ICDS and Construction Contracts: Key Differences and Tax Impact

CA. Vijay Maheshwari
B.Com., FCA, DISA

Income Computation And Disclosure
Standards (ICDS)
ICDS I: Accounting Policies
ICDS II: Valuation of Inventories
ICDS III: Construction Contracts
ICDS IV: Revenue Recognition
ICDS V: Tangible Fixed Assets
ICDS VI: The effects of changes in foreign exchange rates
ICDS VII: Government Grants
ICDS VIII: Securities
ICDS IX: Borrowing Costs
ICDS X: Provisions, Contingent liabilities and Contingent
assets

Background
 Section 145(1) of the Income‐tax Act, 1961 (Act)
prescribes method of accounting for computation of
income for “PGBP “IOS” as cash or mercantile system.
 Section 145(2) of the Act gives power to Central
Government to notify the accounting standards to be
followed by any class of assesses or income.
 Accordingly, two tax accounting standards had been
notified until now:
1.Disclosure of accounting policies
2.Disclosure of prior period and extraordinary items
and changes in accounting policies

Background
 Finance Act, 2014 amended section 145(2) of the Act to
substitute “accounting standards” with “income
computation and disclosure standards” (ICDS).
 CBDT had issued 12 draft ICDS.
 On 31st March, 2015, the Central Government has
notified 10 ICDS which shall be effective from 1st April,
2015.
 The introduction of ICDS may significantly alter the way
companies compute their taxable income.

General principles
 Applicable for computation of income chargeable under
the head “profits and gains of business or profession”
and “income from other sources”
 Applies to all taxpayers
 Applies to mercantile system of accounting only.
 In case of Conflict between Act & ICDS, Act will prevail.
Not applicable to
• Cash system of accounting
• non maintenance of books of accounts (44AD/44AE)

Construction Contract
ICDS‐III

Construction Contracts
AS ‐ 7 ICDS III
 Real Estate Developers
No applies on RED
(Guidance Note  issued by the
ICAI)
ICDS is silent
 Contract Cost
Contract Cost includes:
‐ Direct cost
‐ Cost allocated to the
contract
‐ Cost specially charged
under the terms of the
contract
The scope of the Contract
Cost has been widened to
include “Allocated Borrowing
Cost”

Construction Contracts
AS ‐ 7 ICDS III
Recognition of Contract Revenue
If possible to reliably
estimate the outcome of
a contract.
When there is reasonable certainty
of its ultimate collection.
Impact: The recognition of contract revenue may preponed
under ICDS.

AS‐7 ICDS III
Situation when outcome of contract cannot be reliably estimated
Revenue should be recognized only to
the extent of contract costs incurred.

No quantitative threshold laid down for
determining the stage of completion,
until when, the outcome of a contract
cannot be reliably measured.
ICDS provides that early stage
of a contract shall not exceed
25% of the stage of
completion.

Upto 25% of the stage of
completion, to the extent of
cost incurred
25% or > Contract revenue &
Cost to be recognized
Impact: Under ICDS, profit recognition has to start compulsorily once 25%
stage is completed but the same is not the case currently under AS – 7.

AS‐7 ICDS III
Retention Money
Revenue agreed in the contract Revenue agreed, including
retentions.
Impact Analysis: Angelique International Ltd. vs Department of Income
Tax [ITA No.4085/DEL/2011] which does not recognize retention money
as income for tax purpose if there is no enforceable debt. ICDS leads to
deviation from the settled judicial position.
Incidental Income
Any incidental income, not included
in the contract revenue, shall be
deducted while computing
construction cost.
Contract cost shall be reduced by
any incidental income except
interest, dividend and capital gains
which shall be taxed separately as
per IT.

AS‐7 ICDS III
Recognition of foreseeable losses
Recognise immediately the
foreseeable losses regardless of
commencement or stage of
completion of contract.
ICDS does not permit recognition of
the foreseeable/expected losses on
a contract.

Impact: ICDS deviates from the present legal settled position in the case
of CIT V/s. Triveni Engineering & Industries Ltd (49 DTR 253) (Del) & CIT v.
Advance Construction Co. (P) Ltd (275 ITR 30) (Guj)) in which foreseeable
losses on construction contracts were allowed as a deduction for tax
purpose.

Example:
Ye
ar
Loss Unrelate
d Income
Computation Remarks
Income
Tax
Books
of
Accoun
ts
1 Expected
loss =
5,000
4,000 4,000 (1,000) Foreseeable loss not
allowed as per ICDS Hence
incidental income is taxed
2 Contract
conclude
s on loss
4,000 (1,000) 4,000 MAT may apply

Capital Assets [2(14)]

•Exclusion clause – Rural Agriculture land in India
excluding :‐

a) Within municipality having population of 10000 or
more   or

b) Within aerial distance of –



Population Distance
>10K <   1 Lac Upto 2 Kms
>1 L <  10 L Upto 6 Kms
>10 Lac   Upto 8 Kms
CA. Vijay Maheshwari 13 29‐Nov‐15


•Rural Agriculture land

Population
Last preceding census,
Published before 1st day of the previous year



•Rural Agriculture land     Agricultural Land ?
Use of Land on date of sale is relevant not the intention of
buyer
M.S. Srinivasa Naicker Vs ITO [2007] 292 ITR 481 Mad.
Factors to be considered
CIT Vs Sidharth J. Desai [1982] 10 Taxmann (Guj. HC)
1. Revenue record and payment of Land revenue
2. Actual use or ordinary use
3. Return on investment on Land
4. If ceased to use, cease is temporary or permanent.
5. Even if not used, whether intended to use ?
6. Facilities available; road, plots etc.
7. Use history


Transfer[2(47)]

In relation to Capital assets : Inclusive definition:‐
i. the sale, exchange or relinquishment of the asset
ii. the extinguishment of any rights therein ; or
iii. the compulsory acquisition thereof under any law
iv. Conversion of Capital assets into stock‐in‐trade
v. Redemption of Zero coupon bond
vi. Part performance of a contract ‐ any transaction
involving the allowing of the possession of any
immovable property to be taken or retained in part
performance of a contract of the nature referred to in
section 53A.
vii. Any transaction which has effect of
transferring/Enabling the enjoyment of any IP


Transfer[2(47)(v)]

Joint Development Arrangement:‐
Issues
• Whether transfer and taxable ?
• If yes, point of time for transfer?
• Fixation of Consideration?

General Law Vs Income Tax

Chaturbhuj Dwarkadas Kapadia Vs CIT (2003) 260 ITR
491 Bom
Jasbir Singh Sarkaria (2007) 294 ITR 196(AAR)


Transfer[2(47)(v)]
 Transfer at the time of agreement
 If landowner has substaintially relinquish his
ownership
 Allows developer to execute agreement for sale of
undivided interest on land & Biding on Landowner
 Property is ultimately intended to sell to developer

 When Landowner’s right is extinguished later on, at
that time.
Chaturbhuj Dwarkadas Kapadia Vs CIT (2003) 260 ITR
491 Bom
Jasbir Singh Sarkaria (2007) 294 ITR 196(AAR)


Transfer[2(47)(v)]
 Consideration
JDA is like exchange of assets, Money’s worth of property
received in exchange.
CIT Vs George Henderson & Co Ltd. (1967) 66 ITR 622
(SC)

No Capital gain if any of ingredient of Computation is
indeterminable.
CIT Vs B C Sriniwasa Setty (1981) 128 ITR 294 SC


Transfer[2(47]
Some other Issues:‐
 Revaluation of assets‐ Not a transfer
Well Pack Packaging Vs CIT (2003) 130 Taxmann 215
(Mad)

 Family Arrangement/Settlement –Not a Transfer
CIT Vs A Ramanathan (2000) 245 ITR 494 (Mad.)

 Forfeiture of Sahare application money ‐a Transfer
CIT Vs BPL Sanyo Finance Ltd. (2009) 312 ITR 63 (Kar.)


Conversion of Capital assets into SIT[45(2)]

Activity Conversion of Capital assets into or
treatment as Stock in trade
Taxable
Year
In the year of sale or other wise
transfer
Considerati
on
FMV as on date of conversion or
treatment


Issues relating to Sec. 45(2)
Converted assets is sold in piecemeal in
different years
Capital gain shall arise in parts in different
years and not in year in which last of stock in
trade is sold
CIT Vs Crest Hotels Ltd. (2001) 78 ITD 213
(Mum.)


• Capital assets converted in SIT on 25‐06‐
2012 (FY 12‐13) FMV as on that date was –
200 Lacs
• Indexed cost (in FY 12‐13) was – 100 Lacs
• Capital assets sold for Rs. 250 Lacs in FY
2015‐16

Year of taxation of LTCG & PGBP – FY 2015‐16
Capital Gain – 100 Lacs
PGBP‐ 50 Lacs



Year % Sold CG PGBP
FY 13‐14 10 10 5
FY 14‐15 40 40 20
FY 15‐16 50 50 25
Total 100 100 50
Suppose in above case such Stock is sold in
piecemeal as under :‐




Case Study II
In above example suppose Mr. X introduced such
Asset (Land) into his partnership firm to carry
development thereon in FY 2013‐14, value
recorded books of firm was Rs. 200 Lacs,. The
Partnership firm sold it in piecemeal as stated
above.  Whether entire Capital Gain U/s 45(2) will
be taxed in FY 203‐14 or as per piecemeal sale?
R.Gopinath (HUF)  v.  ACIT, APPEAL NO: ITA NOS. 29
& 30/Mds/2008

Deeming fiction [Sec 50C & 43CA]

50C ‐Capital Assets w.e.f. 01‐04‐2003
43CA‐ Others [PGBP] w.e.f. 01‐04‐2013

•Language of both the provisions are same.
•Judicial pronouncement in respect of Sec. 50C would
also be applicable on Sec. 43CA


Deeming fiction [Sec 50C]

•The assets transferred is a capital asset.
•Asset is Land or Building or Both
•There is a value adopted, assessed or assessable by any
authority of State govt for the purpose of stamp duty.
•The actual consideration is less than the value of such
authority.
Then
•Such value will be consideration for transfer of the asset.


Issues relating to Sec 50C

Reference to DVO
•If assesee claims before AO that value adopted by
valuation officer exceeds FMV and
•Valuation by Authority has not been disputed in any
appeal/revision/reference before any authority/Court/HC

The AO may refer valuation of asset to valuation officer.

AO is bound to refer the matter to DVO
Manjula Singhal vs ITO (2011) 46 SOT 149 (Jodh.)



Reference to DVO – AO bound by the valuation of DVO
•Reference once made, valuation of DVO is binding of
AO, even it is less than circle rate
Bharti Jayeesh Sangani Vs ITO (2011) 128 ITD 345 (Mum)

•Burden to claim that Circle rate is higher than FMV is on
Assessee.
Sharad Dinesh Photograper Vs ITO (2011) 43 SOT 452
(Mum)



Date for the purpose of Valuation
•Normally date of registration of conveyance deed
but
Case covered Us/ 2(47) (v) i.e. (53A)
•Sale agreement executed
•Full value paid
•Possession of property handed over

Then  date of sale agreement shall be date for Circle rate.
Dy CIT Vs. S Venkat Reddy (2013) 32 Taxmann.com 24
(Hyd.)
ITO .v. Modipon Ltd. (Delhi)(Trib.) (2015)
www.itatonline.org



Land or Building or both
• Where the Capital assets have been transferred jointly.
Suppose :‐
Circle rate of Land – X
Circle rate of Building –Y
Circle rate (Composite) –Z

Case 1
X+Y > Actual consideration, whereas Actual consideration
is equal to Z, can AO invoke 50C for X+Y


Land or Building or both
• Case 2
X+Y < Actual consideration, whereas Actual consideration
is less than Z, can AO invoke 50C for Z

Case 3
Z > Actual Consideration, where as X+Y < Actual
Consideration ,
Can Assessee demands for separate valuation

Answer :‐
J. Anjaneya Sharma Vs CIT (2014) 221 Taxmann 148 (AP)
If land and Building are sold as one asset, there should be
one assessment of value of Land and Building.
No, Yes, No



Capital assets introduced Capital Contribution [45(3)]
• Where a capital assets is transferred by a partner to a
firm, the amount recorded in books of accounts of firm
shall be full value of consideration.

Whether 50C overrides Sec. 45(3) ?

Carlton Hotel Pvt Ltd. Vs ACIT [2009] 122 TTJ 515 (Luk)
Since such transfer doesn’t require registration under the
stamp act hence Sec. 50(C) not applies.

Note : word assessable has been insered by Fin Act 2009.



Whether 50C overrides Sec. 45(3) ?
• Specific and General provision

•Both deeming provision – same field of consideration.

•Hypothetical reference to stamp valuation authority

Chakrabarty Medical Centre Vs. TRO
Thee is no legal requirement that there should be a
written agreement & duly stamped.




50C Vs 56 (2) (vii)

Both would be applicable ?



Exemption U/s 4, 54F and 54EC etc

Case Study
Actual Consideration – 50L
Circle Value – 60L
Indexed cost – 20 L

Case I Invested Rs. 30 L
No capital gain since entire proceeds have been invested
ITAT Banglore Shri Gouli Mahadevappa Vs ITO (2011)
128 ITD 503



Exemption U/s 4, 54F and 54EC etc

Case‐II
Invested Rs. 40 L
Karnataka HC in Shri Gouli Mahadevappa Vs ITO (2013)
356 ITR 90
Capital gain would be computed normally i.e. 40 L and
Sum invested (by whatever source) would be eligible for
exemption.
Similar view in Raj Babbar vs ITO (2013) 56 SOT 1 (Mum
tri)
Different view
Nila V Shah Vs CIT (A) (2012) 51 SOT 461 (Mum‐Trib)
Capital gain – Normally computed
Investment would be upto actual consideration


Depreciable assets subject to Sec. 50C ?

Case I Block carrying no CG
Case II Block exists or Consideration is more than WDV
i.e. gain has to be computed

ACIT Vs Roger Pareira Communications Pvt Ltd (2009)
34 SOT 64(Mum)
Long term or Short term?
Rate of Tax?
Smita Conductors Ltd. .v. Dy. CIT (2015) 152 ITD 417
(Mum.)(Trib.)



Depreciable assets subject to Sec. 50C ?

The deeming provisions has, therefore, to be restricted
only to computation of capital gain and for the purpose
of other provisions of the Act, the capital gain has to be
treated as long‐term capital gain.
for the purpose of computation of capital gain,
The flat has to be treated as short‐term capital asset under
section 50C, but for the purpose of
applicability of tax rate it has to be treated as long term
capital asset if held for more than
three years
Smita Conductors Ltd. .v. Dy. CIT (2015) 152 ITD 417
(Mum.)(Trib.)



Transfer of Lease right in land?

Lease right is neither Land or Building or both hence Sec.
50 C not applies.
Atul G. Puranik v/s. ITO (2011) 132 ITD 499 (Mum)

Transfer of Share of Company owing Land or Building ?

Transfer of Share can not be equated to Sec. 53A of
transfer of property act hence Sec. 50C not applies.
Irfan Abdul Kader Fazlani v/s. CIT (2013) 29
Taxmann.com 424 (Mum)

Issues relating to Sec 43CA

Points differ to Sec. 50C
Date of Agreement and date of registration is different
•If consideration or its part have been received
•By any mode other than cash
•On or before the date of agreement for transfer

Case :‐
Date of agreement 31‐03‐2015  (Circle Value‐ 50 L)
Date of registration 30‐06‐2015 (Circle Value – 60L)
Actual consideration Rs. 40 L
Full value of consideration for PGBP U/s 43CA‐ 50L


Section 56(2)(vii)
Receipt of IP without or inadequate consideration

Person Individual/HUF
Activity Receives any immoveable property
Consideration Nil or Less than Circle value by > 50,000/‐
Taxable Income Circle Value – Consideration
Excluded events • Received from relative
• On occasion of marriage
• Under will/ inharitance
• Death of Prayer /donor
• From a Local
Authority/Educational/Medical
Institution/Trust etc.

Section 56(2)(vii)
Receipt of IP without or inadequate consideration

Relative :‐
• Spouse
• Brother/Sister
• Brother/Sister of spouse
• Brother/Sister of either of parents
• any lineal ascendant or descendant
• any lineal ascendant or descendant of spouse
• Spouse of above all (except 1)

Note
• This provision doesn’t apply on Firm, AOP, CO ect)
• Other provisions are similar to Sec. 50C & 43CA


Section 56(2)(vii)
Issues :‐
Case‐ I
A purchased a building for Rs. 40 Lacs, Circle rate ‐50
Lacs, in FY 14‐15 and sold it for Rs. 60 Lacs in FY 15‐16.

In FY 14‐15– Income U/s 56 – 10 Lacs
In FY 15‐16 – Capital Gain 10 Lacs (60‐50)
Note : Section 49(4) deems value U/s 56 as cost of
acquisition for the purpose of computing CG.

Case II
In FY 14‐15, A put to use such building for his business.
In which sum he will get depreciation allowance?


Section 56(2)(ix) & Sec. 51
Sec. 56
Money received as an advance or otherwise in course of
negotiation of transfer of capital assets is
• Such sum is forfeited
• Transfer of such assset doesn’t affected

Sec. 51
No deduction from Cost/WDV/FMV is taxed u/s 56


Sec. 50D
Deeming consideration

Event Transfer of Capital Assets
Consideration Not ascertainable /determinable
Deemed Consideration FMV as on date of transfer

Section 269SS
Acceptance of Loan/Deposit/Specified sum
The earlier provisions of section 269SS of the Income‐tax
Act provide that no person shall take from any person
any loan or deposit otherwise than by an account payee
cheque or account payee bank draft or online transfer
through a bank account, if the amount of such loan or
deposit is Rs.20,000/‐ or more

In case any assessee contravenes the said provisions he
shall be liable to pay, by way of penalty, a sum equal to
the amount of the loan or deposit so accepted u/s 271D of
the Act.


Section 269SS/269T
Amendment made by Finance Act 2015

CIT vs. Madhav Enterprise Pvt. Ltd.( ITA.No. 561 of 2013)
Guj HC

269SS   “specified sum” means
any sum of money receivable, whether as advance or
otherwise,
in relation to transfer of an immovable property,
whether or not the transfer takes place.’.
269T ʺspecified advanceʺ means any sum of money in the
nature of advance, by whatever name called, in relation to
transfer of an immovable property, whether or not the
transfer takes place.

Issues: Sec.  269SS/269T

 Any exclusion: Yes, if both payee and payer is having
agricultural income and not having income chargeable
to tax.
 Transaction completed in same day?
 Mens rea is not essential ingredient to invoke 271D,
Ignorance of Las is no excuse for violation
Mahak Singh Vs ITO (2010) 127 ITD1 (Del)
 If it is found that :‐
• There were business exigency forcing assessee to violate
• Creditors were genuine and transaction never doubted.
• There were no revenue to state
CIT Vs Balaji Trades 2007 Tax LR 261 (Mad.)


Issues: Sec.  269SS/269T

 Deposit accepted from agriculturist is only a technical
fault.
ITOVs Wooden Industries (2003) SOT 44 (Ahem)
 If it is found that :‐
• There were business exigency forcing assessee to violate
• Creditors were genuine and transaction never doubted.
• There were no revenue to state
CIT Vs Balaji Trades 2007 Tax LR 261 (Mad.)
 Credit entries in book is not deposit as per Section 269SS.
      CIT Vs Lala Murari Lal & Sons 2004  2 SOT 543(Luc.)
 Transaction between firm and partner inter se
CIT Vs Lokpat Film Exchange 2007  212  CTR (Raj)


Section 194‐IA TDS W.E.F 01‐06‐2013

Any person, being a transferee, responsible for paying (other than the
person referred to in section 194LA) to a resident transferor any sum by
way of consideration for transfer of any immovable property (other
than agricultural land), shall, at the time of credit of such sum to the
account of the transferor or at the time of payment of such sum in cash
or by issue of a cheque or draft or by any other mode, whichever is
earlier, deduct an amount equal to one per cent of such sum as income‐
tax thereon.
No deduction under sub‐section (i) shall be made where the
consideration for the transfer of an immovable property is less than
fifty lakh rupees.
The provisions of section 203A shall not apply to a person required to
deduct tax in accordance with the provisions of this section.
Explanation : (b) ʺimmovable propertyʺ means any land (other than
agricultural land) or any building or part of a building.


Section 194‐IA TDS W.E.F 01‐06‐2013


Transferor Resident
Transferee Any person (Resident or Non Resident)
Asset Transferred Immovable property except agricultural land
Point of Deduction Payment or credit whichever is earlier
Rate of Deduction   1% (if PAN available otherwise 20%)
Consideration
paid/payable
Rs. 50 Lacs or more
TAN number Not required
Return
Only 26QB followed by payment (PA4‐Nov‐15N
must)
Default
Interest ‐1.5%/1%
Penalty –Upto Amount of tax defaulted (271C)

Issues relating to Sec 194IA

 Applies on Capital assets or SIT or both ?
 Payment to builder in Instalments?
 If more than one seller having individual share <50L
 If more than one buyer having individual share <50L
 Consideration Actual or deemed (U/s 50C/43CA)?
 Difference in accounting method of Seller & Buyer?
 Exemption U/s 54 etc. how to avail when receipt is 99%
 Cancellation of transactions ? Refund?
 Low deduction/ No deduction certificate U/s 197?
 Different date of Transfer and payment ?
 Meaning of transfer ? 2(47) ?


Issues relating to Sec 194IA

 Agricultural Land, in whose hand? Transferor or
Transferee?
 Transfer of lease of immovable property?
 Builder’s charges for amenities like Sports, club, Gym,
Pool, parking etc are subject to TDS?
 Advance paid (before agreement to buy) and later on
adjusted to consideration?
 Compensation paid for failing to acquire an IP?
 Exchange of property (Barter)?
 JDA? Transfer of TDR?


Exemptions Sec. 54
Investment in a residential house

Assessee Individual or HUF
Event Transfer of Long term Capital Assets being
residential house
Investment in One residential house situated in India
Periodicity of Investment Purchase : 1 Yr before & 2 years after
Construction : within 3 years
Quantum of Exemption Least of : CG or Invested sum
If could not invest till due date
U/s139(1)
Deposit into CGA within 139(1)
Condition New assets not to transfer within 3 yrs from
acquisition/completion
If new asset transferred   Capital gain exemption would be deducted
from COA of New assets
If CGA not utilized LTCG proportionate to un‐utilized in PY in which
3 year expires.

Issues relating to Sec 54

•Construction may be commenced even before transfer?

•Construction by Builder ?  Or Co‐operative society?
CIT v. Uma budhiya [2004] Taxman 39 (Kol.)

•Direct link between CG & Investment?
Ajit Vaswanit Vs. CIT [2001] 117 Taxman 123 (Delhi),
CIT V.DR.P.S. Pasricha[2008] 20 SOT 468 (Mum)
CIT v. Uma budhiya [2004] Taxman 39 (Kol.)
ISHAR SINGH CHAWLA V.CIT [2010] 130 TTJ (Mum)



•Joint Development agreement?
Jatinder Kumar Madan v. Ito [2012] 51 SOT 583 (Mum)

•Residential House?
Ashok Sayal V.CIT [2012] 24 Taxman.com 274 (punj. Har.)

•Purchase of tenancy right/lease Right?
Yogesh Sunderlal Shah V. Cit [2012] 139 Itd 194 (Mum)

•More than one house sold in different year and purchase
one house?
CIT V. Ranjit Vithaldas [2012] 137 Itd 267(Mum)



•House purchased in joint name with wife?
CIT v. Suresh Verma [2012] ITD 102 (Del)
CIT Vs Kamal Wahal [2013] 30 Taxmann .com 34 (Delhi)
CIT Vs. Gurnam Singh : (2014) 327 ITR 278 P & H HC
Contrary ruling Prakash Vs ITO [2008] 173 Taxman 311
Bom HC

•Cost to make House inhabitable?
Saleem Faxelbhoy V. CIT [2006] 9 SOT 610  (Mum)

•Renovation/Modification of existing house?
Pushpa Vs ITO [2013] 213 Taxman 191 (Ker)


Exemptions Sec. 54F
Investment in a residential house

Assessee Individual or HUF
Event Transfer of Long term Capital Assets other than
a residential house
Investment in One residential house situated in India
Periodicity of Investment Purchase : 1 Yr before & 2 years after
Construction : within 3 years
Quantum of Exemption Investment X(CG/Net Consideration)
If could not invest till due date
U/s139(1)
Deposit into CGA within 139(1)
Condition New assets not to transfer within 3 yrs from
acquisition/completion
If new asset transferred
/Another new asset purchased
Exempted CG shall be taxed in year of transfer
(LT)
If CGA not utilized un‐utilized Sum X (CG/Net Sale Consideration)
in PY in which 3 year expires.

Issues relating to Sec 54F

•Residential House on Agricultural land?
CIT Vs Om Prakash Goyal [2012] 53 SOT 158 (Jai)

•Incomplete transactions?
If investment ‐made eligible
CIT Vs Sambandnam Udaykumar [2012] 206 Taxman 150
(Karnat)
V A Tharabai Vs CIT [2012] 50  SOT 537 (Chennai)
Usha Vaid Vs ITO [2012] taxmann.com 188
CIT v. Kapil Nagpal (Delhi)(HC) 2015 itatonline.org

•Purchased of Booking right on House
CIT v. Ram Gopal (2015) 372 ITR 498/ 230 Taxman 205
(Delhi)(HC)


Already hold more than one house :
•House owned by assessee’s wife & Income clubbing U/s
64?
S. Krishna Kumar Vs CIT [2012] 22 taxmann.com 200
(Chennai)

•House hold by minor daughter and income clubbed U/s
64?
N Ram Kumar Vs CIT [2012] 25 taxmann.com 337 Hyd

•Father holds >1 house & Minor child claims exemption
CIT Vs Madan Lal Bassi [2004] 88 ITD 557  (Chand)


Exemptions Sec. 54EC
Investment in a Certain bonds

Assessee Any
Event Transfer of a Long term Capital Assets
Investment in Specified assets (Bond of NHAI & REC)
Periodicity of Investment Within 6 months from transfer
Quantum of Exemption Least of CG & Investment
Condition Max investment 50 L
If new asset transferred Exempted CG shall be taxed in year of transfer
(LT)

Issues relating to Sec 54EC

Extened period of : Investment
•NHAI bond was not available other bond was available?
CIT Vs Cello Plast [2012] 209 Taxaman 617 Bom HC
ACIT v. Kamlakar Moghe (Bom.) (HC) 2015 itatonline.org

•Subscription of bond was closed & Invested just on
opening after 6 months?
Shree Ram Engg & Man. Ind. Vs CIT [2012] 52 SOT 16
(Alha)

•Consideration received in instalments
Mahesh Nemichandra Ganeshwade Vs ITO [2012] 51 SOT
155


Issues relating to Sec 54EC

Section 50 & Sec. 54EC
•Exemption in case of transfer of Depreciable assets ?
CIT V. Assam Petroleum Industries (P)Ltd. [2003] 131
Taxman 699 (Gauh)
CIT Vs ACE Builders Pvt. Ltd. [2005] 144 Taxman 855
(Bom)
CIT vs Bharat Enterprises [2011] 14 Taxman.com 110
(Mum‐Trib)
CIT .v. Cadbury India Ltd. (2015) 229 Taxman 5
(Bom.)(HC)

Investment made prior to transfer
Hemant Kumar Nema .v. ACIT (2014) 52 taxmann.com
202 / (2015) 67 SOT 49 (Indore)(Trib.)


Thank You
CA. VIJAY MAHESHWARI
12/B, 1st Floor, Vaishali Complex
Deendayal Square, Shrikant Verma Marg
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ICDS and Construction Contracts: Key Differences and Tax Impact

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