Tax Summary

SUMMARY OF IMPORTANT CBT UPDATES AND

IMPORTANT JUDICIAL PRONOUNCEMENTS

(SUPREME COURT/HIGH COURTS/TRIBUNALS)

The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavor to provide accurate and timely information, there can be no

guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act on such information without appropriate professional advice after a thorough

examination of the particular situation.

Summary of Important CBDT Updates

Sl. No. Particulars Regarding

1. Letter F. No. 279/Misc./M-

20/2011-IT dated 01.07.2014

CBDT revises Proforma-B for submission of proposal to file

appeal/SLP by the IT department in the Supreme Court

2. Press Release dated 04.07.2014

Department requests the co-operation of all the taxpayers for

completing the validation process of E-mail ID and Mobile number at

the earliest for a smooth and convenient return filing process

3. www.incometaxindiaefiling.gov.in

CBDT released e-filing java utility of ITR-7 [for persons including

companies required to furnish return u/s 139(4A) or 139(4B) or

139(4C) or 139(4D)] for A.Y. 2014-15 on 03.07.2014

4. www.incometaxindiaefiling.gov.in

Tax payers are requested to check the details of ITR-V not received,

refund failed status and demand amount outstanding in ‘My

Account’ section after login.

5. Communication No. 56 dt.

21.06.14

CPC (TDS) issues reminder to the deductors for downloading TDS

certificates (Form 16/16A) for F.Y. 13-14 from the TRACES portal

6. https://www.tin-nsdl.com/

NSDL releases new Form 24G Return Preparation Utility (RPU) and

File Validation Utility (FVU) Version 1.3 for Form 24G statements

from F.Y. 2005-06 onwards on 27.06.2014

Tribunal

Sl. No. Journal Case Name and

Court

Section of IT

Act, 1961 Gist

HIGH COURTS

1. 103 DTR 316

Radials

International Vs.

ACIT

(Del.)

28(i) & 45

Along with the intention of the assessee, other crucial

factors like the substantial nature of the transactions,

frequency, volume etc. must be taken into account to

evaluate whether the transactions are adventure in the

nature of trade. Where source of funds of the assessee

were its own surplus funds and not the borrowed funds

and about 71% of the total shares have been held for a

period longer than 6 months, and have resulted in an

accrual of about 81% of the total gains to the assessee,

profit from sale of shares was assessable as capital gains

and not as business income.

2. 223 Taxman

97 (Mag.)

CIT Vs. Euro India

Ltd.

(Del.)

37(1)

Expenditure incurred on procuring feasibility report for

starting a new business is capital in nature and, in such a

case, it would be immaterial whether ultimately the

project has materialized or not. However, if the

expenditure is incurred on obtaining feasibility report for

expansion of the existing business where there is unity of

control and common funds, then such expenditure would

be treated as business expenditure.

3. 223 Taxman

228

CIT Vs. A. Suresh

Rao

(Kar.)

2(29A) r.w.s.

48, 54EC &

54F

Where original site was allotted to the assessee prior to

36 months after payment of full value, merely because

the said allotment was cancelled and a new site was

allotted, in law, would make no difference, admittedly

when the original consideration paid was treated as

consideration for subsequent allotment. Therefore,

capital gains arising on sale of new property would be

LTCG and the assessee was entitled to benefit of

exemption u/s 54EC and 54F.

TRIBUNAL

4.

103

DTR

365

ACIT Vs. Shiv Shakti Flour

Mills (P) Ltd.

(Gau.) (TM)

254(1)

and 4

- When there is a decision of non-jurisdictional High

Court on an issue, and there is no conflicting

decision directly on the issue either by any other

High Court or by the Supreme Court, the same is to

be followed by the Tribunal.

- Transport subsidy is granted after setting up of the

new industry and has the effect of reducing the

inward and outward transport costs for the purpose

of determining the cost of production as well as for

sales. Therefore, the same is to be treated as a

revenue receipt, and is, accordingly, taxable in the

hands of the assessee.

5.

148

ITD

424

Radhu Palace Vs. ACIT

(Del.) 45

The assessee was a partnership firm. During the year, two

new partners were admitted and consequently the assets

owned by the assessee were revalued and increase in the

capital on account of revaluation of assets was added to the

account of the existing partners. The AO by holding that

LTCG arose on revaluation of the assets made addition to

the assessee’s income u/s 45. It was held that since the firm

continued to be the owner of the assets and no transfer of

assets took place, which is necessary to invoke provisions of

sec.45(4) for levying capital gain on transfer of capital asset,

provisions of sec. 45 were not applicable.

6.

148

ITD

388

Jamsetji Tata Trust Vs. JDIT

(Exemption)

(Mum.)

11

Educational grant given to the Indian students for studying

abroad fulfils the condition of application of money in order

to claim exemption u/s 11.

7.

148

ITD

343

Shree Nashik Panchvati

Panjarpole Vs. DIT

(Exemptions)

(Mum.)

2(15)

r.w.s.

12AA

- The CBDT vide Circular No. 11/2008, dated 19-12-

2008 has clarified that the proviso to sec.2(15) will

not apply in respect of the first three limbs of sec.

2(15) i.e. relief of the poor, education or medical

relief. Consequently, where the purpose of a trust

or institution is relief of the poor, education or

medical relief, it will constitute charitable purpose,

even if it incidentally involves the carrying on of the

commercial activity.

- The assessee-trust was established for the purpose

of cow breeding and protection of cows and oxen.

It was granted registration u/s 12AA. During the

relevant year, DIT(E) found that income of the

assessee from sale of milk was far in excess of Rs.10

lakh. DIT(E) took a view that the assessee was doing

regular activities which were in nature of business

by way of sale of milk, and, thus, it was directly hit

by proviso to sec. 2(15). Accordingly, DIT having

invoked provisions of sec. 12AA(3), cancelled the

registration granted to the assessee-trust. It was

noted that the milk procured from cows was

distributed free of charge to the children, hospitals,

schools, balmandir, mahila anathashram etc. and,

thereafter, the remaining milk was distributed to

the general public at large at a very nominal rate.

Therefore, the assessee could not be said to be

carry on any business, trade or commerce within

the meaning of proviso to sec. 2(15) and, thus,

impugned order cancelling registration deserved, to

be set aside.

8.

148

ITD

367

LSG Sky Chef (India) (P.) Ltd. Vs.

DCIT

(Mum.)

199

r.w.s.

198

Form No. 26AS is a statement generated at the end of the

revenue and the assessee cannot be in any manner be held

responsible for any discrepancy therein or for non-matching

of TDS reflected therein with the assessee’s claim. The

revenue is fully entitled to conduct proper verification in

the matter and satisfy itself with regard to the veracity of

the assessee’s claim but cannot deny the assessee the

credit in respect of TDS without specifying any infirmity in

its claim. The assessee, therefore, by furnishing the TDS

certificates bearing full details of tax deducted at source,

had discharged the primary onus on it towards claiming

credit in its respect and accordingly the AO is directed to

allow the assessee, the credit of tax so deducted.

9.

148

ITD

372

Loknete Balasaheb Desai

Sahakari Sakhar Karkhana Ltd.

Vs. DCIT

(Pune)

4

The assessee, a co-operative sugar factory was engaged in

the business of manufacturing and sale of sugar. It

deducted certain amount from the bills payable to the

members and non-members towards supply of sugarcane.

The said deduction was shown under the head ‘Area

Development Fund’ (ADF). The AO opined that the amount

collected by the assessee towards ADF was to be assessed

as income in the assessee’s hands. It was noted that the

collection made by the assessee towards ADF was

impressed with an obligation to spend the same for

specified social purposes approved in AGM and the

persons/members paying the contribution to ADF were

aware before the deduction was made that for what

purpose the assessee was collecting the said fund and

where the fund would be utilized. On facts, the assessee’s

role was like a trustee of ADF and, thus, the amount

collected in the said capacity could not be brought to tax in

its hands.

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CA Sneha Parwal

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