On the eve of the superannuation of Honourable Accountant Member of ITAT,
Mr. B. Ramakotaiah, a full court farewell was held on 9-8-2018 at Hyderabad.
Mr. Sunil Kumar Yadav, Senior Judicial Member, chaired the
full court farewell function

Professionals across the country attended the full court farewell and
expressed their respects and gratitude for rendering immense service to the
ITAT and taxpayers.

Speaking on the occasion, Mr. B. Ramakotaiah thanked the Members,
Staff, Professionals and Departmental Representatives for helping him in
discharging his duties and responsibilities with great diligence.

August 4, 2018

Mr. B. Ramakotaiah, Accountant Member, ITAT, Hyderabad

Respected Sir,

The members of the ITAT Bar Association, Mumbai had the good fortune to appear before Your Honour for over 5 years. Your tenure in Mumbai was unanimously regarded as too short.

We will always remember you for your quick grasp of complex issues and analytical skills.

Your professional approach in the Bench you presided over, put all those who appeared before you at ease. It was a Court Room singularly free of tension.

On the eve of your superannuation and the beginning of a new phase in your life, on behalf of the ITAT Bar Association and on my own behalf, I convey our best wishes to you. We pray that the future holds ample opportunities for you to do all that you have always wanted to. ‘

Yours Sincerely
For ITAT Bar Association,
Mrs. Arati Vissanji, President

August 4, 2018

To,

Hon’ble Mr. B. Ramakotaiah,
Accountant Member
ITAT, Hyderabad.

Respected Sir,

On the eve of your retirement, it is with great happiness that the Members of the Income Tax Bars across the country remember your distinguished career on the Bench. Your Honour has rendered immense service to the ITAT and the taxpayers by delivering many landmark judgments which have contributed immensely to Income Tax Jurisprudence. Your Honour has always conducted Court proceedings with a smiling face which made the court proceedings very cordial and pleasant. Sir, your in-depth knowledge on taxation and ability to convince the fellow member with persuasion has always been appreciated by the Bar.

During your tenure at Mumbai, the Bar and the Departmental Representatives had a very cordial atmosphere while presenting the matters before the Bench.

Your Honour is a fitting inspiration for Junior Members and also for a presiding Judge / Member to exemplify that how a good judge should conduct his court proceedings. Your conduct on the Bench was supportive to junior members of the Bar in promoting their art of advocacy.

Sir, on behalf of both, the All India Federation of tax Practitioners and on my own behalf, I wish your Honour a very happy, healthy and peaceful retired life and success for your future endeavours. We look forward to you joining the profession where undoubtedly you shall continue to use your knowledge and command on tax laws for the benefit of taxpayers of our country.

Thanking you,

For All India Federation of Tax Practitioners
Ganesh Purohit
National President

  1. S.4 : Charge of income-tax – Income derived by a trade, professional or similar association from specific services performed for its members – Non-Resident – Mutuality – Liaison office of Non-Resident non profit organisation for the benefit of members in the absence of profit motive and surplus if any was ploughed back into the organisation again to be utilised for same objects – Income cannot be asssseed as business income – Receipts from non-members only 2.05% and also isolated incident which has not affected the dominant object of the applicant – Membership fee and contribution from members is also not liable to tax in India – Once principle of mutuality is applied, the question of a permanent establishment did not arise – Receipt or income cannot be taxed applying the principle of mutuality [S.28(iii)]

    AAR held that liaison office of non-resident non profit organisation for the benefit of members in the absence of profit motive and surplus if any was ploughed back into the organisation again to be utilised for same objects therefore the income cannot be asssseed as business income. Receipts from non-members only 2.05% and also isolated incident which has not affected the dominant object of the applicant. Membership fee and contribution from members is also not liable to tax in India under the provisions of Income-tax Act or the DTAA. Once principle of mutuality is applied, the question of a permanent establishment did not arise. Where the principle of mutuality operates and the profits cannot be distributed, but only be utilised for the benefit of members and confined to the objects of the organisation, the receipts or income cannot be taxed.

    International Zinc Association In re (2018) 404 ITR 766/167 DTR 81 (AAR)

  2. S.9(1)(i) : Income deemed to accrue or arise in India – Business connection – Front-end fee payable by a customer in India, for appraisal of loan application carried out outside India, under financing arrangement with applicant is not taxable as income from ‘interest’ and said fee is also not taxable as fee for technical services (FTS) under as they do not pass ‘make available’ test –Not liable to deduct tax at source – DTAA India-France [S.195, Arts. 12, 13]

    AAR held that front-end fee payable by a customer in India, for appraisal of loan application carried out outside India, under financing arrangement with applicant is not taxable as income from ‘interest’ and said fee is also not taxable as fee for technical services (FTS) under as they do not pass ‘make available’ test.

    Societe De Promotion Et De Participation Pour La Cooperation Economique, In re (2018) 256 Taxman 129 (AAR)

  3. S.9(1)(i) : Income deemed to accrue or arise in India – Permanent establishment – Main business and revenue earning activities of assessee carried on in and from Saudi Arabia, and monitored by Saudi Arabian Ministry – Services carried on by Indian Company in nature of support services only and not constituting main business of Non-Resident – Non-Resident retaining with itself authority to finalise marketing strategies and terms of contracts directly with customers – Indian Company cannot be held to be a Permanent Establishment of Non-Resident – DTAA-India – Kingdom of Saudi Arabia [Arts. 5, 12 ]

    AAR held that main business and revenue earning activities of assessee carried on in and from Saudi Arabia, and monitored by Saudi Arabian Ministry. Services carried on by Indian Company in nature of support services only and not constituting main business of Non-Resident. Non-Resident retaining with itself authority to finalise marketing strategies and terms of contracts directly with customers. Indian Company cannot be held to be a Permanent Establishment of Non-Resident. Considering the contract the AAR held that performance of service the Indian Company could not be termed as agent of the applicant, as this was done on its own behalf as per the role assigned to it. AAR also held that the applicant had given an undertaking in the question itself that the Indian company would be compensated on arm’s length basis in accordance with the Indian transfer pricing laws and legislation.

    Saudi Arabian Oil Company, In Re (2018) 405 ITR 83 (AAR)

  4. S.9(1)(1) : Income deemed to accrue or arise in India – Permanent Establishment – Payment received by the applicant from the Indian hotel owner for provision of global reservation services (“CRS”) would be chargeable to tax in India under S.9(1)(1) read with Articles 5 and 7 of the India – Luxemburg DTAA as business income and is attributable to the applicant’s permanent establishment in India. Duty of Authority to look at all aspects of questions set forth to enable it to pronounce ruling on substance of questions posed. Giving ruling on stream of income without regard to other business operations and streams of income leaving other provisions open for regular assessment –DTAA-India – Luxembourg [Arts. 5, 7 12, R.12 ]

    AAR held that payment received by the applicant from the Indian hotel owner for provision of global reservation services (“CRS”) would be chargeable to tax in India under S.9(1)(1) read with Articles 5 and 7 of the India -Luxemburg DTAA as business income and is attributable to the applicant’s permanent establishment in India. In view of this the question whether these payments would be characterised as “royalty” or fees for technical services “becomes wholly academic and is therefore, not considered necessary to be answered. AAR also held that duty of authority to look at all aspects of questions set forth to enable it to pronounce ruling on substance of questions posed. Giving ruling on stream of income without regard to other business operations and streams of income leaving other provisions open for regular assessment.

    Frs Hotel Group (LUX) S.A.R.L., In Re 2018] 404 ITR 676 (AAR)

  5. S.28(va) : Business income – Non-Resident – Non-compete fee – Negative covenant for three years only and not permanently – Receipts is taxable as business income but not taxable in India in absence of any permanent establishment of Non-Resident in India – There was no transfer of any capital asset hence not liable to capital gains tax – DTAA – India-United Kingdom [Ss.45 2(47) Art. 7(1)]

    AAR held that the receipts arising out of a negative covenant not to carry on a business were taxable as business income under section 28(va). S.28(va) of the Act nowhere provides that the recipient of non-compete fee must already be carrying on business which he has agreed not to carry on further. The section applies to any person who has received or is entitled to receive a sum in consideration for agreeing not to carry out any activity in relation to any business and is not restricted to only that business which he was already carrying on. Whether the receiver of the non-compete fee was carrying on any business or whether he was carrying on the same business or a different business than that of the payer of the non-compete fee or the transferor of shares, etc., was totally irrelevant while considering taxability under section 28(va)(a). AAR also held that in the absence of any permanent establishment of the applicant in India, such business income would not be taxable in India by virtue of Article 7 of the DTAA. There was no transfer of any capital asset hence not liable to capital gains tax.

    HM Publishers Holdings Ltd., In Re (2018) 405 ITR 441 (AAR)

  6. S.44BB : Mineral Oils – Computation – Consideration received under contract is not fees for technical fees or royalty – Consideration received was held to be taxable as business income – DTAA – India-United Arab Emirates – Duration of operation of less than 120 days is not material. [Ss. 9(1) (vi), 9(1)(vii) Arts. 5(1), 12]

    AAR held that; consideration received under contract is not fees for technical services or royalty. Consideration received was held to be taxable as business income. Duration of operation of less than 120 days is not material. The income arising from the permanent establishment shall be subject to tax in India as business income of the applicant. That the income derived by the applicant from its permanent establishment would be computed in accordance with the provisions of S. 44BB of the Act. (AAR No. 1295 of 2012 dt. 28-3-2018)

    Seabird Exploration FzLlc, In Re (2018) 403 ITR 82/302 CTR 19 (AAR)

  7. S.195 : Deduction at source –Non-Resident – Fees for technical services – Royalty – Building platform comprising secure servers equipped with proprietary software which pulled content from customer’s web server and replicated it for faster, more reliable delivery – End-users accessing customer’s website through platform – Amount received by the assessee is not royalty – Assessee did not have any permanent establishment in India. Accordingly not liable to deduct tax at source – DTAA India -USA of [ S.9(1)(vi), 9(1)(vii), Arts. 5, 12(3), (4)]

    AAR held that the solutions provided by the applicant were neither specialised nor exclusive and did not cater to individual requirements of the customer. The solutions were offered by the applicant through its platform and they remained the same for all customers who availed of the applicant’s facility, irrespective of the business or website content. The solutions provided by the applicant without human intervention could not be treated as provision of technical services. The payments received by the applicant from the Indian company for content delivery solutions were outside the scope of “fees for technical services” within the meaning of Explanation 2 to section 9(1)(vii) of the Act. AAR also held that the payment received cannot be assessed as royalty. As the assessee did not have any permanent establishment in India . Accordingly not liable to deduct tax at source .

    Akamai Technologies Inc., In Re. (2018) 404 ITR 495 (AAR)

  8. S.245N : Advance ruling – Transaction includes also proposed transaction –Maintainability of application cannot be raised at the time of hearing of application – Duty of the authority to look into all aspects of questions posed for its consideration, proceedings on the presumption that one part of agreement has no bearing on other is held to be not tenable [Ss. 245S(1), 245R]

    AAR held that, the very purpose of setting up the Authority for Advance Rulings is to give a ruling in advance to remove uncertainty in the mind of an applicant and eliminate the possibility of dispute regarding the tax issues surrounding a proposed or intended transaction, even before the transaction or a dispute occurs. When the provisions of S.245N(a)(i) of the Income-tax Act, 1961 are read with S. 245S(1) it becomes clear that not only a “transaction” but also a “proposed transaction” on which ruling has been sought would get covered. Maintainability of application cannot be raised at the time of hearing of application. Duty of the authority to look in to all aspects of questions posed for its consideration, proceedings on the presumption that one part of agreement has no bearing on other is held to be not tenable.

    Saudi Arabian Oil Company, In Re (2018) 405 ITR 83 (AAR)

  9. S.245R : Advance rulings – Capital gains – Application for advance ruling could not be rejected merely because it involved computation of capital gains as computation of capital gains is embedded in concept of valuation and question pertained to legal admissibility of transaction and not of any valuation – DTAA-India-Mauritius [Art. 13(4)]

Department has raised the objection regarding the maintainability of the application filed by assessee taking a view that question raised involved valuation and determination of fair market value of property and hence application was barred under clause (ii) of proviso to section 245R(2). AAR held that application for advance ruling could not be rejected merely because it involved computation of capital gains as computation of capital gains is embedded in concept of valuation and question pertained to legal admissibility of transaction and not of any valuation

Worldwide Wickets In re (2018) 254 Taxman 222 (AAR)

  1. S.2(1A) : Agricultural income-Mushroom is not a ‘vegetable’, ‘plant’, ‘fruit’ or ‘animal’ but is a ‘fungus’. Anything which is produced by performing basic operations on the soil is an “agricultural product” and the income therefrom is “agricultural income”. The nature of the product and the fact that it is not a ‘plant’, ‘flower’, ‘vegetable’ or ‘fruit’ is irrelevant. The only relevant aspect is whether the production is by performing some basic operations on the soil. Accordingly the income from production and sale of mushrooms can be termed as ‘agricultural’ income. [S.10(1)]

    Tribunal held that mushroom is not a ‘vegetable’, ‘plant’, ‘fruit’ or ‘animal’ but is a ‘fungus’. Anything which is produced by performing basic operations on the soil is an “agricultural product” and the income therefrom is “agricultural income”. The nature of the product and the fact that it is not a ‘plant’, ‘flower’, ‘vegetable’ or ‘fruit’ is irrelevant. The only relevant aspect is whether the production is by performing some basic operations on the soil. Accordingly the income from production and sale of mushrooms can be termed as ‘agricultural’ income. (ITA Nos. 1015 to 1018/Hyd/2015 C.O. Nos. 53 to 56/Hyd/2015, dt. 9-7-2018)(AY. 2008-09 to 2012-13)

    DCIT v. Inventaa Industries Private Limited (2018) 95 taxman.com 162 (Hyd.)(Trib.)(SB), www.itatonline.org

  2. S.2(22)(e): Deemed dividend – Both the registered and beneficial shareholders are two individuals and not the assessee company – Addition cannot be made as deemed dividend. The argument of the Dept., based on Gopal and Sons (HUF) v. CIT (2017) 399 ITR 1(SC) that even though the assessee-recipient of money is neither the registered nor the beneficial shareholder of the payer company, the money should be assessed as “deemed dividend” is not correct

    Dismissing the appeal of the revenue the Tribunal held that the question of law considered by the Supreme Court in the case of Gopal and Sons (HUF) v. CIT (2017) 399 ITR 1(SC) was different from the issue which arises in the present matter. The question of law which the Supreme Court was called upon to consider was whether loans and advances received by a HUF could be deemed as a dividend within the meaning of S. 2(22)(e) of the Act. The assessee in that case was the HUF and the payment in question was made to the HUF. The shares were held by the Karta of the HUF. It is in this context that the Supreme Court came to the conclusion that HUF was the beneficial shareholder. In the instant case, however, both the registered and beneficial shareholders are two individuals and not the assessee-company. Therefore, in our view, the judgment of the Supreme Court does not rule on the issue which has come up for consideration in the instant matter. (ITA No. 1003/MUM/2017, dt. 20-6-2018)(AY. 2010-11)

    DCIT v. Gilbarco Veeder Root India Pvt. Ltd. (Mum)(Trib.), www.itatonline.org

  3. S.4 – Charge of Income-tax – Subsidy received from Government for setting up of an industry in the backward area was to be treated as a capital receipt

    On revenue’s appeal, relying on the Supreme Court’s decision in the case of Sahney Steel and Press Works v. CIT (1997) 228 ITR 253 (SC) and CIT v. Ponni Sugar & Chemicals Ltd. (2008) 306 ITR 392 (SC), the Tribunal held that ‘purpose test’ should be applied for determining the character of the subsidy. Since the subsidy in the present case was received by the assessee for setting up of an industry in the backward area of West Bengal, it was held that the CIT(A) rightly treated the same as capital in nature. (ITA No. 3002/Del/2011). (AY. 2005-06)

    ACIT v. Pasadensa Foods Ltd. (2018) 163 DTR 243 (Delhi)( Trib.)

  4. S.4 : Charge of income-tax –Personal effects – Sale of painting received by gift from father is held to be capital receipts – Amendment by Finance Act 2007 w.e.f. 1-4-2008 is prospective in nature [Ss.2(14), 28(i)]

    AO treated the sale of painting which was received by father late Mr. M.F. Husain as business income instead of capital receipts. On appeal the Tribunal held that the painting received by the assessee from his late father as gift is a personal effect and not liable to tax. Amendment by Finance Act, 2007 w.e.f. 1-4 -2008 is prospective in nature. (ITA. No 4320/Mum/2016 “D” dt. 11-5-2018)(AY. 2006-07)

    Owais M. Husain v ITO (Mum.) (Trib.)

  5. S.5 : Scope of total income – Non-Resident – Alleged deposit in HSBC foreign bank Account at Geneva – A non-resident having money in a foreign country cannot be taxed in India if such money has neither been received or deemed to be received, nor has it accrued or arisen to him or deemed to accrue or arise to him in India – Addition cannot be made for the alleged deposit in foreign Bank accounts [Ss. 5(2), 6, 9]

    Dismissing the appeal of the revenue the Tribunal held that the assessee being a non -resident, having money in a foreign country cannot be called upon to pay income tax on that money in India unless it satisfies the tests of taxability on non-resident under the provisions of the Act, which in the instant case is not getting satisfied in the case of the assessee. Thus the bank account of HSBC Bank, Geneva is outside the purview of this Act. A non-resident having money in a foreign country cannot be taxed in India if such money has neither been received or deemed to be received, nor has it accrued or arisen to him or deemed to accrue or arise to him in India. Accordingly addition cannot be made for the alleged deposit in foreign Bank accounts. (ITA No. 4751/Mum/2016/ 4752/Mum/2016 dt. 19-6-2018) (AYs. 2006-07, 2007-08)

    Dy. CIT v. Dipendu Bapalal Shah (2018) 95 taxman.com 171 (Mum.) (Trib.) www.itatonline.org

  6. S.5 : Scope of total income – Non-resident foreign national – Alleged deposits in HSBC Foreign Bank account at Geneva – Deletion of the addition by the CIT(A) is held to be not justified – AO is directed to make further investigation to find out whether the source of the deposits in foreign account originated from India [S.5(2), 6, 9]

    AO made an addition on the ground that the assessee could not prove with documentary evidences that the deposits are not from India. CIT(A) deleted the addition on the ground that it is a foreign bank account of a non-resident and the deposits therein cannot be added in the hands of the assessee individual. On appeal by the revenue, the Tribunal held that the assessee has used his invalid Indian passport which he should have surrendered to the Indian authorities in opening a bank account in Geneva. Hence, the intent of the assessee is not above board. Further it is settled law from the Hon’ble Apex Court in Kapurchand Shrimal (1981) 131 ITR 451 (SC) that the revenue authorities are entitled to look into the surrounding circumstances and economic reliability. The Assessing Officer is directed to make further investigation into the source of the deposits in the bank accounts. Accordingly, the matter was set aside to the Assessing Officer. (ITA No. 5889/Mum/2016 dt. 1-6-2018) (AY. 2003-04),

    DCIT v. Rahul Rajnikant Parikh & Ors. (Mum.) (Trib.), www.itatonline.org

  7. S.9(1)(i) : Income deemed to accrue or arise in India – Business connection – Subsidiary of a foreign company constitutes “business connection” and/ or “fixed Permanent Establishment” and/or “Dependent Agent Permanent Establishment” of assessee in India – Held No. (b) whether any attributes of profits on account of signing, network planning and negotiation of off-shore supply contracts in India could be attributed to such business connection/ permanent establishment – Held No and (c) whether notional interest on delayed consideration of supply of equipment and licensing of software taxable in the hands of assessee as interest from vendor financing – Held No – DTAA – India – Finland – Majoriy view 
    is in favour of the assessee. 
    [Arts. 5, 7]

    These appeals pertaining to Assessment Years 1997-98 & 1998-99 have been taken up for hearing by this Special Bench in pursuance of direction given by the Hon’ble Delhi High Court vide judgment and order dated 
    7th September, 2012, passed in ITA Nos. 395 of 2005; 1137 & 1138 of 2006, 503 and 1324 of 2007; and 30 of 2008. The Hon’ble High Court has remanded certain issues back to the Tribunal to decide afresh as to, firstly, whether the Indian subsidiary of the assessee would provide business connection or a permanent establishment in India; secondly, even if so, then is there any attributes of profits on account of assigning, networking planning and negotiation of off-shore contract supply in India and if yes then to what extent and basis thereof; and lastly, the question of notional interest on delayed consideration received for supply of equipment and software, is taxable in the hands of the assessee as interest from vendor financing.

    All the issues referred by the High Court is answered in favour of the assessee by majority view. i.e., Merely having a subsidiary company or if foreign enterprise has a control on that company which carries out the business in that country (India) will not itself constitute a PE. Nothing is taxable on account of signing, network planning and negotiation of off- shore supply contracts, therefore, there is no question of any attribution of income on account of these activities which are purely related to supply contracts. Accordingly, the issue of attribution which has been remanded back by the Hon’ble High Court has become purely academic. After considering the relevant finding and rival contentions, we find that, it has not been brought on record that in any of the contract the assessee had charged any interest on delayed payment or providing any credit facilities to its customers or any customer has paid any such amount for each day elapsed from the due date to the actual payment. Once none of the parties have either acknowledged the debt or any corresponding liability of the other party to pay, then it cannot be held that any income should be taxed on notional basis which has neither accrued nor received by the assessee.

    Minority view, is the Tribunal held that the assessee company had a PE in India, by way of the premises and existence of its Indian subsidiary Nokia India Pvt. Ltd., and that the profit attributable to the specified operations of this PE are 3.75% of total sales of the equipment in India. In the result, while I uphold the action of the CIT(A) in principle, I marginally reduce the quantum of profits attributable to the PE. As against profit @ 5% of sales held to be attributable to the Indian PE, I hold the profit on 3.75% of sales to be attributable to PE in respect of the specified activities. In the result, in my considered view, the plea of the assessee against the existence of business connection and the existence of permanent establishment is to be rejected, and plea of the assessee on the attribution of profit is to be partly accepted in the terms indicated above. To this extent, even as I humbly bow to the majority so far results of these appeals are concerned, I disassociate myself with the order as finalised by the majority. Save on the above points, I am in considered agreement with the conclusions arrived at in the lead order and I respectfully endorse the same. (I.TA. Nos.1963 & 1964/DEL/2001 dt. 5th June, 2018 (AYs. 1997-98, 
    1998 -99)

    Nokia Networks OY, v. JCIT (2018) 65 ITR 23/194 TTJ 137/94 taxman.com 111 (SB) (Delhi (Trib.) www.itatonline.org

  8. S.10(10A) : Commutation of pension – Employees of statutory corporations cannot be regarded as employees of State or Central Government and exemption is not available, however as the assessee was under bona fide belief and discharged its obligation u/s. 192, proceedings u/s. 201(1), 201(IA) were quashed [Ss.192, 201(1), 201(IA)]

    Tribunal held that assessee being a statutory corporation its employees could not be regarded as State or Central Government employees and, therefore, exemption under S.10(10AA)(i) was not available and assessee was liable to deduct tax at source. However, since the assessee was under bona fide belief that its employees were to be regarded as employees of State Government and that its employees were entitled to exemption of entire sum of unutilised leave encashment under S. 10(10AA)(i), assessee had discharged its obligation under S. 192, proceedings under S. 201(1) and 201(1A) were to be quashed. (AYs. 2013-2014-15 )

    KPTCL v. ITO (2018) 170 ITD 587 (Bang.) (Trib.)

  9. S.10A : Free trade zone – Exemption – Period of ten consecutive years to be reckoned from year of commencement of manufacture and not from incorporation

    The Appellate Tribunal held that though the assessee came into existence on August 4, 1998, the assessee ventured into to the operation of manufacturing software from assessment year 2000-01 only. Hence, the assessee is eligible for exemption for a period of ten consecutive assessment years beginning with the assessment year 2000-01 to the Assessment Year 2009-10. (A.Y. 2009-10)

    Aspire Systems (I) P. Ltd. v. Dy. CIT (2018) 62 ITR 656 (Chennai)(Trib.)

  10. S.12AA : Procedure for registration – Trust or institution – Filing or non-filing of return of income or payment of tax has nothing to do with genuineness of activities of an institution – Benefit of S.11 is subject to application of income and income can also be taxed u/s. 13 if there is violation – CIT (E) is directed to grant registration to the 
    assessee forth with [Ss. 2(15) 11, 13(1)(b)]

    Allowing the appeal of the assessee the Tribunal held that filing or non-filing of return of income or payment of tax has nothing to do with genuineness of activities of an institution. Benefit of S.11 is subject to application of income and income can also be taxed u/s. 13 if there is violation – CIT(E) is directed to grant registration to the assessee forth with.

    B.S.A. College. v. CIT(E) (2018) 170 ITD 485 (Agra) (Trib.)

  11. S.12AA : Procedure for registration – Trust or institution – Mainly on ground that it was charging hefty fee from students registration cannot be refused as society is providing free education to needy students and free medical aid to needy patients [S.2(15)]

    Allowing the appeal of the assessee the Tribunal held that rejection of application for registration was not justified; mainly on ground that it was charging hefty fee from students registration cannot be refused as society is providing free education to needy students and free medical aid to needy patients.

    B. B. Educational Society v. CIT (2018) 170 ITD 362 (Delhi) (Trib.)

  12. S.14A : Disallowance of expenditure – Exempt income – assessee’s share capital along with reserve and surplus is many times higher than the amount invested in shares – No disallowance can be made [8D(2)(ii)]

    It has been held by the Appellate Tribunal that if an assessee has interest free funds as well as interest bearing funds at its disposal, then the presumption would be that investments were made from interest free funds at its disposal. Since the assessee’s share capital along with reserve and surplus is far in excess of its investment in shares, etc. yielding exempt income, nod disallowance can be made under section 14A r/w r. 8D(2)(ii) of the Income-tax Rules. (A.Y. 2008-09)

    DLF Commercial Developers Ltd. v. Dy. CIT (2018) 164 DTR 207 (Delhi)(Trib.)

  13. S.23 : Income from house property – Annual value – Deemed rent to be computed on the basis of Municipal rateable value and not on the basis of market rent [S.22]

    AO estimated the rent based on the inspectors report which was based on the local enquiry conducted in the surrounding areas of the building situated. On appeal Tribunal following the ratio in CIT v. Tip Top Typography (2014) 368 ITR 330 (Bom.) (HC) directed the AO to compute the deemed rent as per Municipal rateable value (ITA. No 4320/Mum/2016 “D” dt. 11-5-2018)(AY. 2006-07)

    Owais M.Husain v. ITO (Mum.) (Trib.)

  14. S.23 : Income from house property – Annual value – Stock-in-trade – Unsold flats which are held by a builder as stock in trade cannot be brought to tax under the head ‘income from house property’. They are only assessable as business profits when sold. [S.22]

    Dismissing the appeal of the revenue the Tribunal held that unsold flats which are held by a builder as stock-in-trade cannot be brought to tax under the head ‘income from house property’. They are only assessable as business profits when sold. (Followed Runwal Constructions v. ACIT ITA No. 5408/5409 /Mum/2016 dt. 22-2-2018) (ITA No.6037/Mum/2016, dt. 27-6-2018)( AY. 2012-13)

    ITO v. Arihant Estate Pvt. Ltd. (Mum.)(Trib.), www.itatonline. Org

  15. S.23 : Income from house property – Annual value – Though property remained vacant during relevant previous year benefit of S. 23(1)(c) is available [S.23(1) (c)]

    Dismissing the appeal of the revenue the Tribunal held that; in order to avail benefit of S. 23(1) (c) it is not necessary that property should have been actually let in relevant previous year or during any time prior to relevant previous year, therefore, where properties remained vacant during relevant previous year, the assessee could still avail deduction under S 23(1)(c) of the Act. (AYs. 2008-09 to 2013-14)

    ITO v. Metaoxide (P.) Ltd. (2018) 170 ITD 235 (Mum.) (Trib.)

  16. S.23 : Income from house property – Annual value – The assessee has the option to claim as self occupied property which is more beneficial to him [S.22]

    Allowing the appeal of the assessee the Tribunal held that, the Income-tax Act, nowhere states that option of selecting a self occupied property, once exercised, cannot be changed. Accordingly the tax payer can change his selction during assessment proceedings. (ITA No.5616/Mum/2015 dt. 23-5-2018, “ F”)(AY. 2011-12)

    Venkatavarthan N. Iyengar v. ACIT (Mum) (Trib)

  17. S.28(i) : Where in terms of memorandum of association, main object of assessee company was to acquire properties and to further let out such properties, income earned from such letting out was to be brought to tax as ‘business income’ and not as ‘income from house property’

    Assessee had acquired a shopping area and after acquiring the same, assessee further let out different portion of shopping space to different persons. This letting out income was shown by the assessee as “contribution from shops” and the amount paid as rent for acquiring the property was shown as “licence fees and other charges”. The assessee claimed said income as income from business or profession.

    The AO held that since the assessee was having the irrevocable right for 50 years over the shopping space, in view of provisions of section 27(iiib) the assessee was the owner of the building or shopping space. Therefore, the income derived from the said building or shopping space were to be taxed under the head Income from House Property. On appeal, CIT(A) upheld the order of AO.

    Aggrieved, the assessee filed an appeal before the Tribunal.

    The Hon’ble Tribunal held that assessee’s main object as stated in its Memorandum of Association was to acquire on licence or by purchase, lease, exchange, hire or otherwise lands and property of any tenure, or premises in any part of India and to license or sub-license or lease or sub-lease or let, such lands or property or premises or any part thereof, clearly spells out that the assessee’s main business is to carry out systematic and regular activity in the nature of business of letting out property. Section 27(iiib) read with section 269UA(f) of the Act is not applicable in the instant case as the agreement is only for use of property and not for the transfer of the same. Since the company is neither the owner nor the deemed owner in terms of section 27(iiib), the ‘Contribution from Shops’ cannot be assessed under the head ‘Income from House Property’.

    Tribunal relied on the decisions in case of Chennai Properties & Investments Ltd. (373 ITR 673) (SC), Rayala Corpn. (P.) Ltd. (386 ITR 500)(SC) and Bombay Plaza (P.) Ltd. (161 ITD 552) (Kol) and upheld the assessee’s claim that the income from granting premises on sub-license was to be assessed under the head income from business.

    Oberoi Investments (P) Ltd. v. ACIT ( 2018) 161 DTR 257 (Kol.) (Trib.)

  18. S.28(i) : Business loss – Forfeiture of security – Capital or revenue – Encashment of bank guarantee for failure to construct bus shelter with in time prescribed in the agreement is allowable as business loss

    Assessee entered into an agreement with Delhi Transport Corporation for setting up 400 bus queue shelters under build operate and transfer basis. Assessee was to construct above shelters and operate them for 10 years and thereafter they were to be transferred to Delhi Transport Corporation. Assessee was required to pay Delhi Transport Corporation monthly revenue of ` 4.09 crore in respect of fees for 400 bus shelters and it was free to earn revenue through advertisement etc. to be displayed on those bus shelters. In terms of assessment, assessee was to give a performance security to Delhi Transport Corporation . Since assessee failed to construct bus shelters within time prescribed in agreement, DTC encashed amount of performance security. Assessee debited said amount in profit and loss account and claimed deduction for same. Assessing Officer rejected assessee’s claim taking a view that loss was of capital nature. On appeal Tribunal held that, the assessee was engaged in business of constructing bus shelters and loss of bank/performance guarantee occurred during course of business of assessee, it could not be regarded as capital expenditure when assessee failed to create requisite bus shelters within prescribed time period. Therefore, impugned order was to be set aside and assessee’s claim for deduction was to be allowed. (AY. 2009-10)

    Green Delhi BQS Ltd. v. ACIT (2018) 170 ITD 738 (Delhi) (Trib.)

  19. S.28(i) : Business loss – Derivatives – loss at end of year on mark-to-market basis could not be disallowed on ground that same was contingent in nature [S.37(1)]

    Tribunal held that assessee, carrying on trading activities in stock and commodities and held derivatives as stock-in-trade, its claim for loss at end of year on mark-to-market basis could not be disallowed on ground that same was contingent in nature. (AY. 2011-12)

    Edel Commodities Ltd. v. DCIT ( 2018) 170 ITD 402 (Mum.) (Trib.)

  20. S.32 : Depreciation – Goodwill – Intangible asset – Goodwill will fall under the expression ‘or any other business or commercial rights of similar nature’ hence depreciation is available on genuine goodwill. Whether there is transfer of goodwill and valuation done by the assessee is erroneous has to be decided by Division Bench, accordingly the matter is sent back to Division Bench

    Special bench of the ITAT held that, goodwill will fall under the expression ‘or any other business or commercial rights of similar nature’ hence depreciation is available on genuine goodwill. Followed CIT v. Smifs Securities Ltd. (2012) 348 ITR 302 (SC). However the question whether when a firm has been succeeded by a company and net assets of the firm have vested in the company, there is any transfer of goodwill in the real sense and whether the valuation of goodwill done by the assessee is erroneous has to be decided by the Division Bench. Accordingly the matter is sent back to Division Bench for disposing off the appeal in above terms. (ITA No.1976/Del/2006, dt. 19-7-2018)(AY. 2001-02)

    CLC & Sons Pvt. Ltd. v. ACIT (2018) 95 taxman.com 219 (SB) (Delhi)(Trib.) www.itatonline.org

  21. S.35 : Scientific research –Rejection of weighted deduction in respect of donation cannot be denied when the institution was enjoying approval within the meaning of S. 35(1)(ii) as on date of receipt of donation, no matter that the approval was cancelled subsequently with retrospective effect

    Allowing the appeal of the assessee the Tribunal held that rejection of weighted deduction in respect of donation cannot be denied when the institution was enjoying approval within the meaning of S. 35(1)(ii) as on date of receipt of donation, no matter that the approval was cancelled subsequently with retrospective effect. (ITA No. 532/Mum/2018, dt. 29-6-2018) (AY. 2014-15)

    Vora Financial Service P. Ltd. v. ACIT (2018) 96 taxman.com 88 (Mum)(Trib.), www.itatonline.org

  22. S.35 : Scientific research – Deduction on account of purchase of ‘assets’ for its in-house R&D facility is allowable as deduction. Objective behind exclusion clause in S. 43(4)(ii) is to be that expenditure on scientific research should be incurred on research actually carried out by assessee in-house and assessee should not spend money in acquiring rights in or arising out of scientific research carried on by some other person. [Ss.35(1)(iv), 43(4)(ii)]

    Allowing the appeal of the assessee the Tribunal held that, deduction on account of purchase of ‘assets’ for its in-house R&D facility is allowable as deduction. Objective behind exclusion clause in S. 43(4)(ii) is to be that expenditure on scientific research should be incurred on research actually carried out by assessee in-house and assessee should not spend money in acquiring rights in or arising out of scientific research carried on by some other person. Tribunal also held that if interpretation sought to be urged by revenue was to be accepted, then benefit sought to be conferred by provisions of section 35(1)(iv) would virtually be denied in all cases by invoking exclusion clause in section 43(4)(ii). (AY.2008 -09)

    Tata Hitachi Construction Machinery Company Ltd. v. DCIT (2018) 170 ITD 720 (Bang.) (Trib.)

  23. S. 37(1) : Business expenditure – capital or revenue expenditure – amortisation of premium paid on leasehold land – premium in nature of rent – premium is allowable as revenue expenditure

    The Appellate Tribunal has held that the assessee had entered into an agreement with various parties for the purchase of leasehold lands at various places, which were to be used for its business operations, for establishing retail outlets, liquid petroleum gas bottling plants and refineries. The leasehold premium amortised by the assessee was in the nature of compensation paid to the landlords, in addition to the rent. Since the leasehold premium amortised by the assessee was in the nature of rent, it was to be allowed as a revenue expenditure in the hands of the asseessee. (AYs. 2006-07, 2007-08)

    Bharat Petroleum Corporation Ltd. v. ACIT (OSD) (2018) 63 ITR 244 (Mum.)(Trib.)

  24. S.37(1) : Business expenditure- Settlement charges paid to SEBI without admitting or denying guilt and was paid just to settle dispute, said settlement charges/consent fee could not be equated with penalty for violation of law under Explanation 1 to S. 37(1) of the Act and is allowable as business expenditure. [Securities and Exchange Board of India Act, 1992 , S.11, 1B and of SEBI (Prohibition of Fraudulent and Unfair Trade Practices Relating to Securities Market) Regulations, 2003 R.11]

    Dismissing the appeal of the revenue the Tribunal held that payment to SEBI without admitting or denying guilt and was paid just to settle dispute, said settlement charges/consent fee could not be equated with penalty for violation of law under Explanation 1 to S. 37(1) of the Act and is allowable as business expenditure. Referred ITO v. Reliance Shares & Stock Brokers (P.) Ltd. (2015) 67 SOT 73 (Mum) (Trib.). (AY. 2011-12)

    DCIT v. Anil Dhirajlal Ambani (2018) 171 ITD 144 (Mum) (Trib.)

  25. S.37(1) : Business expenditure – Notional addition – Sale at discounted price to retailers was to increase volume of sales through e-commerce – Where a trader transfers his goods to another trader at a price less than market price and transaction is a bona fide one, taxing authority cannot take into account market price of those goods, ignoring real price fetched to ascertain profit from transaction – Revenue cannot bring to tax hypothetical income accordingly the addition was deleted [Ss.2(24), 4, 28(1), 40(A)(2)(a), 145]

    Assessee company is engaged in business of wholesale trader/distributor of books, mobiles, computers and related accessories. Assessee sold the goods to retailers at a price less than their cost price to increase volume of sales through e-commerce. AO rejected the explanation of assessee and made addition on notional basis which was confirmed by the CIT(A). On appeal allowing the appeal of the assessee the Tribunal held that when a trader transfers his goods to another trader at a price less than market price and transaction is a bona fide one, taxing authority cannot take into account market price of those goods, ignoring real price fetched to ascertain profit from transaction. The Tribunal also held that even otherwise, since assessee had not incurred any expenditure to acquire marketing intangibles or for creation of goodwill, impugned order passed by Assessing Officer was not sustainable. Revenue cannot bring to tax hypothetical income accordingly the addition was deleted. (Referred, CIT v. Shoorji Vallabhdas & Co. (1962) 46 ITR 144 (SC) CIT v. Calcutta Discount Ltd. (1973) 91 ITR 8(SC) CIT v. A. Raman & Co. (1968) 67 ITR 11 (SC) and A. Khader Basha v. ACIT (2015) 232 Taxman 434 (Karn.) (HC) (AY. 2015-16)

    Flipkart India (P.) Ltd. v. ACIT (2018) 170 ITD 751 (Bang.) (Trib.)

  26. S.37(1) : Business expenditure – Fines and penalties – Levy of penal interest by Reserve Bank of India for failure to maintain statutory liquidity ratio is entitled to deduction in Assessment year in which liability is crystallised

    Tribunal held that, levy of penal interest by Reserve Bank of India for failure to maintain statutory liquidity ratio is entitled to deduction in assessment year in which liability is crystallised. Liability to incur the expenditure had crystallised only on January 28, 2014 relevant to the assessment year 2014-15, i. e., on the date of the letter of intimation by the Reserve Bank of India. Therefore the assessee was entitled to deduction. (AY. 2014-15)

    Chennai Port Trust Employees’ Co-operative 
    Bank Ltd. v. DCIT (2018) 65 ITR 1 (SN)(Chennai) (Trib.)

  27. S.37(1) : Business expenditure –Keyman insurance policy in the name of directors is held to be allowable as business expenditure

    Allowing the appeal of the assessee the Tribunal held that Keyman insurance policy in the name of directors is held to be allowable as business expenditure though it is referred as life insurance policies. (AYs. 2011-12, 2012 -13)

    Arcadia Share & Stock Brokers (P.) Ltd. v. ACIT (2018) 170 ITD 616 (Mum.) (Trib.)

  28. S.37(1) : Business expenditure – Capital or revenue – Payment of spectrum charges to Department of Telecommunications on quarterly basis is held to be revenue expenditure [S.35BB]

    Tribunal held that payment of spectrum charges was not meant for obtaining a licence to use spectrum, but for actual use of it on regular basis which is allowable as revenue expenditure (AY.2009-10)

    DCIT v. Vodafone Essar Digilink Ltd. (2018) 170 ITD 430 / 193 TTJ 150 (Delhi) (Trib.)

  29. S.37(1) : Business expenditure – Capital revenue – Opening of new stores/outlets expenditure on salaries, machinery and other repairs, travelling conveyance professional fees, electricity expenses telephone expenses etc is held to be revenue expenditure

    Dismissing the appeal of the revenue the Tribunal held that expenses incurred on opening of new stores/outlets expenditure on salaries, machinery and other repairs, travelling conveyance professional fees, electricity expenses telephone expenses etc. is held to be revenue expenditure. (AY. 2010-11)

    ACIT v. Reliance Digital Retail Ltd. (2018) 166 DTR 194 (Mum.) (Trib.)

  30. S.37(1) : Business expenditure –Interest under Jharkhand VAT Act, 2005 being compensatory nature is allowable as deduction. Penalties being not compensatory nature is held to be not allowable [Jharkhand VAT Act, 2005 S. 30(1), 30(3), 30(4)(d), 63(3)]

    Interest paid under S.30(1) of Jharkhand VAT Act 2005 being compensatory in nature, is allowable deduction as business expenditure Penalties imposed is not allowable deduction.(AY. 2010-11)

    Bokaro Power Supply Co. Ltd. v. Dy. CIT (2018) 191 TTJ 22 (Delhi)(Trib.)

  31. S.40(a)(ia) : Amounts not deductible – Deduction at source – Payee in its return disclosing payment received, no disallowance can be made for failure to deduct tax at source – Second proviso to S.40(a) of the Act is to be read as applicable with retrospective effect

    Tribunal held that when the payee in its return disclosing payment received, no disallowance can be made for failure to deduct tax at source .Second proviso to S.40(a) of the Act is to be read as applicable with retrospective effect. (AYs. 2010-11, 2011-12)

    CIT v. Ahmedabad Strips P. Ltd. (2018) 64 ITR 683 (Ahd.) (Trib.)

  32. S.40(a)(i) : Amounts not deductible – Deduction at source – Non-resident – Professional fees paid to foreign company to know about tax law applicable in that country could not be taxed in India as per Art. 14 of the OECD Model Tax Convention hence not liable to deduct tax at source

    Dismissing the appeal of the revenue the Tribunal held that; Professional fees paid to foreign company to know about tax law applicable in that Country could not be taxed in India as per Art 14 of the OECD Model Tax Convention hence not liable to deduct tax at source. (AY. 2006-07 to 2008-09)

    ACIT v. Deloitte Haskins & Sells (2018) 170 ITD 267 (Mum.)(Trib.)

  33. S.40A(2): Expenses or payments not deductible – Excessive or unreasonable – Firm – Partner – When partners of the firm contribute land as stock in trade though provision of S.45(3) would not be applicable, AO can examine reasonableness of payment to partners [S.45(3)]

    On appeal by the revenue the Tribunal held that when the partners of assessee-firm made capital contribution in form of land which was treated as stock-in-trade, provisions S. 45(3) would not apply rather case would be governed by provisions of S 28 to 43A and, thus, AO was entitled to examine reasonableness of payments made to partners for their contribution of land in terms of S 40A(2)(a) accordingly the matter was set aside to examine the issue in terms of S.40A(2)(a) of the Act. (AY. 2007-08)

    ACIT v. Karuna Estates & Developers. (2018) 170 ITD 249 (Visakh) (Trib.)

  34. S.40A(3) : Expenses or payments not deductible – Cash payments exceeding prescribed limits – No disallowance can be made for cash payments if the transaction is genuine and the identity of the payee is known. Rule 6DD is not exhaustive. The fact that the transaction does not fall within Rule 6DD does not mean that a disallowance has to be per force made [R.6DD]

    Allowing the appeal of the assessee the Tribunal held that no disallowance can be made for cash payments if the transaction is genuine and the identity of the payee is known. Rule 6DD is not exhaustive. The fact that the transaction does not fall within Rule 6DD does not mean that a disallowance has to be per force made. (ITA No.1065/JP/2016, dt. 15-5-2018)(AY. 2013-14)

    A Daga Royal Arts v. ITO (2018) 94 taxman.com 401 (Jaipur)(Trib), www.itatonline.org

  35. S.45 : Capital Gains – Bogus capital gains from penny stocks – In order to treat the capital gains from penny stocks as bogus, the Department has to show that there is a scam and that the assessee is part of the scam. The chain of events and the live link of the assesee’s action giving her involvement in the scam should be established. The Dept cannot rely on alleged modus operandi & human behaviour and disregard the evidence produced by the assessee [S.48]

    Allowing the appeal of the assessee the Tribunal held that. In order to treat the capital gains from penny stocks as bogus, the Dept. has to show that there is a scam and that the assessee is part of the scam. The chain of events and the live link of the assesee’s action giving her involvement in the scam should be established. The Dept cannot rely on alleged modus operandi & human behaviour and disregard the evidence produced by the assessee. In the result, the appeal of the assessee is allowed. (I.T.A No. 2281/Kol/2017, dt. 20-7-2018)(AY. 2014-15)

    Navneet Agarwal v. ITO(Kol)(Trib.), www.itatonline.org

  36. S.45: Capital gains – Bogus long-term gains from penny stocks –The transaction cannot be treated as bogus until and unless a finding is given that the shares were acquired by the assessee from the person other than the broker claimed by the assessee. The enquiry conducted by the Investigation, Indore is not a conclusive finding of fact in view of the fact that the shares were duly dematerialised & held in the D-mat account. Merely supplying of statement to the assessee at the fag end of the assessment proceedings is not sufficient to meet the requirement of giving an opportunity to cross examine. The AO cannot proceed on suspicion without any material evidence to controvert or disprove the evidence produced by the assessee [S.10(38)]

    Allowing the appeal of the assessee the Tribunal held that the transaction cannot be treated as bogus until and unless a finding is given that the shares were acquired by the assessee from the person other than the broker claimed by the assessee. The enquiry conducted by the Investigation, Indore is not a conclusive finding of fact in view of the fact that the shares were duly dematerialised & held in the D-mat account. Merely supplying of statement to the assessee at the fag end of the assessment proceedings is not sufficient to meet the requirement of giving an opportunity to cross examine. The AO cannot proceed on suspicion without any material evidence to controvert or disprove the evidence produced by the assessee. Accordingly the appeal of the assessee is allowed. (ITA No. 826/JP/2014, dt. 16-7-2018)(AY. 2010-11)

    Pramod Kumar Lodha v. ITO (Jaipur)(Trib.), www.itatonline.org

  37. S. 45: Capital gains – Penny Stocks – 31000% increase in value of shares over 2 years is highly suspicious but cannot take the place of evidence. The addition cannot be made based on generalisations. Evidence collected from third parties cannot be used against the assessee without giving him a copy and an opportunity to rebut the same [S.68]

    Allowing the appeal of the assessee the Tribunal held that merely because 31000% increase in value of shares over 2 years is highly suspicious but cannot take the place of evidence. The addition cannot be made based on generalisations. Evidence collected from third parties cannot be used against the assessee without giving him a copy and an opportunity to rebut the same. (ITA No. 2394/Kol/2017, dt. 27-6-2018)(AY. 2014-15)

    Prakash Chand Bhutoria v. ITO (Kol)(Trib.), www.itatonline.org

  38. S.45 : Capital gains – Exchange – Slump sale – A transaction by which an undertaking is transferred in consideration of the allottment of shares is an “exchange” and not a “sale”. The fact that the agreement refers to the parties as “seller” and “purchaser” is irrelevant. S. 2(42C) and S. 50B apply only to “sale” and not to “exchange”. As there is no estoppel against a statute, an assessee is entitled to raise the claim regarding non-taxability at any stage of the proceedings [S.2(42C), 50B]

    Allowing the appeal of the assessee the Tribunal held that a transaction by which an undertaking is transferred in consideration of the allotment of shares is an “exchange” and not a “sale”. The fact that the agreement refers to the parties as “seller” and “purchaser” is irrelevant. S. 2(42C) and S. 50B apply only to “sale” and not to “exchange”. As there is no estoppel against a statute, an assessee is entitled to raise the claim regarding non-taxability at any stage of the proceedings. (ITA No. 2913/Mum/2015, dt. 16-5-2018)(AY. 2007-08)

    Oricon Enterprises Ltd. v. ACIT (2018) 94 taxman.com 250/171 ITD 231 (Mum.)(Trib.), www.itatonline.org

  39. S.45 : Capital gains – Alleged bogus long-term capital gains – As neither the statement of Mr. Mukhesh Choksi was provided to the assessee nor cross-examination was allowed and it was not even placed on record, the action of the AO in treating the LTCG and STCG as income from other sources was not warranted. [S. 69 ]

    Dismissing the appeal of the revenue the Tribunal held that as neither the statement of Mr. Mukhesh Choksi was provided to the assessee nor cross-examination was allowed and it was not even placed on record, the action of the AO in treating the LTCG and STCG as income from other sources was not warranted. Tribunal also held that view taken was peculiar to the facts of the case and the revenue is always at liberty to in other cases, to challenge the alleged bogus purchases (based on the statement of Mr. Mukhesh Choksi). (ITA No. 1614/hyd/2017, dt. 29-5-2018)(AY. 2007-08)

    ITO v. K. Ramakrishna Reddy(Hyd.)(Trib.), www.itatonline.org

  40. S.45 : Capital gains – Argument that the allotment of shares by the assessee’s holding co. to foreign investors at huge valuation results in a “transfer”/ “indirect transfer” of the assessee’s assets to the foreign investors is not correct. Argument that a multi-layered holding structure was deliberately created to avoid taxes in India and to conceal the information about the ultimate beneficiaries is also not correct [Ss.2 (47), 48]

    Allowing the appeal of the assessee the Tribunal held that the endeavour of the departmental officers to tax the transaction in question as capital gains was not supported by any legal base. First and foremost there was no transfer of capital asset, which is the basis for invoking the provisions of S. 45 of the Act, in the case under consideration.The AO and FAA have tried to build a house without laying down foundation. Without the existence of capital assets they have tried to tax capital gains. They have nowhere mentioned as to which capital asset was transferred by the assessee, during the year under consideration. Secondly, it is also not known as to whom the assets were transferred.As per the balance sheet of the assessee it had sold some vehicles during the year and no other asset was sold.If no asset other than vehicles was sold, then how the capital gain would arise about shares, is beyond our comprehension. In spite of reading the orders of the AO and FAA many a times carefully, we are not clear as to how the acquisition of shares of SOHM by Actis can be used for determining the alleged taxability of the assessee under the head short term capital gains. Both the entitiesi.e. Act is and SOHM are not located in India.They are fifth generation holding companies and any transaction between them cannot be imported to tax alleged capital gains of the assessee. As stated earlier, the assessee had acquired businesses two Indian entities, namely, RCC and VMPL. By linking purchasing of shares of SOHM by Actis with the shares issued by Supermax Personal Care Pvt.Ltd. assessee to the Singapore entity, the AO and FAA have taxed the alleged capital gains.But, the basic fact of transfer of capital asset/(s)by the assessee to a transferee was never proved. Tribunal also observed that the FAA has mentioned in his order that the assessee had transferred the Interest/(stake)in itself outside India to SSPL.We find that the concept of ‘creating of interest in any assets in any manner’ and transferring’ interest/stake’was not part of the word ‘transfer’ for the year under consideration and nor it was applicable to that year. (I.T.A./6107/Mum/2016, dt. 1-6-2018)(AY. 2011-12)

    Supermax Personal Care Private Limted v. ACIT (Mum.)(Trib.), www.itatonline.org

  41. S.48 : Capital gains – Computation – Portfolio Management Scheme (PMS) fees paid by the assessee to the PMS Manager neither falls under the category of transfer fees nor cost of acquisition/improvement. Consequently it is not deductible while computing capital gains from sale of the shares [S.45]

    Dismissing the appeal of the assessee the Tribunal held that Portfolio Management Scheme (PMS) fees paid by the assessee to the PMS Manager neither falls under the category of transfer fees nor cost of acquisition/improvement. Consequently it is not deductible while computing capital gains from sale of the shares. (ITA No. 6950/Mum/2016, dt. 30-5-2018)(AY. 2010-11)

    Mateen Pyarali Dholkia v. DCIT (2018) 171 ITD 294/94 taxman.com 294 (Mum.)(Trib.), www.itatonline.org

  42. S.48 : Capital gains – Computation – While computing the capital gains the benefit of indexation should be given on basis of date of acquisition of asset and not on basis of actual payment [S. 45, 55(2)]

    Allowing the appeal of the assessee the Tribunal held that while computing the capital gains the benefit of indexation should be given on basis of date of acquisition of asset and not on basis of actual payment. Relied on Lata G. Rohra v. DCIT (2008) 21 SOT 541 (Mum) (Trib), Charanbir Singh Jolly v. ITO (2006) 5 SOT 89( Mum.) (Trib.) (ITA No .1244/Mum/2016 dt. 27-2-2018 (AY. 2011-12)

    Shishir Gorle v. DCIT (Mum.) (Trib.) www.itatonline .org

  43. S.48 : Capital gains – Computation – property inherited on death of husband – cost of acquisition to be applied from the year when the previous owner first held asset and not when the assessee inherited the property [S.55A]

    In this case the Appellate Tribunal held that while computing the capital gains arising on transfer of a capital asset inherited by the assessee on the death of her husband, the indexed cost of acquisition had to be computed with reference to the year in which the previous owner first held the asset and not the year in which the assessee became the owner of the asset. (A.Y. 2007-08)

    Bhoote Meenakshi (Smt.) v. ACIT (2018) 62 ITR 754 (Bang.)(Trib.)

  44. S.50C : Capital gains – Full value of consideration – Stamp valuation – If the assessee has invested the entire sale consideration in new house property, the capital gains are exempt u/s. 54F. The AO cannot apply S. 50C and treat the stamp duty valuation as the consideration and assess the difference between the stamp duty valuation and the actual valuation to capital gains [S.54F]

    Dismissing the appeal of the revenue the Tribunal held that if the assessee has invested the entire sale consideration in new house property, the capital gains are exempt u/s. 54F. The AO cannot apply s. 50C and treat the stamp duty valuation as the consideration and assess the difference between the stamp duty valuation and the actual valuation to capital gains. (ITA No. 11/JP/2016, dt. 28-9-2017.)(AY. 2011-12)

    ITO v. Raj Kumar Parashar (2017) 86 taxman.com 78/167 ITD 237 (Jaipur)(Trib.), www.itatonline.org

  45. S.50C : Capital gains – Full value of consideration – stamp valuation – Provision being a deeming provision and applies only to the transfer of land or building. It does not apply to the transfer of “booking rights” and to right to purchase flats in a building [S.45]

    Allowing the appeal of the assessee the Tribunal held that, S.50C being a deeming provision and applies only to the transfer of land or building. It does not apply to the transfer of “booking rights” and to right to purchase flats in a building. (ITA No.635/Kol/2018, dt. 4-7-2018)(AY. 2013-14)

    Baniara Engineers Pvt. Ltd. v. ITO (SMC) (Kol.)(Trib.), www.itatonline.org

  46. S.54 : Capital gains – Profit on sale of property used for residence – Return – There is no bar / restriction that an assessee cannot file a revised return of income after issuance of notice u/s. 143(2). A revised return of income can be filed even in course of the assessment proceedings provided the time limit prescribed u/s. 139(5) is available. The Departmental Authorities are not expected to deny assessee’s legitimate claim of deduction by raising technical objection- Exemption claimed in revised return was directed to be allowed. [Ss.39(5) 143(2)]

    Assessee filed the revised return u/s. 139(5), offering the capital gain and claiming exemption u/s.54 of the Act. AO held that the revised return being invalid the assessee is not entitle to exemption u/s. 54 of the Act which was confirmed by the CIT(A). On appeal allowing the appeal the Tribunal held that there is no bar/ restriction that an assessee cannot file a revised return of income after issuance of notice 
    u/s. 143(2). A revised return of income can be filed even in course of the assessment proceedings provided the time limit prescribed u/s. 139(5) is available. The Departmental Authorities are not expected to deny assessee’s legitimate claim by raising technical objection. (ITA No. 176/Mum/2017, dt. 20-6-2018)(AY. 2011-12)

    Mahesh H. Hinduja v. ITO (2018) 95 taxman.com 168 (Mum)(Trib), www.itatonline.org

  47. S.56: Income from other sources- Share premium- Addition cannot be made in respect of share premium received by assessee from its holding companies as said share premium was on account of capital transaction and was not an income within charging sections of Act. S 56(2)(vii)(b) read with section 2(24)(xvi) are not made applicable to shares issued to Non-Residents mainly to encourage foreign investments. [Ss.2(24)(xvi), 56(1), 56 (2)(vii)(b), 68, Companies Act, 2013, S.52, Companies Act, 1956 S.78]

    Dismissing the appeal of the revenue, Tribunal held that addition cannot be made in respect of share premium received by assessee from its holding companies as said share premium was on account of capital transaction and was not an income within charging sections of Act. Assessee also supported the fair value of equity shares with a certificate issued by a chartered accountant using DCF method which was approved method as prescribed by RBI and assessee had filed its bank statements as well as FIRC issued by its bankers as evidence and thus, no fault lay with assessee in issuing equity shares. Therefore, no addition was warranted towards share premium received by assessee from its holding companies as said share premium was on account of capital transaction and was not an income within charging sections of Act. S 56(2)(vii)(b) read with S. 2(24)(xvi) are not made applicable to shares issued to non-residents mainly to encourage foreign investments. Addition also cannot be u/s. 68 of the Act as the assessee has filed bank statements as well as FIRC issued by its bankers as evidence. The Tribunal also held that the assessee did utilise proceeds of funds raised towards share premium for setting up manufacturing unit for manufacturing soles for footwear for which business purposes funds were stated to be entrusted by shareholders , therefore addition cannot be made as income from other sources. (AY. 2012-13)

    DCIT v. Finproject India (P.) Ltd. (2018) 171 ITD 82 (Mum) (Trib.)

  48. S.56 : Income from other sources – Gift – Provisions of section 56(2)(vii)(b) are applicable to only those transactions which are entered into after 1-10-2009 [S.56(2)(vii)(b)]

    AO held that the assessee had received a property worth ` 48.57 lakh without any consideration. Accordingly he added said amount to assessee’s income under section 56(2)(vii)(b) of the Act. Tribunal held that since the impugned transaction was entered into on 6-6-2009, as per registered sale deed, same would not be hit by provisions of section 56(2)(vii)(b).Accordingly the addition was deleted. (AY. 2010-11)

    Shailendra Kamalkishore Jaiswal. v. ACIT (2018) 171 ITD 6 (Nag.) (Trib.)

  49. S.56 : Income from other sources – buy back of shares – S.56(2)(vii)(a) is a counter evasion mechanism to prevent laundering of unaccounted income under the garb of gifts. The primary condition for invoking S.56(2)(vii)(a) is that the asset gifted should become a “capital asset” and property in the hands of recipient. If the assessee-company has purchased shares under a buy back scheme and the said shares are extinguished by writing down the share capital, the shares do not become capital asset of the assessee-company and hence 
    S. 56(2)(viia) cannot be invoked in the hands of the assessee company [S.56(2)(vii)(a)]

    Allowing the appeal of the assessee the Tribunal held that S.56(2)(vii)(a) is a counter evasion mechanism to prevent laundering of unaccounted income under the garb of gifts. The primary condition for invoking S. 56(2)(vii)(a) is that the asset gifted should become a “capital asset” and property in the hands of recipient. If the assessee-company has purchased shares under a buy back scheme and the said shares are extinguished by writing down the share capital, the shares do not become capital asset of the assessee-company and hence S. 56(2)(vii)(a) cannot be invoked in the hands of the assessee company. (ITA No. 532/Mum/2018, dt. 29-6-2018) (AY. 2014-15)

    Vora Financial Service P. Ltd. v. ACIT (Mum.)(Trib.), www.itatonline.org

  50. S.68 : Cash credits – Presumptive taxation – Retail business – Not maintain books of account – Return filed under presumptive taxation – Cash deposits in bank accounts of assessee – Returned income not matching presumptive rate of tax on gross turnover – Department to treat return as invalid – Addition cannot be made as cash credits [S.44AF]

    Tribunal held that the cash was deposited in the bank accounts of the assessee. The returned income did not match the presumptive rate of tax on the gross turnover of the assessee. In the returns of income itself the assessee made it very clear that she was not maintaining books of account. If the Department was of the view that the returns had not been filed in terms of the provisions of section 44AF nothing prevented the Department from treating the return of income as invalid. The Assessing Officer straightaway applied the provisions of section 68 to the cash found deposited in the bank accounts knowing fully well that the assessee was not maintaining any books of account. An addition under S. 68 can only be made where any sum is credited in the books of the assessee maintained for any previous year. Thus, the very sine qua non for making of an addition under section 68 presupposes a credit of the amount in the books of the assessee. Therefore since no books of account were maintained in the ordinary course of business of the assessee, no such addition under S. 68 was tenable. The Assessing Officer was to delete the additions so made under S.68 in the respective assessment years. Referred CIT v. Bhaichand H.Gandhi (1983) 141 ITR 67 (Bom.) (HC) Anand Ram Raitani v. CIT (1977) 223 ITR 544 (Gauhati)(HC) (AY. 2010-11 to 2012-13)

    Babbal Bhatia (Smt) v. ITO (2018) 65 ITR 532 (Delhi) (Trib.)

  51. S.68 : Cash credits – Bogus share premium – Addition cannot be made on the ground that the directors of the share subscribers did not turn up before the AO. The assessee can be required to prove only such facts which are in his knowledge. Creditworthiness of the subscriber cannot be disputed by the AO of the assessee but by the AO of the subscriber. If the assessee has discharged its onus to prove identity, creditworthiness & genuineness of the share applicants, the onus shifts to AO to disprove the documents furnished by assessee. In absence of any investigation, much less gathering of evidence by the AO, an addition cannot be sustained merely based on inferences drawn by circumstance

    Dismissing the appeal of the revenue the Tribunal held that on account of alleged bogus share premium, addition cannot be made on the ground that the directors of the share subscribers did not turn up before the AO. The assessee can be required to prove only such facts which are in his knowledge. Creditworthiness of the subscriber cannot be disputed by the AO of the assessee but by the AO of the subscriber. If the assessee has discharged its onus to prove identity, creditworthiness & genuineness of the share applicants, the onus shifts to AO to disprove the documents furnished by assessee. In absence of any investigation, much less gathering of evidence by the AO, an addition cannot be sustained merely based on inferences drawn by circumstance. Tribunal also held that, S. 68 of the Act provides that if any sum found credited in the year in respect of which the assessee fails to explain the nature and source shall be assessed as its undisclosed income. In the facts of the present case, both the nature & source of the share application received was fully explained by the assessee. The assessee had discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants. The PAN details, bank account statements, audited financial statements and Income-tax acknowledgments were placed on AO’s record. Accordingly all the three conditions as required u/s. 68 of the Act i.e., the identity, creditworthiness and genuineness of the transaction was placed before the AO and the onus shifted to AO to disprove the materials placed before him. Without doing so, the addition made by the AO is based on conjectures and surmises cannot be justified. In the facts and circumstances of the case as discussed above, no addition was warranted under S. 68 of the Act. (ITA. No. 1162/Kol/2015, dt. 14-6-2018) (AY. 2012-13)

    ITO v. Wiz-Tech Solutions Pvt. Ltd.( Kol.)(Trib.), www.itatonline.org

  52. S.68 : Cash credits – Bogus share capital – If the AO has remained silent with folded hands and has not made any independent inquiry from the concerned AO of shareholder company and has not controverted the evidence produced by the assessee, that itself is sufficient to knock off the addition made. The fact that there is no personal appearance from director of said cash creditor (share holder) does not mean that an adverse inference u/s. 68 can be drawn by the AO without the AO discharging the secondary burden lying upon him

    Allowing the appeal of the assessee the Tribunal held that if the AO has remained silent with folded hands and has not made any independent inquiry from the concerned AO of shareholder company and has not controverted the evidence produced by the assessee, that itself is sufficient to knock off the addition made. The fact that there is no personal appearance from director of said cash creditor (shareholder) does not mean that an adverse inference u/s. 68 can be drawn by the AO without the AO discharging the secondary burden lying upon him. (ITA No. 3133/Del/2018, dt. 25-6-2018)(AY. 2009-10).

    Moti Adhesives Pvt. Ltd. v. ITO (Delhi)(Trib.), www.itatonline.org

  53. S.71 : Set off of loss – One head against income from another – Unabsorbed depreciation and brought forward business loss can be set off against income from other sources [S.72]

    Allowing the appeal of the assessee the Tribunal held that unabsorbed depreciation and brought forward business loss can be set off against income from other sources. (AY.2010-11)

    Nanak Ram Jaisinghani v. ITO (2018) 170 ITD 570 (Delhi) (Trib.)

  54. S. 72 : Carry forward and set off of business losses – Speculation losses – There is no bar in adjustment of unabsorbed business losses from speculation profit of current year, provided speculation losses earlier years has been first adjusted from speculation profit [S.71, 73]

    AO did not allow set off of unabsorbed non-speculation business loss incurred by assessee against current year’s speculation profit. CIT(A) up held that order of AO. On appeal Tribunal held that there is no bar in adjustment of unabsorbed business losses from speculation profit of current year, provided speculation losses for earlier years has been first adjusted from speculation profit. Followed CIT v. Ramshree Steels (P.) Ltd. (2018) 400 ITR 61 (All.) (HC)(AY.2011-12)

    Edel Commodities Ltd. v. DCIT ( 2018) 170 ITD 402 (Mum.) (Trib.)

  55. S. 72A : Carry forward and set off of accumulated loss and unabsorbed depreciation – Merger – Non-banking finance company (NBFC) – Merger Scheme approved by High Court having in mind larger public interest, Claim of set off of unabsorbed short-term capital loss and unabsorbed business loss incurred by amalgamating companies cannot be denied on ground that amalgamating companies did not own an ‘industrial undertaking’ as defined under S. 72A of the Act. [Ss.72, 74]

    Assessee was a non-banking finance company (NBFC). By virtue of order of High Court, six companies with unabsorbed capital and business losses were merged with assessee-company. Assessee’s claim was denied on ground that amalgamating companies did not own an ‘industrial undertaking’ as defined under S. 72A of the Act. Allowing the appeal of the assessee the Tribunal held that on fact, merger scheme duly approved by High Court having in mind larger public interest, could not be disturbed by revenue merely because assessee was not entitled for benefits under S. 72A of the Act. Tribunal also held that even otherwise, since department had not filed any appeal under section 391(7) of the Companies Act, 1956 against order of amalgamation sanctioned by High Court, by applying doctrine of acquiescence, department would be now barred from raising an objection to scheme. Accordingly the assessee’s claim for set off of unabsorbed losses of amalgamating companies was to be allowed. (AY. 2012-13)

    Electrocast Sales India Ltd. v. DCIT (2018) 170 ITD 507 (Kol.) (Trib.)

  56. S.73 : Losses in speculation business – Trading of shares was not primary activity – Solitary transaction of sale of shares could not have been treated as speculative business

    Allowing the appeal of the assessee the Tribunal held that trading of shares was not primary activity of assessee, accordingly the solitary transaction of sale of shares by assessee could not be held to be part of carrying on business of trading in shares, hence, said sale transaction could not have been treated as speculative business of assessee under Explanation to S. 73. (AY. 2003-04)

    Moser Baer India Ltd. v. DCIT (2018) 170 ITD 522 (Delhi) (Trib.)

  57. S.74 : Losses – Capital gains – Unquoted shares – Sale of shares at ` 2 per share – long-term capital loss on issue of shares cannot be disallowed merely on basis of suspicion and conjectures without making any enquiries in the hands of the purchaser of shares

    Assessee incurred long-term losses on sale of unquoted shares which was disallowed by the AO on the ground that sale consideration of ` 2 per share had been grossly understated. Allowing the appeal of the assessee the Tribunal held that the onus was on revenue to prove with cogent materials that assessee had indeed received higher sale price. Since no enquiries whatsoever were conducted in hands of purchaser of shares, disallowance made on basis of suspicion and conjectures was to be deleted. (AY. 2012-13)

    Electrocast Sales India Ltd. v. DCIT (2018) 170 ITD 507 (Kol.) (Trib.)

  58. S.80 : Return for losses – Unabsorbed depreciation and carried forward losses – A return filed u/s. 153A is deemed to be a return filed u/s. 139(1). Accordingly, the restrictive provisions of S. 80 do not apply. The return u/s. 153A, once accepted and assessed, replaces the original return filed u/s. 139. Therefore, the assessee is eligible for carry forward business loss [Ss.139(1), 153A]

    Dismissing the appeal of the revenue the Tribunal held that a return filed u/s. 153A is deemed to be a return filed u/s. 139(1). Accordingly, the restrictive provisions of S. 80 do not apply. The return u/s. 153A, once accepted and assessed, replaces the original return filed u/s. 139. Therefore, the assessee is eligible for carry forward business loss. (ITA No.2461/DEL/2016, dt. 6-6-2018)(AY. 2010-11)

    ACIT v. Splendor Landbase Ltd. (Delhi)(Trib), www.itatonline.org

  59. S.80IA : Industrial undertakings – Infrastructure development –Developer – Contractor – Business of construction/development of Infrastructure facilities such as roads and providing necessary and crucial components of Railway system is entitle to deduction as developer [S.80IA(4)]

    Tribunal held that the assessee, engaged in business of construction/development of Infrastructure facilities such as roads and providing necessary and crucial components of railway system is entitle to deduction as developer. (AYs. 2004-05 to 2009-10)

    Bhinmal Contractors Property and Land Developers (P.) Ltd. v. ACIT DCIT (2018) 170 ITD 599 (Mum) (Trib.)

  60. S. 80IE : Undertakings – North – Eastern States – ‘initial assessment year’ would be year in which substantial expansion is completed by assessee which would enable it to generate revenue – Denial of exemption is held to be not justified

    Allowing the appeal of the revenue the Tribunal held that ‘initial assessment year’ would be year in which substantial expansion is completed by assessee which would enable it to generate revenues and claim deduction thereon. Tribunal also held that there is no time limit prescribed in S.80IE as to when substantial expansion should be completed by assessee. Accordingly the denial of exemption is held to be not justified. 
    (AY. 2009-10)

    Jay Shree Industries Ltd. v. JCIT (2018) 170 ITD 479 (Kol.) (Trib.)

  61. S.90 : Double taxation relief –The failure to submit a ‘Tax Residency Certificate’ (TRC) as required by S. 90(4) is not a bar to the grant of benefits under the DTAA. However, the assessee is required to produce reasonable evidence of the entitlement of the foreign entity to benefits under the DTAA-India – USA. [S.90(4), Art. 12(4)(b)]

    Allowing the appeal of the assessee the Tribunal held that the failure to submit a ‘Tax Residency Certificate’ (TRC) as required by S. 90(4) is not a bar to the grant of benefits under the DTAA. However, the assessee is required to produce reasonable evidence of the entitlement of the foreign entity to benefits under the DTAA. (ITA Nos. 478 / 479/Ahd/2018, dt. 21-6-2018)(AY. 2013-14, 2014-15)

    Skaps Industries India Pvt.Ltd. v. ITO (2018) 94 taxman.com 448 (Ahd)(Trib), www.itatonline.org

  62. S.92B : Transfer Pricing – International transactions – Investment in share capital of subsidiaries outside India – Advancing towards investment and for expansion of business out of interest free funds – No interest can be charged – Not in nature of international transaction-Transfer pricing provision is not applicable – Adjustment is not required [S.92C]

    Allowing the appeal of the assessee, the Tribunal held that investment in share capital of subsidiaries outside India. Advancing towards investment and for expansion of business out of interest free funds interest cannot be charged. Transaction is not in nature of international transaction hence transfer pricing provisions is not applicable. Accordingly adjustment is not required. (AYs. 2008-09 to 2011-12)

    Bartronics India Ltd. v. DCIT (2018) 65 ITR 540 (Hyd.) (Trib.)

  63. S.92C : Transfer Pricing – Arm’s Length Price – Outstanding expenses – Interest – Period of 60 days reasonable within which expenses ought to have been recovered – SBI-PLR rates alone should be calculated without any 3 per cent spread. 8.15 per cent should be adopted while calculating Arm’s Length Price interest – Opportunity cost to assessee’s funds to be calculated in relation to interest earning capacity in domestic market [S.92B]

    Tribunal held that for recovery of outstanding expenses, interest period of 60 days reasonable within which expenses ought to have been recovered. SBI-PLR rates alone should be calculated without any 3 per cent spread 8.15 per cent should be adopted while calculating Arm’s Length Price interest. Opportunity cost to assessee’s funds to be calculated in relation to interest earning capacity in domestic market. (AY. 2012-13)

    Allianz Cornhill Information Services P. Ltd. v. DCIT (2018) 65 ITR 33 (SN) (Cochin) (Trib.)

  64. S. 115JB : Book profit – Ascertained liability – Assessing Officer has no power to go behind profit/loss declared for company law purposes, and ‘book profit’ shown therein has to be taken as base for making adjustments under section 115JB. Addition cannot be made – Clause (c) of Explanation 1 to section 115JB merely speaks of making additions to book profit, only in event where provision made for meeting liabilities is not an ascertained liability [S.36(1)(vii), 36(1)(viia)]

    Tribunal held that as per clause (c) of Explanation 1 to section 115JB, provision made for doubtful debts, being unascertained liability, deserves to be added to book profit, however the Assessing Officer has no power to go behind profit/loss declared for company law purposes, and ‘book profit’ shown therein has to be taken as base for making adjustments under section 115JB. Clause (c) of Explanation-1 to section 115JB merely speaks of making additions to book profit, only in event where provision made for meeting liabilities is not an ascertained liability. In the peculiar facts of the case, the addition made by the Assessing Officer to the tune of 
    ` 22.19 crores is not in accordance with law since this is a part of the ascertained liability which was otherwise adjusted in the provision account separately maintained by the assessee though, while claiming write off, it was restricted to 
    ` 22.89 crore. In other words, in principle, the view taken by the Accountant Member is agreed with. The assessee is not entitled to further reduction to the book profit but the disallowance of ` 22,89,02,937 deserves to be set aside. (AY. 2009-10)

    Southern Power Distribution Company of AP Ltd. v. DCIT (2018) 170 ITD 1(TM) (Hyd.) (Trib.)

  65. S.142(2A) : Inquiry before assessment – Special audit – AO not giving any finding about nature and complexity of accounts, volume of accounts, multiplicity of transactions, specialised nature of business activity of assessee – Order being no speaking order for special audit was held to be not valid – Since the direction for special audit was without proper jurisdiction the time so taken could not be counted and the period did not get extended. Since the order was passed on July 28, 2010, it was time barred. Therefore the order passed by the Assessing Officer was bad in law [S.153C]

    Tribunal held that the services of the expert in the field of accounts cannot be denied to the AO. At the same time, reasonable satisfaction to be brought out on record about the nature and complexity of the accounts. The AO had not given any finding about the nature and complexity of accounts, volume of accounts, multiplicity of transactions, or the specialised nature of business activity of the assessee. The assessee had submitted books of account translated in English and the reasons given by the AO, viz., that details had not been given, the intricate the nature of the seized material, that the true picture of undisclosed income could not be worked out within a span of a week, could not make any valid ground for referring a case to special audit. Even when the books of account had not been called for satisfaction as to the nature and complexity of accounts of the assessee is a sine qua non for directing the assessee to get the accounts audited by an accountant as defined in the Explanation below sub-section (2) of section 288. As there was no speaking order and giving no reason for arriving at the conclusion having regard to the nature and complexity of the accounts the order under section 142(2A) was bad in law. Since the direction for special audit was without proper jurisdiction the time so taken could not be counted and the period did not get extended. Since the order was passed on July 28, 2010, it was time barred. Therefore the order passed by the Assessing Officer was therefore, bad in law. (AYs. 2005-06 to 2008-09)

    Sunder Mal Sat Pal v. ITO (2018) 65 ITR 28 (SN) (Chd) (Trib)

  66. S.143(2) : Assessment – Notice – Reassessment – If the notice u/s. 143(2) is issued prior to the furnishing of return by the assessee in response to notice u/s. 148, the notice issued u/s. 143(2) is not valid and the reassessment framed on the basis of said notice has to be quashed. S. 292BB does not save the assessment [Ss.147) 148, 292BB]

    Allowing the appeal of the assessee, the Tribunal held that if the notice u/s. 143(2) is issued prior to the furnishing of return by the assessee in response to notice u/s. 148, the notice issued u/s. 143(2) is not valid and the reassessment framed on the basis of said notice has to be quashed. S. 292BB does not save the assessment.(ITA Nos. 5163 & 5164/Del/2010 & ITA No. 5554/Del/2012 dt. 2-7/2018) (AYs. 2004-05, 2005-06)

    Halcrow Groups Ltd.v. ADIT (Delhi)(Trib), www.itatonline.org

  67. S.143(3) : Assessment – Amalgamation – Assessment in name of Company not in existence having amalgamated with another is liable to be cancelled as nullity being bad in law [S.263]

    Allowing the appeal of the assessee the Tribunal held that assessment in name of Company not in existence having amalgamated with another is liable to be cancelled as nullity being bad in law. The Assessing Officer was at liberty to have alternative recourse and such a course of action could be taken by the Assessing Officer only if it was still permissible in terms of law and had not become time barred. (AY. 2008-09)

    Basundhara Goods P. Ltd. ITO (2018) 65 ITR 62 (SN) (Kol.) (Trib.)

  68. S.143(3): Assessment – Income from undisclosed sources – Survey – Surrendered during survey and assessee retracting statement – Onus is on AO to investigate further and establish additions made on basis of surrender –Addition cannot be made merely on the basis of surrender – Addition of ` 1,42,778 on account of gross profit was confirmed. [S.133A]

    Tribunal held that merely on the basis of statement surrendered during survey which was retracted addition cannot be made. Onus is on AO to investigate further and establish additions made on basis of surrender. Addition of ` 1,42,778 on account of gross profit was confirmed.

    Satish Chand Agarwal v. ITO (2018 64 ITR 713 (Jaipur) (Trib.)

  69. S.143(3) : Assessment – On Money – The fact that the assessee has sold flats at an undervaluation does not mean that he has understated the consideration and earned undisclosed ‘on money’. The mere presumption that excess price could have been charged is not a ground for coming to the conclusion that the assessee did charge a higher price. The burden of proving such understatement or concealment is on the Revenue- Addition was deleted

    Allowing the appeal of the assessee, the Tribunal held that the fact that the assessee has sold flats at an undervaluation does not mean that he has understated the consideration and earned undisclosed ‘on money’. The mere presumption that excess price could have been charged is not a ground for coming to the conclusion that the assessee did charge a higher price. The burden of proving such understatement or concealment is on the Revenue .Accordingly the addition was deleted. Tribunal considered the ratio in in ITO v. Diamond Investment and Properties in ITA No. 5537/M/2009 dt. 29-7-2010 and ACIT v. Rustom Soli Sethna, ITA No. 5086/M/2014 dt. 22-6-2017 Prashant Arjunrao Kolhe v. DCIT [2016] 75 taxmann.com 156(Mum)( Trib), Aum Shiv Enterprises v. ACIT ITA No. 6985 /M/2010 dt.24-8-2013 (Mum) (Trib), Neelkamal Realtors and Erectors v. DCIT ITA No.1143/M/2013 dt. 16-8-2013 (Mum) (Trib) and K.P. Varghese v. ITO (1981) 131 ITR 597 (SC). (ITA No.2656/Mum/2016, dt. 25-5-2018) (AY. 2012-13)

    Shah Realtors v. ACIT (Mum)(Trib), www.itatonline.org

  70. S.145 : Method of accounting – Real estate construction contracts – Consistency method of accounting – Completed contract – Percentage completion – Accounting Standards AS-7 and AS-9 – AO was not justified in applying the percentage completion method on the assessee merely on the basis that it was followed by the developer JSM DPL and arbitrarily making addition to the income ignoring the fact that project completion method/ completed contract method of accounting has been consistently adopted by the assessee. [Ss. 5, 43C]

    Allowing the appeal of the assessee the Tribunal held that in the instant appeal assessee even though not directly involved in the construction activity and it is merely gave its land for development and it was agreed between the assessee company and the developer that 32% of the saleable area shall be given to the assessee. The assessee has constituently followed completed project contract/percentage completion method as recognised its revenue at the time of execution of getting the sale deed registered and before that it has to be consistently showing the advance from sale of flats as the liability in the balance sheet. Accordingly in the given circumstances of the case and in the light of judgment referred in preceding paragraphs are of the considered view that the Ld. AO was not justified in applying the percentage completion method on the assessee merely on the basis that it was followed by the developer JSM DPL and arbitrarily making addition to the income ignored the fact that project completion method/ completed contract method of accounting has been consistently adopted by the assessee and even has been accepted by the revenue authority for the A.Y. 2010-11 and A.Y. 2011-12. We therefore set aside the findings of learned CIT(A) and delete the addition of ` 16,12,34,754/- for Assessment Year 2012-13. (ITA No.121/Ind/2016 & 686/Ind/2016, dt. 3-8-2018)(AYs. 2012-13, 2013-14)

    Ashok H-Tech Builders Pvt. Ltd. v. DCIT (Indore)(Trib.), www.itatonline.org

  71. S.147 : Reassessment – After the expiry of four years – If there is nothing in the recorded reasons to suggest that the income chargeable to tax which has escaped assessment is ` one lakh or more, the notice issued u/s. 148 of the Act beyond four years of the end of the relevant assessment year is invalid [S.148]

    Allowing the appeal of the assessee the Tribunal held that if there is nothing in the recorded reasons to suggest that the income chargeable to tax which has escaped assessment is ` one lakh or more, the notice issued u/s. 148 of the Act beyond four years of the end of the relevant assessment year is invalid. Followed Mahesh Kumar Gupta v. CIT ( 2014) 363 ITR 300 (All) (HC) Amar Nath Agarwal v. CIT (2015) 371 ITR 183 (All.) (HC) (ITA No. 167/Agra/2018, dt. 19-6-2018)(AY. 2007-08)

    Usha Agarwal v. ITO (SMC) (Agra)(Trib), www.itatonline.org

  72. S.147 : Reassessment – After the expiry of four years – Bogus share capital – Statement was retracted – No allegation of failure on part of assessee to disclose material facts – Reasons recorded without independent application of mind – Reassessment is held to be invalid [S.148]

    Tribunal held that, there is no allegation of failure on part of assessee to disclose material facts. Reasons recorded without independent application of mind. The statement of two persons relied upon was retracted and alleged statements of two persons were not with the AO at the time of reopening of assessments. No enquiry or prima facie verification was made. Therefore the reopening was bad in law as the reasons recorded were without application of mind. (AY. 2009-10)

    ACIT v. Adhunik Cement Ltd. (2018) 64 ITR 65 (SN) (Kol.) (Trib.)

  73. S.147 : Reassessment – Merely on the basis of statement recorded by investigation wing and cross examination was not provided – Reopening assessment on borrowed satisfaction rather than his own satisfaction –Reassessment is held to be invalid [S.148]

    Tribunal held that the validity of reassessment proceedings has to be judged with the material available with the Assessing Officer and opinion are strictly based on documents and information in possession of the Assessing Officer. No reopening can be made in mechanical manner. Reopening cannot be based on borrowed satisfaction. The independent satisfaction of the Assessing Officer is the basic necessity. (AY. 2007-08, 2008-09)

    Nirmala Agarwal v. ACIT (2018) 64 ITR 658 (Jaipur) (Trib.)

  74. S.147 : Reassessment – If the reopening is based on information received from the investigation dept., the reasons must show that the AO independently applied his mind to the information and formed his own opinion. If the reopening is done mechanically, it is void. Also, if the reasons refer to any document, a copy should be provided to the assessee. Failure to do so results in breach of natural justice and renders the reopening void [S.148]

    Allowing the appeal of the assessee the Tribunal held that if the reopening is based on information received from the investigation dept., the reasons must show that the AO independently applied his mind to the information and formed his own opinion. If the reopening is done mechanically, it is void. Also, if the reasons refer to any document, a copy should be provided to the assessee. Failure to do so results in breach of natural justice and renders the reopening void. (ITA Nos. 41 & 40/Agra/2017, dated 1-6-2018)(AY. 2010-11)

    Deepraj Hospital (P) Ltd. v. ITO (Agra)(Trib.), www.itatonline.org

  75. S. 147 : Reassessment – Search-original assessment was pending before Commissioner (Appeals) – Assessing Officer is not empowered to issue reassessment notice — Reassessment is held to be illegal as void ab initio. [Ss.148, 153A]

    Tribunal held that the proceedings initiated under S. 153A of the Act were still pending for adjudication before the Commissioner (Appeals) when the notice under S. 148 of the Act was issued. The same issue of addition of ` 12 lakhs, being loan received from KVF, was the subject matter of the section 153A proceedings as well as the section 148 proceedings. There could not be two parallel proceedings on a similar subject matter and proceedings initiated first must come to an end for making way for initiation of other proceedings on the same subject matter. According to the statutory scheme and the provisions of the Act during the pendency of proceedings under S. 153A the Assessing Officer was not empowered to issue notice under Ss. 147 / 148. Therefore the reassessment proceedings for assessment year 2003-04 suffered from the basic defect of the reassessment notice being illegal and, therefore, the reassessment proceedings could not be sustained. Accordingly the reassessment proceedings for the assessment year 2003-04 were quashed as void ab initio. (AYs. 2003-04, 2004-05)

    Vipul Motors P. Ltd. v. ACIT (2018) 65 ITR 12 (SN) (Delhi) (Trib)

  76. S.151 : Reassessment – Sanction for issue of notice – If the CIT merely states “Yes, I am satisfied” while granting sanction to the reopening, it means that the sanction is merely mechanical and he has not applied independent mind. There is not an iota of material on record as to what documents he had perused and what were the reasons for his being satisfied to accord the sanction to initiate the reopening of assessment- Order was quashed and held to be void ab-initio. [Ss.147, 148]

    Allowing the appeal of the assesee the Tribunal held that if the CIT merely states “Yes, I am satisfied” while granting sanction to the reopening, it means that the sanction is merely mechanical and he has not applied independent mind. There is not an iota of material on record as to what documents he had perused and what were the reasons for his being satisfied to accord the sanction to initiate the reopening of assessment- Order was quashed and held to be void ab initio. (I.T.A. No. 238/Agra/2018 & I.T.A No. 129/Agra/2018, dt. 19-6-2018)(AY. 2008-09)

    Ghanshyam v. ITO (SMC)(Agra)(Trib.), www.itatonline.org

  77. S.151 : Reassessment – Sanction for issue of notice – If the AO reopens on the basis of information received from another AO without further inquiry, it means he has proceeded “mechanically” and “without application of mind”. If the CIT does not give reasons while according sanction, it implies that he has also not applied his mind. Both render the reopening void [Ss.147, 148]

    Allowing the appeal of the assessee the Tribunal held that if the AO reopens on the basis of information received from another AO without further inquiry, it means he has proceeded “mechanically” and “without application of mind”. If the CIT does not give reasons while according sanction, it implies that he has also not applied his mind. Both render the reopening void (ITA No. 988/Del/2018, dt. 25-5-2018) (AY. 2008-09)

    Sunil Agarwal v. ITO (Delhi)(Trib), www.itatonline.org

  78. S.159 : Legal representatives –Notice or order on dead person or wound up company is a nullity subject to condition that the department is made aware of the death or winding up. If the assessee participated in the proceedings and thereafter has taken the plea that order or notice was served on dead person, wound-up company are nullity. In such cases, the assessment is liable to be set-aside for a fresh assessment in accordance with law instead of its annulment. [Ss.163, 176]

    Tribunal held that a notice/order on a dead person/wound-up company is a nullity, this is subject to the condition that the department is made aware of the death/winding-up. If the legal representative, either voluntarily or in response to a notice issued against the deceased but served upon his agent, allows the assessment proceedings to continue against the deceased/ wound-up company without any objection and lets the AO make an assessment order, it would not be open for him to take a plea at the appellate stage, as a last resort or as an afterthought, that the proceedings taken and the assessment order made against the deceased/ wound-up company are nullity. In such cases, the assessment is liable to be set-aside for a fresh assessment in accordance with law instead of its annulment. (ITA No.1929/Del/2017, dt. 19-6-2018)(AY. 2012-13)

    Pesak Ventrue Ltd. v. DCIT (2018) 95 taxman.com 113 (Delhi)(Trib.), www.itatonline.org

  79. S.161 : Liability of representative assessee – Income from house property – Shares of beneficiaries are definite – Trust cannot be assessed separately at maximum rate – Tax on the share of each beneficiary will have to be separately calculated as if it formed a part of the beneficiary’s income. Tax payable by the Trust will be the sum total of the tax calculated on the share of each beneficiary. [Ss.22, 26, 164]

    Assessee was a family trust with 14 beneficiaries having equal shares. During previous year relevant to assessment year assessee was in receipt of only rental income. Shares of all beneficiaries were determined and known. AO held that shares of beneficiaries though definite in trust, they were not co-owners of trust property, thus, S. 26 mandating assessment in hands of each beneficiary separately would not apply. AO assessed rental income in hands of assessee-trust at maximum marginal rate instead of allotting it in hands of beneficiaries. Allowing the appeal of the assessee the Tribunal held that since beneficiaries were real owners of property of trust and their shares of income were determined, tax on share of each beneficiary would be separately calculated as if it formed a part of beneficiary’s income and tax 
    payable by trust would be sum total of tax calculated on share of each beneficiary. (AY. 2007-08)

    Abad Trust v. ADI (E) (2018) 171 ITD 50 (Cochin) (Trib.)

  80. S. 194A : Deduction at source – Interest other than interest on securities – Non-resident – External commercial borrowings with ICICI Bank Singapore Branch – ICICI Bank Indian resident company and its global income including offshore Branch chargeable to tax in India – Not liable to deduct tax at source. Matter was set aside for verification [Ss.6(3), 194A (3) (iii), 195, 201 (1) 201(iA)]

    Allowing the appeal of the assessee the Tribunal held that the office of the Joint Commissioner Mumbai had clarified by his letter dated January 24, 2011 that the ICICI-Bank was an Indian resident company in terms of S.6(3)(iii) and the global income of the bank including the offshore branch was chargeable and was assessed to tax in India. Any payment made to a resident banking company does not come within the purview of tax deduction at source in terms of the provisions of S. 194A(3)(iii). The agreement between the assessee and the bank stated that the bank was acting as an arranger-cum-facility agent. The Singapore branch was the original lender. But the letter written by the Singapore branch stated that it was an arranger and facility agent and the lender of the loan was a group of financial institutions to be assembled by the arranger. The facts were contradictory to each other according to the assessee’s own record. Therefore the issue needed to be re examined by the Assessing Officer in the light of the claim of the assessee that the Singapore branch was the main lender. The assessee was directed to substantiate its case with further evidence. In case the Assessing Officer found that the Singapore branch was the lender of external commercial borrowing there was no default in deduction of tax at source under section 201(1) and (1A). Hence the issue was set aside to the Assessing Officer with a direction to consider the issue afresh in the light of the evidence filed by the assessee. (AYs. 2009-10, 2011-12)

    Bajaj Eco Tec Products Ltd. v. ITD (TDS) (2018) 65 ITR 48 (SN) (Mum.) (Trib.)

  81. S.194I : Deduction at source – Rent – Hoarding – If a person has taken a particular space on rent and thereafter sub-lets same, fully or in part, for putting up a hoarding, such payments would be liable for tax deduction at source under S. 194-I and not under S. 194C of the Act. [Ss.194C, 201(1))201(IA)]

    Tribunal held that as per CBDT, Circular 715 dt. 8-8-1995(1995) 215 ITR 12 (St), a contract for putting up a hoarding is in nature of advertising contract and provisions of S. 194C would be applicable however, if a person has taken a particular space on rent and thereafter sub-lets same, fully or in part, for putting up a hoarding, such payments would be liable for tax deduction at source under S.194I and not under S. 194C of the Act. The matter was remanded to the AO to decide according to law. (AYs. 2003-04, 2005-06)

    Accord Advertising (P.) Ltd. v. ITO (2018) 171 ITD 111 (Mum.) (Trib.)

  82. S.199 : Deduction at source – Credit for tax deducted – Credit for tax deducted at source has to be given in assessment year in which income has actually been assessed/offered to tax and not in year of deduction itself

    Tribunal held that credit for tax deducted at source has to be given in assessment year in which income has actually been assessed/offered to tax and not in year of deduction itself.(AY. 2010-11)

    Surendra S. Gupta. v. ACIT (2018) 170 ITD 732 (Mum.) (Trib.)

  83. S.206AA : Requirement to furnish Permanent Account Number –Payment to Non-Resident – Assessee can apply the rate prescribed under DTAA if it is beneficial to him – Provision of S.206AA does not override provisions of DTAA [Ss. 90, 195]

    Allowing the appeal of the assessee the Tribunal held that assessee can apply the rate prescribed under DTAA if it is beneficial to him. Provision of S.206AA does not override provisions of DTAA. (AY. 2013-14)

    Emmsons International Ltd. v. DCIT (2018) 171 ITD 140 (Delhi) (Trib.)

  84. S.219 : Credit for advance tax –Succession of business – Receipt on account of Mobilisation advance under work order when assessee was partnership – Succession by Company – Credit should be given to the assessee in subsequent year whenever receipt or part of receipt recognised as income by Company

    Tribunal held that according to the provisions of S. 219 tax credit on account of tax deduction at source was available in respect of the corresponding income offered to tax by the assessee. Although tax at source was deducted on the amount which was received by the assessee as mobilisation advance and the amount had to be recognised as income of the assessee in the subsequent year due to the succession of business of the assessee’s partnership by the company the tax deduction at source in the name of the assessee would not automatically be available for credit to the company. Accordingly, the Assessing Officer was to allow the credit of the tax deduction at source available in the account of the assessee which had ceased to exist due to the succession of the business activity by the company in the subsequent year whenever the receipt or part of the receipt was recognised as income by the company (AY. 2012-13)

    ITO v. Dreamax Infrastructure Developers. (2018) 65 ITR 500 (Jaipur) (Trib.)

  85. S.249 : Appeal – Commissioner (Appeals) – Form of appeal and limitation – E-filing of appeal is not applicable to order passed prior to 1-3-2016 [S.246A]

    Allowing the appeal of the assessee the Tribunal held that e-filing of appeal is not applicable to order passed prior to 1-3-2016. CIT(A) was directed to admit the appeal and pass an order on merits. (Notification No. SO.637 (E) [No. 11/2016 (F. No. 149/150/2015 -TPL), dated 1-3-2016) (AY. 2009-10)

    Ashraf Aziz Kasmani v. ITO (2018) 170 ITD 230 (Mum.) (Trib.)

  86. S.249 : Appeal – Commissioner (Appeals) – Form of appeal and limitation – e-filing of appeals before CIT(A) w.e.f. 1-4-2016 – Appeal filed in paper format should be permitted to make good the defect and file an appeal electronically – Appeal cannot be rejected on technical grounds. Delay in filing the appeal is condoned and CIT(A) is directed to decide the issue on merits. [R.45]

    Allowing the appeal of the assessee, the Tribunal held that appeal filed in paper format should be permitted to make good the defect and file an appeal electronically. Appeal cannot be rejected on technical grounds. Assessee is directed to file the appeal electronically with in 10 days from the date of receipt of the order. Delay in filing the appeal is condoned and CIT(A) is directed to decide the issue on merits. (ITA No. 7134/Mum/2017 dt 4-5-2018 (SMC)(AY. 2013-14)

    All India Federation of Tax Practioners v. ITO (Mum.) (Trib.) www.itatonline.org

  87. S.250 : Appeal – Commissioner (Appeals) – Procedure – All issues to be mandatorily adjudicated when specific ground is raised. Matter remanded to CIT(A) to decide all the issues raised before him afresh which were not adjudicated [R.27]

    In appeal before the CIT(A) the assessee has challenged the addition on facts as well as on jurisdictional issue on reopening of assessment – CIT(A) has decided the issue on jurisdiction in favour of assessee, however he has not decided the issue on merits. On appeal by revenue the assessee has filed application under Rule 27 of the ITAT Rules and contended that CIT(A) ought to have decided the matter on merits. Tribunal held that even if a decision is challenged before the first appellate authority both on issue of validity of jurisdiction as well as merits of the case, the adjudication on the issue of merits can by no stretch of imagination be liable for rejection on the ground that the assessment has been quashed due to change of opinion. Ref : CIT v. Ramdas Pharmacy [1970] 77 ITR 276 (Mad.) (HC). (I.T.A. No.3662/Mum/2016, dt. 2-7-2018) (AY. 2006-07)

    DCIT v. J. M. Financial Institutional Securities Ltd. (Mum.) (Trib.), www.itatonline.org

  88. S.251 : Appeal – Commissioner (Appeals) – Powers – CIT (A) has no power to travel beyond the subject-matter of the assessment and is not entitled to assess new sources of income. In order for the CIT(A) to enhance, there must be something in the assessment order to show that the AO applied his mind to the particular subject-matter or the particular source of income with a view to its taxability or to its non-taxability and not to any incidental connection – Enhancement of long term capital gains on sale transaction was deleted [S.246A]

    Tribunal held that CIT(A) has no power to travel beyond the subject-matter of the assessment and is not entitled to assess new sources of income. In order for the CIT(A) to enhance, there must be something in the assessment order to show that the AO applied his mind to the particular subject-matter or the particular source of income with a view to its taxability or to its non-taxability and not to any incidental connection. Enhancement of long term capital gains on sale transaction was deleted. (ITA Nos. 751, 752, 753/JP/2015, dt. 25-5-2018)(AYs. 2006-07, 2007-08, 2008-09)

    Jagdish Narayan Sharma v. ITO (Jaipur)(Trib.), www.itatonline.org

  89. S.253 : Appellate Tribunal – Tax Effect – Below ` 10 lakhs – Where the addition relates to undisclosed foreign assets/ bank accounts – Exception to circular – Appeal by revenue is maintainable

    The Tribunal held that since the present case was falling within the exceptions carved out in the Circular No. 21/2015 dt. 10-12-2015, appeals have to be contested where the addition related to undisclosed foreign assets/bank accounts. Assessee is having foreign bank account and information thereof has been received by Indian authorities inasmuch as the assessee has used Indian address. Hence, the appeal by the Revenue having been filed in accordance with the CBDT Circular in this regard is duly maintainable. (ITA No. 5889/Mum/2016 dt. 1-6-2018 (AY. 2003-04),

    DCIT v. Rahul Rajnikant Parikh & Ors (Mum.) (Trib.), www.itatonline.org

  90. S.253 : Appellate Tribunal – Territorial jurisdiction – Stay –Location of Assessing Officer, at point of time when Tribunal hears and determines case, is relevant for determining jurisdiction of Bench to hear stay/appeals – Registry was directed to place matter before President to take final call on issue, hence the Registry was directed to place matter before President for final decision on transfer of assesee’s case to Delhi Benches [S. 127, ITATR, 4]

    Tribunal held that the Assessing Officer having jurisdiction to assess the income of the assessee is located in New Delhi, which falls in jurisdiction of Delhi therefore the jurisdiction for hearing of these applications, and hearing of the related appeals, vests in Delhi Benches of this Tribunal. However, it is for the Hon’ble President to take a final call on the issue, as is the unambiguous thrust of Rule 4(1) of the ITAT Rules. We, therefore, deem it fit and proper to direct the Registry to place all stay applications and related appeals, as indeed all other appeals of this assessee, before Hon’ble President for appropriate orders. In order to ensure, however, that these applications are not rendered infructuous or nugatory by recovery of the impugned outstanding tax demands in the meantime, we also take on record the categorical assurance so graciously extended by the learned Departmental Representative, not to take any coercive measures for recovery or collection of the outstanding disputed demands till the time the present stay applications are disposed of by the Tribunal.

    In the result, while, in our considered view, the correct jurisdiction of hearing these appeals is with Delhi Benches, the matter is to be placed before Hon’ble President for directing transfer of appeals, as he, under the scheme of Rule 4(1) of the ITAT Rules, is the final arbiter on this issue. (S.A. Nos. 41 to 45/Ahd/2018 dt.11-5-2018) (AY. 2008-09, 2009-10)

    Vedanta Ltd. v. ADIT (IT) (2018) 170 ITD 652 (Ahd.) (Trib.)

  91. S.254(2) : Appellate Tribunal –Rectification of mistake apparent from the record – Principles of Natural Justice – Judgments relied upon by the ITAT were not confronted to any of the parties – Mistake apparent on record – Order was recalled

    Allowing the application of the assessee, the Tribunal held that judgments relied upon by the ITAT were not confronted to any of the parties and hence the order was recalled. Tribunal relied on Inventure Growth & Securities Ltd. (2010) 324 ITR 319 (Bom.) (HC), Deepak Dalela v. ITO (2014) 147 ITD 19 (Jaipur) (Trib.), CIT v. Quality Steel Tubes Ltd. (2012) 253 CTR 298 (All.) (HC); Honda Siel Power Products Ltd. v. CIT (2007) 295 ITR 466 (SC); CIT v. S. Kumar Tyres Mfg. Co. (2008) 305 ITR 360 (MP) (HC) and Naresh K. Pahuja v. ITO (2009) 224 CTR 284 (Bom) (HC).

    MA No. 223/M/2017, dt. 2-3-2018 (AY. 2009-10) Hikal Ltd. v. CIT (Mum.) (Trib.)

  92. S.254(2) : Appellate Tribunal – Rectification of mistake apparent from the record – Excessive delay by the Tribunal in passing judgement shakes the confidence of the litigants – orders have to be passed invariably within three months of the completion of hearing of the case. The delay is incurable. Even administrative clearance cannot cure the delay. Such decisions rendered after 
    3 months reflect a mistake apparent from the record and have to be recalled and the appeals heard afresh [R.34(5)]

    Allowing the petition the Tribunal held that excessive delay by the Tribunal in passing judgment shakes the confidence of the litigants. Under Rule 34(5) of the Tribunal Rules read with Shivsagar Veg. Restaurant v. ACIT (2009) 317 ITR 433 (Bom.) & Otters Club v. DIT (E) (2017) 392 ITR 244 (Bom.)(HC) orders have to be passed invariably within three months of the completion of hearing of the case. The delay is incurable. Even administrative clearance cannot cure the delay. Such decisions rendered after 3 months reflect a mistake apparent from the record and have to be recalled and the appeals heard afresh. (ITA No. 1994/Mum/2014 dt.1-2-2016)(MA No. 151/Mum/2016, dt. 11-5-2018)(AY. 2007-08)

    Crompton Greaves Limited v. CIT (Mum)(Trib.), www.itatonline.org

    Editorial: Crompton Creaves Ltd v. CIT (2016) 46 ITR 465/ 177 TTJ 1/(2017) 82 taxmann.com (Mum.) (Trib.) is recalled. (S.263 Revision – Explanation 2 is declaratory nature.)

  93. S.254(2) : Appellate Tribunal – Rectification of mistake apparent from the record – The limitation period for filing a Rectification Application has to be computed from the date of “communication” of the order and not from the date of passing the order. The fact that the order was pronounced in open court is not relevant because the parties will not be aware of the mistakes therein until after perusal of the order

    Allowing the application the Tribunal held that the limitation period for filing a Rectification Application has to be computed from the date of “communication” of the order and not from the date of passing the order. The fact that the order was pronounced in open court is not relevant because the parties will not be aware of the mistakes therein until after perusal of the order. (M.A. No. 42/Chd/2018, dt. 27-4-2018)(AY. 2013-14 )

    Jagmohan Gurbakshish Singh v. DCIT ( Chad)(Trib), www.itatonline.org

    Universal Print O Paxk v. ITO (Chad.)(Trib.), www.itatonline.org

  94. S.263 : Commissioner – Revision of orders prejudicial to revenue – Share application money – No finding that assessee’s unaccounted money routed through circuitous manner – Assessment order accepting share capital/share premium is not prejudicial to interests of revenue – No Adverse finding or comment by Commissioner as why work-in-progress shown by assessee at nil is not correct or requires further inquiry or verification – Revision was held to be not valid [Ss.68, 145]

    Allowing the appeal of the assessee the Tribunal held that CIT has not given any finding that assessee’s unaccounted money routed through circuitous manner.Assessment order accepting share capital/share premium is not prejudicial to interests of revenue Tribunal also held that no Adverse finding or comment by Commissioner as why work-in-progress shown by assessee at nil is not correct or requires further inquiry or verification. Accordingly the revision was held to be not valid (AY. 2014-15)

    Vidya Prakashan Mandir P. Ltd. v. CIT (2018) 65 ITR 26 (Delhi) (Trib.)

  95. S.263 : Commissioner – Revision of orders prejudicial to revenue – Land development expenditure – Explanation 2 to S. 263 insert by the FA 2015 (which confers power upon the CIT to revise assessments where inadequate inquiries have been conducted by the AO) is prospective in nature and does not apply even to a case where the CIT passed the order after Explanation 2 came on the statute – Revision is held to be not valid unless the CIT demonstrate that the view taken by the AO is unsustainable in law

    Allowing the appeal of the assessee the Tribunal held that Explanation 2 to s. 263 inserted by the FA 2015 (which confers power upon the CIT to revise assessments where inadequate inquiries have been conducted by the AO) is prospective in nature and does not apply even to a case where the CIT passed the order after Explanation 2 came on the statute The CIT should show that the view taken by the AO is unsustainable in law. The action of the CIT in directing the AO to conduct enquiry in a particular manner is contrary to the law interpreted in CIT v. Goetze (India) Ltd. (2014) 361 ITR 505 (Delhi)(HC). If such course of action is permitted, the CIT can find fault with each and every assessment order without making any enquiry or verification in order to establish that the assessment order is not sustainable in law. (ITA No. 3125/Mum/2017, dt. 19-1-2018)(AY. 2012-13)

    Indus Best Hospitality & Realtors Pvt. Ltd. v. PCIT (Mum.)(Trib.), www.itatonline.org

  96. S.271(1)(c) : Penalty – Concealment – When penalty notice did not specify which limb of section 271(1)(c) penalty proceedings had been initiated i.e., whether, for concealment of particulars of income or furnishing of inaccurate particulars, penalty should be deleted

    During the assessment proceedings, the AO made disallowance of certain expenses and thereby issued notice for penalty under section 271(1)(c) of the Act. The CIT(A) upheld the levy of penalty by AO. Aggrieved, the assessee filed an appeal before the Tribunal.

    Before the Tribunal, assessee submitted that no specific allegation as to the concealment of particulars of income or furnishing of inaccurate particulars has been levied by the AO in the notice issued by him under section 274 r.w.s 271(1)(c) of the Act which clearly shows that the same is the standard format of the notice and AO has just ticked on the option of concealment of income or furnishing inaccurate particulars of such income.

    The Hon’ble Tribunal held that the AO has initiated the penalty without specifying specific charge i.e. whether it is for concealment of particulars of income or furnishing of inaccurate particulars, which is contrary to the provisions of law. The notice issued by the AO under section 271(1)(c) read with section 274 of the Act is bad in law as it does not specify which limb of section 271(1)(c) of the Act, the penalty proceedings had been initiated i.e. whether for concealment of particulars of income or furnishing of inaccurate particulars. Therefore, the penalty in dispute is not sustainable in the eyes of law, hence the Tribunal deleted the penalty.

    Om Logistics Ltd. v. ITO ( 2018) 63 ITR 1 (Delhi) (Trib.)

  97. S.271(1)(c) : Penalty – Concealment – Where quantum appeal has been restored back to the file of the Assessing Officer no penalty can be levied since the quantum order itself does not survive [S. 253]

    The assessee had filed an appeal against the quantum order before the ITAT and the tribunal had restored the matter back to the file of the AO. However, this fact was not intimated by the Assessee to the AO during penalty proceedings and AO had levied penalty on account of the additions made in the quantum order. Before CIT(A) as well the fact that quantum order has been set aside was not disclosed by the assessee and the penalty was confirmed by CIT(A).Aggrieved the assessee filed an appeal before Tribunal. The ITAT held that once quantum order was not in existence, on the basis of that order no penalty could be levied. The Tribunal noted that the penalty order was passed by the authorities below inadvertently on account of miscommunication or oversight of actual facts. Accordingly, the penalty was deleted by the Tribunal.

    Paramjit Singh v. ITO (2018) 52 CCH 290 (Amritsar) (Trib.)

  98. S.271(1)(c) : Penalty – Concealment – notice issued without striking out irrelevant words – shows non application of mind – penalty not sustainable

    The penalty provisions of section 271(1)(c) of the Act are attracted where the assessee had concealed the particulars of income or furnished inaccurate particulars of such income. The two limbs of section 271(1)(c) carry different meanings. Therefore, it is imperative for the AO to strike off the irrelevant limb so as to make the assessee aware as to what is the charge made against him so that he can respond accordingly. The standard pro forma of notice under section 274 without striking off the irrelevant clauses would lead to an inference of non-application of mind by the A.O. (A.Y. 2007-08)

    Bhubaneswar Development Authority v. Dy. CIT (2018) 62 ITR 290 (Cuttack)(Trib.)

  99. S.271(1)(c) : Penalty – Concealment – Where the AO levied penalty u/s. 271(1)(c) but did not specify under which limb had the penalty been imposed i.e., whether it was on account of concealment of income or for furnishing of inaccurate particulars of income, then penalty was not sustainable

    Tribunal held that no proper charge was levied by the AO at any of the three stages i.e. while passing the assessment order, while issuing the jurisdictional penalty notice and while passing the penalty order. Relying on the Apex Court’s Judgment in the case of CIT vs. SSA’s Emerald Meadows (2016) 386 ITR (St.) 13 (SC) wherein it was held that jurisdictional notice issued by AO u/s. 274 r.w.s 271(1)(c) of the Act was bad in law, as it did not specify that under which limb of section 271(1)(c) of the Act were penalty proceedings initiated. The Tribunal concluded that the AO’s act was a serious lapse in not fixing the charge clearly, while assuming jurisdiction to levy penalty and hence, levy of penalty was not justified. (ITA No. 5006/Del/2013) (A.Y. 1997-98)

    Aditya Chemicals Ltd. v. ITO (2018) 62 ITR 150 (Delhi) (Trib.)

  100. S.271(1)(c) : Penalty – Concealment – The AO cannot initiate penalty on the charge of ‘concealment of particulars of income’, but ultimately find the assessee guilty in the penalty order of ‘furnishing inaccurate particulars of income’ (and vice versa). In the same manner, he cannot be uncertain in the penalty order as to concealment or furnishing of inaccurate particulars of income by using slash between the two expressions. Such error is not procedural but goes to the root of the matter and is not saved by S. 292B. The error renders the penalty order unsustainable in law [S.292B]

    The following point of difference has been referred to me by the Hon’ble President under section 255(4) of the Income-tax Act, 1961 (hereinafter also called as ‘the Act’) :

    “Whether, in case where the satisfaction of the AO while initiating penalty proceedings u/s. 271(1)(c) of the Income-tax Act, 1961 is with regard to alleged concealment of income by the assessee, whereas the imposition of the penalty is for ‘concealment/furnishing inaccurate particulars of income’, the levy of penalty is not sustainable?”

    The third member held that the question posed is, therefore, answered in affirmative to the effect that where the satisfaction of the AO while initiating penalty proceedings u/s. 271(1)(c) of the Income-tax Act, 1961 is with regard to alleged concealment of income by the assessee, whereas the imposition of the penalty is for ‘concealment/furnishing inaccurate particulars of income’, the levy of penalty is not sustainable.

    Accordingly the Registry of the Tribunal is directed to list these appeals before the Division Bench for passing an order in accordance with the majority view. (ITA Nos. 554, 555, 510 & 556/Asr/2014, dt. 7-5-2018) (AYs. 2008-09, 2009-10)

    HPCL Mittal Energy Ltd. v. ACIT (TM)(Amritsar)(Trib.) www.itatonline.org

  101. S.271(1)(c) : Penalty – Concealment – Mistake of Tax Practitioner – Human error – Reasonable cause – Penalty deleted

    A wrong claim does not amount to furnishing of inaccurate particulars. It can only be described as a human error to which we are all prone to make and cannot be considered to be guilty of either furnishing inaccurate particulars or attempting to conceal the income. (ITA No. 3340/Mum/2016 (AY. 2008-09)

    Jagat Lodha v. ACIT (Mum.) (Trib.)

  102. S.271(1)(c) : Penalty -Concealment – Bogus purchases – Levy of penalty was held to be not justified

    The Tribunal held that the addition was made on the basis of the incriminating statement of third party recorded under section 132(4) without furnishing the same to the assessee. The assessee having chosen not to file any appeal against the addition in view of smallness of amount and in the wake of its claim of huge loss, in the return, levy of penalty under S. 271(1)(c) is not sustainable, more so, as the assessee had filed necessary documents to substantiate the genuineness of purchases. (AY. 2010-11)

    Balaji Motion Pictures Ltd. v. Dy. CIT (2018) 191 TTJ 641 /61 ITR 421 (Mum.)(Trib.)

  103. S.271(1)(c) : Penalty – Concealment – Additional ground – Omission to strike off the relevant clause in the notice issued under section 271 r/w. section 271(1)(c) is a legal issue hence require to be admitted. No striking of the irrelevant clause in the notice clearly brings out the diffidence on the part of AO and no clear and crystallised charge has been conveyed to the assessee under S.271(1)(c), which has to be met by it. Proceedings suffer from non-compliance with principles of natural justice. Consequently, the penalty imposed was deleted [S.254(1).

    Tribunal held that omission to strike off the relevant clause in the notice issued under section 271 r/w. section 271(1)(c) is a legal issue hence require to be admitted. The Tribunal also held that no striking of the irrelevant clause in the notice clearly brings out the diffidence on the part of AO and no clear and crystallised charge has been conveyed to the assesse under section 271(1)(c), which has to be met by it. Proceedings suffer from non-compliance with principles of natural justice. Consequently, the penalty imposed under section 271(1)(c) is deleted. (AYs. 1997-98, 1999-2000, 2004-05)

    Auto Riders India (P) Ltd. v. ACIT (2018) 191 TTJ 376 (Mum.)(Trib.)

  104. S.271AAB : Penalty – Search – Levy of penalty on the basis of loose sheets found on the course of search was held to be not justified as loose sheets represented only projection [S. 132(4)]

    Dismissing the appeal of the revenue the Tribunal held that levy of penalty on the basis of loose sheets found in the course of search was held to be not justified as loose sheets represented only projection. (AY. 2013-14)

    ACIT v. Marvel Associates. (2018) 170 ITD 353 (Visakh) (Trib.)

  105. S.271D : Penalty – takes or accepts any loan or deposit –Representative of the assessee consented to the proposition that apart from the bona fides of the transaction, assessee is also required to prove the existence of reasonable cause to come within the immunity provided in S. 273B of the Act, Accordingly the Tribunal has not dealt any further with the reservations expressed by the Division Bench in the reference note. Accordingly on facts the assessee has failed to show that there was a reasonable cause for getting loans in violation of the provisions of S. 269SS of the Act. Levy of penalty is held to be justified. [Ss. 269SS, 273B]

Tribunal held that since the learned representative for the assessee consented to the proposition that apart from the bona fides of the transaction, assessee is also required to prove the existence of reasonable cause to come within the immunity provided in S. 273B of the Act, we do not dwell upon any further with the reservations expressed by the Division Bench in the reference note. Tribunal referred the Judgment of Apex Court in ADIT (Inv.) v. Kum. A.B. Shanthi (2002) 255 ITR 258 (SC). This was expressed before the parties, who thereafter have made submissions on merits. Accordingly the Tribunal held that the assessee has failed show that there was any urgent business necessity and hence the assessee was constrained to take loans by way of cash. In view that the assessee has failed to show that there was a reasonable cause for getting loans in violation of the provisions of S. 269SS of the Act. Accordingly we are of the view that the learned CIT(A) was justified in confirming the penalty of ` 2.00 lakh imposed by the assessee. (ITA No. 6304/Mum/2012, dt. 13-6-2018)(AY. 2008-09)

Deepak Sales & Properties Pvt. Ltd. v. ACIT (2018) 95 taxman.com 162 (Mum.)(Trib.)(SB), www.itatonline.org

  1. S.2(14)(iii) : Capital asset –Agricultural land – Land entered in revenue records as agricultural land – Agricultural income from land declared and accepted by the revenue – Onus is on department to prove contrary – Profits on sale of land is not assessable to capital gains tax. [S.45]

    Dismissing the appeal of the revenue the Court held that if the land was recorded as agricultural land in the revenue records, the presumption that it was agricultural land and also when the agricultural income shown by the assessee was accepted by the revenue in earlier years. Referred Sarifabibi Mohamed Ibrahim v. CIT (1993) 204 ITR 631 (SC) (AY. 2010-11)

    CIT v. Ashok Kumar Rathi. (2018) 404 ITR 173 (Mad) (HC)

  2. S.2(22)(e) : Deemed dividend –Current account – Advance to shareholder – Transactions between shareholder and company were in nature of current account addition cannot be made as deemed dividend

    Dismissing the appeal of the revenue the Court held that transactions between shareholder and company were in nature of current account addition cannot be made as deemed dividend. (AY. 2009-10)

    CIT v. Gayatri Chakraborty. (2018) 256 Taxman 156 (Cal.) (HC)

  3. S.2(22)(e) : Deemed dividend –Trade advances which were in nature of commercial transactions cannot be assessed as deemed dividend

    Dismissing the appeal of the revenue the Court held that; trade advances which were in nature of commercial transactions cannot be assessed as deemed dividend.

    CIT v. Deepak Vegpro (P) Ltd. (2018) 161 DTR 170 / 300 CTR 98 (Raj.)(HC)

  4. S.2(42C) : Slump sale – There was neither any plant, machinery, furniture and fixtures, nor was there any building in existence at time when land was sold. Therefore it was not a slump sale

    Dismissing the appeal of the revenue, the Court held that there was neither any plant, machinery, furniture and fixtures, nor was there any building in existence at time when land was sold. Therefore it was not a slump sale. (AY. 2004-05)

    PCIT v. Linde India Ltd. (2018) 254 Taxman 204 (Cal.)(HC)

  5. S. 4 : Charge of income-tax –Capital or revenue – Business of real estate – Compensation received under Arbitration Award is held to be capital receipt

    Dismissing the appeal of the revenue the Court held that compensation received under Arbitration Award is held to be capital receipt. The purpose of the ultimate use of the assessee’s land when acquired was rendered irrelevant on account of the seller defaulting in its commitment. This rendered the amount expounded by the assessee immobile. The eventual receipt of the amounts determined as compensation or damages, therefore, fell into the capital stream.

    CIT v. Aeren R Infrastructure Ltd. (2018) 404 ITR 318 (Delhi) (HC)

  6. S.10 (23C) : Educational institution – Merely because surplus profit earned in educational activities did not automatically presuppose a business activity that invalidated the exemption as long as surplus was utilised for charitable purposes [Ss.2(15), 10(23C)(via), 11(4A)]

    Dismissing the appeals and allowing the petition, the Court held that, merely because surplus profit earned in educational activities did not automatically presuppose a business activity that invalidated the exemption as long as surplus was utilised for charitable purposes. The assessee which maintained its eleven schools and the 120 satellite schools in furtherance of the education joint venture agreements with an educational purpose, that also was qualified as “charitable purpose” within the meaning of S.2(15) and was not in contravention of S. 11(4A). (AY. 1998-99, 2008-09 )

    DIT v. Delhi Public School Society (2018) 403 ITR 49 (Delhi) (HC)

  7. S.10(34) : Dividend – Domestic companies – Tax on distribution of profits – Applicable only for amounts which suffered tax u/s. 115O does not apply to deemed dividends. [Ss. 2(22)(e), 115O]

    Dismissing the appeal the Court held that dividend will be exempt only for amounts which suffered tax u/s. 115O and does not apply to deemed dividend. (AY. 2005-06)

    Dr. T. J. Jaikish v. CIT (2018) 403 ITR 256 (Ker.) (HC)

  8. S.10B : Export oriented undertakings – Processing done outside specified area – Mere location of the plant outside the export oriented unit and customs bonded area is not a disqualification to claim deduction – Entitled to exemption

    Dismissing the appeal of the revenue the Court held that the processing of the iron ore in a plant belonging to the assessee being in the nature of job work was not prohibited and formed an integral part of the activity of the export oriented unit; the mere fact that the plant was situated outside the bonded area was of no legal significance as the benefit of customs bonding is only for the limited purpose of granting benefit as regards customs and excise duty. The entitlement to deduction under the Act is to be looked into independently and the benefit would stand or fall on the applicability of S 10B. Hence the mere location of the plant outside the export oriented unit and customs bonded area was not a disqualification to claim deduction. (AYs. 2009-10, 2010-11, 2011-12)

    PCIT v. Lakshminarayana Mining Company. (2018) 404 ITR 522 (Karn.) (HC)

  9. S.11 : Property held for charitable purposes – Corpus donation – Corpus donation on which it earned interest, in view of specific direction of donors that said interest would also form part of corpus and entitled to exemption [Ss.11(1)(d), 62, 63]

    Assessee received corpus donation on which it earned interest. Assessee’s claim for exemption on interest earned on corpus donation was rejected. Tribunal allowed the claim. On appeal dismissing the appeal of the revenue the Court held that in view of specific direction of donors that said interest would also form part of corpus, accordingly assessee’s claim for exemption under S.11 in respect of interest so earned was to be allowed. (AYs. 2007-08 to 2012-13)

    CIT(E) v. Mata Amrithanandamayi Math Amritapuri (2017) 85 taxmann.com 26 (Ker.) (HC)

    Editorial: SLP of revenue is dismissed, CIT (E) v. Mata Amrithanandamayi Math Amritapuri. (2018) 256 Taxman 62 (SC)

  10. S.32 : Depreciation – Hospital equipments – Since assessee could neither sell said hospital equipment as scrap nor it could use them and same were also written off in its books of account, written down value of hospital equipment was to be allowed as depreciation [S.32(1)(iii)]

    Dismissing the appeal of the revenue the Court held that as per principle laid down in S. 32(1)(iii) where a plant and machinery is discarded/destroyed in previous year, amount of money received on sale as such or as scrap or any insurance amount received to extent it falls short of written down value is allowed as depreciation, provided same is written off in books of account. Since assessee could neither sell said hospital equipments as scrap nor it could use them and same were also written off in its books of account, written down value of hospital equipments was to be allowed as depreciation. (AY. 2007-08)

    CIT (E) v. Bhatia General Hospital (2018) 254 Taxman 285 (Bom.)(HC)

  11. S.36(1)(vii) : Bad debt – Business loss – Finance company – Advances in form of equity participation to derive income Investment written off is allowable as bad debts [S.28(i)]

    Dismissing the appeal of the revenue the Court held that where monies were advanced through the mechanism of equity participation, the intention of the assessee was to derive income rather than to increase its investment on the capital side. If it were profits with the assessee from the investment it would have been on the revenue side of income and since it was the converse, the losses were properly and rightly claimed as bad debts by the assessee. Referred Badridas Daga v. CIT ( 1958) 34 ITR 10 (SC) and Associated Banking Corporation of India Ltd. v. CIT (1956) 56 ITR 1 (SC)

    CIT v. Industrial Finance Corporation of India Ltd. (2018) 404 ITR 629 (Delhi) (HC)

    Editorial: SLP of revenue is dismissed, CIT v. Industrial Finance Corporation of India Ltd. (2018) 401 ITR 171 (St.)(SC)

  12. S.37(1) : Business expenditure – Capital or revenue – Expenses on restructuring of business is held to be allowable as revenue expenditure

    Dismissing the appeal of the revenue the Court held that, expenses on restructuring of business is held to be allowable as revenue expenditure.

    PCIT v. Akzo Noble India Ltd. (2018) 256 Taxman 1 (Cal.)(HC)

  13. S.37(1) : Business expenditure – Allocation of expenses – Difference between “Res Judicata” and “Consistency Principle” explained. While “Res Judicata” does not apply to income –tax matters, the principles of consistency does. If the revenue has accepted a practice and consistently applied and followed it, the Revenue is bound by it. The Revenue can change the practice only if there is a change in law or change in facts and not otherwise [S.143(3)]

    The question raised by the revenue before the High Court is “whether on the facts and circumstances of the case and in law, the Tribunal was justified in deleting the disallowances made u/s. 37(1) without appreciating the facts of the case and legal matrix as clearly brought out by the AO and the CIT(A)? “ Dismissing the appeal of the revenue the Court held that the impugned order of the Tribunal records the fact that the revenue Authorities have consistently over the years i.e., for the 10 years prior to Assessment Years 2007-08 and 2008-09 and for 4 subsequent years, accepted the principle that all expenses which have been incurred are attributable entirely to earning professional income. Therefore, the revenue allowed the expenses to determine professional income without any amount being allocated to earn capital gain. In the subject assessment year, the Assessing Officer has deviated from these principles without setting out any reasons to deviate from an accepted principle. Moreover, the impugned order of the Tribunal also records that the revenue was not able to point out any distinguishing features in the present facts, which would warrant a different view in the subject assessment year from that taken in the earlier and subsequent assessment years. Accordingly the Court held that though the principle of res judicata does not apply to income-tax matters, the principles of consistency does. If the revenue has accepted a practice and consistently applied and followed it, the revenue is bound by it. The revenue can change the practice only if there is a change in law or change in facts and not otherwise. (ITA No. 280 of 2016, dt. 28-6-2018) (AY. 2008-09)

    PCIT v. Quest Investment Advisors Pvt. Ltd. (2018) 96 taxman.com 157 (Bom.)(HC), www.itatonlineorg

  14. S.37(1) : Business Expenditure – Commission – Expenditure incurred was reasonably linked with its business which was confirmed by the parties hence allowable as business expenditure

    Dismissing the appeal of the revenue the Court held that Commission expenditure incurred was reasonably linked with its business which was confirmed by the parties hence allowable as business expenditure. (AY. 2006-07)

    CIT v. Mohan Export India Pvt. Ltd. (2018) 403 ITR 207/162 DTR 247 (Delhi) (HC)

  15. S.37(1) : Business expenditure – Commission paid to related directors of the assessee company is held to be allowable as business expenditure

    Dismissing the appeal of the revenue the Court held that Commission paid to related directors of the assessee company is held to be allowable as business expenditure as the assessee had been paying commission to agents regularly year after year; that it was not doubted by revenue and same was accepted; further, that receipts of same were duly shown by commission agents in their balance sheet and profit and loss accounts and that they had paid tax thereon, which was also accepted by revenue. (AY. 1994-95)

    CIT v. Hind Nihon Proteins (P.) Ltd. (2018) 254 Taxman 210 (Delhi)(HC)

  16. S.40(a)(ia) : Amounts not deductible – Deduction at source – No contract between assessee and parties of hired vehicles on freight basis for transportation on behalf of principal – Not liable to deduct tax at source [S.194C]

    Dismissing the appeal of the revenue the Court held that there was no contract between assessee and parties of hired vehicles on freight basis for transportation on behalf of principal, accordingly the assessee is not liable to deduct tax at source. (AY. 2008-09)

    CIT v. Shark Roadways Pvt. Ltd. (2018) 405 ITR 78 (All. Amounts not deductible – Deduction at source – Non-resident – Commission – Obligation to deduct tax at source arises only if the sum is chargeable to tax in India, even after insertion of Explanation 2 to S.195(1) by Finance Act 2012 with retrospective effect from 1-4-1962

    Dismissing the appeal of the revenue the Court held that Explanation 2 to S. 195(1) inserted by Finance Act 2012 with retrospective effect from 1-4-1962 has bearing while ascertaining payments made to non-residents is taxable under the Act or not. However, it does not change the fundamental principle that there is an obligation to deduct TDS only if the sum is chargeable to tax under the Act. If the conclusion is arrived that such payment does not entail tax liability of the payee under the Act, s. 195(1) does not apply. Relied G.E. India Technology Centre P. Ltd. v. CIT (2010) 327 ITR 456 (SC). (TA No. 290 of 2018, dt. 9-4-2018)

    PCIT v. Nova Technocast Pvt. Ltd. (2018) 94 taxman.com 322 (Guj.)(HC), www.itatonline.org

  17. S.40(a)(ia) : Amounts not deductible – Deduction at source – A co-operative society formed for the welfare of the employees of the Life Lnsurance Corporation and all members of assessee is not liable to deduct tax at source – Decision of jurisdictional High Court is binding on the AO [S. 194A]

    Allowing the petition the Court held that; a co-operative society formed for the welfare of the employee of the life insurance corporation and all members of assessee is not liable to deduct tax at source. Court also observed that; Coimbatore District Central Bank Ltd. v. ITO (2016) 382 ITR 266 (Mad) (HC) which the respondent has not gone through the decision, copy of which was filed by the petitioner along with their reply to the show-cause notice. The Assessing Officer was bound by the decision rendered by the jurisdictional High Court. It is stated that as on date there is no appeal by the revenue as against the decision. That apart, in the assessee’s own case for the previous assessment years, the Tribunal has held in favour of the petitioner assessee. Mere pendency of an appeal would not amount to an order of stay. Therefore, even assuming appeals have been presented as long as orders passed by the Tribunal has not been stayed or set aside, it is binding upon the Assessing Officer. (AY. 2015-16)

    LIC Employees Co-operative Bank Ltd. v. ACIT (2018) 254 Taxman 119 (Mad.)(HC)

  18. S.40(a)(ia) : Amounts not deductible – Deduction at source – Caual workers – Labour payment to one or two persons on site for disbursing same among labourers – In absence of any contract to carry out any work with a specified person there is no liability to deduct tax at source. [S.194C]

    Dismissing the appeal of the revenue the Court held that the assessee handed over labour payment to one or two persons on site for disbursing same among labourers. There was no contract between assessee and any specified person for carrying out any work. In absence of any contract to carry out any work with a specified person provisions of S. 194C would not be attracted and, hence, there would be no liability to deduct tax at source. (AY. 2007-08)

    PCIT v. Swastik Construction (2018) 254 Taxman 163 (Guj.)(HC)

  19. S.40A(3) : Expenses or payments not deductible – Cash payments exceeding prescribed limits – 20% expenditure – Purchase of land as stock-in-trade – Villagers paid the amount in cash in the absence of banking facilities. Deletion of addition was held to be justified [R.6DD(h)]

    Dismissing the appeal of the revenue the Court held that the payment of cash was made to villagers for purchase of land as stock-in-trade. Villagers were paid the amount in cash in the absence of banking facilities. Deletion of addition was held to be justified

    CIT v. Ace India Abodes Ltd. (2018) 162 DTR 118 (Raj.)(HC)

  20. S.43A : Rate of exchange – Foreign currency – Foreign exchange fluctuation on loan liability on fixed asset being notional and no actual payment was made would not require any adjustment in the cost of the fixed assets on accrual basis, as the S.43A is amended w.e.f. 1st April, 2003 [S.37(1)]

    Dismissing the appeal of the revenue the Court held foreign exchange fluctuation on loan liability on fixed asset being notional and no actual payment was made would not require any adjustment in the cost of the fixed assets on accrual basis as the S.43A is amended w.e.f. 1st April, 2003. Referred CIT v. Woodward Governor India P. Ltd (2009) 312 ITR 254 (SC) (AY. 2003-04) (ITA No. 1129 of 2015 dt. 18-4-2018)

    PCIT v. Spicer India Ltd (Bom.) (HC) www.itatonline.org

  21. S.45 : Capital gains – Business income – Investment in shares – Intention of assessee at time of purchase of shares is paramount – Gain arising on sale of shares which was held as investment is assessable as capital gains and not as business income [S.28(i)]

    Dismissing the appeal of the revenue the Court held that intention of assessee at time of purchase of shares is paramount; if assessee had clear intention of being an investor and held shares by way of investment, assessee is investor and any gain arising out of transfer of shares should be treated as ‘capital gains’ and not ‘business income’. (AY. 2005-06)

    PCIT v. Bhanuprasad D. Trivedi (HUF)(2017) 87 taxmann.com 137 (Guj) (HC)

    Editorial: SLP of revenue is dismissed, PCIT v. Bhanuprasad D. Trivedi (2018) 256 taxman 66 (SC)

  22. S.45 : Capital gains – Business Income earned on sale of floor of building was held to be assessable as capital gains and not as business income – The assessee was not a property dealer but a member of the Indian Revenue Service, working with the department itself. Only a portion of the property was sold. Profit on sale of land is held to be assessable as capital gains [S. 2(13)]

    Dismissing the appeal of the revenue the Court held that Income earned on sale of floor of building was held to be assessable as capital gains and not as business income. Major portion of the developed building was to remain with the assessee after construction. Sale of one unit therefrom per se would not have constituted an adventure in the nature of trade. There is substantial gap in time between the day of acquisition of the asset and its development and part-sale. The assessee was not a property dealer but a member of the Indian Revenue Service, working with the department itself. Only a portion of the property was sold. Ratio in G. Venkataswami Naidu & Co. & Co. v. CIT [1959] 35 ITR 549 (SC) has followed.

    CIT v. Surjeet Kaur (2018) 254 Taxman 214 (Cal.)(HC)

  23. S.45(2) : Capital gains – Conversion of a capital asset into stock-in-trade – Capital gains to be computed on sale up-to-date of conversion of land into stock-in-trade and profit on sale of stock in trade to be assessed as business income or loss. Capital gains to be set-off against business loss [S.28(i)]

    Dismissing the appeal of the revenue the Court held that when a capital asset is converted into stock-in-trade, capital gains to be computed on sale up-to-date of conversion of land into stock-in-trade and profit on sale of stock-in-trade to be assessed as business income or loss. Capital gains to be set off against business loss. (AY. 2009-10)

    CIT v. Essorpe Mills Ltd. (2018) 404 ITR 323 (Mad) (HC)

  24. S.48 : Capital gains – Computation – Payment of liquidated damages in discharge of liability under earlier agreement to sell is held to be allowable expenditure –The expression “expenditure” used in clause (i) in S. 48 should be given the same meaning as used in S.37(1), except that the expenditure may also be capital in nature. Settlement of a claim and payment made can amount to expenditure [Ss. 37(1), 45]

    Allowing the appeal of the assessee the Court held that payment of liquidated damages in discharge of liability under earlier agreement to sell is held to be allowable expenditure. The expression “expenditure” used in clause (i) in S 48 should be given the same meaning as used in S.37(1), except that the expenditure may also be capital in nature. Settlement of a claim and payment made can amount to expenditure. (AY.1994-95)

    Kaushalya Devi (Dec.) Through LR v. CIT (2018) 404 ITR 136 (Delhi) (HC)

  25. S.54F : Capital gains – Investment in a residential house – Relief is available if unutilised sale consideration deposited in capital gains account scheme within due date of filing belated tax return under S. 139(4) [Ss.45, 54B]

    For claiming exemption under S. 54B and 54F it is not necessary that investment should have been made within original due date of filing return under S. 139(1), even belated return u/s. 139(4) is also eligible for exemption.

    PCIT v. Shankar Lal Saini. (2018) 253 Taxman 308 (Raj.)(HC)

  26. S.68 : Cash credits – Only on the ground that loan was not found to be reflected in balance sheet of donor addition cannot be made as cash credit. Assessee had demonstrated genuineness of transaction as well as reliability and creditworthiness of donor, said addition was unjustified

    Dismissing the appeal of the revenue the Court held that when the assessee had demonstrated genuineness of transaction as well as reliability and creditworthiness of donor, therefore merely on the ground that loan was not found to be reflected in balance sheet of donor addition cannot be made as cash credit. (AY. 2005 -06)

    PCIT v. Bhanuprasad D. Trivedi (HUF)( 2017) 87 taxmann.com 137 (Guj.) (HC)

    Editorial: SLP of revenue is dismissed, PCIT v. Bhanuprasad D. Trivedi (2018) 256 taxman 66 (SC)

  27. S.68 : Cash credits – Survey –Addition of undisclosed income cannot be made on the basis of (a) entries in diary found during survey & (b) admission of director in s. 133A survey if assessee has filed a retraction and alleged that the entries/statement were recorded under pressure. Statement u/s. 133A is merely information simplicitor and not evidence per se. Addition cannot be sustained if the Dept. has not investigated the matter and found material to support the addition. [S.133A]

    Dismissing the appeal of the revenue the Court held that addition of undisclosed income cannot be made on the basis of (a) entries in diary found during survey & (b) admission of director in s. 133A survey if assessee has filed a retraction and alleged that the entries/ statement were recorded under pressure. Statement u/s. 133A is merely information simplicitor and not evidence per se. Addition cannot be sustained if the Dept. has not investigated the matter and found material to support the addition. (TA No. 612/2018, dt. 12-6-2018) (AY. 2011-12)

    PCIT v. Texraj Realty P. Ltd. (2018) 95 taxman.com 102 (Guj)(HC), www.itatonline.org

  28. S.68 : Cash credits – Sub-contract – Outstanding credits payable to sub-contractors where tax was deducted at source could not be added treating same as unexplained cash credit – If addition is upheld it will lead to very abnormal to a govt contractor

    Dismissing the appeal of the revenue the Court held that, outstanding credits payable to sub contractors where tax was deducted at source could not be added treating same as unexplained cash credit. If addition is upheld it will lead to very ubnormal to a govt contractor. (AY. 2007-08)

    PCIT v. Swastik Construction (2018) 254 Taxman 163 (Guj.)(HC)

  29. S.68 : Cash credits – Firm – Partner – Capital introduced by the partner was duly reflected in the books of account maintained by him, addition cannot be made in the assessment of the firm

    Dismissing the appeal of the revenue the Court held that Capital introduced by the partner was duly reflected in the books of account maintained by him, addition cannot be made in the assessment of the firm. (AY. 2010-11)

    PCIT v. Vaishnodevi Refoils & Solvex (2018) 253 Taxman 135 (Guj.) (HC)

  30. S. 69C : Unexplained expenditure – Bogus Purchases – Purchases cannot be treated as Bogus if (a) they are duly supported by bills, (b) all payments are made by account payee cheques, (c) the supplier has confirmed the transactions, (d) there is no evidence to show that the purchase consideration has come back to the assessee in cash, (e) the sales out of purchases have been accepted & (f) the supplier has accounted for the purchases made by the assessee and paid taxes thereon [S.143(3)]

    Dismissing the appeal of the revenue the Court held that purchases cannot be treated as bogus if (a) they are duly supported by bills, (b) all payments are made by account payee cheques, (c) the supplier has confirmed the transactions, (d) there is no evidence to show that the purchase consideration has come back to the assessee in cash, (e) the sales out of purchases have been accepted & (f) the supplier has accounted for the purchases made by the assessee and paid taxes thereon.

    PCIT v. Tejua Rohitkumar Kapadia (2018) 94 Taxmann.com 324 (Guj.)(HC)

    Editorial: SLP of revenue is dismissed PCIT v. Tejua Rohitkumar Kapadia (2018) 94 taxmann.com 325 (SC), www.itatonline.org

  31. S.80IA : Industrial undertakings – Distribution of electricity – Penalty recovered from suppliers for delay in execution of contracts, unclaimed balances of contractors, rebate from power generators, interest on fixed deposits for opening letter of credit to Power Grid Corporation is includible in profits – Miscellaneous recovery from employees, difference between written down value and book value of released assets, commission for collection of electricity duty, rental income is not part of profits

    Court held that the penalty recovered from suppliers and contractors for delay in execution of works contract, unclaimed balances outstanding pertaining to security deposits and earnest money deposits of contractor written back in the books of account, rebate from power generators, interest income (fixed deposit for opening of letter of credit to Power Grid Corporation Ltd. had to be taken into account while computing the deduction under S. 80IA(4) of the Act. Court also held that, miscellaneous recovery from employees, the difference between the written down value/book value of released assets, commission from collection of electricity duty, and rental income could not be taken into account while computing the deduction under S.80IA(4) of the Act (AYs. 2006-07 to 2008-09)

    Hubli Electricity Supply Co. v. DCIT (2018) 404 ITR 462 (Karn.) (HC)

  32. S.80IB(10) : Housing projects – Date of commencement – Merely securing approval of Local Authority is not step towards development, actual date of construction is relevant. Project completed in year 2001 therefore balconies to be excluded [S.80IB(10)(c)

    Dismissing the appeal of the revenue the Court held that the mere securing of approval from the local authority did not lead to any step towards development and therefore, it was the actual date of construction of the project which was determinative for the purpose of deduction under section 80IB(10)(c). Court also held that the balconies could not be taken into account for calculation of built-up area of 1000 sq. feet limit for construction undertaken prior to April 1, 2005.

    CIT v. Padmini Infrastructure (P.) Ltd. (2018) 405 ITR 27 (Delhi) (HC)

  33. S.92C : Transfer pricing – Comparable – While determining ALP of components and parts exported to AE which are used in manufacturing of two wheelers the same cannot be compared with sale of finished goods in domestic market

    Dismissing the appeal of the revenue the Court held that while determining ALP of components and parts exported to AE which are used in manufacturing of two wheelers the same cannot be compared with sale of finished goods in domestic market. ( AYs. 2005-06, to 2007-08)

    CIT v. Keihin Fie (P) Ltd. (2018) 255 Taxman 191 (Bom.) (HC)

    Editorial: Keihin Fie (P) Ltd. v. ACIT (2015) 57 taxmann.com 287 (Pune) (Trib.) is affirmed

  34. S.92C : Transfer pricing Arm’s Length Price – Selection of comparables – Functional dissimilarities and distinction in services provided has to be excluded [S.92CA]

    Dismissing the appeal of the revenue the court held that finding of fact given by the Tribunal that functional dissimilarities and distinction in services provided has to be excluded. (AY. 2011-12)

    CIT v. B. C. Management Services Pvt. Ltd. (2018) 403 ITR 45/253 Taxman 128 (Delhi) (HC)

  35. S.139 : Return of income – Delay of 37 days – Change of auditor –CBDT was directed to condone the delay of 39 days in filing of return. [S. 119(2)(b)]

    Allowing the petition the Court held that when the assessee had satisfactorily explained reasons for delay in filing return of income, approach of 1st respondent should be justice oriented so as to advance cause of justice. Accordingly the delay of 37 days in filing return of income should not defeat claim of assessee. Once authority had been conferred with discretion to condone delay, application seeking condonation of delay of 37 days could not be rejected for such reasons as assigned by 1st respondent Accordingly the petition was allowed. (AY. 2014-15)

    Regen Powertech Private Ltd. v. CBDT (2018) 165 DTR 187 / 255 Taxman 100 (Mad.) (HC)

  36. S.139 : Return – Delay in filing of return – Reasonable cause – Court directed the CBDT to reconsider the application for condonation of delay as the circumstances were beyond the control of the assessee. [Ss.80AC, 80IB, 119]

    Allowing the petition the Court held that delay in filing the return was as the assessee was searching for his brother who was swept away while crossing flooded river. As the circumstances were beyond the control of the assessee the CBDT was directed to reconsider the application for condonation of delay. (AY. 2007-08)

    Babulal Mohanraj Jain v. CBDT (2018) 253 Taxman 170 (Bom.) (HC)

  37. S.139 : Return of income – Delay due to crashing of computer system – Application which was filed for condonation of delay was rejected, after six years of filing of petition was held to be not justified – CIT was directed to condone the delay and hear the matter expeditiously with the observation that delay in disposing the application after six years of filing of the petition has to be viewed seriously while rendering substantial justice to parties [S.119(2)(b)]

    Application of the assessee for condonation of delay in filing the return was dismissed after six years of filing of the application. On writ the Court directed the CCIT to condone the delay and hear the matter expeditiously. Court also observed that delay in disposing the application after six years of filing of the petition has to be viewed seriously while rendering substantial justice to parties. (AY. 2006-07)

    PDS Logistics International (P) Ltd. v. CCIT (2018) 164 DTR 222/93 taxmann.com 194 (Karn.) (HC)

  38. S.143(2) : Assessment – Notice – One return is filed pursuant to notice issued u/s. 148, issue of notice u/s. 143(2) is mandatory. [Ss. 139, 144, 148]

    Dismissing the appeal of the revenue the Court held that once a return was filed, issuance of notice under section 143(2) to the assessee was mandatory prior to making an assessment. The question of making an assessment ex parte without issuing a notice under section 143(2) did not arise. The assessee had filed a return pursuant to the notice under section 148 notwithstanding that it might not have filed a return under section 139 for any assessment year in question. (AY. 2003-04)

    CIT v. Staunch Marketing Pvt. Ltd. (2018) 404 ITR 299 (Delhi) (HC)

  39. S.143(2) : Assessment – Notice – Limited scrutiny – The CBDT Circulars which restrict the right of the AO in limited scrutiny cases apply only in cases where the AO seeks to do comprehensive scrutiny to find if there is potential escapement of income on other issues. However, if the S. 143(2) notice seeks information on whether the share premium is from disclosed sources and is correctly offered to tax, the AO can also inquire into whether the premium exceeds the FMV and is taxable u/s. 56(2)(viib) of the Act [S.56(2) (viib)]

    The petitioner challenged the notice issued u/s. 143(2) of the Act wherein information on whether the share premium is from disclosed sources and is correctly offered to tax, the AO can also inquire into whether the premium exceeds the FMV and is taxable u/s. 56(2)(viib) of the Act. Dismissing the petition the Court held that; The CBDT Circulars which restrict the right of the AO in limited scrutiny cases apply only in cases where the AO seeks to do comprehensive scrutiny to find if there is potential escapement of income on other issues. However, if the 
    S.143(2) notice seeks information on whether the share premium is from disclosed sources and is correctly offered to tax, the AO can also inquire into whether the premium exceeds the FMV and is taxable u/s. 56(2)(viib) of the Act. (WP(C). No. 3485 of 2018, dt. 22-5-2018) (AY. 2015-16)

    Sunrise Academy of Medical Specialities (India)Private Limited v. ITO (2018) 94 taxman.com 181 (Ker.)((HC), www.itatonline.org

  40. S.145 : Method of accounting –Valuation of stock – Tribunal taking only market rate one day later for determining valuation of stock-in-trade is held to be not consistent with law – Tribunal was directed to reconsider valuation of closing stock on the basis of principles established by law

    Allowing the appeal of the assessee the Court held that Tribunal taking only market rate one day later for determining valuation of stock-in-trade is held to be not consistent with law. Tribunal was directed to reconsider valuation of closing stock on the basis of principles established by law. Cost or market whichever is less. (AY. 2010-11)

    Shri Ram Kutir Khandsari Udyog P. Ltd. v. CIT (2018) 404 ITR 185 (All.) (HC)

  41. S.145 : Method of accounting –Licence fee – Merely on the basis of billing, income cannot be assessed unless the income accrues to the assessee – Rule of constancy is followed [S.5]

    Dismissing the appeal of the revenue the Court held that the manner in which the assessee has reflected his income by following mercantile system of accounting cannot be found fault with as the amounts attributable to the period post 31st March is income which has not accrued during the previous year relevant to subject assessment year. This is so as it is not due during the period for which the revenue seeks to bring it to tax. The appellant has not been able to show that the method followed by the respondent does not correctly bring out the income chargeable to the tax. The obligation in respect of the license fees billed for the entire calendar year is yet to be discharged at the end of the previous year related to the subject assessment year and would be due only in the next previous year related to the next assessment year. (Referred CIT v. Nagri Mills Co. Ltd. (1981) 131 ITR 257(Guj.) (HC) and CIT v. Excel Industries Ltd (2013) 358 ITR 295(SC)) (AYs. 2004-05, 2006-07, 2008-09)

    PCIT v. C.U. Inspections India (P.) Ltd. (2018) 254 Taxman 137 (Bom.)(HC)

  42. S.145 : Method of accounting – Mere fact that books of account were not supported by vouchers of payments received from patients, same could not be a ground to reject assessee’s books of account and to make addition on estimate basis

    Allowing the appeal of the assessee the Court held that mere fact that books of account were not supported by vouchers of payments received from patients, same could not be a ground to reject assessee’s books of account and to make addition on estimate basis (AY. 2003-04)

    Dr. Prabhu Dayal Yadav. v. CIT (2018) 253 Taxman 191 /162 DTR 12 (All.) (HC)

  43. S.147 : Reassessment – After the expiry of four years – Income forming subject matter of appeal – Reassessment is held to be not valid [Ss. 148, 151]

    Assessments cannot be reopened under section 147 of the Income-tax Act, 1961 by the Assessing Officer in relation to income arising out of a matter which was the subject matter of an appeal. Accordingly, that the investment agreement dated August 12, 2009 being the subject-matter of the appeals before the Appellate Tribunal and, thereafter, before the court, it was not open to the Assessing Officer to treat it as the foundation for forming an opinion that income chargeable to tax had 
    escaped assessment in the context thereof. (AY. 2010-11)

    Anne Venkata Vishnu Vara Prasad v. ACIT (2018) 405 ITR 491 (T&AP) (HC)

    Yelamanchili Venkta Ramana v. ACIT (2018) 405 ITR 491 (T&AP) (HC)

  44. S.147 : Reassessment – After the expiry of four years – Notice is not mentioning of failure to disclose material facts – Reassessment is not valid [Ss. 148, 151]

    Allowing the petition the Court held that the Assessing Officer did not even state either in the notices dated March 31, 2017 issued under section 148 of the Act or in the letters dated September 22, 2017 and October 11, 2017 furnishing reasons for issue of such notices, that the assessee had failed to disclose fully and truly all material facts necessary for assessment. Further, she did not also mention that she had reason to believe that the income chargeable to tax which had escaped assessment would amount to or was likely to be ` one lakh or more. The notice issued beyond four years of assessment was not valid. (AY. 2010-11)

    Anne Venkata Vishnu Vara Prasad v. ACIT (2018) 405 ITR 491 (T&AP) (HC)

    Yelamanchili Venkta Ramana v. ACIT (2018) 405 ITR 491 (T&AP) (HC)

  45. S.147 : Reassessment – After the expiry of four years – Income from Mushroom Cultivation as Agricultural Income. The ground that the petitioner had failed to disclose all the relevant material was not incorporated in the reasons supplied to the petitioner – Court directed the Counsel to furnish the compilation of judgments on reassessment proceedings to the Commissioner to study the same. Even for reopening the assessment within four years there are certain jurisdictional requirements that must exist before the power of reassessment is exercised. Strictures passed against the AO for making comments which are highly objectionable and bordering on contempt and for being oblivious to law. [Ss. 2(1A), 10(1), 148]

    Allowing the petition the Court held that the reassessment proceedings to deny the exemption u/s. 10(1) of the Act in respect of Mushroom Cultivation was held to be not valid as there no failure on the part of the assessee to disclose the relevant material facts. In the course of original assessment proceedings the assessee has disclosed fully and truly all material facts. Court also directed the Counsel to furnish the compilation of judgments on reassessment proceedings to the Commissioner to study the same. Even for reopening the assessment within four years there are certain jurisdictional requirements that must exist before the power of reassessment is exercised. Court also passed strictures against the AO for making comments which are highly objectionable and bordering on contempt and for being oblivious to law. (WP No. 1000 of 2017 dt.13-3-2018)(AY. 2011-12) (WP No 1001 of 2017 11-4-2018 (AY. 2013-14)

    Zuari Foods and Farms Pvt. Ltd. v. ACIT (Bom.)(HC), www.itatonline.org

  46. S. 147 : Reassessment – After the expiry of four years – Information from investigation wing – No averment of failure on part of the assessee to disclose fully and truly all material facts necessary for assessment – Reassessment is held to be not valid [S.148]

    Dismissing the appeal of the revenue the Court held that there was no averment of failure on part of assessee to disclose fully and truly all material facts necessary for assessment. Merely on the basis of information from investigation wing, reassessment was held to be not valid (ITA No. 117 of 2016 dt. 23-8-2017)(AY. 2005-06)

    PCIT v. Light Carts P. Ltd (2018) 404 ITR 574 (All.) (HC)

  47. S.147 : Reassessment – After the expiry of four years – Transfer of shares – There was no failure to disclose material facts – Reassessment is bad in law [S. 148, R.40B]

    Allowing the petition the Court held that; if the primary facts were placed before the Assessing Officer he would have been in a position to take a decision thereupon, and it could not amount to failure on the part of the assessee to withhold to furnishing the material particulars. The assessee had placed on record the necessary information for the purpose of assessing the income as regards the transfer of shares. Production of Form 29B under Rule 40B was a requirement at the time of original assessment and during the scrutiny assessment, the assessee was specifically called upon to respond to certain queries, which the assessee did what was sought to be done by the Assessing Officer in reopening of the assessment by issuing notice under S.148 after a period of four years was on a mere change of opinion and the reason of non –furnishing of the form was only an attempt to exercise a non-existent power. The assessee did not fail to disclose all the material facts necessary for the assessment. Referred Gemini Leather Store v. ITO ( 1975) 100 ITR 1(SC) (AY.2010-11)

    Dempo Brothers Pvt Ltd. v. ACIT (2018) 403 ITR 196 (Bom.) (HC)

  48. S.147 : Reassessment – Recording of reasons is mandatory – Capital gains – Inflated cost of indexation of land – The Assessing Officer cannot supply reasons from any material or grounds outside the reasons recorded by him – Notice issued without application of mind is held to be in valid [S.148]

    Allowing the petition the Court held that recording of reasons is a mandatory requirement before the Assessing Officer can issue notice for reopening an assessment. The notice must succeed or fail on the basis of reasons so recorded and the Assessing Officer cannot supply reasons from any material or grounds outside the reasons recorded by him. Court observed that at all stages the Assessing Officer exhibited absolute non-application of mind to the facts and materials on record. The notice for reopening of assessment was therefore, based on reasons which were the product of such non -application of mind. Accordingly the notice was quashed. (AY. 2009-10)

    Vithalbhai G. Prajapati v. ITO (2018) 404 ITR 732 (Guj.) (HC)

  49. S.147 : Reassessment – Accommodation entries – Non application of mind – Merely on the basis of DIT (Inv.) without verification, reassessment is held to be bad in law [S.148]

    Dismissing the appeal of the revenue the Tribunal held that merely on the basis of DIT (Inv.) without verification is without application of mind hence the reassessment is held to be bad in law. (AY. 2003-04)

    CIT v. SNG Developers Ltd. (2018) 404 ITR 312 (Delhi) (HC)

  50. S.147 : Reassessment – Bogus purchases – Even the assessment which is completed u/s. 143(1) cannot be reopened without proper ‘reason to believe’. If the reasons state that the information received from the VAT Dept that the assessee entered into bogus purchases “needed deep verification”, it means the AO is reopening for doing a ‘fishing or roving inquiry’ without proper reason to believe, which is not permissible. [S.143(1), 148]

    Dismissing the appeal of the revenue the Court held that even the assessment which is completed u/s. 143(1) cannot be reopened without proper ‘reason to believe’. If the reasons state that the information received from the VAT Dept. that the assessee entered into bogus purchases “needed deep verification”, it means the AO is reopening for doing a ‘fishing or roving inquiry’ without proper reason to believe, which is not permissible. Court also observed that, before closing, we can only lament at the possible revenue loss. The law and the principles noted above are far too well-settled to have escaped the notice of the Assessing Officer despite which if the reasons recorded fail the test of validity on account of a sentence contained, it would be for the Revenue to examine reasons behind it. (Tax A No. 541 of 2018, dt. 7-5-2018) (AY. 2009-10 )

    PCIT v. Manzil Dineshkumar Shah (2018) 95 taxman.com 46 (Guj.) HC), www.itatonline.org

  51. S.147 : Reassessment – Recorded reason was dated 31st March 2010 where as notice u/s. 148 was issued on 30th March 2010 – Recording of reasons before issue of notice is mandatory hence reassessment was held to be bad in law [S.148]

    Dismissing the appeal of the revenue the Court held that even before recording reasons on 31st March 2010, under his signature, a notice u/s. 148 was already issued on 30th March, 2010, therefore Tribunal was right in holding that even if case made out in affidavit belatedly filed by AO was correct, it would not advance case of revenue. Court observed that the process of recording reasons as per mandate of Sub-Section (2) of S. 148 was completed when AO signed reasons on 31st March, 2010, thus, even before recording reasons under his signature, a notice u/s. 148 was already issued on 30th March, 2010, therefore reassessment was held to be bad in law.

    CIT v. Blue Star Ltd. (2018) 162 DTR 302/301 CTR 38 (Bom.) (HC)

  52. S.147 : Reassessment – Reopening of assessment based on assessment of subsequent assessment year without any new material is found, reassessment was not valid. [Ss. 80IA, 148]

    Dismissing the appeal of the revenue the Court held that Reopening of assessment based on assessment of subsequent assessment year without any new material is found, reassessment was not valid. (AYs. 2007-08, 2008-09 )

    CIT v. Jai Prakash Associates Ltd. (2018) 403 ITR 41 (All.) (HC)

  53. S.147 : Reassessment – Change of opinion – Unexplained investment – Reasons not recorded – Reassessment on the basis of report of departmental valuer is held to be bad in law [S.148]

    Dismissing the appeal of the revenue the Court held that reassessment on the basis of report of departmental valuer is held to be bad in law (AY. 1991-92).

    CIT v. P. Nithilan (2018) 403 ITR 154 (Mad.) (HC)

  54. S.148 : Reassessment – Notice – Issue of notice at old address after expiry of period of limitation, in spite of change in the official record by updating PAN data base – Reassessment is held to be bad in law [Ss.147, 292BB]

    Allowing the appeal of the assesesee the Tribunal held that reassessment notice under S. 148(1) was issued against assessee after expiry of period of limitation at old address of assessee which was already changed by assessee before date of issuance of said reassessment notice in official record by updating PAN database, it could be said that there was no service of reassessment notice upon assessee. Accordingly reassessment proceeding is held to be bad in law. (AY. 2009-10)

    Ardent Steel Ltd. v. ACIT ( 2018) 302 CTR 362/166 DTR 33 (Chhattisgarh) (HC)

  55. S.151 : Reassessment – Sanction for issue of notice – If the AO reopens the assessment by obtaining the sanction of the Commissioner of Income-tax instead of the Additional Commissioner of Income-tax, there is a breach of S. 151 which 
    renders the reopening void [Ss.147, 148]

    Dismissing the appeal of the revenue the Court held that if the AO reopens the assessment by obtaining the sanction of the Commissioner of Income-tax instead of the Additional Commissioner of Income-tax, there is a breach of S. 151 which renders the reopening void. (ITA No. 904 of 2016, dt. 25-7-2018)(AY. 2004-05)

    CIT v. Aquatic Remedies Pvt. Ltd. (Bom.)(HC) www.itatonline.org

  56. S.153A : Assessment – Search –When search operations are conducted u/s. 132, the obligation of the assessee to file any return remains suspended till such time that a notice is issued for such purpose u/s. 153A(1)(a). If the return is filed within the reasonable time permitted by such notice u/s. 153A(1)(a), the return is deemed to have been filed within the time permitted u/s. 139 (1)/ 139(3) and loss can be carried forward. [Ss.72, 80, 139(1), 139(3)]

    Allowing the appeal of the assessee the Court held that when search operations are conducted u/s. 132, the obligation of the assessee to file any return remains suspended till such time that a notice is issued for such purpose u/s. 153A(1)(a). If the return is filed within the reasonable time permitted by such notice u/s. 153A(1)(a), the return is deemed to have been filed within the time permitted u/s. 139(1)/139(3) and loss can be carried forward. (ITAT No. 20 of 2015, dt. 25-6-2018) (AY. 2004 -05)

    Shrikant Mohta v. CIT (2018) 95 taxman.com 224 (Cal)(HC), www.itatonline.org

  57. S.153C : Assessment – Income of any other person – Search – No satisfaction was recorded stating that how seized material belonged to the assessee. In the absence of any incriminating material, notice was held to be invalid [S. 132]

    Dismissing the appeal of the revenue the Court held that, as no satisfaction was recorded stating that how seized material belonged to the assessee. Accordingly in the absence of any incriminating material, notice was held to be invalid. (AY. 2009-10)

    CIT v. N. S. Software (FIRM) (2018) 403 ITR 259 (Delhi) (HC)

  58. S.158BD : Block assessment – Undisclosed income of any other person – Recording of satisfaction can be done even after assessment of person searched, however must be recorded within reasonable time. Recording of satisfaction was done after nine months after assessment of person searched is held to be bad in law [S.158BC]

    Dismissing the appeal of the revenue the Court held that recording of satisfaction can be done even after assessment of person searched, however must be recorded within reasonable time. On facts recording of satisfaction was done after nine months after assessment of person searched is held to be bad in law. (CIT v. Calcutta Knitwears (2014) 362 ITR 673 (SC)) [B. P. 1992-93 to 2001-02]

    CIT v. Jitendra H. Modi HUF (2018) 403 ITR 110 (Guj) (HC)

  59. S.179 : Private company – Liability of directors – Before the Assessing Officer assumed jurisdiction, efforts to recover the tax dues from the company should have failed and such efforts and failure of recovery ought to have been mentioned in the notice, howsoever briefly. No distinction can be made between professional or paid directors and directors holding a large shareholding stake in the company

    Allowing the petition the Court held that the Act made no distinction between professional or paid directors and directors holding a large shareholding stake in the company. S.179(1) only gave jurisdiction to the AO to proceed against a company when he was unable to recover the dues of the company from it. It was not, therefore, open to the Assessing Officer to read conditions into S. 179(1) and ignore the strict rule of interpretation of fiscal statutes which prohibited reading anything in the statute not expressed therein. That before the Assessing Officer assumed jurisdiction, efforts to recover the tax dues from the company should have failed and such efforts and failure of recovery ought to have been mentioned in the notice, howsoever briefly. (AY. 2011-12)

    Mehul Jadavji Shah v. DCIT (2018) 403 ITR 201 (Bom.) (HC)

  60. S.192 : Deduction at source – Salary – Commission paid to non-executives/independent directors could not be treated as salary and, not liable to deduct tax at source [S.15]

    Dismissing the appeal of the revenue the Court held that Commission paid to non-executives/independent directors could not be treated as salary and, not liable to deduct tax at source. (AY. 2006-07 to 2010-11)

    CIT v. Zee Entertainment Enterprises Ltd. (2018) 254 Taxman 370 (Bom.)(HC)

  61. S.194J : Deduction at source – Fees for professional or technical services – Since no income was reflected in balance sheet and Profit & Loss account of HSL towards payment made by assessee and it was reimbursement of expenses incurred on cost to cost basis by assessee, it could not be treated as in default. If there is no income embedded in a payment TDS provision would not apply as the TDS is only an alternative method of collection of taxes [Ss. 201, 201(IA)]

    Dismissing the appeal of the revenue the Court held that Since no income was reflected in balance sheet and Profit & Loss account of HSL towards payment made by assessee and it was reimbursement of expenses incurred on cost-to-cost basis by assessee, it could not be treated as in default. Court also observed that if there is no income embedded in a payment, then TDS provisions would not apply as TDS is only an alternative method of collection of taxes; reimbursement cannot be deducted out of bill amount for purpose of TDS. Under the circumstances, the assessee falls outside the scope of S. 194J read with S. 200 during the relevant assessment years. Consequently, the provisions of S. 201 and 201(1A) are not attracted. Circular No. 715, dated 3-8-1995 (AY. 2008-09 to 2010 -11)

    CIT v. Kalyani Steels Ltd. (2018) 254 Taxman 350/163 DTR 513 (Karn.)(HC)

  62. S.221 : Collection and recovery – Assessee deemed in default –Pendency of appeal before CIT(A) – Attachment of bank account and recovery of amount – Recovery of the amount was held to be without following the due process of law – Stay was granted and directed the revenue to refund 85 per cent of tax recovered [S. 156]

    When the first appeal was pending. Revenue has attached bank account and recovered the amount. On writ allowing the petition the Court directed the revenue to refund 85% of tax recovered without following the due process of law. On facts notice under S. 221 was issued on 6-2-2017 and dispatched on 16-2-2017. Notice was received by assessee on 17-2-2017. Attachment of bank account of assessee on first working day after that and withdrawal of amount in Bank. Stay was granted. (AY. 2014-15)

    Sunflower Broking Pvt. Ltd. v. DCIT (2018) 403 ITR 305 (Guj.) (HC)

  63. S.226 : Collection and recovery – Modes of recovery – The ITO (TDS) Bhagalpur cannot act arbitrarily and extend favour to the Mining Department and release their bank account and decide to attach the bank account of the petitioner and recover the tax liability from the bank account of the petitioner in proceedings u/s. 226(3) – Department was directed to refund the amount collected within three months along with interest, failure to which the department was directed to pay the cost of ` 1 lakh which shall be paid from the pocket of the ITO [S.226(3)]

    By issuing the notice u/s. 226(3) to the assessee the ITO (TDS) attached the bank account and recovered the amount. On writ allowing the petition the Court held that after closure scrutiny of the entire facts and circumstances of the case, we notice that neither the Income-tax Department nor the Mines Department has come out with any corrective measures to refund the excess amount or the amount deducted from the bank account of the petitioner and as such we hereby direct the Income Tax Department to forthwith return the amount recovered from the bank account of the petitioner as we are of the considered view that the action of the Department is illegal, arbitrary and totally unauthorised in the peculiar facts and circumstances, since amount was recovered by the respondent Income Tax Department therefore the Department is liable to pay the said amount with interest at the rate applied by the Income Tax Department while calculating the dues from the date of recovery from petitioner’s bank account till the date of refund. In the event of failure to refund the said amount within a period of three months from today, they are liable to pay the cost of ` 1 lakh also which shall be recovered from the pocket of the ITO of the Income Tax Department at the same time we notice the lapses on the part of the Mines and Geology Department as for whose lapse the petitioner has to suffer not only uncalled for litigation but has to face the ordeal of the litigation and as such we direct for payment of the cost of the one lakh by the Mines and Geology Department within a period of three months. We direct that after refund of the amount recovered from the bank account of the petitioner, the Income Tax Department may pursue the matter for recovery in accordance with law against the Mines and Geology Department and take all legal recourse which is admissible under the law including under S. 276B and 276BB of the Act.

    Sainik Food (P) Ltd. v. PCIT (2018) 164 DTR 265 (Pat.) (HC)

  64. S.251 : Appeal – Commissioner (Appeals) – Powers – Once penalty order was set aside by revisional authority, it was thereafter not open for Commissioner (Appeals) to still examine merits of such an order and declare his legal opinion on same. [Ss.264,271(1)(c)]

    During pendency of appeal, assessee filed a revision petition against order of penalty passed by Assessing Officer before Commissioner. He also made a communication to CIT(A) before whom his appeal was pending conveying his wish to withdraw appeal .Commissioner allowed assessee’s revision petition. Despite revisional order passed by Commissioner cancelling penalty, CIT(A) proceeded to decide appeal on merits and dismissed same. Tribunal set aside order passed by CIT(A). On appeal by the ITO dismissing the appeal the Court held that once penalty order was set aside by revisional authority, it was thereafter not open for CIT(A) to still examine merits of such an order and declare his legal opinion on same. (AY. 2011-12)

    Nitin Babubhai Rohit v. Dharmendra Vishnubhai Patel (2018) 254 Taxman 103 (Guj.)(HC)

  65. S.254(1) : Appellate Tribunal – Tribunal has no power of enhancement – Tribunal cannot take back benefits granted to assessee by Assessing Officer. Therefore, direction of Tribunal to Assessing Officer to determine depreciation or business loss of each year and carry forward lower of two for adjustment under section 115JA, which would result in enhancement of assessment, was not justified [S.115JA]

    Allowing the appeal of the assessee the Court held that Tribunal has no power of enhancement – Tribunal cannot take back benefits granted to assessee by Assessing Officer. Therefore, direction of Tribunal to Assessing Officer to determine depreciation or business loss of each year and carry forward lower of two for adjustment under section 115JA, which would result in enhancement of assessment, was not justified. Followed Mcorp Gobal (P) Ltd v. CIT (2009) 309 ITR 434 (SC), Hukumchand Mills Ltd. v. CIT (1967) 63 ITR 232 (SC) (AY. 1999-2000)

    Sanmar Speciality Chemicals Ltd. v. ITO (2018) 256 Taxman 46 (Mad)(HC)

  66. S.254(1) : Appellate Tribunal –Additional claim – Block assessment – The fact that the second proviso to S. 158BC(a) prohibits an assessee who is subjected to search from filing a revised return of income does not mean that the assessee is prohibited from raising an additional claim before the appellate authorities [S.158BC]

    Question before the High Court was “ Whether on the facts and in the circumstance of the case and in law, the Tribunal was justified in holding that as the appellant had not excluded or reduced lease rentals from the depreciation offered to tax while filing the return of undisclosed income for the block period it was not entitled to do so later on in view of second proviso to section 158BC of the Act ?”

    Court held that, “We note that the prohibition in Second Proviso to Section 158BC(a) of the Act of filing a revised return of income before the Assessing Officer would not prohibit a Assessee from raising the additional claim before Appellate Authorities as held by this Court in CIT v. Pruthvi Brokers and Shareholders P. Ltd. (2012) 349 ITR 336(Bom) (HC). This on consideration of the decision of the Supreme Court in National Thermal Power Co. Ltd. v. CIT (A) 229 ITR 384 (SC) and Goetze (India) Ltd. v. CIT (2016) 284 ITR 323 (SC). In fact, in Goetze (India) Ltd., the Apex Court after holding that Assessing Officer has no power to entertain claim for deduction otherwise than by filing revised return of income by assessee, clarified that the same would not fetter the appellate authority from entertaining a claim not made before the Assessing Officer”. In the above view, the substantial question of law is answered in favour of the appellant assessee and against the respondent revenue.

    However, the merits of the claim made by the appellant in respect of the additional grounds urged before the Tribunal would be required for consideration by the Tribunal. (AY. 1985-86 to 1995-96) (ITA No. 118 of 2003, dt. 10-7-2018)

    Alok Textile Industries Ltd. v. DCIT (Bom)(HC), www.itatonline.org

  67. S.254(1) : Appellate Tribunal – Stay – While deciding an application for stay of demand, the Appellate Tribunal can only consider the prima facie case of merits. It cannot give a final finding on the merits and decide the appeal itself. [Central Excise Act, S.35]

    Court held that while deciding an application for stay of demand, the Appellate Tribunal can only consider the prima facie case of merits. It cannot give a final finding on the merits and decide the appeal itself. WP No. 5704 of 2014, dt. 13-11-2017)

    Maharashtra State Road Transport Corporation v. CST (2018) (12) G.S.T.L.140 (Bom)(HC), www.itatonline.org

  68. S.254(1) : Appellate Tribunal – limitation – Tribunal considering appeal from order of assessment and dismissal of appeal from order of revision without considering on merit is held to be not valid. [S.263]

    Court held that order passed by the Tribunal on the ground of limitation without going into the merits of the case was unjustifiable when the issue was considered on the merits while adjudicating the consequential orders. (AY. 2006-07 to 2008-09)

    Hubli Electricity Supply Co. v. DCIT (2018) 404 ITR 462 (Karn.) (HC)

  69. S.254(1) : Appellate Tribunal – Duties – Additional grounds – Tribunal must consider additional grounds raised on question of law arising from facts on record

    Allowing the appeal of the assessee the Court held that the Tribunal has the discretion to allow or not to allow a new ground to be raised. But where the Tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings such a question should be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee.

    Ravindra Arora v. ACIT (2018) 404 ITR 452 (Raj.) (HC)

    Praveen Arora v. ACIT (2018) 404 ITR 452 (Raj.) (HC)

  70. S.254(2) : Appellate Tribunal –Rectification of mistake apparent from the record – If there is no discussion whatsoever by the Tribunal of the various case laws detailed in the submissions filed by the assessee, the order is non-speaking and has to be recalled. The Tribunal should take into account the material and case laws relied upon by the assessee during the hearing

    Allowing the petition the Court held that if there is no discussion whatsoever by the Tribunal of the various case laws detailed in the submissions filed by the assessee, the order is non-speaking and has to be recalled. The Tribunal should take into account the material and case laws relied upon by the assessee during the hearing. (WP-1833-2018, dt. 3-2-2018) (AY. 2007-08)

    Amore Kewels Private Ltd. v. DCIT (Bom)(HC), www.itatonline.org

  71. S.254(2) : Appellate Tribunal –Rectification of mistake apparent from the record – While dealing with the application for rectification, the Tribunal where it finds is an error apparent on record then it should recall the original order and place the appeal for consideration of the issue on merits before the Regular bench – It is not appropriate to dispose of the controversy on merits of the submission while disposing of the Rectification application [S.11(1)]

    Allowing the petition the Court held that while dealing with the application for rectification, the Tribunal where it finds an error apparent on record then it should recall the original order and place the appeal for consideration of the issue on merits before the Regular Bench. It is not appropriate to dispose of the controversy on merits of the submission while disposing of the Rectification application. Order of the Tribunal was quashed. Matter remanded to the Tribunal to decide the matter as per law. (Referred Safari Mercantile (P) Ltd. v. ITAT (2016) 386 ITR 4 (Bom) (HC); Gyan Constructions v. ITAT (2015) 55 taxmann.com 479 (Bom) (HC) (WP No. 1340 of 2018 dt 28-6-2018)

    Universal Education v. ITAT (Bom.) (HC) www.itatonline.org.

  72. S.260A : Appeal – High Court – Transfer pricing – Appeals against exclusion or inclusion of comparables to determine ALP of tested parties should not be filed in a ritualistic manner. Any inclusion or exclusion of comparables per secannot be treated as a question of law unless it is demonstrated to the Court that the Tribunal or any other lower authority took into account irrelevant consideration or excluded relevant factors in the ALP determination that impact significantly – The counsel of the Revenue is directed to serve a copy of this order on the Principal Chief Commissioner of Income Tax within the State of Maharashtra for necessary action [S.92C]

    Dismissing the appeal of the revenue the Court held that appeals against exclusion or inclusion of comparables to determine ALP of tested parties should not be filed in a ritualistic manner. Any inclusion or exclusion of comparables per se cannot be treated as a question of law unless it is demonstrated to the Court that the Tribunal or any other lower authority took into account irrelevant consideration or excluded relevant factors in the ALP determination that impact significantly. Court also observed that we hope the above observations would be kept in mind both by the revenue and the assessee who seek to prefer appeals from the orders of the Tribunal on Transfer Pricing particularly inclusion/exclusion of comparables. The Commissioner of Income Tax and the assessee in general would do well to also review the appeals filed and withdraw the same, in case the only challenge therein is to finding of facts, if the same is without evidence of any perversity or is in the face of settled legal position. The counsel of the revenue is directed to serve a copy of this order on the Principal Chief Commissioner of Income Tax within the State of Maharashtra for necessary action (ITA No. 1384 of 2015, dt. 26-6-2018)(AY. 2008 -09)

    PCIT v. Barclays Technology Centre India Private Ltd. (2018) 95 taxman.com 170 (Bom)(HC), www.itatonline.org

  73. S.260A : Appeal – High Court – Advocate – Objection taken to SMS from Dept. Advocate that what Court is “pressurising me to do is both wrong and unethical. No Advocate of any worth would stoop so low. Sorry I am not able to comply with this rather unusual demand”. The SMS is contrary to the statement made by the learned Additional Solicitor General. The SMS either stems from not understanding our view or it is a made up indignation so as to accuse us of pressurising him to do an activity not expected of an Advocate. It appears to be in the second category as the SMS appears to give a completely different twist to the facts as stated to him by associate. Copy of order sent to CBDT Chairman

    Court held that Objection taken to SMS from Dept. Advocate that what Court is “pressurising me to do is both wrong and unethical. No Advocate of any worth would stoop so low. Sorry I am not able to comply with this rather unusual demand”. The SMS is contrary to the statement made by the learned Additional Solicitor General. The SMS either stems from not understanding our view or it is a made up indignation so as to accuse us of pressurising him to do an activity not expected of an Advocate. It appears to be in the second category as the SMS appears to give a completely different twist to the facts as stated to him by Associate. Copy of order sent to CBDT Chairman. (ITA No. 130 of 2016, dt. 2-8-2018) (AY. 2009-10, 2010-11)

    PCIT v. Starflex Sealing India Pvt. Ltd. (No. 2) (Bom.)(HC), www.itatonline.org

  74. S.260A : Appeal – High Court – Strictures passed against the revenue for not following the assurance given earlier

    Strictures passed against the revenue for not following the assurance given earlier – Court observed that “We are pained at this attitude on the part of the State to obtain orders of admission on pure questions of law by not pointing out that an identical question was considered by this Court earlier and dismissed by speaking order. Revenue has not carried out the assurance which was made earlier. Revenue should give proper explanation why assurance given earlier is not being followed. It is time responsibility is fixed and the casual approach of the revenue in prosecuting its appeals is stopped”. (ITXA-130-2016 & ITXA-151-2016 (SR.7), dt. 27-6-2018)

    PCIT v. Starflex Sealing India Pvt. Ltd. (Bom.)(HC), www.itatonline.org

  75. S.260A : Appeal – High Court – Representation by departmental advocates – Court observed that advocates representing revenue must be utmost careful whilst making statement on instructions, as same are accepted by Court, without question. Court also observed that it is appropriate to suggest to CBDT to consider holding of a training programme, where leading advocates could address domain – expert on ethics, obligation and standard expected of advocates before they start representing State, as it would ensure that revenue is properly represented to serve greater cause of justice and fair play [S.119]

    Court observed that it is appropriate to suggest to CBDT to consider holding of a training programme, where leading advocates could address domain-expert on ethics, obligation and standard expected of advocates before they start representing State, as it would ensure that revenue is properly represented to serve greater cause of justice and fair play – It is primary duty of Assessing Officer to up date Counsel with regard to all facts involved in matter, more particularly facts which may have transpired after passing of impugned order of Tribunal so as to avoid unnecessary delays in disposing of cases pending before Court. The ASG and the Registry is directed to forward a copy of this Order to the Chairman, CBDT. The ASG is expected to interact and advise the CBDT in respect of the issues referred to hereinabove to enable proper representation by the advocates on behalf of the revenue-Matter remanded. (AY.2001-02)

    PCIT v. Grasim Industries Ltd. (2018) 256 Taxman 79 (Bom.)(HC)

  76. S.260A : Appeal – High Court – Territorial jurisdiction of High Court – Assessment order and penalty order passed by Assessing Officer at New Delhi – First Appeal adjudicated by Commissioner (Appeals), New Delhi and second appeal by Tribunal at New Delhi – Punjab and Haryana High Court has no territorial jurisdiction to adjudicate appeal [Ss.80HHC, 271(1)(c)]

    Dismissing the appeal of the revenue the Court held that; the Assessing Officer who passed the assessment order and the penalty order was based at New Delhi and the first appeal was adjudicated by the Commissioner (Appeals), New Delhi and the second appeal by the Tribunal at New Delhi. Court held that, the Punjab and Haryana High Court had no territorial jurisdiction to adjudicate upon the litigation over an order passed by the Assessing Officer at New Delhi. The appeal was returned to the Department for filing before the competent court of jurisdiction in accordance with law (AY. 2001-02)

    CIT v. Nectar Lifescience Ltd. (2018) 405 ITR 566 (P&H) (HC)

  77. S.260A : Appeal – High Court – Transfer pricing – Substantial questions of law – Comparables- Arm’s length price –‘Transfer Pricing Adjustments’ should become final with a quietus at the hands of the final fact finding body, i.e., the Tribunal. The ITAT’s findings of fact cannot be challenged in the High Court unless it is shown that the findings are ex facie perverse and unsustainable and exhibit total non-application of mind by the Tribunal to the relevant facts of the case and evidence before it [S.92C]

    Dismissing the appeal of the revenue the Court held that Transfer Pricing Adjustments on the basis of the comparables are a matter of estimate of broad and fair guess-work of the authorities based on relevant material. The exercise of fact finding or ‘Arm’s Length Price’ determination or ‘Transfer Pricing Adjustments’ should become final with a quietus at the hands of the final fact finding body, i.e., the Tribunal. The ITAT’s findings of fact cannot be challenged in the High Court unless it is shown that the findings are ex-facie perverse and unsustainable and exhibit total non-application of mind by the Tribunal to the relevant facts of the case and evidence before it. (I.T.A.No.536/2015, dt. 25-6-2018) (AY. 2006-07)

    PCIT v. Softbrands India P. Ltd. (2018) 94 taxman.com 426 (Karn.)(HC), www.itatonline.org

  78. S.260A : Appeal – High Court – Limitation – The time limit for filing an appeal to the High Court begins from the date of receipt of the order by the officer entitled to file the appeal. The fact that the ITAT may have dispatched the order earlier is not relevant. The fact that the officer may be aware of the ITAT’s order owing to collateral proceedings is also not relevant

    Court held that the time limit for filing an appeal to the High Court begins from the date of receipt of the order by the officer entitled to file the appeal. The fact that the ITAT may have dispatched the order earlier is not relevant. The fact that the officer may be aware of the ITAT’s order owing to collateral proceedings is also not relevant. (ITA No. 30 of 2011, dt. 17-5-2018) (AY. 1997-98)

    DIT (IT) v. Hyundai Heavy Industries Co. Ltd. (2018) 94 taxman.com 208/256 taxman 147 (Uttarakhand)(HC), www.itatonline.org

  79. S. 263 : Commissioner – Revision of orders prejudicial to revenue – Limitation – If the authority issuing the show-cause notice lacks jurisdiction and if the notice is clearly barred by law, writ is maintainable – Notice issued by the PCIT is quashed [Art. 226]

    Allowing the petition the Court held that a writ petition to challenge a S. 263 notice is maintainable if the authority issuing the show-cause notice lacks jurisdiction and if the notice is clearly barred by law. As per Alagendran Finance 162 Taxman 465 (SC), the two year limitation period stipulated u/s. 263(2) runs from the date of the original assessment and not from the date of reassessment when the S. 263 notice deals with issues which are not subject matter of reassessment proceedings. Notice issued by the PCIT is quashed (W. A. N o . 1092 of 2017, dt. 14-6-2018) (AY. 2012-13)

    Indira Industries v. PCIT (2018) 95 taxman.com 103 (Mad)(HC), www.itatonline.org

  80. S.263 : Commissioner – Revision of orders prejudicial to revenue – Exclusion of the deduction allowed u/s. 80IB while quantifying the deduction u/s. 80HHC – Two views possible – Revision was held to be not valid. [S.80HH]

    Allowing the appeal of the assessee the Court held that the view taken by the Assessing Officer was clearly supported by decisions of the Madhya Pradesh and Bombay High Courts. The view taken by the Assessing Officer was a plausible view. If it resulted in loss of revenue, it could not be treated as prejudicial to the interests of the Revenue for the purpose of invoking the power under S.263 of the Act. Moreover, the fact that two views existed was evident from the order of reference passed by the Full Bench.

    Agasthiya Granite P. Ltd. v. ACIT (2018) 403 ITR 279 (Mad.) (HC)

  81. S.271(1)(c) : Penalty – Concealment – Capital gains – Claiming exemption under S.10(38) with a note that reserved its right to carry forward the loss – Deletion of penalty is held to be justified [Ss.10(38), 45]

    Dismissing the appeal of the revenue the Court held that the assessee had claimed exemption under S. 10(38) with a note that it reserved its right to carry forward the loss of ` 80.64 crore, under the bona fide belief that under S.10(38) the loss was not required to be considered. It could not be stated that the act of the assessee in giving the note was with some ulterior intention or concealment of income or giving inaccurate particulars. Deletion of penalty is held to be justified. (AY. 2008-09)

    DIT (IT) v. Nomura India Investment Fund Mother Fund. (2018) 404 ITR 636 (Bom.) (HC)

    Editorial: SLP of revenue is dismissed DIT (IT) v. Nomura India Investment Fund Mother Fund (2018) 401 ITR 172 (St)(SC)

  82. S. 271(1)(c) Penalty – Concealment – “sale and lease back” – Quantum of revenue appeal was admitted and pending for final hearing –Merely using the words that there is concealment of income and / or furnishing inaccurate particulars of income is not sufficient. The same should be particularised by the AO with a finding as to what particulars of income has been concealed or what particulars of income are inaccurate. The words ‘concealment’ or giving ‘inaccurate particulars of income’ have to be read strictly before penalty provisions can be invoked [S.32]

    Question before the High Court was “Whether in the facts and circumstances of the case and in law, the Tribunal was justified in deleting the penalty levied under Section 271(1)(c) of the Act?” In the quantum appeal of the revenue was admitted on following questions of law “Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in allowing depreciation on assets given on sale and lease back basis when the transactions were purely financial transactions?”. Dismissing the appeal of the revenue the Court held that, mere using the words that there has concealment of income and / or furnishing inaccurate particulars of income would not in the absence of same being particularised, lead to imposition of penalty. It is only when the specified officer of the Revenue is satisfied that there has been concealment of particulars of income or furnishing inaccurate particulars of income that the occasion to explain the conduct in terms of Explanation I to Section 271(1)(c) of the Act would arise. (CIT v. Zoom Communication Pvt. Ltd. (2015) 371 ITR 570 (Delhi) (HC) is distinguished) (ITA No. 1363 of 2015, dt. 4-6-2018) (AY. 1995-96, to 1997-98)

    CIT v. L & T Finance Ltd. (Bom.)(HC), www.itatonline.org

  83. S.271AAA : Penalty – Search initiated on or after 1st June, 2007 – Manner in which undisclosed income earned was not satisfied – Deletion of penalty was held to be not valid [S. 132(4)]

    Allowing the appeal of the revenue the Court held that; the appellate authorities misdirected themselves in holding that the conditions under S. 271AAA(2) were satisfied by the assessee. The second condition for availing of the immunity from penalty was that the assessee should have specified in the statement under S. 132(4) the manner in which such income stood derived. The assessee had merely stated that the sums advanced were undisclosed income. However, she had not specified how she had derived that income and under what head it fell (rent, capital gains, professional or business income out of money lending, source of money, etc.). Unless such facts were mentioned with some specificity, it could not be said that the assessee had fulfilled the requirement that she had in her statement under S. 132(4), “substantiated the manner in which the undisclosed income was derived”. The order of the appellate authorities deleting the penalty was erroneous. (AY. 2009 -10)

    CIT v. Ritu Singal (2018) 403 ITR 97 (Delhi) (HC)

  84. S. 275 : Penalty – Bar of limitation – Concealment – Notices issued after period of limitation as per first limb of S.275(1)(a) hence barred by limitation [Ss. 271(1)(c), 275 (1)(a)]

    Allowing the petition the Court held that the time limit under the second limb was six months from the end of the month in which the order of the Commissioner (Appeals) was received. For the assessment year 2011-12 the order under S.143(3) was passed on December 30, 2016. Therefore, the limitation for initiation of penalty proceedings under S. 275(1)(a) was on or before March 31, 2017, in terms of the first limb of the provision. According to the second limb of the provision, though it was six months from the end of the month in which the order of the Commissioner (Appeals) was received, in the assessee’s case the proviso to S. 275(1)(a) would be attracted and the period would be one year from the date on which the order was passed by the Commissioner (Appeals). The assessees had preferred the appeals before the Commissioner (Appeals) on February 1, 2017, and at that point of time, when the penalty notices under S. 271(1)(c) were issued, the appeals were pending. Therefore, the Assistant Commissioner had lost out on the limitation aspect with regard to the first limb of S. 275(1)(a), as the penalty notices had been issued on September 11, 2017 and September 14, 2017, which were after March 31, 2017, which would be the period of limitation for initiating penalty proceedings under S. 275(1)(a). (AYs. 2011-12 to 2015-16)

    J. Srinivasan v. ACIT (2018) 404 ITR 51 (Mad.) (HC)

  85. S.276B : Offences and prosecutions – Failure to pay to the credit tax deducted at source – Non-Executive Chairman is not involved in day-to-day affairs of company – Managing Director admitting liability and entering into negotiations with revenue – Prosecution of non-executive Chairman is held to be not valid [Ss.2(35), 278AA]

    Allowing the petition the Court held that non-executive chairman is not involved in day-to-day affairs of company. Managing Director admitting liability and entering into negotiations with revenue. Prosecution for failure to pay to the credit tax deducted at source of Non-Executive Chairman is held to be not valid. It was contended that as per S.276B, of the Act, a person who is incharge of and is responsible to the company for the conduct of the business of the company can be prosecuted. The test laid down by S.276B is entirely different and distinct from that laid down by S.2(35) of the Act. S 2(35) is relevant only for imposing a penalty on a person and is not relevant for deciding whether he should be prosecuted for an offence under the Act.

    Kalanithi Maran v. UOI (2018) 405 ITR 356 (Mad.) (HC)

  86. S. 279 : Offences and prosecutions – Sanction – Show cause notice –Writ against show cause notice is premature and not maintainable – It is not necessary for the authority to issue a show cause notice before granting an order of sanction. [Ss. 276(c)(1), 277, Art. 226]

    Dismissing the petition the Court held that the writ petition against show cause notice is premature and not maintainable. The proceeding was only in the form of a show-cause notice and therefore, the assessee had to respond to it and it could not be questioned in a writ petition. However, there was no necessity for the authority to issue a show-cause notice before granting an order of sanction as it was an administrative act. Nevertheless, the Principal Director (Investigation) had issued the show-cause notice with a view to provide an opportunity to the assessee, of which he had to avail. Hence, the show-cause notice need not be interfered with in a writ petition under Article 226 of the Constitution. The Principal Director (Investigation) was one of the authorities enumerated in the proviso to S.279(1) and therefore, had sufficient jurisdiction to issue the show-cause notice under S.276C(1). (AY. 2017-18)

    Krishnaswami Vijayakumar v. DIT (2018) 404 ITR 442 (Mad) (HC)

  87. S.281 : Certain transfers to be void – Tax Recovery Officer could not declare a transaction of transfer as void, if revenue wants to have transaction nullified, it must go to civil court to seek declaration to that effect [S. 222, Second Schedule, R.11]

    Allowing the petition the Court held that Tax Recovery Officer could not declare a transaction of transfer as void, if revenue wants to have transaction nullified, it must go to Civil Court to seek declaration to that effect. However since in instant case notice under Rule 2 of Second Schedule was served on defaulter assessee and sale transactions executed by said defaulter with instant petitioner took place thereafter, it would not be open to petitioner to claim benefit of proviso to S. 281(1) of the Act. The orders impugned in these writ petitions are quashed to the extent indicated above. The stand of the respondent in declining to lift the attachment already made is sustained. The order of the respondent declaring the transactions in question as null and void is quashed.

    D. S. Senthilvel v. TRO (2018) 256 Taxman 179 (Mad.) ( HC)

  88. S. 281 : Certain transfers to be void – Transfer of property by legal heirs of original assessee – Tax recovery officer has no power to declare transfer is void- Department was granted liberty to file a civil suit to declare the sale transaction and sale deed executed in favour of the petitioner, null and void [S. 222, 226]

    Court held that the Tax Recovery Officer could not declare the transfer of the property null and void according to the provisions of the 1961 Act. granting liberty to the petitioner to approach the Tax Recovery Officer under Rule 11 of the Second Schedule seeking adjudication of its claim was set aside and the Department was granted liberty to file a civil suit to declare the sale transaction and sale deed executed in favour of the petitioner, null and void.

    Agasthiya Holdings Pvt. Ltd. v. CIT (2018) 403 ITR 288 (Mad.) (HC)

  89. S.282 : Service of notice –Reassessment – Service of notice at the factory premises of the assessee on the security guard was held to be valid, though “service” of notice u/s. 147/148 is not a mere procedural requirement, but a condition precedent for initiation of proceedings, the service upon a person who was not authorised to receive notice does not render the proceedings null and void if the assessee complied and entered appearance [Ss. 148, 292B]

    Question before the Court was “Whether the Income Tax Appellate Tribunal is justified in law in holding that service of notice at the factory premises of the assessee on the security guard was not proper service under the provisions of Section 282(2) of the Income-tax Act, 1961?” After considering the various case laws on the subject the High Court answered the question in favour of the revenue and held that the assessment proceedings under Section 147/148 of the Act are not invalid or void for want of proper service of notice. However, an order of remand is required to be passed as the Tribunal has not adjudicated and decided the appeal filed by the respondent-assessee on merits. (ITA No. 805/2005, dt. 31–2018)(AY.1995-96)

    CIT v. Sudev Industries Limited(Delhi)(HC), www.itatonline.org

Wealth-tax Act, 1957

  1. S.7 : Net wealth – Value of assets – Valuation of all assets and the valuation operated not on a year -to-year basis but for a four year cycle. The only exception was that where jewellery included gold or silver or any other alloy, the valuation of gold had to be undertaken annually – Deletion of addition was held to be justified.[Wealth-tax Rules, 1957, 18, 19]

Dismissing the appeals of the revenue the Court held that it was evident that a conjoint reading of Rules 18 and 19 of the Wealth-tax Rules, 1957, required valuation of all assets and the valuation operated not on a year-to-year basis but for a four year cycle. The only exception was that where jewellery included gold or silver or any other alloy, the valuation of gold had to be undertaken annually. Only because the search was an event which per se could not have compelled the assessees to go in for fresh valuation, unless there was a compulsion in law to do so. The assessees acted within their rights in relying upon the prevailing valuation, which had ended on March 31, 2012.

PCWT v. Padma Dalmia (2018) 403 ITR 150 (Delhi) (HC)

PCWT v. Raghu Hari Dalmia (2018) 403 ITR 150 (Delhi) (HC)

  1. S.10(20) : Local authority –Industrial township referred in proviso to Article 243Q is not equivalent to a “municipality” and a “local authority” – Income is not entitled to exemption [S.10(20A), Art. 243P, 243Q ]

Dismissing the appeal of the assessee, the Court held that New Okhla Industrial Development Authority (NOIDA) is not covered by the word /expression ‘Municipality’ in clause (e) of Article 243P. It is neither included in sub-clause (ii) of Explanation, nor is it covered by S.10(20) except clause (ii). NOIDA was constituted under S. 3 of the U.P. Industrial Area Development Act, 1976 by notification dt. 17-4-1976. The Act was enacted by State Legislature to provide for the constitution of an Authority for the development of certain areas in the State of UP into an industrial and urban township. Under the 1976 Act, various functions had been entrusted to the Authorities. Thus NOIDA is not a local authority, hence is not exempted from payment of income-tax under S. 10(20) and S.10(20A) of the Act. (CA Nos 792-793 of 2014, dt. 2-7-2018).

New Okhla Industrial Development Authority (NOIDA) v. CCIT (2018) 95 taxmann.com 58(SC)/ www.itatonline.org

  1. S.80IC : Special category States – Initial year – The fact that the assessee has earlier availed deduction u/s. 80IA & 80IB is of no concern because deduction u/s. 80IC is available from the “initial year” i.e., the year of completion of substantial expansion. The inclusion of period for the deduction availed u/s. 80-IA & 80-IB, for the purpose of counting ten years, is provided in sub-section (6) of section 80IC and it is limited to those industrial undertakings or enterprises which are set-up in the North-Eastern Region.

    Assessees claim for the AY. 2008-09, 2009-10 u/s. 80IC of the Act was rejected by the AO on the ground that this was 11th and 12th year of deduction and as per S. 80IC(6), deductions under S. 80IC and S. 80IB cannot exceed the total period of ten years. Disallowance was affirmed by High Court. Allowing the appeal of the assessee the Court held that: the fact that the assessee has earlier availed deduction u/s. 80IA & 80IB is of no concern because deduction u/s. 80IC is available from the “initial year” i.e., the year of completion of substantial expansion. The inclusion of period for which deduction was availed u/s. 80IA & 80IB, for the purpose of counting ten years, is provided in sub-section (6) of S. 80IC and it is limited to those industrial undertakings or enterprises which are set-up in the North-Eastern Region. (CA No(s). 4765-4766 of 2018, dt. 18-5-2018) (AYs. 2008-09, 2009-10)

    Mahabir Industries v. PCIT (SC), www.itatonline.org

  2. S.194I : Deduction at source – Rent – Annual rent paid under lease deed is rent – Tax to be deducted at source from the payment of lease rent to NOIDA /Greater NOIDA [Ss.10(20), (10(20A)]

    Court held that the definition of ‘rent’ in the explanation to S.194I is very wide explanation states that “Rent” means any payment, by whatever name called under the lease, sub-lease, tenancy or any other agreement for the use of any land. The High Court has read the relevant clause of the lease deed and has rightly come to the conclusion that payment which is to be made as annual rent is rent with in the meaning of S.194I. Accordingly payment of annual lease rent to NOIDA/Greater Noida is liable to deduction of tax at source. Court also observed that Circular No 699 dt. 30th Jan., 1995 (2012) 212 ITR 2 (St) cannot be relied upon by NOIDA/Greater Noida to contend that there is no requirement of tax deduction at source under S.194I. (CA Nos. 9199/12750/15613/15615/2017 dt. 2-7-2018) (AYs. 2010-11, 2011-12)

    New Okhla Industrial Development Authority (NOIDA) v. CCIT (2018) 168 DTR 145 (SC)

  3. S.194LA : Deduction at source – Compensation on acquisition of certain immovable property – Where Land Acquisition Collector while disbursing compensation, had deducted tax at source and deposited same with Income Tax Department, better course of action, which was in consonance with provisions of Act, for assessee should have been to approach concerned Assessing Officer and raise issue that no tax was payable on compensation/enhanced compensation received by them as their land was agricultural land – Collector was directed to follow the procedure prescribed by Kerala High Court. [S.197]

    Court held that it is Assessing Officer who has to come to conclusion whether land is agricultural land or not. Accordingly where Land Acquisition Collector while disbursing compensation, had deducted tax at source and deposited same with Income Tax Department, better course of action, which was in consonance with provisions of Act, for assessee should have been to approach concerned Assessing Officer and raise issue that no tax was payable on compensation/enhanced compensation received by them as their land was agricultural land. Court also held that in future, Land Acquisition Collectors shall follow the procedure as stipulated by the High Court of Kerala in Nalini v. Dy. Collector, Land Acquisition [2006 (4) ILR Kerala 229

    UOI v. Hari Singh (2018) 254 Taxman 126 (SC)

  4. S.220 : Collection and recovery – Assessee deemed in default – Stay – CBDT’s OMs dated 29-2-2016 & 31-7-2017 by which AO’s have been directed to grant stay of disputed demand on payment of 20%/15% does not fetter the power of the AO & CIT to grant stay on payment of amounts lesser than 15%/20%. The AO/CIT have to deal with the prima facie merits and give reasons for rejection of the stay application

    “Having heard Shri Vikramjit Banerjee, learned ASG appearing on behalf of the appellant, and giving credence to the fact that he has argued before us that the administrative Circular will not operate as a fetter on the Commissioner since it is a quasi judicial authority, we only need to clarify that in all cases like the present, it will be open to the authorities, on the facts of individual cases, to grant deposit orders of a lesser amount than 20%, pending appeal. The appeal is disposed of accordingly.” (CA. No. 6850 of 2018, dt. 20-7-2018) (AY. 2007-08)

    PCIT v. LG Electronics India Pvt. Ltd. (SC),www.itatonline.org

  5. S.252 : Appellate Tribunal – ITAT Appointment Rules – Persons selected as Member of the ITAT will continue till the age of 62 years and the person holding the post of President, shall continue till the age of 65 years

    The validity of the ‘Tribunals, Appellate Tribunals and Other Authorities (Qualifications, Experience And Other Conditions of Service of Members) Rules, 2017‘ had been challenged in the Supreme Court in Kudrat Sandhu v. UOI (Writ Petition (Civil) No. 279 of 2017).

    The Supreme Court had earlier directed that pending the outcome of the challenge, the appointment of Members of the ITAT will be for a period of five years or till the maximum age that was fixed under the old Act and Rules.

    The Supreme Court has now clarified the situation as follows:

    “At this juncture, we may note that there is some confusion with regard to the Income Tax Appellate Tribunal (ITAT) as regards the age of superannuation.

    We make it clear that the person selected as Member of the ITAT will continue till the age of 62 years and the person holding the post of President, shall continue till the age of 65 years.”

    See also: Law Ministry Invites Applications for Appointment to Posts of Judicial & Accountant Members In ITAT WP(C) No. 279/2017

    Kudrat Sandhu v. UOI (2018) 95 taxman.com 167 -(SC), www.itatonline.org

  6. S.260A : Appeal – High Court – Inter-department litigation –Clearance from the Committee on dispute – Order of High Court directing the CIT to approach the High Powered Committee for clearance from Committee on Dispute for filing appeal before the High Court is set aside and matter remanded to High Court for deciding the appeal on merits

    Allowing the appeal of the Revenue, Order of High Court directing the CIT to approach the High Powered Committee for clearance for filing appeal before the High Court was set aside and the matter remanded to High Court for deciding the appeal on merits. Referred Oil & Natural Gas Commission v. CCE (1994) 116 CTR 643/ 1994 (70) ELT 45 (SC).

    CIT v. Doordarshan Commercial Services (2018) 166 DTR 425 (SC)

  7. Interpretation of taxing statutes –Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification. When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue. The ratio in Sun Export Corporation, Bombay v. Collector of Customs Bombay (1997) 6 SCC 564 is not correct and all the decisions which took similar view as in Sun Export Case stand overruled

The Full Bench of Supreme Court explained the entire law on interpretation of statutes, relating to ‘purposive interpretation’, ‘strict interpretation’, ‘literal interpretation’, etc. Difference in interpretation of statutes v. exemption notifications explained. When there is doubt or ambiguity in interpretation of a statute or notification/the question whether the benefit of doubt should go to the taxpayer or to the revenue explained. Law on Doctrine of Substantial Compliance and “intended use” also explained. Court held as under:

(1) Exemption notification should be interpreted strictly; the burden of proving applicability would be on the assessee to show that his case comes within the parameters of the exemption clause or exemption notification.

(2) When there is ambiguity in exemption notification which is subject to strict interpretation, the benefit of such ambiguity cannot be claimed by the subject/assessee and it must be interpreted in favour of the revenue.

(3) The ratio in Sun Export Corporation, Bombay v. Collector of Customs Bombay (1997) 6 SCC 564 is not correct and all the decisions which took similar 
view as in Sun Export Case stand overruled.

The instant civil appeal was directed to be placed before appropriate Bench for considering the case on merits after obtaining orders from the Hon’ble Chief Justice of India. (CA No. 3327 of 2007, dt. 30-7-2018).

Commissioner of Customs v. Dilip Kumar (FB)(SC), www.itatonline.org

Interpretation of taxing statutes – “Explanation” and “Proviso”

In a taxing Act, one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing to be read in nothing is to be implied. One can only look fairly at the language used. (CA Nos. 792-793 of 2014, dt. 2-7-2018).

New Okhla Industrial Development Authority (NOIDA) v. CCIT (2018) 95 taxmann.com 58(SC)/ www.itatonlin.org

Interpretation of taxing statutes – Rule against double taxation

A taxing statute should not be interpreted in such a manner that its effect would be to cast a burden twice over for the payment of tax on the taxpayer unless the language of the statute is so compelling that the Court has no alternative than to accept it. In case of reasonable doubt, the construction most beneficial to the taxpayer is to be adopted. (Referred, Laxmipat Singhania v. CIT (1969) 72 ITR 291 (SC) Jain Brothers v. UOI (1970) 77 ITR 107 (SC);

Mahaveer Kumar Jain v. CIT (2018) 404 ITR 738/ 165 DTR 113/ 302 CTR 1/ 255 Taxman 161 (SC), www.itatonline.org

Date extension syndrome

Of late from past few years it is observed that time for filing of returns is extended on one pretext or other. It has become a routine that has spoilt the habit of tax consultants and taxpayers alike.

We Indians are normally in habit of doing the work at last moment only. It is seen that as soon as the time was extended, the taxpayer’s line for filing the returns vanished and we also became relaxed.

The question that comes to my mind is how long this practice will continue and how to get out of this syndrome of extension of time for filing the return.

The main reason for extension of time earlier was that revised forms of returns are released late by the CBDT which delayed the required changes in the software causing heavy pressure of work on tax consultants and consequential collapse of the system that necessitated extension of time.

However now it is observed that the format for audit report is changed and heavy burden has come on the chartered accountants to ensure the compliance of several laws in the audit report and proper reporting for the same.

Needless to mention that if reporting is not properly done after due verification then the career of the chartered accountants is at stake resulting into disciplinary action.

The taxpayers particularly in mofussil areas are not alive to this situation and do not hand over their accounts for audit well in time thereby it becomes impossible to make proper verification, the chances of mistakes are multiplie.

More or less similar problem has to be faced by the advocates and T.P.S that at the end of limitation, slips and occurrence of risk of mistake becomes very high.

The changes made in the Income-tax Act those are applicable from 1-4-2017 i.e., for assessment year 2017-18 and onwards, particularly new penalty provisions u/s. 270A. It has made sea change in the concept of penalty for concealment to under reporting of income. The old concepts have been given a complete go-by and new analogy has been provided where there is no question of mens rea or criminal mind.

The above change has brought out the importance of proper computation of income and filing of return depicting correct income putting a heavy and onerous burden on tax consultants to ensure correct reporting of income.

Friends we have to ensure the proper compliance of law and there is need to educate our clients with the latest changes in law and procedure. We are compelled to seek extension of time for filing the returns because our clients are not ready with the required data in time.

We need to change the culture of working, no doubt it will take time but a beginning has to be made by our fraternity. To begin with send messages to the clients that charges will be higher if they approach you in fag end of the limitation, we may devise such other means also to motivate the clients to come in time for their work. It will help our members to save them from midnight working and spending quality time with the family.

With best wishes

Ganesh N. Purohit
National President

Has the CBDT exceeded its jurisdiction by issuing instructions stating
that performance of CIT(A), who will be judged on the basis of enhancements
made and on issue of penalty notices? The instructions are contrary 
to the basic principles enshrined within Constitution of India

Article 265 of the Constitution of India states that “No tax shall be levied (or) collected except by authority of law“. Under the Income-tax Act, the CIT(Appeals) is a quasi-judicial authority. He has the power to do what the Assessing Officer failed to do including the power of enhancement. Para 4 of the Instruction [Letter F.No. DGIT (VIG) /HQ/SI/Appeals/ 2017-18/9959] dt. 8-3-2018, reads as under:-

“Many technical and legal lapses have also been noticed during vigilance inspections of CIT(A). For instance in some cases, the AOs made additions towards unsecured loans and or share application money after detailed inquiries and bringing clear facts on record that either the creditor was not traceable or had meagre source of income or could not produce bank account details or could not explain the sources of deposits just before advancing loan. The CIT(A) gave relief primarily on legal grounds without considering the facts on record and without making any further inquiry in the matter. In one case, the CIT(A) accepted the explanation that cash deposits in bank account, which were added by the Assessing Officer as unexplained, represented the business receipts of the assessee, despite the fact that no books of account were maintained by the assessee for this business activity. In some other cases, the additions were deleted in a summary manner solely on the ground that opportunity of cross-examination was not given to the assessee. The CIT(Appeals) could have given the opportunity of cross examination to the assessee rather than summarily deleting the additions. In such cases, it has been held by the Hon’ble Apex Court in a number of cases that the scope of power of CIT(A) is coterminous with that of the AO“.

Incentives to CIT(A) for Quality orders: (www.itatinline.org)

CBDT in the Central Action Plan 2018 has sought to offer incentives to CITs(A) for passing “quality” orders. The incentives have been offered where the CIT(A) in appellate proceedings, passes an order where :

(a) enhancement has been made,

(b) order has been strengthened, in the opinion of the CCIT, or

(c) penalty u/s. 271(1) has been levied by the CIT(A)

The concerned CCIT shall examine any such appellate orders referred by him by the CIT(A), decide whether any of the cases reported, deserves the additional credit and convey the same through a DO letter to the CIT(A), which can be relied upon while claiming the credit at the year end.

The above instruction and Central Action plan is directly interfering with independence and unbiased decision making process of the CIT(A), which may be struck down by the Courts. It is to be appreciated that if the AO is not satisfied with the order of CIT(A) appeal can be filed before the Tribunal against the order of CIT(A).

A valid parameter to judge the performance of the CIT(A), is to verify as to how many of his orders are affirmed by the Income Tax Appellate Tribunal. This is the easiest way to measure the performance of the CIT(A). As the order of CIT(A) is not available in public domain, the CBDT may find out through an internal mechanism as to how many orders of the CIT(A) are approved, how many are set aside and how many are reversed.

The Hon’ble Bombay High Court in CIT v. TCL India Holdings (P) Ltd (2016) 241 Taxman 138 (Bom.) (HC) (www.itatonline.org), while dealing with the guidelines made by the CBDT for reducing tax litigation referred the Instruction No 3./2012 dated 11th April 2012 of the CBDT of the CBDT that set out parameters of appraisal of performance of the Counsel for the Department for renewal of appointment. One of the criteria mentioned in the said Instruction is the number of cases won by the counsel for the Income-tax department. The Hon’ble High Court observed that “This can never be a measure of competence of an advocate i.e., an officer of court. In fact, the quality of the Advocate would be best judged by his performance and not in the result of the litigation“. According to us ratio should apply to even the CIT (Appeals) in the discharge of their duty as quasi-judicial authority in as much as primary function is to uphold the rule of the law in a fair and unbiased manner.

Various business and professional organisations have sent detailed representations to the CBDT requesting them to withdraw the instructions. We hope the CBDT will heed those representations and withdraw them. If the CBDT does not withdraw the said notification, professional organisations may have to knock the door of Judiciary in search of justice.

Tax payers and tax practitioners are both very concerned with the implications of this instruction to the CIT(A) to pass ‘qualitative orders’. Sacrificing the basic yardstick of a free and fair hearing untainted by any ‘incentives’ is a basic human right of all assessees. For a better manner to assess the performance of CIT(A) the CBDT may consider the following suggestions.

1. Before being posted as a CIT(A), a mandatory posting as a Departmental representative before the Income-tax Appellate Tribunal at least for one year may be considered for all the CITs(A). This will help them in understanding the basic principles of natural justice, the importance of the opportunity of cross examination, violations of Rule 46A etc. For example, there are number of reported cases where one will find that the CIT(A) has enhanced Assessment without the issuance of the mandatory notice for enhancement.

2. Orientation course for new CIT(A): The ITAT conducts a training course for newly appointed Members and a yearly orientation course is also held to update the Members on various points of law and to find out how to perform better. It is desired that a similar training course for CIT(A) may be designed that can be addressed by the Judges of the High Court on basic principles of law.

3. There has to be training imparted to the CIT(A) as to how to write the orders. e.g.: facts, contention of the AO, submission of assessee. Case laws relied upon by the AO, case laws relied upon by the assessee, finding of CIT(A) on each and every point, etc. In some of the orders of CIT(A) it is observed that all the grounds of appeal are not dealt with and many a times they just copy the submissions and render their finding which often does not exceed even one paragraph. Such orders are set aside by the Tribunal on the ground that the order is not a speaking order causing wastage of valuable time and taxpayer’s money.

4. While hearings conducted by the ITAT across the country starts sharp at 10.30 AM, there is no time schedule for the CIT(A) hearings. If due to any reason, the CIT(A) is not able to conducted the hearing at the scheduled time, his office should inform the assessee or consultant that the hearing can be rescheduled.

5. In the year 1992, the then Chief Commissioner of Income-tax, Mumbai on the request of the Chamber of tax Consultants Mumbai and BCAS, had organised a half day interactive meeting with all CIT(A) of Mumbai at Hotel West End. The minutes of the meeting were also circulated and the meeting helped the department as well as assessees to achieve quicker disposal of matters. It is desired that such meetings may be held with professional organisations every year and the minutes on administrative issues discussed may also be circulated. This will help the CIT(A) to deliver qualitative orders.

Guidance on launching of prosecution proceeding vide Letter dt. 7th March 2018

In March 2018, the CBDT Chairman had addressed a letter dt. 7 March 2017 to the PCIT’s (www.itatonline.org), in which he had observed that the work relating to the filing of prosecution complaints and disposal of compounding applications “is not up to the mark”. CBDT Chairman had opined that prosecution proceedings can be successfully initiated in several cases and he had directed the officers to put in their best and expedite filing of prosecution complaints and disposal of compounding applications. In view of this instruction, several prosecution notices were issued and a number of prosecution cases were launched by PCIT’s and AO’s without considering the “merits” or “making a qualitative analysis of defaults”, just to meet their targets of launching prosecutions. This has led to a large number of prosecution notices being mechanically issued and prosecution proceedings being launched for the smallest of TDS defaults or additions to income, non-filing of Return of Income or non-payment of taxes on time. As per a reliable source, the intimation received in response to a RTI query shows that around 1 lakh notices have been issued to show that action had been taken in response to such instruction by the CBDT. Unfortunately, there is a paucity of designated Special Courts to deal with the prosecution matters launched. In many cases in Mumbai, the notice for first hearing of the prosecution matters are received only after one year of filing. As per guidelines issued by the CBDT vide Notification No. F.No. 285/35/2013 IT(Inv. V), Dt: 23rd Dec., 2014, the assessee cannot approach the concerned authority for compounding of offenses after one year of the launching of prosecution. In such a situation, the Commissioner cannot accept the compounding application due to no fault of the assessee. In Mumbai, there have been instances where though prosecution has been launched, even charges have not been framed for more than 15 years. One fails to understand as to what the tax administration desires to achieve by indiscriminately launching prosecution? We hope that the Honourable Finance Minister will interact with the tax professionals to better appreciate the harassment caused to the taxpayers.

These various developments have led to an increased fear in the mind of taxpayers, as they are being prosecuted for even small additions without considering the legal position of the claims made by them. Many notices were also issued to non-resident directors of Indian companies or Indian subsidiaries of non-resident companies. Recently in Kalannithi v. UOI (2018) 256 Taxman 260 (Mad.) (HC), the Hon’ble High Court of Madras has quashed the prosecution proceedings launched against a non-executive chairman as he was not in charge of day-to-day affairs of company for the offence related to a default of tax deduction at source committed by the Company.

The Federation has made many representations from time-to-time stating that prosecution proceedings should not be launched for technical offences and also that prosecution should not be launched till the penalty appeal is decided by the Tribunal, (www.itatonline.org). This message of the Federation finds special relevance given that now the CIT(A) are incentivised to make enhancements, levy penalties and ‘improve upon’ the orders passed by the Assessing officers.

Measures to reduce litigation

We are highly appreciative of the Circular No. 3 of 2018, dt. 11th July, 2018 (2018) 405 ITR 29 (St) (www.itatonline.org), of the CBDT – Revision of monetary limits for filing of appeals by the Department before Income-tax Appellate Tribunals, High Courts and SLPs/appeals before the Supreme Court for withdrawal of appeals where the tax effect is less than prescribed limits-Measures for reducing litigation. The ITAT Mumbai and ITAT Ahmedabad have disposed off a number of matters resulting in a great reduction in litigation. However, the same cannot be said in as far as the withdrawal of appeals pending before the Bombay High Court is concerned. As per the instruction of the Chief Commissioner, the appeals can be withdrawn only after getting a certificate from the concerned Assessing Officer. Accordingly these matters are adjourned from time-to-time in the absence of such certificate. In a number of cases, the records are not available before the Assessing Officer due to change of jurisdiction or the Assessing Officer may not be aware that appeal is pending before the Court. These matters are adjourned from time-to-time only for the purpose of getting instructions frustrating the very purpose of the decision to withdraw appeals in low tax effect cases. The precious time of the Court is lost and considering the infrastructure cost and time, the estimated cost to the taxpayers can be at least ` 50,000. It is desired that there should be one nodal officer who can co-ordinate with all the Commissioners, prepare the list of cases which are to be withdrawn and move the Hon’ble High Court to fix all the cases on one day. In Mumbai, at least 3,500 cases can be withdrawn due to the said notification and the High Court may be then free to pursue the remaining matters instead of giving adjournments due to paucity of instructions to the Departmental Representatives from the Assessing Officers. The Tax Bar of Mumbai is always ready and willing to help the administration if any assistance is desired.

Readers may send objective suggestions to render qualitative orders by CIT(A).

Dr. K. Shivaram
Editor-in-Chief

He joined ITAT, Mumbai Bench as an Accountant Member on 19th March, 2012 and has since then been instrumental in both shaping and interpreting the provisions of The Income-tax Act, 1961.

Before joining ITAT, he served in various capacities including as a Commissioner of Income-tax (DR) and served the Income-tax department for several years. The experiences and the knowledge gleaned by him the course of his services to the Income Tax Department undoubtedly proved invaluable to him during his tenure as a Member of the ITAT.

In the course of his illustrious service, he has authored many land mark judgments which were subsequently approved by the High Courts [Ex : ACIT v. Karma Energy Ltd. [2015] 375 ITR 264 (Bom.) (HC)]. Apart from his mastery over the Income Tax laws, he also possessed a rare command over the Hindi Language. A proficiency that was often glimpsed by the Members of the Bar while arguing matters before him.

A man of impeccable courteousness and humility, he once put up a notice that read “He should not be addressed as an ‘HONOUR’” while being addressed in the Court room. His patience and support towards juniors shall be remembered fondly by a great number of young professionals that have embarked upon their journey in the field of Direct tax laws practice. He also helped in releasing the commemorative postage stamp released on the occasion of completion of 75 years of existence of the ITAT, Mumbai.

He has also authored the treatise, “Direct Taxes Glossary”, which has proved to be an invaluable source of information for the professionals as well as the revenue authorities. It has the distinction of being a book where the words and phrases used in the Income-tax Act, the Wealth-tax Act and the Gift-tax Act, which are often used and not understood in the correct relevant perspective, can be found in one place.

On behalf of the Tax Bar, we wish him happy and prosperous years in his post superannuation period.

A Full Court farewell function was held at Hyderabad. Honourable Mr. R. S. Syal Vice- President, Delhi, presided over the farewell function.

Representatives from various professional organisations and Commissioners (DRs) spoke on the occasion and wished him a happy and prosperous retired life.

Letter addressed by the President of the ITAT, Bar Association, Mumbai, reads as under :

“The members of the ITAT Bar Association Mumbai had the privilege of appearing before Your Honour for more than 10 years. Your in-depth knowledge on law and procedure have always been appreciated and acknowledged by members of the Bar. During your tenure as Vice-President of the ITAT at Mumbai, we had many occasions to interact with Your Honour on various administrative issues. We found that these were addressed by Your Honour to our satisfaction.”

Letter addressed by the National President of the AIFTP reads as under:

“Members of the All India Federation of Tax Practitioners had great honour of interacting with you and taking guidance from time- to-time. Your honour has addressed the students from the time, when the AIFTP in association with ITAT Bar Association, Mumbai had organised the N. A. Palkhivala Memorial National Tax Moot Court Competition in Mumbai. The address of your “How to argue matters in Court and become a better lawyer”, which was published on itatonline.org, is read by the students and young professionals regularly. In your speech, you have shared invaluable tips on how young professionals should argue matters in court and become better advocates. Sincerity to the Court and client, mastery over the facts and law, an ability to work hard and tirelessly and never-say-die attitude are necessary attributes for success in the legal profession. Your honour has rendered many landmark judgments which are affirmed by High Court and Apex Court. In Dy.CIT v. Prescon Builders P. Ltd. (2015) 171 TTJ 788 (Mum.) (Trib.) stricture is passed against the AO for not following the direction of the Tribunal. Your 
in-depth knowledge on law and procedure is well appreciated by the Tax Bar across the country.” CA Hemendra V. Shah from Hyderabad spoke on the occasion on behalf of AIFTP.

Speaking on the occasion, Honourable Mr. D. Manmohan, Vice-President, thanked the President, Vice-President, Member-Colleagues, members of the Bar, departmental representatives and others who have helped him to discharges his duties without any fear or favour. He mentioned about his journey during the service and before the service, the working experience with Member Colleagues and professionals, the administrative side of ITAT, the Vice-Presidency, etc. amongst various other aspects of his life.

One of the Paragraphs from his speech has been quoted here:

“Calcutta being the first capital of India and Bombay being the Financial Capital of India, there is a scope for tax planning backed by very skilfull chartered accountnts and naturally the cases which come up before the Tribunal also involve intricate questions of law and fact. The stakes involved in such cases being high, commensurately top notch lawyers are engaged, and thus I had the good fortune of hearing and learning from good counsels from Mumbai, Calcutta, etc.”

National Tax Conference

Organised by

ALL INDIA FEDERATION OF TAX PRACTITIONERS (WZ)
Jointly with
TAX PRACTITIONERS’ ASSOCIATION, THANE
GOODS AND SERVICES TAX PRACTITIONERS’ ASSOCIATION OF MAHARASHTRA, MUMBAI
TAX FRIENDS, THANE

on Saturday, 6th October, 2018 and Sunday, 7th October, 2018

at Hotel Satkar Residency, Pokhran Road No. 1, Next to Cadbury, Opp. Singhania School, 
Thane (West) – 400 606

Theme : DISHA – The Way Forward

PROGRAMME

Day 1 : 6th October, 2018 (9.00 a.m. to 05.30 p.m.)

Registration & Breakfast
Inaugural Session

Hon’ble Mr. Justice Abhay S. Oka, Judge, Bombay High Court

First Technical Session – Income Tax – Issues in Section 56(2)

Chairman : Shri S. K. Poddar, Advocate, Ranchi
Speaker : CA. Pradip Kapasi, Mumbai

Second Technical Session – GST – Intricate Issues of Valuation (Other than relating to Real Estate)

Chairman : Shri Vikram Nankani, Sr. Advocate, Mumbai

Speaker : CA. S Venkataramani, Bengaluru

Third Technical Session – GST – Audit of Accounts and reconciliation with Books

Chairman : CA. Ashok Chandak, Nagpur

Speaker : CA. Rajat Talati, Mumbai

NEC Meeting to be held from 6.00 p.m. to 7.30 p.m. (same venue)

Day 2 : 7th October, 2018 (08.30 a.m. to 06.00 p.m.)

Registration & Breakfast
Fourth Technical Session – Impact of GST and Issues under GST on Real Estate Transactions

Chairman : Dr. Ashok Saraf, Sr. Advocate, Guwahati

Speaker : Shri Kuntal Parekh, Advocate, Ahmedabad

Fifth Technical Session – Penalties and Prosecutions under the Income-tax Act, 1961

Chairman : Shri N. M. Ranka, Sr. Advocate, Jaipur

Speaker : Shri V. P. Gupta, Advocate, New Delhi

Sixth Technical Session – RERA – Transformation and Balancing of Rights and Obligations

Chairman : Shri K. K. Ramani, Advocate, Mumbai

Speaker : CA. Ashwin Shah, Thane

Panel Discussion – GST

Moderator : Shri D. K. Gandhi, Advocate, Ghaziabad

Panellists : Shri P. C. Joshi, Advocate, Mumbai; CA. Parind Mehta, Mumbai

Panel Discussion – Income Tax

Moderator : CA Chetan Karia, Mumbai

Panellists : CA. Pinakin Desai, Mumbai; Dr. K. Shivaram, Sr. Advocate, Mumbai

Valedictory and Vote of Thanks

Registration fee:

Up to 4th August, 2018 Up to 31st August, 2018 After 31st August, 2018
Members ₹ 3,250/- per head ₹ 3,750/- per head ₹ 4,500/- per head
Spouse ₹ 3,000/- per head ₹ 3,500/- per head ₹ 4,250/- per head
Non members ₹ 4,000/- ₹ 4,500/- ₹ 5,250/-

There will be 2 lucky draws in every session

For registration please contact

[email protected] / +91 22 25372532 / AIFTP Office : +91 22 22006342

Bank details for sending registration is :

TAX PRACTITIONERS ASSOCIATION, THANE
TJSB BANK, Panch Pakhadi, Thane
Savings Account
A/C NO. 008110100007709
IFSC CODE NO. TJSB0000008

*Hotel Room* charges at Hotel Satkar Residency excluding GST 
(50% Advance to be remitted directly to hotel with intimation to NTC email)

Double Occupancy ₹ 5,200/- + GST 18% / Single Occupancy ₹ 4,250/- + GST 18%

Suite ₹ 11,200/- + GST 28%

NEFT details are as under:

NAME OF BANK ACCOUNT: HOTEL SATKAR RESIDENCY
CORPORATE ADDRESS: Pokhran Road No.1, Next to Cadbury Co., Opp. J. K. Singhania High School, Thane (W).
BANK NAME: HDFC Bank Ltd.
BANK ADDRESS: Shop No. 1-6, Devdaya Park, Opp. Raymonds Ltd. Gate, Pokhran Rd. No.1, Vartak Nagar, Mumbai – 400 606
BANK BRANCH: Vartak Nagar, Thane
BANK A/C NO. 04882560000360
ACCOUNT TYPE: Current Account
NEFT / IFSC CODE. HDFC0000488
SWIFT CODE: HDFCINBB
MICR CODE 400240069
BRANCH CODE 0488

For any query or assistance relating to room booking please contact :

Hotel Satkar Residency

+91 22 25985858 / [email protected]

*For any further enquiries relating to NTC, please contact*
[email protected]

Mr. Ganesh Purohit, National President, AIFTP, 9425154914
Mr. Pankaj Ghiya, Secretary General, AIFTP, 9829013626
Mr. Deepak R. Shah, Chairman, AIFTP (WZ), 9820148536
Mr. Salil Lodha, Hon. Secretary, AIFTP (WZ), 9820149302
Mr. Pranav Kapadia, GSTPAM, 9821332460
Mr. Pradip Kapadia, GSTPAM, 9821029082
AIFTP Office Mr. Ravi 022 22006342 / 49706343
Mr. Vijay Kewalramani, Conference Chairman, 9820073165
Mr. Bharat Sachdev, Conference Secretary, 9820232910
Mr. C.L. Bhanushali, TPA, Thane, 9821296400
Mr. Kamlesh Saboo, TPA, Thane, 9819195333
Mr. Parag Chitnis, TPA, Thane, 9987032650
Mr. Girish Rathi, TPA, Thane, 9867617989
Mr. Hari Dudani, Hon. Secretary, Tax Friends, 8007777257

Conference Secretariate

M/s. V. N. Kewalramani & Associates
108/109, Paradise Tower, Gokhale Road, Naupada, Thane – 400 602, Maharashtra
Tel.: 022-25372532 • Mobile: 9820073165