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21.12.2015 - Voice of CA presents - Updates
Monday, December 21, 2015

I. Headlines Today    

  1. Govt may raise service tax rate in Budget  (Click for detail)
  2. No Service Tax on Payments to Expats in Arms of MNCs  (Click for detail)
  3. Over 27 L New Assessees under I-T in india  (Click for detail)
  4. More changes to companies law, clearer CSR norms likely in 2016  (Click for detail)
  5. Government introduces bill for bankruptcy law in Parliament  (Click for detail)
  6. Remove additional tax in GST, need flexibility issues: Rangarajan  (Click for detail)
  7. Tax buoyancy jumps in first half of this fiscal  (Click for detail)
II.  Direct Taxes Case Laws: 

1.  Kulbhushan Khosla Vs. CIT, I.T.A. No. 33/2004, Date of Pronouncement: 14.12.2015, Delhi High Court

Whether reopening u/s 147 of the Act of an assessment is permissible merely on the basis of office note of predecessor AO in which a reference was made to Foreign Tax Department (FTD), in absence of any adverse material received.


In brief, the AO had made detailed enquiry regarding gifts received by assessee from foreign donors and completed assessment u/s 143(3) of the Act. Later on, successor AO reopened the case u/s 147 merely on the basis that alleged transaction needs verification. The assessee had challenged reopening of the assessment inter alia on the ground that no adverse material or new information was received from the FTD up to the time of the reopening of assessment. The Hon’ble ITAT has held that a mistake committed by one AO cannot bind the successor AO, who if he feels that an item of income had escaped assessment, then he bound to act with reference to a provision of law and not allow the proceedings to lapse only because the report of the FTD as in the present case is not receive and uphold order of the CIT(A) & the AO.

The Hon’ble High Court has held that a detailed enquiry was conducted during original assessment proceedings, in the absence of any adverse material, the reopening of the assessment was at best due to change of opinion of the AO that some income had escaped assessment. This was impermissible u/s 147 of the Act. 

Case followed: CIT v. Multiplex Trading & Industrial Co. Ltd. (ITA 356/2013, Delhi) and Oriental Insurance Company v. CIT (ITA 174/2013, Delhi).

(Please click here for judgment)


2.  ITO (E) Vs. Bhansali Trust, I.T.A. No. 5948/Mum/2012, Date of Order: 31.08.2015, ITAT - Mumbai

Non-intimation of addition in the object clause of Trust, subsequent to the grant of registration u/s 12A of the Act, is a valid ground to deny the exemption u/s 11 of the Act.


The AO denied the exemption claimed u/s 11 & 12 of the Act for reason that objects of the trust had been amended after the grant of registration u/s 12A of the Act. Whereas, the assessee contented that even amendments in the objects remain charitable and do not cause any detriment to the original objects as mentioned in the original Trust Deed and only their scope has been enlarged. Moreover, the exemption u/s 11 was not denied by the AO during the scrutiny assessment for earlier years.

Hon’ble ITAT held that there is no change in the tone and tenor of the objects pursued by the assessee in a real sense. On analysis of the changes in objects of the Trust deed, we find that the amendment only seek to provide enabling powers to the Trust to accomplish its original objects which are in the fields of educational purpose, medical purpose, relief of poverty and objects of general public utility not involving carrying on any activity for profit. Thus, the appeal of the Revenue is dismissed.

(Please click here for judgment)     

 Golden Rules:

  "What is forgiveness?
It is the wonderful fruit that a tree gives
when it is being hurt by a stone..."


  Thanks & Regards


Voice of CA 

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