Connect us       New User?     Subscribe Now
Confirm your Email ID for Updates
18.06.2013 - Voice of CA Presents - Updates
Tuesday, June 18, 2013



 I.  Headlines Today:   

  1. E-filing of audit reports must with tax returns  (Click for detail)
  2. Seven important tax documents you should be aware of  (Click for detail)
  3. Tax defaulters get a second chance  (Click for detail)
  4. Central Board of Direct Taxes tightens disclosure guidelines  (Click for detail)
  5. Indian economy going through a mild recession  (Click for detail)
  6. Reserve Bank of India boosts FDI efforts, to notify Press Notes 2 and 3 soon  (Click for detail)
  7. Mukesh Ambani's port, power firms get ready for big boom  (Click for detail)

II.  Case laws - Direct Tax:

1.   CIT Vs. M/s Southern Bottlers Pvt. Ltd., ITA No. 225 of 2004, Date of Decision: 07.05.2013, Punjab & Haryana High Court

Decision: Partial In favour of assessee & partial disposed,
Section: 36(1)(iii) of Income Tax Act, 1961
Assessment Year: 1989-90

Issue 1: Whether the excess of ‘security deposits’ over refunds received by the assessee on the sale of bottles is not a trading receipt?

Issue 2: Whether it was right in law in deleting the addition made on account of interest on interest free loans advanced by the assessee-company to its directors and sisters concerns?


1.    For the reasons recorded in Munjal Gases Case (Supra), question No. 1 is decided in favour of the assessee.

2.    It was held that CIT disallows the interest expenditure on account of Providing interest free loan to the directors on which he himself pay the amount of interest to the bank as per section 36(1)(iii) & relying on CIT Vs. Abhishek Industries Ltd. But on appeal to the CIT (Appeals) it was held that assessee providing interest free loan is commercial expediency by relying on the judgement as given in S.A. Builders ltd. accordingly upheld by the ITAT (Appeals) but Apex court held that commercial expediency cannot be mere availing of interest free loan from one assessee and giving interest free loan to another. The assessee in order to prove commercial expediency has to prove that it was a prudent act of reasonal person in the trade to avail interest free loan & to advance interest free loan to some other person.

Thus, appeal is dismisssed as the question is not determined in regard to commercial expediency.

(Please click here for judgment)


2.  Commissioner of Income Tax-I Vs. M/s Vardhman Polytex Ltd, Chandigarh, ITA No. 55 of 2013, Date of Decision: 23.05.2013, Punjab & Haryana High Court

Decision: In favour of assessee, Section 36(1)(iii) of I.T.Act, 1961

Whether the interest on borrowed funds used for setting up a new unii before the asset was put to use should be capitalized u/s 36(1)(iii) or allowed as revenue expenditure ????

The assessee has treated the interest paid on borrowed capital for the establishment of new unit at baddi as revenue expenditure. Where as department has the view that capital borrowed for the purpose of establishing new plant should be capitalised instead of revenue. As per section 36(1)(iii) and relying upon the judgement of the DCIT vs. Core health Pvt. Ltd. Tribunal decided the appeal in favour of the assessee. The hon’ble Punjab & Haryana High Court relying upon the judgment of Hon’ble  Supreme Court of India, in Civil Appeal No.6438 of 2012 titled 'M/s Vardhman Polytex Limited, Ludhiana Vs. Commissioner of Income Tax' held the same to be treared as Revenue expenditure.

(Please click here for judgement)

3.  M/s Bhoday Steel Rolling Mills Vs. CIT (Appeals), Patiala & Another., CWP No. 12215 of 2013, Date of Decision 30.05.2013, Punjab & Haryana High Court

The Application for stay of demand should be forwarded with appropriate substantive reasons, where the assessee does so, It shall be the duty of the AO to consider it in accordance with the law.

(Please click here for judgment)


 Golden Rules:

"If you miss an opportunity, don't fill the eyes with tears
Bcos, It will hide another better opportunity in front of you"


  Thanks & Regards


Voice of CA




« Back
Online Poll
Connect Us       New User?     Subscribe Now