Tuesday, 20 October 2015
Where the assessee has been assessed at higher amount under sales tax law and demand has been raised against the assessee, notwithstanding that the assessee has not made any entry for liability in his books of accounts and has gone into appeal before higher authorities, the deduction in respect of sales tax demand shall be allowed- Kedar Nath Jute Mfg. Co. Ltd. 82 ITR 363(SC)
It is not a universally true proposition that what may be a capital receipt in the hands of the payee must necessarily be capital expenditure in relation to the payer. Therefore, the decision in CIT vs. Maheshwari Devi Jute Mills (1965) 57 ITR 36 (SC) wherein it was held that the sale of loom hours was in the nature of capital receipt and hence, not taxable, cannot be regarded as an authority for the proposition that payment made by an assessee for purchase of loom hours would be capital expenditure[Para 4]-Empire Jute Co. Ltd 124 ITR 1
Test of Enduring benefit is not certain or conclusive test. What is important is not that advantage lasts forever but whether the expense incurred does away with a recurring expense(s) defrayed towards running a business as against an expense undertaken for the benefit of the business as a whole. In other words, the expenditure which is incurred, which enables the profit-making structure to work more efficiently leaving the source of the profit-making structure untouched, would be an expense in the nature of revenue expenditure. Fine tuning business operations to enable the management to run its business effectively, efficiently and profitably, leaving the fixed assets untouched would be an expenditure in the nature of revenue expenditure even though the advantage may last for an indefinite period. Test of enduring benefit or advantage would thus collapse in such like cases. It would be only truer in cases which deal with technology and software application, which do not in any manner supplant the source of income or add to the fixed capital of the assessee-Asahi India Safety Glass Ltd. 203 Taxman 277 (Del.)
Monday, 19 October 2015
Amount received towards society corpus fund, water and electricity connection charges, cost of solar water heating system, which was in turn to be defrayed to respective agencies is not sale consideration for the ssale of flats[Para 10.5] Smt. S. Uma Devi [2015] 62 taxmann.com 64 (Hyderabad - Trib.) JANUARY 30, 2015
The incomes of the properties owned by the minor daughters were clubbed in the hands of the assessee[u/s 64(1A)], but the investment for purchase of the said properties came from the independent sources of the daughters and hence, it cannot be presumed that assessee is the owner of the properties for calculating limit of owning one residential house on the date of transfer u/s 54F.[Para 4.7] Smt. S. Uma Devi [2015] 62 taxmann.com 64 (Hyderabad - Trib.) JANUARY 30, 2015
For purpose of S. 54F requiring ownership of not more than one residential house on the date of transfer , ownership of building let out for commercial purposes can not be included. Allahabad High Court in P.N. Shukla v. CIT [2005] 276 ITR 642/142 Taxman 624 (All. Quoted to signify the word “residential” used with house[Para 4.3] Smt. S. Uma Devi [2015] 62 taxmann.com 64 (Hyderabad - Trib.) JANUARY 30, 2015
The entire order of AO reads as follows :"The penalty proceedings initiated in this case under s. 271C r/w s. 274 of the IT Act, 1961 are hereby dropped."Held by High Court in Para 12 of its order that “the order passed by the AO is cryptic, to say the least, and it cannot be sustained” Toyota Motor Corporation 306 ITR 49. Order of High Court confirmed by supreme court in Toyota Motor Corporation 306 ITR 52 rejecting the plea of the assessee that when all relevant aspects were placed for consideration and if order did not record reasons, assessee can not be faulted followed in Smt. S. Uma Devi [2015] 62 taxmann.com 64 (Hyderabad - Trib.) JANUARY 30, 2015
Though law does not mention any specific mode of exercising option for setting apart income for charitable purpose in succeeding year , If such option is exercised when return is filed, that would be treated as in conformity and comply with provisions contained in section 112015] 61 taxmann.com 400 (SC)G. R. Govindarajulu & So 03-09-2015
Service tax not to be included in gross receipts for calculation of presumptive income. The decision is rendered in context of 4BB in case of mineral oil companies, however might apply for 44 AD also.[2015] 61 taxmann.com 170 (Delhi - Trib) Sundowner Offshore International follows another Delhi Trib Judgement in Ensco Maritime.
Sunday, 18 October 2015
Issue of parking fee of aircrafts settled by supreme court in Japan Airlines. Earlier Delhi High Court in Japan Airlines and United Airlines said that S. 194I is applicable while Madras High Court in case of Singapur Airlines said that S. 194I is not applicable. Apex Court, however differed in its opinion both from Madras High Court which said that since the “'any other agreement or arrangement for the use of any land or any building' have to be read ejusdem generis and it should take it colour from the earlier portion of the definition namely “lease, sub-lease and tenancy” and therefore limited meaning should be given to the words “ any other agreement or arrangement”. Also decision of Delhi High Court was dissented as it did not look into substance of the transaction as the fee was being paid for other facilities and use of land was incidental, Apex Court held that 194I is not applicable. Decision pronounced on 04-08-2014
Education Institution took certain vehicles on hire for carrying its students and staff from home to school and back . Since Expl III to S.194C (2) clearly provides that work includes carriage of passenger by any mode of Transport other than railways Tribunal is justified in invoking 194C -Lotus Valley Edu Soc. (All HC ) 12.09.13 [45 TMC 37]
Commission income of Indian company allowed to retained with U.S. client with RBI permission and to be utilized for purchase of capital goods. Due to devaluation of rupee cost of capital goods when realized resulted in profit on remittances .HC order that character of income changed on being reserved for capital goods hence profit is capital in nature-Tata Locomotive &Engg co.ltd.60 ITR405(SC)13.1.66
Merely charging Fee resulting in surplus does not ipso facto mean that activities are commercial in nature
ICAI
347 ITR 99(DEL)
CA
Study Circle 347 ITR 321 (Mad)
Tolani Education Soc 259 CTR 26 [Bom ]
Beaureau
of Indian Standards 358 ITR 78 (Del)
Sabarmate
Ashram 362 ITR 539 (Guj)
Indian
school certificate exam 2014 TIOL 855
Indian international centre(Del Trib) 11-5-15 57 tmc 265 Section 263-Where AO issues questionnaire and makes specific querries it can not be said to be case of no enquiry -Malabar industrial CO.243 ITR 83(SC) -Green World Corn 181 Taxmann 111 (SC) -Sun beam Auto Ltd.332ITR 167 (DEL) -Anil Kumar Sharma 335 ITR 83 (DEL) -Gabrid India 203 ITR 108 (Bom) -Kanada Rice Mills 178 ITR 446 (P&H)
Purposive construction
a)In
some cases it becomes necessary for courts to fill in gaps as parliament choses
to leave in enactments- Lord Doe Parco in
Cutler vs Wandworth Stadium [1949] 1All ER544
b)In
Guiseppi v Walling 60 Harvard Review 372 LJ Frank- ineptness of drafting impels
the courts to fill in gaps -an activity which no matter one may interpret is in
part legislative
c)SC
in Director of Enforcement vs Deepak Mahajan & Another AIR 1994 SC 1775 approved above decision
Monetary limits for appeal-Application of circular to pending cases also
Monetary limits
for appeal – Circular 3/2011-Shyam biri works(All HC) 6.5.15 57 TMC 157-Application
of circular to pending cases also.
Other favorable cases
1)Ranka and Ranka(kar)352 ITR 121
2)Pithwa Engg.
works (bom) 276 ITR 519
3)Camco color
254 ITR 565
4)Smt
Vijay Kavekar 350 ITR 237
5)Madhokar Inamdar 318 ITR 149
6)Vitesses
tag co. 331 ITR 433
7)P.S
.Jain and co. 335 ITR 591(del hc)
8)Ashok
Kumar Manibhai Patel 317 ITR 386
Unfavorable
Decisions
Shambubhai Mahadev Ahir 363 ITR 572(Guj FB)
Varinder
construction co. 331 ITR 449 (FB)(P&H)
Kodanand Tea
Estate 275 ITR 244 (MAD)
John Chackola 337 ITR 385 (Ker)
Navbharat Explosive
337 ITR (36) 515 Chatissgarh
Held
Circular
has to be read with national litigation policy
Whose
purpose is to reduce litigation period from fifteen years to three years so
that valuable time can be spared for contentious issues.
-Full
bench of Guj & P&H HC have not
considered national litigation policy and Hence high courts applied literal
interpretation of circular.
-CBDT
Circular make no effort to review pending cases.
- Since
this is beneficial piece of legistation, pendulum is tilled more in favour of
assessee and impels courts to interpret the provisions harmoniously with
national litigation policy.
- Hence
circular held applicable to pending cases also.
|
No TDS sum paid to foreign agent for rendering services o/s India if did not have PE in India
Commission is not FTS and hence not covered by expl to
sec 9 applicable to (v)(vi)(vii) of 9(1)
Fluidtherm
technology (P) ltd. 57 tmc 87(Mad)24.03.15
faizan shoes 367 itr 155(mad)
Fanda
shoes [ita 159/2013](itat mad)
Deita
shoes [ita 909/2013](itat mad)
Supreme
cout on commission to foreign agents on exports not taxable
1)Toshoku
ltd 125 ITR 525 (sc)(1980)
2)R
.D. Aggarwal & co. 56 ITR (20)(sc)1965
3)Carborandum
co. 108 ITR 335(1977)
Tax Controversy Leaders (2015) in India declared by International Tax Review
1.
Rajiv Anand (Deloitte India)
2.
Manisha Gupta (Deloitte India
3.
Gagan Kumar (Krishnomics Legal)
4.
Rahul Mitra (KPMG)
5.
Sanjay Sanghavi (Khaitan & Co.)
6.
KR Sekar (Deloitte India)
7.
Rohan Shah (Economics Law Practice)
8.
SP Singh (Deloitte India)
9.
Naresh Thacker (Economics law Practice)
10.
Alok Yadav (Economics Law Practice)
11.
Sunil Badla (KPMG)
12.
ML Bhagta(Kanga)
13.
Soli Sohrab Dastur
14.
Arvind Datar
15.
Nitesh Desai
16.
Aliff Fazelbhoy
17.
Hitesh Gajaria
18.
Sujit Ghosh
19.
KR Girish
20.
Akhil Hirani
21.
Amit Jain (EY)
22.
Porus Kaka
23.
Dinesh Kanabar
24.
Kanchun Kaushal, PWC
25.
Pawan Kumar, PWC
26.
Ajoy Kumar Gupta, (Khaitan & Co.)
27.
Sunil Moti Lala (SML Tax Chamber)
28.
Himanshu Mandavia, KPMG
29.
Vinod Mangotra, KPMG
30.
Rakesh Nangia, (Nangia & Co.)
31.
Vikram Nankani
32.
Percy Pardiwalla
33.
Krishma Phaterphekar, KPMG
34.
Rohan Phataphekar, KPMG
35.
Alpana Saksena, KPMG
36.
Harish Salve, Black Stone Chambers
37.
Jayesh Sanghavi, EY
38.
Sriram Sheshadri, BMR
39.
Himanshu Sinha, Trilegal
40.
Sanjay Tolia, PWC
41.
Girish Vanvari, KPMG
42.
Vikas Vasal, KPMG
43.
Ajay Vohra
44.
Rajan Vohra, SRBC & Associates
Where search warrant was issued in name of person other than person searched and some incriminating documents were found at the premises of person searched. Search proceedings were however dropped suo motto by the department due to search warrant wrongly issued. There after proceedings u/s 153C were initiated on one of the promoters on the basis of documents found in his premises, but proceedings u/s 153C were also dropped because original proceedings got vitiated. However department initiated action u/s 148 in respect of documents found at the premises of person searched. Action of the department upheld by Allahabad High Court in SHIVAM GRAMODYOG SANSTAN Oct 14, 2015(2015) 94 CCH 0052 AllHC, relying upon Dr.Sarad B. Sahai 235 CTR 596 which said that although search is declared illegal but the post- search assessment has to take place
Where search warrant was issued in name of person other than person searched and some incriminating documents were found at the premises of person searched. Search proceedings were however dropped suo motto by the department due to search warrant wrongly issued. There after proceedings u/s 153C were initiated on one of the promoters on the basis of documents found in his premises, but proceedings u/s 153C were also dropped because original proceedings got vitiated. However department initiated action u/s 148 in respect of documents found at the premises of person searched. Action of the department upheld by Allahabad High Court in SHIVAM GRAMODYOG SANSTAN Oct 14, 2015(2015) 94 CCH 0052 AllHC, relying upon Dr.Sarad B. Sahai 235 CTR 596 which said that although search is declared illegal but the post- search assessment has to take place
Saturday, 17 October 2015
Held by Bombay HC in Ramesh Babu Lal Shah (23.07.14) 53 TMC 277, where assessee entered into agreement for purchase of land later sold by seller to some other person for development and amount received by assessee in consent degree of court is business receipt if disputed transaction was adventure in nature of trade.
Test for substantial question of law to be entertained by HC laid down by SC in Sir Chuni lal Mehta vs. Centuary Spinning AIR 1962 SC 314 . Tests are i) Whether directly or indirectly affects substantial rights of parties ii) Question is of general public importance iii) whether it is an open question not settled by pronouncement of SC/PC iv)Issue not free from difficulty v) Calls for discussion for alternative view
Held by Supreme Court in Sugali Sugar Works (P) Ltd 236ITR518 that the assessee transferred certain sums representing advances and deposit out of suspense account to capital reserve. Unilateral act on part of debtors shall not bring it in purview of section 41. Bombay High Court in J.K Chemicals 62 ITR 34 quoted
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