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26.04.2016 - Voice of CA presents - Updates
Tuesday, April 26, 2016


I. Headlines Today   

  1. Extension of last date of Submission of ST-3 service tax return to April, 29  (Click for detail)
  2. CBEC raises monetary limits for filing appeals in indirect tax cases  (Click for detail)
  3. Over 450 tax cases withdrawn  (Click for detail)
  4. Workers' Mimimum Wage Raised to Rs 10,000 per Month  (Click for detail)
  5. Govt cuts EPF interest rates  (Click for detail)
  6. ICAI has released a Guidance Note on the Companies (Auditor's Report) Order, 2016  (Click for detail)
II.  Direct Taxes Case Laws: 

1.  Visvesvaraya Technological University Vs. ACIT,  Civil Appeal Nos. 4361-4366 of 2016, Date of Order: 22.04.2016, Supreme Court of India

Whether fees collected from students are to be considered as Government funding for deciding whether University is wholly or substantially financed by Government even if collection of fees is empowered by statute?


Brief Facts:
The assessee, Visvesvaraya Technological University had been constituted under Visveswaraiah Technological University Act, 1994 to discharge functions earlier performed by the Department of Technical Education, Government of Karnatka. For the Assessment Years 2004-05 to 2009-10, returns were filed in response to the notice u/s 148 declaring NIL income after claiming deduction u/s 10(23)(iiiab). The AO disallowed such exemption and the same decision was upheld by all the Authorities and the High Court. Aggrieved by which, assessee appealed before the Supreme Court.

It was held that if collection of fees is to be understood to be amounting to funding by the Government merely because collection of such fees is empowered by the Statue, all such receipts by way of fees may become eligible to claim exemption u/s 10(23)(iiiab). It will be more appropriate to hold that the funds received from the Government u/s 10(23)(iiiab) must be direct grants/ contributions from the Government Sources including the value of Land made available by the Government and not the fees collected under the statue. In the present case, the total funding by the Government would be around 4%-5% of its total receipts and therefore, it is concluded that the assessee does not satisfy the second requirement (i.e. wholly or substantially owned by the Government) of the Section 10(23)(iiab). Hence, the assessee is not entitled to any exemption under the quoted section.
The appeal of the assessee is dismissed.

(Please click here for judgment)


2.  DIT(E) Vs. M/s Lala Lajpatrai Memorial Trust, I.T.A. No. 2307 of 2013, Date of Judgment: 13.04.16, Bombay High Court

Whether if the predominant purpose is charitable and the earning of profit from an incidental activity like letting of property for educational activities does not affect the charitable status?

Held Yes

Brief Facts:
The assessee trust founded under a Trust Deed claimed that the object for the establishment trust being "advancement of education" fell within charitable purpose as defined u/s 2(15) of the Act. The CIT granted registration u/s 12A(a) of the Act. The assessee owned plot of land having a building consisting of an auditorium on the ground floor and class rooms from 2nd to 7th floors. This building was let out to one Lala Lajpatrai Institute which conducts Junior College, Senior college, Law College etc and the 6th and 7th floors are let out to run a Management Institute which was in consonance with the objects of the trust which intended to promote colleges and schools.

The income which was received by the assessee from letting out the premises to Lala Lajpatrai Institute was claimed as exempted from taxation from 1976 till the AY 2009-10 in question. Invoking proviso to Section 2 (15), a show cause notice was issued to the assessee as to why registration u/s 12A shall not be withdrawn in exercise of the powers u/s 12AA(3) of the Act, as the assessee had received service charge of Rs.12 lacs for renting out the premises for running the institution of Management and earned an income of Rs.15,02,182/- for letting out of the auditorium. The assessee responded that letting out of the property of the trust did not amount to any trade, business or commercial activity and thus there was no case for withdrawing of the exemption granted to the assessee as there was a very nominal rent from Institute. It was, thus, contended that the proviso to section 2(15) of the Act is not attracted in the assessee's case relying on CBDT Circular No.11/2008 dated 19th December 2008.The DIT(E). However, registration of the assessee cancelled  u/s 12A of the Act observing that the educational institutes were being conducted by a different entity.

Hon’ble High Court upheld the order of the tribunal that the revenue’s contention that the tribunal has overlooked the provisions of section 11(4A) is unfounded. The service charges received in respect of 6th and 7th floor were clearly on account of educational purpose. Letting out was incidental and not the principle activity of the assessee trust. Thus, Section 11(4A) which require separate account to be maintained would not be attracted in view of our conclusion that the said amounts as received by the assessee for the assessment year have been received from educational activity which is the dominant activity of the assessee trust. An interpretation as urged on behalf of the revenue would render nugatory the very spirit, rationale and the object of the exemption provisions making the same unworkable.
Thus, the appeal of revenue was dismissed.

(Please click here for judgment)

III. A Useful Presentation:

1.  Step by step Online Filing of Appeals before FAA (First Appellate Authority)
     Under Income Tax Act, 1961 

(Please click here for detail)

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



IV. A Useful Article:

1.  Video Presentation: Changes in Cenvat Credit Rules, 2004 vide Union Budget 2016

(Please click here for detail)

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


 Golden Rules:

  "Everything is valuable in just two situations,
before receiving and after loosing.
Try to value things when they are with us"


  Thanks & Regards


Voice of CA 

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