The difficulty which is faced by the NRIs as it is nowhere mentioned in the budget and the issues that the firms might run into the subsequent urging to refuse the Income Tax Settlement Commission (ITSC) have triggered court cases.
The Supreme court has asked the tax council Central Board of Direct Taxes (CBDT) to respond to the representation from the NRI, who might be exposed to higher taxes for staying more time in India because of coronavirus. The biggest chain of restaurants providing south Indian food furnished the application to the Madras High court to say to ITSC which was incorporated to resolve the tax disputes for accepting the application.
NRI Vs GoI
Answering the writ application through Gaurav Baid an NRI who is from Dubai has stayed in India the SC said to CBDT to answer in 3 weeks. Gaurav to the court said that the person who is being judged as NRI in the Fiscal year 2019-20, must be considered as NRI in the Fiscal year 2020-21 with respect to the lockdown despite the number of days spent in India.
“The Court took note of the fact that while the government had issued a clarification and relaxation for stranded NRIs for the FY 2019-20, no clarification or relaxation had been issued for the present FY, despite representations,”
“As the Budget was silent on the matter, many NRIs panicked. Some are already paying tax in countries where they are located while others live in states with little or no tax. There was a sudden fear of a high tax outgo in the absence of any clarification in the Budget,”
Saravana Bhavan Plea:
As per the application furnished by the Pitchai Rajagopal Shiva Kumaar who is a partner of M/s. Hotel Saravana Bhavan, the firm cannot furnish the application prior to ITSC on Feb 1 2021 as the registry denied accepting the application because of the procurement in the Finance bill. The bill asks the repealing of the ITSC with the quick effect from 1/02/2021 along with the interim board will be formed to dispose of all the pending applications prior to ITSC. the same board does not consider the application.
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“illegally denied the Petitioner from filing an application u/s. 245C of the Income Tax Act, based upon the proposed amendment.”
“If the application is not ultimately accepted, the assessee could face hardship. It would have to respond to notices in detail and explain seized documents before March 31, 2021. The additional income is considered based on the facts shared before ITSC and taxes have also been paid as the company was preparing to file its application before ITSC. The assessee will have to explain the working of taxes paid. If it is unable to move ITSC, but does not show the additional income in its return, it could face penalty proceedings,”
