Share Application Money Not Taxable as Business Income – Section 28(iv) Not Applicable
• The assessee received ₹10.17 crores during FY 2011–12 and 2012–13 from existing shareholders and related parties as share application money.
• No shares were allotted until March 2021 due to financial distress and ROC compliance delays. The amount remained reported as “Share application money pending allotment” in audited financials.
• The AO treated the amount as business income under Section 28(iv), alleging that the assessee derived a benefit by not issuing shares despite receiving funds.
• CIT(A) deleted the addition, accepting the funds were capital in nature, supported by confirmations, balance sheets, ITRs, and eventual issuance of shares in FY 2020–21.
• The assessee provided share certificates, stamp duty payments, and Company Secretary documentation confirming share allotment to all contributors.
• Since the funds were genuine, from existing shareholders, and ultimately resulted in share allotment, they represent capital receipts and not business income. Section 28(iv) was deemed inapplicable.
• Revenue’s appeal dismissed. Addition of ₹10.17 crores under Section 28(iv) was rightly deleted by CIT(A).
Cash Loan Repayment: Section 271E Penalty Waived Due to Reasonable Cause
• The assessee took a loan from M/s. Tata Finance Corporation for a commercial vehicle. In the financial year relevant to AY 2012–13, the assessee repaid ₹14,59,688 in cash.
• The Assessing Officer, during assessment under Section 143(3) r/w Section 147, accepted the transaction and return as genuine. However, since repayment was in cash exceeding ₹20,000, it was held to be in violation of Section 269T.
• Penalty proceedings under Section 271E were initiated and penalty equal to the repaid amount was imposed on 28th December 2018.
• The assessee explained that the financer demanded cash repayment through a letter dated 5th November 2012, which was submitted during proceedings.
The transaction was also reflected in the books of accounts.
• Despite this, both the CIT (Appeals) and the ITAT, Raipur upheld the penalty, ignoring Section 273B, which allows for exemption from penalty if reasonable cause is shown.
• The assessee appealed to the High Court under Section 260A, raising a substantial question of law about whether the authorities acted perversely by ignoring Section 273B.
The High Court observed:
• The transaction was genuine and not intended to evade taxes. The financer’s insistence on cash repayment constituted reasonable cause.
• Section 273B provides that no penalty should be levied if there is a reasonable cause for failure to comply with Section 269T.
• It held that the penalty was not justified in the absence of mala fide intent or revenue loss.
TCS under Section 206C(1F) for Luxury Goods – CBDT Notification 36/2025
• Earlier TCS applied only on the sale of motor vehicles exceeding ₹10 lakh in value. Now, TCS provisions are amended to include below luxury items if exceeded ₹10 lakh, as notified by the government.
• Wrist watches
• Art pieces such as antiques, paintings, sculptures
• Collectibles such as coins and stamps
• Yachts, rowing boats, canoes, helicopters
• Sunglasses
• Bags such as handbags and purses
• Pairs of shoes
• Sportswear and equipment like golf kits and ski-wear
• Home theatre systems
• Horses used for horse racing or polo
Key Clarifications:
• TCS will apply on the sale of a single item of any of the above goods if its value exceeds ₹10 lakh.
• The amended provisions are effective from 22nd April 2025, the date of notification.
MAS Consults on Proposed Amendments to AML/CFT Notices for FIs and VCCs – to Mandate PF Assessments, Align Trust Regime and Streamline STR Filing Regime
On 8th April 2025, the Monetary Authority of Singapore (“MAS“) issued its “Consultation Paper on Proposed Amendments to AML/CFT Notices and Guidelines” (“Consultation“) to seek feedback on its proposed amendments to the anti-money laundering and countering the financing of terrorism (“AML/CFT“) regime for financial institutions (“FIs“) and variable capital companies (“VCCs“).
1. Purpose: The proposed amendments will ensure that the AML/CFT regime takes in developments in money laundering (“ML“), terrorism financing (“TF“) and proliferation financing (“PF“), including the latest revised Financial Action Task Force (“FATF“) Standards.
2. Affected institutions: The amendments will apply across the financial sector, including banks, merchant banks, finance companies, payment service providers, direct life insurers, capital markets intermediaries, financial advisers, central depository, approved exchange and recognised market operators, approved trustees, trust companies, non-bank credit and charge card licensees and digital token service providers, as well as VCCs.
3. Timelines: The Consultation closes on 8th May 2025. The amendments will be set out in various AML/CFT Notices and Guidelines which are intended to take effect from 30th June 2025.
4. Coverage: The amendments will:
• Mandate PF risk assessments: Clarify that ML includes PF and that ML risks include PF risks, such that the requirement for FIs and VCCs to carry out ML/TF risk assessments includes PF risk assessments.
• Align trust regime to include trust relevant parties and legal arrangements: Effectively ensure that the requirements in MAS Notice TCA-N03 (e.g. on collecting information and identifying effective controllers) will more broadly apply to: (i) trust relevant parties (i.e. not only limited to settlors, trustees and beneficiaries, etc, but also including protectors, classes of beneficiaries and objects of powers, and persons with specific powers or exercising effective control under the trust, etc); and (ii) legal arrangements (i.e. not only limited to trusts).
• Streamline STR filing regime: Clarify the timelines for filing suspicious transaction reports (“STRs“), to improve the timeliness and promptness of the provision of information to the Suspicious Transaction Reporting Office (“STRO“) for analysis and follow-up. This represents a significant enhancement to the STR reporting timeline.
• Clarify screening requirements and SOW/SOF establishment: Clarify the: (i) applicable screening requirements; and (ii) establishment of source of wealth (“SOW“) and source of funds (“SOF“), for customers and beneficial owners of FIs and VCCs.
Notification relating to the Micro, Small and Medium Enterprises Development Act, 2006:
The Ministry of Micro, Small and Medium Enterprises, pursuant to its powers under the Micro, Small and Medium Enterprises Development Act, 2006 (“ MSMED Act”) has, by way of a notification dated 21st March 2025 (“Amendment”), amended its earlier notification bearing number S.O. 2119 (E), dated the 26th June 2020. The Amendment has revised the existing thresholds for classification of enterprises to the following:
a) Micro Enterprises: Investment in plant and machinery or equipment not exceeding INR 2,50,00,000/- (Indian Rupees Two Crores and Fifty Lakhs only) and turnover not exceeding INR 10,00,00,000/- (Indian Rupees Ten Crores Only);
b) Small Enterprises: Investment in plant and machinery or equipment not exceeding INR 25,00,00,000/- (Indian Rupees Twenty Five Crore Only) and turnover not exceeding INR 1,00,00,00,000/- (Indian Rupees One Hundred Crore Only);
c) Medium Enterprises: Investment in plant and machinery or equipment not exceeding INR 1,25,00,00,000/- (Indian Rupees One Hundred and Twenty-Five Crore Only) and turnover not exceeding INR 5,00,00,00,000/- (Indian Rupees Five Hundred Crores Only).
These revised limits under the Amendment shall come into effect from 01st April 2025 and are intended to broaden MSME eligibility, enabling a larger number of businesses to access government schemes and financial benefits.
Notification relating to the Banking Laws (Amendment) Act, 2025:
The Banking Laws (Amendment) Act, 2025 (“Amendment Act”), effective from 15th April 2025, provides significant updates to several key financial statutes, including the Reserve Bank of India Act, 1934 (“RBI Act”), the Banking Regulation Act, 1949, the State Bank of India Act, 1955, and the Banking Companies (Acquisition and Transfer of Undertakings) Acts of 1970 and 1980.
a) Amendment to the Reserve Bank of India Act, 1934: Section 42 of the RBI Act has been amended to redefine the term “fortnight” as either the 1st–15th or 16th to the last day of each month. The reporting requirement has been revised from “each alternate Friday” to “the last day of each fortnight,” and the time period for compliance has been reduced from 7 (Seven)to 5 (Five) days. Further, certain outdated provisions have been omitted for streamlining the section.
b) Amendments to the State Bank of India Act, 1955, Banking Companies (Acquisition and Transfer of Undertakings) Act, 1970 and Banking Companies (Acquisition and Transfer of Undertakings) Act, 1980 (shall be collectively referred to as “Banking Laws”): The term “dividend” in the Banking Laws has been substituted with the term “money”. These amendments mandate the transfer of unclaimed monetary amounts, including unpaid dividends, unpaid bonds and interest or redemption proceeds thereon, for 7 (Seven) years, to the Investor Education and Protection Fund (“IEPF”) in accordance with the Companies Act, 2013. Similarly, transfer of all shares for which the dividend is unclaimed for a period of 7 (Seven) consecutive years to the IEPF. The respective claimants may apply for a refund under the prescribed IEPF rules.
c) Amendments to the Banking Regulation Act, 1949:
Key amendments include the following:
(i) Section 5: This section provides definitions of key terms under the Banking Regulation Act, 1949. The definition of “substantial interest” under sub-section (ne) of Section 5 has been amended, whereby the threshold for the minimum paid-up capital requirement is increased from INR 5,00,000/- (Indian Rupees Five Lakhs Only) to INR 2,00,00,000/- (Indian Rupees Two Crore Only), or such other amount as notified by the Central Government.
(ii) Section 10A: This section deals with the composition of the Board of Directors and qualifications of directors. Pursuant to the amendment to sub-section (2A), clause (i), The tenure of directors in the case of co-operative banks has been extended from 8 (Eight) to 10 (Ten) years.
(iii) A new provision has been introduced permitting bank customers to nominate up to four (4) individuals, either successively or simultaneously. In the case of successive nominations, the nomination will be effective only for one person and the rights will pass strictly in the order of priority.
Banking regulations amendment 2025
Session Shark Steals Session Tokens to Slip Past Office 365 MFA
New Phishing Tool Bypasses MFA
Security researchers at SlashNext have uncovered a new phishing-as-a-service toolkit called Session Shark, designed specifically to bypass Microsoft Office 365 multi-factor authentication (MFA). Although it’s marketed as a legitimate tool, its true intent is clearly malicious. Session Shark uses an adversary-in-the-middle (AiTM) approach to steal session tokens—small pieces of data that verify a user has completed MFA. With these tokens, attackers can gain full access to an account without ever needing the user’s second authentication factor, making MFA protections effectively useless if the initial login credentials are captured.
Real-Time Account Takeovers
Once a victim is lured to a fake login page that closely mimics the real Office 365 interface, Session Shark captures their login credentials and session cookie, which are immediately sent to the attacker through a Telegram bot. This enables real-time alerts, allowing attackers to hijack accounts within seconds, often before any defences can respond. To evade detection, Session Shark is equipped with several stealth features. It uses CAPTCHA and human verification techniques to block automated scanners, deploys behind Cloudflare to obscure its true hosting server and bypass IP-based blocks, and employs custom scripts and evasive coding to slip past threat intelligence systems. These combined methods greatly reduce the chances of early detection, allowing attackers to maintain their phishing operations longer and increase their success rate.
How to Avoid This Attack
• Extra Login Checks: Use extra security steps that adjust based on the user’s behaviour, like checking if they’re using a familiar device or location.
• Teach Employees About Phishing: Regularly train people to recognize fake emails or links that try to steal their information.
• Email Filters & Security Software: Use tools that can block fake emails and harmful websites before they reach your employees.
• Watch for Unusual Activity: Keep an eye on any strange login attempts, like someone logging in from a different location or new device.
• Keep Systems Updated: Regularly update software, including Office 365, to fix any security problems.
• Block Malicious Domains: Use DNS filtering, web proxies, and email security gateways to block phishing links before users can access them.
