Connect us       New User?     Subscribe Now
Confirm your Email ID for Updates
24.10.2015 - Voice of CA presents - Updates
Saturday, October 24, 2015

I. Headlines Today:    

  1. CBDT allows range concept and multi year data for arriving at Arm's Length Price (ALP)  (Click for detail)
  2. No service tax on 'charitable' yoga income  (Click for detail)
  3. Finmin floats Cabinet note on monetary policy panel  (Click for detail)
  4. CBEC revises monetary limits for crackdown against tax evaders  (Click for detail)
  5. Gold monetisation scheme won't work for short-term deposits, say bankers  (Click for detail)
  6. As FPIs bond with Indian paper, cost of money falls  (Click for detail)
II.  Direct Taxes Case Laws:


1.  Rockland Hotels Ltd. Vs. Income Tax Settlement Commission Principal Bench, W.P.(C) 3557/2014, Date of Order: 20.10.2015, High Court of Delhi

Question of law involved is as to, who qualifies as a related party in terms of clauses (a)(v) and (a)(vi)(B) of the Explanation to sub-section (1) to section 245C.

Applying the parameters of clauses (a)(v) and (a)(vi), only if a director of the petitioner companies has a substantial interest in the specified person (company), then, the petitioner companies, their directors and relatives of their directors qualify as related parties. The Petitioner companies would not qualify as a related party merely because any relative of one of its directors has a substantial interest in the specified person. Further, the petitioner companies would qualify as a related party, if a specified person (company) or any of its directors or any relative of any of its directors have a substantial interest in the petitioner companies. Beneficial owner of the share as referred to in Explanation (b)(A) refers to shares held in a company by a person either in his own name or in the name of other, persons. A corporate entity is a separate legal entity. Merely because a director of the specified person holds shares in a company which in turn holds shares in the Petitioner would not make the director the beneficial holder of the shares of the Petitioner and thus qualify the petitioner as a related party. We do not find any infirmity with the reasoning of the Settlement Commission. Since the conditions of Explanation (a)(vi)(B) are not satisfied, these writ petitions are thus liable to be dismissed.

(Please click here for judgment)


2.  Principal Commissioner of Income Tax Vs. Universal Precision Screws, I.T.A. No. 392/2015, Date of Order: 06.10.2015, High Court of Delhi

Assessee is a 100% EOU, claiming deduction u/s 10B, whether AO is right in interpreting that interest from FDRs was not income derived from the undertaking, and including the exchange rate difference in the domestic sales and treating the scrap sale as part of the domestic sale.

The Supreme Court in CIT v. Punjab Stainless Steel Industries (2014) 364 ITR 144 (SC) sale of scrap is not includable in the total turnover since the Assessee was not engaged in the business of scrap. Consequently, the impugned orders of the CIT (A) and the AO treating the scrap amount as part of the domestic turnover was set aside. the Bombay High Court in CIT v. Gem Plus Jewellery India Ltd. (2011) 330 ITR 175 (Bom.) which held that foreign exchange fluctuations realized within the stipulated period forms part of the sale proceeds and is directly related to the export activates. It was, accordingly, held that this should be treated as income derived from export activities, as such the foreign exchange fluctuation has to be considered as part of the export turnover.

In the present case, the Assessee has stated that the interest on FDRs was received on “margin kept in the bank for utilization of letter of credit and bank guarantee limits”. In those circumstances, the decision of the ITAT that such interest bears the requisite characteristic of business income and  has nexus to the business activities of the Assessee cannot be faulted. In other words, interest earned on the FDRs would form part of the “profits of the business of the undertaking” for the purposes of computation of the profits derived from export by applying formula under Section 10B(4) of the  Act.

(Please click here for judgment)

III.  A Useful Article:


(Please click here for detail)

[ Contribution by CA. Madhukar N. Hiregange; and contributor is available at eMail-id: ]           


IV.  Reported Cases:

Direct Taxes Segment:

1.  Filing of appeal with complete knowledge of its fate by revenue only reflects mischievous adamancy to attempt to mislead Tribunal and waste time of Court and officers concerned.
2.  While making provision for dismantling signal towers and restoration of site after termination of lease period, a telecom operator was not required to deduct tax at source.
(Please click here for detail)


 Golden Rules:

  "Direction is more important than speed.
We are so busy looking at our speedometers
that we forgot the MILESTONE"


  Thanks & Regards


Voice of CA

« Back
Online Poll
Connect Us       New User?     Subscribe Now