Through this article Author gives a simplified version of circulars and Notifications issued by CBDT after Budget Presented by Finance Minister in February 2019 till 26th September 2019.

A. Summary of Income Tax Circulars  (Feb-Sep 2019)

I. 3rd Corrigendum to Income Tax Circular No. 1/2019 dated 08/02/2019

Clarification to Sec 80 TTB is as follows

a. If sec 80TTA available ,then sec 80TT B  not is available

b. Allows deduction to a senior citizen(who attains at the age of 60)

c. From his gross total income

d. in respect of income by way of interest on deposits with-

 (a) a banking company to which the Banking Regulation Act, 1949 (10 of 1949)

 (b) a co-operative society engaged in carrying on the business of banking

(including a co-operative land mortgage bank or a co-operative land development bank);or

 (c) a Post Office as defined in clause (k) of section 2 of the Indian Post Office Act, 1898 (6 of 1898).

II.  Circular No. 6/2019-Income Tax Dated: 31/03/2019

From 01.04.2019 onwards, returns cannot be filed without quoting the Aadhaar number.

III. Circular No. 7/2019-Income Tax Dated: April 8, 2019

whose parent entities are resident in USA, in furnishing of the report under sub-section (4) of section 286 of the Act read with sub-rule (4) of rule 10DB of the Rules, gets an  extended  period  up to April 30, 2019.

IV. Circular No. 82019-Income Tax Dated: 10/5/2019

“Fund manager” in Section 9A(4)(b) of the Income-tax Act   Includes an AMC as approved by SEBI under the SEBI (Mutual Funds) Regulations, 1996.

V. Circular No. 9/2019-Income Tax Dated 14th May, 2019

Reporting under clause 30C and clause 44 of the Tax Audit Report shall be kept in abeyance till 31st March, 2020.

Explanation by Author

30 C of Tax Audit report will be as follows

(a) Whether the assessee has entered into an impermissible avoidance arrangement, as referred to in section 96, during the previous year? (Yes/No.)

(b) If yes, please specify:—

(i) Nature of impermissible avoidance arrangement:

(ii) Amount (in Rs.) of tax benefit in the previous year arising, in aggregate, to all the parties to the arrangement:

Clause 44 of the Tax Audit report will be as follows

Break-up of total expenditure of entities registered or not registered under the GST:

VI. Circular no.  10/2019-Income Tax Dated 22/5/2019

The delay in filing of Form no. 10B for AY 2016-17 and AY 2017-18, in all such cases where the audit report for the previous year has been obtained before the filing of return of income and has been furnished subsequent to the filing of the return of income but before the date specified under section 139 of the Act is condoned.

In all other cases of belated applications in filing Form no. 10B for years prior to AY 2018-19, the Commissioners of Income-tax are authorized to admit such applications for condonation of delay u/ s 119(2)(b) of the ACT

VII. Circular No. 11/2019-Income Tax Dated 19th of June, 2019

where total income of an assessee includes any income referred to in section(s) 68/69/69A/69B/69C/69D of the Act, no deduction in respect of any expenditure or allowance or set off of any loss shall be allowed to the assesse.

Through the above amendment board reasserted the above position.

Explanation by author

Sec 68-Cash credits

Sec-69-Unexplianed Investments etc.

VIII. Circular No 12/2019-Income Tax dated 19th of June, 2019

While framing assessment in case of firms, a cross-verification of returns of Firms with income-tax return of firm’s partner will be desirable .

AOs should invariably call for a copy of the partnership deed to understand details of payment of remuneration.

It has also come to notice that some firms try to inflate the profits eligible for deduction under section 80IA of the Act by not claiming expenditure towards remuneration, salary, interest etc. which are payable to the partners. In such situations, Assessing Officers may examine these transactions in light of provisions of sub-section (10) of section 80IA of the Act which empower Assessing Officer to re-compute profit of the eligible business after excluding the profits of the related activity/business which produced the excessive profit.

IX. Circular No. 13/2019-Income Tax dated 24 June, 2019

Exemption of service element and disability element of disability pension granted to disabled personnel of armed forces who have been invalided on account of disability attributable to or aggravated by such service

X. Circular No. 14/2019-Income Tax Dated dated 03rd July, 2019

The matter has been considered by the Board. As section 115 UB(I) of the Act provides that the investments made by Category I or Category II AIFs are deemed to have been made by the investor directly, it is hereby clarified that any income in the hands of the non-resident investor from off-shore investments routed through the Category I or Category II AIF, being a deemed direct investment outside India by the non-resident investor. It  is not taxable in India under section 5(2) of the Act. 6.

XI. Circular No. 15/2019-Income Tax Dated 12 July, 2019

Issues in respect of payment of third installment under the Income Declaration Scheme, 2016- clarification on certain procedural issues under section 195 of the Income Disclosure Scheme, 2016 read with section 119 of the Income-tax Act, 1961-reg

The genuine hardship of the declarants on account of procedural/technical issues with the banks has been considered. It has been decided that payments effected through cheque/RTGS/electronic transfer by the declarant by 3rd of October, 2017 (the deemed extended date for the third installment as per para 2 above) which were credited by the banks till 5th October, 2017 shall be deemed to have been paid by 30th September, 2017.

XII. Circular No. 17/2019-Income Tax Dated: 8th August 2019

Monetary limits for filing of appeals in income-tax cases be enhanced as follows

1. Before Appellate Tribunal 50,00,000 -.

2. Before High Court 1,00,00,000

3. Before Supreme Court 2,00,00,000

XIII. Circular No. 18/2019-Income Tax Dated: 8th August, 2019

Clarification in respect of filling-up of the ITR forms for the Assessment Year 2019-20

XIV. Circular No. 19/2019-Income Tax dated 14/8/2019

No communication shall be issued by any income tax authority  to the assessee or any other person, on or after the 1/ 10/20 19 unless a computer-generated Document Identification Number (DIN) has been allotted and is duly quoted in the body of’ such communication.

XV. Circular No. 20/2019-Income Tax dated 19/8/2019

Clarification regarding treatment of Farm-in expenditure incurred by the Oil Exploration and Production (E&P) Companies –

XVI. Circular No. 21/2019-Income Tax dated 27/8/2019

It is further clarified that a non-resident taxpayer, who is Director in a domestic company and also in a foreign company, which does not have any income received in India, or accruing or arising in India, should answer the relevant question in the affirmative, and provide details of directorship in the domestic company only. It is also clarified that a resident taxpayer would continue to be required to disclose details of his directorship in any company. including foreign company, in the relevant column

XVII. Circular No. 22/2019-Income Tax dated 30/8/2019

I. Assessment of Startups The circular No. 16/2019 dated 7th of August, 2019 provided for the following procedure for pending assessment of the Startups:-

A. In case of Startup companies recognized by Department for Promotion of Industry and Internal Trade (DPIIT) which have filed Form No. 2 and whose cases are under “limited scrutiny” on the single issue of applicability of section 56(2)(viib) of the Income-tax Act, 1961 (the Act),the contention of the assessee will be summarily accepted.

B. In case of Startup companies recognized by DPIIT which have filed Form No. 2 and whose cases have been selected under scrutiny to examine multiple issues including the issue of section 56(2)(viib)of the Act, this issue will not be pursued during the assessment proceedings and inquiry on other issues will be carried out by the Assessing Officer only after obtaining approval of the supervisory authority.

In case of Startup Companies recognized by the DPIIT, which have not filed Form No.2, but have been selected for scrutiny, the inquiry in such cases also will be carried out by the Assessing Officer only after obtaining approval of the supervisory authorities.

II. Time limit for Completion of pending assessments of the Startups All assessment referred to in 2(i) should preferably be completed by the AOs by 30th September, 2019. The assessments referred to in 2(ii) & 2(iii) should be taken up on priority and should be preferably completed by 31st October, 2019.

III.. Procedure for addition made U/S 56 (2)(vii b) in the past assessment The clarification issued on 9th August,2019 provided that the provisions of the section 56(2)(viib) of the Act shall also not be applicable in respect of assessment made before 19th February, 2019 if a recognised Startups has filed declaration in Form No.2. The following procedure is laid down with regard to addition made under section 56(2)(viib) of the Act in assessment order passed before 19th February, 2019:- 1. In case the appeal against the assessment is pending before the Commissioner of Income-tax (Appeal)[CIT(A)], the appellate order should be passed by CIT(A) on or before 31st December, 2019 after taking into account the fact that the Startup has filed declaration in Form No. 2 and hence the provisions of section 56(2)(viib) of the Act are not applicable for the addition made under section 56(2)(viib) of the Act before 19 February, 2019. The Department shall not file further appeal on the issue of addition made under section 56(2)(viib) of the Act; ll. In case the case is pending before the IT AT, the Department shall not press the ground relating to addition under section 56(2)(viib) of the Act in these cases.

IV. Income-tax demand

It is reiterated that the outstanding income-tax demand relating to additions made under section 56(2)(viib) shall not be pursued and no communication with the assessee in respect of outstanding demand shall be made for this purpose. In respect of other income-tax demand, it is decided that the income-tax demand shall not be pursued unless the demand is confirmed by the ITAT

V. Constitution of Startup cell

In order to redress grievances and to address various tax related issues in the cases of Startups, a Startup Cell is constituted on 30th August, 2019.

Explanation by author

Clause (viib) of sub section (2) of section 56 was inserted vide finance act, 2013 w.e.f 01.04.2013 i.e. for A. Y. 2013-14 to provide that where a closely held company issues its shares at a price which is more than its fair market value then the amount received in excess of fair market value of shares will be charged to tax in the hand of the company as income from other sources

XVIII. Circular No. 23/2019-Income Tax dated 06/09/2019

In this context, Board has decided that notwithstanding anything contained in any circular issued U/S 268A specifying monetary limits for filing of departmental appeals before Income Tax Appellate Tribunal (ITAT), High Courts and SLPs/appeals before Supreme Court, appeals may be filed on merits as an exception to said circular, where Board, by way of special order direct filing of appeal on merit in cases involved in organised tax evasion activity.

XIX. Circular No. 25/2019-Income Tax dated 09/09/2019

As a one-time measure, the condition that compounding application shall be filed within 12 months, is hereby relaxed, under the following conditions:

i) Such application shall be tiled before the Competent Authority i.e. the Pro CCIT/CCIT/Pr. DGIT/DGIT concerned, on or before 31.12.2019.

ii) Relaxation shall not be available in respect of an offence which is generally/normally not compoundable, in view of Para 8.1 of the Guidelines dated 14.06.2019.

XX. Circular No. 27/2019-Income Tax dated 26/09/2019

Assessees are required to produce/ cause to produce their response/evidence to any notice/ communication/ show-cause issued by the Assessing Officer electronically (unless specified otherwise) through their ‘E-filing’ account on the ‘E-filing’ portal.

XXI. Taxation Laws (Amendment) Ordinance 2019

HIGHLIGHTS OF THE ORDINANCE: The President has promulgated an Ordinance dated 20 September, 2019 to amend the Income-tax Act, 1961 and the Finance (No.2) Act, 2019.

Insertion of new sections 115BAA and 115BAB.

After section 115BA of the Income-tax Act, the following sections shall be inserted with effect from the 1st day of April, 2020, namely:—

Tax on income of certain domestic companies

“115BAA. (1) The income-tax payable in respect of the total income of a person, being a domestic company, for any previous year relevant to the assessment year beginning on or after the 1st day of April, 2020, shall, at the option of such person, be computed at the rate of twenty-two per cent.

For the purposes of sub-section (1), the following conditions shall apply subject to the condition that the total income of the company has been computed,-

Without any deduction under the provisions of

i. section 10AA or clause

ii. sub-section (1) of section 32 or

iii. section 32AD or

iv. section 33AB or

v. section 33ABA or sub-clause

vi. sub-clause (iia) or sub-clause (iii) of sub-section (1) or sub-section (2AA) or

vii. sub-section (2AB) of section 35 or

viii. section 35AD or

ix. section 35CCC or

x.section 35CCD or

xi.under any provisions of Chapter VI-A under the heading “C.—

Deductions in respect of certain incomes” other than the provisions of section 80JJAA;

xii.without set off of any loss carried forward from any earlier assessment year if such loss is attributable to any of the deductions referred to in sub-clause (i); and

xiii.by claiming the depreciation, if any, under section 32, other than clause (iia) of sub-section (1) of the said section, determined in such manner as may be prescribed.

Tax on income of certain new domestic manufacturing companies.

115BAB. (1)  The income-tax payable in respect of the total income of a person, being a domestic company, for any previous year relevant to the assessment year beginning on or after the 1st day of April, 2020, shall, at the option of such person, be computed at the rate of fifteen per cent.

For the purposes of sub-section (1), the following conditions shall apply, namely:—

(a) the company has been set-up and registered on or after the 1st day of October, 2019, and has commenced manufacturing on or before the 31st day of March, 2023, and,—

(i) is not formed by splitting up, or the reconstruction, of a business already in existence:

Provided that this condition shall not apply in respect of an undertaking which is formed as a result of the re-establishment, reconstruction or revival by the person of the business of any such undertaking as is referred to in section 33B, in the circumstances and within the period specified in the said section;

(ii) does not use any machinery or plant previously used for any purpose.

The total income of the company has been computed,—

(i) without any deduction under the provisions of section 10AA

(ii) or clause (iia) of sub-section (1) of section 32

(iii) or section 32AD or

(iv) section 33AB or

(v) section 33ABA or

(vi) sub-clause (ii) or sub-clause (iia) or sub-clause (iii) of sub-section (1) or sub-section (2AA) or sub-section (2AB) of section 35 or section 35AD or

(vii) section 35CCC or section 35CCD or

(viii) under any provisions of Chapter VI-A under the heading “C.—Deductions in respect of certain incomes” other than the provisions of section 8 OJJAA ;

Amendment of section 115JB

In section 115JB of the Income-tax Act, with effect from the 1st day of April, 2020,—

(a) in sub-section (1), the following proviso shall be inserted, namely:—

“Provided that for the previous year relevant to the assessment year commencing on or after the 1st day of April, 2020, the provisions of this sub-section shall have effect as if for the words “eighteen and one-half per cent.”, occurring at both the places, the words “fifteen per cent.” had been substituted.”;

Amendment of section 115QA.

In section 115QA of the Income-tax Act, in sub-section (1), the following proviso shall be inserted and shall be deemed to have been inserted with effect from the 5th day of July, 2019, namely:—

“Provided that the provisions of this sub-section shall not apply to such buy-back of shares (being the shares listed on a recognised stock exchange), in respect of which public announcement has been made before 5th day of July, 2019 in accordance with the provisions of the Securities and Exchange Board of India (Buy-back of Securities) Regulations, 2018 made under the Securities and Exchange Board of India Act, 1992 as amended from time to time.

Timelines for exercising the option:

It has be exercised before due date of furnishing the returns of income for assessment year 2019-2020, i.e., 30 September 2020 or 30 November, as applicable. Once the option has been exercised, it cannot be subsequently withdrawn for the same or any future previous years. Revised statutory tax rate applicable:

The Surcharge would be ten percent (10%) and Cess would be 4 percent (4%).

The amendments made to surcharge on income-tax, for Individuals, Hindu Undivided Families,

Association of Persons, Body of Individuals and Artificial judicial person, are as follows:

5 million – 10 million –10%.

Above 10 million –15%

B. Summary of Income Tax  Notifications (Feb-Sep 2019)

I. Notification No. 14/2019-Income Tax Dated: 06th March 2019

 It is hereby notified for general information that ‘the said three units under the aegis of ‘Agricultural Development Trust, Baramati , Pune’ have been approved by the Central Government for the purpose of clause (ii) of sub-section (1) of section 35 of the said Act, read with Rules 5C and 5E of the Income-tax Rules, 1962 (said Rules), from Assessment year 2018-2019 onwards in the category of ‘University, College or other Institution’, engaged in research activities

II. Notification No. 16/2019-Income Tax Dated: 08th March 2019

Maximum Amount of Gratuity –Rs.20 lakhs from 29/3/2019.

Explanation by author

Earlier amount-10,00,000.

III. Notification No. 21/2019-Income Tax Dated: 13th March, 2019

In exercise of the powers conferred by section 118 of the Income-tax Act, 1961 (43 of 1961), the Central Board of Direct Taxes hereby directs that the Commissioner of Income-tax (e-Verification) shall be subordinate to the Principal Director General of Income-tax (Systems).

III. Notification No. 22/2019-Income Tax Dated 14/03/2019

Government  has Exempted income in respect of , ‘Prayagraj Mela Pradhikaran, Prayagraj’, an authority constituted by the State Government of Uttar Pradesh

IV. Notification No. 24/2019-Income Tax Dated 19/03/2019

Government  has Exempted income in respect of ‘Andhra Pradesh Electricity Regulatory Commission’, Hyderabad, a Commission constituted under the Andhra Pradesh Electricity Reforms Act, 1998

V. Notification No. 25/2019-Income Tax Dated: 19/03/2019

Government has Exempted  income in respect of ‘Visakhapatnam Special Economic Zone Authority’, an authority constituted by the Central Government,

VI. Notification No. 27/2019-Income Tax Dated: 20/03/2019

In exercise of the powers conferred by clause (e) of sub-section (9) of section 9A of the Income-tax Act, 1961 (43 of 1961), the Central Government hereby notifies the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 made under the Securities and Exchange Board of India Act, 1992 (15 of 1992) as the regulation for the purposes of the said section

VII.Notification No. 28/2019-Income Tax Dated: 26/03/2019

Government has Exempted income in respect of, ‘Odisha Electricity Regulatory Commission’, Bhubaneswar, a commission established by the State Government of Odisha,

IX. Notification No. 33/2019-Income Tax Dated: 09/04/2019

Government has Exempted income, ‘Mysore Palace Board’, Karnataka, a board constituted by the Government of Karnataka,

IX. Notification No. 34/2019-Income Tax Dated: 09/04/2019

Government has Exempted Income in respect of ,‘Telangana State Electricity Regulatory Commission’, Hyderabad, a commission constituted by the State Government of Telangana,

XII. Notification No. 35/2019-Income Tax Dated: 09/04/2019

Government has Exempted income in respect of , ‘Kerala Headload Workers Welfare Board’, Kochi (PAN AAAJK1176F), a Board constituted by the State Government of Kerala,

XII. Notification No. 36/2019-Income Tax Dated: 12/04/2019

In the Income-tax Rules, 1962, in Appendix II– (A) in Form No. 16,– (i) the “Notes” occurring after “Part A” shall be omitted; (ii) for “Part B (Annexure), shall be substituted.

XIII. Notification No. 9/2019-Income Tax Dated: 06th, May, 2019.

In exercise of the powers delegated by the Central Board of Direct Taxes, under sub-rule (6A) of Rule 31 of the Income-tax Rules, 1962, the Principal Director General of Income-tax (Systems) hereby specifies the procedure, formats and standards for the purposes of generation and download of certificates from “TDS Reconciliation Analysis and Correction Enabling System” or (https://www.tdscpc.gov.in) (hereinafter called TRACES Portal), as below:

XIV. Notification No. 41/2019-Income Tax Dated: 22/05/2019

In the Income-tax Rules, 1962, in Appendix II, in Form No. 15H in Part II, in note 10, the following proviso shall be inserted, namely:— “Provided that such person shall accept the declaration in a case where income of the assessee, who is eligible for rebate of income-tax under section 87A, is higher than the income for which declaration can be accepted as per this note, but his tax liability shall be nil after taking into account the rebate available to him under the said section 87A.”. [Notification No. 41/2019/F. No. 370142/5/2019-TPL]

XV. Notification No. 42/2019-Income Tax Dated: 23/05/2019

The Government has exempted incomes in respect of  ‘All India Council for Technical Education’, New Delhi, a Council established by the Central Government.

XVI. Notification No. 43/2019-Income Tax Dated: 23/05/2019

The Government has exempted Incomes in respect of ‘Tamil Nadu Real Estate Regulatory Authority’, an Authority constituted by the State Government of Tamil Nadu .

XVII.  Notification No. 10/2019 Dated: 04, June, 2019 – Issued by Directorate of Income Tax (Systems)

 The Principal Director General of Income-tax (Systems) hereby lays down the following procedures of registration in the e-filing portal, the manner of the preparation of the statements and submission of the statements

XVIII. Notification No. 45/2019-Income Tax Dated: 20/06/2019

The Government has exempted Incomes in respect of ‘Central Silk Board’, Bengaluru, PAN: AAALC0093M a Board constituted by the Central Government.

XIX. Notification No. 46/2019-Income Tax Dated: 20/06/2019

The Government has exempted Incomes in respect of  ‘International Sericultural Commission’, Bengaluru, (PAN:AAAGI0020F) a body constituted under a treaty entered into by the Central Government.

XX. Notification No. 47/2019-Income Tax Dated: 20/06/2019

Now, therefore, in exercise of the powers conferred by clause (iii) of sub-section (4) of section 80-IA of the said Act, the Central Government hereby notifies the undertaking, being developed and being maintained and operated by M/s. Magrath Properties Pvt. Ltd., as an industrial park for the purposes of the said clause

XXI. Notification No. 48/2019-Income Tax Dated: 26/06/2019

It is hereby notified for general information that the organization M/s. Manipal Academy of Higher Education, Manipal,Karnataka (PAN:- AAAJN0078Q) has been approved by the Central Government for the purpose of clause (ii) of sub-section (1) of section 35 of the Income-tax Act, 1961 (said Act), read with Rules 5C and 5E of the Income-tax Rules, 1962 (said Rules), from Assessment year 2015-16 and onwards in the category of ‘University, College or other Institution’.

XXII. Notification No. 52/2019-Income tax Dated: 04/07/2019

The Government has exempted Incomes in respect of  ‘Chhattisgarh Building and Other Construction Workers’ Welfare Board’ (PAN AAALC0598F), a Board constituted by the Government of Chhattisgarh.

XXIII. Notification No. 53/2019-Income Tax Dated: 16/07/2019

It is hereby notified for general information that the organization M/s National Centre for Cell Science, Pune (PAN:-AAATN0848B) has been approved by the Central Government for the purpose of clause (ii) of sub-section (1) of section 35 of the Income-tax Act, 1961 (said Act), read with Rules 5C and 5D of the Income-tax Rules, 1962 (said Rules), from Assessment year 2019-20 onwards in the category of ‘Scientific Research Association.

XXIV. Notification No. 56/2019-Income Tax Dated: 02/08/2019

The Government has exempted Income in respect of ‘Bangalore Water Supply and Sewerage Board’, Bengaluru (PAN AAALB0015G) a Board constituted by the Government of Karnataka.

XXV. Notification No. 60/2019-Income Tax Dated: 05/09/2019

Amendment in the procedure of getting 80 G status Institution

XXVI. Notification No. 61/2019- Income Tax Dated: 12/09/2019

E -ASSESSMENT SCHEME

XXVII. Notification No. 65/2019- Income Tax Dated: 13/09/2019

In pursuance of the powers conferred by sub-section (1) and (2) of section 120 and sub-section (2) of Section 143 of the Income-tax Act, 1961 (43 of 1961) (hereinafter referred to as said Act), read with rule 12E of the Income-tax Rules, 1962, the Central Board of Direct Taxes hereby authorises that the Assistant Commissioner of Income-tax (e-Verification), having headquarter at Delhi, to act as prescribed Income-tax Authority for the purpose of sub-section (2) of section 143 of the said Act, in respect of returns furnished under section 139 or in response to a notice under sub-section (1) of section 142 of the said Act during the financial year commencing on 1st day of April, 2018 for the purposes of issuance of notice under sub-section (2) of section 143 of the said Act.

XXVIII. Notification No. 69/2019-Income Tax Dated: 20/09/2019

(i) Motor cars, other than those used in a business of running them on hire, acquired or put to use on or after the 1st day of April, 1990 except those covered under entry (ii)— Depreciation allowed as per percentage of written down value –15.

(ii) Motor cars, other than those used in a business of running them on hire, acquired on or after the 23rd day of August, 2019 but before the 1st day of April, 2020 and is put to use before the 1st day of April, 2020.– Depreciation allowed as per percentage of written down value –30

Motor buses, motor lorries and motor taxis used in a business of running them on hire other than those covered under entry (b)—— Depreciation allowed as per percentage of written down value— 30

Motor buses, motor lorries and motor taxis used in a business of running them on hire, acquired on or after the 23rd day of August, 2019 but before the 1st day of April, 2020 and is put to use before the 1st day of April, 2020.—- Depreciation allowed as per percentage of written down value–45

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