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02.06.2015 - Voice of CA presents - Updates
Tuesday, June 2, 2015

  I. Headlines Today:    

  1. ITR forms simplified  (Click for detail)
  2. Longer wait for revised income-tax forms  (Click for detail)
  3. Income tax return filing process goes online – truly  (Click for detail)
  4. Shah panel sets the ball rolling on MAT debate  (Click for detail)
  5. RBI cuts repo rate 25 bps to 7.25%, Leaves CRR and SLR unchanged  (Click for detail)
  6. IRDA Circular: Revised Guidelines on Insurance Repositories and electronic issuance of Insurance Policies  (Click for detail)
  7. IRDA Circular: Handling of the unclaimed amounts pertaining to the policyholders  (Click for detail)


II.  Direct Tax Case Laws:

1.  DIT Vs. M/s Lufthansa Cargo India, I.T.A. No. 95/2005, Date of Order: 27.05.2015, High Court of Delhi

Whether the ITAT is right in holding that payments made by the assessee to the non-residents for component overhaul and maintenance are not fee for technical services within the meaning of Section 9(1)(vii) of the Income Tax Act, 1961 so as to oblige the assessee to deduct tax at source under Section 195 of the Act from such payments?

Held No.

The ITAT concluded that Technik performed the entire work on “an inanimate body without any involvement or participation of assessee’s personnel”. It also held that managerial or physical exertion by Technik‟s engineers on the assessee‟s components did not render such services managerial, technical and consultancy services within the meaning of Section 9(1)(vii)(d).

Hon’ble Delhi High Court held that the ITAT was unduly influenced by all the regulatory compulsions which the assessee had to face. Besides international convention and domestic law that mandated aircraft component overhaul, the manufacturer itself – as a condition for the continued application of its warranty, and in order to escape any liability for lack of safety, required periodic overhaul and maintenance repairs. Unlike normal machinery repair, aircraft maintenance and repairs inherently are such as at no given point of time can be compared with contracts such as cleaning etc. Component overhaul and maintenance by its very nature cannot be undertaken by all and sundry entities. The level of technical expertise and ability required in such cases is not only exacting but specific, in that, aircraft supplied by manufacturer has to be serviced and its components maintained, serviced or overhauled by designated centres. It is this specification which makes the aircraft safe and airworthy because international and national domestic regulatory authorities mandate that certification of such component safety is a condition precedent for their airworthiness. The exclusive nature of these services cannot but lead to the inference that they are technical services within the meaning of Section 9(1)(vii) of the Act. The ITAT‟s findings on this point are, therefore, erroneous.

(Please click here for judgment)


2.  CIT Vs. M/s. Grup Ism P. Ltd., I.T.A. No. 325/2014, Date of Order: 29.05.2015, High Court of Delhi

Whether the payment incurred by the assessee to laisonong agent i.e. the UAE concerns wast technical service in terms of Second Explanation to Section 9 (1) (vii) read with Section 194J?

Held No

It is evident that in the transaction between the assessee and Marble Arts & Crafts, the former (non-resident) acted as an agent of the assessee for the purposes of the latter‟s dealings with the Works Department, Abu Dhabi, which included coordinating with the authorities in the said department and handling invoices for the assessee. As far as CGS International is concerned, it acts as a liaisoning agent for the assessee, and receives its remuneration from each client that it successfully solicits for the assessee.

Facially, such services cannot be said to be included within the meaning of „consultancy services‟, as that would amount to unduly expanding the scope of the term „consultancy‟. Therefore, this Court does not accept the revenue‟s contention that the services provided were in the nature of „consultancy services‟. Consequently, the remittances made by the assessee would not come within the scope of the phrase „fees for technical services‟ as employed in Section 9(1)(vii) of the Act. This question is answered against the revenue and in favour of the assessee.

(Please click here for judgment)

III.  Company Law Matter:

1.  T. Vasanthakumar Vas. Vijayakumari, Criminal Appeal No. 728 of 2015, Date of Judgment: 28.04.2015, Supreme Court of India

Section 138, read with section 139, of the Negotiable Instruments Act, 1881 - Dishonour of cheque for insufficiency of fund etc – if accused respondent accepted  dishonoured cheque as well as signature presumption under section 139 would operate and burden was on accused to disprove cheque or existence of any legally recoverable debt or liability.

(Please click here for judgment)


 Golden Rules:

  "Life has two rules:
#1 Never quit and
#2 Always remember rule # 1"


  Thanks & Regards


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