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22.09.2015 - Voice of CA presents - Updates
Tuesday, September 22, 2015

  I. Headlines Today:    

  1. Management Representation for Tax Audit under section 44AB of the Income Tax Act, 1961 for Assessment Year 2014-15  (Click for detail)
  2. Management Representation for Statutory Audit for Assessment Year 2014-15  (Click for detail)
  3. IT to Go After Black Money After Sept 30 CBDT Boss  (Click for detail)
  4. Corporate tax exemptions phase out may end MAT  (Click for detail)
  5. Vodafone moves SC for stay on Rs 92-crore tax demand  (Click for detail)
  6. Arun Jaitley: Rates should come down, but RBI final authority  (Click for detail)
  7. MCA: Applications are inviting for filling up the post of Chairperson in the Competition Commission of India  (Click for detail)
II.  Direct Taxes Case Laws:

1.  M/s. Japan Airlines Co. Ltd. Vs. CIT, Civil Appeal No. 9875 of 2013, Date of Order: 04.08.2015, Supreme Court of India

Whether Tax is deductible u/s 194C or 194I by International airlines for landing and parking charges in respect of its aircrafts.

The charges which are taken from the aircrafts for landing and even for parking of the aircrafts are not dependent upon the use of the land. On the contrary, the protocol prescribes a detailed methodology of fixing these charges. Chapter 4 of Airport Economics Manual issued by International Civil Aviation Organization deals with 'Determine the cost basis for charging purposes'. The charges on air-traffic which includes Landing Charges, Lighting Charges, Approach and Aerodrome Control Charges, Aircraft Parking Charges, Aerobridge Charges, Hangar Charges, Passenger Service Charges, Cargo Charges etc. are to be fixed applying the formulae stated therein. A reading thereof would clearly point out the cost analysis which is to be done for fixing these charges.

Thus, when the airlines pay for these charges, treating such charges as charges for 'use of land' would be adopting a totally naïve and simplistic approach which is far away from the reality. We have to keep in mind the substance behind such charges. When matter is looked into from this angle, keeping in view the full and larger picture in mind, it becomes very clear that the charges are not for use of land per se and, therefore, it cannot be treated as 'rent' within the meaning of Section 194-I of the Act.

(Please click here for judgment)


2.  Stitchwell Qualitex (RF) Vs. ITO, ITA No. 346/2002, Date of Order: 16.09.2015, High Court of Delhi

Whether for claiming depreciation u/s 32, asset must be put to use or ready for put to use?

The AO disallowed the above claim of depreciation on the ground that (i) no sales have been made from Unit-II; (ii) purchases made for Unit-II are only Rs. 361.70; (iii) no expenses under any head have been claimed; (iv) all the wages payments and official documents showed that no manufacturing activity took place; (v) no separate staff was engaged and (vi) no power bill has been received. The AO held that the Assessee failed to prove that it had undertaken any manufacturing activity during the AY in question

In the present case the context is the claim for depreciation under Section 32 of the Act. On facts, it is not in dispute that the building was constructed in the previous year 1988-89. Further, the plant and machinery was installed in the factory in the previous year ending 31st March 1990. The Court in of the view that the installation of the plant and machinery in the building would amount to use of the building so as to justify the claim for depreciation on the building. Further, the plant and machinery installed in the building during AY 1989-90 was ready for use for the purpose of business of the Assessee. The electricity connection was given on 6th February 1990. Another important fact was that the Assessee was already conducting its business and this was Unit II which was by way of expansion of an existing business. It is not the Revenue's case that the building and plant and machinery were not for the purpose of business of the Assessee. Therefore, it is concluded that the building and machinery in Unit II were used for the purpose of the business of the Assessee during the AY in question. The question of law is accordingly answered in the negative, i.e. in favour of the Assessee and against the Revenue. The impugned order of the ITAT on the issue is set aside and the appeal is allowed with no order as to costs.

(Please click here for judgment)

III.  Company Law & Other Matters:

1.  Shri Ajay Batra Vs. M/s BHP Machines Ltd. & Others, C.P No. 1(111) /2009, Date of Order: 29.02.2012, Company Law Board, New Delhi

In the matter of Companies Act, 1956, under Section 111-A

It is an act of fraud and forgery and no such resolution was considered at the Board Meeting . For such a relief Petitioner who asserts himself to be a member of a company has no locus to file an appeal under Sec 111A and may appeal his common law right by filing a suit.

(Please click here for judgment)


IV.  Reported Cases:

Direct Taxes Segment:

1.  Proviso to section 201(1), which bars imposition of penalty under section 221 unless Assessing Officer is satisfied that failure to deduct and pay tax was without good and sufficient reasons, would have no application where assessee had deducted tax but fails to pay.
2.  Where assessee sold a property and purchased another residential plot and commenced construction, which was not completed within three years, benefit of section 54F will be available, once it was established by assessee that she had invested entire net consideration in construction of residential house within stipulated period. 
(Please click here for detail)


3rd Global Tax Summit:

1.   The Confederation of Indian Industry (CII) is organizing its day long 3rd Global Tax Summit.  This is on Thursday, 8 October 2015 at Shangri-La’s, Eros Hotel, New Delhi. The topics to be deliberated at the Summit are as follows:


·       Spillovers of the Global Tax changes-How is India keeping pace

·       Global controversy trends and emerging ADR mechanisms-The road ahead

·       Tax reforms for a competitive India Inc.-The need of the hour

·       The Indirect Tax reforms agenda-Challenges and way forward

 You may click the link given below for the detail:



 Golden Rules:

  "Performance always comes from passion & not from pressure,
be passionate and love what you do & do what you love,
Success is always Yours"


  Thanks & Regards


Voice of CA

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