Connect us       New User?     Subscribe Now
Confirm your Email ID for Updates
30.04.2014 - Voice of CA presents - Updates
Wednesday, April 30, 2014

  I. Today's Headlines:    

  1. DVAT Return Filing Last Date has been Extended  (Click for detail)
  2. Income Tax department lens on Rs 5 lakh crore share sales by India Inc  (Click for detail)
  3. Flipkart set to receive ED notice on FEMA breach of Rs 1,400 crore  (Click for detail)
  4. Money laundering: Assets, properties worth Rs 1,759 cr seized by ED  (Click for detail)
  5. Allow ‘materiality’ in fraud reporting obligations of statutory auditors: ICAI President  (Click for detail)
  6. India ousts Japan to become 3rd largest economy: World Bank  (Click for detail)
  7. RBI directs RTGS participants to use correct transaction code  (Click for detail)

II.  Direct Tax Case laws:

1.  CIT Vs. M/s D & M Components Ltd., ITA No. 561, 566/2012, Date of Pronouncement: 21.04.2014, Delhi High Court

Whether frequent transactions of large amounts in shares without maintaining separate books accounts will lead to business income instead of STCG?


The assessee is engaged in business of auto spare pails and investment in bonds, mutual funds and other securities. The assessee filed his return declaring STCG on the basis that the shares were purchased with an intention of investment. But the Ld. AO rejected the assesse’s claim making profit from sale of shares taxable under the provisions of business income. On further appeal to Ld. CIT (A), the same was upheld stating that assessee failed to maintained separate books of accounts for the investment and the sale purchase took place in very short time period. Whenever any share is purchased with the intention of investment, it cannot be sold off within a very short span of time, since the share market is always fluctuating. However, Hon’ble ITAT allowed the assessee’s claim overlooking the revenue’s contention.

The Hon’ble High Court held in favour of revenue stating that having regard to the short duration of holding of the shares, and the lack of clarity in the account books the said amount shall be treated as business income and not capital gains.

(Please click here for judgment)

2.  Mahindra Forgings Ltd. Vs. ADIT (International Taxation), ITA Nos. 1985, 2563, 2564 & 2565 of 2012, Date of Order: 27.02.2014, ITAT - Pune

In case of purchase of complex machinery from abroad, where installation charges of said machinery were included in purchase price itself, assessee was not required to deduct tax at source on payment of said charges.

It is undisputed that the machinery is complex equipment, hence could not be installed by any ordinary person that is why only machinery seller non resident was given contract of erection and installation and services thereof. Such erection/installation of highly complex machinery was not comparable to ordinary installation just because two separate agreements were reached, one for sale transaction and other for installation/erection and other related services. The principle of  "inextricable nexus" does not change. In the facts before us, the part payment for purchase of sale of machinery transaction was linked to successful erection of machinery at Chakan, Pune in all these contracts. So, it was not obligatory on the part of assessee to deduct the tax at source on entire payment even if it does not offer u/s. 195(2) for deduction at a lower or nil rate. The Assessing Officer is directed accordingly.

(Please click here for judgment)

III. A Useful Article:

[ Contribution by CA Bimal Jain and contributor is available at ]

“Indirect Tax & Other Laws Communique” for the week ending April 27, 2014 to provide quick glance of up-to-date changes in Service Tax, Excise, Customs, Value Added Tax and Company Laws.

(Please click here)   



 Golden Rules:

  "A creative man is motivated by
the desire to achieve,
not by the desire to beat "


  Thanks & Regards


Voice of CA 

« Back
Online Poll
Connect Us       New User?     Subscribe Now