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24.08.2015 - Voice of CA presents - Updates
Monday, August 24, 2015

I. Headlines Today:    

  1. I-T dept gets kudos for faster refunds  (Click for detail)
  2. Will your return get rejected  (Click for detail)
  3. FM Arun Jaitley on the market turmoil today  (Click for detail)
  4. FM: Banking Expansion Can Prevent Another Saradha-like Scam  (Click for detail)
  5. Taxman eyes service depts for complaint redressal  (Click for detail)
  6. Paper soon to trim corp tax relief  (Click for detail)
  7. MAT Relief for Foreign Portfolio Investors Likely  (Click for detail)
  8. Invitation for empanelment as Examiners for Chartered Accountants Examinations  (Click for detail)


II.  Series of Synopsis on SA:

1.  In continuation of our mail of August 21, 2015 [Click for 21.08.2015 - Updates], with which in the captioned Series, Synopsis on SA 210, among others, was sent, attached in that Series now is the Synopsis on SA 220 Quality Control for an Audit of Financial Statements.
III.  Direct Taxes Case Laws:

1.  CIT Vs. MGF Automobile Ltd., I.T.A. No. 13/2014, Date of Order: 13.08.2015, Delhi High Court

Pursuant to search, in absence of any incriminating document whether the AO was correct in disallowing the set off of the losses of amalgamated co. against the business income of the amalgamated co. on two grounds. One, neither the amalgamated co. nor the amalgamating co. was an „industrial undertaking‟ within the meaning of Section 72 A (7) (aa) of the Act. Secondly, the  amalgamated co. failed to retain three-fourths of the book value of the fixed assets as required by Section 72 A (2) (b) (i) of the Act.

Held No.

The ITAT has by the impugned order dated 28th June 2013 allowed the Assessee‟s appeals. Relying on the decision of this Court in CIT v. Anil Kumar Bhatia (2013) 352 ITR493 (Del) and of the Rajasthan High Court in Jai Steel (India) Jodhpur v. Asst. Commissioner of Income Tax (2013) 36 523 (Raj), the ITAT came to the conclusion that the additions could have been made by the AO “only if some incriminating document was found during search.” The ITAT recorded in its order that: “In the present case it is apparent that on the date of search on 12/09/07, the assessments for assessment year 2004-05 & 2005-06 were already completed. There was no incriminating material found during search for these years as is apparent from arguments of Ld. AR and from records and Ld. Departmental Representative did not bring to our notice regarding any incriminating material having been found during search.”

The ITAT also noted: “During proceedings before us the bench had asked a question to Ld. AR as to whether any statement u/s 132 (4) was recorded during search to which the Ld. AR replied in negative and Ld. Departmental Representative also showed his ignorance about such statement. This question was asked because the view of the Bench is that if during course of search some statement is recorded u/s 132(4) and in that statement certain facts are recorded from the interpretation of which Assessing Officer could conclude that there was some undisclosed income then that statement can be considered as incriminating material.” High court upheld the order of Tribunal.

(Please click here for judgment)

2.  CIT Vs. Divine Infracon Pvt. Ltd., I.T.A. No. 771/2014, Date of Order: 13.08.2015, Delhi High Court

Whether the Revenue could assail the finding returned by the CIT(A) in favour of the Assessee in an appeal preferred by the Assessee before the Tribunal, limited to the issue decided by the CIT(A) against the Assessee,  where Revenue did not appeal against the decision of CIT(A).

Held No.

Before the Tribunal the scope of the subject matter of the Appeal was limited to the finding of the CIT(A) with regard to the merits of the addition made; the issue whether the same was beyond the scope of Section 153A of the Act was not the subject matter before the Tribunal and, thus, the Tribunal could not have entertained any plea in that regard. Indisputably, the Revenue could also not take recourse to Rule 27 of the Income Tax (Appellate Tribunal) Rules, 1963. By virtue of the said Rule, a respondent before the Tribunal can support the decision appealed against not only on the grounds decided in favour of the respondent but also on grounds decided against it. However, Rule 27 of the said Rules would not extend to permitting the respondent to expand the scope of an appeal and assail the decision on issues, which are not subject matter of the appeal. In CIT vs. Edward Keventer (Successors) Pvt. Ltd (supra), this court had reiterated that “it would not be open to a respondent to travel outside the scope of the subject matter of the appeal under the guise of invoking r 27”.

(Please click here for judgment)

IV.  Reported Cases:

Direct Taxes Segment:

1.  If borrowed fund was used for capital work in progress, interest on said fund is allowable under section 36(1)(iii).
2.  Interest paid on borrowed amount invested in shares and debentures for purpose of business, would be allowed as deduction under section 36(1)(iii).   
(Please click here for detail)


 Golden Rules:

"Plain paper has no value but if you write on it,
it becomes document. Life is same.
We have to decide which kind of document we want to make of it


  Thanks & Regards


Voice of CA

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