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23.09.2016 - Voice of CA presents - Updates
Friday, September 23, 2016

I. Headlines Today    

  1. CBDT Order under section 119 of the Income-tax Act, 1961  (Click for detail)
  2. CBEC: Frequently Asked Questions (FAQ) on GST  (Click for detail)
  3. Consensus eludes GST threshold  (Click for detail)
  4. Income Tax Department trying its best to make IDS a success  (Click for detail)
  5. IT Department unravel Rs 1200 cr undisclosed income from Kerala  (Click for detail)
  6. After Panama Papers, Bahamas: More Indians in secret tax haven list  (Click for detail)
  7. The Jio effect? Vodafone India gets Rs 47,700-cr war chest  (Click for detail)
  8. SEBI Circular regarding Consolidated Account Statement  (Click for detail)
II.  Direct Taxes Case Laws: 

1.  M/s G. S. Homes and Hotels P. Ltd. Vs. DCIT, Civil Appeal Nos. 7379-7380 of 2016, Date of Judgment: 09.08.2016, Supreme Court of India

Whether the amount received by the assessee company from its shareholders on account of share capital and maintenance deposit will be taxed as business income under the Income Tax Act, 1961?


Brief Facts:
The assessee company is engaged in the business of real estate. The return of income for the Assessment Year 1996-97 was filed with Nil income. It was notice that the assessee has shown land as stock in trade in the balance sheet and the same has not taken to profit and loss account. Therefore there is reduction in total income to that extent. Also, it was bought under notice that the assessee company had developed a huge commercial complex for the benefits of its shareholders for which shareholders to deposited funds. Also, the maintenance deposit had to be made with the company for the maintenance and upkeep of the building. The said deposits were used to construct the building. The Assessing Officer treated all the refundable deposits under the scheme as income and the same was confirmed by CIT (A) which was held that the income derived from deposits which was used for construction is to be treated as business income.  

It was held that the certain amount of Rs. 45,84,000/- on account of share capital received from the various shareholders shall not be treated as business income. However, the order of the High court in respect of the short term capital gains for the properties T1 and T2 and maintenance deposits is upheld.
The appeal of the assessee is partly allowed.

(Please click here for judgment)


2.  Genus Electrotech Limited Vs. Union of India, Special Civil Application No. 9010 of 2016, Date of Judgment: 18.07.2016, High Court of Gujarat

Whether the mere issuance of notice without providing the reasons for the transfer of the jurisdiction of the assessee company will be enough for passing the order under Section 127(2) of the Income Tax Act, 1961?   


Brief Facts:
The assessee is a company. Due to its shifting of Registered Office from New Delhi to Ahmedabad in year 2011, its pending appeals for Assessment years 2006-07 to 2008-09 were also transferred from ACIT, Circle – 12(1), New Delhi to Ahmedabad. On 30th July, 2015, search and seizure operations were carried out at the residential premises of the director of the company and also at the factory and corporate office of the company at Gandhidham, Moradabad (U.P.). Following which, the order u/s 127(2) of the Income Tax Act, 1961 was passed by the Principal Commissioner of Income Tax at Ahmedabad shifting the jurisdiction of the company from Ahmedabad to Moradabad w.e.f. 31.12.2015. Assessee filed the petition on the grounds that the order passed by the PCIT is against the Natural justice of law.

It was held that no assessment cases can be transferred from one place to another only as long as at least one of the cases of the group is pending at such place. The search and survey operations at the premises would not in any manner will reduce the requirement of the prescribed authority to convey the assessee the reasons for the transfer of jurisdiction. Moreover, the fact that the assessee awareness of the search and survey actions would not change the requirements of the law. An empty formality of issuing the notice cannot override the principal of natural injustice which is essentially inbuilt in any administrative order.   

(Please click here for judgment)

 Golden Rules:

  "Be slow in choosing a good person
and much slower while loosing them
because relationship is not an opportunity,
it is a sweet responsibility"


  Thanks & Regards


Voice of CA 

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