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13.07.2015 - Voice of CA presents - Updates
Monday, July 13, 2015

  I. Headlines Today:    

  1. CBDT Noti. reg. Electronic Verification Code (EVC) for electronically filed Income Tax Return as an alternative mode of verification released. EVC would verify the identity of the person furnishing the return of income  (Click for detail)
  2. Bar Council of Delhi  issues  notice to Ernst & Young, PwC, Deloitte & KPMG on complaint filed by  Society of Indian Law Firms alleging unauthorized practice of law by Big 4  (Source:
  3. Small service providers on tax radar  (Click for detail)
  4. Deluge of tax-free bonds may leave less money for financial market  (Click for detail)
  5. Tough fight ahead for Narendra Modi govt to make gold jewellery buying transparent  (Click for detail)
  6. ICAI to help Indian Railways move to accrual accounting system  (Click for detail)
  7. Government asks Sebi to tweak rules on related party transactions to make it at par with Companies Act 2013  (Click for detail)
  8. RBI: Requirement for obtaining prior approval of RBI in cases of acquisition/ transfer of control of Non-Banking Financial Companies (NBFCs)  (Click for detail)
  9. RBI: Prepaid Payment Instrument (PPI) guidelines – Introduction of New Category of PPI for Mass Transit Systems (PPI-MTS)  (Click for detail)


II.  Direct Taxes Case Laws:

1.  Ved Parkash Vs. Commissioner of Income Tax, I.T.A. No. 235 of 2015 (O&M), Date of Decision: 02.07.2015, Punjab and Haryana High Court

Whether the cash deposit may be considered as income without considering the cash withdrawals from the same bank?

Held No

The AO noticed a cash deposit in the appellant’s savings bank account of ` 11,04,167/-. The amount had been deposited in cash in the appellant’s bank account. The AO observed that the gross turn-over was only 4,21,855/- and, therefore, the cash cannot be related to the appellant’s
business transactions. This finding was also on account of the fact that the appellant had not produced any sale/purchase details. The AO, therefore, made an addition of ` 11,04,167/-. The CIT (Appeals) noted that the appellant had initially stated that he was not maintaining any regular books of accounts and later he submitted that the books of accounts were complete. Only a computerized cash book had been filed without any bills/vouchers. In these circumstances, the appellant’s case that he had been maintaining accounts was not acceptable.

The CIT (Appeals), however, accepted the contention that the AO ought not to have treated the cash deposit as income without considering the cash withdrawals from the same bank. The CIT (Appeals), therefore, fairly granted the appellant relief by directing the AO to make addition of only peak of the deposits in the bank account after getting the details from the appellant. These are pure questions of fact which require the appreciation of evidence. No question of law much less a Substantial question of law arises in this regard.

(Please click here for judgment)

2.  Income Tax Officer Vs. Mrs. Deepali Sehgal, I.T.A. No. 5660/Del/2012, Date of Order: 5.09.2014, ITAT - Delhi

Whether CIT(A) has erred in law in deleting the addition of Rs. 2438000/- being unexplained cash deposits in the Saving Bank Ale with HDFC Bank U/S 69A of the I.T.Act, 1961, since the same being explained out of cash withdrawn from Saving Bank Account and partnership overdraft account?

Held No.

the AO, in his remand report could not bring out any fact that the cash withdrawn from Saving Bank Account and partnership overdraft account was used for other purpose anywhere else then, merely because there was a time gap between withdrawal of cash and its further deposit to the bank account, the amount can not be treated as income from undisclosed sources u/s 69 of the Act in the hands of the assessee. The AO rejected the explanation of the assessee on hyper technical basis which is not acceptable. On careful perusal of the decisions relied by the Ld. D.R. we are of the view that the facts of the present case are clearly distinguishable as in the present case the explanation offered by the assessee is reliable and acceptable on the touchstone of the prudence of an ordinary man but merely on the ground that the act of assessee created huge interest liability on partnership firm does not enable revenue authorities to consider the cash withdrawn and it deposit to same bank account after a substantial gap of time, as unexplained income u/s 69 A of the Act. Hence, we reach to a conclusion that the AO made addition without any legal and justified reason which was rightly deleted by the CIT(A). Hence, both the grounds of the assessee are being devoid of merits and dismissed.

(Please click here for judgment)  

III.  Indirect Taxes Case Law:


1.  Montage Enterprises (P) Ltd. Vs. Commissioner of Central Excise & Service Tax, Appeal No. E/1912/2012-SM, Date of Decision: 17.10.2014, CESTAT - New Delhi

Issue: Whether CENVAT credit is available on Telephone expenses, courier charges, cargo handling, travelling services and hiring of cars?


•    Yes for Telephone expenses, courier charges, cargo handling; &    

•    No for travelling services and hiring of cars

The Hon’ble CESTAT held that Services availed should have relevancy thereof to the business of the appellant and the claim falls under Rule 2(1) of the Cenvat Credit Rules, 2004. The Hon’ble CESTAT observed that Telephone expenses, courier charges and cargo handling charges have relevancy with business of the assessee and therefore, same are eligible for input service credit. Whereas, travelling services and hiring of cars were ineligible in absence of any evidence as to their relation with manufacture/business.

(Please click here for judgment)      

IV.  Company Law & Other Matters:

1.  IDBI Trusteeship Services Ltd. Vs. Hubtown Ltd., Summary Suit No. 520 of 2013, Date of Judgment: 08.05.2015, High Court of Bombay

Section 6 of the Foreign Exchange Management Act, 1999, read with regulation 6 of the Foreign Exchange Management (Transfer or Issue of Security by a Person Resident Outside India) Regulations, 2000 - Capital account transactions in real estate sector FDI Policy prohibits non-equity investment.

(Please click here for judgment)


2.  Mr. Chiranjiv Singh & Anr. Vs. M/s Omega Exports Pvt. Ltd., C.P. No. 56(ND)/2012, Date of Order: 31.12.2014, Company Law Board - New Delhi

As per Companies Act, 1956 Sec 397, 398, 399, 402 & 403 In this case liberty is given to petitioners to approach this Bench on the same cause of action, provided their right over the Shareholding survives after the jurisdictional issue has been decided by the Arbitrator appointed by the Divison of the Honble High Court.

(Please click here for judgment)       


V.  Reported Cases:

Direct Taxes Segment:

1.   Registration u/s 12A cannot be denied merely upon activities of trust are extended outside India, where trust property is held wholly and exclusively under trust for charitable and religious purposes.
2.  Whether order of Tribunal pronounced beyond 60/90 days as prescribed in rule 34(5)(c) can be challenged in a petition under section 254(2) - Held No.  
(Please click here for detail)


 Golden Rules:

  "Good people are like street lights along the roads
they do not make the distance short but
they light up the path and make the walk easy and safe"


  Thanks & Regards


Voice of CA

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