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03.02.2016 - Voice of CA presents - Updates
Wednesday, February 3, 2016

I. Headlines Today    

  1. Report of The Companies Law Committee - submitted to Union Minister of Finance and Corporate Affairs  (Click for detail)
  2. Government sets­up Tax Policy Research Unit and Tax Policy Council to bring consistency, multidisciplinary inputs, and coherence in Tax Policy  (Click for detail)
  3. Narendra Modi government gearing up to announce Food Security Act with Rs 130,000 crore outlay  (Click for detail)
  4. Easwar panel to study salary deductions tax treaties next  (Click for detail)
  5. Government starts exercise to create pool of arbitrators  (Click for detail)
  6. RBI proposes easier access to foreign capital for start ups  (Click for detail)

  II.  Direct Taxes Case Laws: 

1.  M/s Anusha Investments Ltd. Vs. ITO, T.C.A. No. 398 of 2007, Date of Judgement: 14.07.2015, High Court of Madras

Whether the provisions of Section 195 of the Income Tax Act, 1961 are attracted on payment made to foreign company for purchase of shares irrespective of the capital loss or gain incurred by that foreign Company on such sale?

Held No

In brief the assessee purchased shares from a foreign company on which loss was suffered by that foreign company. In appeal before the hon’ble Tribunal, it was held that irrespective of the fact whether the foreign company suffered a loss or gain on the sale of shares, a duty is cast on the assessee u/s 195 of the Act to deduct the tax whenever it made payment to the non-resident.

The hon’ble High Court relied on the decision of Supreme Court in GE India Technology Centre P. Ltd. vs. CIT 327 I.T.R. 456 (2010) wherein it was held that the provisions of Section 195 of the Act would apply only to those sums which are chargeable to tax under the Income Tax Act. It was held that in the instant case, there is no tax liability and thus, the assessee has not defaulted under the provisions of Section 195 of the Act. It was further held that as per Section 237 r.w.s 199, only recipient of the sum i.e. the payee could seek a refund. If the contention of the Department is accepted that the payer has to deduct tax on all payments and pay tax, even if such deduction comes out of his own pocket and he has no remedy whatsoever, even where the sum paid by him is not a sum chargeable under the Act, it would lead to absurd consequences.

The appeal of Assessee was allowed.

(Please click here for judgment)

2.  ITO Vs. Shri Rajesh Agarwal, I.T.A. No. 893 & 894/LKW/2014, Date of Pronouncement: 03.07.2015, ITAT - Lucknow

Whether service of notice u/s 143(2) of the Income Tax Act, 1961 through affixture on the last day of prescribed period is valid where the same notice through speed post was also sent on the afternoon of the same day?

Held No

In the instant case, the notice u/s 143(2) of the Act was issued by affixture at the threshold along with ordinary notice by post on 30.9.2011 i.e last day of limitation /prescribed period for issuance of notice u/s 143(2) of the Act. The AO contended that the notice was served in the prescribed period & is valid.

The hon’ble ITAT upheld the decision of the Ld. CIT (A) and held that the onus is upon the Revenue to place evidence on record with regard to the service of notice in the prescribed period. In the instant case, the probability of service of the said notice by midnight on the same day through Post is very remote. Further, as per Order V, Rule 17 of the Code of Civil Procedure, 1908, the affixation can be done only when the assessee or his agent refuses to sign the acknowledgement or could not be found. However, in the instant case, assessee neither refused to sign the acknowledgement nor was any effort made by the AO to locate and serve the notice upon him. It was concluded that the assessment was illegal and void ab initio.

The appeals of the Revenue are dismissed.

(Please click here for judgment)

 Golden Rules:

  "Dreams are today's answers to tomorrow's questions"


  Thanks & Regards


Voice of CA 

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