26-October-2009-Statutes Happenings

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Online PR News – 28-October-2009 – – Case Laws-Direct Tax Laws -From Itat

Assessability of capital gains on transfer of shares - Sale as contemplated u/s 2(47)(i) and extinguishment of rights as contemplated u/s 2(47)(ii) are not mutually inter-changeable; if a particular transaction is the transaction of sale then unless the sale is complete, no transfer can be said to have taken place because there will always be extinguishment of rights in case of sale and if a single right out of the entire bundle of property in capital asset is extinguished, then, the transfer would be taken as complete; this will lead to absurd situation; thus, the transfer of share is complete when the share certificate along with duly executed transfer deed is handed over to the transferee - Hami Aspi Balsara v. ACIT [ITA No. 6402 & 6403/Mum/2008]

Power of AO to suo motu extend period for completion of special audit u/s 142(2A) of IT Act, 1961 - The power to suo motu extend the period for completion of the special audit was available to the AO only w.e.f. 1-4-2008 and before such date, the extension can be made only at the request of the assessee on an application made in this behalf by the assessee - Bishan Saroop Ram Kishan Agro Pvt. Ltd. v. DCIT [ITA Nos. 3413 to 3416; 3068, 3459 & 3670/Del/2008]

Scope of expression ‘fees for technical services’ under Article 13(4) of Indo-French DTAA for purpose of section 195 of IT Act, 1961 - Payments for all kind of technical services are to be treated as ‘fees for technical services’’ for the purpose of Article 13(4) of Indo-French DTAA - Maruti Udyog Ltd. v. ADIT (Int’l Taxation) [ITA Nos. 4217,4219 & 4221 (Del.) of 2005]

Determination of charge under section 115JB of IT Act, 1961 - Charge under section 115JB is to be determined with reference to 7.5 per cent of book profits; the process of determination of book profit is to be preceded with the comparison of liability for income-tax under normal provisions of income-tax which may be nil also; the income-tax payable cannot be circumscribed by positive figure only and, therefore, to say that those companies where income-tax payable being Rs. 1/- would be covered and not the Zero tax companies, would not be correct - DCW Ltd. v. DCIT [ITA No. 4175/Mum/2005]

Availability of depreciation under section 32(1)(iii) of IT Act, 1961 to a manufacturer of pistons - Terminal allowance as allowed under clause (iii) of section 32(1) is available only to power generating units and not to other assessees like the one in question - DCIT v. SAMKRG Pistons & Rings Ltd. [ITA No. 304/Hyd/2006]

Allowability of deduction under section 80-IB of IT Act, 1961 to a manufacturer and trader of wheat products - Milling of wheat into Rawa, bran, Atta, and Maida has to be considered as amounting to manufacture or production and as such, the assessee-manufacturer of such items is entitled for deduction u/s 80-IB - DCIT v. Sri Sai Roller Flour Mills Pvt. Ltd. [ITA No. 1440/Hyd/08]

Allowability of expenditure incurred for compliance of law - If the payment is incidental to the carrying on the business then the same has to be allowed; the compliance of law is incident of every business carried on by a person; therefore, any payment made for the purpose of compliance of the provisions of law would tantamount to payment incidental to the carrying on the business - Kaira Can Company Ltd. v. DCIT [ITA No. 820/Mum./05 & 3452/Mum/2006]

Jurisdiction of AO to proceed with assessment under section 147 of IT Act, 1961 - If the AO has cause or justification to know or suppose that income has escaped assessment it can be said to have a reason to believe that an income had escaped assessment; at the time of recording reasons for initiating proceedings u/s 147 it is not necessary that the Assessing Officer should have finally ascertained the fact by legal evidence or conclusion; at the initial stage what is required is ‘reason to believe’ but no established fact of escapement of income - Ms. Rainee Singh v. ITO [ITA No. 2474/Del/2005]

Corporate Laws

Competition (Amendment) Ordinance, 2009 Promulgated - [6 of 2009]

Direct Tax Laws -

Section 9 of the Income-tax Act, 1961 - Income - Deemed to accrue or arise in India - Withdrawal of Circulars No. 23 dated 23rd July, 1969, No. 163 dated 29th May, 1975 and No. 786 dated 7th February, 2000 - Circular No. 7/2009 [F. No. 500/135/2007-FTD-I], dated 22-10-2009

Securities Laws -

Trading Hours on Stock Exchanges - Circular No. SEBI/DNPD/Cir-47/2009, dated 23-10-2009

Combating Financing of Terrorism (CFT) under Unlawful Activities (Prevention) Act, 1967 - Directions to stock exchanges, depositories and all registered intermediaries - Circular No. ISD/AML/CIR-2/2009, dated 23-10-2009

Sezs -

Effective implementation of the Hazardous Waste Rules, 2008 - Reference from M/so Environment & Forests - Instruction No. 40, dated 1-10-2009

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