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21.08.2015 - Voice of CA presents - Updates
Friday, August 21, 2015

I. Headlines Today:    

  1. Press Release: Undisclosed Foreign Income and Assets Challan  (Click for detail)
  2. FinMin clarification regarding the provisions of Section 73, 76 and 78 of the Finance Act, 1994 and Section 11AC of the Central Excise Act, 1944 after amendments made vide Finance Act. 2015  (Click for detail)
  3. ITR filing: Tax department to organise special camp in Delhi  (Click for detail)
  4. Key Services may be Taxed at Lower Rate in GST Regime  (Click for detail)
  5. You can bring in Rs.15,000 more without filling forms  (Click for detail)
  6. Firms appoint new auditors in shift to meet new standards  (Click for detail)
  7. Banks to remain closed on 2nd, 4th Saturdays  (Click for detail)


II.  Series of Synopsis on SA:

1.  In continuation of our mail of August 17, 2015 [Click for 17.08.2015 - Updates], with which in the Series of Synopsis on Standards on Auditing, Synopsis on SA 200, among others, was sent, attached in that Series now is the Synopsis on SA 210 Agreeing the Terms of Audit Engagements.

Click here for the ‘Synopsis’

Click here for the SA 210 issued by the ICAI
III.  Direct Taxes Case Laws:

1.  Principal CIT Vs. Tupperware India Pvt. Ltd., I.T.A. No. 415/2015, Date of Order: 10.08.2015, Delhi High Court

Whether ITAT was justified in holding that the reassessment proceedings under Section 147/148 of the Act were not legally initiated and are on account of change of opinion since notice u/s 148 was issued on account of inadmissible expenditure under Section 40 (a) (i) of the Act?

Held Yes.

At the outset it requires to be factually noticed that the reopening order of the AO only refers to the report of Statutory Auditor under Section 44AB of the Act which report was already enclosed with the return filed by the Assessee. Therefore, factually, there was no new material that the AO came across so as to have „reasons to believe that the income had escaped assessment. As far as the legal requirement is concerned, the Court finds that the decision in CIT v. Orient Craft Ltd. (supra) answers the question squarely in favour of the Assessee in the facts of the present case. In Orient Craft Ltd. this Court considered the decisions of the Supreme Court in CIT v. Kelvinator India Ltd. (2010) 320 ITR 561 and Rajesh Jhaveri Stock Brokers P. Ltd.

(Please click here for judgment)


2.  CIT Vs. Vaish Associates, I.T.A. No. 50/2014, Date of Order: 11.08.2015, Delhi High Court

Whether the AO is correct in concluding that since the partnership deed “neither specified the amount of salary to be paid to each of the working partners nor has laid down a specific method of computation thereof” and has only mentioned „allocable profit‟ which has not been defined in the partnership deed, under such circumstances section 40(b)(v) of the Act would not apply?

Held No.

ITAT held that clause 6(a) of the partnership deed dated 20th June 2008 clearly indicates the methodology and the manner of computing the remuneration of partners. The remuneration of the partners has been computed in terms thereof. The Court additionally notes that under Section 28(v) of the Act, any salary or remuneration by whatever name called received by partners of a firm would be chargeable to tax under the head profits and gains of business or profession.

The proviso to Section 28 (v) states that where such salary has been allowed to be deducted under Section 40(b)(v), the income shall be adjusted to the extent of the amount not so allowed to be deducted. Further Section 155 (1A) of the Act states that where in respect of a completed assessment of a partner in a firm, it is found on the assessment or reassessment of the firm that any remuneration to any partner is not deductible under Section 40(b), the AO may amend the order of the assessment of the partner with a view to adjusting the income of the partner to the extent of the amount not so deductible. A conspectus of these provisions makes the opinion the ITAT consistent with the legal position and therefore the salary paid to the partners was in accordance with Section 40(b)(v) of the Act and ought not to have been disallowed.

(Please click here for judgment)

IV.  Reported Cases:

Direct Taxes Segment:

1.  Expediency, legitimacy and business need will have to be examined from assessee's point of view and not certainly, from department's view.
2.  Cash payment involving business exigency allowed.   
(Please click here for detail)


 Golden Rules:

  "You never know which footstep will bring a good twist in life.
So keep on walking.
Happiness comes when it is most unexpected


  Thanks & Regards


Voice of CA

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