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10.01.2017 - Voice of CA presents - Updates
Tuesday, January 10, 2017

I. Headlines Today    

  1. Direct Tax Notification: Income tax (1st Amendment) Rules, 2017  (Click for detail)
  2. CBDT Instruction: Double Taxation Agreement - India-Sweden Convention For Avoidable Of Double Taxation And Prevention Of Fiscal Evasion-Suspension Of Collection Of Taxes During Mutual Agreement Procedure (Map)  (Click for detail)
  3. Company Law Notification: Exemption to Specified IFSC Private company under section 462 of the Companies Act, 2016  (Click for detail)
  4. Finance Minister: Higher tax mop-up shows no slowdown post note ban  (Click for detail)
  5. Excise, service taxpayers to migrate to GST portal by Jan 31  (Click for detail)
  6. Exchanges want commodities transaction tax scrapped  (Click for detail)
  7. At Petrol Pumps, No Extra Charge For Card Payments, Says Government  (Click for detail)
  8. Govt advised RBI on note ban 1 day before Modi's announcement: Report  (Click for detail)
  9. Indian Institute of Insolvency Professionals of ICAI  (Click for detail)
II.  Direct Taxes Case Laws: 

1.  Smt. Chalasani Naga Ratna Kumari Vs. ITO, I.T.A. No. 639/Vizag/2013, Date of Order: 23.12.2016, ITAT - Visakhapatnam

Issue: 1
Whether an agricultural land held by assessee, which is suitable for agricultural operation, loses the characteristics of agricultural land merely because no agricultural operation was carried by assessee on such land?


Brief Facts:
During the assessment proceedings, the Ld. AO noticed that the assessee had sold vacant land and has not offered capital gains on the said transaction/ Therefore, the Ld. AO issued a show cause notice and asked to explain why capital gains income was not offered to tax on sale of land. In response to notice, the assessee submitted that land sold is agricultural land. However, the Ld. AO held that “though assessee claims to have sold agricultural lands, the land sold by the assessee is only a vacant land not suitable for agricultural operations and there are no agricultural operations carried out for past several years”.

In this regard, The Hon’ble ITAT held that “though there is no agricultural operation carried out by the assessee, the lands held by the assessee are classified as agricultural lands in the revenue records and also suitable for agricultural operations. Therefore, impugned lands cannot be held as non-agricultural lands, just because the assessee has not carried out any agricultural operations”.

Issue: 2
Whether for the purpose of Section 50C, stamp duty value on the date of agreement to sale is to be considered, instead of stamp duty value as on the date of sale deed.

Held: Yes

Brief Facts:
The assessee entered into an agreement for sale of land for a consideration of Rs. 3,40,00,000/- on 15/12/2007 and received an advance of Rs.2,52,00,000/-. As on the date of agreement, the market value of the property for the purpose of payment of stamp duty is less than the consideration shown in the sale agreement. Such land has been conveyed through a registered sale deed on 1.9.2008 for a consideration of Rs. 3,40,00,000/-, whereas the stamp duty valuation of the land was fixed at Rs. 4,12,30,000/-. Therefore, the ld. AO considered the stamp duty value as on the date of registration of sale deed as sale consideration for the purpose of computing capital gain and invoke the provision of Section 50C of the Income Tax Act, 1961.

The Hon’ble ITAT placed reliance on the judgment of Hon’ble Ahmedabad ITAT in the case of Dharma Sibai Sonani Vs. DCIT in ITA No.1237/Ahd/2013, wherein it was held that “the proviso to section 50C of the Act inserted by the Finance Act, 2016 w.e.f. 1.4.2017 is curative in nature and intended to remove an undue hardship to the assessee and accordingly given retrospective effect from 1st April, 2003 i.e. the date effective from which section 50C of the Act was introduced. Accordingly, as per the proviso, the stamp duty value of the property on the date of execution of the agreement to sale should be adopted instead of value on the date of execution of sale deed”.

Therefore, we are of the view that the A.O. was erred in adopting value of the property as on the date of sale deed to determine deemed consideration u/s 50C of the Act.

(Please click here for judgment)


2.  CIT Vs. M/s Bhushan Steels & Strips Ltd., I.T.A. No. 314/2003, Date of Judgement: 01.12.2016, High Court of Delhi

Whether the assessee is entitled to depreciation under Section 32 of the Income Tax Act even when the assessee was not the owner of the property in question and was in possession thereof as a lessee during the year under consideration?

Held: Yes

Brief Facts:
The facts of the case are that the assessee for the Assessment Year (AY) 1994-95 had reported that it had entered into a lease agreement on 16.04.1993. It also stated that on the next day i.e. 17.04.1993 the parties had entered into a lease arrangement under which assessee had the option to purchase the leased property on expiry of three years from the commencement of the lease upon payment of Rs. 3.36 crores. In the event it chose not to exercise the option the amount of security deposit (i.e 3.16 cr) would become refundable. The assessee claimed depreciation under Section 32(1) of the Income Tax Act, 1961 (in short the Act) contending that the improvements made and the cost of acquisition is depreciable. The AO rejected assessee’s claim based on his contention that the term 'Owner' in the context of depreciation shall mean the full legal owner i.e. when the law recognises that the title has vested into such owner.

In the case of “CIT vs. Podar Cement (P) Ltd. (1997) 226 ITR 625” The Hon’ble Supreme court had held “For the purpose of Section 9, the owner must be that person who can exercise the rights of the owner, not on behalf of the owner but in his own right.” Relying on the above decision of the supreme court it was held that the Tribunal was correct in holding that non-registration of the agreement did not imply that the benefit otherwise available under Section 53A of the Transfer of Property Act, 1882 of being entitled to continue in possession in part performance of an agreement to sell, had to be denied.
The appeal of the revenue is denied.

(Please click here for judgment)

III. Useful Articles:

1.  “MIGRATION TO GST” - Assistance for transition

(Please click here for detail)

2.  Key takeaways of 8th GST Council meeting: Impasse continues on dual control issue, next meeting on January 16

(Please click here for detail)

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

 Golden Rules:

  A simple rule for success,
"Just try one more time in a different way before you decide to quit"


  Thanks & Regards


Voice of CA 

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