Saturday, May 31, 2014

[aaykarbhavan] Business Standard

__._,_.___

Posted by: Dipak Shah <djshah1944@yahoo.com>

receive alert on mobile, subscribe to SMS Channel named "aaykarbhavan" [COST FREE] SEND "on aaykarbhavan" TO 9870807070 FROM YOUR MOBILE. To receive the mails from this group send message to aaykarbhavan-subscribe@yahoogroups.com

Visit Your Group

New Members 1

• Privacy • Unsubscribe • Terms of Use

__,_._,___

[aaykarbhavan] ITAT : Share transfer pursuant to family arrangement not 'gift'; Transfer consideration measurable

ITAT : Share transfer pursuant to family arrangement not 'gift'; Transfer consideration measurable
Bilakhia Holdings P. Ltd.

May 31 2014

Transfer of shares by family members to assessee company, in pursuance to family arrangement, cannot be termed 'voluntary' & hence not a 'gift';

Regards

Prarthana Jalan

__._,_.___

Posted by: Prarthana Jalan <prarthanajalan@ymail.com>

Visit Your Group

New Members 1

• Privacy • Unsubscribe • Terms of Use

__,_._,___

[aaykarbhavan] Sec. 292BB is confined to deemed service of notice; it can’t cure defect in notice issued under sec. 143(2)

Sec. 292BB is confined to deemed service of notice; it can't cure defect in notice issued under sec. 143(2)

May 31, 2014[2014] 45 taxmann.com 159 (Gujarat)

IT: Section 292BB is only confined to service of notice and does not apply to issuance of notice

Regards

Prarthana Jalan

__._,_.___

Posted by: Prarthana Jalan <prarthanajalan@ymail.com>

Visit Your Group

New Members 1

• Privacy • Unsubscribe • Terms of Use

__,_._,___

[aaykarbhavan] TDS obligation arose even if hire charges were paid through settlement of accounts without actual cash payments

TDS obligation arose even if hire charges were paid through settlement of accounts without actual cash payments

May 31, 2014[2014] 45 taxmann.com 196 (Delhi - Trib.)

IT/ILT: Where, assessee a tax resident of Thailand, was engaged in execution of hydroelectric-power project of NTPC as a sub-contractor of another Thailand based company ITDL, in view of fact that ITDL provided certain machinery on hire to assessee, tax was required to be deducted at source while making payment of hire charges even though said payment was not made in cash and it was merely adjusted from amount due to assessee on account of execution of contract work

IT/ILT: Payment of legal expenses made by assessee to a law firm in Thailand in relation to arbitration proceedings conducted in said country, was not chargeable to tax in India and, thus, assessee was not required to deduct tax at source while making said payments

Regards

Prarthana Jalan

__._,_.___

Posted by: Prarthana Jalan <prarthanajalan@ymail.com>

Visit Your Group

New Members 1

• Privacy • Unsubscribe • Terms of Use

__,_._,___

[aaykarbhavan] Irregular trading of shares with less frequency is an investment activity; resultant profit is capital gain

Irregular trading of shares with less frequency is an investment activity; resultant profit is capital gain

May 31, 2014[2014] 45 taxmann.com 182 (Delhi)

IT: Where shares were held as investment and same were not traded regularly and frequency and volume of transaction were less, it had to be treated as investment activity and not as business

Regards

Prarthana Jalan

__._,_.___

Posted by: Prarthana Jalan <prarthanajalan@ymail.com>

Visit Your Group

New Members 1

• Privacy • Unsubscribe • Terms of Use

__,_._,___

[aaykarbhavan] Valuation by DVO shall be the actual consideration under sec. 50C even if such value is lesser than stamp valuation

Valuation by DVO shall be the actual consideration under sec. 50C even if such value is lesser than stamp valuation

May 31, 2014[2014] 45 taxmann.com 141 (Visakhapatnam - Trib.)

IT : Where fair market value determined by DVO on a reference made by Assessing Officer in terms of sub-section (2) of section 50C is less than value adopted or assessed by Stamp Valuation Authority then such fair market value determined by DVO has to be treated as full value of consideration received by assessee for purpose of computing capital gain

Regards

Prarthana Jalan

__._,_.___

Posted by: Prarthana Jalan <prarthanajalan@ymail.com>

Visit Your Group

New Members 1

• Privacy • Unsubscribe • Terms of Use

__,_._,___

Friday, May 30, 2014

[aaykarbhavan] Details of assets reported in wealth-tax returns by loan defaulter to be shared by I-T Dept. with PSU Banks: CBDT

SHARING OF ASSET DETAILS AS PER WEALTH TAX RETURNS OF LOAN DEFAULTERS WITH PUBLIC SECTOR BANKS

LETTER [F.NO.328/10/2014-WT], DATED 28-5-2014

During a review meeting on the performance of Public Sector Banks (PSBs) taken by Finance Minister on 5.3.2014, the PSBs raised concern that the details of assets as available in the Wealth Tax Returns of loan defaulters are not being shared by Income Tax Department with the Banks despite repeated requests.

2. In this context, kind attention is drawn to section 42B of the Wealth Tax Act, 1957 which states that where a person makes an application to the Chief Commissioner or Commissioner in the prescribed form, seeking any information relating to any assessee in respect of any assessment made under this Act, the Chief Commissioner or Commissioner may, if he is satisfied that it is in the public interest so to do, furnish or cause to be furnished the information asked for in respect of that assessment.

3. In view of the fact that every Return of Wealth filed by the assessee is subject to assessment under section 16 of the Wealth Tax Act, the information contained therein qualifies for being supplied u/s 42B of the Wealth Tax Act, provided the CCWT/CWT is satisfied that supply of such information to PSBs is in public interest. CBDT in this context clarifies that information on assets of loan defaulters to enable recovery of loans by PSBs from such defaulters is in public interest.

4. It is further clarified that such information may be provided in respect of the borrower/mortgager/guarantor of the loan only. At the time of supply of such information a confidentiality clause may be included specifying that such information be used only for the purpose of recovery of loan and will not be shared with any other person/agency. An undertaking to this effect shall be obtained from the Bank (to be signed by an officer not below the rank of the Manager of the Branch concerned) before furnishing the information.

5. In order to ensure that the tax dues of the Department against the defaulter (if any) are safeguarded, an undertaking be obtained from the PSB to obtain a No Objection Certificate (NOC) from the jurisdictional CIT of the loan defaulter before appropriation of the surplus amount recovered from sale of immovable/movable asset of the defaulter, information in respect of which is shared, after adjustment of its loan dues.

6. The above guideline may be brought to the notice of all DGsIT, CCsIT and CsIT of your charge.

Source: www.taxmann.com

Regards

raghunath

This email is free from viruses and malware because avast! Antivirus protection is active.

__._,_.___

Posted by: "svraghunath" <svraghunath@gmail.com>

Visit Your Group

New Members 1

• Privacy • Unsubscribe • Terms of Use

__,_._,___

[aaykarbhavan] Business Standard

__._,_.___

Posted by: Dipak Shah <djshah1944@yahoo.com>

Visit Your Group

New Members 1

• Privacy • Unsubscribe • Terms of Use

__,_._,___

[aaykarbhavan] ETDS return - changes wef 01-06-14

TDS/ TCS – No need to submit Provisional Receipt of original statement & Statement Statistics Report wef 01.06.2014

Added In Income Tax

With effect from June 1,2014,Deductors/Collectors need not submit copy of Provisional Receipt of original statement and Statement Statistics Report (SSR) for furnishing e-TDS/TCS correction statement.

Revised TDS returns to be accepted without Original Provisional receipts wef 01.06.2014

Added In Income Tax

Circular No: NSDL/TIN/2014/024 May 28, 2014 Subject: Revised procedure for acceptance of e-TDS/TCS correction statements and upload of scanned documents to TIN Central System Attention of all TIN Facilitation Centers (TIN-PCs) is invited to the procedure of acceptance of e-TDS/TCS correction statements and upload of scanned images as provided in chapter 6 and 7 of […]

Read the Full Article

with regards,

---

CA. Mukesh Saran
M.Com.,FCA, DISA(ICAI)
Lucknow
09415465330
saranfca@gmail.com, saranfca@icai.org

http://msaranassociates.icai.org.in/ http://sites.google.com/site/saranfca/home

I believe in three "H"s of life - Humour, Hard work and Honesty

__._,_.___

Posted by: Nitesh More <moreassociate@gmail.com>

Visit Your Group

New Members 1

• Privacy • Unsubscribe • Terms of Use

__,_._,___

[aaykarbhavan] Income tax - Whether surplus arising on sale of agri land gives rise to agricultural income within meaning of sec 2(1A) read with Explanation (1) of Sec 2(14)(iii) and consequentially exempt u/s 10(1) - YES: ITAT Third Member

JODHPUR, MAY 30, 2014: THE issues before the Bench are - Whether the transactions of purchase and sale of five pieces of agricultural land with standing crop, by way of separate conveyance deeds, beyond the prescribed distance from any municipal council, amounts to transactions on capital account or adventure in the nature of trade and Whether the surplus arising on sale of agricultural land gives rise to agricultural income within the meaning of section 2(1A) read with Explanation (1)/Section 2(14)(iii)(a) and (b) and consequentially exempt under section 10(1) of the Act. And the answers go against the Revenue.

Facts of the case

The assessee purchased certain agricultural land and sold in the previous year relevant to assessment year under consideration. The case of the assessee was that the income arises from the transaction of agricultural land and hence it was exempt under section 10(1) r.w.s. 2(lA)(a) of the Act. Even otherwise the income arising therefrom is not assessable to capital gains tax in view of the provisions of section 2(14)(iii)(a)(b). On the other hand, the case of the Revenue was that it was an adventure in the nature of trade and the income from the impugned land was business income. The AO as well as the CIT(A) were of the opinion that the amount received by the assessee on sale of the impugned land deserved to be treated as profit from adventure in the nature of trade and assessable as business income.

When the case was heard by the Division Bench at ITAT Jodhpur, the Judicial Member observed that the impugned land was purchased on 07.02.2006 and it was sold on 23.03.2007 and it was situated beyond the prescribed municipal limits in a village and being agricultural land the sale proceeds thereon were not assessable to tax as business income. The Judicial Member recorded that the impugned land was purchased and sold alongwith standing crops and the Department accepted the return of income wherein agricultural income on sale of standing crops was shown. He also took into consideration the plea of the assessee that at no point of time the assessee sought for conversion of land use by making an application with the respective authorities. Though the assessee was dealing in sale and purchase of plots in urban areas, so far as this land was concerned, the intention was not to convert into plots and in fact the agricultural land with standing crops was sold to single party.

The Judicial Member observed that the assessee purchased five pieces of agricultural land adjoining each other through different sale deeds and the land was registered on different dates from - 7th February, 2006 to 5th April, 2006. The assessee showed the purchase of agricultural land as 'fixed asset'. In the preceding year the assessee earned Rs.70,000/- on sale of crops which was shown as agricultural income in the return filed by the assessee, which was accepted by the Revenue. In this year Rs.22,000/ was declared on sale of standing crop and accepted by the AO. In fact, another crop was standing at the time of sale which was passed on to the purchaser of the land and hence no agricultural income from this crop was shown in the return as the land was sold along with the crop though the same was declared for rate purposes, for computing tax liability. If the intention of the assessee was to carry on an adventure in the nature of trade she would have applied for conversion of land use and drawn up the requisite plotting scheme, engaged professional architects for preparing site plan approval and would have commenced preliminary development works whereas no such activity was undertaken by the assessee which shows that the intention of the assessee at the time of purchase of land was only to retain the land and it was not purchased for the purpose of resale as an adventure in the nature of trade. He also observed that undoubtedly the land is situated beyond 8 kms from the municipal limit and hence the land has to be considered as agricultural land. So long as the land is capable of agricultural operations, the sale of agricultural land by itself would not make it business income. He also relied upon several precedents apart from analysing the facts of the case to come to the conclusion that the impugned land is Barani land admeasuring only seven Bighas with standing crop which in itself prove that it was not purchased with an intention to utilise the land for any other purpose. He thus concluded that the impugned land is out of the purview of the definition of "capital assets" and hence income therefrom cannot be assessed to tax by treating it as adventure in the nature of trade.

The Accountant Member was not agreeable with the view taken by the Judicial Member. He concluded that the assessee sold the land to make profit. He observed that the assessee was not having any agricultural background since she was deriving income by way of salary. She purchased five pieces of contiguous agricultural land from five different persons. Some amount was spent on levelling the land and also on fencing the land. The land was purchased alongwith standing crop and the said standing crop was sold in the earlier year. It was claimed that two crops were raised in this year and the first crop was sold resulting in agricultural income. The Accountant Member stressed upon the fact that both the lower authorities have given concurrent findings that the transactions of purchase and sale of agricultural land constitute adventure in the nature of trade mainly on account of the fact that the assessee never intended to carry on agricultural operations on the land; the lands were neither irrigated nor any tube well facility was available earlier or installed by the assessee and in fact they were sold within a period of 12 to 13 months of purchase deriving a huge return of 558 percent. He also observed that the land is situated at a distance of more than 500 kms from the place where the assessee usually resides and therefore he drew a conclusion that these lands were not purchased for the purpose of cultivation. Since she was engaged in the business of real estate development the impugned purchase was with the full knowledge that the values are likely to appreciate rapidly as these fall within the new town of National Capital Region (NCR), the global city, on national highway No.8. He also observed that the investment was made out of borrowed funds. Accountant member was of the view that if assessee had not carried on any agricultural operation it would reflect that he is not interested in obtaining any return from these lands and on sale thereof it could be considered as adventure in the nature of trade. The Accountant Member observed that the assessee had not earned any income out of her labour as she was staying in Jodhpur. The land was also not given to any other person for cultivation. She does not have any past record of carrying on agricultural operations. It was observed that the land was situated on the border of Rajasthan and it had been characterised as NCR since 1985, i.e. prior to the date of purchase and a global city was expected to come up in the vicinity which gives great opportunities of making profit. The fact that the assessee borrowed funds to make investment and sold at a very high price, i.e. 6 times more than the purchase price also showed that it was an adventure in the nature of trade. He thus concluded that the entries in the books of account was not really material and at any rate not conclusive of the matter. The Accountant Member was of the opinion that the assessee was a dealer in land and the intention was to make more profit though in the books a different nomenclature was given to it.

With regard to the pleas of the assessee that some expenditure was incurred on levelling and fencing, the Accountant Member observed that the expenditure was too small compared to the investment. Accountant Member observed that no attempt was made by the assessee to install facilities for irrigating the land and borrowed funds were utilised for purchasing various pieces of land. The assessee is otherwise engaged in the business of real estate and hence the impugned purchases were not with the intention of carrying on agricultural operations.

Since there was difference of opinion among the Judicial and Accountant members regarding the nature of piece of land sold, the matter was referred to the third member.

The assessee submitted that the land was situated beyond the prescribed municipal limit and it was also recorded as agricultural land in the Revenue records. The assessee purchased the agricultural land with standing crops thereon and income on sale of the standing crops was shown as agricultural income in the immediately preceding year, which was accepted by the tax authorities. Even in the year of sale of land the first standing crop was sold by the assessee and income therefrom was shown as agricultural income and the AO having accepted the nature of income it cannot now be said that it is not agricultural land and the assessee intended to earn business income thereon. He also submitted that the land being agricultural in nature sale thereof gives rise to agricultural income within the meaning of section 2(1A) read with Explanation 1/2(14)(iii)/10(1) of the Act. It was submitted that only such land which falls within the description of agricultural land under section 2 (14)(iii), upon sale thereof, gives rise to income which cannot be considered as agricultural income within the meaning of section 2(1A) whereas upon sale of agricultural land which is situated beyond eight kilometres from the local limits of any municipality, the sale proceeds thereof had to be considered as 'agricultural income', in which event section 10(1) comes into play, i.e. whether it was on capital account or revenue account, agricultural income cannot be included in the total income. It was also submitted that the assessee had also included the impugned sale proceeds for rate purposes.

CIT-DR relied upon the order passed by the Accountant Member and submitted that whether the transaction is an adventure in the nature of trade or not essentially depends on various facts and it is a mixed question of facts and law and the metaphor "one swallow does not make a summer" cannot be extended to a single trade transaction. His main contention was that the assessee knew, at the time of purchase, that the land falls in the NCR zone and the surrounding circumstances, as stated by the Accountant Member, would highlight that the transaction was with an intention to make maximum profit and hence it may be treated as an adventure in the nature of trade.

Having heard the parties, the tribunal held that,

++ the Apex Court as well as various High Courts have reiterated the basic principle and observed that it is impossible to evolve any formula which can be applied in determining the character of an isolated transaction and a holistic view has to be taken, by taking into consideration the circumstances of the case;

++ if it is not considered as an adventure in the nature of trade the next issue that arises for consideration is whether sale of agricultural land gives rise to 'agricultural income' or it is assessable to tax under the head 'capital gains'. Admittedly, the expression "agricultural income" is not comprehensively defined in the Income Tax Act, though it was explained, under section 2(1A), that any revenue derived from land, which is situated in India, can be considered as agricultural income. Section 2(14) of the Act defines capital asset, which was substituted by Finance Act, 1970 and thereafter in 1989 whereby only such agricultural land which is located within eight kilometres from the municipal limit should be treated as capital asset. In other words, agricultural land situated beyond eight kilometres from the nearest municipal limit cannot be treated as capital asset and sale proceeds thereof may be treated as revenue derived from land which is situated in India and is used for agricultural purposes;

++ it has to be inferred that land situated beyond eight kilometers from the municipal limits has to be excluded from the expression 'capital asset', consequently upon sale of such land, it has to be treated as agricultural income;

++ The fact that the land was falling outside the municipal limit was never disputed by both the Members and in fact a specific ground was raised before the Tribunal that the revenue received on sale of land is exempt under section 2(1A) of the Act. The counsel filed a detailed written submission wherein he pointed out that the assessee treated the sale proceeds as agricultural income under section 10(1) and offered the same for rate purpose. On an appeal the CIT(A)observed that the income which results from sale of agricultural land is not: agricultural income as per sec. 2(1A) of the Act overlooking a specific ground before him that income arising on transfer of agricultural land used for cultivation (subject to land revenue and located beyond eight kilometers of municipal limits) cannot be assessed to tax under the Income Tax Act, 1961. The counsel referred to the amendments brought out by the Finance Act, 1970 and by the Finance Act, 1989 with retrospective effect to highlight that the intention of the Legislature was to tax income from transfer of agricultural land situated in the specified area only and cautiously excluded such land from the scope of agricultural income. He also relied upon the decision of the Bombay High Court in the case of Manubhai A. Sheth vs. Income Tax Officer 128 ITR 87 in support of his contention that profits or gains on sale of agricultural land will be revenue within the meaning of section 2(1) (now 2(1A) of the Act) This principle was reiterated by the Bombay High Court in the case reported in 208 ITR 98. By virtue of the amendments to section 2(14)(iii) of the Act, only agricultural land situated within the municipal limits gets excluded from the definition of agricultural land. Per contra, agricultural land situated outside the municipal limits, upon sale, gives rise to agricultural income only;

++ the impugned land cannot be treated as capital asset since it is situated beyond eight kilometers from the municipal limits and it was purchased as agricultural land and sold accordingly without making any changes such as conversion in the land records, plotting of land, etc. In fact the counsel for the assessee stated that even at the time of purchase of the land it cannot be inferred that the assessee intended to make enormous profit by selling the land within a short span. He also submitted that National Capital Region master plan was prepared in 2002 and notified in 2010 and it was to come into effect from 2031 whereas the land was purchased in 2006 by which time even the master plan was not notified. It is also not in dispute that the assessee earned agricultural income in the immediately preceding year on sale of standing crop and the same was offered as agricultural income. The AO accepted the same for rate purposes. Similarly, for the year under consideration, i.e. year of sale of land, the assessee earned agricultural income for the first part of the year which was also offered for rate purpose and accepted by the Revenue. There is nothing on record to suggest that the assessee has done any act to convert the land for non-agricultural use. It is not even the case of the Revenue that the assessee advertised for sale of the land. The case of the assessee, on the other hand, was that the Vedic Village Developers Pvt. Ltd. offered tempting price and the assessee decided to take the benefit out of it though there was no intention to carry on trade. The Accountant Member observed that the land was situated within the land already acquired by the Vedic Village Developers Pvt. Ltd. At the time of hearing, the counsel for the assessee submitted that it is a concocted fact and it was never admitted by the assessee. It is not even the case of the Revenue that the land purchased by the assessee is situated within the land acquired by the Vedic Village Developers Pvt. Ltd. It cannot thus be inferred that the assessee purchased the land with an intention to convert the same for non-agricultural purposes. It is thus clear that it is a case of sale of agricultural land and the land being situated beyond eight kilometres from the municipal limit, it cannot be subjected to tax under the Income Tax Act either as business income or capital gains. Though the Kerala High Court in the case of T.K. Sarala Devi 167 ITR 136 and the High Court of Punjab and Haryana in the case of Tula Ram 199 ITR 450 dissented from the decision of the Bombay High Court in the case of Manubhai A. Sheth , in the light of the latest decision of the Apex Court in the case of Singhai Rakesh Kumar vs. Union of India 2002-TIOL-545-SC-IT-LB , which in my opinion clarifies the issue subsequently, the only interpretation permissible is that the land situated outside the municipal limits stands excluded from the expression 'capital asset' from the inception and the sale proceeds have to be treated as revenue received from agricultural land. At any rate, the view taken by the Bombay High Court, in my opinion, can be said to be an appropriate view, on an analysis of provisions of section 2(1A)/2(14)(iii) (a) & (b)/ 10(1). When two views are possible a view which is in favour of the assessee has to be taken in the light of the decision of the Apex Court in the case of Vegetable Products Ltd. 2002-TIOL-574-SC-IT-LB . Under these circumstances I answer question No.2 in the affirmative by holding that the surplus arising on sale of the impugned agricultural land gives rise to agricultural income and not assessable to tax. Thus the view of the Judicial Member, on this issue, reflects the correct legal position;

++ the assessee purchased the land with standing crops thereon and it was shown in the Khasra Girdawari records as a land cultivated throughout the period of holding by the assessee. No efforts have been taken by the assessee to change the nature of land. Income from the standing crops was offered for rate purpose as agricultural income. It is not in dispute that the transaction of purchase and sale of agricultural land is not part of a regular business activity of the assessee and it cannot also be treated as expansion of regular business of the assessee. It was an isolated transaction of purchase of agricultural land and sale thereof within a period of 13 months. Though the land is situated in the National Capital Region and there was a plan to develop Shahajanpur - Nimrana area of Alwer district as a global city but the fact remains that the master plan was finalised in the year 2010 and as per the master plan the area will be developed by the year 2031. The case of the assessee is that if the assessee's intention was to carry on an adventure in the nature of trade she has to wait at least till the master plan is finalised as otherwise she cannot expect substantial profit. On the contrary, the land was sold within a short span, seizing the opportunity of offer of better price which shows that the assessee intended to purchase the land as an investment only. It was also submitted by the counsel that the land was covered in NCR area since 1985 and hence this fact, in isolation, can never be considered as a key factor to decide the intention of the assessee since it is a long term project. At any rate, the government policy and the concrete master plan of 2031 was notified in the year 2010, which is a date falling after the sale of the agricultural land and hence it was contended on behalf of the assessee that any inference taken by such fact would be improper since the date of purchase of the land and the date of sale can at best be taken into consideration in appreciating the intention of the purchase of the land. The Apex Court in the case of G. Venkataswami Naidu & Co. vs. CIT 2002-TIOL-179-SC-IT-LB , which in turn was followed by various other courts, observed that merely because a property was sold for a profit it cannot be assumed that it is an adventure in the nature of trade. It is not a case that the purchaser, subsequent to the purchase, tried to improve the quality of the land thereby making it more readily saleable. No single plunge in the waters may partake of the character of an adventure in the nature of trade but the emphasis is given to the fad that the single plunge must be in the waters of trade, i.e. the intention of the assessee should be treated as paramount to consider as to whether it was a sale of agriculture land simplicitor or it was an adventure in the nature of trade. The Judicial Member rightly observed that the land was actually cultivated throughout the period of holding by the assessee, which is evident from the fact that the agricultural income was offered for rate purpose and accepted by the Revenue. It is, therefore, difficult to appreciate the observation of the Accountant Member that the assessee did not take any active step to get returns from the land. The Accountant Member has given emphasis to the fact that the assessee sold the land within a short span out of free will. In my considered opinion whether the land was sold out of compulsion or out of free will, will not alter the character of the transaction. Every assessee would like to make profit on a transaction, given an opportunity. In the instant case the assessee purchased the land with standing crops but ultimately sold the land tempted by the offer made by the Vedic Village Developers Pvt. Ltd. but mere sale of land on a profit cannot be a factor to conclude that the intention of the assessee was to carry on an adventure in the nature of trade. In other words, the subsequent making of profit cannot be a decisive factor. Thus, taking a holistic view of the matter, I am of the view that the Judicial Member had correctly come to the conclusion that the transaction was not an adventure in the nature of trade. The Judicial Member rightly observed that the impugned land will not fall within the purview of capital asset, being the land situated beyond the prescribed municipal limits and thus the sale proceeds thereof are not assessable to tax. For the above reasons question No.1 is answered accordingly;

++ the difference of opinion between the A.M and the J.M. was regarding the nature of piece of land sold. As per the ld. J.M. this land was agricultural one and not a 'capital asset'. The A.M. has taken a different view and has held this land sold as a 'capital asset'. The ld. Third Member has agreed with the view of the J.M. and, therefore, in majority view the piece of land sold is not a 'capital asset';

++ hence, according to the opinion of majority of the Members of the Appellate Tribunal, we answer this ground [issue] in the favour of the assessee.

Regards

Prarthana Jalan

__._,_.___

Posted by: Prarthana Jalan <prarthanajalan@ymail.com>

Visit Your Group

New Members 1

• Privacy • Unsubscribe • Terms of Use

__,_._,___

[aaykarbhavan] Fw: Pre-Print Highlights of CC from CLI, JUdgments and Information [1 Attachment]

 F   Act technically legal and correct can be demonstrated to be   oppressive to shareholders u/ss. 397 and 398 of 1956 Act : HB   Stockholding Ltd. v. DCM Shriram Industries Ltd. p.   271
       
Can Any body supply me Full Text Of Judgment as mentioned above?
C A Shah D J 
USA


Payments of commission for services rendered in relation to securities are out of ambit of sec. 194H; no TDSMay 30, 2014[2014] 45 taxmann.com 183 (Allahabad)
IT:   Services rendered in relation to securities get excluded from express   definition of 'brokerage or commission' and thus, excluded from purview   of section 194H

Income Tax

  Whether if service provider fails to collect service tax from its
  clients but once pointed out by Audit, deposits same with interest
  from own account, such expenses can be claimed as eligible deduction
  u/s 37(1) - YES: HC

  THE assessee company had not collected service tax on mechanical
  erection and installation of plant and machinery, structure work,
  piping work and works contract works for a period of time. During the
  audit, the assessing authorities raised certain objections and asked
  the assessee to furnish the reasons on why he failed to do so. The
  assessee failed to furnish any answers to the objection, as a result
  the assessee deposited service tax as specified by the authorities,
  with interest. When the return was filed, the assessee claimed
  deduction on the service tax and interest paid, as expenditure
  incurred for business. During the assessment, the AO concluded that
  the amount paid as service tax and the interest thereon, cannot be
  claimed for deduction as it was the outcome of infringing a provision
  of law.

  The issue before the Bench is - Whether if a service provider fails to
  collect service tax from its clients but once pointed out by Audit,
  deposits the same with interest from own account, such expenses can be
  claimed as eligible deduction u/s 37(1). And the verdict goes in
  favour of the assessee.Power of company to Purchase its own securities Under companies Act,2013 Posted In Company Law | Articles | No Comments »
       
CS M. Kurthalanathan
Section 68 of the companies act 2013  and Companies  (Share capital and Debentures) Rules,2014 deals with the power of company to purchase its own securities.
Sources of Buy Back:
A company may purchase its own shares or other specified securities out of;
its free reserves;
the securities premium account; or
the proceeds of the issue of any shares or other specified securities
No buy-back of any kind of   shares or other specified securities shall be made out of the proceeds   of an earlier issue of the same kind of shares or same kind of other   specified securities.
    "specified securities" includes employees' stock option or other securities as may be notified by the Central Government from time to time. "free reserves" includes securities premium account.
  
   Conditions:
the buy-back is authorised by its articles;
a special resolution has been passed at a general meeting of the company authorising the buy-back:
  Special Resolution is not required- if; 
(i) the buy-back is, ten per cent. or less of the total paid-up equity capital and free reserves of the company; and
(ii) such buy-back has been authorised by the Board by means of a resolution passed at its meeting;
the buy-back is twenty-five per cent. or less of the aggregate of paid-up capital and free reserves of the company
In respect of the buy-back of equity shares in any financial   year, the reference to twenty-five per cent. in this clause shall be   construed with respect to its total paid-up equity capital in that financial year
the ratio of the aggregate of secured and unsecured debts owed by the company after buy-back is not more than twice the paid-up capital and its free reserves
The Central Government may, by order, notify a higher ratio of the debt to capital and free reserves for a class or classes of companies
all the shares or other specified securities for buy-back are fully paid-up;
the buy-back of the shares or other specified securities listed on any recognised stock exchange is in accordance with the regulations made by the Securities and Exchange Board in this behalf; and
the buy-back in respect of shares or other specified securities other than those specified in clause (f) is in accordance with such rules as may be prescribed:
No offer of buy-back under   this sub-section shall be made within a period of one year reckoned from   the date of the closure of the preceding offer of buy-back, if any. 
Disclosures:
The explanatory statement to be annexed   to the notice of the general meeting pursuant to section 102 shall   contain the following disclosures, namely:-
the date of the board meeting at which the proposal for buy-back was approved by the board of directors of the company;
the objective of the buy-back;
the class of shares or other securities intended to be purchased under the buy-back;
the number of securities that the company proposes to buy-back;
the method to be adopted for the buy-back;
the price at which the buy-back of shares or other securities shall be made;
the basis of arriving at the buy-back price;
the maximum amount to be paid for the buy-back and the sources of funds from which the buy-back would be financed;
the time-limit for the completion of buy-back;
the aggregate shareholding of the promoters and of   the directors of the promoter, where the promoter is a company and of   the directors and key managerial personnel as on the date of the notice   convening the general meeting;
the aggregate number of equity shares purchased or   sold by persons during a period of twelve months preceding the date of   the board meeting at which the buy-back was approved and from that date   till the date of notice convening the general meeting;
the maximum and minimum price at which purchases and sales were made along with the relevant date;
the quantum of shares proposed to be tendered and the details of their transactions and their holdings for the last twelve months prior to the date of the board meeting at which the buy-back was approved including information of number of shares acquired, the price and the date of acquisition;
a confirmation that there are no defaults subsisting in repayment of deposits, interest payment thereon, redemption of   debentures or payment of interest thereon or redemption of preference shares or payment of dividend due to any shareholder, or repayment of any term loans or interest payable thereon to any financial institution or banking company;
a confirmation that the Board of directors have made a full enquiry into the affairs and prospects of the company and that they have formed the opinion-
(i) that immediately following the date on which the general meeting is convened  there shall be no grounds on which the company could be found unable to pay its debts;
 (ii) as   regards its prospects for the year immediately following that date,   that, having                      regard to their intentions with   respect to the management of the company's business during that year and   to the amount and character of the financial resources which will in their view be available to the company during that year, the   company shall be able to meet its liabilities as and when they fall due   and shall not be rendered insolvent within a period of one year from   that date; and
(iii) the   directors have taken into account the liabilities(including prospective   and contingent liabilities), as if the company were being wound up under   the provisions of the Companies Act, 2013
a report addressed to the Board of directors by the company's auditors stating that-
              (i) they have inquired into the company's state of affairs;
              (ii) the amount of the   permissible capital payment for the securities in question is in their   view properly determined
              iii) that the audited accounts on the basis of which calculation with reference to buy  back is done is not more than six months old from the date of offer document and
              iv) the Board of   directors have formed the opinion as on reasonable grounds and  that the   company, having regard to its state of affairs, shall not be rendered   insolvent within a period of one year from that date. 
  Time Limit:
Every buy-back shall be completed within a period of one year from the date of passing of the special resolution, or as the case may be, the resolution passed by the Board. 
Modes of Buy-Back: 
The buy-back  may be—
from the existing shareholders or security holders on a proportionate basis;
from the open market;
by purchasing the securities issued to employees of the company pursuant to a scheme of stock option or sweat equity.
Letter of offer (LO): 
The company which has been authorized by a special resolution shall, before the buy-back of shares, file with the Registrar of Companies a letter of offer in Form No. SH.8, along with the fee.
The letter of offer shall be dated and   signed on behalf of the Board of directors of the company by not less   than two directors of the company, one of whom shall be the managing   director, where there is one.
Declaration of Solvency:
The company shall file with the   Registrar, along with the letter of offer, and in case of a listed   company with the Registrar and the Securities and Exchange Board, a   declaration of solvency in Form No. SH.9 along with the fee and signed by at least two directors of the company, one of whom shall be the managing director, if any, and verified by an affidavit to the effect that the Board of Directors of the company has made a full   inquiry into the affairs of the company as a result of which they have   formed an opinion that it is capable of meeting its liabilities and will not be rendered insolvent within a period of one year from the date of declaration adopted by the Board.
No declaration of solvency shall be   filed with the Securities and Exchange Board by a company whose shares   are not listed on any recognised stock exchange 
Dispatch of LO to shareholders:
The letter of offer shall be dispatched   to the shareholders or security holders immediately after filing the   same with the Registrar of Companies but not later than twenty days from its filing with the Registrar of Companies.
Period of  Buy- back: 
The offer for buy-back shall remain open for a period of not less than fifteen days and not exceeding thirty days from the date of dispatch of the letter of offer.
 In case the number of shares or other   specified securities offered by the shareholders or security holders is   more than the total number of shares or securities to be bought back by   the company, the acceptance per shareholder shall be on proportionate   basis out of the total shares offered for being bought back. 
Verification of offer:
 The company shall complete the verifications of the offers received within fifteen days from the date of closure of the offer and the shares or other securities lodged shall be deemed to be accepted unless a communication of rejection is made within twenty one days from the date of closure of the offer. 
Open a Bank Account:
 The company shall immediately after the   date of closure of the offer, open a separate bank account and deposit   therein, such sum, as would make up the entire sum due and payable as   consideration for the shares tendered for buy-back in terms of these   rules.
Payment to security holders: 
The company shall-
(a) make payment of consideration in cash to those shareholders or security holders whose securities have been accepted; or
(b) return the share certificates to the   shareholders or security holders whose securities have not been   accepted at all or the balance of securities in case of part acceptance 
Obligations of the Company: 
The company shall ensure that—
the letter of offer shall contain true, factual and material   information and shall not contain any misleading information and must   state that the directors of the company accept the responsibility for   the information contained in such document;
the company shall not issue any new shares including by way of bonus   shares from the date of passing of special resolution authorizing the   buy-back till the date of the closure of the offer under these rules,   except those arising out of any outstanding convertible instruments;
the company shall confirm in its offer the opening of a separate   bank account adequately funded for this purpose and to pay the   consideration only by way of cash;
the company shall not withdraw the offer once it has announced the offer to the shareholders;
the company shall not utilize any money borrowed from banks or   financial institutions for the purpose of buying back its shares; and
the company shall not utilize the proceeds of an earlier issue of   the same kind of shares or same kind of other specified securities for   the buy-back. 
Extinguishment of certificate: 
Where a company buys back its own shares   or other specified securities, it shall extinguish and physically   destroy the shares or securities so bought back within seven days of the last date of completion of buy-back. 
Restriction:
Where a company completes a buy-back of   its shares or other specified securities under this section, it shall   not make a further issue of the same kind of shares or other securities   including allotment of new shares or other specified securities within a period of six months.
Exceptions:
by way of a bonus issue or
conversion of warrants, stock option schemes, sweat equity or
conversion of preference shares or debentures into equity shares. 
  Register of shares or securities bought back: 
The company, shall maintain a register of shares or other securities which have been bought-back in Form No. SH.10.
 The register of shares or securities   bought-back shall be maintained at the registered office of the company   and shall be kept in the custody of the secretary of the company or any   other person authorized by the board in this behalf.
The entries in the register shall be   authenticated by the secretary of the company or by any other person   authorized by the Board for the purpose
Particulars:
the consideration paid for the shares or securities bought back,
the date of cancellation of shares or securities,
date of passing of special resolution at the meeting of the members authorizing buy-back of securities
date of approval  by the board
number, price and amount of shares or other  specified securities authorized to buy back
date of opening and closing of buy-back offer
date by which buy-back was completed
description of shares or other specified securities bought back by the company:
v  Folio No/DP Id/client ID number or certificate number of securities bought back
v  Name of last holder of securities
v  Category to which they belong
v  Date of Buy-back
v  Number of securities bought back
v  Mode of buy-back
v  Nominal value of securities
v  Price at which securities are bought back
v  Date of payment
v  Amount paid for bought back of securities
v  Cumulative total of securities bought back
v  Date of  cancellation/extinguishment and physical destruction of  securities bought back
v  Reference to entry in ROM
v  Remarks, if any
Filing of Return:
The company, after the completion of the   buy-back , shall file with the Registrar, and in case of a listed   company with the Registrar and the Securities and Exchange Board of   India, a return in the Form No. SH.11 within 30 days of such completion along with the fee.
There shall be annexed to the return filed with the Registrar in Form No. SH.11, a certificate in Form No. SH.15 signed by two directors of the company including the managing director,   if any, certifying that the buy-back of securities has been made in   compliance with the provisions of the Act and the rules made there   under.
No return shall be filed   with the Securities and Exchange Board by a company whose shares are not   listed on any recognised stock exchange.
Penalty: 
    Company  Fine which shall not be less than Rs.1,00,000/- but which may extend to Rs3,00,000/-   
  Officer
     Imprisonment for a term which may extend to 3 years or
Fine which shall not be less than Rs.1,00,000/- but which may extend to Rs.3,00,000/- or
with both.
    
    Buy back – Companies Act,1956 Vs Companies Act,2013 
    S.No  CA,1956  CA,2013  
  1  The expression offer of buy back was defined as buyback by resolution of board of directors within the 10% limit.  It  omits the definition of the expression offer of buy-back   
  
  2  Every buy-back to be completed within 12 months from the   date of passing the special resolution or the Board resolution as the   case may be.  It replaces the 12 months time limit with 1 year.  
  3  No offer of buy-back shall be made within a period of 365 days reckoned from the date of the preceding offer of buy-back.  It  has changed the 365 days period to 1 year period   .The period of 1 year under the 2013 act has to be reckoned from the   date of the closure of the preceding offer of buy-back  
  4  Section 77A(5)(c) of the 1956 Act provides that the buy back may be from holders of odd lots of shares.  Section 68(5) of the 2013 Act omits this provision.  
  Disclaimer:
The entire contents of this   document have been prepared on the basis of relevant provisions and as   per the information existing at the time of the preparation. Though   utmost efforts has made to provide authentic information, it is   suggested that to have better understanding kindly  cross-check  the   relevant sections, rules under the Companies Act,2013

Psychology Behind Google Success Story – "Freechology" Posted In CA CS ICWA | Articles | No Comments »
       
CA Rajesh Pabari
Why this Article? To explain a simple idea of freedom psychology   which can take your organization from Good to Great. Success of your   organization does not need radical changes in the entire system, success   can be created out of simple things and ideas implemented in organized   and phased manner. In this article, we will try to look at a simple   psychological aspect of human beings and we can definitely create   wonders.
Try to remember an office picnic or   office party or get together. Do you remember the people who were super   active, roaring, chilling out, shouting, dancing and talking to as many   people as possible. When you see someone at picnic or party, the person   becomes altogether different sometimes. That's the precise time to know   the nature of your employees. You can watch and observe the amount of enthusiasm your colleagues and team Members shows.
It's not necessary to be psychologist in order to study psychology everyday.
Many a times, I went to picnic with   friends, with office colleagues and I could observe change ofbehavior in   them and myself also. They become open, they speak much, they crack   jokes more, they laugh more, they open up, they show tremendous amount   of zeal and enthusiasm. Only when the circumstances became suitable for   the burst out, they became open and shown what they are and what is   their potential.
The simple things disclose very important aspects of human psychology   and human behavior. Did you observe that the change in circumstances   and the cohesive environment made them become superactive, super   performer like never before?
Similarly, if an organization provides culture of openness and frankness and liveliness then the employees will show their true potential, full productivity, full enthusiasm about everything that comes along.
Now, you will say, this person is insane. How such a simple thing can give morale booster and productivity enhancing?
After all, how it will add to the profits of the organization.
Let me give u the live example of Google, Google is able to give the picnic environment to their employees all the time all days.
They have rest rooms,they have game   rooms, and they are free to seat anywhere in office and work. They can   seat in garden and work. When the circumstances are right, productivity   goes up, ideas comes, innovations happens, solutions pops up, client   satisfaction goes up, profits goes up.
You may have heard a sentence that a problem cannot be solved by the same frame of mind with which it was created.
Let's analyze this, if the persons seat   in same place same computer same environment same colleagues around how   you expect new ideas to pop up, productivity to go up, innovations to happen?
How can you reap mangoes if you have been sowing tomato and potatoes?
This is the same case here. What we do   is keep on sowing tomatoes and we expect to reap mangoes 20 years later.   That will not happen ever. Write it down. (Likh Ke le lo)
Indian (typical Indian) businesses have   been working for soooooo many years in the same fashion and in same way   for very long time (except few). They have been reaping the rewards   in the same way as they were reaping. Now, it's the time to challenge   ourselves and evaluate where we are going wrong? What Next? Are we ready   to ride the wave of change and development? Are we ready to dream more?   Are we ready to bring about change in culture in our organization, our   nation and the whole world?
This reminds me a great quote "If you will keep doing what you were doing, you will keep getting what you were getting"
Profound idea, isn't it?
So, let's work on it. What can we do?
Service professional, service industry people, IT Industry Bosses, please take note of this.
1. It's incredibly important to allow the employees   to seat anywhere they want on any day. Portability is important. If   majority of staff uses laptop then nothing better than that. (Remember,   the picnic, you are free to roam around)
2. Don't let them seat at same place for whole day (if we can't be like Google, we can at least adopt some features)
3. Those who are intellectual people   working for you are incredibly important for your organization, to take   care of them is your duty. Give then freedom to take breaks whenever   they want. Just ask for final results. (This precisely is applicable for   Silicon Valley corporates)
4. If your organization and office space   is big enough, make sure to keep a quiet place or rest room where   people can take nap. (Yes, am not insane, it's incredibly important for   brain's optimum functioning and brilliant ideas to pop up)(WatchTED talk by RussellFoster for knowing about importance of sleep.)
http://www.ted.com/talks/russell_foster_why_do_we_sleep
5. An environment of security (mental   peace) and family like environment is of prime importance. (Remember the   picnic, people shows their talents when they see familiar people around   them). That's the environment where productivity sores   and client satisfaction touches highest possible level. Profits will   become imperative. Then, it's just the bi-product of all the above   things taken together.
http://www.ted.com/talks/simon_sinek_why_good_leaders_make_you_feel_safe
If your company is in service industry, and you are making your ideas generators in front of computers for eight hours,   just understand, you are putting your business at risk, the boredom   will take over and you are riding the wave of crash. Be alert in   advance. Do a little research and save your organization from impending   crisis.
Jain Hind.
A similar article on organization's   greatness has already been posted. You may also like to read that.   'Journey of Your Organization from Good to Great' (http://taxguru.in/chartered-accountant/journey-organisation-good-great.html)
(In case any feedback, please feel free to contact on carajeshpabari@gmail.com or +919022780919)

IT: Second proviso to sec. 40(a)(ia) is effective retrospectively even
  if it was inserted by Finance Act, 2012 prospectively from April 1,
  2013

  ■■■

  [2014] 45 taxmann.com 555 (Agra - Trib.)

  IN THE ITAT AGRA BENCH

  Rajeev Kumar Agarwal

  v.

  Additional Commissioner of Income-tax, Range -3, Mathura

  BHAVNESH SAINI, JUDICIAL MEMBER
  AND PRAMOD KUMAR, ACCOUNTANT MEMBER
  IT APPEAL NO. 337 (AGRA) OF 2013
  [ASSESSMENT YEAR 2006-07]
  MAY  29, 2014

  Dr. Rakesh Gupta for the Appellant. Radha Sharma for the Respondent.

  ORDER

  Pramod Kumar, Accountant Member - This appeal, filed by the assessee,
  calls into question correctness of learned Commissioner (Appeals)
  order dated 2nd September, 2013, in the matter of assessment under
  section 143(3) of the Income Tax Act, 1961(hereinafter to as 'the
  Act'), for the assessment year 2006-07, upholding the disallowance of
  Rs 5,01,872 under section 40(a)(ia) of the Act.

  2. The issue in appeal lies in a rather narrow compass of undisputed
  material facts. During the course of the scrutiny assessment
  proceedings, the Assessing Officer noticed that the assessee has made
  interest payments, aggregating to Rs 5,01,872, without discharging his
  tax withholding obligations under section 194A. It was in this
  backdrop that the Assessing Officer, having noted the undisputed
  position regarding applicability of section 194 A on the facts of this
  case, and having noted that the scope of section 40(a)(ia) restricting
  deduction in respect of sums in respect of which tax withholding
  liability is not discharged, disallowed Rs 5,01,872 under section
  40(a)(ia) r.w.s. 194 A of the Act. Aggrieved, assessee carried the
  matter in appeal before the CIT(A). It was, inter alia, contended by
  the assessee that in view of the insertion of second proviso to
  Section 40(a)(ia) by the Finance Act 2012, and in view of the fact
  that the recipients of the interest have already included the income
  embedded in these payments in their tax returns filed under section
  139, disallowance under section 40(a)(ia) could not be invoked in this
  case. It was also contended that even though this proviso is stated to
  be effective 1st April 2013, since the amendment in "declaratory and
  curative in nature, and, therefore, it should be given retrospective
  effect from 1st April, 2005, being the date from which sub clause (ia)
  of section 40(a) was inserted by the Finance (No. 2) Act, 2004". None
  of these submissions, however, impressed the learned CIT(A). Relying
  upon a Special Bench decision in the case of Bharati Shipyard Ltd. v.
  DCIT (141 TTJ 129), herejected this plea and concluded that insertion
  of second proviso to Section 40(a)(ia) cannot be held to have
  retrospective effect. The disallowance was thus confirmed by the
  learned CIT(A). The assessee is aggrieved and is in appeal before us.

  3. We have heard the rival contentions, perused the material on record
  and duly considered factual matrix of the case as also the applicable
  legal position.

  4. Let us first take a look at the legislative amendment of section
  40(a)(ia), vide Finance Act 2012, and try to appreciate the scheme of
  things as evident in the amended section. Second proviso to Section
  40(a)(ia), introduced with effect from 1st April 2013, provides, that
  "where an assessee fails to deduct the whole or any part of the tax in
  accordance with the provisions of Chapter XVII-B on any such sum but
  is not deemed to be an assessee in default under the first proviso to
  sub-section (1) of section 201, then, for the purpose of this
  sub-clause, it shall be deemed that the assessee has deducted and paid
  the tax on such sum on the date of furnishing of return of income by
  the resident payee referred to in the said proviso". In other words,
  as long as the assessee cannot be treated as an assessee in default,
  the disallowance under section 40(a)(ia) cannot come into play either.
  To understand the effect of this proviso, it is useful to refer to
  first proviso to section 201(1), which is also introduced by the
  Finance Act 2012and effective1st July 2012, and which provides that
  "any person, including the principal officer of a company, who fails
  to deduct the whole or any part of the tax in accordance with the
  provisions of this Chapter on the sum paid to a resident or on the sum
  credited to the account of a resident shall not be deemed to be an
  assessee in default in respect of such tax if such resident-(i) has
  furnished his return of income under section 139; (ii) has taken into
  account such sum for computing income in such return of income;
  and(iii) has paid the tax due on the income declared by him in such
  return of income, and the person furnishes a certificate to this
  effect from an accountant in such form as may be prescribed." The
  unambiguous underlying principle seems to be that in the situations in
  which the assessee's tax withholding lapse have not resulted in any
  loss to the exchequer, and this fact can be reasonably demonstrated,
  the assessee cannot be treated as an assessee in default. The net
  effect of these amendments is that the disallowance under section
  40(a)(ia) shall not be attracted in the situations in which even if
  the assessee has not deducted tax at source from the related payments
  for expenditure but the recipient of the monies has taken into account
  these receipts in computation of his income, paid due taxes, if any,
  on the income so computed and has filed his income tax return under
  section 139(1). There is also a procedural requirement of issuance of
  a certificate, in the prescribed format, evidencing compliance of
  these conditions by the recipients of income, but that is essentially
  a procedural aspect of the matter. The legislative amendment so
  brought about by the Finance Act, 2012, so far as the scheme of
  disallowance under section 40(a)(ia) is concerned, substantially
  mitigates the rigour of, what otherwise seemed to be, a rather harsh
  disallowance provision.

  5. As for the question as to whether this amendment can be treated as
  retrospective in nature, even in the case of Bharti Shipyard (supra)–
  a special bench decision vehemently relied upon in support of
  revenue's case,the special bench, on principles, summed up the settled
  legal position to the effect that "any amendment of the substantive
  provision which is aimed at …… (inter alia) removing unintended
  consequences to make the provisions workable has to be treated as
  retrospective notwithstanding the fact that the amendment has been
  given effect prospectively". It was held that if the consequences
  sought to be remedied by the subsequent amendments were to be treated
  as "intended consequences", the amendment could not be treated as
  retrospective in effect. The special bench then proceeded to draw a
  line of demarcation between intended consequences and unintended
  consequences, and finally the retrospectivity of first proviso was
  decided against the assessee on the ground that this special bench was
  of the considered view that "the objective sought to be achieved by
  bringing out section 40(a)(ia) is the augmentation of TDS provisions"
  and went on to add that "If, in attaining this main objective of
  augmentation of such provisions, the assessee suffers disallowance of
  any amount in the year of default, which is otherwise deductible, the
  legislature allowed it to continue". It was further observed that
  "this is the cost which parliament has awarded to those assessees who
  fail to comply with the relevant provisions by considering overall
  objective of boosting TDS compliance"(Emphasis by underlining supplied
  by us). In other words, the amendment was held to be prospective
  because, in the wisdom of the special bench, the 2010 amendment to
  Section 40(a)(ia) by inserting first proviso thereto, which is what
  the special bench was dealing with, was an "intended consequence" of
  the provision of Section 40(a)(ia).

  6. However, the stand so taken by the special bench was disapproved by
  Hon'ble Delhi High Court in the case of CIT v. Rajinder Kumar (362 ITR
  241). While doing so, Their Lordships observed that, "The object of
  introduction of Section 40(a)(ia) is to ensure that TDS provisions are
  scrupulously implemented without default in order to augment
  recoveries……..Failure to deduct TDS or deposit TDS results in loss of
  revenue and may deprive the Government of the tax due and payable"
  (Emphasis by underlining supplied by us)". Having noted the underlying
  objectives, Their Lordships also put in a word of caution by observing
  that, "the provision should be interpreted in a fair, just and
  equitable manner". Their Lordships thus recognized the bigger picture
  of realization of legitimate tax dues, as object of Section 40(a)(ia),
  and the need of its fair, just and equitable interpretation. This
  approach is qualitatively different from perceiving the object of
  Section 40(a)(ia) as awarding of costs on the "assessees who fail to
  comply with the relevant provisions by considering overall objective
  of boosting TDS compliance". Not only the conclusions arrived at by
  the special bench were disapproved but the very fundamental assumption
  underlying its approach, i.e. on the issue of the object of Section
  40(a)(ia), was rejected too. In any event, even going by Bharti
  Shipyard decision (supra), what we have to really examine is whether
  2012 amendment, inserting second proviso to Section 40(a)(ia), deals
  with an "intended consequence" or with an "unintended consequence".

  7. When we look at the overall scheme of the section as it exists now
  and the bigger picture as it emerges after insertion of second proviso
  to section 40(a)(ia), it is beyond doubt that the underlying objective
  of section 40(a)(ia) was to disallow deduction in respect of
  expenditure in a situation in which the income embedded in related
  payments remains untaxed due to non deduction of tax at source by the
  assessee. In other words, deductibility of expenditure is made
  contingent upon the income, if any, embedded in such expenditure being
  brought to tax, if applicable. In effect, thus, a deduction for
  expenditure is not allowed to the assessees, in cases where assessees
  had tax withholding obligations from the related payments, without
  corresponding income inclusion by the recipient.That is the clearly
  discernable bigger picture, and, unmistakably, a very pragmatic and
  fair policy approach to the issue - howsoever belated the realization
  of unintended and undue hardships to the taxpayers may have been. It
  seems to proceed on the basis, and rightly so, that seeking tax
  deduction at source compliance is not an end in itself, so far as the
  scheme of this legal provision is concerned, but is only a mean of
  recovering due taxes on income embedded in the payments made by the
  assessee. That's how, as we have seen a short while ago, Hon'ble Delhi
  High Court has visualized the scheme of things - as evident from Their
  Lordships' reference to augmentation of recoveries in the context of
  "loss of revenue" and "depriving the Government of the tax due and
  payable".

  8. With the benefit of this guidance from Hon'ble Delhi High Court, in
  view of legislative amendments made from time to time, which throw
  light on what was actually sought to be achieved by this legal
  provision, and in the light of the above analysis of the scheme of the
  law, we are of the considered view that section 40(a)(ia) cannot be
  seen as intended to be a penal provision to punish the lapses of non
  deduction of tax at source from payments for expenditure- particularly
  when the recipients have taken into account income embedded in these
  payments, paid due taxes thereon and filed income tax returns in
  accordance with the law. As a corollary to this proposition, in our
  considered view, declining deduction in respect of expenditure
  relating to the payments of this nature cannot be treated as an
  "intended consequence" of Section 40(a)(ia). If it is not an intended
  consequence i.e. if it is an unintended consequence, even going by
  Bharti Shipyard decision (supra), "removing unintended consequences to
  make the provisions workable has to be treated as retrospective
  notwithstanding the fact that the amendment has been given effect
  prospectively". Revenue, thus, does not derive any advantage from
  special bench decision in the case Bharti Shipyard (supra).

  9. On a conceptual note, primary justification for such a disallowance
  is that such a denial of deduction is to compensate for the loss of
  revenue by corresponding income not being taken into account in
  computation of taxable income in the hands of the recipients of the
  payments. Such a policy motivated deduction restrictions should,
  therefore, not come into play when an assessee is able to establish
  that there is no actual loss of revenue. This disallowance does
  deincentivize not deducting tax at source, when such tax deductions
  are due, but, so far as the legal framework is concerned, this
  provision is not for the purpose of penalizing for the tax deduction
  at source lapses. There are separate penal provisions to that effect.
  Deincentivizing a lapse and punishing a lapse are two different things
  and have distinctly different, and sometimes mutually exclusive,
  connotations. When we appreciate the object of scheme of section
  40(a)(ia), as on the statute, and to examine whether or not, on a
  "fair, just and equitable" interpretation of law- as is the guidance
  from Hon'ble Delhi High Court on interpretation of this legal
  provision, in our humble understanding, it could not be an "intended
  consequence" to disallow the expenditure, due to non deduction of tax
  at source, even in a situation in which corresponding income is
  brought to tax in the hands of the recipient. The scheme of Section
  40(a)(ia), as we see it, is aimed at ensuring that an expenditure
  should not be allowed as deduction in the hands of an assessee in a
  situation in which income embedded in such expenditure has remained
  untaxed due to tax withholding lapses by the assessee. It is not, in
  our considered view, a penalty for tax withholding lapse but it is a
  sort of compensatory deduction restriction for an income going untaxed
  due to tax withholding lapse. The penalty for tax withholding lapse
  per se is separately provided for in Section 271 C, and, section
  40(a)(ia) does not add to the same. The provisions of Section
  40(a)(ia), as they existed prior to insertion of second proviso
  thereto, went much beyond the obvious intentions of the lawmakers and
  created undue hardships even in cases in which the assessee's tax
  withholding lapses did not result in any loss to the exchequer. Now
  that the legislature has been compassionate enough to cure these
  shortcomings of provision, and thus obviate the unintended hardships,
  such an amendment in law, in view of the well settled legal position
  to the effect that a curative amendment to avoid unintended
  consequences is to be treated as retrospective in nature even though
  it may not state so specifically, the insertion of second proviso must
  be given retrospective effect from the point of time when the related
  legal provision was introduced. In view of these discussions, as also
  for the detailed reasons set out earlier, we cannot subscribe to the
  view that it could have been an "intended consequence" to punish the
  assessees for non deduction of tax at source by declining the
  deduction in respect of related payments, even when the corresponding
  income is duly brought to tax. That will be going much beyond the
  obvious intention of the section. Accordingly, we hold that the
  insertion of second proviso to Section 40(a)(ia) is declaratory and
  curative in nature and it has retrospective effect from 1st April,
  2005, being the date from which sub clause (ia) of section 40(a) was
  inserted by the Finance (No. 2) Act, 2004.

  10. In view of the above discussions, we deem it fit and proper to
  remit the matter to the file of the Assessing Officer for fresh
  adjudication in the light of our above observations and after carrying
  out necessary verifications regarding related payments having been
  taken into account by the recipients in computation of their income,
  regarding payment of taxes in respect of such income and regarding
  filing of the related income tax returns by the recipients. While
  giving effect to these directions, the Assessing Officer shall give
  due and fair opportunity of hearing to the assessee, decide the matter
  in accordance with the law and by way of a speaking order. We order
  so.

  11. In the result, the appeal is allowed for statistical purposes in
  the terms indicated above.
--
  Regards,
  
  *Pawan Singla ,** LLB*
  *M. No. 9825829075*


  On Friday, 30 May 2014 3:09 AM, "info@cliofindia.com" <info@cliofindia.com> wrote:
  


                                           
                  
                                                                                      
                                    
          
                               

Click   here to view subject index 





                                              
   Rs. 1,530/-  Paper Bound  Edition 
  (Two Volumes)                                                
           
          
   
                           www.cliofindia.cominfo@cliofindia.com 	              COMPANY CASES (CC)   HIGHLIGHTS                                       ISSUE DATED 30-5-2014    
       Volume 184 Part 4    
    
            
                            SUPREME COURT
  
         HIGH COURTS
  
          ENGLISH CASES
  
         CLB
  
    
         SAT 
  
         DRAT
  
         STATUTES
  
         JOURNAL
  
    
         NEWS-BRIEFS
  
         
  
         
  
         
  
    
            
   
  
   
  
   
  
                            SUPREME COURT JUDGMENTS    
    
        
  
 F   Failure by public sector undertaking to file authorisation from   board of directors with complaint is curable procedural defect : Haryana   State Co-operative Supply and Marketing Federation Ltd. v. Jayam Textiles p.   266    
 
   
  
   
  
                            HIGH COURT JUDGMENTS    
    
        
  
  F   Remedies before SEBI and CLB not mutually exclusive but   cumulative : DCM Shriram Industries Ltd. v. HB Stockholdings Ltd. (Delhi)   p. 275
 
 F   Order of CLB dismissing petition on issue of locus standi of   petitioner, appealable : R. P. Khosla v. Connaught Plaza Restaurant P.   Ltd. (Delhi) p. 305 
 
 F   Where petitioners not qualified under any of clauses of section   237(b) of 1956 Act to seek opinion of CLB, dismissal of petition proper   :  R.   P. Khosla  v. Connaught Plaza Restaurant P. Ltd. (Delhi) p. 305   
 
 F   Where articles of association amended in accordance with law,   procedure adopted to take over fractional share under articles of   association, legal : Vijay Kumar D. Shah v. Hewlett-Packard Global Soft Ltd.   (Karn) p. 314
 
 
 
 
                            COMPANY LAW BOARD ORDERS    
    
        
  
  F   Act technically legal and correct can be demonstrated to be   oppressive to shareholders u/ss. 397 and 398 of 1956 Act : HB   Stockholding Ltd. v. DCM Shriram Industries Ltd. p.   271
 
 
 
                             STATUTES AND NOTIFICATIONS    
    
        
  
 F Circulars :
 General Circulars :			
 Circular No. 10 of 2014, dated 7th May,   2014-Certification of E-forms/non-e-forms under the Companies Act, 2013 by   the practicing professionals-regarding		 p. 143
 
 F Regulations :			
 Foreign Exchange Management (Manner of Receipt and   Payment) (Amendment) Regulations, 2014		 p. 141
 
 Foreign Exchange Management (Transfer or Issue of any   Foreign Security) (Amendment) Regulations, 2014		 p. 142
 
 F Rules :			
 Companies (Acceptance of Deposits) Rules, 2014		   p.   118
 
 Companies (Appointment and Remuneration of Managerial   Personnel) Rules, 2014		 p. 98
 
 
 
 
                             JOURNAL    
    
        
  
 
 F Indian class actions under the new   Companies Act-Vishal Mishra		 p. 	45
 
 F The company secretary in employment-Section   205 of the Companies Act, 2013-T. Ramappa		 p. 41
 
 
 
 
 
 
 
                       COMPANY LAW INSTITUTE OF INDIA PVT. LTD.
      No. 2, Vaithyaram Street,
      T.Nagar, Chennai - 600017.
	      Phone: (044) 24350752 - 55
      Fax: (044) 24322015
      info@cliofindia.com
          
        To Unsubscribe : Reply back with "Unsubscribe" in subject followed by the   key word "ITR" or "CC" or "VST" or  "CCD" or "GSTR" or "ITR (Trib)", respectively or "All"    if you do not want any Email.  ITR : Income Tax Reports, CC : Company Cases,   VST : VAT and Service Tax Cases, CCD : Consolidated Commercial Digest,   GSTR : Goods and Service Tax Reports, ITR (Trib) : ITR'S Tribunal Tax   Reports.  Also send your feedback or comments to info@cliofindia.com              
    
    

__._,_.___

View attachments on the web

Posted by: Dipak Shah <djshah1944@yahoo.com>

Visit Your Group

New Members 2

• Privacy • Unsubscribe • Terms of Use

__,_._,___

Company	Fine which shall not be less than Rs.1,00,000/- but which may extend to Rs3,00,000/-
Officer	Imprisonment for a term which may extend to 3 years or Fine which shall not be less than Rs.1,00,000/- but which may extend to Rs.3,00,000/- or with both.

S.No	CA,1956	CA,2013
1	The expression offer of buy back was defined as buyback by resolution of board of directors within the 10% limit.	It omits the definition of the expression offer of buy-back
2	Every buy-back to be completed within 12 months from the date of passing the special resolution or the Board resolution as the case may be.	It replaces the 12 months time limit with 1 year.
3	No offer of buy-back shall be made within a period of 365 days reckoned from the date of the preceding offer of buy-back.	It has changed the 365 days period to 1 year period .The period of 1 year under the 2013 act has to be reckoned from the date of the closure of the preceding offer of buy-back
4	Section 77A(5)(c) of the 1956 Act provides that the buy back may be from holders of odd lots of shares.	Section 68(5) of the 2013 Act omits this provision.

Saturday, May 31, 2014

May 31 2014

Sec. 292BB is confined to deemed service of notice; it can't cure defect in notice issued under sec. 143(2)

TDS obligation arose even if hire charges were paid through settlement of accounts without actual cash payments

Irregular trading of shares with less frequency is an investment activity; resultant profit is capital gain

Valuation by DVO shall be the actual consideration under sec. 50C even if such value is lesser than stamp valuation

Friday, May 30, 2014

Payments of commission for services rendered in relation to securities are out of ambit of sec. 194H; no TDS

Rs. 1,530/-

Paper Bound Edition (Two Volumes)

COMPANY CASES (CC) HIGHLIGHTS

ISSUE DATED 30-5-2014 Volume 184 Part 4

ISSUE DATED 30-5-2014

Volume 184 Part 4

SUPREME COURT HIGH COURTS ENGLISH CASES CLB SAT DRAT STATUTES JOURNAL NEWS-BRIEFS

SUPREME COURT JUDGMENTS

HIGH COURT JUDGMENTS

COMPANY LAW BOARD ORDERS

STATUTES AND NOTIFICATIONS

JOURNAL

Paper Bound Edition
(Two Volumes)

ISSUE DATED 30-5-2014

Volume 184 Part 4

SUPREME COURT

HIGH COURTS

ENGLISH CASES

CLB

SAT

DRAT

STATUTES

JOURNAL

NEWS-BRIEFS