’ has been inserted. The amendment allows a
Regulation 40(1) states that a request for transmission or lessee to elect to account for any change in lease
transposition of securities shall not be processed unless the payments resulting from the rent concession the same
securities are held in dematerialized form with a
way it would account for the change applying this
depository.
Standard if the change were not a lease modification.
SEBI received various representations stating that many
investors are not able to participate in open offers, ▪ Ind AS-109 Financial Instruments & Ind AS-107 Financial
buybacks and delisting of securities of listed entities since Instruments: Disclosures :- Additional paragraphs with
the securities held by them were not in dematerialized regard to ‘Temporary exceptions from applying specific
form hedge accounting requirements’ for hedging
To address the concern of the investors, it is clarified that relationships directly affected by interest rate
shareholders holding securities in the physical form are benchmark reform and related disclosure requirements
allowed to tender shares in open offers / buybacks through
have been inserted. Due to COVID-19, there is risk of
tender offer route and exit offers in case of voluntary or
compulsory delisting. However, provisions of such tendering change in the fair value of Assets because of frequent
shall be as per the provisions of the respective regulations. change in the interest rate is prevalent. Hence in the
current amendment the entity has on option to apply the
Reporting to Stock Exchanges regarding violations
fair value as per the change in the interest rate.
under Securities and Exchange Board of India (Prohibition
of Insider Trading) Regulations, 2015 relating to the Code ▪ IND AS 1 Presentation of Financial Statements, IND AS 8
of Conduct Accounting Policies, Changes in Accounting Estimates
SEBI, vide Circular No. SEBI/HO/ISD/ISD/CIR/P/2019/82 and Errors, IND AS 34 Interim Financial Reporting:-
dated July 19, 2019, had specified the standard format for Amendments have been made to the definition of the
reporting of violations related to Code of Conduct. The said term ‘Material’. The term and its relevance for the
format has been suitably modified vide Circular dated July primary users of general-purpose financial statements
23, 2020. Accordingly, the listed companies, intermediaries has been explained in further detail.
and fiduciaries shall inform the violations of Securities and
Exchange Board of India (Prohibition of Insider Trading) ▪ Ind AS-10 Events after the Reporting Period:
Regulations, 2015 relating to Code of Conduct as per the Amendments have been made to clarify that the
revised format to the Stock Exchange(s). disclosure requirements for non-adjusting events are
05 BDO India Newsletter

REGULATORY UPDATES
applicable to primary users of general-purpose financial INSTITUTE OF CHARTERED ACCOUNTANT OF INDIA (ICAI)
statements.
Guidance Note on the Companies (Auditor’s Report) Order,
▪ IND AS 103 Business Combinations: The term “business” 2020
and the elements of businesses is defined in more detail
to assist in evaluation of a business. The ICAI has issued a Guidance Note on the Companies
(Auditor’s Report) Order, 2020 (“the Guidance Note”).
RESERVE BANK OF INDIA (RBI)
The Central Government, in exercise of the powers
Credit flow to Micro, Small and Medium Enterprises Sector conferred, under sub-section (11) of section 143 of the
The RBI vide circular dated July 02, 2020 has notified new Companies Act, 2013, issued the Companies (Auditor’s
criteria for classifying an enterprise as Micro, Small and Report) Order, 2020, (CARO 2020/ “the Order”) vide Order
Medium enterprises under the Micro Small and Medium number S.O. 849(E) dated 25th February 2020. The order is
Enterprises Development Act, 2006. The new criteria will in supersession of the earlier Order issued in 2016, viz., the
come into effect from July 1, 2020. The details are as Companies (Auditor’s Report) Order, 2016 (CARO 2016).
follows: CARO 2020 was initially applicable for audits of financial
year 2019-20 and onwards. Subsequently, vide notification
An enterprise shall be classified as a Micro, Small or
dated 24th March 2020, its applicability has been deferred
Medium enterprise on the basis of the following criteria,
by one year. CARO 2020 is applicable for audits of financial
namely:
year 2020-21 and onwards.
▪ a micro enterprise, where the investment in plant and
CARO 2020 contains certain matters on which the auditors
machinery or equipment does not exceed one crore
of companies (except auditors of those categories of
rupees and turnover does not exceed five crore rupees;
companies which are specifically exempted under the
▪ a small enterprise, where the investment in plant and Order) have to make a statement in their audit reports.
machinery or equipment does notexceed ten crore
The text to be used in the CARO 2020 is articulated in
rupees and turnover does not exceed fifty crore rupees;
Appendix I to Guidance Note.
and
Appendix II to this Guidance Note contains a clause-by
▪ a medium enterprise, where the investment in plant
clause comparison of the reporting requirements of the
and machinery or equipment does not exceed fifty crore
Order and the CARO 2016.
rupees and turnover does not exceed two hundred and
fifty crore rupees Appendix III to this Guidance Note contains the definitions
of important terms used in this Guidance Note.
Extension of timeline for finalization of audited accounts
Appendix IV to this Guidance Note contains list of important
The RBI vide notification dated July 06, 2020 has issued sections/ rules/ regulations/ statutes referred to in this
extension of timeline for finalization of audited accounts. Guidance Note.
Every applicable NBFC shall finalize its balance sheet within
The purpose of this Guidance Note is to enable the auditors
a period of 3 months from the date to which it pertains, or
to comply with the reporting requirements of CARO 2020.
any date as notified by SEBI for submission of financial
results by listed entities. Technical Guide on Accounting for Expenditure on Corporate
SEBI vide circular No. SEBI/HO/CFD/CMD1/CIR/P/2020/106 Social Responsibility Activities
dated June 24, 2020 has further extend the timeline for The ICAI has issued a Technical Guide on Accounting for
submission of financial results under Regulation 33 and Expenditure on Corporate Social Responsibility Activities.
Regulation 52 of the SEBI (Listing Obligations and The objective of this guide is to provide guidance on
Disclosure Requirements) Regulations, 2015 to July 31, recognition, measurement, accounting, presentation and
2020 for the quarter/ half yearly and/or annual financial disclosure of expenditure on activities relating to corporate
results and the year ending March 31, 2020. social responsibility.
06 BDO India Newsletter

REGULATORY UPDATES
The Technical guide provides guidance on accounting for
expenditure on CSR activities in cash and in kind in line with
the requirements of the Generally Accepted Accounting
Principles including the applicable Accounting Standards. MSME Business Continuity Checklist
The ICAI has issued a Micro, Small and Medium Enterprises
Educational Material on Indian Accounting Standard (Ind AS)
(MSME) Business Continuity Checklist. The MSME sector is
38 Intangible Assets
rightfully being seen as a growth booster, providing
Ind AS Implementation Committee of ICAI on July 14, 2020 has resilience to ward off global economic adversities on
issued Educational Material on Indian Accounting Standard account of the COVID 19 pandemic. The Government has
(Ind AS) 38 Intangible Assets. The purpose of this Educational announced a host of measures to revive the MSME sector.
Material is to provide guidance on aspects of Ind AS 38 by way The accounting profession has a deep reach and connects to
of Frequently Asked Questions (FAQs) and illustrations the MSME sector as trusted financial advisors. In this
explaining the principles enunciated in the Standards. checklist ICAI has focused on several factors that require
The Educational Material also contains summary of Ind AS 38, special attention by the management of MSME which can
major differences of this Ind AS with corresponding guide their initiative to face this tough time. Keeping in
Accounting Standard (AS) 26, Intangible Assets, and mind that there would be specific situations for specific
Corresponding International Accounting Standard (IAS) 38, stakeholders, the checklist has been made generic in
Intangible Assets. nature, rather than specific to any industry or legal body.
Technical Guide on Easy Incorporation of Companies through
SPICE+
The ICAI has issued a Technical Guide on Easy Incorporation of
Companies through SPICE+. The objective of this Technical
Guide (TG) is to provide detailed guidance on the procedural
aspects of the integrated form for the benefit of all the
members and other stakeholders.
From January 2017, the MCA has taken a significant step
ahead in combining multiple forms for incorporation, in one
single form. This is an initiative for simplifying company
incorporation. This system of SPICe facilitated electronic
filing of Memorandum and Article of Association, at the time
of incorporation.
The MCA has made improvements in the SPICe initiative by
rolling out a new further simple application to expedite
incorporating a company in India. This new web form is called
‘Simplified Proforma for Incorporating Company Electronically
Plus - SPICe+. The process dispenses many procedures and
thus there is saving in time and cost for incorporating a
company in India. This is operative from February 2020.
Requisite procedural formalities along with relevant legal
inputs have been furnished in this TG which is designed to
appraise complete process for incorporation of the
companies. This will guide practicing-chartered accountants,
enabling them incorporate company without external
consultation.
07 BDO India Newsletter

TAX UPDATES
Direct Tax
CIRCULARS/ NOTIFICATIONS/PRESS RELEASE
New Form 26AS.
Form 26AS contained information about tax deducted at
source (TDS) and tax collected at source (TCS), details of
other taxes paid, refunds etc. The Central Board of Direct
Taxes (CBDT) has replaced this Form 26AS with new Form
26AS by introducing new Rule 114-I with effect from 1 June
2020 (Notification No. 30 of 2020 dated 28 May 2020). The
new Form 26AS to show additional details about taxpayer’s
financial transactions such as cash deposit / withdrawal
from saving bank accounts, sale / purchase of immovable
property, time deposits, credit card payments, purchase of India in specified businesses during the period 1 April 2020 to
shares, debentures, foreign currency, mutual funds, buy 31 March 2024 subject to satisfaction of conditions. CBDT has
back of shares, cash payment for goods and services, etc. issued notification to bring the businesses engaged in the
This information is received by the Revenue Authorities infrastructure sub-sectors mentioned in Updated Harmonized
under section 285BA of the Income Tax Act, 1961 (IT Act) Master List of Infrastructure Sub-sectors within the ambit of
through Specified Financial Transactions (SFTs) reports section 10(23FE) of the IT Act. Subsequently, CBDT issued
being filed by specified persons. Now all such information circular to provide procedure for making an application (in
under different SFTs will be shown in new Form 26AS which Form I) and compliance requirement (i.e. file a quarterly
would enable the taxpayers to e-file their tax returns statement within one month from end of the quarter
quickly and correctly by calculating the correct tax liability electronically in Form II in respect of each investment made
in a feel-good environment. during the quarter).
Specified person for this purpose has been defined to mean
[CBDT Press Release dated 18 July 2020] wholly owned subsidiaries of Abu Dhabi Investment Authority
Central Board of Direct Taxes (CBDT) signs Memorandum of (ADIA), notified Sovereign Wealth Fund (SWF) and notified
Understanding (MoU) with government agencies. Pension Funds (PF), which fulfil conditions specified in the
clause or to be prescribed for the PF.
Recently, CBDT has issued press releases intimating that it
has formally signed MoU for data exchange with the [Notification No. 44 of 2020 (F. No. 370142/24/2020-TPL),
following government agencies: dated 6 July 2020 read with Circular No. 15 of 2020 (F.
NO. 370142/26/2020/TPL), dated 22 July 2020]
▪ Central Board of Indirect Taxes and Customs (CBIC)
Extension of timeline to file belated/revised tax returns for
▪ Ministry of Micro, Small and Medium Enterprises
fiscal year 2018-19 and relaxation from payment of interest
(MoMSME) granted to senior citizen.
▪ Securities Exchange Board of India (SEBI) In order to ease the compliance burden of taxpayers due to
The MoU would come into force from the date it was ongoing Covid-19 pandemic, Government had extended
signed and would now facilitate the sharing of data and various compliance timelines falling between 20 March 2020
information on an automatic and regular basis. To read and 29 June 2020 to 30 June 2020 by passing Taxation and
BDO analysis of these CBDT press releases, please go to : Other Laws (Relaxation of Certain Provisions) Ordinance,
https://www.bdo.in/en-gb/insights/alerts-updates/tax- 2020. Thereafter, another notification1 was issued wherein
alert-cbdt-signs-mou-for-data-exchange timelines for various compliances were further extended.
Recently, CBDT has issued a notification extending the
[CBDT Press Release dated 8 July 2020, 20 July 2020
timeline to file belated/revised tax returns for the fiscal year
and 21 July 2020 read with Notification No S.O. 2119(E)
2018-19 to 30 September 2020. Further the notification
of MoMSME, dated 26 June 2020]
provides relaxation to senior citizen taxpayers. To read BDO
Expansion in scope of specified businesses under newly analysis of this CBDT notification, please go to :
inserted section 10(23FE) of the IT Act. https://www.bdo.in/en-gb/insights/alerts-updates/tax-alert-
Finance Act, 2020 had introduced a new section 10(23FE) in timeline-for-filing-belated-revised-tax-return-for-fiscal-year-
the IT Act to provide income-tax exemption to specified 2018-19-extended-to-30-s
persons from dividend, interest and long term capital gains [Notification No. 56 of 2020 (F. No. 370142/23/2020-TPL),
income, which would be earned from investments made in dated 29 July 2020]

1 Notification No 35 of 2020 dated 24 June 2020

08 BDO India Newsletter

TAX UPDATES
Direct Tax
Relaxation from applicability of section 206AA to dividend requested the HC that the letter filed with the Revenue
extended to dividend Authorities be treated as a manual refund application.
Where PAN is not available, Section 206AA of the IT Act Before the HC, Revenue Authorities submitted that matters
provides that the tax shall be withheld at the higher rate such as the instant matter requires manual scrutiny and
(20%). However, Rule 37BC of the Income-tax Rules, 1962 verification of TDS amount utilized according to established
(IT Rules) relaxation in respect of certain payment (i.e. procedure. The Revenue Authorities placed established
royalty, fees for technical services and payments on procedure before the HC, which is reproduced hereinbelow:
transfer of any capital asset) is provided to non-resident if ▪ Deductor has to approach jurisdictional TDS Assessing
they furnish alternative documents. With abolishment of Officer with the grievance.
Dividend Distribution Tax by Finance Act 2020, the
▪ Jurisdictional TDS Assessing Officer will forward this
dividend is now taxable in the hands of recipient. As
grievance to CPC-TDS via e-mail on
dividend was not specifically covered in the exemption list,
aohelpesk@tdscpc.gov.in or through post.
non-furnishing of PAN would attract the tax withholding
rate of 20%. Recently, CBDT has issued notification to ▪ CPC-TDS will accordingly guide the Assessing Officer to
amend Rule 37BC and thereby bring dividend within the inform the deductor to tick the option “Refund due to
ambit of exempt. With this, dividend payment to non- Appeal effect” to place the refund request. By doing so,
residents would be exempted from higher tax withholding deductor will be able to place the refund request with
provided non-residents furnishes the alternative zero amount as well and the refund request will not get
documents. This amendment is applicable from the date of rejected by the system. A request number will be
publication of notification (i.e. 24 July 2020) generated.
▪ Deductor will inform this request number to the
Further, this notification has also notified rules for TCS on
Jurisdictional Assessing Officer and Jurisdictional TDS
goods, TCS under Liberalised Remittance Scheme and
Assessing Officer will confirm the same to CPC-TDS by
overseas tour program package. This amendment shall be
sharing the refund request number. This refund request
applicable from 1 October 2020.
number is required by CPC-TDS for record purpose for
[Notification No. 54 of 2020 dated 24 July 2020] future referencing.
JUDICIAL UPDATES ▪ This online refund request generated as per the
Delhi High Court directs the taxpayer to follow the abovementioned point no. iii is further forwarded to TDS
established procedure to claim refund of excess TDS . Assessing Officer. Assessing Officer will have the right to
enhance the refund amount from Zero (0) to the amount
Taxpayer had deposited INR 6.95 Mn through single challan available in the challan and also upload the relevant
towards its tax withholding (TDS) liability. However, only documents supporting the genuineness of the facts and
INR 1.98 Mn could be adjusted against the liability. Hence, reasons for refund.
the taxpayer tried claiming refund of INR 4.97 Mn, being
▪ After approval from the competent Authority refund
balance amount of that challan. However, the taxpayer
request will be processed in online manner.
was unable to claim the refund of this excess amount
because on TRACES2 portal ‘Maximum Refund Allowed’ Taxpayer submitted that it shall follow the above-mentioned
column showed NIL balance. The taxpayer observed that procedure in 2 days. The HC directed the Revenue Authorities
the excess amount of INR 4.97 Mn reflected under the to decide the taxpayer’s request for refund within four weeks
column- ‘Remaining Balance Available’. To resolve this thereafter.
mismatch, the taxpayer raised a ticket on the TRACES [Clean Wind Power Kurnool Private Limited vs DCIT
portal but the same was closed without resolving the issue. [W.P.(C) 3902/2020 and CM APPL 13961/2020]
Taxpayer filed writ petition before the Delhi High Court Website promotion / advertisement activities not taxable
(HC) to direct Revenue Authorities to remove technical under India-USA DTAA.
glitches and enable TRACES portal so that taxpayer can file
During the fiscal year 2012-13, the taxpayer had made
its refund application. As an alternate prayer, the taxpayer

2TRACES stands for TDS Reconciliation Analysis and Correction Enabling System.
09 BDO India Newsletter

TAX UPDATES
Direct Tax
payment of INR 1.3 Mn to ESM SYS LLC, USA (US Co) for ▪ included services” in Article 12 of India-USA DTAA, it is
obtaining the services of data promotion, social media required to fulfill either of the following two conditions:
management and general consulting. During audit, the tax − Services are ancillary and subsidiary to the application
officer proposed to disallow this amount as tax was not of right for which royalty is paid; or
withheld under section 195 of the IT Act. The taxpayer
− Services make available technical knowledge,
contended that the payment made to US Co were in the
experience, skill, know-how, or processes etc. or if it
nature of services provided for site promotion activities,
consists of development and transfer of any technical
data promotion, managing and overseeing various on page
plan or technical design.
and off page activities which drive traffic to a specific
website, etc. The taxpayer also contended that under ▪ There was no sharing of knowledge or know-how or any
India-USA DTAA, these services should be governed by technology to the taxpayer as prescribe in Article 12 of
Article 7 (i.e. Business Profit) and in absence of US Co DTAA.
having PE in India the same should not be taxable. [ESM Sys Pvt Ltd vs ITO (ITA No. 350/AHD/2018)]
However, the tax officer held that the payment is covered
Loss from hotel unit in USA and investment in US LLC covered
by section 9(1)(vii) of the IT Act (i.e. fees for technical
by “Income from Other Sources” head
services) as well as Explanation 2 to section 9(1)(vi) of the
IT Act (i.e. royalty) and thereby disallowed the expense Taxpayer, an individual, is a whole-time director in an Indian
under section 40(a)(ia) of the IT Act as taxes were not company. When the taxpayer was a non-resident Indian and
withheld. The First Appellate Authority confirmed tax employed in USA, the taxpayer had made following
officer’s order. investments:
Before the Tribunal, the taxpayer submitted following: ▪ 2 Limited Liability Companies (LLC) incorporated in USA;
and
▪ various provisions of India-USA DTAA were not
considered by lower authorities. ▪ one unit of Hotel Trump International, USA.
▪ The equipments /servers used were located outside For the fiscal year 2015-16, apart from salary income earned
India and these equipments were not owned by the US in India, taxpayer also earned income (including loss) from
Co. sources outside India. In its tax return, thetaxpayer treated
▪ Also, the services provided by US Co has never made the loss from hotel unit and loss from the 2 LLC to be covered
available any technical under the head ‘income from other sources’ and accordingly
expertise/experience/skill/know-how to enable the sought to set-off these losses against the salary income.
taxpayer for carrying out such activities on its own. However, the tax officer treated these losses as Business Loss
and accordingly denied the set off. The taxpayer filed an
▪ The payment made was in the nature of business income
appeal before the First Appellate Authority which was
and since there was no PE in India, therefore tax was
dismissed. Hence, the taxpayer filed an appeal before the
not required to be withheld.
Tax Tribunal.
After hearing both the parties, Tribunal held that the Before the Tribunal, the taxpayer contended that he had
payment is not taxable under India-USA DTAA and therefore made investment in one unit of a property in USA which along
not liable for tax withholding. While coming to this with other such 159 unit holders was developed as a hotel
conclusion, the Tribunal made following observations: entity. The arrangement was such that taxpayer was allotted
▪ the entire transaction had taken place on internet a unit in that hotel complex along with several other similar
through virtual server. units. The income of the hotel was divided and defrayed to
▪ Servers were located worldwide outside India and not the unit holders by the enterprise that was operating hotel in
under the control of taxpayer and it was used for hiring USA. Neither the taxpayer nor any other unit holders had any
of space for domain hosting and display of control or any say or role in the management of the hotel.
advertisement on the server located worldwide. Further, the taxpayer cannot have done business with hotel
unit in USA because of following reasons:
▪ To cover the service in the definition of “fee for
10 BDO India Newsletter

TAX UPDATES
Direct Tax
▪ Whole-time directorship in Indian company forbade him transaction where the First Appellate Authority had applied
from engaging in any other activity elsewhere. GAAR retrospectively, even though the scheme of
▪ Hotel unit was located in USA and the taxpayer could amalgamation was approved by the Punjab & Haryana High
not be there at all due to the exigencies of employment Court and Delhi High Court. To read our detailed analysis,
in India. please go to : https://www.bdo.in/en-gb/insights/alerts-
updates/tax-alert-gaar-provisions-cannot-be-applied-
▪ Taxpayer was the owner of only a fraction of the retrospectively
property (i.e. 1 out of 160 units) and the rest of the
property was owned by several other persons. [DCIT vs M/s JCT Ltd (ITA No. 84/Kol/2019)]
Project Office undertaking non-core activities in India does
On the investment in 2 US LLC, the taxpayer submitted
not constitute Permanent Establishment
that these investments were made for the purpose of
earning investment income over and above the regular The Supreme Court had an occasion to examine whether the
salary income. PO set up for non-core activities constitutes a Fixed Place PE
in India. To read our detailed analysis, please go to :
The taxpayer also contended that in earlier years, the tax
https://www.bdo.in/en-gb/insights/alerts-updates/tax-alert-
officer has treated the income from investments in hotel
supreme-court-holds-project-office-undertaking-non-core-
unit and US LLC as taxable under the head “Income from
activities-in-india-does-not-con
Other Sources”.
[DIT-II (International Taxation) vs Samsung Heavy
The Tribunal held that the loss from hotel unit and 2 US
Industries Co Ltd (Civil Appeal No. 12183 of 2016)]
LLC should be assessed under Income from Other Sources.
While coming to this conclusion, the Tribunal made Slump sale tantamount to succession and therefore claim of
following observations: depreciation to be restricted to WDV as appearing in books of
transferor
▪ It is evident that conduct of the taxpayer was not
intending to run a hotel unit himself but rather he had Mumbai Tax Tribunal had an occasion to analyse the
purchased unit while he was employed in USA and has applicability of section 170 of the IT Act to a case involving
given the unit for being run under the ‘Hotel Operations the slump sale of business and thereby invoking sixth
and Maintenance Agreement’ to be run by managing proviso to section 32 of the IT Act to restrict the claim of
company. depreciation made by the buyer of such business. To read our
▪ By virtue of being a whole-time director in Indian detailed analysis, please go to : https://www.bdo.in/en-
company, the taxpayer couldn’t have made the capital gb/insights/alerts-updates/tax-alert-slump-sale-tantamount-
outlay in 2 LLC for the purpose of business and, to-succession-and-therefore-claim-of-depreciation-to-be-
apparently, this was only for the purpose of an restricted
investment. The tax officer has failed to appreciate the
[ITO vs Archroma India Pvt. Ltd (ITA No. 306/Mum/2019)]
fact that in the case of capital outlays of this nature, it
is important to determine as to whether the investment Deputation of employee does not result into PE and the
was in the realm of business or not. Tax officer has, at reimbursement of salary cost is not Fees for Technical
no point of time, established that the intention of Services
taxpayer was to earnout business income. Delhi Tax Tribunal[1] had an occasion to examine whether the
▪ Revenue Authorities have accepted in the preceding expat would result into foreign company having PE in India or
fiscal years this tax position taken by the taxpayer and not and also whether the reimbursement of salary cost
since there is no change in the facts and circumstances tantamount to FTS or not. To read our detailed analysis,
the view once accepted cannot be disturbed. please go to : https://www.bdo.in/en-gb/insights/alerts-
updates/tax-alert-deputation-of-employee-does-not-result-
[Sh. Rohit Kapur vs Add CIT (ITA No. 9016/Del/2019)]
into-permanent-establishment-and-the-reimbursement
GAAR provisions cannot be applied retrospectively
[DDIT vs Yum Restaurants (Asia) Pte Ltd (ITA No.
Kolkata Tax Tribunal had an occasion to delve on a 6018/Del/2012)]
11 BDO India Newsletter

TAX UPDATES
Transfer Pricing
JUDICIAL UPDATES
92B of the Act was held to be inapplicable for a transaction
Factors for determining the most appropriate method
of investment in share capital of subsidiaries outside India.
The taxpayer is engaged in the business of trading and Accordingly, he deleted lower tax authority’s adjustment.
service of surveying instruments. During the year under Aggrieved, the lower tax authority appealed to the tax
consideration, the taxpayer has imported finished goods
tribunal. The tax tribunal after perusing the contentions
from associated enterprise (AE) and the transaction was
benchmarked by the taxpayer using Resale Price Method opined that the investment was infused to revive the
(RPM). The lower tax authority stated that the method company by foreseeing the business opportunities available
selected by taxpayer is not the most appropriate method in Saudi Arabia. The taxpayer was able to substantiate the
(MAM) as the taxpayer did not account for functional inordinate delay in allotment by email correspondence to
differences and accordingly proceeded to compute the prove that the transaction is genuine in nature. Further, the
arm’s length price (ALP) using Transactional Net Margin tax tribunal relied on decision of co-ordinate bench of Delhi
Method (TNMM). The higher tax authority also upheld the
Tribunal rendered in Bharti Airtel Limited V/s Addl. CIT (ITA
order of the lower tax authority. Aggrieved, taxpayer filed
an appeal before tax tribunal. The taxpayer contended that No. 5816/Del/2012 dated 11/03/2014) wherein it was held
he did not add any value to the products imported from AE, that that the tax authorities do not have the power to
thereby stating that he is a normal distributor. Also, recharacterize a transaction unless substantial evidence is
taxpayer contented that TNMM is the method of last resort found indicating it to be a sham or bogus transaction.
and RPM needs to be given preference over TNMM while Hence, the ground of the lower tax authority was dismissed.
determining the most appropriate method. Further, during
the proceeding, the taxpayer referred to the favorable Voltas Limited [TS-342-ITAT-2020(Mum)-TP]
orders passed in its own case for earlier and subsequent
years where taxpayer had applied RPM for similar
transactions. Taxpayer further stated that though Res
Judicta principles are not applicable to Income tax
proceedings, a different view is not warranted unless the
facts of the case differ significantly. The tax tribunal placed
reliance of a Supreme Court tax proceedings precedent
wherein it was held that held that where a fundamental
aspect permeating through the different assessment years is
accepted one way or the other, a different value in the
matter is not warranted unless there is any material change
of facts. Thus, tax tribunal accepted taxpayer’s contention.
Topcon Sokkia India Pvt Ltd [TS-340-ITAT-2020(DEL)-TP]
Deletion of notional interest adjustment on share
application money pending allotment
The taxpayer is engaged in the business of providing premier
air conditioning and engineering services. The taxpayer had
made an investment in its wholly owned subsidiary (‘AE’)
company in Saudi Arabia by way of share application money,
which was pending allotment. The said investment was
made to revive the AE by foreseeing business opportunities
available in Saudi Arabia. It had not regarded the said
transaction as an international transaction under section
92B of the Income Tax act, 1961 (‘Act’). However, the lower
tax authority made a TP adjustment by charging notional
interest on the share application money pending allotment
by treating it as loan since the shares were not allotted
beyond a reasonable period. The higher tax authority, in
support of the taxpayer, relied on the judgment of the High
Court of Bombay in the case of Vodafone India Services Pvt.
Ltd. Vs. Addl. CIT (2014) 368 ITR 1 (Bom) wherein section
12 BDO India Newsletter

TAX UPDATES
Indirect Tax
GOODS & SERVICE TAX
Advance Rulings
Leasing of property/building to a lessee engaged in
commercial activity of letting out rooms are liable to GST at
18%
Facts of the case
▪ M/S. Lakshmi Tulasi Quality Fuels (‘Taxpayer’) or
(‘Lessor’) is engaged in supply of petroleum oils and
lubricants through a petrol bunk in Andhra Pradesh. In
addition to that the taxpayer is the absolute and sole
owner of a building in Telangana.
▪ Taxpayer has entered into a lease agreement with D-
Twelve Spaces Private Limited ('Lessee') a company
incorporated under the provisions of the Companies Act, Observations & ruling by the AAR
2013 which is inter-alia engaged in the business of
▪ AAR observed from the agreement between the lessor
running, managing and operating the day to day affairs of
and lessee that there are 73 rooms in the building with
residential premises and sub-lease of such residential
all amenities like exhaust fans, geysers, lights and
premises to individuals (including students) for the
fittings, curtain rods, sanitary fittings etc., provided by
purpose of long stay accommodation. As per the terms of
the lessor.
the lease agreement, in consideration of grant of lease to
▪ On perusal of the lease agreement and "Residents
use and possess the aforesaid property, the lessee is
Enrolment Form" together and taking note of the
required to pay to the taxpayer a monthly rent of INR 0.72
submissions made, AAR observed that apart from renting
Mn and all operational costs such as electricity, telecom
of the rooms, the inmates are also being provided with
and water charges as per the actual meter reading or
food and hospitality services.
based on the invoice or the bill issued by the relevant
authorities. ▪ Considering the number of rooms and amenities provided
in it, boarding and hospitality services extended to the
Question before the Advance Ruling Authority (AAR)
inmates and from all the clauses of the agreements, it
▪ Whether the taxpayer is eligible for exemption from appears that the building was constructed for the
payment of GST on the monthly rentals received on lease purpose of running as a lodge house.
of residential building, as per entry no:13 of notification
▪ Though the taxpayer claimed that they have rented-out
no.9/2017-CT dated 28 June 2017?
residential dwelling for use as residence, it appears that
Submissions made by the taxpayer the premise is a non-residential property and further
▪ The taxpayer submitted that they are eligible for lessee is primarily engaged in commercial activity of
exemption from payment of GST under entry no. 13 of renting of rooms in the dwelling and providing boarding
notification no.9/2017- CT dated 28 June 2017 which is and hospitality services to the inmates.
‘Services by way of renting of residential dwelling for use ▪ On combined perusal of the arrangement, it was clear
as residence’. that the lessor has rented-out their dwelling for
▪ Taxpayer further stated that on perusal of the aforesaid commercial activity and supply of such services, in the
entry no:13 of exemption notification, it can be inferred facts and circumstances of the case, are classifiable as
that the exemption would be applicable, if the following ‘Rental or leasing services involving own or leased non-
conditions are cumulatively fulfilled and they fulfil the residential property’ under Service Code (Tariff) 997212
conditions: [notification no: 8/2017-IGST (R) dated 28 June 2017].
− The service should be by way of renting of residential ▪ Therefore, AAR held that the said supply in the hands of
dwelling; the lessor is liable to GST at the rate of 18%.

− The residential dwelling should be for used for [AAR- Andhra Pradesh- M/s Lakshmi Tulasi Quality Fuels,
residential purpose. AAR No.12/AP/GST/2020 dated 05 May 2020]
13 BDO India Newsletter

TAX UPDATES
Indirect Tax
the tax authorities and the investigation, on the said
EXCISE & SERVICE TAX
date was still pending.
Judicial Updates
Observations and Ruling of High Court
Liberal interpretation has to be given to the Sabka Vishwas
▪ Hon’ble High Court observed that a liberal interpretation
(Legacy Dispute Resolution) Scheme (SVLDRS), 2019
has to be given to the scheme as its intent is to unload
Facts of the case the baggage relating to legacy disputes under the
▪ Ms. Vaishali Sharma (‘Taxpayer’) is in receipt of income Central Excise and Service Tax and to allow the
from the services rendered to M/s Herbal Life India businesses to make a fresh beginning. And the tax
Private Limited. Taxpayer, pursuant to summons dated authorities should have provided an opportunity of
14 May 2018 admitted the tax liability on the hearing to the taxpayer before rejecting the declaration
abovementioned income on 18 May 2018. Accordingly, dated 29 December 2019 under the SVLDRS.
the taxpayer filed a declaration dated 29 December
▪ Accordingly, the Hon’ble High Court had set-aside the
2019 under the SVLDRS, 2019 but the same has been
impugned order dated 26 February 2020 and the
rejected on the sole ground that the demand was
designated committee is directed to decide the
neither quantified nor communicated to the taxpayer on
taxpayer’s application after giving an opportunity of
or before 30 June 2019.
hearing to the taxpayer. A reasoned order, after giving
Submissions by the taxpayer an opportunity of hearing, shall be passed by the
▪ Aggrieved by the said rejection order, the taxpayer filed designated committee on or before 31 August 2020.
a Writ petition before the Hon’ble High Court of Delhi. [High Court-Delhi – Ms. Vaishali Sharma Vs. Union of
The taxpayer submitted that as she had admitted her India and Ors. [WP(C) 4763/2020 dated 05 August 2020]
liability on 18 May 2018 itself, the demand stood
CUSTOMS
quantified and the said amount had been paid in four
instalments in the months of June and July of 2018. Judicial Updates
▪ The taxpayer further submitted that para 4(a) and 10 Conversion of shipping bills from one scheme of export
(g) of the Central Board of Indirect Taxes and Customs benefit to another scheme shall be allowed without any
(CBIC) circular dated 27 August 2019 provides for relief conditions
under the scheme for cases under investigation and Facts of the case
audit where the duty involved had been admitted by the ▪ M/s Prudential Rubber Private Limited (‘Taxpayer’) has
assessee/declarant in a statement on or before 30 June filed an appeal before Customs, Excise & Service Tax
2019. Appellate Tribunal (CESTAT), on rejection of application
▪ Further stated that the impugned order is in violation of for conversion of 13 Advance Authorisation shipping bills
principles of natural justice inasmuch as the tax to Drawback shipping bills by the Principal Commissioner
authorities had neither issued any notice nor given any of Customs.
opportunity of hearing to the taxpayer. Had the ▪ The taxpayer is an exporter of 'Tread Rubber' made from
taxpayer given the personal hearing before rejecting the PBR SBR and natural rubber, filed 13 shipping bills to
declaration, the taxpayer would have justified her case. export under Advance Authorisation and all the 13
▪ In support of the above submission, she relied upon the consignments were exported after getting the Let Export
judgment of the Hon’ble High Court of Delhi in the case Order (‘LEO’).
of Chaque Jour HR Services Private Limited Vs. Union of ▪ Subsequently, the taxpayer requested to convert these
India & Ors. [W.P.(C) No. 1999/2020 dated 11 March Advance Authorisation shipping bills to Drawback
2020 [2020-TIOL-625-HC-DEL-CX] as well as in the case shipping bills on the following grounds:
of Industrial Personnel & Security Services Private − That they had obtained the Advance Authorisation as
Limited Vs. Commissioner of Central Goods & Services per Standard Input Output Norms (SION) and:
Tax, Delhi South & Anr. [2020-VIL151-DEL-CE = 2020-
− After fulfilling the export obligation, they had
TIOL-939-HC-DEL-CX].
applied for no-bond certificate from the Regional
Submissions by the tax authorities Authority (‘RA’), JDGFT, Cochin.
▪ Tax authorities stated that the amount quantified by ▪ However, the said application was rejected on the
the taxpayer in the statement had not been accepted by ground that one of the import items, viz., natural
14 BDO India Newsletter

TAX UPDATES
Indirect Tax
rubber, is covered under Appendix 4J with pre-import taken a view in this issue and to quote the order of
condition and special Export Obligation Period (EOP) as per the Mumbai Bench in the case of Parle Products
public notice no.35/2015-20 dated 11 September 2015. Private Limited (supra):
Since before effecting import of natural rubber they had "……..5.6 We find strong force in the contentions
exported the goods, their exports have not been raised by learned Counsel for the appellant that
considered by the Regional Authority (RA). Hon'ble High Court of Kerala in the case of Leotex
▪ The Commissioner while adjudicating the request of the (supra) in para 4 has held that the Board itself had
taxpayer seeking conversion, rejected the same on the decided to liberalise the provision regarding
ground that they have not submitted the request for conversion from one scheme to another, there
conversion within three months from the date of LEO. should not be any reason to allow the same. It is
Submissions by the taxpayer also to be noted that the provisions of Section 149
▪ The taxpayer submitted that the request for conversion is of the Customs Act, 1962 does not prescribe time
made after the expiry of the permitted period as limit for amendment of the shipping bills hence the
mentioned in the circular no. 36/2010-Cus dated 23 Board's Circular seeking restriction on time limit for
September 2010. conversion is going beyond the mandate of law."
▪ Further the taxpayer relied on the following case laws in ▪ CESTAT relied on the aforesaid case law and in the
support of the submissions: absence of any contrary decision or order to the
above, the impugned order has been set-aside and
− Diamond Engineering Chennai Private Limited Vs.
appeal is allowed with consequential relief.
Commissioner of Customs – 2013 (288) ELT 265 (Tri-
Chennai) [2013-TIOL-221-CESTAT-MAD]: Wherein it was [CESTAT-Bangalore – M/s Prudential Rubber Private
held that amendment of shipping bill after export is Limited Vs. The Principal Commissioner, Customs
governed by the proviso to section 149 of the Customs House, Cochin- Customs Appeal no. C/20177 of 2019
Act, 1962 which prescribes no time limit for such dated 25 March 2020]
conversion and if the documentary evidence available
at the time of export is produced, such conversion
needs to be allowed.
− Parle Products Private Limited Vs. Commissioner of
Customs – 2017 (358) ELT 341 (Tri-Mumbai) [2017-TIOL-
1626-CESTAT-MUM]: Wherein, the CESTAT while
considering the duty drawback which was not
sanctioned for two years, for various reasons, held that
there is no time limit provided under section 149 of the
Customs Act, 1962 for conversion of shipping bills.
− V.R.A. Cotton Mills Private Limited Vs. Commissioner of
Customs – 2014 (309) ELT 100 (Tri. Ahmedabad) [2014-
TIOL-1438-CESTAT-AHM]: Held that section 149
permitted amendment of shipping bills without any
time limit, which is possible even after export of
goods.
Submissions by the tax authorities
▪ Tax authorities submitted that the Commissioner is right in
rejecting the conversion of these shipping bills on the
ground that it was not submitted within three months from
the date of LEO.
Observations and Ruling of CESTAT
▪ CESTAT observed that the issue involved is no more res
integra and the co-ordinate Benches of the Tribunal have
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