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07.05.2016 - Voice of CA presents - Updates
Saturday, May 7, 2016

I. Headlines Today    

  1. CBDT: Taxability of Income/Loss arising from Transfer of Unlisted Shares  (Click for detail)
  2. Government takes strict action against defaulting/non performing tax officials/officers  (Click for detail)
  3. Finance Bill, 2016 as passed by Lok Sabha  (Click for detail)
  4. Lok Sabha has passed the Insolvency and Bankruptcy Code 2016  (Click for detail)
  5. Govt promises confidentiality for black money disclosures  (Click for detail)
  6. RBI Norms for Protecting Customers  (Click for detail)
II.  Direct Taxes Case Laws: 

1.  VLS Finance Ltd. Vs. CIT, Civil Appeal No. 2667 of 2007, Date of Order: 28.04.2016, Supreme Court of India

Whether the limitation period for passing of block assessment order under Section 158BE of the Income Tax Act would exclude the period for which the direction for Special Audit was stayed by the High Court?


Brief Facts:
The search and seizure operation was conducted on the premises of the assessee. Thereafter, notice under section 158BC(c) of the Income Tax Act was issued and the returns were filed for the block period. However, the assessment was not completed by the AO within the stipulated time as per period prescribed in Section 158BE. A direction u/s 142(2A) was also issued by the AO for the conduct of Special Audit for the block period. The assessee challenged such order in the High Court via writ petition and the stay remained in operation during the pendency of such writ petition. Later, the high court quashed the direction for special audit in view of the fact that assessee was not given proper opportunity of being heard. It was also held that since special audit was an integral step in the assessment proceedings, once the direction for special audit was stayed by the High Court, the assessment proceedings cannot go on and the order of the limitation period u/s 158BE was not violated. Therefore, the assessee filed an appeal before the Supreme Court. 

Special audit is an integral part of the assessment proceedings. It is not possible for the Assessing Officer to carry out the assessment without it and, therefore, stay of the special audit may be treated as stay of assessment proceedings. Therefore period of such stay will be excluded from period of limitation to complete block assessment proceedings under Explanation 1 to section 158BE(2). Moreover, the exclusion of the time period is not dependent upon the final outcome of the proceedings in which interim stay was granted. The appeal of the assessee stands dismissed. 

(Please click here for judgment)


2.  DDIT Vs. Mitsubishi Motors Corporation, I.T.A. No. 411/Del/2014, Date of Pronouncement: 28.04.2016, ITAT - Delhi

Whether the capital gain that had arisen to a non-resident from transfer of shares in an Indian Company would be taxed at the rate of 20% and the proviso to Section 112(1) would be not applicable?


Brief Facts:
Assessee is a foreign company incorporated in Japan and engaged in the business of development, design, manufacture, assembly, sales and purchase, import of automobiles and its component parts. During the year under consideration, the assessee reported income from three streams, viz., capital gains, royalty and fees for technical services. However, only income under the head ‘Capital gains’ was offered for tax. The dispute in the instant appeal is only qua the application of tax rate on the amount of such capital gain alone. Such capital gains arose from the sale of shares of Eicher Motors Ltd. to Eicher Motors Ltd. Shares were held for more than one year, therefore, assessee applied 10% rate of taxation as per provisions of proviso to Section 112(1) of the Income Tax Act. AO held that the proviso was not applicable to the assessee and hence, tax was charged @ 20%. On the appeal of the assessee in Dispute Resolution Panel, the assessee’s claim was accepted and tax rate of 10% was given effect. Hence, the revenue is in appeal before the ITAT.

It is held by the Hon’ble jurisdictional High Court in Cairn UK Holdings Ltd. that the long-term capital gain earned by the assessee non-resident on off market sale of shares of listed Indian company is taxable @ 10% under the proviso to section 112 and proviso to section 112(1) does not state that an assessee, who avails benefit of the first proviso to section 48, is not entitled to the benefit of lower rate of tax at 10%. As the view taken by the DRP is in consonance with that of the Hon’ble High Court, we ergo countenance the same.The appeal of the Revenue stand dismissed.

(Please click here for judgment)  

III. Useful Articles:

1.  Goods imported/ purchased inter-State used in Works contract, would be exempt from VAT

(Please click here for detail)

2.  Rate of interest on delayed payment &increase in period of limitation for non-fraud cases under ST, Excise & Customs

(Please click here for detail)  



(Please click here for its Video)

3.  Reverse Charge - POT & KrishiKalyan Cess

(Please click here for detail)



(Please click here for its Video)


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

 Golden Rules:

  "Take the time to take the route that is right for you.
You will learn something valuable every trip you take,
so don't be afraid to make mistakes"


  Thanks & Regards


Voice of CA 

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