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15.09.2016 - Voice of CA presents - Updates
Thursday, September 15, 2016

I. Headlines Today    

  1. CBDT clarifies that extended due date of filing return would also apply for tax audit report  (Click for detail)
  2. ITR filing deadline extended: 4 things not to miss  (Click for detail)
  3. CBDT Circular: Clarifications on the Direct Tax Dispute Resolution Scheme, 2016  (Click for detail)
  4. Notification for amendment to Schedule V of Companies Act, 2013  (Click for detail)
  5. Bill on national wages floor to be tabled in winter session  (Click for detail)
  6. Lost your job or taking VRS? Here's how the severance payout will be taxed  (Click for detail)
  7. RBI forms panel to review commodities hedging guidelines  (Click for detail)

II. A Useful Presentation:

1.  The Income Declaration Scheme, 2016 

(Please click here for detail)  

(Contribution by CA. Sanjay Kumar Agarwal, Founder - Voice of CA)


III.  Direct Taxes Case Laws: 

1.  Ramnagar Pachwai & C.S. (S) Shop Vs. Income-tax Officer, I.T.A. No. 148/Kol/2015, Date of Pronouncement: 05.08.2016, ITAT - Kolkata

Whether the Ld. A.O. was justified in disallowing cash payments (in excess of Rs.20,000 on each occasion) made by the assessee to supplier for purchase of its stock-in-trade in terms of Section 40A(3) of the Income Tax Act, 1961?

Held: No

Brief Facts:
The Assessee is a retail vendor of Country Liquor and Pachai. Its purchase and sale are strictly controlled by the State Government. As per the revised procedure prescribed by the Excise Department, for lifting Country Spirit, the assessee, who is a retail vendor, was required to make the entire payment consisting of cost of the stock-in-trade, Excise duty and bottling charges etc. only to the wholesale Licensee appointed by the State Government. Following the revised procedure, the Assessee made payments partly by Demand Draft and partly by cash deposits in the Bank A/c of its Supplier i.e. M/s. Asansol Bottling and Packaging Co. Pvt. Ltd. maintained in the State Bank of India. While completing the assessments of the assessee, the Ld. A.O. allowed the payments made by Demand Drafts but disallowed the cash deposits (in excess of Rs.20,000 on each occasion) made in the Bank A/c of the Supplier maintained in the State Bank of India in terms of Sec.40A(3) of the I. T. Act. The Assessee filed appeals against the aforesaid disallowances before CIT (A). The Ld. CIT (A) has, however, rejected this submission relying on the Hon'ble Kerala High Court decision in the case of K. Abdu & Co. -vs.- ITO reported in 170- Taxman-297 in which it has been held that the exemption is admissible only when the payment is made to the State Bank of India as an Institution and not when the payment is made to the party's account maintained by the Bank.

The Hon’ble ITAT held that it could be safely concluded that the wholesale licensee (agent) had acted at the instance of the State Government. Once this is so, then the said wholesale licensee could be construed as an agent of the State Government. Therefore Rule 6DD(k) will come into picture. The payment made by the assessee retail vendor to the Principal, Government of West Bengal through its wholesale agent. The relationship between the assessee (authorized retailer) and Government of West Bengal (the supplier) acting under West Bengal Excise Rules through its Authorised Wholesaler Licensee (Agent), both de facto and dejure , is one of ‘Principal’ and ‘Agent’. We hold that the assessee retail vendor had made payment to the said agent (wholesale licensee) would fall under the exception provided in Rule 6DD(k) of the Rules. Accordingly, disallowances made u/s 40A(3) is deleted.

(Please click here for judgment)


2. M/s Mahavir Spinning Mills Ltd. Vs. CIT, I.T.A. No. 408/2007, Date of Judgment: 02.09.2016, High Court of Punjab & Haryana

Whether the export turnover of a unit whose profits are exempt u/s 10B of the Income Tax Act, 1961 can be included in the ‘export turnover’ for the purposes of calculating the deduction u/s 80HHC of the Act?

Held: Yes

Brief Facts
The appellant-assessee is a 100% export oriented undertaking exporting the goods it produces and admittedly availed the benefit u/s 10B of the Income Tax Act, 1961. The department contended that to the extent of benefit received u/s 10B the same cannot be included in the export turnover and total turnover in the formula stipulated in section 80HHC.

However, AR contended that Sec 10B(4)(iii) of the Act provides that in computing the total income of the assessee, no deductions shall be allowed under certain mentioned sections, but Sec 80HHC is not one of those sections. It was also contended that the insertion of Sec 10B was to provide “further incentive” to 100% export oriented undertakings for earning more foreign exchange and not an incentive in lieu of the incentive contained in section 80HHC. Relying upon section 80HHC(4)(C)(b) of the Act, Ld DR. contended that section 80HHC is a self contained code and as is Section 10B.

It was held that a literal reading of the provisions and literal application of the formula does not enable us to exclude the export turnover of the unit in the EPZ from the export turnover of such goods nor from the total turnover of the business. The profit arising out of these units in the EPZ is also not excludable from the profits of the business. We may note that Section 80HHC is a beneficial provision for the purposes of encouraging exports. Section 80 HHC clearly defines the terms export turnover, total turnover and profits of business. None of these definitions exclude the export turnover in respect whereof benefit has been derived under section 10B. In the circumstances, the first question of law is answered in affirmative in favour of the appellant.

(Please click here for judgment)  

IV. Useful Articles:

1.  Government notifies September 12, 2016 as the appointed date for GST Council Provisions 

(Please click here for detail)

2.  GST Bill gets President’s assent –Now becomes a law 

(Please click here for detail)

3.  Supply of Goods Vs. Supply of Services in GST: Test of Constitutional Validity 

(Please click here for detail)

(Contribution by CA. Bimal Jain and contributor is available at eMail-id:


 Golden Rules:

  "Black colour is sentimentally bad
but every black board makes the student life bright.
It's not about the colour,
it’s only about the way of thinking"


  Thanks & Regards


Voice of CA 

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