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12.03.2016 - Voice of CA presents - Updates
Saturday, March 12, 2016

I. Headlines Today    

  1. CBDT Inst.: Guidelines for Implementation of Transfer Pricing Provisions  (Click for detail)
  2. Uncollected tax demand increased to Rs 7 lakh cr in FY15  (Click for detail)
  3. CAG finds 96 per cent of Rs.7 lakh crore of tax arrears ‘difficult to recover’  (Click for detail)
  4. Labour min to oppose EPF tax in any form  (Click for detail)
  5. Investors get tax relief on investment gains  (Click for detail)
  6. ICAI: E-Flash - Amendments Proposed by The Finance Bill, 2016  (Click for detail)
II.  Direct Taxes Case Laws: 

1.  Priya Mahajan Vs. CIT, I.T.A. No. 384 of 2015, Date of Decision: 26.11.2015, Punjab & Haryana High Court

Whether a person is entitled for the 100% deduction of the interest u/s 24(b) of the Act of house loan when there are four co-owners in whose names the house property has been purchased and assessee had solely re-paid the entire interest and principal since the date of borrowing?

Held: No

Brief Fact
The assessee is an individual who filed her return at Income of Rs. 7,44,834/- and revised return of income at Rs. 3,08,663/-. The case was taken up for scrutiny. The assessee claimed deduction of interest on housing loan u/s 24(b) of the Act for the property. The AO made an addition of 75% of the entire interest after allowing only 25% of the total interest as deduction since there are four co-owners. Aggrieved by the order, the assessee filed an appeal before the CIT (A) who dismissed the appeal. Still dissatisfied, the assessee filed an appeal before the Tribunal. The Tribunal dismissed the appeal affirming the findings of the CIT(A) by observing that the plot in question was purchased and the housing loan upon it had been taken jointly by four persons, therefore, the allowable interest to the assessee was 25% of the entire interest.

Further, it was held that the AO as well as the CIT(A) were justified in holding that since the individual shares were not specified in the sale deed, the logical conclusion was that everyone had equal share in the property. It was also recorded that, even, the assessee had failed to produce any evidence on record regarding her claim that she alone had invested for purchase of the house property.

The authorities below on appreciation of material on record have concurrently recorded that the assessee was entitled to 1/4th deduction, i.e. 25% of the entire interest. Learned counsel for the assessee was not able to demonstrate that the approach of the authorities below was erroneous or perverse or that the findings of fact recorded were based on misreading or misappreciation of evidence on record. The view of the Assessing Officer, the CIT(A) and the Tribunal is a plausible view based on material on record which warrant no interference by this Court.

(Please click here for judgment)


2.  Banihal Holdings Pvt. Ltd. Vs. ACIT, I.T.A. No. 256/2006, Date of Order: 22.02.2016, High Court of Gujarat

“Whether, expenses incurred by the assessee on salary and other expenses for maintaining its very corporate existence have to be apportioned between the taxable and exempted income of the assessee?”


Brief Facts
The assessee company had declared the loss of Rs.2.67 lacs during the A.Y 2001-2002 and had shown a total income of Rs.73.75 lacs, out of which only sum of Rs. 39,900/- was liable to income tax. Out of taxable income of Rs. 39,900/- the assessee had claimed expenditure of Rs. 3.07 lacs comprising salary paid to the Company Secretary of Rs.2.91 lacs and other miscellaneous expenses of Rs.16, 000 and remaining income was exempt u/s 10 being either dividend income or agricultural income. The Assessing Officer therefore, totally disallowed the expenditure and the corresponding loss since the expenses incurred by the company had primarily resulted in income which was exempt under section 10 of the Act and, therefore, would not be allowable in terms of section 14A of the Act.

In our opinion, the CIT(Appeals) and the Tribunal committed no error. The fact that virtually entire income of the assessee was exempt is not in dispute. The fact that the assessee paid salary of Rs. 2.91 lacs to the Company Secretary so engaged by the company is also not in dispute. Merely because under the relevant provision of the Companies Act, it was compulsory for the company to engage a Company Secretary, would not in any manner change the fundamental facts. The salary paid to the Company Secretary was for running the business of the company which principally comprised of investment in shares and agricultural operations. The act of engagement of Company Secretary was clearly for the purpose of carrying on activities of the company, in absence of which, the company would be breaching the legal requirement. That being the position, the expenditure had to be apportioned between the taxable income and the exempt income.

(Please click here for judgment)

III. Useful Articles:

1.  "Indirect Tax - Latest Judicial Precedents"

(Please click here for detail)

2.  "Excise Duty on Textile Sector: Increased cost and Compliance Burden"

(Please click here for detail)

[Contribution by CA. Ashish Chaudhary and contributor is available at eMail-id:]


 Golden Rules:

  Maturity is not when we start speaking "Big Things"
but actually it is when we start understanding "Small Things"


  Thanks & Regards


Voice of CA 

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