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15.04.2016 - Voice of CA presents - Updates
Friday, April 15, 2016


I. Headlines Today    

  1. All ITRs for AY 2016-17 are available for e-Filing.
  2. ST Circular: Clarification on issues reg. levy of Service Tax on the services provided by Govt. or a local authority to business entities  (Click for detail)
  3. Significant reform to cut audit delays: CBEC relaxes tax regime  (Click for detail)
  4. India not to use 'tax haven' in black money info dossiers  (Click for detail)
  5. No retro service tax on spectrum, mines  (Click for detail)
  6. RBI issues advisory on submission of ‘Annual performance Report’ by Indian Party/Resident individuals  (Click for detail)
  7. Hosting of exemption(s) in a paper(s) granted in Intermediate (IPC) and Final examinations, valid for May, 2016  (Click for detail)
  8. Notification for Eligibility Test (ET) for DISA, on Sunday the May 22, 2016, Last Date for Online Form Submission: 05th May , 2016 till 5:30 PM  (Click for detail)
II.  Direct Taxes Case Laws: 

1.  T. Rajkumar Vs. Union of India,  W.P. Nos. 17407 - 17412 of 2015, Date of Decision: 12.04.2016, High Court of Madras

Issue: Whether challenging to section 94-A (1), the Notification dated 1-11-2013 and the Press Release dated 1-11-2013 notifying Cyprus as a non-cooperative jurisdiction is sustainable in law?

Held: No

Brief Facts:
Since December 1994, India and Cyprus entered into an treaty to avoid double taxation of income and prevention of tax evasion. The Government of India had notified section 94-A (1), as there was no information flow from Cyprus. Petitioners filed several petitions, challenging legality of section 94-A(1), on ground that it conferred sweeping powers upon the central government to specify any country as a notified jurisdictional area in relation to transactions entered into by any assessee, irrespective of whether such country is one, with whom a bilateral treaty has already been entered into.

The Government of India has the power to issue a Notification. The power conferred by the Section 94-A cannot be said to be uncontrolled and unrestrained since Government of India has to exercise the power only in circumstances, where there is lack of effective exchange of information. Both contracting parties are under obligation to exchange information under the Treaty in good faith. When one of the parties commits a default by failing to provide information, it is not open to the beneficiary of such a default to contend that the other contracting party should honour their obligations. Lack of exchange of information by Cyprus, which led to the Notification dated 1-11-2013 cannot fall under the category of information, which is not obtainable under the laws. If the purpose of the Government of India entering into an agreement under section 90(1) is defeated by the lack of effective exchange of information, then section 90(1)(c) is actually diluted by one of the contracting parties and not by section 94A(1).Section 94A was the need of the hour. Hence, challenges to section 94-A (1), the Notification dated 1-11-2013 and the Press Release dated 1-11-2013 notifying Cyprus as a non-cooperative jurisdiction were not sustainable in law.

(Please click here for judgment)


2.  Dewanchand Ramsaran Industries Pvt. Ltd. Vs. ACIT, I.T.A. No. 4587/Mum/2013, Date of Pronouncement: 11.04.2016, ITAT - Mumbai

Whether the expenses incurred on mobilization of rigs can be claimed as Revenue Expenditure under the Income Tax while the same has been capitalised in the Books of Accounts under the Companies Act?


Brief Facts:
The assessee company is engaged in the business of giving Rigs on hiring to Government and Private Parties. It has claimed the expenses with respect to the mobilization of rigs, which were not debited to Profit & Loss Account but was treated as capital expenditure in the books of accounts prepared under the Companies Act, while the same were Revenue Expenditure as per the Income Tax Act. The AO did not allow the expenses to be claimed as Revenue Expenditure in light of the reason that no sufficient evidences were produced by the assessee to prove that the rigs came into use in the relevant Assessment year. The CIT(A) upheld the order of the AO. Aggrieved by which, the assessee is in appeal before the ITAT.

Once the expenditure is found to be allowable as revenue expenditure as per provisions of the Income Tax Act,1961, the same are to be allowed as revenue expenditure under the Act while computing income chargeable to tax even if the tax-payer has given different treatment in its books of accounts by capitalizing the same in its books of accounts instead of debiting it to the Profit and Loss Account. This is the mandate of the Income Tax Act,1961 which has to be followed as the taxes can only be collected by the authority of law. The addition made by the A.O. and confirmed by the CIT(A) is to be deleted. The mobilization expenses incurred by the assessee company as an revenue expenditure allowable under the Act as deduction while computing the income chargeable to tax. The appeal of the assessee is allowed.

(Please click here for judgment)

III. A Useful Video:

1.  Categorization of Services Under Finance Act 1994

(Please click here for Video)

(Contribution by CA. Puneet Goyal and contributor is available at eMail-id:


IV. A Useful Article:

1.  ‘Any services’ provided by Government or Local authority to a Business Entity chargeable to ST under Reverse Charge w.e.f. April 1, 2016: Related Changes/ Clarification

(Please click here for detail)

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


 Golden Rules:

  "When U do anything new and daring...
First people laugh at U,
Then they challenge U,
Then they watch U succeed,
AND Then....
they wish they were U"


  Thanks & Regards


Voice of CA 

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