Saturday, February 15, 2014

Some Latest Judgements

The Chattisgarh High Court has held that where assessee surrendered income during search, explained manner in which it was derived in statement and paid tax as well as interest thereon, it was not necessary to file return before due date to get immunity from penalty for concealment under clause (2) of Explanation 5 to section 271(1)(c)

The Pune ITAT bench has held that where premium paid in excess of face value of investments classified under HTM (Held to Maturity) category had been amortized over period till maturity, same ‘revenue expenditure’

The Mumbai ITAT bench has held that entire expenses incurred on gratuity and other terminal benefits at time of retirement of employee are arevenue in nature allowable in year of retirement

The Mumbai ITAT bench has held that VRS payments made to retiring employees are allowable as revenue expenditure

The Mumbai ITAT bench has held that travelling expenses incurred by foreign head office on travelling of its own staff in connection with Indian branches was allowable under section 37(1) and section 44C was not applicable to it

Section 194C, read with section 40(a)(ia): TDS on contracts The Allahabad High Court has held that in a case of purchase of goods and equipment, provisions of section 194C would not be attracted

Section 194-I, read with section 194C: 
TDS on contracts and Rent The Karnataka High Court has held that where assessee entered into an agreement with a contractor for hiring of vehicles and made use of vehicles and equipment and paid hire charges on basis of number of hours of use, section 194-I, and not section 194C, would be attracted.

Section 115JA: Computation of Booked Profit

The Delhi High Court has held that Since computation of minimum alternate tax was cumbersome which was not possible by merely examining return or documents enclosed with return itself as several aspects were required to be examined, prima facie adjustment under section 143(1)(a) could not be made.

Section 24: Deductions from House Property

The Punjab & Haryana High Court has held that interest on interest paid due to default in payment of home loan installments is not deductible u/s 24

Section 32: Depreciation

The Mumbai ITAT bench has held that even if merged company did not claim depreciation for last few years, depreciation in hands of resultant company was to be allowed on WDV computed without adjustment of earlier depreciation

Section 50C: Special provision for full value of consideration in case of Land & Building 

The Jodhpur ITAT bench has held that where assessee sold a property and he had challenged market value adopted by Registrar for stamp duty purposes, provisions of section 50C(1) would not apply for purpose of computing capital gain on sale of property

Objective of SFIS is to accelerate growth in export of services so as to create a powerful and unique ‘Served From India’ brand, instantly recognized and respected world over.


Indian Service Providers, listed in Appendix 41 of Handbook of Procedures Volume 1 (HBPv1)-

  • who have free foreign exchange earning of at least ` 10 lakhs in current financial year
  • For Individual Indian Service Providers, minimum exchange earnings of ` 5 Lakhs.

LIST OF SERVICES AS PER GATT (eligible and ineligible)

All Indian Service Providers (Appendix 10 
of HBP v.1)


Duty Credit Scrip equivalent to 10% of free foreign exchange earned during current financial year (w.e.f 1.1.2011).


  • For import of any capital goods (including spares, office equipment & furniture and consumables) that are otherwise freely importable and / or restricted under ITC (HS).
  • For importing / domestic sourcing of capital goods (including spares) related to the manufacturing sector business of service provider.
  • For import of only those vehicles, which are in the nature of professional equipment
  • For payment of duty in case of Import/ domestic sourcing of motor cars, SUV’s and all purpose
  • vehicles as Professional Equipment by Hotels, Travel agents, Tour operators, etc.
  • Such vehicles will have to be registered for Tourist purpose only.
  • Proof of registration will need to be submitted to RA (Revenue Authority) within 6 months.
  • In case of hotels, clubs having residential facility of minimum 30 rooms, golf resorts and stand- alone restaurants having catering facilities, for  import of consumables including food items and alcoholic beverages.

For payment of excise duty for procurement from 
domestic sources, in respect of items permitted for 
imports under SFIS Duty Credit Scrip.


Entitlement /goods (imported / procured) shall be 
non transferable (except within group company and 
managed hotels) and be subject to Actual User 
    Additional customs duty/excise duty paid in cash or through debit under Duty Credit Scrip shall be adjusted as CENVAT Credit or Duty Drawback as per DoR (Department of Revenue) rules, except
    under SFIS.


    Valid for a period of 18 months. Re validation of Duty Credit Scrip shall not be permitted unless covered under paragraph 2.13.1 or paragraph 2.13.2 A of HBP v1.

    Transfer of export performance from one to another 
    shall not be permitted.

    Available subject to a minimum of Rs 5 Lakh each and multiples thereof




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