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23.01.2015 - Voice of CA presents - Updates
Friday, January 23, 2015

I. Headlines Today:    

  1. Circular: Explanatory Notes to the Provisions of the Finance (No.2) Act, 2014  (Click for detail)
  2. CBEC Instructions reg. Issue of Summons in Central Excise and Service Tax matters  (Click for detail)
  3. ST Noti. No. 1: Amendment in Territorial Jurisdiction of Service Tax Authorities  (Click for detail)
  4. Jaitley Pledge No Balm for MNCs' Tax Pain  (Click for detail)
  5. 3-year bank FDs may get tax exemption  (Click for detail)
  6. Subsidies to be rationalised: Arun Jaitley  (Click for detail)
II.  Direct Tax Case Laws:

1.   CIT Vs. Dr. M.A.M. Ramaswamy, T.C. (A) No. 649 of 2006, Date of Decision: 10.12.2014, High Court of Madras

Issue: Whether business loss could be set-off from winnings from betting and gambling income, as they would be taxed on gross basis as per section 115BB, read with section 58(4) of the Income-tax Act? Held: no

Brief facts: The assessee is a breeder and owner of race horses. For the assessment year 1998-99, the assessee filed return of income declaring a total income of Rs.28,01,55,597/-. The assessee has shown betting income of Rs.31,24,28,980/- and while computing the total income, the assessee has adjusted the losses suffered under the head "business" against the income earned under other heads, including betting income, and after setting off such losses, betting income of Rs.28,52,18,347/- was brought to tax by the assessee at the flat rate of 40% as prescribed under Section 115BB of the Act, as against the total betting income of Rs.31,24,28,980/-. The Assessing Officer held that the total winnings are to be taxed under Section 115BB of the Act and losses cannot be set off against such income.

Held: We are, therefore, of the considered view that the total winnings from betting of the assessee should be brought to tax at the rate of 40% as contemplated under Section 115BB of the Act. The order passed by the Tribunal, which affirmed the order of the Commissioner of Income Tax (Appeals), is liable to be set aside.

(Please click here for judgment)


2.   B.S. Sangwan Vs. ITO, I.T. Appeal No. 2680 (Delhi) of 2011, Date of Decision: 21.01.2015. ITAT - Delhi

Issue: whether it is open to the CIT to set out one reason for revising the order u/s 263 in show cause notice but actually revise the order on some other ground? Held:No

Brief fact: The assessee is a railway contractor and had filed his return of income, for the assessment year 2007-08 disclosing a taxable income of Rs 4,92,380. This income tax return was subjected to the scrutiny assessment proceedings u/s 143(3) of the Act, the Assessing Officer assessed the at Rs 5,82,380. On 14th February 2011, learned Commissioner issued a show cause notice to the assessees which are (a) difference in work in progress (b) Depreciation and (c) non deduction of TDS on few expenses. Learned counsel for the assessee elaborate arguments on merits on each of the point set out in learned Commissioners show cause notice. However the Commissioner had simply restored the assessment order to the file of the Assessing Officer for fresh adjudication after making "proper enquiries”.

Held: “That's not permissible under the scheme of the law, as a revision order can only be passed on the ground on which the assessee has been given reasonable opportunity of being heard, and as it is not open to Commissioner to set out one reason for revising the order but actually revise the order on some other ground. In our humble understanding, lack of proper inquiries, which an Assessing Officer ought to have conducted on the facts of the said case, is altogether a different reason from inadmissibility of a claim of deduction or an income which ought to have been brought to tax. In view of the above discussions, as also bearing in mind entirety of the case, we are of the considered view that the impugned revision order is contrary to the scheme of law, and should be quashed for this reason alone.”

(Please click here for judgment)  

 Golden Rules:

  "Past of ice is water, future of ice is water too,
so live like ice,
no regrets for past, no worries about future"


  Thanks & Regards

CA. Sanjay Agarwal

Member Central Council

 Founder - Voice of CA

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