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16.01.2016 - Voice of CA presents - Updates
Saturday, January 16, 2016


I. Headlines Today    

  1. CBDT notifies forms for accumulation of income by a trust  (Click for detail)
  2. Initiatives taken by CBDT to reduce litigation  (Click for detail)
  3. CBDT would issue refunds up to Rs. 5,000 without adjustment of outstanding tax liability  (Click for detail)
  4. Budget 2016: FinMin commits to fiscal consolidation target  (Click for detail)
  5. FM Arun Jaitley says will help bankers lend more  (Click for detail)
  6. Govt may announce new interest rates on small savings schemes soon  (Click for detail)
  7. Govt. to issue second tranche of Sovereign gold bonds from Jan 18, 2016  (Click for detail)
  8. RBI notifies new Foreign Exchange Management (Export of Goods and Services) Regulations  (Click for detail)
II.  Direct Taxes Case Laws: 

1.  CIT Vs. Schutz Dishman Bio-Tech Pvt. Ltd., Tax Appeal No. 958 of 2015, Date of Order: 21.12.2015,  High Court of Gujarat

Whether the Ld. AO was justified in construing that frequent movement of funds between related entities as reflected in ledger accounts is nothing but deemed dividend as per Section 2(22)(e) of the Act.


The assessee has maintained current accommodation adjustment account with its sister concern. The AO contended that these transactions are in nature of loans & advances falling within ambit of section 2(22)(e) & accordingly provisions of section 201(1) & 201(A) were invoked by him for non deduction of TDS. The Hon’ble ITAT upheld the decision of the CIT (A) that transactions in the nature of loans and advances are usually very few in number whereas in the present case, such transactions are in the form of current adjustment accommodation adjustment entries wherein there is a movement of fund both ways, on need basis.

The Honble High Court has upheld the decision of ITAT & CIT(A) that looking to large number of adjustment entries in the accounts between two entities, the amounts were not in the nature of loan or deposit, but merely adjustments, application of section 2(22)(e) of the Act would not arise.

(Please click here for judgment)

2.  ITO Vs. M/s. First American Securities Pvt. Ltd., I.T.A. No. 4768/Del./2012 Date of Pronouncement: 11.01.2016, ITAT-Delhi

Whether interest paid by an investment company on loan taken for investment in shares of closely associated concern to acquire substantial control, is revenue in nature and allowed u/s 36(1)(iii) of the Act.


The assessee was engaged in business of investments and purchased shares of a jointly controlled entity. The Ld. AO has contended that interest paid on loan taken for said investment is capital in nature as assessee made investment for purpose of acquiring substantial control over the entity, shares are not freely tradable and investment is classified as long term, moreover no business activity was carried out during the year except such investment. Whereas, the CIT (A) has held that since it is very specifically mentioned in the objects of the MOU that assessee is to make strategic investment in the business entities and capital was borrowed for the purpose of business and was not utilized for acquisition of any asset or for extension of any business, therefore, same is allowed as revenue expenditure.

The Hon’ble ITAT has upheld the decision of the CIT(A) by placing reliance on CIT v. Phil Corpn. Ltd. [2011] 14 58 (Bom.) & Srishti Securities (P.) Ltd. vs. JCIT 2005-(148) Taxman 0049 (ITAT-Mum).

(Please click here for judgment)

III.  Indirect Tax and Other Laws Communique:

“Indirect Tax and Other Laws Communique” for the fortnight ending January 10, 2016 which includes summarisation of various latest case laws, circulars, notifications and news flash.

(Please click here for detail)

[Contribution by CA. Bimal Jain; contributor is available at eMail:]


 Golden Rules:

  "Life does not provide warranties and guarantees.
It only provides possibilities and opportunities.
Shouldn't miss them,
make best of them"


  Thanks & Regards


Voice of CA 

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