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29.09.2015 - Voice of CA presents - Updates
Tuesday, September 29, 2015

  I. Headlines Today:    

  1. No extension in the due date of filing of audit report and the return of income for the Assessment Year 2015-16 till yet (latest update as at 5.30PM)
  2. City importers evade VAT dues govt mulls heavy penalty soon  (Click for detail)
  3. Beating the Black Money Crackdown  (Click for detail)
  4. Withholding tax on masala bonds set at 5%  (Click for detail)
  5. RBI cuts Repo rates, loan EMI to fall  (Click for detail)
II.  Direct Taxes Case Laws:

1.  Teletube Electronics Ltd Vs. CIT, I.T.A. No. 38/2002, Date of Order: 24.09.2015, High Court of Delhi

Whether the Tribunal was right in holding that transaction of lease of facilities was a case of sale of leasehold rights, whether a transaction pertaining to land and building or of plant and machinery could be treated as sale of either the leasehold rights in respect of the land or the sale of the plant and machinery itself?

Held No.

In the present case the land is not a depreciable asset and that as far as the building and plant and machinery were concerned, the ownership thereof remained in the Assessee and, therefore, it could not be said that either the asset itself have been sold or the block of assets ceased to be in existence.” The ITAT appears to acknowledge that the ownership of the assets continued with the Assessee. However, the ITAT proceeded to hold that the “leasehold rights” and “not the asset itself” was sold. It is not understood how the ITAT has arrived at the concept of sale of leasehold rights because a sale connotes absolute transfer of rights with no reversion of any part thereof to the original owner. There has to be an extinguishment of ownership rights in order that a transaction can be said to be a 'sale'. Here, as noted earlier, the lessee does not even have the right of sub-letting the facilities. The leasehold right is only for a period of ten years and at the end of that period the leased facilities revert to the owner. Consequently, the Court is unable to agree with the conclusion of the ITAT that in the present case there was a “sale” of leasehold rights by virtue of the lease agreement in question.

(Please click here for judgment)


2.  Ram Piyari Devi Charitable Trust and Anr vs. DGIT, WP(C) 4725/2012 & CM No.9795/2012, Date of Order: 24.09.2015, High Court of Delhi

Whether denial of exemption under Section 10(23C)(vi) is correct, where the application has been rejected on the ground that in the Statement of Objects of the Trust, there are various activities mentioned and, as such, it was held that the petitioner is not existing solely for the purposes of education as envisaged in Section 10(23C) (vi) of the Act.

Held No.

It is not denied by the revenue that the only activity that the petitioner is indulging in is education namely running of a school and no other activity. The requirements of Section 10(23C) (vi) as laid down by the Supreme Court are: (i) existence of an educational institution and (ii) approval of the prescribed authority for the purposes of grant of exemption for which an application in the prescribed form has been filed. In the present case, the petitioner satisfies both the tests. There is admittedly an educational institution in existence and the petitioner has also moved an application in the prescribed form. The inquiry conducted by the Director General with regard to the application of funds and generation of profit is to be conducted post the grant of approval. If the above conditions are satisfied, in the first instance, the Competent Authority is to grant approval. The Competent Authority is empowered to impose conditions while granting such approval. The inquiry whether the conditions had been complied with or not, as envisaged by the third proviso to Section 10(23C), is to be conducted post grant of approval and not as a condition precedent to grant of approval.

(Please click here for judgment)    


III.  A Useful Article:


(Please click here for detail)

[ Contribution by CA. Shashank Gupta; and contributor is available at eMail-id: ]           


IV.  Reported Cases:

Direct Taxes Segment:

1.  In course of transfer pricing proceedings, while computing operating cost, abnormal costs incurred on account of start up of business like salary, rent and depreciation etc. have to be excluded.
2.  When in view of series of judgments of jurisdictional High Court, amendment brought to section 40(a)(ia) is only clarificatory in nature having retrospective effect from 1-4-2005, such law binds lower judicial authorities and as such orders of lower judicial authorities can be rectified on basis of subsequent binding judicial precedents.
(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:

  "In order to have a comfortable journey of life,
need to reduce the luggage of desires"


  Thanks & Regards


Voice of CA

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