III. Direct Taxes Case Laws:
1. DIT Vs. Mitchell Drilling International Pvt. Ltd., I.T.A. No. 403/2013, Date of Order: 28.09.2015, High Court of Delhi
Whether
the amount of service tax collected by the Assessee from its various
clients should have been included in gross receipt while computing its
income under the provisions of section 44BB of the Act?
Held No.
The
Court holds that for the purposes of computing the ‘presumptive income’
of the assessee for the purposes of Section 44 BB of the Act, the
service tax collected by the Assessee on the amount paid t it for
rendering services is not to be included in the gross receipts in terms
of Section 44 BB (2) read with Section 44 BB (1). The service tax is not
an amount paid or payable, or received or deemed to be received by the
Assessee for the services rendered by it. The Assessee is only
collecting the service tax for passing it on to the government. The
Court further notes that the position has been made explicit by the
CBDT itself in two of its circulars. In Circular No. 4/2008 dated 28th
April 2008 it was clarified that “Service tax paid by the tenant doesn't
partake the nature of "income" of the landlord. The landlord only acts
as a collecting agency for Government for collection of Service Tax.
Therefore,
it has been decided that tax deduction at source) under sections 194-I
of Income Tax Act would be required to be made on the amount of rent
paid/payable without including the service tax.’ In Circular No. 1/2014
dated 13th January 2014, it has been clarified that service tax is not
to be included in the fees for professional services or technical
services and no TDS is required to be made on the service tax component
under Section 194J of the Act.
(Please click here for judgment)
2. CIT Vs. Smt B S Shanthakumari, I.T.A. No. 165/2014, Date of Order: 13.07.2015, High Court of Karnataka
Whether
assessee is entitled to benefit u/s 54F, where assessee has not placed
any material on record to show that he had commenced the construction
and completed the same within three years from the date of sale of her
property?
Held Yes
Section
54 F is a beneficial provision which promotes for construction of
residential house. Such provision has to be construed liberally for
achieving the purpose for which it is incorporated in the statute. The
intention of the legislature, as could be discerned from the reading of
the provision, would clearly indicate that it was to encourage
investment in the acquisition of a residential plot and completion of
construction of a residential house in the plot so acquired. A bare
perusal of the said provision does not even remotely suggest that it
intends to convey that such construction should be completed in all
respect in three years and /or make it habitable.
The
essence of said provision is to ensure that assessee who received
capital gains would invest same by constructing a residential house and
once it is established that consideration so received on transfer of his
long term capital asset has invested in constructing a residential
house, it would satisfy the ingredients of S. 54F. if the assesee is
able to establish that he had invested the entire net consideration
within the stipulated period, it would meet the requirement of S. 54F
and as such assessee would be entitled to get the benefit of S. 54F of
the Act.
(Please click here for judgment)
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