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04.05.2018 - Voice of CA presents - Latest Updates
Friday, May 4, 2018

  I. Headlines Today:   

  1. CBDT invites suggestions on draft notification pertaining to new Rule 11UAB of IT Rules, 1962  (Click for detail)
  2. GST Council meet today, taxpayers may get simpler return filing forms  (Click for detail)
  3. GST Council to take a call on converting GSTN into a govt-owned company  (Click for detail)
  4. Another cess coming? GST Council may approve imposition of Sugar cess  (Click for detail)
  5. IT Dept detects Rs 1 lakh Cr unreported high value transactions  (Click for detail)
  6. Firms to challenge input tax credit notices, revenue department's stand  (Click for detail)
  7. President promulgates ordinance to amend the Commercial Court, Commercial Division of High Courts Act  (Click for detail)
  8. ICAI: Inviting comments/suggestions on “The Financial Resolution and Deposit Insurance (FRDI) Bill, 2017”  (Click for detail)
  9. ICAI: Implementation Guide on Reporting Standards (Revised SA 700, Revised SA 705 and Revised SA 706) issued by the Auditing and Assurance Standards Board  (Click for detail) 

II. A Useful Presentation:

1.  An Overview of Income Computation & Disclosure Standards (ICDS) and its Impact

(Please click here)

(Contribution by CA. Sanjay K. Agarwal, Founder - Voice of CA; and contributor is available at Email-id: )

  III. Direct Taxes Case Law: 

1.  PCIT Vs. M/s Aeren R Infrstructure Ltd., I.T.A. No. 235&236/2017, Date of Pronouncement: 25.04.2018, High Court of Delhi

Whether the settlement compensation received by parties on default of seller’s commitment of sale of land should be treated as capital stream and hence, not liable to tax.


Brief Facts
The assessee engaged in the business of real estate entered into agreement for purchase of land from one JMA Buildcom Private Ltd for purchase of 10 acres of land for a consideration of Rs.15Cr. Upon the seller defaulting in its commitment to sell, the parties resorted to Dispute Settlement Arbitration and settlement compensation was awarded to assessee. The Ld. AO and CIT(A) rejected the claims of assessee treating the compensation as revenue stream stating that land purchased would have been a part of stock in trade and compensation received from the failed agreement to sell should be treated as revenue receipt. However, the Hon’ble ITAT reversed the order of first appellate citing that compensation received is for lost profit and not loss of profit as if agreement to sell had been completed then the land purchased as stock in trade would have yielded profit to the assessee. Being aggrieved the revenue has filed an appeal before the Hon’ble High Court.

The Hon’ble High Court while upholding the order of Hon’ble ITAT held that the compensation received for immobilization, sterilization, destruction or loss of a capital asset would be treated as a capital receipt. In the present case the amount expanded by asseseee was rendered immobile due to default by seller in its commitment to sell (the would-be stock-in-trade land for the assessee). Therefore, eventual receipt of compensation/damages clearly fell into capital stream and therefore not liable to tax as revenue receipt.
The appeal was held in favour of assessee and against the revenue.

(Please click here for judgment)

Golden Rules:

  "A life without an aim is like a envelop without an address
a life with aim but no plan to achieve it,
is like an envelop with address, not posted" 


Thanks & Regards


Voice of CA 

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