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16.12.2016 - Voice of CA presents - Updates
Friday, December 16, 2016

I. Headlines Today    

  1. President assents to Taxation Laws (Second) Amendment Act, 2016  (Click for detail)
  2. CBDT Press Release: Filing of Revised Income Tax Returns by the Tax Payers Post DeMonetisation of Currency  (Click for detail)
  3. CBDT Notification: Govt. lifts ban on blacklisted Cyprus with retro-effect from Nov. 1, 2013  (Click for detail)
  4. Govt mulls special session to push GST-related bills  (Click for detail)
  5. Insolvency and Bankruptcy Board of India (IBBI) notifies norms for liquidation process  (Click for detail)
  6. MCA notifies rules for Compromises, Arrangements and Amalgamations  (Click for detail)
  7. Traders can register themselves under the GST from Dec 16  (Click for detail)
II.  Direct Taxes Case Laws: 

1.  CIT Vs. M/s Metal & Chromium Plater (P) Ltd. T.C.A. No. 359 of 2008, Date of Order: 09.11.16, High Court of Madras

Issue: Whether adjusted book profit calculated as per section 115JB of Income Tax Act, 1961 would be further eligible for claiming any exemption under the provisions of Income Tax Act, 1961, except otherwise specifically barred by the section?

Held: Yes

Brief Facts:
An assessment of A.Y. 2003-04 was completed in terms of Section 143(3) of the Income Tax Act, 1961. The assessee had preferred a claim for exemption u/s 54EC of the Act. The Assessing Officer has allowed such exemption in regular computation of income. However, the tax payable as per regular computation was less than 7.5% of the Book Profits. Therefore, the provisions of Minimum Alternate Tax (MAT) stood attracted. While processing the computation of tax in terms of Section 115JB of the Act, the assessing officer denying relief to assessee u/s 54EC the Act.

The allowance of the claim under Section 54EC has to be seen in the context of the provisions of Section 115JB which is a self-contained code of assessment. The levy of tax is on the ‘book profits’ after effecting various upward and downward adjustments as set out in terms of the Explanation thereto. The provisions of sub-section (5) of sec 115JB open the assessment to the application of all other provisions contained in the Income Tax Act except if specifically barred by that section itself. Thus, the adjusted book profits would be further eligible to the benefits set out in the other provisions of the Act and the plain language of Section 115JB thus admits of the grant of relief under section 54EC in an assessment thereunder.
The departmental appeal is dismissed.

(Please click here for judgment)


2.  Adani Gas Ltd. Vs. PCIT, I.T.A. No. 1252/Ahd/2016, Date of Order: 02.12.2016, ITAT - Ahmedabad

Issue: Assessment order passed by AO u/s 143(3) which was neither erroneous nor prejudicial to the interests of the revenue was revised by the PR. CIT revised u/s 263, is such revision justifiable?

Held: No

Brief Facts: Assessee company was a wholly owned subsidiary of Adani Enterprise Ltd. A scheme for demerger u/s 391 to 394 of the Companies Act, 1956 was prepared and submitted to Hon’ble Gujarat High Court. The same was approved by Hon’ble High Court on 19-11-2009 and it provided for transfer w.e.f. 01-01-2007. Consequently, an amount of Rs.33.99 crores was paid towards goodwill which is disclosed separately but was not amortized in the year itself as the economic benefits there from were expected to accrue over a period of time based on the foreseeable life of the business. During the A.Y. 2011-12 Assessee filed Original return of income claiming depreciation at Rs. 54.74 Crore. However, Revised return of income was filed on 25.9.2012 claiming depreciation of Rs.62.18 crores which included depreciation of Rs.7,43,51,086/- claimed @ 25% on the WDV of goodwill of Rs.29.74 crores.

The case was selected for scrutiny assessment. Order u/s 143(3) of the Act was passed allowing claim of assessee. Thereafter, Pr. CIT invoked the powers u/s 263 of the Act and issued notice contending that the assessment order u/s 143(3) of the Act is erroneous and prejudicial to the interest of revenue about excess depreciation claimed on goodwill. In reply to the notice Assessee submitted that the issue of claiming depreciation on goodwill was well taken up by AO during assessment proceedings and all the details relating thereto were furnished and the claim by Assessee was found to be correct by AO and there was full application of mind by him as he adopted legally correct view.

The Hon’ble ITAT is of the view that the AO has accepted the assessee’s claim of depreciation on goodwill on the reduced WDV as on 01/04/2010 after making enquiries, proper verification and application of mind and therefore, ld. Pr. CIT has wrongly assumed the jurisdiction u/s 263 of the Act and the same is uncalled for and unwarranted and deserves to be quashed.

Hon’ble ITAT followed the ratio of Hon’ble Supreme Court in the case of Malabar Industrial Company Ltd. vs. CIT 243 ITR 83, which is identical to assessee’s case, wherein it was held that "A bare reading of section 263 of the Income-tax Act, 1961, makes it clear that the prerequisite for the exercise of jurisdiction by the Commissioner suo motu under it, is that the order of the Income-tax Officer is erroneous in so far as it is prejudicial to the interests of the Revenue. The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue.”
The departmental appeal is dismissed.

(Please click here for judgment)   

III. A Useful Article:

1.  Recovery of Drawback claimed, on non realization of export proceeds

(Please click here for detail)

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

 Golden Rules:

  "Don't compare yourself to anybody else.
You're unique, one of a kind, an original.
So don't settle for being a copy"


  Thanks & Regards


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