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CSR Regulations and charitable institutions – Recent developments
By Aastik Ahuja
The article in this issue of Direct Tax Amicus analyses the various income-tax implications of the amendments in Section 135 of the Companies Act, 2013 and the Companies (CSR Policy) Rules, 2014 with effect from 22 January 2021, and related aspects, on the companies and charitable trusts/societies being implementing agencies. Discussing the pre-amendment regime and its drawbacks, the article highlights how various loopholes have been plugged by the amendments. It examines the changes made by the Finance Act, 2021 which will ensure that the provisions relating to corpus contributions are not mis-utilised. Relying on some recent ITAT decisions, the article also points out that transfer of unspent CSR amounts to Schedule VII Funds which are covered under Section 80G(2) may be claimed as deduction. According to the author, the companies and institutions acting as implementing agencies must be extremely mindful of ensuring actual utilisation of the funds earmarked towards charitable purposes, as the provisions under both the Companies Act and the Income-tax Act, 1961 have been tightened with respect to the same...
Notifications & Circulars
Indirect transfer of assets/capital assets situated in India, before 28 May 2012 – Procedure for availing necessary relief from old/existing orders notified
Faceless assessment – Additional cases notified for exclusion
Time limits for filing ITRs and Reports of Audit relaxed
Timelines extended under Taxation and Other Laws Act, 2020 to ease compliance
Safe Harbour Rules amended to now apply for AY 2020-21 and AY 2021-22, w.e.f. 1 April 2021
Ratio decidendi
Amount of income-tax ‘deductible’ at source can be reduced while calculating advance tax for period prior to F.Y. 2012-13 – No interest liability even if tax not deducted by payer – Supreme Court
Investments when can be presumed to have been made from interest-free funds, even if assessee does not maintain separate accounts – Supreme Court
Limitation – Period from 15 March 2020 to 2 October 2021 to be excluded while calculating limitation period – Supreme Court
Reassessment proceedings, on or after 1 April 2021, can be initiated only in accordance with the new reassessment provisions brought by Finance Act, 2021 – Allahabad High Court
Onus, under Section 179, is on the director to show that non-recovery of dues was not attributable to gross neglect, misfeasance or breach of duty on his part – Delhi High Court
Pri]vate parties cannot apportion income-tax liabilities by private agreement – Delhi High Court
Assessment in name of an amalgamating company which is not in existence at the relevant time is invalid and cannot be revised under Section 263 – ITAT Ahmedabad
Depreciation is allowable on goodwill emerging out of scheme of amalgamation – ITAT Ahmedabad
