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31.05.2016 - Voice of CA presents - Updates
Tuesday, May 31, 2016

I. Headlines Today    

  1. Service tax will be 15% from tomorrow  (Click for detail)
  2. No TDS for provident fund withdrawals of up to Rs 50,000 from June 1  (Click for detail)
  3. CBDT notifies Rules for Direct Tax Dispute Resolution Scheme; 31st Dec, 2016 is the deadline to make declaration  (Click for detail)
  4. SEBI introduces new guidelines for winding-up of depositories  (Click for detail)
  5. Govt Announces Rules for Equalisation Levy  (Click for detail)
  6. TCS Threshold on Purchase of Gold Jewellery Reversed  (Click for detail)
  7. Rules for tax on online ads released  (Click for detail)
II.  Direct Taxes Case Laws: 

1.  LS Cable & System Ltd., Korea Vs.  CIT & ANR,  W.P.(C) 8799/2015 & CM 19522/2015, Date of Judgement: 13.05.2016, High Court of Delhi

Whether the AAR can reject the application for determination of tax liability, where the application was filed before filing of return, for the reason that the issue was identical with application for preceding year and notice was issued u/s 143(2) in that year.

Held - No
The Petitioner, a company incorporated under the laws of South Korea, is engaged in the manufacture of electric wires and cables for power distribution. It executes its onshore works through Project Offices in India. For A.Y 2012-13, it filled its ROI on 29.11.2012 and on 13.08.2013, notice u/s 143(2) was issued to the assessee. On 29.09.2013, the Assessee filed 4 applications before the AAR seeking determination of its tax liability in respect of amounts received towards the offshore supplies contract, of which 3 applications were pertaining to AY 2013-14. Thereafter, on 29.11.2013, the Petitioner filed its returns for AY 2013-14 but did not offer the revenues earned from offshore supplies as the Petitioner took the stand that no portion of the profits arising therefrom is taxable in India. In respect of AY 2013-14, notice u/s 143(2) was issued on 15.09.2014.

The AAR rejected the applications since notice u/s 143(2) had already been issued by the Department earlier to the filing of the applications. Regarding filing of applications pertaining to AY 2013-14 even before the filing of the returns, the AAR observed that since the issues are identical in all the four applications and if even in one of the applications, the notice is issued u/s 143(2), it will be a case of pending question before the Income Tax authorities.

The Hon’ble Court held that order of the AAR is unsustainable in law. The mere issuance of a notice u/s 143(2) in relation to AY 2012-13 does not tantamount to the issues raised in the application filed by the Petitioner before the AAR on 20.09.2013 being already pending before the AAR. Further, in respect of AY 2013-14, there was no statutory bar to the AAR considering the said application. The order of the AAR is, thus, set aside.

(Please click here for judgment)


2.  M/s Tegh International  Vs.  Asst. CIT,  I.T.A. No. 1462 & 1463/DEL/ 2014, Date of Judgement: 27.05.2016, ITAT - New Delhi

Whether the proceeding u/s 153A r.w.s. 143(3) of the Income Tax Act, 1961 can be completed on the basis of documents submitted in response to notice u/s 142(1) & 143(2) of the Act in absence of any incriminating material found during the search operation.

Held - No
Assessee firm was engaged in business of export of artificial jewellery. A search was conducted on the assessee companies group on 26.04.2010. Notice u/s 153A was issued and served on the assessee on 13.04.2011. In response to the same assessee filed its return on 02.05.2011. Subsequently, notices u/s 142(1) of the Act along with a detailed questionnaire and u/s 143(2) of the Act were issued. On the basis of submitted detail/ documents, the assessment was completed in terms of an order u/s 153A r.w.s. 143(3) of the Act wherein the AO made addition on account of bogus purchases made through accommodation entries. Assessee contended that the additions not based on any incriminating material found during search operation are not sustainable in the eyes of law.

The Hon’ble Tribunal placing reliance on decision of Hon’ble Delhi High Court in case of CIT vs. Kabul Chawla [2016] 380 ITR 573 held that the additions made by the AO are beyond the scope of section 153A of the Act because no incriminating material or evidence had been found during the course of search so as to doubt the purchases. Hence, the addition in the case is deleted and the ground raised by the assessee in the appeal is allowed.

(Please click here for judgment)

III. A Useful Article:

1.  Krishi Kalyan Cess - Applicability & Open Issues

(Please click here for detail)


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

 Golden Rules:

  "Successful people carry two things on their face.
Smile and Silence.
Smile to solve the problems and
Silence to avoid the problems"


  Thanks & Regards


Voice of CA 

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