26 September 2011
1. As per ICAI suggested answer of nov2010 new: Q2a,speculation loss can’t be carried forward by XYZ Co(purchasing Co) after Amalgamation. TN Manoharan says it can be c/f.
2. Q 1(b): ICAI SA says Sec 54 exemption can be availed by 1 house only(Anand Bassappa’s case, 2 houses was allowed coz they were identical and opposite to each other;but in given case they are in different cities). As per TN, Sec 54 is available in both houses.
3. Q2(b) ICAI :not valid TN : AO’s action is valid. Expense should be disallowed.
4. Q3(b)(iv) : Why hasn’t Rs 5 lac not disallowed and added back?
5. Q3(b)(vi): Why they(icai) have reduced Rs 52000 when it allowable exps and was deducted in the books of accounts of the assessee.So why are they deducting again? In Manoharan sir’s book, it hasn’t been deducted again in the computation of tax.
6. In Q 5(a): ICAI : Sec 80IB is not available. Manoharan: Sec 80IB is available.(As per India Cine Agencies vs CIT(SC) 2009)))
7. In Q7(b): ICAI:availed Sec 5(vi) deduction in s/o Residential house of Rs 60 lac. Mahoharan: availed Sec 5(vi) deduction in Residential house (7/10 X 500=Rs 350 lakh) [Shiv Narain Chaudhury vs CWT (Allahabad)1977]
09 February 2012
Even two different high courts differ on similar cases. Honorable Supreme Court differs from the views of high court. If substantiated with proper provisions and caselaws, either answer may be correct.
The examiners have more than one key if one question can have more than one answer.
28 July 2024
Let's dive into the discrepancies and points of contention between the ICAI suggested answers and T.N. Manoharan’s explanations for the November 2010 CA Final examination questions. These issues often highlight different interpretations or applications of tax laws. Here’s an analysis of each point:
### **1. Speculation Loss Carry Forward (Q2a)** - **ICAI Suggested Answer**: States that speculation losses cannot be carried forward by the purchasing company after amalgamation. - **T.N. Manoharan's View**: Argues that speculation losses can be carried forward.
**Analysis**: - **ICAI's View**: This might be based on the principle that such losses are specific to the company’s business and do not transfer in an amalgamation scenario, which is consistent with certain legal interpretations. - **T.N. Manoharan's View**: If there’s a judicial precedent or specific provision that allows for the carry forward of such losses, then T.N. Manoharan’s interpretation might be valid. It’s essential to refer to specific legal provisions and case laws to confirm this.
### **2. Section 54 Exemption (Q1b)** - **ICAI Suggested Answer**: Exemption under Section 54 can be availed for only one house, based on Anand Bassappa’s case. - **T.N. Manoharan’s View**: Argues that Section 54 exemption is available for both houses.
**Analysis**: - **ICAI’s Interpretation**: This is based on a strict interpretation of the law where only one house is eligible for exemption under Section 54. - **T.N. Manoharan’s Interpretation**: If two houses are similar and in different locations but intended as a single unit, then a broader interpretation might apply, especially if there is precedent or a different judicial opinion. Anand Bassappa’s case may be an exception rather than a rule.
### **3. Disallowance of Expenses (Q2b)** - **ICAI Suggested Answer**: The expense is not valid for deduction. - **T.N. Manoharan’s View**: The Assessing Officer’s action is valid and the expense should be disallowed.
**Analysis**: - **ICAI’s Interpretation**: ICAI might be following a more conservative approach based on specific rules or precedents. - **T.N. Manoharan’s Interpretation**: If T.N. Manoharan supports the disallowance, it may be due to a stricter interpretation of allowable expenses under the relevant tax laws.
### **4. Disallowance of Rs 5 Lakh (Q3b(iv))** - **ICAI Suggested Answer**: There’s no specific reason provided why Rs 5 lakh was not disallowed and added back. - **T.N. Manoharan’s Explanation**: This discrepancy likely needs clarification from ICAI’s perspective. The addition or disallowance should align with actual business transactions and their tax treatment.
**Analysis**: - **ICAI’s Interpretation**: ICAI’s solution might be based on specific assumptions or instructions. - **T.N. Manoharan’s View**: The addition of Rs 5 lakh would be justified based on the nature of the expense and its treatment as per tax laws.
### **5. Deduction of Rs 52,000 (Q3b(vi))** - **ICAI Suggested Answer**: Deducted again, even though it was already an allowable expense in the books. - **T.N. Manoharan’s View**: This deduction should not be repeated in tax computation.
**Analysis**: - **ICAI’s Interpretation**: ICAI might be following a conservative approach or correcting an oversight. - **T.N. Manoharan’s View**: T.N. Manoharan’s interpretation is likely based on practical tax treatment where such expenses should not be deducted again if already accounted for in the books.
### **6. Section 80IB Deduction (Q5a)** - **ICAI Suggested Answer**: Section 80IB is not available. - **T.N. Manoharan’s View**: Section 80IB is available, citing India Cine Agencies vs CIT (SC) 2009.
**Analysis**: - **ICAI’s Interpretation**: May be based on specific criteria or exclusions for Section 80IB. - **T.N. Manoharan’s Interpretation**: If judicial precedents support the availability of the deduction, it can override the ICAI’s view. India Cine Agencies case is a strong precedent supporting this.
### **7. Deduction under Section 5(vi) (Q7b)** - **ICAI Suggested Answer**: Deduction of Rs 60 lakh as per Section 5(vi). - **T.N. Manoharan’s View**: Deduction should be calculated as (7/10 × 500 = Rs 350 lakh) based on Shiv Narain Chaudhury vs CWT (Allahabad) 1977.
**Analysis**: - **ICAI’s Interpretation**: Based on a specific calculation method or rule. - **T.N. Manoharan’s Interpretation**: Reflects a different calculation or interpretation based on the judicial precedent.
### **Conclusion**
For each discrepancy: - **Refer to Relevant Laws and Case Laws**: Understanding the exact legal provisions and relevant case laws is crucial for resolving these differences. - **Check Latest Amendments**: Tax laws and interpretations can evolve, so ensure you are consulting the latest updates. - **Consult ICAI Materials**: ICAI’s latest materials or clarifications might offer insights into these answers.
For accurate answers, always consult the latest ICAI study materials, authoritative tax guides, and possibly seek guidance from senior professionals or legal experts in tax law.
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