Connect us       New User?     Subscribe Now
Confirm your Email ID for Updates
23.06.2014 - Voice of CA presents - Updates
Monday, June 23, 2014


I.  Direct Tax Case Laws:

1.   Radials International Vs. Asstt. CIT, ITA No.485/2012, Date of order: 25.04.2014, Delhi High Court

Whether profit on sale of share invested through portfolio management scheme (PMS) is taxable as capital gain or business income.

In brief, assessee engaged in the business of providing technical, marketing and maintenance services and also trades in tyres. The AO raised contention that the gains realized on sale of shares are in the nature of business income, and not capital gains. However, the assessee contended that its intention is not to earn trading profit and relationship between the investor and the investment manager, as indicated by the agreements entered by Portfolio Management Schemes (“PMS”), is one of principal and agent. Further, the investment was made out of its own surplus funds and not out of borrowed funds and holding period for a majority shares was substantial.
Held_that the intention of an assessee must be inferred holistically, from the conduct of the assessee, the circumstances of the transactions and not just from the seeming motive at the time of investing the money. And other crucial factors like the substantial nature of the transactions, frequency, volume etc. must be taken into account to evaluate whether the transactions are adventure in the nature of trade. In the instance case, the PMS agreement was a mere agreement of agency and cannot be used to infer any intention to make profit. About 71% of the total share have been held for a period longer than 6 months, and have resulted in an accrual of about 81% of the total gains. Only 18% of the total shares are held for a period less than 90 days, resulting in the accrual of only 4% of the total profits. Therefore, profit on such shares is taxable as capital gain.

(Please Click here for judgement)

2.   M/s. Kerala Vision Ltd. Vs. Asstt. CIT, ITAT No. 794/Coch/2013, Date of pronouncement: 06.06.2014, ITAT - Cochin

Section 40(a)(ia) r.w.s. 194J of the Income Tax Act

Whether disallowance u/s 40(a)(ia) of the Act can be made for earlier payments on the basis of subsequent amendment in the Act with retrospective effect.

Held: No

In brief, the assessee engaged in the business of distributing cable signals. It receives satellite signals from various channel companies in the capacity of Multi System Operator and liable to make payment for “Pay channel charges”. The AO raised contention that these charges falls in the category of “royalty” as per the amendment made by F.A., 2012 w.r.e. and thus assessee liable for deduction TDS u/s 194J of the Act and consequently made disallowance u/s 40(a)(ia) of the Act.

Held that the Explanation 6 to sec. 9(1)(vi) inserted by Finance Act, 2012 “for the removal of doubts, it is hereby clarified that the expression "process" includes and shall be deemed to have always included transmission by satellite (including up-linking, amplification, conversion for down-linking of any signal), cable, optic fibre or by any other similar technology, whether or not such process is secret”, is clarificatory in nature only. The Tribunal has placed reliance on the decision pronounced by the Delhi High court in the case of Asia Satellite (2011) 332 ITR 340 and held that assessee is not liable to deduct TDS on the payments made earlier on the basis of retrospective amendment.  

Case referred: Sonata Information Technology Ltd Vs. DCIT (2012) 19 ITR(T) 408 (Mumbai-Trib), Infotech Enterprises Limited Vs. Addl. CIT (2014)30 ITR(T) 542 (ITAT – Hyderabad) and Channel Guide India Limited Vs. ACIT (2012) 139 ITD 49 (ITAT-Mum)

(Please Click here for judgement)

  II. Today's Headlines:    

  1. Jaitley to present Union Budget on July 10 (Click for detail)
  2. FM to come out with reform measures in Budget (Click for detail)
  3. Budget 2014: 5 tax rules that need immediate attention of the FM (Click for detail)
  4. Govt may defer GAAR by a year (Click for detail)


 Golden Rules:

  "Life is like making tea.....
boils your ego,
evaporates your worries,
dilute your sorrow,
filter your mistake and
get taste of HAPPINESS"


  Thanks & Regards


Voice of CA 

« Back
Online Poll
Connect Us       New User?     Subscribe Now