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05.09.2013 - Voice of CA Presents - Updates
Thursday, September 5, 2013

 I.  Today's Headlines   

  1. Forms 15CA & 15CB changed again; no reporting of exempt income, no filing of form 15CB for certain payments  (Click for detail)
  2. Customs Circular: Import of Gold and Gold Dore Bars- Procedure and Guidelines  (Click for detail)
  3. RBI Circular: Overseas Direct Investments – Rationalization/Clarifications  (Click for detail)
  4. RBI Circular: External Commercial Borrowings (ECB) from the foreign equity holder  (Click for detail)
  5. RBI Circular: Liberalized Remittance Scheme – Clarifications  (Click for detail)
  6. Statement by Governor of the RBI Dr. Raghuram Rajan on taking office on September 4, 2013  (Click for detail)
  7. FM: Insurance bill to be taken up in winter session  (Click for detail)
  8. Income tax department alerts taxpayers to fake mobile apps  (Click for detail)

II.  A Useful Article:

1. [ Contribution by CA Bimal Jain, and contributor is available at ]

"Assessee not expected to verify with Department in order to avail Cenvat credit, whether supplier had paid duty on inputs or not" 

(Please click here)    

III.  Direct Tax Case laws:

1.  Fine Line Construction P. Ltd. Vs. ACIT, ITA No. 4907/Del/2012, Date of Decision: 26.07.2013, ITAT - Delhi

Section 271(1) (c ) of the Income Tax Act, 1961

Whether penalty u/s 271(1) (c ) of the Act can be levied on the ground that there was no concealment of income and income was assessed on estimation basis.

Held: No

The assessee company is engaged in the business of construction work. The Assessing Officer applied provisions of section 145 of the Act and computed the total income at 5% of turnover and levied penalty u/s 271(1) (c) of the Act. According to circumstances of the case, the Hon’ble High Court relied on the decision pronounced in case of CIT vs. Vatika Construction P.Ltd. ITA 1246/2010 in which it was held that the Assessing Officer did not have the benefit of material, and therefore could not have, only on the basis of the assessee’s offer to be taxed at 8% on gross receipts, have concluded that it had provided inaccurate particulars in its returns. The course of action suggested by the Assessing Officer was in fact accepted by the assessee, as reasonable. In these circumstances, the imposition of penalty was not justified.

(Please click here for judgment)


2.   DCIT Vs. M/s Ashok Kumar Amit Kumar & Shipra Estates (P) Ltd., ITA No. 3247/Del/2012, Date of Decision: 27.08.2013, ITAT - Delhi

Section 28 & 2(22)(e) of Income Tax Act, 1956

Whether mere debit balance in partner’s capital A/c leads to addition on notional basis?

Issue 1

According to the circumstances of the case, debit balances was more than credit balances in the partner’s capital a/c. So, the revenue contended that the assessee has forwarded an interest free loan to the partner. So, the AO has calculated interest on the amount of net debit balance on notional basis and had made additions accordingly. The Hon’ble ITAT held in favour of the assessee that there is no provision in law for taxing of any income on notional basis. Further, no provision was there in the partnership deed regarding interest on capital.    

Issue 2

As the partner had overdrawn the capital, the AO contended that amount overdrawn was in nature of advances and same was considered as deemed dividend u/s 2(22)(e) of the Act. The Hon’ble ITAT held in favour of assessee that deemed dividend arises in case of company and not in case of a partnership firm and the assessee is a partnership firm.

In the present case, the firm has given interest free loan to the respective partners leaving their capital balance in negative, thereby diverting the funds of the firms or utilizing the same in their hands.

(Please click here for judgment)


 Golden Rules:

"what is the meaning of life?

Life itself has no meaning,
but Life is an opportunity to create a meaning"


  Thanks & Regards


Voice of CA




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