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07.03.2020 - Voice of CA presents - Useful Updates
Saturday, March 7, 2020

  I. Headlines Today:   

  1. Lok Sabha Clears IBC (Amendment) Bill 2020  (Click for detail)
  2. CBDT: Clarifications on provisions of the Direct Tax Vivad se Vishwas Bill, 2020  (Click for detail)
  3. MCA: Insolvency Professionals to file forms in MCA portal in capacity of CEO for Cos under CIRP  (Click for detail)
  4. MCA extends last date of filing form NFRA-2  (Click for detail)
  5. SBI says YES Bank rescue math by Monday, due diligence underway  (Click for detail)
  6. IRDAI comes out with guidelines on insurance claims arising in riots affected North East Delhi  (Click for detail)

II. Direct Taxes Case Law: 

1.   Afonso Real Estate Developers Vs. CIT, Tax Appeal No. 30 of 2013, Date of Pronouncement: 21.02.2020, High Court of Bombay at Goa

Whether the income derived by the Assessee firm on purchase and sale of the agricultural land will be assessed as income from business instead of capital gains, where the Assessee is engaged in buying and selling of properties and the land was held by the Assessee firm for the purpose of business.

Held: Yes

Brief facts:
The appellant-assessee is a partnership firm and filed return of income on 30.01.2008 for the A.Y. 2007-08 declaring a total income of Rs.1,57,069/-, claiming deduction to the extent of Rs.1,69,20,000/- inter alia on the ground that the amount received towards the sale of the properties were assessable as long term capital gains which were entitled to be deducted in terms of Section 54E and 54EC of the Income Tax Act, 1961 (I.T. Act). However, the ld. AO computed the entire income of the appellant-assessee as “business income” and bringing the same to tax.  The appellant-assessee therefore, preferred appeal to the CIT (Appeals) and the order of the AO were set aside. Thereafter, the Revenue instituted appeal before the ITAT and the ITAT allowed the Revenue’s appeal and thereby, restoring the orders made by the AO that the income derived by the appellant-assessee from the sale of the properties was “business income”.  Hence the appeal was made on the aforesaid substantial question of law.

The Hon’ble Court held that in the partnership deed, it is clear that the business of the appellant-assessee is buying and selling properties situated in various places in Goa either wholly or in plots. Considering the wide phraseology employed, it is obvious that the business of the appellant assessee includes buying and selling even agricultural properties. Therefore, the findings recorded by the AO and the ITAT that the income derived by the Assessee on purchase and sale of the agricultural land will be assessed as income from business, were sustained.

Therefore, the substantial question of law was answered against the appellant-assessee and in favour of the respondent Revenue.

Case Reviewed:
Narain Swadeshi Weaving Mills v/s Commissioner of Excess Profits Tax – AIR 1955 SC 176

(Please click here for judgment)

2.  Shri Ramphal Hooda Vs. ITO, I.T.A. No. 8478/Del./2019, Date of Pronouncement: 02.03.2020, ITAT - Delhi

Whether the assesse is eligible for exemption u/s 54/54F, is investment in new property is made in the name of his wife?

Held: Yes

Brief facts:
The long term capital gain from the sale of two properties was invested by the assesse in the name of his wife and exemption of LTCG u/s 54/54F of I.T. Act, 1961 was claimed. However, the A.O. denied the exemption under sections 54/54F of I.T. Act, 1961, to the assesse while relying on the judgment of the Hon’ble Punjab and Haryana High Court in the case of CIT, Faridabad vs Dinesh Verma in ITA No. 381 of 2014 dated 06.07.2015, wherein it was held that “the assessee is not entitled to the benefit conferred under section 54B if the subsequent property is purchased by a person other than the assessee, including his close related even such as wife and children.”

The Hon’ble ITAT held that since the entire sale amount of long term capital gain have been invested in purchase of other property in the name of wife of assessee, the assessee would be entitled for exemption on account of long term capital gains. Also, In CIT v. Podar Cement  (P.) Ltd. (1997 (5) TMI 2 - SUPREME Court), the Hon’ble Supreme Court has also accepted the theory of constructive ownership. Moreover, Section 54F mandates that the house should be purchased by the assessee and it does not stipulate that the house should be purchased in the name of the assessee only. In this view of the matter, the Orders of the below authorities were set aside and the entire addition was deleted.

Hence, the appeal was held in favour of the assessee.

Cases Refered:
CIT v. Podar Cement  (P.) Ltd. (1997 (5) TMI 2 - SUPREME Court
CIT vs., Ravinder Kumar Arora [2012] 342 ITR 38 (Del.)
CIT-XII vs. Shri Kamal Wahal [2013] 351 ITR 4 (Del.)

(Please click here for judgment)  


III. Useful Presentation:

1.  The Direct Tax Vivadse Vishwas Act, 2020
             (Including FAQ’s issued by CBDT vide Circular No. 7/2020)
     [As Passed by Lok Sabha on 04.03.2020]Analysis

     (Please click here)

[ Contribution by CA. Sanjay K. Agarwal, Past Central Council Memeber & Founder - Voice of CA; and contributor is available at Email-id: ]


IV. Useful Articles:

1.  SC: Performance of Charitable Activity not Compulsory for Registration of New Trust u/s 12AA of IT Act

     (Please click here)  

2.  SC dismisses SLP against HC order in Adfert case allowing to file/ revise TRAN-1

     (Please click here)  

3.  IGST refund allowed even if CG imported under EPCG Scheme for the period of July 1, 2017 to October 12, 2017

     (Please click here)   

4.  No GST on ‘Mobilization Advance’ received in Pre-GST Era

[ Contribution by CA. Bimal Jain and contributor is available at eMail-id: bimaljain@ ]


Golden Rules:

  "Patience with Family is Love,
Patience with Others is Respect,
Patience with Self is Confidence
and Patience with God is Faith" 


Thanks & Regards


Voice of CA 

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