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07.01.2014 - Voice of CA presents - Updates
Tuesday, January 7, 2014



  I. Today's Headlines:    


  1. HC upholds laws empowering CAG to conduct audit of private telcos  (Click for detail)
  2. Direct tax collections up 12.5% in April-December  (Click for detail)
  3. Companies may issue debt to non-residents as bonus, says RBI  (Click for detail)
  4. Companies binge on share buybacks  (Click for detail)
  5. Opt for ELSS and Bank FD combo to save on tax, preserve capital  (Click for detail)
  6. ICAI Convocation 2014 - Date, Place & Participants details  (Click for detail)

  7.  

II.  Direct Tax Case laws:

1.  CIT Vs. Oriental Structural Engineers Pvt. Ltd., ITA No. 605/2012 Del/2011 Date of Decision: 15.01.2013, High Court of Delhi

Section 14A & Rule 8D of the Income Tax Act, 1961

Whether disallowance u/s 14A of the Act can be made in case where investment made out of “commercial expediency” to earn taxable income.

Held: No

The assessee borrowed funds and invested in shares of subsidiary companies. The assessee had to form Special Purpose Vehicles (SPVs) in order to obtain contracts from the NHAI and the SPVs so formed engaged the company as contract to execute the works awarded to them (i.e. SPVs) by the NHAI. In its profit and loss account, the assessee has shown the turnover from execution of these contracts and therefore no expense and interest attributable to the investments made by the assessee in the SPVs on account of commercial expediency can be disallowed u/s 14A r.w. Rule 8D because it cannot be termed as expense /interest incurred for earning exempted income.

(Please click here for judgment)

 

2.  Chalasani Venkateswara Rao Vs. ITO, ITA No. 70 of 2000, Date of Order: 03.08.2012, High Court of Andhra Pradesh

Section 45(4) of the Income Tax Act, 1956

Whether a sum of money paid to partner on dissolution in respect of full & final settlement of his share is regarded as a transfer and liable to tax u/s 45(4) of the Act.

Held_No

In the instant case, a partnership firm was dissolved & the assessee partner received an amount for final settlement of his share in the partnership whereas, all the assets of the firm will vest in the hands of other partner. The AO was of the contention that, the assessee partner sold his share of right on the assets to the other partner. So, it will be liable to capital gain u/s 45(4). But the hon’ble High Court has held that the amount received by any partner in full & final settlement of his share & such adjustment of his right is not a ‘transfer’ in the eye of law.

(Please click here for judgment)


 

III.  Useful Article:

1.  [ Contribution by CA Sanjeev Singhal and contributor is available at sanjeev.singhal@skaca.in ]

"Distribution of CENVAT by Input Service Distributor"

(Please click here)  

 

 Golden Rule:

"Adjustment with right people is better
than argument with wrong people.
A meaningful silence is better
than meaningless words"

 

  Thanks & Regards

Team

Voice of CA

 

 


 

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