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25.05.2016 - Voice of CA presents - Updates
Wednesday, May 25, 2016


I. Headlines Today    

  1. CBDT Notification: The Income Declaration Scheme Rules, 2016  (Click for detail)
  2. Notification of dates under The Income Declaration Scheme, 2016  (Click for detail)
  3. Clarifications on the Income Declaration Scheme, 2016  (Click for detail)
  4. Explanatory notes on provisions of the Income Declaration Scheme, 2016 as provided in Chapter IX of the Finance Act, 2016  (Click for detail)
  5. Draft Rule for Manner of determination of FMV & reporting requirement for Indian concern-Indirect transfer provisions u/s 9(1) of IT Act, 1961  (Click for detail)
  6. Relaxation for furnishing of UID in case of Form 15G/15H for certain Quarters  (Click for detail)
  7. Income Tax department to 'name and shame' crorepati defaulters this fiscal  (Click for detail)
  8. Fair market value formula not that fair: Experts  (Click for detail)
II.  Direct Taxes Case Laws: 

1.  Indu Lata Rangwala Vs. Dy. CIT, W.P.(C) 1393/2002, Date of Judgment: 18.05.2016, High Court of Delhi


Whether the reassessment u/s 147 of the Income Tax Act, 1961 can be opened on the basis of “reasons to believe” based on documents already filled before the AO during processing of return u/s 143(1) of the Act.

Held- Yes

Brief Facts:
The assessee was a partner in a partnership firm which was taken over by the petitioner as a sole proprietorship concern. The loss returns were filed by the assessee & the partnership firm for the relevant period. Both these returns were filled along with statement of accounts, audit report etc. These returns were processed u/s 143(1) which was duly accepted by authorities and the acknowledgment of the same was issued. Later, on the basis scrutiny of the documents submitted along with return, Ld. A.O. initiated assessment u/s 147. Assessee contended that reasons to believe as recorded by Ld. A.O. are on the basis of documents already submitted during assessment u/s 143(1) and there was no new tangible material. Therefore this is merely change of opinion.

The Hon’ble High Court held that an intimation u/s 143(1)(a) cannot be treated to be an order of assessment. There being no assessment u/s 143(1)(a), the question of change of opinion does not arise and where the initial return is processed u/s 143(1) of the Act and an intimation is sent to the Assessee, the reopening of such assessment no doubt requires the AO to form reasons to believe that income has escaped assessment, but such reasons do not require any fresh tangible material. Therefore, it was held that the assessment proceeding u/s 147 can be carried forward.

(Please click here for judgment)


2.  M/s Nut ‘n’ Spices Vs. ACIT, I.T.A. No. 545/Mad/2016, Date of Pronouncement: 20.05.2016, ITAT - Chennai

Whether for the purpose of calculation of Interest u/s 234B of the Income Tax Act, 1961 subsequent to assessment of income u/s 147 of the Act made after the processing of return u/s 143(1) of the Act, the provisions of sub-section (1) of Section 234B are to be applied and not sub-section (3)?

Held: Yes

Brief facts:
The assessee filed its return of income which was processed u/s 143 (1). Subsequently, a survey u/s.133A of the Act was conducted and the case was reopened u/s 147 of the Act. The assessment was made for the first time and was completed u/s 143 (3) r.w.s. 147 which resulted in tax demand. Interest u/s 234B was worked out as per the provisions of sub-section (1) of section 234B. The Assessee contended that the interest u/s 234B should have been calculated as per sub-section (3) and not as per sub-section (1). The Ld. CIT(A) upheld the order of AO. Aggrieved by the order of the CIT(A), the assessee is in appeal before the Hon’ble ITAT.

The Hon’ble ITAT held that intimation u/s.143(1) is not an assessment and thus, the case of “Assessment ” for the first time in the hands of assessee u/s.147 will fall under sub-section(1) of section 234B. As per Explanation-2 it is clarified that where, an assessment is made for the first time u/s 147 or section 153A, the assessment shall be regarded as a regular assessment for the purposes of this section and the interest u/s 234B must be calculated as per the provisions of section 234B(1). Therefore, the contention of the assessee that the interest should have been calculated under sub-section (3) of section 234B is rejected by the Hon’ble ITAT.

(Please click here for judgment)

III. A Useful Article:

1.  Indirect Tax Dispute Resolution Scheme, 2016: Overview

(Please click here for detail)


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

 Golden Rules:

  "Winners never quit and quitters never win"

  Thanks & Regards


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