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02.05.2016 - Voice of CA presents - Updates
Monday, May 2, 2016


I. Headlines Today    

  1. Circular: ​Payment of interest on refund u/s 244A of excess TDS deposited u/s 195 of Income-tax Act, 1961  (Click for detail)
  2. Circular: ​Limitation for penalty proceedings u/s 271D & 271E of Income-tax Act, 1961  (Click for detail)
  3. Circular: ​Commencement of limitation for penalty proceedings u/s 271D & 271E of Income-tax Act, 1961​  (Click for detail)
  4. MCA has clarified that Companies (Accounting Standards) Amendment Rules, 2016 would be applicable on the date of publication in the Official Gazette  (Click for detail)
  5. I-T department had 5.17 crore assessees in FY'15  (Click for detail)
  6. I-T exemptions for private varsities  (Click for detail)
  7. Professionals should start preparing for tax filing  (Click for detail)

II. CBDT releases Direct Taxes Data    

  1. Income Tax Department Time Series Data Financial Year 2000-01 to 2014-15  (Click for detail)
  2. Income Tax Department PAN Allotment Statistics Financial Year 2013-14  (Click for detail)
  3. Income Tax Department Income Tax Return Statistics Assessment Year 2012-13​​​​​​​​  (Click for detail)​​​​​​​​


III.  Direct Taxes Case Laws: 

1. CIT Vs. M/s Ramaniyam Homes P Ltd., Tax Case (Appeal) No. 278 of 2014, Date of Pronouncement: 22.04.2016, High Court of Madras

Whether the principal amount waived by the bank under the one time settlement is a taxable receipt covered within the definition of the term ‘income’ and taxable under Section 28(iv) of the Income Tax Act, 1961?


Brief Facts:
The assessee filed the Return of Income for the Assessment Year 2006-07 declaring the loss of Rs. 2,42,20,780/-. The notice under Section 143(2) and 142(1) of the Income Tax Act was issued to the assessee. AO found that assessee was engaged in one time settlement scheme with the Indian Bank. Therefore, interest waived by the bank was treated as income u/s 41(1). Moreover, AO treated the difference between the amount waived off and amount paid by the assessee as income u/s 28(iv). The CIT(A) approved the taxability of income u/s 41(1) but deleted the addition u/s 28(iv). ITAT upheld the decision of CIT(A). Aggrieved by which, the revenue is in appeal before the High Court.

It was held that Not the actual receipt of money, but the receipt of a benefit or perquisite, which has a monetary value, whether such benefit or perquisite is convertible into money or not, which is what is covered by Section 28(iv). The accounting practices make no distinction between the loan taken for the purpose of acquiring capital asset and the loan taken for the purpose of trading activities. But section 36(1)(iii) allows the deduction of interest for loan taken for business purposes but interest paid in respect of the loan taken for acquiring capital asset would be allowed deduction only when such asset is put to use. When the portion of loan taken for acquiring capital asset is reduced (either by one time settlement or otherwise), as per double entry system of accounting, the total amount of loan shown on the liabilities side of the balance sheet is reduced and the amount shown as capital reserve is increased to the extent of the waiver. Alternatively, the waived amount is shown as a capital receipt in the Profit & Loss Account. Hence in the above case, the question of law is answered in the favour of the Revenue and the waived portion of the loan would be taxable u/s 28(iv).
The appeal of the revenue is allowed.

(Please click here for judgment)


2.  Oxford Softech P. Ltd. Vs. ITO, I.T.A. No. 5100/Del/2011, Date of Decision: 07.04.16, ITAT - Delhi

Whether the penalty could be attracted if the assessee was under a bonafide belief claiming a deduction u/s 80IA of the Act ?


The assessee company is engaged in providing certain services including air conditioning, generator backup, interiors, electric, wooden fixtures and fittings etc. claiming deduction u/s 80 IA of the Act to the extent of 100%. The order in Form 10CCB r.w. Rule 18BBB was filed with the return. The A.O. disallowed the claim with the contention that the assessee is merely providing certain interiors, furniture, fixtures and generator back up power services etc. for BPO/Software companies which are lessees of the building owned by its Director and has received services and hire charges for the same and the assessee is not engaged in the business of developing, operating and maintaining, the infrastructure facilities as specified in Sec.80 IA of the Act. It was also contended that the audit report submitted by the assessee in form no.10 CCB does not mention the sub section of s.80 IA of the Act under which the assessee was claiming deduction in column no.7 of the audit report.

The assessee could not submit the specific provision of Sec.80 IA under which it was claiming deduction. Reliance placed by the assessee on approvals of Dy.Director/Director of Software Technology Park of India for claiming deduction u/s 80 IA, which is extracted in the assessment order is not warranted for the reason that, the guarantee card etc. are issued to the assessee company for approval of 100% software export unit status under Software Technology Park Scheme and has no connection with claim for deduction u/s 80 IA. The Dy.Director/Director of STPI is not the competent authority to allow deduction u/s 80 IA of the Act as per provisions of the law in the case of the assessee. Thus he denied the deduction.

Hon’ble ITAT held that a perusal of audit report demonstrates that the auditors of the assessee also believed that the assessee was eligible for deduction u/s 80 IA of the Act supported by an audit report. The assessee had also made an application to STPI for setting up the infrastructure facilities under the STPI Scheme. All details of the claim made u/s 80 IA were filed by the assessee, along with the return of income. Under these circumstances, the explanation given by the assessee that it was under a genuine belief that it was entitled for relief u/s 80 IA of the Act is bonafide. Hence, ITAT held that the assessee was under a bonafide belief that it was entitled to the claim for deduction under provisions of s.80 IA of the Act. The provisions under the Act are highly complicated and its different for a layman to understand the same. Even seasoned tax professionals have difficulty in comprehending these provisions. Making a claim for deduction u/s 80 IA of the Act which has numerous conditions attached is a complicated affair. It is another matter that the assessing authorities have found that the claim is not admissible. Under these circumstances, it cannot be said that this is a case of furnishing of inaccurate particulars of income penalty u/s 271(1)(c) cannot be levied.
Thus, the appeal of assessee was allowed.

(Please click here for judgment)  

IV. A Useful Update:

1.  Indirect tax Digest - April 29, 2016

(Please click here for detail)

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


 Golden Rules:

  "Adjustment with right people is always better
Than Argument with wrong people"


  Thanks & Regards


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