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20.09.2016 - Voice of CA presents - Updates
Tuesday, September 20, 2016

I. Headlines Today    

  1. Instruction No. 8 - The Income Declaration Scheme, 2016  (Click for detail)
  2. Income disclosure: CBDT sends out SMS to assessees, promises confidentiality  (Click for detail)
  3. CBDT revises Form 64A dealing with statement of income distributed by business trust  (Click for detail)
  4. FinMin clears legal cloud on GST Act  (Click for detail)
  5. GST Council to decide on cess treatment  (Click for detail)
  6. GST notification doesn’t end government’s power to levy excise  (Click for detail)
  7. RBI: Master Direction - Reporting under Foreign Exchange Management Act, 1999  (Click for detail)
  8. RBI issues master direction on ECBs, Trade Credit, Borrowing and Lending in foreign currency  (Click for detail)
II.  Direct Taxes Case Laws: 

1.  Smt. Roma Sengupta Vs. CIT, I.T.A. No. 214 of 2004, Date of Order: 11.03.2016, High Court of Calcutta

Whether 50% of the sale consideration received by the assessee with respect to the matrimonial house was taxable in the hands of the assessee despite the fact that the Tribunal arrived at a finding that the said amount was paid on account of alimony?

Held: No

Brief Facts:
The assessee is a divorcee and filed her return of income disclosing an income and LTCG consequent to sale of 50% of her share in the matrimonial house sold and sought to deduct 50% of the cost of acquisition. Also, she claimed exemption u/s 54 of the Act with respect to the aforesaid LTCG and further claimed deduction of brokerage from the amount of capital gain. The assessee contended that the matrimonial house was acquired using the sale proceeds of a flat and that she was a co-owner of the said matrimonial house, having 50% share therein. The AO relying upon a report filed by the inspector held that the ex-husband of the assessee was the exclusive owner of the flat and the assessee was just his nominee. The AO also observed that since the flat was owned exclusively by the former husband and the sale proceeds from the said property were utilized to purchase the matrimonial house, therefore the former husband of the assessee was the full owner of the newly purchased matrimonial house and thus held that the assessee could not get the benefit of cost of acquisition u/s 48 of the Act, as she did not contribute any investment to purchase the matrimonial house, further held as per section 49(2) that the self generated acquired property’s cost of acquisition is taken to be nil and also disallowed the claim for brokerage.

The assessee appealed before the CIT(A) and the order was passed in favor of the assessee, aggrieved the Revenue appealed before the Tribunal and it rejected the contention of the assessee as regards capital gains on the basis that 50% of the sale proceeds were received by the assessee on account of alimony from her former husband. In the Hon’ble High Court the Ld. AR contended that the lump sum alimony is a capital receipt and therefore not taxable whereas Ld. DR contended that the Tribunal did not hold that the 50% of the sale consideration given to the wife was on account of alimony and also that the assessee could not make a new case.

The Hon’ble Court held the revenue cannot be heard to contend that it has been taken by surprise because it did not prefer any appeal against the finding of the Ld. Tribunal that the payment was “on account of alimony” and thus must be deemed to have been satisfied by such finding and that it was open to the assessee to contend that the receipt was capital in nature and therefore not taxable.

(Please click here for judgment)


2.  Soma Rani Ghosh Vs. DCIT, I.T.A. No. 1420/KOL/2015, Date of Order: 09.09.2016, ITAT - Kolkata

Whether a disallowance is to be made in respect of transportation expenses on which TDS u/s 194C has not been deducted but PAN is obtained from all the individual transporters?

Held: No

Brief Facts
Assessee is carrying on proprietary export business in export of Chemical, Surgical and Clinical Goods and incurred Transport Charges by way of Lorry Hire Charges, both in relation to Purchases, referred to as Carriage Inward, and Exports to Bangladesh referred to as Carriage Outward. On the premise that the assessee was required to deduct TDS on the expenses incurred under the head Transport Charges u/s 194C of the Act and since the assessee failed to deduct the same, Ld. AO disallowed the expenses claimed as expense towards Carriage Inward and Carriage Outward, treating such expense disallowable u/s 40(a)(ia) of the Act. The assessee contended before the Ld CIT that because of the provision of Section 194C(6), she was not liable to deduct TDS on payments to transporters who had submitted their PAN, and those details of PAN and addressees of the transporters were filed during the course of scrutiny assessment before the AO.

The Ld CIT had dismissed the appeal on the premise that section 194C(6) will not apply to payments made by a person who himself is not a transporter. Also, he stated that provisions of section 194C(6) and 194C(7) have to be read together and the benefit u/s 194C (6) is available only when the assessee fulfils the conditions laid down in sub-section 194C(7) of the Act.

It was held that Ld. CIT’s interpretation of a contractor is wrong and as per section 194C(1), person undertaking to do the work is the Contractor and the person so engaging the contractor is the contractee and the distinction between a contractor and a sub-contractor has been done away with and Explanation under 194C(7) clarifies that "contract" shall include sub-contract. Further, subject to compliance with the provisions of Section 194C(6), immunity from TDS u/s 194C(1) in relation to payments to transporters, applies to transporter and non-transporter contractees alike and that Sections 194C(6) and Section 194C(7) are independent of each other, and cannot be read together to attract disallowance u/s 40(a)(ia). Thus, it was held if the assessee complies with the provisions of Section 194C(6), no disallowance u/s 40(a)(ia) of the Act is permissible, even if there is violation of the provisions of Section 194C(7) of the Act and subsequently the additions made were deleted.

(Please click here for judgment)  

 Golden Rules:

  "Though no one can go back and make a brand new start,
anyone can start from now and make a brand new ending"


  Thanks & Regards


Voice of CA 

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