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19.06.2015 - Voice of CA presents - Updates
Friday, June 19, 2015

  I. Headlines Today:    

  1. After MAT, indirect transfer woes for foreign investors  (Click for detail)
  2. E-commerce portals to file tax returns every quarter  (Click for detail)
  3. An employer can be penalized for not issuing Form 16 by due date  (Click for detail)
  4. Excessive judicial interference not good for investors: Jaitley  (Click for detail)
  5. SC gives Sahara 18 months to pay up Rs.36,000 crore  (Click for detail)
  6. Ratan Tata: CSR comes from within; can’t be effective in the form of tax  (Click for detail)
  7. RBI: Alteration in the name of “State Bank of Mauritius Ltd” to “SBM Bank (Mauritius) Ltd” in the Second Schedule to the RBI Act, 1934  (Click for detail)


II.  Direct Taxes Case Laws:

1.   ITO Vs. The Executive Engineer, I.T.A. Nos. 492 to 495/Del/2014, Date of Order: 15.06.2015, ITAT - Delhi

If assessee failed to furnish the detail u/s 139(5B) of the Income tax Act, 1961 due to some reasonable cause, no penalty can be imposed u/s 272B of the Act.

The assessee filed quarterly TDS statement in which furnished incorrect PANs of tax-deductees. The AO issued show cause as to why penalty u/s 272B of the Act be not imposed. In reply, assessee filed a correct statement alongwith PANs of deductees. The AO without considering above reply imposed penalty u/s 272B.

Hon’ble ITAT has held that the provisions of section 272B are subject to the provisions of section 273B, which provides that notwithstanding anything contained in the provisions, inter alia, of section 272B, no penalty shall be imposed if it is proved that there was a reasonable cause. Further, reliance is placed on the decision of the Hon’ble Supreme Court in the case of industan Steel Ltd. Vs. State of Orissa (1972) 83 ITR 26 (SC), in which it was held that penalty cannot be ordinarily imposed unless the party obliged either acts deliberately in defiance of law or is guilty of conduct contumacious or dishonest, or acts in conscious disregard of its obligation. In present case, the assessee has not mentioned correct PANs at the time of filing of Form No.26Q as the same were not available. However, as and when the necessary information was obtained, the assessee corrected the lapse and revised the statement by furnishing due particulars thereof. Thus, appeal of revenue is dismissed.

(Please click here for judgment)


2.  Rani Shaver Polutry Breeding Farms Pvt. Ltd. Vs. DCIT, I.T.A. No. 6146/Del/2013, Date of Order: 17.04.2015, ITAT - Delhi

Whether the penalty u/s 271(1) (C) can be imposed merely on the grounds that AO disallowed certain expenses claimed by the assessee.


In brief, the assessee was engaged in the business of Poultry Breeding. The business activity was discontinued due to unfavourable conditions and the surplus funds were invested in various mutual funds & securities. The assessee claimed expenditure out of said income. However, the AO partly allowed and levied penalty u/s 271(1)(C). The CIT(A) confirmed the penalty by placing reliance on CIT vs. Zoom Communication (P) Ltd.

Hon’ble ITAT held that the ratio laid down by the Hon’ble Delhi High Court in the case of CIT vs. Zoom Communication (P) Ltd. is not applicable as in the present case the claim cannot be called not bonafide, in as much as there is cleavage of judicial opinion to the effect that even when business activity is lull, the expenditure incurred in running the company can be claimed as a revenue expenditure. Therefore, the addition made in the quantum proceedings is not free from doubt. The ratio of decision of CIT vs Reliance Petroproducts Pvt. Ltd. 322 ITR 158(SC) is applicable where it was held that mere making of the claim, which is not sustainable in law, by itself, will not amount to furnishing  inaccurate particulars regarding the income of the assessee. Such claim made in the return cannot amount to the inaccurate particulars. Thus, the appeal of assessee is allowed.

(Please click here for judgment)   

III.  Indirect Taxes Case Law:

1.   Ajay Kumar Gupta Vs. Customs, Excise & Service Tax Appellate Tribunal, STA No. 30 of 2014, Date of Decision: 29.04.2015, High Court of Punjab & Haryana

Whether penalty u/s 76 & 78 are imposable when the service tax was wrongly collected by the person?

Held: No
In the issue under consideration the appellant has raised three invoices on 29.03.2008 with service tax element of Rs. 6,52,207/- and the service tax so collected was deposited on 15.11.2008. SCN was issued on 24.06.2009 for imposition of interest and penalty u/s 76, 77 & 78 for late deposit of service tax. The original adjudicating authority confirmed the demand. The appellant filed an appeal against the order before the Comm. (Appeals). The applicant pleaded that during the relevant period the service was not taxable and the service tax was collected by mistake and the same was already deposited with the department. The Comm. (Appeals) noticed that during the relevant period service was not taxable.

However, as per Section 73A it was his duty to deposit the amount so collected with the department. The Comm. (Appeals) held that penalty was not liable to be imposed under Sections 76 & 78 of the Act whereas the nominal penalty imposed under Section 77 of Rs. 1000/ was upheld. On appeal before CESTAT, Delhi by the department the CESTAT quashed the decision of Comm. (Appeal) and confirmed the penalty. On the appeal before High Court, the Hon’ble High Court held that the provision of section 68 was not attracted therefore penalty u/s 76 & 78 are not leviable. Hence, the Hon’ble High Court upheld the decision of Comm. (Appeals) and quashed the decision of Delhi CESTAT.

(Please click here for judgment)


IV.  Company Law & Other Matters:

1.   Naresh N. Shah & Ors. Vs. Larsen & Toubro Ltd. & Ors., C. P.  No. 2 of 2012, 02.01.2015, Company Law Board, Mumbai - Bench

Section 111 read with section 111A, of the Companies Act, 1956 - Transfer of shares :-The petitions stands dismissed as the petitioners failed to make out any case for grant for reliefs and there were no reasons to disbelieve the statement made by the answering respondents that there is no difference in signatures on Transfer deeds. The technical points raised by the petitioners as to the non compliance of guidelines for “Good/ Bad Delivery “by the respondent company and non compliance of the circular of MCA don’t have substance. Also, the petitioners failed to establish that their names were  removed by company without sufficient cause resulting in dismissal of the petition..

(Please click here for judgment)  


V.  Reported Cases:

Direct Taxes Segment:

1.   To claim the benefit u/s 54E of the Income Tax Act, 1961, period of six months is reckoned form the date of transfer of capital asset and not from the date of receipt of final sales consideration.
2.  Registration application u/s 12A of the Income Tax Act, 1961 cannot be rejected merely on ground that organization formed with a view to provide services to ex-army personnel, their widows and dependents and charged one time nominal registration fee.  
(Please click here for detail)


 Golden Rules:

  "Change does not happen when circumstances improve,
change happens when we decide to improve our circumstances


  Thanks & Regards


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