Accounting watchdog Institute of Chartered Accountants of India (ICAI), which regulates auditors, is currently facing the prospect of meeting an income tax penalty of Rs 16 crore, after the Income-Tax department withdrew tax exemptions on the institute. It is also understood that the I-T department has written tothe institute’s banks to freeze the accounting regulator’s accounts till the institute pays the penalty, according to persons familiar with the development.
ICAI’s newly-elected president, Amarjit Chopra, confirmed the tax, but played down the issue saying that the institute is contesting the I-T department’s assessment. The move comes at a time when the government is exploring the feasibility of having an independent regulator for auditors, a proposal that has been opposed by ICAI as it could significantly prune the current role of the institute.
Under section 10 (23C) of the Income Tax Act of 1961, the ICAI, which was formed by an Act of Parliament, is exempted from paying income tax as it had been established for the purpose of education and for advancement of projects of general public utility.
The I-T department’s contention is that the fee earned from training can be construed as business income. A tax assessment panel is also understood to have said that the ICAI allegedly failed to get accounts signed by auditors and of allegedly providing loans to partners without guarantee and interest, said people connected with the development.
ICAI’s Mr Chopra said since the matter is sub-judice, he can’t comment on the topic. RK Sinha, director exemptions at the I-T department, also declined to comment on the issue.
Read more: https://www.taxguru.in/icai/21386.html#ixzz0gztyDOF2
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