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29.07.2016 - Voice of CA presents - Updates
Friday, July 29, 2016

I. Headlines Today    

  1. Lok Sabha nods to Benami transactions amendment Bill  (Click for detail)
  2. DVAT: Filing of online return for first quarter extended to Aug 31, 2016  (Click for detail)
  3. ST Circular: Instructions reg. provisional attachment of property u/s 73C of the Finance Act, 1994  (Click for detail)
  4. DT Circular: Clarification reg. attaining prescribed Age of 60 years/80 years on 31st March itself, in case of Senior/Very Senior Citizens whose date of birth falls on 1st April, for purposes of IT Act, 1961  (Click for detail)
  5. Companies (Incorporation) Third Amendment Rules, 2016  (Click for detail)
  6. No arrest of jewellers in cases of duty evasion below Rs 2 crore  (Click for detail)
  7. Fin Min warns tax officials on resolution against revenue dept  (Click for detail)
  8. Logistics stocks up on GST clearance hope  (Click for detail)
  9. Why you must file I- T returns on time  (Click for detail)
  10. Did you get income-tax notice? Explain high-value transactions with ease  (Click for detail)
II.  Direct Taxes Case Laws: 

1.  Housing and Urban Development Corpn. Ltd. Vs. DCIT, I.T.A. No. 348/2003 & 247/2004, Date of Order: 21.07.2016, High Court of Delhi

Whether the interest earned from Investments made by the way of short term deposits with public undertakings in form of securities and bonds will be covered under the meaning of interest under Section 2(7) of the Interest Tax Act, 1974?


Brief Facts:
The assessee is in the business of financing housing projects promoted by various organisations including the State Governments. During its course of business, the assessee deposits surplus funds available to it with various companies. During the relevant assessment year it had deposited its surplus funds with the Steel Authority of India Limited (SAIL). The AO contended that the interest earned by the assessee on these deposits shall fall within the definition of ‘interest’ under terms of Section 2(7) of the Interest Tax Act, 1974. The CIT(A) upheld the order of the AO. Further, ITAT upheld the same order stating that since money had been placed at the disposal of the SAIL under a contract, it could partake the character of a loan for which compensation of interest has been paid by SAIL to the assessee. Aggrieved by which, assessee is in appeal before the High Court.

It was held that the two expressions ‘loans’ and ‘deposits’ are to be taken different. Moreover, the word ‘means’ in the definition of the interest u/s 2(7) of the Interest Tax Act, 1974 purports to be exhaustive and there is no scope of going beyond the definition of interest. The definition uses an expression means and that is followed by “interest on loans and advances” and hence it should be considered as being exhaustive of the entire definition. However, the legislature has intended to 'include' other two transactions under the definition but those two transactions do not include interest on deposits. It is therefore not acceptable that the expression “interest on loan and advances” should include “interest on deposits”. Therefore, the question of law is answered in the favour of the assessee.

(Please click here for judgment)


2.  RC Golden Granites Pvt. Ltd. Vs. ITO, I.T.A No. 897, 898, 899, 900/Mds/2016, Date of Pronouncement: 22.07.2016, ITAT - Chennai

Whether the approval granted by the Development Commissioner for 100% EOU further ratified by the Board of Approval will be an eligible criterion for claiming exemption u/s 10B of the Income Tax Act, 1961?


Brief Facts:
The assessee company is engaged in the business of manufacturing and export of Monument Granite and is registered as 100% Export Oriented Unit (EOU) in Special Economic Zone (SEZ) Tambaram and eligible for exemption u/s 10B of the Income Tax Act, 1961. The Assessing Officer while passing the consequential order for giving effect to the order of CIT-V passed in decision of the revised petition filed by the assessee u/s 264 contended that the assessee has not fulfilled the conditions for claiming the said deduction u/s 10B as the assessee has not submitted the approval of the Board constituted for the same purpose and moreover there is nothing in any  of the  circulars or instruction implying that approval for purpose for purposes of an STP/EOU/EPZ also entitled a unit to benefit u/s 10B. CIT(A) upheld the order of the AO. Aggrieved by which, assessee appealed to the Tribunal.

It was held that Board has ratified the approval of 100% EOU. As per CBDT Instruction No. 02/2009 that the approval of Development Commissioner in case of 100% export oriented unit as ratified by the Board of Approval will be eligible for claiming deduction u/s 10B of the Income Tax Act, 1961. Moreover, the moment the decision / approval of the Development Commissioner is ratified by the Board of Approval it will relate back to the date on which the approval was granted by the Development Commissioner.

(Please click here for judgment)

 Golden Rules:

  Once a WISE Man asked GOD:
"What is the meaning of Life?"
GOD: Life itself has no meaning in it.
Life is an opportunity to create a Meaning"


  Thanks & Regards


Voice of CA 

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