Latest Blogs from SBS and Company LLP

    Summary of DT Decisions

    1. Jaipur Tribunal in the case of Prakash Chandra Mishra[1] - No Equalization levy is deductible when the person running the advertisement (ad), the target audience and the person displaying the ad are all located outside India:

    The Jaipur Tribunal has held that the assessee is not liable to deduct equalization levy (‘EL’) on the advertisement charges paid to a non-resident on behalf of his clients who are non-residents having no Permanent Establishment, where the target audience are also located outside India. In this regard, considerations have been given to the provisions of section 165A of Finance Act, 2016 and section 9 of the ITA[2] where the intent of the statute has been clearly depicted that only those transactions that are having a territorial nexus with India can be covered under the purview of EL.

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    Summary of GST Decisions

    1. Delhi High Court in Seema Gupta vs. Union of India & Ors[1] - Renting of Residential Dwelling under reverse charge is challenged especially when the renting is not taken in business account:

    An interesting issue has come up before the Honorable Delhi High Court in the above matter. Seema Gupta, the writ petitioner has challenged the constitutional validity of insertion of an entry in reverse charge notification Entry 5AA in Notification No 13/2017 – CT (R) [inserted by way of Notification No 5/2022- CT (R)].

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    Corporate Social Resposibility (CSR) Implementation Taken Seriously

    All are aware that the concept of Corporate Social Responsibility (CSR) was introduced by the Companies Act, 2013 (Act) with effect from 01.04.2014, not a mandatory provision, but over the years, the provisions have been made mandatory and the implementation taken seriously.

    The amendment to the CSR Rules made vide Notification[1] dated 22.01.2021, shows the intensity and the transparency with which the ministry wants the corporates to implement the provisions in letter and spirit. Please refer our CSR articles published in our earlier editions.

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    Sale of Space for Online Advertisement is Royalty & Taxability of Payments for Google AdWords Programme

    Introduction:

    When it is seen from the commercial perspective, the word ‘advertisement’ plays a vital role in the success of any business or commercial activity. The main objective of any advertisement is to reach out to customer and increase awareness of brand/product/service.

    The word ‘internet/digital’ has changed the lifestyle globally including the way of conducting a business or transaction. Advertisement is not an exception in digital model and in fact online advertisement has created lot of new business opportunities across the globe.

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    GST On TDRs for Commercial Projects – Also under Reverse Charge?

    We are aware that the taxability of Transferable Development Rights (for brevity ‘TDR’) has undergone a significant change with effective from 01st April 2019. The liability was shifted on the developer subject to certain conditions. The reasoning of such a shift to developer only if has unsold flats as on the date of completion certificate appears to be inspired from the Honourable Hyderabad Tribunal in the matter of Vasantha Green Projects[1].

    With the shift of burden of the taxability of TDRs on the developers, has provided a great relief to the land owners. Unless the land owner intends to sell his share prior to completion certificate, there is no requirement for him to obtain the registration under GST laws. As discussed in our previous articles, the land owner is only obliged to pay tax on two transactions. One, being the transfer of development rights to the developer and two, being the sale of flats falling his share to the customer prior to the completion certificate. Since, the taxation on transfer of development rights has been shifted to the developer, he is relieved from the burden of registration qua such transaction. The other transaction which compels his to obtain registration is sale of flats falling to his share prior to completion certificate. If the land owner retains or sells them post completion certificate, then there is no obligation to register under GST laws.

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