AFVOA Newsletter of Year 2021

Section 3 – Value Add / Special Tasks CV 2 No. 01 / 2021 Page 20 of 123 AFVOA’s Income Tax Imbroglio – To Pay or Not to Pay Among its many achievements since inception, ‘the road less travelled’ or more precisely, ‘the road never travelled’ for AFVOA is the domain of Income Tax liability, more on account of consistent deficiency in professional advice extended by the Association’s Chartered Accountants in the recent times. The diverse opinions and ambiguous clarifications provided by the accounting professionals had created apprehensions in the minds of the previous Managing Committees. While belling the cat was never a problem for the battle-scarred veterans, the needless fear psychosis created by the bad advice about the possibility of having to cough up a huge tax liability in arrears made them step back. The proverbial Damocles Sword was well in its place, waiting to fall anytime without warning. The uncertainty around it and a routine notice received from the IT Department during Mar 2018 prompted the present President of the Association to reach out to the Principal Commissioner of Income Tax (TN & Puducherry) for application of the ‘doctrine of mutuality’ in letter and spirit. Not surprisingly, no response has been received so far. Matters came to a head when our Chartered Accountant advised the Treasurer to arrange for remittance of Income Tax before Mar 31, 2021, amounting to Rs 1,60,000 for the Financial Years 2017-18 and 2018-19. According to him, there was no income tax liability for FY 2019-20 since the overall result of AFVOA’s operations was in the negative (excess of expenditure over income, owing to one-off expenditure for Silver Jubilee celebrations during the year). Since all the Members of the Managing Committee had a very clear understanding of the principle of mutuality, this advice from our accounting Service Provider was not acceptable. With permission from the President, one of the M C members sought the help of a senior Chartered Accountant with 40 years of standing in the profession, who summarily and instantly dismissed the idea of any tax liability for AFVOA, provided the interest from Investments did not exceed Rs 2,50,000 in any year. He also clearly advised on the methodology to file ITR before Mar 31, 2021 to set our record straight. Reassured by the logic and conviction of his argument, the M C consciously decided to follow his advice, though it was not in line with our CA’s advice. The senior CA had personally guided the member to compute the ITR and file it online on Mar 24, 2021. In the ITR, instead of paying tax on self assessment, AFVOA had claimed a refund of the tax deducted at source (TDS) of Rs 18,070. Sure enough, this course of action did not find favour with our CA.