Connect us       New User?     Subscribe Now
Confirm your Email ID for Updates
18.12.2013 - Voice of CA presents - Updates
Wednesday, December 18, 2013



  I. Today's Headlines:    


1.    CBDT Relaxes Time Period For Issue Of Refund Intimations. (Click here for details)
 
2.    S. 40(a)(ia) TDS Disallowance: CBDT issues circular to clarify applicability of Section in reference to amounts paid and payable.  (Click here for details)
 
3.    RBI likely to raise repo rate by 0.25%. (Click here for details)
 
4.    Rupee higher ahead of RBI rate decision. (Click here for details)

II.  Direct Tax Case laws:

 

1. Income Tax Department vs. Shri Shailesh D. Shah, ITA No.7012/M/10, Date of Order: 11.12.2013, ITAT-Mumbai

S. 41(1): Liability outstanding for long period of time is assessable as income (despite no write-back in A/cs) if assessee is unable to prove genuineness of liability

It is very improbable that payments to labour can remain outstanding for more than three years. The assessee has not been able to produce the records relating to the name, addresses and bills of the labour etc to prove that the liability continues to exist. It is accordingly a case of cessation of liability. The view that such sums shown as liability is assessable to tax is sanctioned by Chipsoft Technology where the view was taken that it would be illogical to say that a debtor or an employer, holding on to unpaid dues, should be given the benefit of his showing the amount as a liability, even though he would be entitled in law to say that a claim for its recovery is time barred, and continue to enjoy the amount. This view is not contrary to the view taken in Vardhaman Overseas Ltd where the law was laid down that s. 41(1) does not apply if the amount of liability is not written back in the accounts. If both judgements are read in harmony, it can be observed that the assessee cannot be allowed to show an amount as a liability even though he has no intention to pay it back but to enjoy the same for an unlimited period without being added to his income only on the excuse that he has not written off the same in his books of accounts. However, if the facts of the case establish that the liability has been genuinely shown by the assessee and his subsequent conduct shows that he has paid back the said credits and his intention was not to enjoy the amount for unlimited period without any intention to pay back the same, then it cannot be said to be a case of cessation of liability.

(Please click here to view the Judgment)

2. Metro & Metro vs. Additional Commissioner of Income Tax, I.T.A. No.: 393/Agra/2012, Date of Order : 01.11.2013, ITAT-Agra.

When no human intervention is involved in any services, such services cannot be treated to be of nature which can be covered by scope of section 9(1)(vii)

As regards assessee's submission that the provisions of section 9(1)(vii) will not come into play in this case because the entire testing process is automated, it is well settled that when no human intervention is involved in any services, such services cannot be treated to be of the nature which can be covered by the scope of section 9(1)(vii). It is also undisputed that question is not of more or less of human involvement. It is, the question of presence of or absence of human involvement. Furthermore testing charges paid by assessee, a manufacturer and exporter of leather goods, to a German company, could not be regarded as fee for technical services prior to amendment in section 9(1) by Finance Act 2010, it was not liable to deduct tax at source while making payment of said charges in assessment year 2008-09

(Please click here to view the Judgment)


 

 Golden Rule:

"I’ve learned that people will forget what you said,

people will forget what you did,

but people will never forget how you made them feel. "

 

  Thanks & Regards

Team

Voice of CA

« Back
 
Online Poll
Connect Us       New User?     Subscribe Now