Section 54 relief allowed on capital gain from land, viz, long-term asset, though flat that existed on it was short-term asset

C.N. ANANTHARAM V. ASSISTANT CIT [2015] 55 taxmann.com 282 (Karnataka High Court)

Where assessee constructed a building on land, which was long-term capital asset even though said building was short-term capital asset, assessee was entitled to claim benefit of section 54 to the extent capital gain attributable to land.

Facts:

• Assessee transferred a building (used for residential purposes) within 3 years of its purchase which was constructed on a land, viz, long-term capital asset.
• Assessee claimed exemption under Section 54 in respect of investment made by him in another residential house to the extent capital gain attributable to sale of land.
• The Assessing Officer (AO) opined that capital gain as was attributable to long-term capital asset, viz, land would not qualify for relief under section 54 as the building which existed on the same was a short-term capital asset.
• The appellate authorities upheld the order passed by the AO. Aggrieved-assessee filed the instant appeal before the High Court. 

The High Court held in favour of assessee as under:

• The legislature has defined the meaning of house property as ‘building or land appurtenant thereto’. In view of the aforesaid definition of house property, a land appurtenant to a residential house is entitled to benefit under Section 54. Therefore, if a land appurtenant to a residential house could be entitled to benefit under Section 54, it was difficult to accept that the land on which the residential building was constructed would not be entitled to the said benefit.
• When a property, i.e., residential house is sold, the sale consideration includes the value of the land and the value of the construction. The AO treated the capital gain on sale of land (on which the residential house was constructed) as a long-term capital gain while the capital gain on sale of building was treated as a short-term capital gain. Therefore, if, for levying tax under the Act, such a distinction could be made, one failed to understand why that distinction would not be kept in mind in extending the benefit under section 54.
• Therefore, the assessee was entitled to the benefit of section 54 to the extent capital gain attributable to land.

Rent-a-cab and outdoor catering services used for business purposes are eligible for credit

Caparo Fasteners v. Commissioner of Central Excise, Jaipur I - (2015) 55 taxmann.com 165 (New Delhi - CESTAT)

Rent-a-cab services, outdoor catering services consumed for factory canteen and repair/maintenance of vehicles used for business purposes are eligible for credit as 'input services'; however, no credit is available to extent of amount recovered from employees.

• Assessee took input service credit as follows:
• 'Rent-a-cab' services for bringing workers to their factory and vice versa.
• Outdoor catering services availed by its workers on ground that it was statutory requirement to maintain factory canteen as there were more than 350 workers. Further, assessee submitted that pro rata credit attributable to amount recovered from workers for supply of concessional food was reversible.
• Repair and maintenance services for vehicles owned by it.

• Department denied credit on ground that these services had no nexus with manufacture.

Tribunal held partly in favour of assessee as under :

• For 'rent-a-cab' and outdoor catering services: services in question had been availed by assessee in course of business of manufacturing; hence, assessee was entitled to take impugned credit. However, if any amount was recovered from employees towards these services, same was not entitled to credit. As this fact had not been examined, matter was remanded back for verification as to amount recovered from employees.

• For repair and maintenance service: any service availed by a manufacturer in course of business is eligible for credit. Admittedly, vehicles in question had been used by assessee in course of their business being a manufacturer of excisable goods. Hence, assessee was entitled to credit.

Indirect Tax Revenue (Provisional) Collections Increase From Rs. 36,408 Crore in May 2014 to Rs. 49,993 Crore During May 2015

An Increase of 37.3 % Registered During the Month of May 2015 over the Corresponding Period in the Previous Year; Central Excise Collections Registered an Increase of 84.2%; Customs Collections Registered an Increase of 16% While Service Tax Collections Registered an Increase of 13.2% During the Same Period; FM: The Underlying Momentum in the Economy is Improving Across all Sectors Including Manufacturing as Reflected in Healthy Excise Collections During the First Two Months of the Current Financial Year 2015-16.

Indirect Tax Revenue (Provisional) Collections increase from Rs. 36,408 Crore in May, 2014 to Rs. 49,993 Crore during May 2015, thus registering an Increase of 37.3% during the month of May 2015 over the corresponding period in the previous year.

Overall, Indirect tax collections during the first two months i.e. from April to May, 2015 of the Current Financial Year 2015-16 increased from Rs.69,069 crore (during the same period in 2014-15) to Rs. 96,128 crore and thus registering an increase of 39.2% during April- May 2015 over the corresponding period in the previous year.

These increase were spread across all the three categories- customs, central excise and service tax.

Central Excise collections have increased from Rs. 11,838 crore in May 2014 to Rs. 21,809 crore during May, 2015 registering an increase of 84.2 %. Central Excise collections during April to May 2015 increased to Rs. 38,535 crore from Rs. 20,493 crore (during April to May 2014) and thus registering an increase of 88.0%.

Customs collections have increased from Rs.13,539 crore during May, 2014 to Rs.15,700 crore during May 2015 registering an increase of 16.0%. Customs collections during April to May 2015 increased to Rs. 29,986 crore from Rs. 25,094 crore (during April to May 2014) and thus registering an increase of 19.5%.

Service Tax collections have increased from Rs. 11,031 crore in May 2014 to Rs. 12,484 crore during May 2015 registering an increase of 13.2 %. Service Tax collections during April to May 2015 increased to Rs.27,607 crore from Rs. 23,482 crore (during April to May 2014) and thus registering an increase of 17.6.0%.

Responding to the indirect tax collection figures, the Union Finance Minister Shri Arun Jaitley said that the these indirect tax collections reflect in part the effect of the additional measures taken by the Central Government including the Central Excise increase on diesel and petrol, increase in clean energy cess, and the withdrawal of exemptions for motor vehicles and consumer durables. He said that even after taking-out the impact of these additional measures, indirect tax collections have shown an increase of 16.9% in May 2015 over May 2014; and by 12.6% for the two month period April-May 2015 over the same period last year i.e. April- May 2014.

The Union Finance Minister Shri Arun Jaitley further said that the underlying momentum in the economy is improving across all sectors including manufacturing as reflected in healthy Excise collections during the first two months of the Current Financial Year 2015-16.

Demand on account of tax /TDS credit mismatch cannot be enforced coercively

No. 275/29/2014-IT-(B)
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
Dated New Delhi, the 1st June, 2015

To,
The CCsIT (CCA)

Subject: Non-deposit of Tax Deducted at Source – regarding. Sir/Madam,

1. Grievances have been received by the Board from many taxpayers that in their cases the deductor has deducted tax at source from payments made to them in accordance with the provisions of Chapter-XVII of the Income-tax Act, 1961 (hereafter ‘the Act’) but has failed to deposit the same into the Government account leading to denial of credit of such deduction of tax to these taxpayers and consequent raising of demand.
2. As per Section 199 of the Act credit of Tax Deducted at Source is given to the person only if it is paid to the Central Government Account. However, as per Section 205 of the Act the assessee shall not be called upon to pay the tax to the extent tax has been deducted from his income where the tax is deductible at source under the provisions of Chapter- XVII. Thus the Act puts a bar on direct demand against the assessee in such cases and the demand on account of tax credit mismatch cannot be enforced coercively.
3. This may be brought to the notice of all the assessing officers in your region so that if the facts of the case so justify, the assessees are not put at any inconvenience on account of default of deposit of tax into the Government account by the deductor.
4. This issues with the approval of Chairperson, CBDT.

Yours faithfully

(Sandeep Singh)

Under Secretary to the Govt. of India

PVR acquires DT Cinemas

PVR will acquire DT Cinemas (DT) for a consideration of Rs. 500 crores subject to approvals. DT is owned by realty major DLF. 

DT Cinemas operates 29 screens with 6,000 seats across eight properties in the National Capital Region (NCR) and Chandigarh. It will add 10 more screens across two properties in the NCR in 12 months. DLF will bear the capital expenditure for the 10 screens and will hand over completed properties to PVR. As a result of the proposed acquisition, PVR will have a presence in 44 cities with 115 multiplexes and 506 screens, PVR said in a statement.

Land is not a part of the deal; PVR will pay rent to DLF after acquisition.Financial details of DT are unavailable. However, PVR expects to generate annual EBITDA of Rs.43-44 crores from the 39 screens in their first full year of operations after integration assuming some synergy benefits. 

For DLF, the deal is part of its strategy to exit non-core businesses and cut huge debt of over Rs.20,000 crores. It has already sold hotel chain Aman Resorts as well as insurance and wind power businesses. 

No denial of section 11 relief to hospital just because it didn't provide concessional treatment to poor patients

ITO V. NOBLE MEDICAL FOUNDATION & RESEARCH CENTRE (2015) 57 taxmann.com 333 (Pune - Tribunal)

Section 11 exemption could not be denied to a hospital on the ground that it didn't provide concessional treatment to poor patients as there is no provision under Income-tax Act which would disentitle assessee to claim exemption on this ground.

Facts:

• Assessee-trust, running a multi-specialty hospital, claimed exemption of income under section 11 of the Income-tax Act ('Act').
• Assessing Officer (AO) denied exemption on ground that assessee was earning profit from its activity and it had failed to provide concessional treatment to poor patients.
• On appeal, the CIT(A) reversed the findings of the AO and allowed exemption to the assessee. Aggrieved by the order of CIT(A), the AO filed the instant appeal before the Tribunal.

The Tribunal held in favour of assessee as under:

• The CBDT in its Circular No. 11, dated 19-12-2008 had clarified that where the purpose of trust or institution is relief to the poor, education or medical relief, it would constitute charitable purpose, even if it incidentally involves carrying on the commercial activities.
• In the instant case, assessee was engaged in carrying on objects of providing medical relief to people at large which has been recognised as charitable activity under the Act. Therefore, exemption under section 11 could not be denied merely because surplus was generated from such activities.
• Further, there is no provision under the Act which would dis-entitle assessee to claim exemption on the ground that it did not provide concession to poor patients and, therefore, this could not be a ground to disallow exemption under section 11.

Response Vs Reaction

At a restaurant, a cockroach suddenly flew from somewhere and sat on a lady. She started screaming out of fear. With a panic stricken face and trembling voice, she started jumping, with both her hands desperately trying to get rid of the cockroach. Her reaction was contagious, as everyone in her group also got panicky. The lady finally managed to push the cockroach away but ...it landed on another lady in the group. Now, it was the turn of the other lady in the group to continue the drama.
The waiter rushed forward to their rescue. In the relay of throwing, the cockroach next fell upon the waiter. The waiter stood firm, composed himself and observed the behavior of the cockroach on his shirt. When he was confident enough, he grabbed it with his fingers and threw it out of the restaurant.
Sipping my coffee and watching the amusement, the antenna of my mind picked up a few thoughts and started wondering, was the cockroach responsible for their histrionic behavior? If so, then why was the waiter not disturbed? He handled it near to perfection, without any chaos.
It is not the cockroach, but the inability of the ladies to handle the disturbance caused by the cockroach that disturbed the ladies. I realized that, it is not the shouting of my father or my boss or my wife that disturbs me, but its my inability to handle the disturbances caused by their shouting that disturbs me. Its not the traffic jams on the road that disturbs me, but my inability to handle the disturbance caused by the traffic jam that disturbs me.
More than the problem, it’s my reaction to the problem that creates chaos in my life.
Lessons learnt from the story:

I understood, I should not react in life. I should always respond. The women reacted, whereas the waiter responded. Reactions are always instinctive whereas responses are always well thought of, just and right to save a situation from going out of hands, to avoid cracks in relationship, to avoid taking decisions in anger, anxiety, stress or hurry.