Belgaum Branch of ICAI E-News Letter

Transcription

1 The Institute of Chartered Accountants of India (Set up by an Act of Parliament) Pages 10 Belgaum Branch of ICAI E-News Letter Respected Professional Colleagues, Accept my greetings for a happy, prosperous & eventful new financial year. It is April and beginning of new financial year for all of us. Most of us kick start the year with Bank Audit amidst the scorching heat. By the time you read this, you would have completed the bank audit successfully. This year throws up new challenges for usprofessionals. In view of the harsh penal provisions, it is going to be a daunting task for all of us to convince our clients and submit the returns of income in time as per the deadline. We may have to bear and carry on pressure that we experienced in the last week of March 2018 till the end of September The positive side of this is that theoretically not much of income tax return related work should remain pending for us after September Let us all gear up for the uphill tasks ahead. In view of the challenges and changes in the laws, we have many programmes in the nature of Our Profession... Our Pride workshops and alike for benefit of the members. On 27 th April, we have one day workshop on Excel as a data analysis and audit tool Also we have two days workshop on GST on 14 th & 15 th of May. As the saying goes All work and no play makes Jack a dull boy, we have organized a one day Indoor Games for the members on Saturday 28 th April to refresh after the hectic bank audit schedule and rejuvenate you all. I request the members to participate in large number and rekindle the player in you. Yours in Service Shivakumar Khadabadi Chairman OFFICE BEARERS CA. Shivakumar D. Khadabadi Chairman CA. Satish M. Mehta Vice Chairman CA. Jaykumar N. Patil Secretary CA. Rahul V. Adake SICASA Chairman CA. Chetan V. Chougule Treasurer CA. Praveen P. Ghali ITT Co-ordinator

2 FORTHCOMING EVENTS DATE & DAY TIME TOPIC(S) KEY SPEAKER(S) 27TH FRIDAY 09.30AM TO PM WORKSHOP ON EXCEL AS DATA ANALYSIS AND AUDIT TOOL CA DUNGAR CHAND U JAIN, MADURAI. CA SACHIN KHADABADI, BELAGAVI 28TH SATURDAY AM ONWARDS INDOOR GAMES FOR MEMBERS AT KLE INDOOR SPORTS COMPLEX AT NEHRU NAGAR,BELAGAVI TH MAY & 15TH MAY MONDAY & TUESDAY AM ONWARDS TWO DAYS WORKSHOP ON GST CA MADHUKAR HIREGANGE

3 LANDMARK RULINGS & STATUTORY CHANGES Income - Tax Corpus specific voluntary contributions aren t taxable even if trust isn t registered u/s 12A: Pune ITAT ITO v. serum Institute of India Research Foundation [2018] 90 taxmann.com 229 (Pune Trib.) The Pune ITAT held that corpus specific voluntary contributions being in nature of Capital receipt are outside scope of income under section (2)(24)(iia) and, thus, same couldn t be brought to tax even in case of trust not registered under section 12A/12AA. ITAT allows section 54 relief even if sum wasn t deposited in Capital Gain Scheme Mrs. Seema sabharwal v. ITO [2018] 91 taxmann.com 2 (Chandigarh Trib.) The assessee had earned Capital gain on sale of her residential property. She deposited the sale proceeds in the Fixed Deposits (FDRs) with bank and invested it in purchase of new property within 2 years of the date of sale of old house. Assessing Officer (AO) and CIT(A) held that the assessee was supposed to deposit the proceeds from the sale of house property in the capital gain account scheme, but she deposited the amount in the FDRs with Bank. Thus, she was not entitled to section 54 exemption. The Tribunal held in favour of assessee as under: Sub-section (2) of section 54 is an enabling provision which provides that the assessee should deposit the amount earned from Capital gain in Capital Gain Account Scheme (CGAS) till the amount is invested for the purchase/construction of the residential house. Sub-section (2) of section 54 regulates the procedure for the substantive rights of the exemption provisions under section 54 and this enabling section cannot abridge or modify the substantive rights given vide sub-section (1) of section 54, otherwise, the real purpose of substantive provisions, i.e., sub-section (1) will be defeated. The procedural and enabling provisions of sub- section (2) couldn t be strictly constructed to impose strict limitations on the assessee and in default thereof to deny him the benefit of exemptions, if the assessee had actually invested the capital gains.

4 LANDMARK RULINGS & STATUTORY CHANGES The primary goal of exemption provisions of section 54 is to promote housing. Therefore, if assessee at time of assessment proceedings proved that he had already invested capital gains in purchase of new residential house within stipulated period, benefit under substantive provisions of section 54(1) couldn t be denied. Interest awarded under land Acquisition Act forms part of compensation; not liable to tax Dnyanoba Shajirao Jadhav v. ITO [2018] 90 taxmann.com 285 (pune Trib.) The assessee was engaged in the business of trading in coconuts. The agriculture land of the assessee was acquired by the State Government for Minor Irrigation Division. The assessee received compensation for acquisition of land including interest under section 28 of the Land Acquisition act, The assessee claimed total amount of compensation including interest as exempt under section 10(37). Assessing Officer (AO) held that the interest received on compensation/ enhanced compensation under section 28 and 34 of the Land Acquisition Act was revenue receipt, chargeable to tax under section 56(2)(vii) and not exempt under section 10(37). The Pune ITAT held that interest awarded under section 28 of the Land Acquisition Act was in nature of solatium and was an integral part of compensation and receipt of said compensation was a capital receipt, whereas, interest awarded under section 34 of the Land Acquisition Act was on account of delayed payment of compensation and was revenue receipt eligible to tax. Therefore, assessee was entitled to exemption. Club not entitled for deduction in respect of interest earned on membership fee kept as FD with bank Poona club Ltd. V. ACIT [2018] 90 taxmann.com 422 (Pune- trib.) The assessee, a Members Club, received membership fee from its members and kept the same as Fixed deposit (FDR) with banks and earned interest income from FDRs. Assessee s plea was that in case interest income from FDRs was taxed under section 56 as income from other services, it should have been allowed deduction under section 57(iii) while computing said income. The tribunal held in favour of revenue as under In order to claim deduction under section 57 (iii) of the Income tax Act, the expenditure should be laid out or expended wholly and exclusively for the purpose of making or earning such income. It was incumbent upon the assessee to establish nexus between the expenditure and income. The expenditure it was incurring for upkeep of the club and other facilities including the depreciation charged on various assets was not directly linked to the interest arising.

5 LANDMARK RULINGS & STATUTORY CHANGES from FDRs. Accordingly; the assessee was not eligible to claim any deduction under section 57(iii). Society engaged in preparing & supplying mid day meals is eligible for section 12AA registration: HC CIT v. Shri Balaji Samaj Vikas Samiti [2018]91 taxmann.com 26 (Allahabad) The assessee-society was engaged in preparing and supplying mid-day meals to the students at primary schools in various villages, against a contract awarded by the State Government. The assessee-society received food preparation and distribution charges, on per child, per month basis from the State Government. It filed an application under section 12AA for grant of registration. The Commissioner (CIT) took a view that the assessee was not engaged in any charitable work. It was found by the CIT that the assessee had been paid meal preparation and distribution charges per child, per month, by the State Government, under a contract, and, therefore, the activity of the assessee could not be treated as charitable in nature. The Allahabad High court held that since assessee was engaged in an activity that was inseparably linked to and performed in continuation of charitable scheme of Government, merely because some money had been paid to it to perform task of cooking and supplying meals, restriction created by first provision to section 2 (15) would not operate and, thus, activity carried out by assessee would fall within ambit of general public utility. No denial of sec. 10(23C) relief just because profit was earned by providing medical facilities at subsidized rates Shushrush Citizens Co-operative Hospital Ltd. V. CCIT [2018] 91 taxmann.com 136 (Bombay) Assessee was a non- profit society registered under Maharashtra Co-operative societies Act, 1960 running a hospital providing medical facilities at subsidized rates. The Bombay HC held that exemption under section 10(23C) (via) couldn t been denied as its predominant object was to carry out charitable purpose and not to earn Profit, that by itself will not attract disqualification. It will attract disqualification if a hospital or institution exists for purpose of earning profit.

6 EVENTS IN IMAGES

7 EVENTS IN IMAGES 15 march 2018 Seminar

8 EVENTS IN IMAGES SICASA SEMINAR ON BANK AUDIT 23 MARCH 2018

9 EVENTS IN IMAGES SEMINAR ON BANK AUDIT 24 MARCH 2018

10 EVENTS IN IMAGES Inter Branch Cricket Match for Students at Union Gymkhana Ground Belgaum on 25 March 2018