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09.04.2011 - Recent Updates as on 09.04.2011
Monday, April 11, 2011


It has been held by the Supreme Court in the case of CIT vs Edward Keventer P Ltd that no part of remuneration paid to director could be regarded as excessive or unreasonable, if the legitimate business need of the company and the benefit derived by or accruing to it therefrom, were taken into account from the point of view of a businessman. Although this decision was cited before the CIT(A), the CIT(A) has not considered the same. His findings are on general basis while upholding the action of the Assessing Officer. It is the well settled proposition of law that the Assessing Officer cannot direct the assessee to conduct its business in a particular manner. It is for the assessee how to conduct its business in a particular manner.

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2.   M/s CRESCENT CHEMICALS Vs. INCOME TAX OFFICER, ITA No. 1355 /Mum / 2010, DATE OF ORDER : 21.01.2011 Assessment Year: 2006-2007 – ITAT - MUMBAI

Assessee firm is an importer and trader in chemicals, plastics and polymer products. During the course of the proceedings the A.O. noted that the assessee firm claimed the expenditure on account of freight and forwarding charges The A.O. further noted that the some of the expenditure was incurred in cash towards freight and forwarding, transport, loading and unloading charges and that was only supported by self-made vouchers. The A.O., therefore, made ad-hoc disallowance of 20% of the freight expenditure, as in his opinion, there was no proper evidence to support the claim to some extent. CIT(A) restricted the disallowance to the tune of 10%. Both the authorities below have made the ad-hoc disallowance. But there is force in the argument of the Counsel that on many occasions, isolated transporters and labourers are required to be engaged when it is not possible to get their bills. Nowhere it is a case of the A.O. that any of the expenditure was found to be bogus. There is no reason to confirm the disallowance made by the CIT (A).

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What's New

  1. IT : Finance Act, 2011 (No. 8 of 2011), dated 8-4-2011  (Click for detail)

  2. Income Tax Notification No. 41 /2010 - NEW-TDS-rules - Nil TDS on Transporter and others to be reported in ETDS quarterly returns  (Click for detail)

  3. General Circular No. 12/2011 - Clarification Regarding Easy Exit Scheme  (Click for detail)

  4. General Circular No. 11/2011 - CO LAW-Allotment of Director Identification No. (DIN) under Co. Act, 1956  (Click for detail)
  5. STAXCIR-134-11-Clarification regarding applicability of service tax exemption to Education Cess and Secondary and Higher Education Cess  (Click for detail)


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Thanks for your valuable time 


"Voice of CA"


CA. Sanjay Kumar Agarwal, Founder - Voice of CA
Member  Central Council - ICAI
Former Chairman - NIRC
Mob : 9811080342, 
CA. Sidharth Jain, Co-Moderator 
CA. Mukesh K Bansal, Co-Moderator-FEMA


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