Budget 2010 - Highlights on Service Tax  

[Contributed by CA Madhukar N Hiregange,  Member - Central Council ICAI and author is available at mhiregange@hotmail.com]

(Click here for Highlights)

  

1.   CIT vs.  Goyal MG Gases Ltd -DHC: ITA 829/2008 of 18/01/2010: Section 41(1) REMISSION / CESSATION OF TRADING LIABILITY:

Upheld “It is to be noted that the loan liability was never claimed or allowed as deduction by way of loss, expenditure or trading liability. Thus, the amount cannot be included as profit chargeable to tax under section 41(1) of the Act. Section 41(1) will apply only when the cessation of liability is in respect of such liability which is allowed as deduction in any of the preceding Assessment years. Thus, section 41(1) has no application in the present case” applied Mahindra and Mahindra Ltd. vs. Commissioner of Income Tax, 261 ITR 501.

(Click here for judgement)  

   

2.  CIT vs  Goetze(India) Ltd-DHC- Reopening after earlier 143(3) : change of opinion & explanation on production of books etc: Applied SC ruling in Kelvinator of 18/01/2010: in its decision dated 20/01/2010:

Held “12. We have already found that the present case is one of a mere change of opinion. Therefore, keeping the observations of the Supreme Court in mind, the only inescapable conclusion is that the Section 147/148 proceedings are without jurisdiction ……14. In the facts of the present case, we find that it is not that the  assessee produced the account books or other evidence from which the Assessing Officer could have „discovered‟ material evidence after exercising due diligence. The case before us is one where the Assessing Officer was alive to the situation and repeatedly raised queries and sought information from the assessee on the very question in issue, that is, prior period expenses. We cannot also ignore the word „necessarily‟ which has been used in the said Explanation 1. The legislature, by using the said word has made it clear that production of account books etc may amount to disclosure though not „necessarily‟ so in every case. Whether the production of books of accounts and other evidence amounts to the kind of disclosure contemplated in Section 147 would have to be determined in the facts and circumstances of each case. In the present case, we have seen that there was no failure on the part of the assessee to make a full and true disclosure.”

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3.   CIT vs. Vimal Moulders(India ) Ltd.-DHC: Income tax addition on basis of action by anti-evasion wing of Central Excise Deptt:

Held/upheld: “The basis for addition is only the proceedings initiated by Excise Department. When the CESAT finally decided the issue in favour of the assessee holding that there was no such discrepancy in the stock as so initially made out by the Excise Department, we find that there is no any justification to sustain this addition in the hands of the assessee. In this connection, a reference may be made to a decision of Hon’ble High Court of Madras in the case of Commissioner of Income-tax vs. Vignesh Kumar Jewellers reported in 2008, 12 DTR (Mad) 293..”

(Click here for judgement)

  

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"Voice of CA"

CA. Sanjay Kumar Agarwal, Founder - Voice of CA

Member - Central Council ICAI  (Former Chairman - NIRC)

Mob : 9811080342, agarwal.s.ca@gmail.com

CA. Kapil Goel, Moderator-Direct Taxes, Mob:9910272806, cakapilgoel@gmail.com

CA. Sidharth Jain, Co-Moderator, sidhjasso@yahoo.com

CA. Mukesh K Bansal, Co-Moderator-FEMA, mkak@rediffmail.com