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12.04.2016 - Voice of CA presents - Updates
Tuesday, April 12, 2016


I. Headlines Today    

  1. CBDT notifies procedures, data structure and standard of Electronic Verification Code (EVC) for electronically filed Form of Appeal to CIT(A)  (Click for detail)
  2. CBDT notifies procedure for registration and submission of statement as per section 285BA(1)(k) of Income-tax Act, 1961 r.w. Rule 114G(7) of Income-tax Rules, 1962  (Click for detail)
  3. CBDT staring at Rs. 7L cr unpaid, disputed taxes  (Click for detail)
  4. I-T e-filing Appeals Based on Aadhaar, Net Banking  (Click for detail)
  5. FinMin to replace interest subvention with back-ended subsidies  (Click for detail)
  6. Govt to Move SC on Tax Levy on Legal Services  (Click for detail)
II.  Direct Taxes Case Laws: 

1. M/s. Foxconn India Developer (P) Ltd. & others Vs. ITO, Tax Case Appeal no. 801 of 2013, Date of Decision: 04.04.2016, High Court of Madras

Whether the upfront payment made for the acquisition of leasehold rights over an immovable property for a long duration, say 99 years, constitute rental income in the hands of lessor, thereby attracting provisions of Section 194-I of the Act?


Brief Facts:
The SIPCOT, a government undertaking, acquired certain acres of land for its development as an Industrial Park. After development of land, SIPCOT laid out the said land into various plots and the assessee was chosen as Developer to establish project specific SEZ in partnership with SIPCOT. The assessee paid Non-refundable One Time Upfront charges for allotment of land. By virtue of the lease deeds, the assessee was entitled to enjoy the land for a period of 99 years, upon payment of annual lease rent of Re.1/- p.a for 98 years and Rs.2/- per year for the 99th year to be paid in advance. The ld. AO contended that the payment was liable for deduction of TDS u/s 194-I of the Act.

The hon’ble High Court held that the substance of the transaction is of importance and the requirement to deduct tax u/s 194-I of the Act would depend upon the agreement between the parties. The purpose of the acquisition was to develop the area into an industrial park and it is clear that the lessor as well as the lessee intended to treat the transaction as "deemed sale". The payments were not only made under the agreement of lease but for a variety of purposes such as becoming a co-developer, developing a Product Specific SEZ, for putting up an industry in the land, etc. Also, the payments were not merely made for the use of land.

Thus, the upfront payment made by the assessee for acquisition of leasehold rights over an immovable property for a long duration of time say 99 years could not be taken to constitute rental income at the hands of the lessor, obliging the lessor to deduct tax at source u/s 194-I of the Act.
The appeal of assessee is allowed.

(Please click here for judgment)


2.  DCIT Vs. M/S Yamuna Power & Infrastructure Ltd., I.T.A. No. 57/Chd/2016, Date of Order: 06.04.2016, ITAT - Chandigarh

Whether the losses of the assessment years prior to the initial assessment year need to be carried forward notionally up to the initial assessment year while calculating the deduction u/s 80-IA of the Income Tax Act, 1961?


Brief Facts:
The assessee company established two wind mills and claimed deduction u/s 80IA of the Act @100% on the income earned from the business of wind power generation projects from AY 2008-09. AO denied the exemption to the assessee for AY 2012-13 in accordance with the provisions of Section 80-IA(5) of the Act while setting off the losses for AY 2004-05 to 2006-07 against the income for AY 2007-08 to 2012-13. CIT(A) reversed the order of the AO. Aggrieved by the order of the CIT(A), the revenue is in appeal before the ITAT.

It was held that only losses of the years beginning from initial assessment year are to be brought forward and no losses of earlier years which were already set off against the income of the assessee. The Revenue is not allowed to look backward and find out if there is any loss of earlier years and bring forward notionally even though the same were set off against other income of the assessee and the set off against the current income of the eligible business. Once the set off is taken place in earlier year against the other income of the assessee, the Revenue cannot rework the set off amount and bring it notionally. The losses pertaining to previous years prior to AY 2008-09 will not be taken into consideration for calculating the amount of deduction u/s 80IA of the Act. Therefore, the AO was not justified in disallowance of claim of deduction u/s 80IA of the Act.
The appeal of the revenue stands dismissed.

(Please click here for judgment)

III. A Useful Article:

1.  1 year time limit to claim refund under Rule 5 of CCR reckoned from the date of receipt of export proceeds and not from date of export of services

(Please click here for detail)

(Contribution by CA. Bimal Jain and contributor is available at eMail-id:


 Golden Rules:

  "Always aim at complete harmony of thought and word and deed.
Always aim at purifying your thoughts and everything will be well

Mahatma Gandhi"


  Thanks & Regards


Voice of CA 

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