Wednesday, September 9, 2015

[aaykarbhavan] Judgments and Infomration [3 Attachments]





Finance Ministry Directive: No Extension Of Due Date For Filing ROI Due On 30.09.2015

The Ministry of Finance has issued a press release dated 09.09.2015 stating that there will be no extension of the date for filing of returns due by 30th September for Assessment Year 2015-16. The Ministry has advised taxpayers to file their returns well in time to avoid last minute rush
Income-tax returns for Assessment Year 2015-16 for certain categories of assessees viz companies, firms and individuals engaged in proprietary business/profession etc whose accounts are required to be audited, are to be filed by 30th September, 2015. The audit report is also required to be filed by the said date.
The Government has received representations from various stakeholders seeking extension of date for filing of returns and tax audit reports beyond 30th September 2015. The reasons cited are delay in notifying the returns and related delay in availability of forms on the e-filing website.
The matter has been considered. Income-Tax Returns Forms 3,4,5,6 and 7 which are used by the above mentioned categories of assessees were notified for Assessment Year 2015-16 on 29.07.2015. The forms were e-enabled and were available on the e-filing website of the Department from 7th August 2015 giving enough time for compliance. The changes made to these forms are not extensive as compared to the earlier years. Further taxpayers entering into either international transactions or specified domestic transactions are required to file their returns by 30th November 2015 only.
After consideration of all facts, it has been decided that the last date for filing of returns due by 30th September 2015 will not be extended. Taxpayers are advised to file their returns well in time to avoid last minute rush.

Vijay V. Meghani vs. ACIT (MA By ICAI) (ITAT Mumbai)

COURT:
CORAM: ,
SECTION(S):
GENRE:
CATCH WORDS:
COUNSEL:
DATE: September 4, 2015 (Date of pronouncement)
DATE: September 9, 2015 (Date of publication)
AY: 1994-95, 1996-97
FILE: Click here to download the file in pdf format
CITATION:
Strictures passed against ICAI By ITAT for alleged "deteriorating standards" and "losing its grip over the Income tax matters" toned down on the basis that they were made in the context of a "hypothetical situation" and were not "intended to criticize the functioning of the ICAI"
In Vijay V Meghani vs. DCIT, the ITAT Mumbai had passed severe strictures and lamented the alleged fall in standards in the CA profession. The Tribunal pointed out several factors which, according to it, show "signs of deteriorating standards" amongst Chartered Accountants. The Tribunal also expressed the fear that the CA profession is "losing its grip over the Income tax matters". The ITAT advised the ICAI to tackle the issues on a war footing so as to bring back the high standards, confidence, quality, prestige, reputation etc. enjoyed by the C.A. profession.
In response to the said order, the Council of the ICAI issued a statement that the comments made by the ITAT on the profession and functions of the ICAI are not warranted. It is also stated that the "sweeping observations" made by ITAT about the Institute and the profession of Chartered Accountancy in a matter relating to a particular tax payer, are out of context.
The ICAI filed a Miscellaneous Application u/s 254(2) before the Tribunal to seek expunging the aforesaid remarks made by the ITAT against the CA profession.
By an order dated 4th September 2015, the ITAT modified its earlier order by stating as follows:
(i) The observations made by the Tribunal about the C.A profession and conduct of the students pursuing the C.A courses, as submitted by Ld A.R, were not necessary to adjudicate the issues that were urged before the Tribunal by the appellant Shri Vijay V Meghani. However, in our view, the Income tax Appellate Tribunal, being a part of Government of India, should not shut its eyes when it is noticed that certain developments occurring in the Country may affect the Country as a whole, more particularly when the reputation of particular profession, from whom the Tribunal is getting assistance in the dispensation of justice, is at stake. Accordingly, we sincerely believe that it is the bounden duty of not only the Tribunal, but also the duty of one and all to point out and discuss about such kind of developments, when it is noticed that the same may affect the public at large. There cannot be any controversy that the interest of our Country is Supreme and no citizen can or should compromise on the same. We may clarify here that the observations were made by the Tribunal in the impugned order in that context only and it was not the intention of the Tribunal to target any particular person or the ICAI. Accordingly, none of the observations made in the order was intended to criticize should be construed as criticizing the functioning of the ICAI. In fact, the Tribunal has only applauded the strict standards followed by ICAI in imparting the education and training.
(ii) It may be noticed that the paragraph 9.6 of the order, which is considered by the ICAI to be offensive, starts with the expression "However, if it is considered for a moment….." Thus, it can be noticed that the Tribunal has considered a hypothetical situation and made further observations about the possible consequences, if the said hypothetical situation had been a reality. Hence, it would not be correct to interpret that the Tribunal has commented upon that the standards of C.A profession or the ICAI. The observations made by the Tribunal in the later part of paragraph 9.6 was intended to highlight or reiterate the importance of the articled clerk training and the self study model conceived by the ICAI and the same was intended only to give a wake-up call to the students pursuing C.A profession.
(iii) However, it appears that the observations made in paragraph 9.6 have not conveyed the message as intended by the Tribunal. According to Ld Counsel, the said observations have given room for misinterpretation and resultant controversies. Accordingly, by exercising the inherent powers of the Tribunal, we modify the paragraph 9.6 of the order as under:-
"9.6 However, if it is considered for a moment that the above said C.A. firm has really given such advice to the assessee herein and accordingly it has furnished the letter and affidavit, then it is a cause of concern to one and all. We have already noticed that the self study model coupled with "on-site articled clerk training" embedded in the Chartered Accountancy course aims to achieve high quality education and training. The articled clerk training conceptualized in the C.A education inculcate the habit of thinking, self introspection, application of mind, analytical ability etc and they enable the C.A students to have strong grip over the subjects and help achieving expertise in the domain fields. The commendable feature of the C.A Course is that, as stated earlier, the C.A students are given training by practicing Chartered Accountants during their articled clerk training program. Thus the methodology adopted by the ICAI enables the C.A. students to become thorough professionals with versatile knowledge and innovative mind. The practical training given by the practicing Chartered Accountants during the articled clerk period, in our view, is the fulcrum centre of the study module of the C.A course and the students pursuing the C.A course should and must utilize the opportunities provided to them or encountered by them during the articled clerk training period to the maximum possible extent. In the recent past, a number of Coaching institutes have been established to give coaching to the students pursuing C.A course. While the self study model and articled clerk training may be supplemented with the coaching given by such institutes, any compromise on the practical training intended during articled clerk period or mere obtaining a C.A degree without practical training would not make the students full fledged chartered accountants and the same would go against the self study model conceptualized by ICAI and there should not be any doubt that it may have undesired results, which may affect the Country as a whole."
(iv) In the result, the miscellaneous application filed by the ICAI is dismissed.
Note: In Madhukar B. Thakoor vs. ITAT the Bombay High Court has deprecated the practice of the ITAT of passing strictures and expunged the derogatory remarks

Related Judgements

  1. Vijay V Meghani vs. DCIT (ITAT Mumbai) 
    ITAT laments severe fall in standards of CA profession. Advices ICAI to take disciplinary proceedings against erring members & tackle issue on war footing
    (i) The advice given by the CA firm shows signs of deteriorating standards with some of the Chartered Accountants in profession, which needs to…
  2. Council of ICAI vs. Ajay Kumar Gupta (Delhi High Court) 
    The CA's explanation that the assessee had taken away the file and that he suffered a paralytic stroke does not inspire any confidence because the relevant documents and information were supplied to him. The assessee accepted the fact that the s. 80HHC claim was not maintainable during the assessment…
  3. Wrigley India Pvt Ltd vs. ACIT (ITAT Delhi) 
    The transfer pricing reports with respect to the impugned determination of ALP leave a lot to be desired. Just because the action of the authorities below, in adopting cost plus method in the above manner, is legally unsustainable, the ALP determination by the assessee cannot be taken as correct….
  4. Partha Ghosh vs. ICAI (Bombay High Court) 
    (1) The ICAI has the power to direct the name of a member to be removed from the Register for "misconduct" and consequently the member would lose his certificate and the right to practice. This is a matter having serious civil consequences and thus the power can only be…
  5. M/s. Vijay Corporation vs. ITO (ITAT Mumbai) 
    S.143(3) contemplates that the AO shall pass an order of assessment in writing. If the assessment order is signed then because the computation of tax is a ministerial act, ITNS-150 need not be signed by the AO. However, if the assessment order is not signed, then the fact that…

ACIT vs. M/s Venus Jewel (ITAT Mumbai)

COURT:
CORAM: ,
SECTION(S): ,
GENRE:
CATCH WORDS: ,
COUNSEL: ,
DATE: July 31, 2015 (Date of pronouncement)
DATE: September 9, 2015 (Date of publication)
AY: 2009-10, 2010-11
FILE: Click here to download the file in pdf format
CITATION:
S. 29/37(1): Loss on account of forward contract entered into by the assessee to hedge against the loss arising on account of fluctuations in foreign exchange is an allowable deduction. Contrary view in Vinod Kumar Diamonds is not good law
The assessee was exposed to the risk arising in fluctuation out of exchange rate and as a prudent business man it would like to hedge its risk. Accordingly, the assessee had booked the forward contracts and utilised the same during the year or in the succeeding years. The pattern of the assessee reflected that it entered into forward contracts during the normal course of business and utilised the same for business allowing them to run upto the date of contract. The assessee was engaged in the export of diamonds and the forwards contract was entered into in respect of foreign exchange to be received as a result of export and the same was done to avoid the risk of loss due to foreign exchange fluctuations. The claim has to allowed after taking note of the claim of forward contracts and the accounting policies, i.e. AS-11 (revised) and applying the ratio laid down by the Apex Court in the case of CIT vs. Woodward Governor India Pvt. Ltd. 294 ITR 451 (SC). The issue i.e. loss on account of forward contract entered into by the assessee to hedge against the loss arising on account of fluctuations in foreign exchange arose before the Tribunal in a series of cases and the claim has been allowed. The learned D.R. for the Revenue had placed reliance on M/s. Vinod Kumar Diamonds Pvt. Ltd ITA No. 506/Mum/2013 dated 03.05.2013. The said decision is contrary to the view taken in Badridas Gauridu P. Ltd. 261 ITR 256 (Bom). We find no merit in the said reliance.

Related Judgements

  1. CIT vs. Friends And Friends Shipping Pvt. Ltd (Gujarat High Court) 
    Though the assessee is not a dealer in foreign exchange, it entered into forward contracts with banks for the purpose of hedging the loss due to fluctuation in foreign exchange while implementing the export contracts. The transactions in foreign exchanges were incidental to the assessee's regular course of business…
  2. London Star Diamond Company (I) P. Ltd vs. DCIT (ITAT Mumbai) 
    Loss on forward foreign exchange contracts is incidental to the exports business and not a "speculation loss". However, if the contract is prematurely cancelled, the assessee has to justify the loss
    Though a forward contract for purchase or sale of foreign currency falls in the definition of "speculation transaction"…
  3. Araska Diamond Pvt. Ltd vs. ACIT (ITAT Mumbai) 
    Unless the assessee shows that there was some existing contract in respect of which he was likely to suffer a loss because of future price fluctuations and that it was to safeguard against such loss that he entered into the…Read more ›
  4. S. Vinodkumar Diamonds Pvt. Ltd vs. ACIT (ITAT Mumbai) 
    There is a difference between a "speculative transaction" and a "hedging transaction". S. 43(5) defines a "speculative transaction" to mean a transaction in which a contract for the purchase or sale of any commodity, including stocks and shares, is periodically or ultimately settled otherwise than by the actual delivery…
  5. DCIT vs. Bank of Bahrain & Kuwait (ITAT Mumbai Special Bench) 
    The Act allows a deduction in respect of crystallized liabilities. While as per commercial principles of policy of prudence, all anticipated liabilities have to be accounted for, as per the Act only "accrued" liabilities are allowable. While anticipated liabilities which are contingent in nature are not allowable, an anticipated…

Cheminvest Ltd. v. CIT (Delhi High Court)

COURT:
CORAM: ,
SECTION(S):
GENRE:
CATCH WORDS: ,
COUNSEL:
DATE: September 2, 2015 (Date of pronouncement)
DATE: September 9, 2015 (Date of publication)
AY: 2004-05
FILE: Click here to download the file in pdf format
CITATION:
No disallowance u/s 14A can be made in a year in which no exempt income has been earned or received by the assessee. S. 14A also does not apply to shares bought for strategic purposes
The High Court had to consider the following substantial question of law:
"Whether disallowance under Section 14A of the Act can be made in a year in which no exempt income has been earned or received by the Assessee?" HELD by the High Court:
(i) The expression "does not form part of the total income" in Section 14A of the envisages that there should be an actual receipt of income, which is not includible in the total income, during the relevant previous year for the purpose of disallowing any expenditure incurred in relation to the said income. In other words, Section 14A will not apply if no exempt income is received or receivable during the relevant previous year. The decision of the Supreme Court in Rajendra Prasad Moody (supra) was rendered in the context of allowability of deduction under Section 57(iii) of the Act, where the expression used is "for the purpose of making or earning such income". Section 14A of the Act on the other hand contains the expression "in relation to income which does not form part of the total income". The decision in Rajendra Prasad Moody cannot be used in the reverse to contend that even if no income has been received, the expenditure incurred can be disallowed under Section 14A of the Act.
(ii) The investment by the Assessee in the shares of Max India Ltd. is in the form of a strategic investment. Since the business of the Assessee is of holding investments, the interest expenditure must be held to have been incurred for holding and maintaining such investment. The interest expenditure incurred by the Assessee is in relation to such investments which gives rise to income which does not form part of total income.
(CIT v. Holcim India (P) Ltd. (decision dated 5th September 2014 in ITA No. 486/2014), Maxopp Investment Ltd. v. Commissioner of Income-tax, New Delhi (2012) 347 ITR 272 (Del), decision of the Special Bench of the ITAT in Cheminvest Ltd. v. CIT (2009) 317 ITR 86, Commissioner of Income Tax, Faridabad v. M/s. Lakhani Marketing Incl. (decision dated 2nd April 2014 of the High Court of Punjab and Haryana in ITA No. 970/2008), CIT v. Hero Cycles Limited [2010] 323 ITR 518 and CIT v. Winsome Textile Industries Ltd. [2009] 319 ITR 204, Commissioner of Income Tax-I v. Corrtech Energy (P) Ltd. [2014] 223 Taxmann 130 (Guj.), Commissioner of Income Tax, Kanpur v. Shivam Motors (P) Ltd. (decision dated 5th May 2014 in ITA No. 88/2014) and CIT v. Rajendra Prasad Moody [1978] 115 ITR 519 (SC) referred)

Related Judgements

  1. Cheminvest Ltd vs. ITO (ITAT Delhi Special Bench) 
    In Rajendra Prasad Moody 115 ITR 522 the Supreme Court held that interest on monies borrowed for purchase of shares was allowable as a deduction u/s 57 (iii) irrespective of whether or not there is any yield of dividend to the assessee. It was held that the words "expenditure…
  2. Garware Wall Ropes Ltd vs. ACIT (ITAT Mumbai) 
    No S. 14A/ Rule 8D disallowance if primary object of investment is to hold controlling stake in group concern and not to earn tax-free income
    We find merit and substance in the contention of the assessee that no expenditure had been incurred by the assessee for earning the exempt income…
  3. CIT vs. Holcim India P. Ltd (Delhi High Court) 
    (i) On the issue whether the assessee could have earned dividend income and even if no dividend income was earned, yet Section 14A can be invoked and disallowance of expenditure can be made, there are three decisions of the different…Read more ›
  4. Charu Home Products Pvt. Ltd vs. CIT (Delhi High Court) 
    This writ petition is directed against the order dated 06.08.2014 passed by the Additional Commissioner of Income Tax with the approval of the CIT, Delhi-I, New Delhi. By virtue of the said order dated 06.08.2014 the stay application filed by…Read more ›
  5. CIT vs. Taikisha Engineering India Ltd (Delhi High Court) 
    The decisions relied upon by the Tribunal in the case of Tin Box Co. 260 ITR 637 (Del), Reliance Utilities and Power Ltd. 313 ITR 340 (Bom.), Suzlon Energy Ltd. 354 ITR 630 (Guj) and East India Pharmaceutical Works Ltd. 224 ITR 624 (SC) could not be now applicable,…


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


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