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25.05.2015 - Voice of CA presents - Updates
Monday, May 25, 2015

I. Headlines Today:    

  1. CBDT Cir.: Draft scheme of the proposed rules for computation of Arm's Length Price (ALP) of an International Transaction or Specified Domestic Transaction undertakenon or after 01.04.2014  (Click for detail)
  2. Tax residency of companies - New rule leaves room for discretion in determining whether a foreign company can be said to be resident in India  (Click for detail)
  3. FPIs Run into a Wall of Confusion After I-T Notices  (Click for detail)
  4. TDS on premature PF withdrawal may go  (Click for detail)
  5. RBI Circular: Lending against security of single product - Gold Jewellery  (Click for detail)
  6. Health savings schemes could soon become a reality  (Click for detail)


II.  Direct Tax Case Laws:

1.   CIT Vs. M/s Sarkar Builders, Civil Appeal No. 4476 of 2015, Date of Order: 15.05.2015, Supreme Court of India

Whether restriction on extent of commercial area in “housing project” imposed w.e.f. 1.4.2005 applies to housing projects approved before 1.4.2005 even though completed after 1.4.2005

Held No.

The SC opinioned that “Can it be said that in order to avail the benefit in the assessment years after 1.4.2005, balconies should be removed though these were permitted earlier? Holding so would lead to absurd results as one cannot expect an assessee to comply with a condition that was not a part of the statute when the housing project was approved. We, thus, find that the only way to resolve the issue would be to hold that clause (d) is to be treated as inextricably linked with the approval and construction of the housing project and an assessee cannot be called upon to comply with the said condition when it was not in contemplation either of the assessee or even the Legislature, when the housing project was accorded approval by the local authorities.

(Please click here for judgment)


2.  CIT Vs. M/s Navbharat Exports, I.T.A. No. 212/2013, Date of Order: 05.05.2015, High Court of New Delhi

Whether ITAT war correct in deleting the findings with respect to the error in rejection of books and the imposition of 12% GP rate by the AO on account of absence of stock register and other alleged irregularities; and Directing to cancel the addition on account of notional income worked out by the AO.

Held Yes

The assessee in its audit report specifically alleged that it is maintaining stock register.All the details of purchase, sales and exports are being maintained and shown to the Assessing Officer. In spite of that, in a flimsy way, Assessing Officer had made the above remark. The next objection pointed out by the Assessing Officer is that yield shown by the assessee is not reliable. The criteria for making comparison of yield by the Assessing Officer is not discernible. He observed that a loose paper was found at the premises of erstwhile partner and the yield computed on that loose paper did not match with the ultimate yield shown by the assessee. It is not coming out on the record that how that loose paper is relevant for working out the yield. The yield of the assessee ought to be verified from the factor, what type of rice it had purchased, how it has processed, what type of machinery it has used, those percentage ought to be compared with some similarly situated assessee or with the result of other years. No such steps have been taken by the Assessing Officer. He merely assigned one reason for the sake of giving reasons.

(Please click here for judgment)

III.  Company Law Matter:

1.  ARG Auto Components Pvt. Ltd. V/s Atlas Pet Plas Industries Limited, C.P. No. 23(111)/2011 in the matter of Sec 111(4)(a) 402 & 403, Date of Pronouncement: 14.01.2015, Company law Board New Delhi Bench
If the issue being related to the allotment of shares being in relation to the Public Limited Company , Company Law Board has no jurisdiction to adjudicate as to whether the allotment is valid or not. However the applicant is at liberty to proceed before civil court over the issue of allotment of shares.


2.  M/s Transchem Ltd. Vs. M/s Firstcorp International Ltd.,  Company Appeal No. 21 of 2014, Judgment Delivered on: 26.03.2015, Company Law Board Mumbai Bench

As per Sec 59(4), CLB is not empowered to make investigation/enquiry into allegation that acquirers acting in concert have acquired shares in violation of Takeover Code.

(Please click here for judgment)



IV.  Reported Cases:

Direct Taxes Segment:

1.   Payment made to swiss company for rendering consultancy services about raising of finance from international market, amounted to “Fee for technical service’ liable to tax in India.

2.  No entitlement to interest u/s 244A on refund, where assessee deposited excess self assessment tax u/s 140A voluntarily.
(Please click here for detail)  

 Golden Rules:

  "Opportunities and obstacles are equal for all.
But the difference is that,
a positive person gives results and
a negative person gives reasons"


  Thanks & Regards


Voice of CA

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