The Institute of Chartered Accountants - …navimumbaica.org/resource/Newsletter/image/Newsletter_June_2014.pdfVolume 04/14-15 Institute of Chartered Accountants of India Navi Mumbai

Volume 04/14-15 Institute of Chartered Accountants of India Navi Mumbai Branch of WIRC

Newsletter, June 2014

1

News letter June 2014

Volume 04/2014-15

My Dear Professional Colleagues,

The entire India has given a clear verdict and has voted for ‘a change'. The verdict is

given for the stability and growth of the Nation and we all hope that with his vision and

policies, our new Prime Minister, Shri. Narendra Modiji, will take our nation to new

heights.

At branch level, we understand the importance of reaching to all the members of Navi

Mumbai, whether he or she in practice or in industry. To have better communication

with members and students, we have made our website more interactive. I am happy to

announce that CA Mangesh Kinareji past Chairman, WIRC and CA Sunil Patodia,

RCM has agreed to grace the occasion of inauguration our revamped website

“www.navimumbaica.org” on 11th June, 2014. The website will have link for online

registration for ITT and GMCS Courses for our students.

In Navi Mumbai, our members have professional exposure ranging from small and me-

dium size organizations to large corporates. My Managing Committee Members are

working towards adding value by strengthening knowledge base of members. The Mock

Tribunal under Income Tax, held on 17th May,2014 was a unique experience , which was

well attended by 120 members and students. I express my sincere gratitude for the

Managing Committee Chairman CA. Sameer L. Gavli 9821161072 Vice-Chairman CA. Shrikant Limaye 9819455561 Secretary CAMinaxi Rachchh 9820898183 Treasurer CA. Ananthram Rao 9320433833 Members CA. Sreekumar Nair 9892290909 CA. J.D.Tandel 9820192895 CA. Santosh Sharma 9323582884 CA. Nawanit Jaipuriyar 9920062526 Co-opted Members CA. Sanjay Nikam 9820446329 CA. Suresh Ameria 9821368836 CA. Manoj Pandey 9322804994

Inside this issue:

Googlies & Doosras u/s 54 deductions…………...3

Service Tax– Resident welfare association……....8

Strengthening Economy– The Agrarian Way…....9

Due Dates Chart…………………………………11

Important Circulars on TDS………………….....12

Recent Judgments…………………………………….13

AGM Notice………………………………….............17

Incentive workshop on Companies Act, 2013……….18

Forthcoming programmes……….…………………..20

Photo Gallery.…..……………………………………21

Issue Compiled by:

CA Abhilash Tewari

The Institute of Chartered Accountants The Institute of Chartered Accountants The Institute of Chartered Accountants

of Indiaof Indiaof India Navi Mumbai Branch of WIRC Navi Mumbai Branch of WIRC Navi Mumbai Branch of WIRC

NewsletterNewsletterNewsletter



2

efforts taken by CA C.N.Vaze and his team to make it a successful event. As a step towards continuous education, the

Branch has arranged an Intensive Workshop on Companies Act,2013 between 11th June to 21st June. Senior faculties will-

make members understand the concept and provisions of the new Companies Act,2013. The workshop is divided into 5

sessions of 3 hours each, having 15 CPE hours for the members. Detailed schedule of the workshop is published in this

newsletter. Further to make the general public aware about the changes brought in by the new Companies Act, 2013, the

Branch has organized one seminar on Thursday 19th June,2014 at NMSA between 4.00 pm to 6.00 pm. The seminar is or-

ganized, jointly with Thane Belapur Industries Association (TBIA) for Directors and Key Managerial Personnel to make

them aware about their role & responsibilities under the new act.

Our institute is committed to the economy not only by helping compliance but also through various social initiatives

which are undertaken at the branch levels. Our Managing Committee has planned various activities on 1st July,2014 to

celebrate “CA Foundation Day”. The day will begin with flag hoisting and members meet, followed by Blood Donation

Camp at Navi Mumbai Sports Association. The Hon. Commissioner of Income Tax, City 22, has agreed to be Guest of

Honour on this occasion. In the afternoon, we have arranged a visit to NGO, which is working for underprivileged chil-

dren staying in slum area, to donate story books, school bags. I request my fellow members to contribute generously for

this noble cause. Strong support from our family members has helped us to concentrate on our complex and demanding

profession. We have also organized family get together to strengthen the bonding between our family members on the

same evening.

I conclude my communication with a note of request to my senior professionals to guide me and my team members in tak-

ing various critical decisions and setting higher standards for the branch working. I wish in advance all my members, a

Happy CA Day.

With Warm Regards

CA Sameer Gavli,

CHAIRMAN,

NAVI MUMBAI BRANCH OF WIRC OF ICAI.

Members are requested to make their

payment of annual membership fees for the

year 14-15 Rs.2500

——-Appeal——-



3

U/s 54 deductions

We all respect Anil Kumble and Harbhajan Singh for their

legendary googlies and doosras respectively. Most of the

world’s renowned batsmen also could not face these deliver-

ies perfectly. Even cricketing coaching manuals have been

getting revised on yearly basis to include the ways to tackle

such increasingly complicated deliveries. Likewise one will

find that all googlies & doosras in the provisions under the

Income tax Act are been getting de-codified rapidly these

days. This is all thanks to our supreme judiciary system

who even after having backlog of millions of cases been

delivering wonderful judgments. Sections 54 & 54EC may

look very small, easy and simple to understand on face of it,

but going through various judicial pronouncements will

surely change one’s mind. With respect to Ss. 54, 54B,

54EC & 54F, I have tried to compile few googlies & doosras

which have been solved by our Hon’ble Courts in India.

These are:

Section 54:

1. In order to claim deduction under section 54, it is inten-

tion of parties when development/purchase agreement

was entered into and municipal permissions were ob-

tained, which determines nature of property sought to be

acquired, and subsequent change in user of property

does not disentitle assessee to relief under section 54.

Thus, Mere non residential use subsequently would not

render the property ineligible for benefit u/S. 54.

- Smt. K. Pratibha vs. Income Tax Officer [2014]

44 taxmann.com 282 (Hyderabad - Trib.)

Comment:

Same view has been taken while deciding the issue for

deduction u/S. 54F in the following cases:

- Dy. CIT v. M.V. Subramanyeswara Reddy

(HUF) [IT Appeal No.1014 (Hyd.) of 2009]

- Mahavir Prasad Gupta v. Jt. CIT [2006] 5 SOT 353

- Shyamlal Tandon vs. ITO [2014] 62 SOT 105

(Hyderabad - Trib.)(URO)

2. Investing in more than one residential house by as-

sessee out of capital gains would not disentitle assessee

Googlies & Doosras

- By CA Kunal Mangal



4

from availing benefit conferred under section 54. Let-

ter 'a' in expression 'a residential house', used in section

54 should not be construed as meaning singular, but

being an indefinite article, said expression should be

read in consonance with other words 'buildings and

lands'. Therefore, 'a residential house' also permits use

of plural by virtue of section 13(2) of General Clauses

Act, 1897.

- Commissioner of Income Tax vs. Khoobchand

M. Makhija [2014] 43 taxmann.com 143

(Karnataka).

Comment:

The above judgment of Hon’ble Karnataka High Court

is a path breaking decision since it has allowed deduc-

tion when the capital gains were invested in two inde-

pendent residential properties. Earlier, the courts have

allowed the deduction when investments were made in

more than 1 property in cases where those properties

were either directly or indirectly connected to each

other like common door, adjacent flats, etc.

- Anand Basappa vs. ITO (2004) 91 ITD 53

(Bang. – Trib.)

- CIT vs. Rukminiamma (KG) (2011) 331 ITR

211 (Karnataka)

- CIT v. Syed Ali Adil [2013] 352 ITR 418

(Andhra Pradesh)

However, interestingly the Hon’ble Mumbai Tribunal in

the case ITO v. Shushila M. Jhaveri [2007] 107 ITD 327

(Mum.) (SB) has held that only one residential house

should be given the relief under section 54.

3. Where assessee incurred bona fide construction expen-

diture after purchasing new house property, additional

expenses so incurred would be eligible for qualifying

investment under section 54. The use of words

'purchased or construed' does not mean that the prop-

erty can either be purchased or constructed and not a

combination of both the actions. A property may have

been purchased as a readymade unit but that does not

restrict the buyer from incurring any bonafide con-

struction expenditure on improvisation or supplemen-

tary work.

- Shrinivas R. Desai vs. Asstt. CIT [2013] 155

TTJ 743 (Ahmedabad - Trib.)

4. In order to claim deduction under section 54, construc-

tion of house has to be completed within prescribed

time limit and in this regard, date of commencement of

construction is not material. Therefore, if construction

of residential house starts before date of transfer of

capital asset but is completed within prescribed time

limit of three years from date of transfer, assessee's

claim for deduction under section 54 cannot be denied.

- Asstt. CIT vs. Subhash Sevaram Bhavnani [2012]

23 taxmann.com 94 (Ahmedabad - Trib.)

- CIT vs. J. R. Subramanya Bhat [1987] 64 CTR

280 (Karnataka)

Section 54B:

1. Exemption under Section 54B cannot be denied solely

on the ground that the new agricultural land purchased

is not wholly owned by the assessee, as the assessee’s



5

son is a co-owner as per the sale deed.-CIT vs. Gur-

nam Singh (2010) 327 ITR 278 (P&H)

But it was held in another case that when investment

is done in the name of son and grandson or in the

name of married major daughters, it does not satisfy

the requirement under analogous provisions under

Section 54B.

- Jai Narayan vs. ITO (2008) 306 ITR 335 (P&H)

- Ganta Vijaya Lakshmi vs. Income-tax Officer

(2014) 160 TTJ 236 (Visakhapatnam - Trib.)

Comment:

Interestingly the Hon’ble Andhra Pradesh High Court

in the case of Mir Gulam Ali Khan vs. CIT [1986] 28

TAXMAN 572 (AP) has held that the word 'assessee'

must be given a wide and liberal interpretation so as

to include his legal heirs also. There is no warrant for

giving too strict an interpretation to the word

'assessee' as that would frustrate the object of granting

exemption.

Hon’ble Rajasthan High Court has taken a divergent

view in the case of Kalya vs CIT [2012] 251 CTR 174

(Rajasthan) by holding that the word 'assessee' used

in Income-tax Act needs to be given a legal interpre-

tation and not a liberal interpretation and, conse-

quently, an assessee would not be entitled to get ex-

emption under section 54B for land purchased by him

in name of his son and daughter-in-law.

2. For the purposes of Section 54B, land need not be

agricultural land, but must be used for agricultural

purposes by the Assessee. The fact that the land was

situated in a commercial area or that the vendee has

purchased it for non-agricultural purposes is not mate-

rial.

- CIT vs. Savita Rani (2004) 270 ITR 40 (P&H)

3. One of the conditions under Section 54B is that the

land was being used by the assessee or a parent of his

for agricultural purposes in the two years immediately

preceding the date on which the transfer took place.

But it was held in one case that where assessee was

unable to cultivate an agricultural land due to vagaries

of nature and non availability of resources, exemption

under section 54B could not be denied on its sale.

- ACIT vs. N. Raghu Varma [2013] 142 ITD 421

(Hyderabad - Trib.)

Section 54EC:

1. Section 54EC gives choice to the assessee either to

invest in REC bonds or NHAI bonds, in case the

bonds of the assessee’s choice are not available, the

time to invest in the bonds get automatically extended

till the bonds are available in the market. Where in-

vestment in eligible bonds was temporarily closed and

by time it was reopen time limit of six months was

expired, investment made on date of reopening was

eligible for exemption under section 54EC.

- CIT vs. Cello Plast (2012) 209 Taxman 617

(Bom.)

- Aspi Ginwala, Shree Ram Engg. & Mfg. In-

dustries vs. ACIT, Baroda (2012) 146 TTJ 385

(Ahmedabad)

2. For the purpose of provisions of section 54EC, the

date of investment by the assessee must be regarded

as the date on which payment is made. Therefore, if

such payment is within a period of six months from

the date of transfer, the assessee would be eligible to

claim exemption. The exemption will not be denied



6

in case bonds are issued to the applicant after a period

of six months though payment was made within 6

months time period.

- Hindustan Unilever Limited vs. DCIT (2010)

325 ITR 102 (Bom.)

3. Allowability of deduction for making investments of

A 1 Crore i.e. A 50 Lakhs in specified bonds in each

two different financial years but within six months

from the date of transfer.

In favor of Assessee

- Coromandel Industries (P.) Ltd. vs. ACIT, Chennai

(2013) 145 ITD 171 (Chennai - Trib.)

- Income Tax Officer vs. Ms. Rania Faleiro (2013)

142 ITD 769 (Panaji - Trib.)

- Smt. Sriram Indubal vs. Income Tax Officer

(2013) 32 taxmann.com 118 (Chennai - Trib.)

In favor of Revenue

- ACIT vs. Shri Raj Kumar Jain & Sons (HUF)

(2012) 50 SOT 213 (Jaipur).

Comment:

With due regards to the Judiciary it is my personal

opinion that the interpretation taken by the courts in

favor of Assessees is not appropriate. This is because

no legislation or its maker would like to create indif-

ference between those who sell their assets after 1st

October and those who sell their assets before 1st Oc-

tober. Though the technical interpretation would con-

vey that an assessee can claim deduction of A 1 Crore

but such interpretation would only make the section

54EC violative of Article 14 of the Constitution

which guarantees the equality before law. Well the

confusions or doubts will eventually settle when the

Hon’ble Supreme Court decides on this matter. And I

am sure that looking at recent trends, the revenue de-

partment will surely knock the doors of Supreme

Court to adjudicate on this issue!

4. Assessee is entitled to exemption under section 54EC

in respect of capital gains arising on transfer of a capi-

tal asset on which depreciation has been allowed.

Section 54EC does not make any distinction between

depreciable asset and non-depreciable asset and,

therefore, exemption available to depreciable asset

under section 54EC cannot be denied by referring to

fiction created under section 50. Legal fiction created

in section 50 is to deem capital gain as short-term

capital gain and not to deem an asset as short-term

capital asset and, therefore, it cannot be said that sec-

tion 50 converts long-term capital asset into short-

term capital asset.

- CIT vs. ACE Builders (P.) Ltd. (2005) 144

Taxman 855 (BOM.)

- CIT vs. Aditya Medisales Ltd. (2013) 38 tax-

mann.com 244 (Gujarat)

- CIT vs. Assam Petroleum Industries (P.) Ltd.

(2003) 131 Taxman 699 (GAU.)

- CIT vs. Polestar Industries (2014) 41 tax-

mann.com 237 (Gujarat)

- CIT vs. United Paper Industries (2014) 42 tax-

mann.com 79 (Bombay)

5. Purchase of REC Bonds in joint names of assessee

and her son cannot disentitle assessee to exemption

under section 54EC where first name was that of as-



7

sessee and assessee’s son had made no contribution.

- Income Tax Officer vs. Smt. Saraswati Rama-

nathan [2008] 114 TTJ 803 (DELHI)

Section 54F:

1. The Hon’ble Mumbai Tribunal in the case of DCIT

vs Uday S. Kotak (2005) 278 ITR AT 171 Mumbai

has held that the tenants of the residential house do

not have ownership rights in the residential house.

Thus, any payment made to them after the completion

of sale does not amount to purchase money paid for

`purchase' of residential house. Such payment may be

cost of acquisition within the meaning of Section 48,

which is relevant only for computing capital gain.

Thus, such payment will not qualify as investment in

the purchase of a residential property for the purpose

of taking deduction u/S. 54F.

Comment:

The decision is a googly in itself considering the fact

that in property matters, particularly in Mumbai, the

term `purchase' extends to paying off tenants to avoid

litigation.

2. Provisions of section 54F mandate construction of a

residential house, within period specified, however,

there is no condition that building plan of residential

house should be approved by Municipal Corporation

or any other competent authority.

- B. Sivasubramanian vs. ITO [2014] 45 tax-

mann.com 74 (Chennai - Trib.)

3. The condition precedent is that the capital gain real-

ized from sale of capital asset should have been

parted by the assessee and invested in constructing a

residential house. Once it is demonstrated that con-

sideration received on transfer of a capital asset is

invested in a residential property, fact that transac-

tions involved in purchase or construction of such

residential property are not complete in all respects

would not disentitle assessee from benefit of exemp-

tion under section 54F.

- ITO vs. Smt. B. S. Shanthakumari [2014] 62

SOT 53 (Bangalore - Trib.)(URO)

- CIT vs. Sambandam Udaykumar [2012] 345

ITR 389 (Karnataka)

4. Benefit of deduction under Sections 54 and 54F when

the capital gains are invested in a property located in a

foreign country.

In favor of Assessee:

- Mrs. Prema P. Shah vs. ITO [2006] 100 ITD 60

(MUM.)

- ITO v. Dr. Girish M. Shah in I. T. A. No. 3582/

Mum/2009, dated 19-2-2010

- Vinay Mishra vs. Asstt. CIT [2013] 30 Tax-

mann.com 341 (BANG.)

In favor of Revenue:

- Leena J. Shah vs. Asstt. CIT [2006] 6 SOT 721

(AHD.)

Sources:

Volume 3, Law of Income Tax - Shri. Sampath

Iyengar

www.Taxmann.com

The Author of this article is Member of ICAI and can be

reached at [email protected]

mailto:[email protected]



8

CBEC vide circular no. 175/01/2014-ST dated

10.01.2014 clarified:-

1) Monthly contribution of Rs. 5, 000/- per member per

month collected by RWA’s for purpose of sourcing

goods and services from third person for common use

of its members is exempt.

2) In case monthly contribution of any member exceeds

Rs. 5, 000/- per monthly, then the entire contribution of

that member will taxable.

3) The RWA’s will be eligible to claim benefit of Notifi-

cation No. 33/2012-ST, subject to conditions specified

in the said notification.

4) Payments made by RWA’s on behalf of members, if

satisfying Rule 5(2) of Service Tax (Determination of

Value) Rules, 2006, will excluded from value of tax-

able services. Eg. Payment of electricity or water

charges by the RWA’s, where the bills are in name of

individual members and RWA’s only collects the

amounts and make payments without charging any

commission.

5) The RWA’s can avail cenvat credit in accordance with

Cenvat Credit Rules.

CBEC vide Mega Exemption Notification No. 25/2012

dated 20.06.12 in clause 28(c) states:-

Services by an unincorporated body or non-profit entity,

registered, to its own members by way of reimbursement of

charges or share of contribution-

a. As a trade union

b. For the provision of carrying out any activity which is

exempt from the levy of service tax, or

c. Up to an amount of Rs. 5, 000/- per member per month

for sourcing of goods or services from a third person

for common use of its members in a housing society or

a residential complex.

The Contributor of this article is Member of ICAI and can be

reached at [email protected]

Residents Welfare Association

Service Tax

- By CA Vignesh Palkar

Humor Corner:

CA on his death bed:

My wife, are you here?

“Yes dear”

My daughter, are you here?

“Yes dad”

My son, are you here?

“Yes dad”

MY ARTICLES, ARE YOU HERE?

“Yes SIR”

Then Who the hell is in the Office




9

Strengthening Economy

The Agrarian Way - By CA Abhilash Tewari

The Election season is over the new government under the

leadership of Shri Narendra Modi has sworn in and taken

charge of the offices. The people of India are looking at the

government with eyes filled with hopes and expectations.

The India Inc is merrier and riding on high hopes. The

stock markets are breaking new record every day but there

is another India that resides in rural India which earns its

livelihood majorly from Farms and cattle. The new govern-

ment apart from focusing on development of infrastructure

to reboost the economy also needs to focus on agriculture.

Agriculture has been backbone of Indian economy since

ancient times. Around 70 percent of Indian population in

India is dependent on agriculture for its livelihood. The

fertility of land in India is beyond question. Such land is

favorable for production of fruits, crops, minerals etc. The

Farmers who are the drivers to the entire process of agri-

culture right from like sowing seeds, to harvesting crops

are around 65% of the total workforce of the nation. The

farmers have now equipped themselves with modern tech-

nologies and equipments for agriculture.

The knowledge of an average Indian farmer about his oc-

cupation is so vast that People from parts of the globe

come to study agriculture science. Agriculture still contrib-

utes a sizeable contribution to the GDP of the country.

In recent past number of poor farmers committed suicide

due to loss in the field. Government introduced several

schemes and concessions to farmers however its impact

hasn’t reached the majority of effected famers the new

government needs to ensure that the implementation and

execution of these schemes reaches the masses. Govern-

ment also needs to focus on providing education to farmers

on subjects such as increasing the productivity of land. The

government also needs to put emphasis increasing the

knowledge of farmers on all activities of farming. Govern-

ment should also ensure that farmer’s receive good return

from their cultivations.

Under the present scenario India agriculture is not given

importance. The People and Government fail to understand

the importance of this sector. Handful people select this

field as career or occupation. In India farmers are manipu-

lated by middlemen. The government needs to ensure that



10

such practices are curbed which would not only result in good returns to the farmers but would also help in reducing the

food inflation. Even today in some places farmers are exploited by the landlords. The revenues from agriculture sector

have increased after introduction of modern technologies in farming. The government now needs to take concrete steps to

improve this sector. Many changes and improvements are required to increase the revenue generated from this sector.

The government needs to place emphasis on lacunas in Indian agriculture such as improper irrigation facilities, scarcity of

essential commodities, and low financial ability of farmers, non availability of quality seeds, fertilizer and chemicals.

Reports of World Banks , IMF, International Financial intermediaries are to be considered carefully to understand the sig-

nificance of the sustenance development of the markets to cater their financial and daily needs of funds , so as to grow

them and make India a developed country instead of a consummating economy. It would not be worthy enough to con-

sume the over producing economies and compromised quality merchandise into our country instead of making it self suffi-

cient in the untouched sectors in which we are in born experts “Agriculture”.

A new term agro-economics is required to be introduced to create a standardized effort to make this economics grow

wildly and enter the European market like anything and the allied markets, to strenghthen the backbone of Indian econ-

omy. And there is no doubt that there could be a great cultural change which is much waited for the Indian people where

the wave should move from accountability to Responsibility of each one of us who announced themselves to be the young

colour of the country.

The government now needs to strengthen the economy by laying due emphasis on the most ignored sector of the Indian

economy i.e agriculture. There is an immediate need for another Green Revolution which would not only ensure growth in

the sector but also result in growth of economy as a whole. The growth of agriculture would also result in growth of re-

lated sectors such as dairy, textile food products, transportation etc. In order to make India self reliable and self sufficient it

is important that the Agriculture sector is given its Due. The Lines Late Prime Minister Shri Lal Bahadur Shastri ‘Jai

Jawan Jai Kisan’ needs to relived and improve not only the sector but also the economy.

The Author of this article is Member of ICAI and can be reached at [email protected]




11

Month TDS

Payment

TDS Re-

turns

Advance

Tax

Payment

Income

Tax

Return

Service

Tax

Payment

Service

Tax

Return

ESIC

Pay-

ment

PF

Pay-

ment

VAT

Pay-

ment

April 30 - - - - 25 21 15 21/30

May 7 15 - - 5 - 21 15 21

June 7 - 15 - 5 - 21 15 21

July 7 15 - 31 5 - 21 15 21

August 7 - - - 5 - 21 15 21

September 7 - 15 30 5 - 21 15 21

October 7 15 - - 5 25 21 15 21/30

November 7 - - 30* 5 - 21 15 21

December 7 - 15 - 5 - 21 15 21

January 7 15 - - 5 - 21 15 21

February 7 - - - 5 - 21 15 21

March 7 - 15/31 - 5/31 - 21 15 21

Due Dates Chart (FY 2014-15)

*for companies requiring to file return U/s 90E



12

CHAPTER XVII-B OF THE INCOME-TAX ACT, 1961 - COLLECTION AND RECOVERY OF TAX - DE-

DUCTION AT SOURCE - CLARIFICATION REGARDING TDS UNDER CHAPTER XVII-B ON SER-

VICE TAX COMPONENT COMPRISED OF PAYMENTS MADE TO RESIDENTS

CIRCULAR NO. 1/2014 [F.NO.275/59/2012-IT(B)] DATED 13-1-2014

1. The Board had issued a Circular No.4/2008 dated 28-04-2008 wherein it was clarified that tax is to be deducted at

source under section 194-I of the Income-tax Act, 1961 (hereafter referred to as 'the Act'), on the amount of rent

paid/payable without including the service tax component. Representations/letters has been received seeking

clarification whether such principle can be extended to other provisions of the Act also.

2. Attention of CBDT has also been drawn to the judgement of the Hon'ble Rajasthan High Court dated 1-7-2013, in

the case of CIT (TDS) Jaipur vs.Rajasthan Urban Infrastructure (Income-tax Appeal No.235, 222, 238 and

239/2011), holding that if as per the terms of the agreement between the payer and the payee, the amount of ser-

vice tax is to be paid separately and was not included in the fees for professional services or technical services, no

TDS is required to be made on the service tax component u/s 194J of the Act.

3. The matter has been examined afresh. In exercise of the powers conferred under section 119 of the Act, the Board

has decided that wherever in terms of the agreement/contract between the payer and the payee, the service tax

component comprised in the amount payable to a resident is indicated separately, tax shall be deducted at

source under Chapter XVII -B of the Act on the amount paid/payable without including such service tax com-

ponent.

4. This circular may be brought to the notice of all officer for compliance.

lobal Warming

Important Circular

On TDS



13

Some recent judgements under Income Tax Act,1961

Rakesh Kumar Gupta vs. UOI (Allahabad High Court)

June 2nd, 2014

Assessee cannot be denied credit for TDS on the ground of Form 26AS mismatch because he is not at fault. Non-

grant of TDS credit causes harassment, inconvenience & makes the assessee feel cheated. Dept to pay interest +

costs of Rs. 25,000

The assessee filed a return in which he claimed a refund of Rs. 2.32 lakhs on account of excess TDS by the Government

department. The return was processed by the Central Processing Centre (CPC) of the Income-tax Department at Banga-

lore and a refund of only Rs.43,740 was issued. No intimation was given to the assessee as to why the balance amount

of Rs.1.88,630 was not refundable. The assessee filed an application u/s 154 for rectification of the mistake and asked

for refund of the balance amount. As there was no response from the department despite several reminders, the assessee

filed a writ petition in the High Court. HELD by the High Court allowing the Petition:

(i) The difficulty faced by the tax payers relating to credit of TDS was considered by the Delhi High Court in Court On

its Own Motion vs. CIT 352 ITR 273 and the CBDT was directed to issue directions with regard to giving credit of

unmatched and mismatched TDS certificates. Pursuant thereto, the CBDT issued Instruction No.5 of 2013 dated

8.7.2013 directing that where the assessee approaches the AO with requisite details and particulars in the form of TDS

certificate as evidence against any mismatch amount the AO would verify whether or not the deductor had made pay-

ment of the TDS in the government account and, in the event, the payment had been made, credit of the same would be

given to the assessee.

(ii) On facts, no effort has been made by the AO to verify whether the deductor had made the payment of the TDS in the

government account. On the other hand, the Income-tax department has shown helplessness in not refunding the amount

on the sole ground that the details of the TDS did not match with the details shown in Form 26AS. There is a presump-

tion that the deductor has deposited TDS amount in the government account especially when the deductor is a govern-

Recent Judgments Source – www.itatonline.org

http://itatonline.org/archives/index.php/rakesh-kumar-gupta-vs-uoi-allahabad-high-courtassessee-cannot-be-denied-credit-for-tds-on-the-ground-of-form-26as-mismatch-because-he-is-not-at-fault-non-grant-of-tds-credit-causes-harassment-inconv/

http://itatonline.org/archives/index.php/court-on-its-own-motion-vs-cit-delhi-high-court-strict-guidelines-issued-to-end-depts-tds-credit-refund-adjustment-harassment/


http://itatonline.org/downloadcenter/?nav=display&file=3

http://itatonline.org/downloadcenter/?nav=display&file=3



14

ment department. By denying the benefit of TDS to the Petitioner because of the fault of the deductor causes not only

harassment and inconvenience, but also makes the assessee feel cheated. There is no fault on the part of the Petitioner.

The fault, if any, lay with the deductor. The mismatching is not attributable to the assessee. The department must refund

the amount within 3 weeks with interest. The department must also pay costs of Rs. 25,000 to the Petitioner.

Citicorp Finance (India) Ltd vs. ACIT (ITAT Mumbai)

TDS Credit must be given even if TDS Certificate is not available/ entry is not shown in Form 26AS

The assessee claimed credit for TDS which was denied by the AO on the ground that the claim did not match the entries

shown in Form No. 26AS and that there was a discrepancy. On appeal, the CIT(A) held that the assessee would be en-

titiled to credit to the extent shown in the computer system of the department. On further appeal by the assessee to the

Tribunal HELD:

The AO is not justified in denying credit for TDS on the ground that the TDS is not reflected in the computer generated

Form 26AS. In Yashpal Sahwney 293 ITR 539 the Bombay High Court has noted the difficulty faced by taxpayers in

the matter of credit of TDS and held that even if the deductor had not issued a TDS certificate, still the claim of the as-

sessee has to be considered on the basis of the evidence produced for deduction of tax at source. The Revenue is empow-

ered to recover tax from the person responsible if he had not deducted tax at source or after deducting failed to deposit

with Central Government. The Delhi High Court has in Court On Its Own Motion Vs. CIT 352 ITR 273 directed the

department to ensure that credit is given to the assessee even where the deductor had failed to upload the correct details

in Form 26AS on the basis of evidence produced before the department. Therefore, the department is required to give

credit for TDS once valid TDS certificate had been produced or even where the deductor had not issued TDS certificates

on the basis of evidence produced by assessee regarding deduction of tax at source and on the basis of indemnity bond.

Kone Elevator India Pvt. Ltd vs. State of T. N (Supreme Court – 5 Judge Bench)

May 14th, 2014

Important principles on distinction between “contract for sale of goods” and “works contract” explained

A Constitutional Bench of 5 Judges of the Supreme Court had to consider whether the law laid down by a three-Judge

Bench in State of A.P. v. Kone Elevators (India) Ltd (2005) 3 SCC 389 that a contract for manufacture, supply and

http://itatonline.org/archives/index.php/citicorp-finance-india-ltd-vs-acit-itat-mumbai-tds-credit-must-be-given-eeven-if-tds-certificate-is-not-available-entry-is-not-shown-in-form-26as/


http://itatonline.org/archives/index.php/kone-elevator-india-pvt-ltd-vs-state-of-t-n-supreme-court-5-judge-bench-important-principles-on-distinction-between-contract-for-sale-of-goods-and-works-contract-ex/



15

installation of lifts in a building is a “contract for sale of goods” and not a “works contract” is correct or not. HELD

by the Constitution Bench over-ruling the three-Judge Bench judgement:

(i) In the case of a “contract for sale of goods”, the entire sale consideration is taxable under the sales tax or value

added tax enactments of the State legislatures. In the case of a “works contract”, the consideration paid for the labour

and service element has to be excluded from the total consideration received and only the balance is chargeable to

sales tax or value added tax;

(ii) Four concepts have clearly emerged from the numerous judgements of the Supreme Court on the point. They are

(a) the works contract is an indivisible contract but, by legal fiction, is divided into two parts, one for sale of goods,

and the other for supply of labour and services; (b) the concept of “dominant nature test” or, for that matter, the

“degree of intention test” or “overwhelming component test” for treating a contract as a works contract is not applica-

ble; (c) the term “works contract” as used in Clause (29A) of Article 366 of the Constitution takes in its sweep all

genre of works contract and is not to be narrowly construed to cover one species of contract to provide for labour and

service alone; and (d) once the characteristics of works contract are met with in a contract entered into between the

parties, any additional obligation incorporated in the contract would not change the nature of the contract;

(iii) The “dominant nature test” or “overwhelming component test” or “the degree of labour and service test” are

really not applicable. If the contract is a composite one which falls under the definition of works contracts as en-

grafted under clause (29A)(b) of Article 366 of the Constitution, the incidental part as regards labour and service

pales into total insignificance for the purpose of determining the nature of the contract;

(iv) On facts, the three-Bench judgement erred in taking the view that the major component was the equipment and

that the skill and labour employed for converting the main components into the end product were only incidental. The

principal logic applied, i.e., the incidental facet of labour and service is not correct because in all the cases, there is a

composite contract for the purchase and installation of the lift. The price quoted is a composite one for both. Various

technical aspects go into the installation of the lift. There has to be a safety device. In certain States, it is controlled by

the legislative enactment and the rules. In certain States, it is not, but the fact remains that a lift is installed on certain

norms and parameters keeping in view numerous factors. The installation requires considerable skill and experience.

The labour and service element is obvious. The preparatory work has to be done taking into consideration as to how

the lift is going to be attached to the building. The nature of the contracts clearly exposit that they are contracts for

supply and installation of the lift where labour and service element is involved. Individually manufactured goods such

as lift car, motors, ropes, rails, etc. are the components of the lift which are eventually installed at the site for the lift

to operate in the building. In constitutional terms, it is transfer either in goods or some other form. In fact, after the

goods are assembled and installed with skill and labour at the site, it becomes a permanent fixture of the building.

However, if there are two contracts, namely, purchase of the components of the lift from a dealer, it would be a con-



16

tract for sale and similarly, if separate contract is entered into for installation, that would be a contract for labour and

service. But, a pregnant one, which is a composite contract for supply and installation, has to be treated as a works

contract, for it is not a sale of goods/chattel simpliciter. It is not chattel sold as chattel or, for that matter, a chattel be-

ing attached to another chattel.

CIT vs. Triveni Engineering & Industries Ltd (Allahabad High Court)

June 5th, 2014

S. 271(1)(c)/ 271(1B): If, in the assessment order, AO directs initiation of penalty on specific issues but not on

others, he is not entitled to levy penalty on the other issues

S. 271(1)(c) empowers the AO, where he is satisfied in the course of any proceedings under the Act that the assessee

had concealed the particulars of his income or furnished inaccurate particulars of such income, to direct the payment

of penalty. Sub-section (1B) was inserted with retrospective effect from 01.04.1989 to provide that where any amount

is added or disallowed in computing the total income or loss of an assessee and the assessment order contains a direc-

tion for initiation of penalty proceedings, such an order of assessment shall be deemed to constitute satisfaction of the

AO for initiation of penalty proceedings under s. 271(1)(c). In order that the deeming fiction in sub-section (1B) must

apply, two requirements must be fulfilled. The first requirement is that an amount must have been added or disal-

lowed in computing the total income or loss of an assessee in any order of assessment or reassessment. The second is

that the order of assessment must contain a direction for the initiation of penalty proceedings under clause (c) of sub-

section (1) of s. 271. Where both the conditions as aforesaid are fulfilled, the order of assessment must be deemed to

constitute satisfaction of the AO for initiating penalty proceedings. In the present case, it is abundantly clear that in

respect of those heads where the AO considered it appropriate to initiate penalty proceedings u/s 271(1)(c), he made a

specific direction to that effect. In respect of the claim of interest on the SDF loan, there is no direction by the AO.

The absence of a reference to the initiation of proceedings u/s 271(1)(c) is not an inadvertent omission since it is clear

that in respect of several other heads, where the AO did consider it appropriate to initiate penalty proceedings, he

made an observation to that effect. In fact, even in the concluding part of his order, the AO issued a direction for initi-

ating penalty notice u/s 271(1)(c) “as discussed above”. The expression “as discussed above” is material because it

refers to those heads in respect of which a specific direction was issued by him for initiating steps u/s 271(1)(c). Un-

doubtedly, as held in Mak Data 358 ITR 593 (SC), the AO has to satisfy himself whether penalty proceedings should

be initiated or not during the course of assessment proceedings and he is not required to record his satisfaction in a

http://itatonline.org/archives/index.php/cit-vs-triveni-engineering-industries-ltd-allahabad-high-court-s-2711c-2711b-if-in-the-assessment-order-ao-directs-initiation-of-penalty-on-specific-issues-but-not-on-others-he-is-not-enti/

http://itatonline.org/archives/index.php/mak-data-p-ltd-vs-cit-supreme-court-under-explanation-1-to-s-2711c-voluntary-disclosure-of-concealed-income-does-not-absolve-assessee-of-s-2711c-penalty-if-the-assessee-fails-to-offer-an-ex/



17

N O T I C E

NOTICE is hereby given that the Annual General Meeting of the Navi Mumbai Branch of Western

India Regional Council of The Institute of Chartered Accountants of India, will be held on Satur-

day, 21st June, 2014 at 1.30 p.m. at NMSA, Vashi, Navi Mumbai to transact the following business:

1. To receive the Annual Report of the Navi Mumbai Branch of Western India Regional Council of ICAI.

2. To receive the Audited financial statements of Navi Mumbai Branch of WIRC of ICAI for the year

ended 31st March, 2014 and

3. To transact any other business with the permission of the Chair.

For and on behalf of

NAVI MUMBAI BRANCH OF WIRC OF ICAI

CA. (Dr.) Minaxi Rachchh

Secretary

Date: 06/06/2014

Notes:

1. In absence of quorum, the meeting shall be adjourned for half an hour. After half an hour, the meeting

shall be reconvened at the same venue for which no quorum shall be required. 2. The Annual Report of Navi Mumbai Branch of WIRC of ICAI and Annual Financial Statements for

2013-14 are available in soft copy. The same shall be mailed to members on request to Secretary on

“[email protected]”.

While answering the felicitation function organised by WIRC at

"Y.BChavanAuditorium" on 24th March,2014, President of ICAI, Hon.

CA K.Raghu, appealed members to donate generously for CA Benevolent

Fund so that the Corpus Fund can be CA Benevolent Fund can be utilized

for the maximum benefit of members' families. I therefore appeal all

members to contribute generously for CA Benevolent Fund. Members can

send the cheques either in favour of "Navi Mumbai Branch of WIRC of

ICAI" or directly to WIRC/ICAI.

——-Appeal——-



18

Navi Mumbai Branch of WIRC of ICAI, jointly with

Corporate & Allied Laws Committee of WIRC of ICAI, organizes

Intensive Workshop on Companies Act 2013 (from SME Perspective)

Objective-

Most of the provisions of The Companies Act 2013 have been notified and many of them have been made effective

from 1st April, 2014. Hence it is very much necessary to understand the concepts and provisions of the New Act as

the preparations for the proper compliance of the Act will have to be initiated in the current year. This intensive work-

shop intends to give in depth insight to various provisions of the Act which will be relevant from the perspective of

small and medium enterprises (SME) companies forming the client base of majority of Chartered Accountants.

Structure of the Workshop-

Session Date & Time Topic Faculty

(Contact No)

I

Wednesday

11/06/2014

4 pm to 7 pm

Introduction to New concepts, Key Definitions,

Applicability, Incorporation of Companies,

Drafting MOA/AOA, Issue of shares & securi-

ties, Impact on Private Limited companies.

CA. Abhay Arolkar

9820999231

[email protected]

II

Saturday

14/06/2014

10 am to 1 pm

Related Party Transactions, Corporate Govern-

ance, Acceptance of Loans and Deposits, Guar-

antees, Lending and Investments. Frauds and

Management Responsibility.

CA. Manish Sampat

9820010064

[email protected]

III

Sunday

15/06/2014

10 am to 1 pm

Appointment and Qualifications of Directors,

Board Meetings, Compliance procedures, An-

nual Returns, Registration of charges, AGM.

CA. Manoj Pati

9920673951

[email protected]

IV

Wednesday

18/06/2014

4 pm to 7 pm

Issues relating to Accounts and Financial State-

ments, Components of Financial Statements,

Voluntary Revision of Financial Statements, Re

-opening of Accounts, Depreciation, Dividend

and Managerial Remuneration, Consolidation of

Accounts etc.

CA. Sushrut Chitale

9821112904

V

Saturday

21/06/2014

10 am to 1 pm

Provisions relating to Audit and Auditors – Ro-

tation of Audit, Ceiling on Audits etc., Manda-

tory Internal Audit, Reporting on Frauds and

Auditors responsibility, Auditor’s focus areas –

compliances and responsibilities.

CA. Paresh Clerk 9820232640 [email protected]




19

Fees for members of ICAI : Rs.1,750 for full 5 sessions, to be paid in cheque, in advance in favour of “Navi

Mumbai Branch of WIRC of ICAI”, by or before 9th June,2014.

Fees includes, study material given by faculties, light refreshments, one copy of Companies Act, 2013, pub-

lished by Taxmann.

Students – Rs.100 per session

Registration – Mr.Bhagwat – 93236 71721 / Mr.Manoj – 97731 53877

Co-ordinator – CA (Dr.) Minaxi – 98208 98183

CA Navneet Jaipuriar – 99200 62526

CPE Hrs – 15

Venue – Conference Hall, Navi Mumbai Sports Association, Near MGM Hospital, Sector- 1A, Vashi, Navi

Mumbai.



20

Forthcoming Programmes

Day & Date Timing Topic Speakers Venue

Thursday

19th June,2014

4.00 pm to 6.00

pm

Responsibilities of Directors

under new Companies Act,

2013.

(The programme is organized

jointly with Thane Belapur In-

dustrial Association and open

for public at large, specially for

directors and key managerial

personnel of Companies. )

CA Ujwal

Landge

NMSA, Vashi

Saturday

29th June, 2014

4.00 pm to 6.00

pm

Analysis of State Budget from

VAT perspective

CA Jayant

Adhyapak

NMSA, Vashi

Tuesday

1st July,2014

9.30 am to 10.00

am

10.00 am to 2.00

pm

Celebration of CA Foundation

Day.

Flat Hoisting and Members

Meet.

Blood Donation Camp

-NA- NMSA, Vashi

Tuesday

1st July,2014

8.00 pm onwards Family Get-together

-NA- To be announced



21

PHOTO GALLERY

Senior Counsel CA K.Gopal and CA V.G.Ginde, acting

as Tribunal Members, in” Mock Tribunal under Income

Tax Act” organized on 17th May, 2014 at Conference

Hall, Navi Mumbai Sports Association, Vashi.

Participating Members arguing the case before Tribunal as

Departmental Representative (DR) and Assessee’s Repre-

sentative (AR) during Mock Tribunal under Income Tax

Act” organized on 17th May, 2014 at Conference Hall, Navi

Mumbai Sports Association, Vashi.

Senior Counsel, CA C.N.Vaze, guiding members, during

Mock Tribunal under Income Tax Act” organized on 17th

May, 2014 at Conference Hall, Navi Mumbai Sports As-

sociation, Vashi.

Members during Mock Tribunal under Income Tax Act”

organized on 17th May, 2014 at Conference Hall, Navi

Mumbai Sports Association, Vashi

DISCLAIMER :

The views and opinion expressed or implied in the Newsletter are those of the authors / con-tributors and do not necessarily reflect those of Navi Mumbai Branch. Unsolicited matters are

sent at the owner's risk and the publisher accepts no liability for loss or damage. Material in this publication may not be reproduced, whether in part or in whole, without the consent of Navi

Mumbai Branch. Members are requested to kindly send material of professional interest so that the same may be published in the newsletter subject to availability of space & editorial editing.



22

Membership Form

Name of the member ..........................................................................................................

Membership Number ..........................................................................................................

Professional Address ...........................................................................................................

……………………………………………………………………………………………………..

Mobile Number ...........................................................................................................

Office Telephone No. ...........................................................................................................

Mail ID (1) ...........................................................................................................

Mail ID (2) ...........................................................................................................

Residential Address ...........................................................................................................

..........................................................................................................

Topic of Interest ...........................................................................................................

..........................................................................................................

Annual Fees Rs.2,500 for CPE Study Circle Meetings

To,

Navi Mumbai Branch of WIRC of ICAI Address: Rainbow apartments, F-2/C-3, Near Vijaya Bank, Sector 10, Vashi, Navi Mumbai-400703

Phone: Mr. Bhagwat 9323671721, Mr. Manoj 9773153877

***********

Documents

The Institute of Chartered Accountants - …navimumbaica.org/resource/Newsletter/image/Newsletter_June_2014.pdfVolume 04/14-15 Institute of Chartered Accountants of India Navi Mumbai