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01.04.2017 - Voice of CA presents - Updates
Saturday, April 1, 2017

I. Headlines Today    

  1. Income Tax (Fourth Amendment) Rules, 2017: Amendment in the Income-tax Rules, 1962, in Rule 12 (Return of income and return of fringe benefits) conforming with New ITR Forms notified by CBDT  (Click for detail)
  2. Form No. ITR-1 SAHAJ: For Individuals having Income from Salaries, one house property, other sources (Interest etc.) and having total income upto Rs.50 lakh (1 Page Return)  (Click for detail)
  3. Form No. ITR-2: For Individuals and HUFs not carrying out business or profession under any proprietorship  (Click for detail)
  4. Form No. ITR-3: For individuals and HUFs having income from a proprietary business or profession  (Click for detail)
  5. Form No. ITR-4-Sugam: For Presumptive Income from Business & Profession  (Click for detail)
  6. Form No. ITR-5: For persons other than,- (i) individual, (ii) HUF, (iii) company and (iv) person filing Form ITR-7  (Click for detail)
  7. Form No. ITR-6: For Companies other than companies claiming exemption under section 11]  (Click for detail)
  8. Form No. ITR-7: For persons including companies required to furnish return under sections 139(4A) or 139(4B) or 139(4C) or 139(4D) or 139(4E) or 139(4F)  (Click for detail)
  9. ITR V - Acknowledgement: Acknowledgement of Return Filing  (Click for detail)
  10. Key changes in new ITR forms for AY 2017-18  (Click for detail)
  11. PMGKY: CBDT says Form 1 can be filed by April 10, if deposit made by deadline  (Click for detail)
  12. Copy of Finance Act, 2017  (Click for detail)
  13. GST Council clears bulk of rules for new tax regime  (Click for detail)
  14. GST Council to decide on rates in May  (Click for detail)
  15. Cabinet clears amendments to Companies Act  (Click for detail)
  16. Income tax, SBI min bal, general insurance premium: full list of changes  (Click for detail)
II.  Direct Taxes Case Laws: 

1.  Seth Walchand Hirachand Memorial Trust Vs. ITO, I.T.A. No. 4852/Mum/2016, Date of Order: 29.03.2017, ITAT - MUMBAI

Issue: Whether exemption available u/s 11(1)(a) of the Income Tax Act, 1961 of 15% of Income can be claimed even in case of deficit?

Held: Yes

Brief Facts
The assessee is a charitable trust and has challenged the confirmation of the order of the AO where he disallowed the accumulation of the 15% even when the income was allowed u/s.11(1)(a) of the Act. The AO observed that if the trust is not left with surplus and there is deficit, then there can be no accumulation made. He further stated that accumulation or setting apart of 15% of income has been allowed by virtue of provision of section 11(1)(a) of the Act, when assessee is unable to spend the entire amount and where the entire amount has been spent, there is no surplus left that can be accumulated.

The assessee contended that as per section 11(1)(a), the expenditure incurred by a trust or institute on the objects of the trust by way of application of income derived from the property held for religious or charitable purposes is deductible from the income. It was submitted that there is no bar in law and there are no specific provisions in the Act which says that such deduction of 15% for accumulation will not be allowed in case of deficit. Such 15% accumulation is allowable irrespective of whether 85% of the income have been applied to charitable purposes or not. However, the AO rejected the assessee’s contention and disallowed the claim. The CIT (A) has also confirmed the order of AO. Being aggrieved by that, the assessee preferred appeal before the Hon’ble ITAT.

The Tribunal held that it is clear from section 11(1)(a) that income derived from property held under trust wholly for charitable purposes or religious purposes shall not be included in the total income to the extent of 15% is unqualified. It was held that exemption available u/s.11(1)(a) i.e. 15% of income is unfettered and not subject to any conditions and thus allowed this issue in favour of the assessee and deleted the addition confirmed by the CIT(A).
Therefore, the appeal of the assessee is allowed.

(Please click here for judgment)


2.  Sh. Adarsh Kumar Swarup Vs. DCIT, I.T.A. No. 1228/Del/2016, Date of Order: 28.03.2017, ITAT - Delhi

Issue: Whether deduction u/s 54 of the Income Tax Act, 1961 can be claimed where only land appurtenant to the residential house is sold and not the whole of the residential house?

Held: Yes

Brief Facts
A residential house and land appurtenant thereto was inherited to assessee by way of will. During the year under consideration, the assessee, out of the land appurtenant to the residential house, had sold land in two parts. In the assessment, the AO has also allowed deduction for the investment made in a flat is u/s 54 of the Act. However, the Ld. CIT(A) in the appeal proceedings alleged that the deduction as allowed by the AO in respect of investment of flat u/s 54 of the Act was wrong as he was of the view that u/s 54 of the Act the deduction is available only when the residential house is transferred and not the land appurtenant thereto and thus, disallowed the deduction u/s 54 of the Act as allowed by the AO. Therefore, being aggrieved by that, the assessee has preferred appeal before the Hon’ble ITAT.

The tribunal remarked that U/s 54 of the Act, the legislature has used the expression "being buildings or lands appurtenant thereto and being a residential house". Following this statement of law and emphasising on the usage of word “or” it held that the deduction u/s 54 of the Act is also available even if the land, which was appurtenant to the residential house, is sold and it is not necessary that the whole of the residential house should be sold because the legislature has used the words "or" which is distinctive in nature and that in the instant case, it is not the case of AO and CIT (A) that the land was not appurtenant to the residential house. The case of the CIT (Appeals) is that the assessee has sold only the land appurtenant to the house and not residential house which held is not a requirement under the law. Further the sale deed itself showed that the land was part of residential house. Hence, the exemption as claimed was upheld.
Therefore, the appeal of the assessee is allowed.

(Please click here for judgment)

III. A Useful Article:

1.  GST Bills passed in Lok Sabha - Significant step towards July 1 rollout

(Please click here)

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


 Golden Rules:

  "Every test in life makes us bitter or better.
Every problem comes to make us or break us.
Choice is ours, whether become victim or victor"


  Thanks & Regards


Voice of CA 

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