Connect us       New User?     Subscribe Now
Confirm your Email ID for Updates
05.01.2017 - Voice of CA presents - Updates
Thursday, January 5, 2017

I. Headlines Today    

  1. Tax kitty to exceed Budget estimate in 2016-17, says Arun Jaitley  (Click for detail)
  2. FEMA Notification: Foreign Exchange Management (Transfer or Issue of any Foreign Security) (Second Amendment) Regulations, 2016  (Click for detail)
  3. FPIs Want Tax Trigger Cap Raised from 5% to 26%  (Click for detail)
  4. Tax department signs 3 advance pricing pacts with taxpayers  (Click for detail)
  5. Prickly Issues May Delay GST Rollout  (Click for detail)
  6. SEBI: Guidelines for participation/functioning of Eligible Foreign Investors (EFIs) and FPIs in International Financial Services Centre (IFSC)  (Click for detail)
II.  Direct Taxes Case Laws: 

1.  Gopal and Sons (HUF) Vs. CIT, Civil Appeal No. 12274 of 2016, Date of Judgement: 04.01.2017, Supreme Court of India

Whether loan/advances received by HUF could be deemed as dividend within the meaning of Section 2(22)(e) of the Income Tax Act,1961

Held, Yes

Brief Facts:
The assessee had filed return of income of AY 2006-07 declaring his total income at Rs.1,62,745/. During the year, assessee had received advance of Rs.1,20,10,988/- from M/s. G.S. Fertilizers (P) Ltd in which the assessee hold 37.12% of the total shareholding of the Company. The AO made an addition of Rs.1,20,10,988/- as deemed dividend u/s 2(22)(e) of the Income Tax Act, 1961 contending that the assessee was both the registered shareholder of the Company and the beneficial owner of shares, holding more than 10% of voting power. The addition was affirmed by the CIT(A) while deleted by ITAT. The High court reversed the judgement of ITAT & sustained the decision of the AO. Being aggrieved by that, the assessee has preferred an appeal before Supreme Court.

The supreme court held that it is not even necessary to determine as to whether HUF can, in law, be beneficial shareholder or registered shareholder in a Company. Although, the share certificates were issued in the name of the Karta, Shri Gopal Kumar Sanei, but in the annual returns, it is the HUF which was shown as registered and beneficial shareholder. Even if the court presumes that it is not a registered shareholder u/s 2(22)(e) then also once the payment is received by the HUF and shareholder (Karta) is a member of the said HUF and he has substantial interest in the HUF, the payment made to the HUF shall constitute deemed dividend within the meaning of section 2(22)(e) of the Act.
Therefore, the appeal of the assessee is dismissed.

(Please click here for judgment)

2.  Susham Singla Vs. CIT, I.T.A Nos. 371 to 377 of 2015, Date of Pronouncement: 23.12.2016, High Court of Punjab & Haryana

Whether in the case where the assessee owns more than 1 property, the notional rent from the properties other than one property which has been considered as self-occupied will be computed as per the provisions of Section 23(1)(a) of the Income Tax Act, 1961 and not as per the provisions of Section 23(1)(c) of the Act?   


Brief Facts:
A search was conducted on the upon Jagdish Jeweller Group and the assessee who was related to the group. It was found that the assessee was the owner of some properties. The revenue issued the notice to the assessee as to why deemed income by determining the annual value of the properties may not be added to the income of the assessee. The assessee was the owner of properties, out of which one property at Patiala was considered to be self – occupied and the notional rent from the rest 3 properties were added to the income of the assessee after allowing statutory deductions. CIT(A) and ITAT upheld the order of the AO. Aggrieved by which, the assessee appealed  before the Hon’ble High Court.

It was contended by the assessee that the said properties had not been let out and remained vacant during the years under consideration and therefore, the annual value of the same cannot be determined u/s 23(4) of the Income Tax Act, 1961 and hence as per the provisions of Section 23(1)(c) of the Act, the Annual Value of such properties should be taken as NIL.  It was held that the Section 23(1) has three sub sections. Section 23(1)(b) and (c) would apply only to those properties which were actually let out and for which rent was actually received or receivable by the assessee. These provisions deal with the concept of real income and not notional income. Thus, the annual value of the properties like the ones in the case in hand which are more than one, owned by the assessee and which admittedly remained vacant throughout the previous year would not be assessed under Section 23(1)(c) but under Section 23(1)(a). The annual value would, therefore, be determined notionally as done in the case in hand by the Assessing Officer and concurrently upheld by the Commissioner and the Tribunal.
The appeal of the assessee is dismissed.

(Please click here for judgment)

III. A Useful Article:

1.  GST Migration for Excise assesses to start from 05/01/2017 and Service Tax assesses from 09/01/2017

(Please click here for detail)

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

 Golden Rules:

  "Don't make your voice loud to make others listen to you.
But, make Your personality loud, that others wait to listen to you"


  Thanks & Regards


Voice of CA 

« Back
Online Poll
Connect Us       New User?     Subscribe Now