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04.08.2016 - Voice of CA presents - Updates
Thursday, August 4, 2016

I. Headlines Today    

  1. GST cleared: One nation, one tax gets going  (Click for detail)
  2. GST: Miles to go for a smooth journey  (Click for detail)
  3. GST: Frequently Asked Questions (FAQs)  (Click for detail)
  4. GST: How the Bill will impact various sectors and stocks  (Click for detail)
  5. CBDT: Suggest Situation justifying waiver of Section 234E fee  (Click for detail)
  6. President assents to the Compensatory Afforestation Fund Act  (Click for detail)
  7. Issuance of rupee bonds to overseas investors by Indian companies - Clarification reg. applicability of provisions of Chapter III of the Companies Act, 2013  (Click for detail)
II.  Direct Taxes Case Laws: 

1.  CIT Vs. Ramanbhai B Patel, Tax Appeal No. 207/208/210 of 2008, Date of Order: 20.07.2016, High Court of Gujarat

Whether the admissions made by the assessee during the search proceedings can be used as a conclusive proof against the assessee?


Brief Facts:
AO had made addition on the basis of a statement recorded by the ADIT under Section 131 of the Income Tax Act, 1961. In the statement recorded, the assessee has admitted to have earned a certain amount in cash on account of various projects. However, after two months, the assessee has retracted from the statement giving the reasoning that the same was obtained under threat. The new statement of the assessee was not accepted by the assessee and the addition was sustained. However, CIT (A) and Tribunal deleted the additions. Therefore, the revenue is in appeal before the Hon’ble High Court.

It was held that the assessee was not allowed to cross-examine the person, on the basis of whose statement the proceedings was initiated. The admission made by the assessee is not a conclusive proof and such admission can be used as evidence unless it is not retracted. While the assessee in this case has already retracted the statement which in our opinion is a valid retraction. Therefore, the appeal of the revenue is dismissed and the order of the Tribunal is upheld.

(Please click here for judgment)


2.  Grindwell Norton Ltd. Vs. Addl. CIT, I.T.A. No. 528/Mum/2012, Date of Order: 27.07.2016, ITAT - Mumbai

Whether the surplus arising on prepayment of deferred sales tax was a revenue receipt and liable to tax u/s.28(iv) of the Income-tax Act?


Brief Facts:
The assessee company is engaged in the business of manufacturing of abrasives and refractory products and also deals in ceramics and plastics. During the relevant Assessment Year, the assessee company had made some gain on repayment of deferred sale tax and same had been claimed as capital receipt and therefore not liable to tax. The AO passed an order stating the amount of surplus on repayment of sales tax to be taxed as business income u/s 41(1) of the Income Tax Act, 1961. The CIT(A) contented that the amount of surplus is not equivalent to remissions of liability and hence not taxable u/s 41(1) but he treated the amount to be benefit accrued to the assessee and same taxable as benefit u/s 28(iv). Aggrieved by which, the assessee is in appeal before the Tribunal.

It was held that no benefit had accrued to the assessee, since ultimate effect of the transaction is that the assessee paid present value of a future liability. In case, the assessee would not have paid this liability, the assessee could have utilized this amount during these years for the purpose of business or for earning of interest income. Instead of doing it like that, the assessee chose to pay it upfront at a discounted value. By making payment of net present value of a future liability, it cannot be said the financial benefit, in real terms, has accrued to the assessee. It is noted that none of the authorities had gone into this aspect and did not quantify, in financial or monetary terms, if any amount could be worked out which could be said to be a ‘benefit’ that had accrued to the assessee. Under these circumstances, we are of this considered opinion that the impugned amount cannot be brought into tax either u/s 41(1) or u/s 28(iv).
The appeal of the assessee is allowed.

(Please click here for judgment)   

III. Useful Articles:

1.  GST Constitutional Amendment Bill passed in RajyaSabha with Key amendments 

(Please click here for detail)

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

Click below for Presentation on Draft GST Law - Levy, Taxable Event: Supply, Taxable Person, Composition Scheme:


 Golden Rules:

  "Dark is not opposite of light,
it’s just the absence of light.
Similarly, a problem is the absence of an idea, not absence of a solution."


  Thanks & Regards


Voice of CA 

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