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15.02.2016 - Voice of CA presents - Updates
Monday, February 15, 2016

I. Headlines Today    

  1. Banking reforms coming: Jaitley  (Click for detail)
  2. Budget 2016-17: Service tax to be raised to 16% but with broader credit  (Click for detail)
  3. Revised Guidance Note on Reporting on Fraud under Section 143(12) of the Companies Act, 2013 released by Auditing and Assurance Standards Board  (Click for detail)
  4. Guidance Note on Audit of Banks (2016) released by Auditing and Assurance Standards Board  (Click for detail)
  5. Taxman gets more teeth to track non-filers of Income Tax returns  (Click for detail)

II.  Direct Taxes Case Laws:

1.  DIT Vs. New Skies Satellite BV, I.T.A. No. 474/2012, Date of Pronouncement: 08.02.2016, High Court of Delhi

Whether the provisions of DTAA can be re-interpreted subsequent to a retrospective amendment made in the provisions of domestic law?


In brief_ the assessee is engaged in data transmission services providing a number of critical processes required for satellite television broadcast and satellite internet service. The assessee received income by way of leasing of transponders of the satellites, the footprints (area over which the satellite can transmit its signal) of which included India. The AO contended that the receipt would be considered as royalty u/s 9(1)(vi) of the Act and also under Article 12 (4) Indo Netherlands DTAA.

On appeal before the hon’ble ITAT, the order was reversed in the favour of assessee, in light of the judgment of Asia Satellite Communications Co. Ltd. V. DIT [2011] 332 ITR 340 (Del), while interpreting Section 9(1)(vi) in the context of such services. On the other hand, the Revenue contended that the insertion of Explanation 4-6 to Section 9(1)(vi) of the Act would automatically extend to the provisions of DTAA and the income of assessee is duly taxable.

The Hon’ble High Court held that no amendment to the Act, whether retrospective or prospective can be read in a manner so as to extend in operation to the terms of an international treaty unless the said DTAAs are amended jointly by both parties. However, the hon’ble Court has not returned a finding on whether the amendment is in fact retrospective and applicable to cases preceding the Finance Act of 2012 where there exists no DTAA.
The appeal of the revenue stands dismissed.

(Please click here for judgment)

2.  M/s Prabhat (A House of Hope for Special Children) Vs. CIT, I.T.A. No. 687/Chd/ 2015, Date of order: 09.02.2016, ITAT - Chandigarh

Whether the CIT (Exemption) can deny registration u/s 12AA of Income Tax Act, 1961 holding that assessee has not incurred any major expenditure on account of Charity?

Held_ No

The assessee filed an application in Form No. 10A before the CIT (Exemption) for registration u/s 12AA of the Act. The CIT (Exemption) denied the registration on the ground that the no major expenditure has been incurred for charitable purposes.

The Hon’ble ITAT held that the CIT (Exemption) has to only consider whether the objects of the Trust are charitable in nature and whether the activities carried on by the assessee are genuine or not. The CIT (Exemption) cannot go beyond these two parameters while granting registration u/s 12AA of the Act and the same have been incorporated in the section itself. It was observed that amount was not expended for charitable purposes; however, the expenditure incurred out of the miniscule amount of donation received in its initial years was the expense necessary to run the society. The aims and objects of the assessee trust are charitable in nature and no adverse remarks as to the genuineness of any of these activities have been made by the CIT (Exemption). Therefore, the CIT (Exemption) is directed to grant registration u/s 12AA of the Act to the assessee trust.
Thus, the appeal is allowed.

(Please click here for judgment)


III. A Useful Article: 

1.  Cenvat credit admissible on services of sales commission agent

(Please click here for detail)  

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


 Golden Rules:

  "Performance always comes from Passion & not from Pressure,
Be Passionate and love what you do & do what you love,
Success is Yours"


  Thanks & Regards


Voice of CA 

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