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21.02.2012 - Voice of CA Presents - Updates
Tuesday, February 21, 2012


I.  Recent Updates:

1.   ARUN SHUNGLOO TRUST Vs. CIT, ITA No. 116/2011, Date of Decision: 13/02/2012, HIGH COURT OF DELHI

In case of transfer by gift, will, trust, etc indexed cost to be determined with reference to holding by previous owner

In Section 48 of the Act, the expression “asset held by the assessee “is not defined and, therefore, in the absence of any intention to the contrary the expression “asset held by the assessee in clause (iii) of the Explanation to Section 48 of the Act has to be construed in consonance with the meaning given in Section 2(42A) of the Act. If the meaning given in Section 2(42A) is not adopted in construing the words used in Section 48 of the Act, then the gains arising on transfer of a capital asset acquired under a gift or will be outside the purview of the capital gains tax which is not intended by the legislature. Therefore, the argument of the revenue which runs counter to the legislative intent cannot be accepted.”

The expression “held by the assessee” used in Explanation (iii) to s. 48 has to be understood in the context and harmoniously with other Sections and as the cost of acquisition stipulated in section 49 means the cost for which the previous owner had acquired the property, the term “held by the assessee” should be interpreted to include the period during which the property was held by the previous owner.

(Please click here for Judgment)


2.  M/s. Solid Works Corporation Vs. DDIT, ITA NO. 3219/MUM/2010, Date of pronouncement: 08/01/2012,  ITAT - MUMBAI

The assessee sold “shrink-wrap application software” called “Solidworks 2003″ to customers in India and claimed that the same was “business profits” and not assessable to tax as it did not a PE in India. The AO held that the income was assessable to tax as “royalty” u/s 9(1)(vi)/ Article 12(3) though the Tribunal (for an earlier year) reversed it on the ground that the product was a “copyrighted article” and not “copyright“. HELD by the Tribunal:

The ruling of the AAR in the case of Dassault (supra) was approved by the Hon’ble Delhi High Court in the case of DIT Vs. Ericsson AB, New Delhi (supra) )[ I.T.A No. 397,504,508 and 511 of 2007, Date of Decision : 23/12/2011]. It can therefore be said that the Hon’ble Delhi High Court has held that consideration paid merely for right to use cannot be held to be royalty. This ratio laid down by the Hon’ble Delhi High Court would also apply when shrink wrap software is sold.

Following the view expressed by the Hon’ble Dellhi High Court in the case of DIT Vs. Ericsson AB, New Delhi (Supra)which is favourable to the Assessee, we hold that the consideration received by the Assessee for software was not royalty. The receipts would constitute business receipts in the hands of the Assessee. Admittedly the Assessee who is a non resident does not have a permanent establishment and therefore business income of the Assessee cannot be taxed in India in the absence of a permanent establishment.

(Please click here for Judgment)


3.  [Contribution by  CA. Amarpal and contributor is available at email-id: ]

Analysis on Circular No. 151/2/2012-ST - Service tax on construction services (Circular is already circulated by Voice of CA with update of 11.02.2012)

Please click here for analysis


II.  Today's Topline News : 
  1. Central Excise Circular No. 960 - Clarification regarding admissibility of exemption under area-based Notifications  (Click for detail)

  2. Black money: Income Tax dept may get to re-open returns beyond 6 years  (Click for detail)

  3. Tax revenues in Jammu and Kashmir touch a high of Rs 4,800 crore: Abdul Rahim Rather  (Click for detail)

  4. Share transfer among promoters amounts to equity sale, rules SEBI  (Click for detail)

  5. SC breather to banks on tax dispute  (Click for detail)

III.  Tenders Info. : 
    Carrying out Concurrent Audit of Data Centre
    (Click for detail)


Key of Success :

"It's good to sit alone for at least some time every day,
but when we sit alone, we should not sit with our past
instead sit alone to dream for future


Thanks for your valuable time


"Voice of CA"  

CA. Sanjay Kumar Agarwal
Founder - Voice of CA 
Mob : 9811080342,      
CA. Sidharth Jain, Co-Moderator 
CA. Mukesh K Bansal, Co-Moderator-FEMA    


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