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22.05.2015 - Voice of CA presents - Updates
Friday, May 22, 2015


I. Headlines Today:    

  1. CBDT Constituted High level Committee to address direct tax matters, To begin with, the Committee will  examine the matter relating to levy of MAT on FIIs for the period prior to 01.04.2015  (Click for detail)
  2. Unconditional exemption of income under Section 10 and no statutory liability to file return of income under Section 139- NO TDS  (Click for detail)
  3. Gold monetisation scheme: Unaccounted wealth may see light of day   (Click for detail)
  4. FDI norms eased for NRIs, others of Indian origin  (Click for detail)
  5. Firms with 10 workers might have to pay provident fund  (Click for detail)
  6. Swap transactions allowed for rupee- denominated foreign loans: RBI  (Click for detail)
  7. Taxing premature PF withdrawals of over Rs 30k may be kept in abeyance  (Click for detail)


II.  Direct Tax Case Laws:

1.  M/s Lahmeyer Holding GMBH Vs. DDIT, W.P.(C) 7417/2012 & CM No.18979/2012, Date of Pronouncement:  19.05.2015, High Court of Delhi

Whether  the assessing officer was well within his rights to construe the material placed before the DRP as “new” material so as to invoke jurisdiction under section 147 of the said Act.

Held No.

The DRP in the course of the proceedings before it, made specific queries with regard to the business restructuring of the petitioner and the transaction in question. The petitioner gave a detailed reply and the same has been noted in the observations of the DRP which we have extracted in the earlier part of the judgment. The DRP, after examining the entire business restructuring arrangement and the transaction in question, did not make any addition. The Assessing Officer in his final assessment order also did not make any addition on account of the subject transaction.

It must be noted that the DRP procedure is part of the assessment proceedings. The fact that no addition was made in respect of the said transaction, would clearly raise the presumption that after having examined the said transaction, it was opined that it was not exigible to tax. The subsequent view being taken, as indicated in the purported reasons for initiating the proceedings under Section 147 of the said Act, would be nothing but a ‘change of opinion’ which is not permissible in law.

(Please click here for judgment)


2.  DIT Vs. Ram Kishan Kulwant Rai Charitable Trust, I.T.A. No. 1322/2010, Date of Order: 14.05.2015, High Court of Delhi

Whether revocation of the certificate under Section 12-A ordered by the DIT (Exemption) taking note of the decision of the AO for AY 2003-04 and 2004-05 is legally tenable.

Once the notice under Section 12A proposing revocation was issued, independent nature of the proceedings had to be satisfied. The assessee was under an obligation to provide such material to satisfy that the donation fulfilled the objective, rather doubting the AO’s reasoning was not supported by law as he was not the appropriate authority.  In these circumstances the DIT (Exemption) was certainly within her rights to insist on a proper explanation which in the circumstances of the case, the assessee failed to provide – perhaps more as a result of its mistake on his mis-apprehension that the entire basis for the revocation proceedings or the AO’s opinion for AY 2003-04 and 2004-05. Once the notice under Section 12A proposing revocation was issued in the independent nature of the proceedings had to be satisfied. The assessee was under an obligation to provide such material to satisfy that the donation fulfilled the objective and were of charitable nature and as such rendered any proposed action for revocation unwarranted. The DIT’s order also has to be set aside.

(Please click here for judgment)   


III.  Company Law Matter:

1.  Harish Chaddha & ANR Vs. M/s Natasha Automobiles Pvt. Ltd. & ORS., C.P. No. 40(ND)/2011 in the matter of Sec. 397,398 with 402 & 403, Date of Pronouncement: 01.04.2015, Company Law Board New Delhi Bench
The Jurisdiction U/s 397 & 398 arises only when the management or the persons dealing with the affairs of the company acting detrimental to the interest of existing shareholders, but not the persons who left the company more than 20 years ago.


IV.  Reported Cases:

Direct Taxes Segment:

1.    Section 206AA of the Act does not override the provisions of section 90(2) of the Act and therefore payments made to non-residents who did not furnish their PAN can be deducted as per rate prescribed in DTAA and section 206AA cannot be invoked to insist on tax deduction at rate of 20 per cent

2.    Registeration u/s 12A cannot be denied to the educational institution, merely because it is otherwise eligible for exemption u/s 10(23C)

(Please click here for detail)

 Golden Rules:

  "Maintain your relationship in life like the needle of a clock.
No matter if one is fast and the other is slower.
All it matters is to stay connected"


  Thanks & Regards


Voice of CA

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