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30.04.2018 - Voice of CA presents - Latest Updates
Monday, April 30, 2018

  I. Headlines Today:   

  1. Due date for filing of AOC-4 XBRL by Ind AS Companies extended to 31st May, 2018  (Click for detail)

  2. How to fill the new details required in ITR-1  (Click for detail) 

  3. Govt mops up Rs 1.5 lakh crore additional tax, to chase 65 lakh non-filers  (Click for detail)

  4. One year after coming into force, Rera remains a work in progress  (Click for detail) 

  5. Now PSBs start forensic audit of ‘potential’ NPA accounts  (Click for detail) 

  6. Govt seeks proposals for debt exchange traded fund by May 16  (Click for detail)

  7. BSE chairman among those named in CBI FIR for Rs 6-billion loan fraud  (Click for detail) 

  8. 12 ways to avoid paying more for bank services  (Click for detail)

  II. Direct Taxes Case Laws: 

1.  CIT Vs. M/s. Shree Rama Multi Tech Ltd., Civil Appeal No. 6391 with 8336 of 2013, Date of Pronouncement: 24.04.2018, Supreme Court of India

“Whether the interest income from share application money received by a company is liable to be set off against public issue expenses”

Held: - Yes

Brief Facts
The assessee filed its return of income for A.Y. 2000-01 declaring a total income of Rs. 20,00,59,650/. However, the Assessing Officer, passed an assessment order and disallowed the set off of the interest income from share application money against the public issue expenses. Aggrieved by the aforesaid order, the assessee went in appeal before ld. CIT (A). The ld. CIT(A) partly allowed the appeal filed by the assessee while upholding the findings of the AO in not allowing set off of interest income from share application money. Being aggrieved by CIT(A), both the parties filed cross-appeals before the Tribunal. And, the Tribunal allowed the claim of the assessee with respect to deduction on account of interest income of Rs. 1,71,30,212 and remanded the matter back to the AO. After this, the Revenue filed an appeal before the Hon’ble High Court. And, the Hon’ble Court uphold the decision of the Tribunal on the point of taxability of the interest income. Again, being aggrieved the revenue has filed an appeal before The Hon’ble Supreme Court.

The Hon’ble Supreme Court uphold the decision of High court that the interest accrued to such deposit of money in the bank is liable to set-off against the public issue expenses that the company has incurred as the interest earned was inextricably linked with requirement of the company to raise share capital and was thus adjustable towards the expenditure involved for the share issue. The rationale explained as, if any income accrued is merely incidental and not the prime purpose of doing the act, then the income is not liable to be assessed and is eligible to be claimed as deduction.
The appeal was held in favour of the assessee and against the revenue.

(Please click here for judgment)

2.  Kaushalya Devi (Deceased) Through Legal Representatives Vs. Commissioner of Income Tax, I.T.A. No. 600/2004, Date of Pronouncement: 20.04.2018, High Court of Delhi

Whether the liquidated damages paid in connection with the transfer of property, for non-fulfillment of first agreement to sell the property can be allowed as an expenditure u/s 48(i) of the Income Tax Act, 1961 for computing long term capital gains.

Held: - Yes

Brief Facts:
The assessee in his return of income for AY 1994-95 declared long term capital gain of Rs.5,42,000/- from sale of immovable property on 4th Oct’1993 for Rs.55,00,000/. While computing the capital gain assessee deducted Rs.2500000/- as liquidated damages paid to Anil Kumar Sharma with whom assessee had earlier entered into an agreement to sell dated 10th April, 1989 for sale of the property for Rs. 15,00,000/-. As per the agreement to sell the assessee had paid Rs.25,00,000/- on 16th December,1993 to Anil Kumar Sharma for foregoing his right and claim under the agreement. The Ld.AO rejected the claim of assessee stating that payment was not incurred wholly and exclusively with transfer of property, cost of improvement or to remove encumberance. The Ld. CIT(A) accepted the contention of assessee stating that agreement was an enforceable contract in law and payment is to be deducted to arrive the capital gain. However, the Hon’ble ITAT overturned the order stating that payment made was personal liability of assessee and agreement dated 4th Oct’1993 didn’t specify any payment of liquidated damages by assessee.
Being aggrieved the assessee has filed an appeal before the Hon’ble High Court.

The Hon’ble Delhi High court held that link or connection of expenditure with the sale of property has to be seen with respect to timing of agreement to sell which was later rescinded, payment of liquidated damages and consequent final agreement to sell the property. Considering the present case where payment was not made long before the actual sale of property and the fact that Anil Kumar Sharma to whom liquidated damages were paid was a signatory as a witness to some of the documents executed in favour of the purchaser at the time of transfer gives us a sufficient proof that expenditure incurred was wholly and exclusively with the sale of property and therefore deduction is allowed herewith.
The appeal was held in favour of the assessee and against the revenue.

(Please click here for judgment)  

III. A Useful Presentation:

1.  A Detailed and Practical Presentation of Refund and Process Thereof Under GST

(Please click here)

[ Contribution by CA. Puneet Goyal; and contributor is available at Email-id: ]



Golden Rules:

  "Mistake is a single page in a part of life.
But, relation is a book of dictionary.
So, don't loose the full book for the single page"


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