Connect us       New User?     Subscribe Now
Confirm your Email ID for Updates
04.11.2015 - Voice of CA presents - Updates
Wednesday, November 4, 2015

  I. Headlines Today:    

  1. FinMin to ease transfer pricing rules  (Click for detail)
  2. Tax ambiguity clouds new financial sector initiatives  (Click for detail)
  3. CBDT clarifies on interest earned by banks on investments in non-SLR securities  (Click for detail)
  4. Modi to launch gold schemes on tomorrow  (Click for detail)
  5. Govt. issues common form for registering under ESIC, EPFO and other Labour Laws  (Click for detail)
  6. Govt. has notified interest rate of 2.25% and 2.50% under Gold Monetization Scheme: RBI to banks  (Click for detail)
II.  Direct Taxes Case Laws:


1.  Seagram Distilleries Pvt. Ltd. (Now Pernod Ricard India Pvt. Ltd.) Vs. CIT, I.T.A. No. 898-901/2009, Date of Order: 06.10.2015, Delhi High Court

Whether provision for transit breakages has a scientific basis or is contingent in nature and as such is not allowable deduction while computing the total income of the Assessees.

Held: Yes

There is no reasonable scientific method adopted by the Assessees to estimate the transit breakages so as to justify creating of provision for such breakages. The provision would, in the circumstances, be a provision for a contingent liability and, therefore, in terms of the AS 29 ought not to be recognized.  Under AS 29 a 'provision' is defined to mean “a liability which could be measured only by using a substantial degree of estimation.” The word 'liability' is defined as “a present obligation of the enterprise arising from past events, the settlement of which is expected to result in an outflow from the enterprise of resources embodying economic benefits. The actual transit breakages as and when they occur are allowable as revenue expenditure in the accounting year in which such breakages occur. Consequently, the question framed is answered in favour of the Revenue and against the Assessees.

(Please click here for judgment)

2.  ITO Vs. Ramesh Kr. Jajodia, I.T.A. No. 2166/Kol/2013, Date of Order: 07.10.2015, ITAT - Kolkata

Whether carry forward of speculation loss transaction allowed when not claimed in the original return and the return was filed within due date however wrongly shown u/s. 139(4) of the Act?

Held: Yes

The assessee filed his return of income for the relevant Y 2009-10 u/s. 139(1) of the Act through e-filing.  The assessee filed the return before the due date but u/s 139(4). The assessee disclosed loss u/s. 43(5) of the Act, from speculative transaction at Rs.17,35,409/- which was not claimed in the original return of income but total income was worked out on the basis of positive income. This return was not processed u/s. 143(1) of the Act by CPC, Bangalore accepted the acknowledgment of return of income. After noticing the omission to give effect to the losses u/s. 43(5) of the Act amounting to Rs.17,35,409/- from speculative transaction, it was incorporated in the return of income which was revised u/s. 139(5) of the Act on 22.12.2009 which was then again revised. Accordingly, assessee moved rectification application, which was also rejected by the ACIT, CPC, Bangalore. Consequently, speculative loss derived u/s. 43(5) of the Act was denied.  Aggrieved, assessee preferred appeal before CIT(A), who allowed the claim  to which revenue appealed to ITAT which held that the assessee revised the return within the time allowed u/s. 139(5) of the Act.  Even otherwise, this disallowance of loss claimed in speculative transactions u/s. 143(5) of the Act cannot be disallowed by acting u/s. 143(1) of the Act.  Because this is a highly debatable issue and debatable issue cannot be adjudicated while passing intimation u/s. 143(1) of the Act. Hence, it was held dismissing the appeal of revenue that the CIT(A) rightly deleted the addition.

(Please click here for judgment)

 Golden Rules:

  "Its very easy to DEFEAT someone,
but very hard to WIN someone "



  Thanks & Regards


Voice of CA

« Back
Online Poll
Connect Us       New User?     Subscribe Now