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11.07.2013 - Voice of CA Presents - Updates
Thursday, July 11, 2013



 I.  Today's Headlines   


  1. Guidance Note on Tax Audit under Section 44AB of the Income-tax Act, 1961 - Revised 2013 Edition  (Click for detail)
  2. CBDT Instruction No. 5: Section 143 - Credit for TDS - AO to give credit for TDS after due verification  (Click for detail)
  3. IT Noti. No. 52: Sec.10(46) of Income Tax Act, 1961 - Eexemptions - Statutory Body/Authority/Board/Commission - Notified Body or authority - Gujarat State Aids Control Society  (Click for detail)
  4. India tax returns: Two important changes NRIs should note this year  (Click for detail)
  5. 2G case: ED issues notices on FEMA violations of Rs 3,805cr  (Click for detail)
  6. I-T captures transactions to nab tax evaders  (Click for detail)
  7. Sebi to align private placement norms with Companies Bill  (Click for detail)

 

II.  Direct Tax Case laws:

1.   M/s Dalal & Broacha Stock Broking Pvt. Ltd. Vs. ACIT, Writ Petition (L) No. 419 of 2013, Date of Pronouncement: 07-05-2013, Bombay High Court

Section 148 of the Income Tax Act, 1961

Whether reopening of assessment u/s 148 of the I.T Act, 1961 is valid when made on the basis of subsequent judgment of the Special Bench of Tribunal in Petitioner’s own case in preceding year.

Held: Yes

The AO cannot reopen an assessment merely on the basis of a change of opinion, however, when he has tangible material to come to the conclusion that there is an escapement of income from assessment, the power to re-open can be exercised.

(Please click here for judgment)


2.   REI Agro Ltd. Vs. DCIT, ITA No. 1331/Kol/2011 and DCIT Vs. REI Agro Ltd., ITA No. 1423/Kol/2011, Date of pronounce: 19.06.2013, ITAT - Kolkata

Section 14A of the Income Tax Act, 1961 r.w. Rule 8D of the Income Tax Rules, 1962.

Whether interest expenditure can be disallowed by mechanically applying the provisions of Rule 8D where there is no linkage or nexus is established between funds borrowed by assessee and impugned investments and AO has also not recorded his satisfaction with correctness of the claim of assessee.

Held: No

It is an admitted position in law that expenditure can be disallowed U/s.14A of the Act if and only if it is incurred in relation to income which does not form part of total income.

The assessee has explained that the share capital and reserves, that is its own funds, were utilised for the purpose of investment in shares for earning dividend income and this has not been negated by lower authorities i.e. neither CIT(A) nor AO. The assessee has also explained each and every investment with sources of funds and its utilization as well as opening application of funds and closing application of funds. Thus, it is clear that the investment in shares was made out of own capital employed and not from borrowed funds and there is no link with expenditure for earning of dividend income incurred by the assessee and once the facts are clear, no disallowance can be made by invoking rule 8D. Further, neither the AO nor CIT(A) has recorded any finding that having regard to the account of assessee, they are not satisfied with the correctness of the claim of expenditure made by assessee or the claim made by assessee that no expenditure has been incurred in relation to income which do not form part of the total income under the Act for the relevant A.Y. In the absence of any such finding, no disallowance on account of interest expenditure can be made by invoking rule 8D of the Rules. Accordingly, in the given facts and circumstances, we delete the addition and allow this issue of assessee’s appeal.

(Please click here for judgment)

 
III. A Useful Article:

[ Contribution by CA Madhukar Hiregange, Former CC Member and contributor is available at mhiregange@hotmail.com ]

Departmental Interaction/Professional Interaction with Service Tax Officers

Many professionals do not get into the VAT, service tax practice due to the high level of corruption there. Many feel that there is no way to practice without payment of bribes. The mistakes one makes in interaction which are avoidable may for serving law abiding clients be useful. Click the link given below for the way which has proved successful for ethical professionals.

(Please click here)   

 

 Golden Rules:

"Richest wealth is wisdom,
strongest weapon is patience,
best security is faith,
most effective tonic is laughter
and surprisingly ALL ARE FREE
"
 

 

  Thanks & Regards

Team

Voice of CA

 

 


 

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