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II. Direct Taxes Case Laws:
1. Tata
Teleservices Limited Vs. Central Board of Direct Taxes & Anr, W.P.
(C) 12304/2015 & CM 32604/2015, Date of Judgment: 11.05.2016, High
Court of Delhi
Issue:
Whether the assessee can be denied refund in pursuance of CBDT
Instruction No. 1 dated 13th January, 2015 issued to clarify the
provisions of Section 143(1D) of the Income Tax Act, 1961?
Held_No
Brief Facts:
The assessee is engaged in the business of providing telecom
services. The assessee is also an eligible undertaking u/s 80IA(2A) and
is eligible for 100% deduction under that section. The assessee has
accumulated losses for A.Y. 2012-13 to 2015-16 and it had claimed refund
on account of the Tax deducted at source and deposited with the
Government by the Payers. The assessee was eligible for grant of refund
u/s 143(1)(e) of the Act which states that the amount of refund due to
the Assessee determined in accordance with other provisions of Section
143(1) shall be granted to the Assessee. However, the refunds were
declined to the assessee for the reason that the case was pending for
scrutiny and as such covered by the provisions of section 143(1D) of the
Act stating that processing of return shall not be necessary where
notice u/s 143(2) was issued to assessee. The CBDT Instruction No. 1 of
2015, inter alia, states the legislative intent is to prevent the issue
of refund after processing as scrutiny proceedings may result in demand
for taxes on finalisation of the assessment subsequently.
Held:
It was held that the impugned CBDT Instruction No. 1 of 2015 dated
13th January 2015 is unsustainable in law and it is hereby quashed. It
was further observed that section 119 of the Act enables the CBDT to
issue orders, instructions and directions to the income tax authorities
for the proper administration of this Act. However, this power has
certain limitations which includes that the same should not be
prejudicial to the assessees. It was directed that the said Instruction
shall not hereafter be relied upon to deny refunds to the Assessees in
whose cases notices might have been issued u/s 143(2) of the Act. The
question whether such return should be processed will have to be decided
by the AO concerned exercising his discretion in terms of Section
143(1D) of the Act.
(Please click here for judgment)
2. M/s
Hanjin Shipping Company Ltd. Vs. Deputy Director of Income Tax, I.T.A.
No. 5277/M/2014, Date of Pronouncement: 13.05.2016, ITAT - Mumbai
Issue:
Whether the amount of service tax collected during the year would
form part of the Gross Receipts for the purpose of the computation of
Income under presumptive basis u/s 44B of the Income Tax Act, 1961?
Held_No
Brief Facts:
The assessee is a foreign company incorporated under the law of
Korea. It has opted for presumptive basis of taxation at the rate of
7.5% of the aggregate amount of income from operation of shipping under
section 44B of the Income Tax Act. The AO contented that the gross
receipts for determining the presumptive profit should be taken
inclusive of the Service Tax collected by the assessee. The AO placed
reliance on judgments of the Delhi bench of the Hon’ble Tribunal in DDIT
(International Taxation) vs. Technip Offshore Contracting BE (ITA No.
4613/Del/2007) and Authority of Advance Ruling in SIem Offshore Inc
((2011) 337 ITR 027). CIT (A) upheld the decision of AO. Aggrieved by
which assessee appealed before the Tribunal.
Held:
The hon’ble Tribunal, in the light of the judgment of Delhi High
Court in the case of DIT vs. Mitchell Drilling International Pvt. Ltd.
(2015) 62 Taxman.com 24 (Delhi), held that the service tax was collected
by the assessee on the behalf of the Government and is a statutory
liability to be paid to the Government and does not involve any element
of profit and hence it cannot be included in the Total receipts for
determining the income on presumptive basis under Section 44B.
The appeal of the assessee is allowed.
(Please click here for judgment)
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