On behalf of all the members of Ranka family, we thank you sincerely from the bottom of our hearts for your well wishes, blessings and condolences. We are truly overwhelmed with the support we have received, giving us comfort and peace through this difficult time.

Our beloved and most respected Dr. N. M. Ranka Sb. served society in an utmost dedicated, devoted and honest manner. Reflecting upon his life, we recognize that his philosophy was one that revolved primarily around contribution to society, as he believed that it was his duty to give back to the community that had given so much to him. He shaped the lives of countless youth, students and extended his support to young lawyers and Chartered Accountants; imbibing values of integrity, authenticity and simplicity. Serving the needy and uplifting the downtrodden was a crucial part of his legacy.

Although a great void has been created with his passing, we assure you that we, his future generations, will carry on his legacy. We will miss him dearly, but aspire to honour him by continuing his work. The organization of several Moot Courts, scholarships, educational programs alongside the establishment of statues of Mahatma Gandhi (Father of the Nation) will continue with the same zeal and enthusiasm.

Lets pray the departed soul rest in eternal peace, solace and may Lord give him appropriate place in his laps. We appreciate your warmth and continuous blessing.

Thank you. With Regards, (]. K. Ranka)

Respectful Homage to Dr. N. M. Ranka, Sr. Advocate & President, AIFTP (2000-02)

I am extremely sorry to learn about the sad demise of Shri N. M. Ranka Saheb. My heartfelt condolences to the entire family. May the departed soul rest in peace.

— Justice R. M. Lodha, Former Chief Justice of India

Please accept our deepest condolences on the sad demise of your father. Though my association with him was extremely short yet it was very meaningful. His gentlemanly behaviour will always remain etched in my mind. I had the privilege of hearing him in a tax matter at Jodhpur immediately after taking oath. Having been told that he was a leading tax practitioner, I was obviously worried having practically no sufficient experience in tax matters. I distinctly remember how courteous he was to ensure that I was at ease. A very bold and appreciative succession taken by the family in furtherance of a person duly deserving for his memory to live on. May god give you and your family the courage to bear this irreparable loss.

— Justice Naveen Sinha, Judge, Supreme Court of India

Dear Brother : My heartfelt condolences to all of you on this bereavement a great Jurist, an Advocate of eminence is no more with us. May his soul rest in peace.

— Justice Deepak Verma, Former Judge, Supreme Court of India

I am very sorry to hear about the passing away of your beloved father. A colossal figure and an eminent member of the Bar, his loss is shared by all of us and members of the Bar.

Please accept heartfelt condolences on behalf of my colleagues and on my behalf. We pray that the almighty give you and members of your family the strength to bear this irreparable loss.

— Justice S. Ravindra Bhat, Chief Justice, Rajasthan High Court

Heartfelt Condolences. May his noble pious and simple soul rest in eternal peace. He was crusader of Moot Courts and installing Gandhi statues in courts all over the country. He was Palakhivala of Rajasthan. A great loss to our fraternity.

— Justice N. K. Jain, Former Chief Justice, Karnataka High Court and Madras High Court.

My heartfelt condolences on the loss of the great stalwart and legend in the legal world Shri N. M. Ranka Saheb.

— Sanjeev Prakash Sharma, Judge, Rajasthan High Court

We are deeply grieved to know about the sad demise of your beloved father Shri N. M. Ranka saheb. Our heartfelt condolences. May the departed soul rest in eternal peace.

— Justice Sangeet Lodha, Judge, Rajasthan High Court

Heartfelt Condolences on sudden and sad demise of Uncle Ranka Saheb. Ranka Saheb a Sr. Advocate was full of grace and dignity. He maintained highest traditions of legal profession and followed standards of ethics. An un-parallelled expert in Taxation laws. My sincere homage to the departed soul. I pray Almighty to grant eternal peace to noble soul and bestow courage and fortitude to you and all the members of Ranka family. Om Shanti.

— Justice P. K. Lohra, Judge, Rajasthan High Court

Deeply saddened to learn. He was a leading lawyer in tax law. Heartfelt condolences to bereaved, family and more particularly brother Justice J. K. Ranka Sb. Pray god that the departed pious soul rest in peace.

— Justice Sandeep Mehta, Judge, Rajasthan High Court

Very sorry to learn about the demise of your revered father Shriyut N. M. Ranka sahib, a Legend of Tax Bar of India. His contribution to legal fraternity can never be forgotten… We deeply condole the Demise & pray God to confer eternal peace to the departed noble soul… may all around him, specially the Family get enough courage to tide over the enormous loss… We will miss his smiling face and very soft demeanour forever…..

— Vineet Kothari, Judge, Madras High Court

Deeply shocked to know that doyen of the Bar, an ardent scholar, great philanthropist, genuine Gandhivadi and above all a Gentleman to the core is no more.

My heartfelt condolences to Mrs. Ranka, Justice J. K. Ranka & all family members. May God bestow eternal peace to noble soul.

— Justice V. S. Dave, Former Judge, Rajasthan High Court

Matter of sorrow to know the sad demise of Shri N. M. Ranka ji heartfelt condolences. I pray to almighty God to rest the departed soul in peace & give enough strength to all family members to bear this loss.

— Justice L. C. Bhadoo, Former Judge, Chhattisgarh High Court

Heartfelt condolences to brother Justice Ranka and his family. May God grant eternal peace to departed soul.

— Justice J. R. Goyal, Former Judge, Rajasthan High Court

Saddened to learn. He was a leading lawyer in tax law. Heartfelt condolence to bereaved family. Pray god departed pious sole rest in peace.

— Justice N. N. Mathur, Former Judge, Rajasthan High Court

My heartfelt condolence to Justice Ranka and bereaved family on sad demise of legal doyen Shree N. M. Ranka Saheb, pioneer in tax consultancy. May Almighty bestow him with eternal peace and utter salvation.

— Justice Vijay Kumar Vyas, Former Judge, Rajasthan High Court

Our deepest condolences. We pray God for eternal peace to the departed noble soul. May God give strength to the bereaved family to bear the loss. Namo Arihantanam

— Justice Tated and family, Mumbai

Shree Ranka ji had always considered his primary duty and responsibility to cultivate fairness in his clients. He would always be fair in all his renditions with his clients. Every statement advanced before a Bench would be factually correct. He would always explain the facts to the bench and would carry the bench to appreciative level. Bench will shed prejudices on hearing his statements. He always made clear efforts to explain the facts as it happened and thus leaving no doubt therein. He would explain each and every doubt that Bench may raise up in a pleasing constant tone and emotions were never there. He believed and practiced that roots make the tree. My wife Jayanthi, daughter Balambika and son Jairam join me in expressing our respects to the great soul.

— A. Kalyanasundharam, Former Senior Vice President, ITAT

Very sad to hear about great Ranka Ji. He was a very pious soul. Pray to God that his soul rests in peace. God will give you and your family strength to bear this great loss.

— Hari Om Maratha, Ex-Member, ITAT

Shocked to know about this sad news. I am indeed nostalgic about the time during 1988 to 1990 when I was Sr. DR at the ITAT Jaipur and almost daily I had to argue case with Shri Ranka as an adversary. During those days he was at the pinnacle of his professional career and he left an indelible impression as a bold and efficient advocate who commanded respect of the Bench. You may be aware that my association with Respected Ranka Saheb started from 1975 when I came to Jaipur as ITO CC and again as Sr. DR and I have learnt a lot from him about the art and science of effectively presenting a case before the Bench. I always held him in high regards. His passing away is a tremendous loss for the family and l send my heartfelt condolences. Thanks for updating. He was undisputedly a great and noble person and has set an example to be emulated by all.

— K. K. Boliya, Former Member, ITAT

On 31st May, 2019 I was shocked to learn about the sudden departure of my near and dear Rankaji to Heavenly Abode.

Shri N. M. Ranka, was personification of truth, non-violence, non-possessiveness, compassion and broad mindedness.

He was the follower of Gandhian Principles in his day-to-day life. He installed statues of the Father of the nation, in the courtyards of several High Courts in the Country, which continue to inspire younger generation for all time to come.

He regularly encouraged young law students by organising annual Ranka National Moot Court Competitions for Five Year Law Course students. He was actively associated with several Charitable Trusts as well as social organisations.

My relation with him date back to 1981 when as a Secretary General of AIFTP, I visited Jaipur and successfully organised the convention with his active help. Since then we became so close to each other that we used to exchange our views on all problems faced in life. I have lost a personal elder brother and a great irreparable loss to AIFTP. The void so created cannot be filled up. Destiny has suddenly snatched away such a great gentle human being.

I am sure his advice, views and learning will continue to guide all of us in future.

I PRAY LORD MAHAVIR TO BESTOW ETERNAL PEACE TO THE GREAT DEPARTED SOUL BY ABSORBING IT TO THE SOUL OF PARMATMA SO AS TO AVOID ANY REBIRTH ON THIS PLANET.

I had the privilege of my paying personal homage by attending the condolence meeting on 2nd June, 2019 at Jaipur along with my friend Dr. K. Shivaram and Mrs. Nikita Badheka.

— P. C. Joshi, Past President, AIFTP

I was saddened to know that Dr. N. M. Ranka Saheb, Sr. Advocate has gone to his Heavenly Abode on 30th May, 2019. He was a very learned, sober & simple man and having in-depth knowledge particularly of tax laws. He spread the message of Federation – “Ethics, Education & Excellence” all over India. He will always be remembered for his services rendered to the Federation as a Lifetime Member of the Federation. He was a man who will be remembered by the tax fraternity for the years together because of his qualities of firm determination, humbleness and promoting young generation in the field of law.

At the time when he was National President of AIFTP, I worked as Secretary General of the Federation with him for the term 2000-2002 and became more aware of his activities of the All India Federation of Tax Practitioners. He selflessly promoted the Federation and served the tax fraternity. The Federation has lost a sincere, devoted, dedicated, determined, courteous member, who promoted and spread the Federation all over the country. The Federation, AIFTP shall never forget him and his name would be stamped in golden words in the history of the AIFTP for his dynamic leadership and spreading the light of AIFTP. He also introduced Awards in the Federation from Ranka Charitable Trust which are continuing till now. He will be remembered for organizing Moot Court Competitions with Law Colleges & Universities for young upcoming law students for making their future better.

In this critical hour of grief, I express my heart-felt condolences and pray to the Almighty to give peace to the departed soul and strength to the members of the bereaved family. We hope that his son Justice J. K. Ranka and other family members will follow the path paved by him, support the activities of the Federation and glorify his name.

— M. L. Patodi, Past President, AIFTP

Dr. N. M. Ranka the scion of the All India Federation of Tax Practitioners, was the guiding force behind the functioning of the AIFTP.

He was like an elder brother to me and whenever I used to call him for any guidance, he was always willing to help and support

He has been an Advocate par excellence in the matters of Direct Taxes and he was well respected in the fraternity and also among the judges, a very learned and knowledgeable person who had authored books on Direct Taxes and got various articles published on various topics.

He was also a philanthropist, who was spiritually inclined and advocated the path of dharma and peaceful non violent living. He not only encouraged the satvik way of life and also practiced what he preached.

He was a caring husband and an affectionate father who brought up his children with dedication and discipline.

I bow down to Late Dr. N. M. Rankaji and pray to God that his soul rest in peace. Om Shanti, Shanti, Shanti

— J. D. Nankani, Past President, AIFTP

The unprecedented demise of Sr. Advocate of Rajasthan High Court from Jaipur Dr. N. M. Ranka is an unrecoverable blow to the members of AIFTP Family and at the same time it’s a loss of a legend to the legal fraternity. He was a great and glorious leader of national repute who commandeered great respect as well earned inexpressible amount of love and affection from one and all. As I used to confide with some of my close friends in him have been seeing the real virtues and qualities of Gandhi especially in times of the growth and March of the Federation. He was always outspoken on every issue with no compromise. He stood firm for his values. A great loss that cannot be compensated. I convey my deepest heartfelt condolences to the members of the bereaved family. Apart from the family I am also individually a bereaved friend.

— Dr. M. V. K. Moorthy, Past President, AIFTP

A Tribute to the pillar of Federation Dr. N. M. Ranka Ji My introduction with Dr. Ranka Ji was on the platform of All India Federation of Tax Practitioners. I found a very distinct personality in him, very calm and cool but clear in his thoughts. His speech was so influensive that he used to fascinate others.

With the passage of time, I saw in him the image of “True Gandhian”. He was a follower of Gandhi Ji by “cevemee, Je®evee Deewj keÀce&Cee” (by soul, to mind and by deeds). He always used to say that follow the ideals of Gandhi Ji and dedicate yourself towards the Federation, the Society and ultimately the Nation. He was vegetarian and non-alcoholic and always pressed others to be the same.

His contribution to AIFTP is commendable, it was a difficult task to bring the Advocates, CAs and Tax Professionals on one platform, to co-ordinate and to work for a common cause.

He used to give importance to unity of thoughts, unity of understanding and unity of action to achieve the goals with due regards to the duties. He used to preach that you will be tested by your deeds and therefore,

lead a life full of duties.

His sudden demise has created a vacuum in the Federation. Not only his family has been shocked but the Federation has also become orphan.

Today Ranka Ji is not amidst us but his ideals, his values, his principles are with us which will guide to achieve the goals and to bring the Federation to greater heights of his dreams.

May the departed soul rest in peace. We pray Almighty to give strength to us, to the Federation and to the members of his family to bear this irreparable loss.

— Prem Lata Bansal, Past President, AIFTP

Our beloved fatherly figure and strongest pillar of AIFTP in India particularly in Rajasthan has passed away leaving all of us in grief.

It is a great loss to the fraternity, AIFTP and personally to me. I was fortunate to receive his love and affection and guidance, he was instrumental in guiding me to establish M.P. Tax Consultants Association and organising first ever all India Tax Conference at Jabalpur in the year 1995.

Dr. Rankaji had been a great source of inspiration for all of us in each and every aspect of profession and application of low. He had been regularly guiding the fraternity by his articles in various journals, his own publications and deliberation during the conferences as Chairman on papers of particular aspects of the Act

It is difficult to fill the vacuum created due to passing away of Ranka Saheb. The Jabalpur Tax Bar Association had also organised a condolence meeting at Jabalpur to express condolence of Jabalpur Tax Bar.

I pray almighty God to grant eternal peace to the departed soul and strength to the family and all of us to bear the irreparable loss.

— Ganesh Purohit, Past President, AIFTP

I had the privilege of interacting on several occasions with Dr. N. M. Ranka in Mumbai and Jaipur when one of us visited the normal place of residence of the other. We had extremely fruitful discussions on subjects not only of professional but general interest. In addition, we often bumped into each other on various professional occasions at different places.

He was always calm, unruffled and conscientious with a creative approach for tackling legal and other problems arising in life. He had a strong sense of legal ethics and of ethics in everyday living. He took very keen interest in professional matters. I am personally aware of the quickness and regularity with which he would react most appropriately to articles and issues which came to his notice. Despite his very busy professional practice, he found time to write several articles and authored many educative books. He was a constant and easily approachable guide and mentor to several individuals and various associations and institutions which he nurtured with great success.

He has left a rich, admirable and enviable legacy for all of us to pursue.

— Soli E. Dastur, Sr. Advocate, Mumbai

The sad demise of Dr. N. M. Ranka is a great blow to All India Federation of Tax Practitioners. He was the heart and soul of the institution and his close association with the institute will be long remembered. He was at the fore front of all the activities of the institute and wrote several articles in the institute journal which showed his great scholastic ability and love for the subject. It is difficult to imagine our refresher courses without his presence and he will be missed by each and everyone in the Federation. The legal profession is poorer by his untimely departure.

— Dr. Y. P. Trivedi, Sr. Advocate & Former Member of Parliament (Rajya Sabha)

Dr. N. M. Ranka, a Senior Advocate and Past President of All India Federation of Tax Practitioners, has left for his heavenly abode on 30th May, 2019. He was a practicing lawyer for the last over six decades. He was a friend, philosopher and guide for all professionals associated with AIFTP, Rajasthan Tax Consultants

Association and other similar bodies. He was recognized as “AIFTP Man of the Millennium”. He was an inspiration to all young and senior professionals. He has contributed more than 300 Articles and Papers in various Seminars, Conferences, Residential courses and Journals. His Articles on various subjects were exhaustive and thought provoking. There is no Tax Seminar or conference organized by AIFTP in which he was not present. He enlightened the participants of all such Seminars and Conferences in his capacity as either Chairman. Paper Writer or Trustee of the Brains’ Trust. He had traveled extensively all over the globe and participated in various conferences world over.

Besides his professional career as a Senior Advocate, he was a Philanthropist. As Chairman of Ranka Public Charitable Trust, he sponsored Ranka Best Tax Seminar Trophy and Awards as well as Ranka Best Management Student Trophy and Award. He was associated with various Charitable Trusts such as Jaipur Rural Health and Development Trust, Shri Amar Jain Medical Relief Society, Social Security Foundation, Ritu Sharda Mandir Foundation and other Public Trusts as a Trustee or Chairman. He was awarded ‘SAMAJ GAURAV” for taking active interest in the unity of Jains.

We all professional brothers and Sisters pay our respectful homage to this stalwart in our profession. We shall always feel his absence. We all pray that this noble soul may rest in peace.

— CA. P. N. Shah, Past President, ICAI

Dr. N. M. Ranka not only initiated me to join legal practice and All India Federation of Tax Practitioners after my retirement in 1999, but also sort to inculcate in me the values of a model professional.

Father is God’s precious gift and it is very very painful to lose it. But, I have to go before the will of almighty.

— Shri S. R. Wadhwa, Former Chairman, Income Tax Settlement Commission

Please accept my sincere condolences at the passing away of N. M. Ranka sahib. He was a towering personality who left his indelible imprint both in the profession and in community. For the family is a grief which, perhaps, time alone may reduce, but a void that would be difficult to fill. May his soul Rest in Peace and he continue to guide you all. I am out of Jaipur and will be back only in mid-June. So please excuse my not being there to personally to be with you. Regards.

— Satish Mehta, Indian Foreign Service Former Ambassador

With deep sense of grief, I on behalf of School Law, MUJ, convey my heartfelt condolences on the said demise of your beloved father, Advocate Shri N. M. Ranka Saheb (as we fondly called) was a hardcore Gandhian and very kind hearted person. He was a renowned advocate, true professional, visionary leader and famous philanthropist.

His departure is a great loss personally for me as I have been associated with him for a decade or so and with his initiatives & vision we could jointly organize a number of moot courts / events. He will be remembered for several decades for his noble deeds.

I pray the Almighty for his soul to rest in eternal peace and grant strength and courage to you and the bereaved family to bear this irreparable loss.

In bereavement.

— Dr. Mridul Srivastava, Dean Faculty of Arts & Law, Manipal University, Jaipur

Late Shri Ranka sahib was not only a notable jurist, but was also a large hearted philanthropic personality. His association with various organizations like Bar Association, Amar Jain Medical Relief Society, S. S. Jain Subodh Samiti, etc. will always be remembered.

The family of Maharaja Sawai Man Singh Vidyalaya pray that almighty God grant peace to the noble soul.

Please accept our deepest condolence & prayers.

— Rani Vidya Devi, Chairperson & Vikramaditya, Secretary, Maharaja Sawai Man Singh Vidyalaya

We pray the Almighty to give peace to the departed soul and enough strength to the bereaved family to bear this irreparable loss.

May His Soul Rest in Peace. Om Shanti, Shanti, Shanti.

— S. L. Agrawal, Registrar, JECRC University, Jaipur

Late Shri N. M. Ranka Ji was like a fatherly figure for our association and had been guiding us since many years. All the members of Direct Tax Professional Association are saddened by this loss, and will miss his words of wisdom and inspiration.

We know first hand how profound a loss it is when you realize that he will no longer be there for all the events in your life. We can tell you though that the very best way to mark his passing is by filling your mind with all of the wonderful memories you have of happier times.

— CA. Vikash Parakh, President, Direct Taxes Professionals’ Association

The Trustees of the Rajasthan Education Trust resolve to express their heart-felt condolences on sad and sudden demise of Shri N. M. Ranka S/o Late Shri Moti Lal Ji Ranka Sr. Advocate, Rajasthan, Tax consultant and a philanthropist, on 30-05-2019 who was associated with this Trust since its creation. His contribution to the growth of the Trust shall always be remembered.

— Justice (Retd.) V. S. Dave, Trustee, Rajasthan Education Trust

Hon’ble Mr. Justice Mohammad Rafiq, Judge, Rajasthan High Court

My Esteemed Colleagues on the Bench

Shri Mahendra Singh Singhvi, Advocate, Rajasthan

Shri Chiranji Lal Saini,

Chairman, Bar Council of Rajasthan

Shri Anil Upman,

President, Rajasthan High Court Bar Association, Jaipur

Shri Narpat Singh Tanwar,

General Secretary, Jaipur Bar Association, Jaipur

Learned Senior Advocates, Learned Members of the Bar, Officers of the Registry &

Mr. Justice J. K. Ranka, former Judge of this Court, and other Members of the bereaved family.

With a profound sense of grief, we have assembled here to mourn the sad demise of Dr. N. M. Ranka, learned Senior Advocate who left for heavenly abode on 30th May, 2019, leaving all of us in shock and pain.

Dr. Ranka was born at Beawar on 27th September, 1933. He did his Graduation in Commerce in 1953 and obtained degree in Law in 1955. He joined the Profession in 1953 and was enrolled as a Pleader in 1956 and thereafter as an Advocate in 1962. He was having specialization in the field of tax laws and was an expert of national repute. He is one of the eminent names in the domain of tax consultancy. By utilizing the vast knowledge of this field, he remained involved in propounding reliable services. He was also engaged in a lot of philanthropic activities. During his lifetime participated in more than 750 Tax Conferences, Seminars or Workshops organized in different parts of India. He has contributed more than 500 articles and papers, to various National Tax Journals. He was felicitated by a large number of Tax and other Associations. All India Federation of Tax Practitioners has honoured him as “AIFTP Man of the Millennium” and “Jain Sewa Ratna” by Shree Jain Sewa Sangh, Mumbai. On 5-1-2019 Dr. Ranka was conferred with the Degree of ‘Doctor of Philosophy’ by Honoris Causa in recognition of his eminence and contributions in Legal Practices and Public Life by JECRC University, Jaipur.

Dr. N. M. Ranka was earlier President of Rajasthan Tax Consultants’ Association, and later he became its patron. He was President of the Jaipur Tax Consultants’ Association. He was also President of Mansarovar Advocates Club Trust, Chairman of Ranka Public Charitable Trust and Trustee of a large number of Charitable Trusts and Societies in educational and medical field. He was Secretary and also Vice-President of Amar Jain Medical Relief Society for over 35 years and was instrumental in setting up a Medical Hospital with all facilities. He was Member of Supreme Court Bar Association, Bar Association of India, All Gujarat Federation of Tax Consultants and many more professional associations. He was also life member of Indian Law Institute. He was conferred honourary membership of Direct Taxes Professionals’ Association, Kolkata and Rotary Club of Beawar. He believed in Gandhian philosophy and, through his trust, installed 39 marble statues of Father of the Nation Mahatma Gandhi including one in the premises of this Court. He had been organizing ‘Ranka National Moot Court Competitions’ since 2011. All India Federation of Tax Practitioners had instituted ‘Ranka Awards’ in his name. He also founded ‘Ritu Sharda Mandir Foundation’ for orphans and presented more than 3,100 precious law books to Rajasthan University, Direct Tax Professional Association, Kolkata & others.

Hearing Dr. N. M. Ranka was a matter of pleasure. He would place his case before the Court coolly but firmly. He never raised his voice but always argued his cases with smile and softness. He was very simple, yet sophisticated and gentle in his arguments. He argued the cases in a simple and understandable way. While arguing a matter, he was never in hurry. He would present a most difficult case at great ease. He had a pleasing personality. Out side the court also, he would always meet you with a smile on his face.

Dr. N. M. Ranka was not only soft spoken, humble and very courteous to all but was very friendly and an enthusiastic personality. Hardly he would step in the Court without full and complete study of the facts. He practiced with a sense of dignity and pride, and dispensed all the best of his own art. He was possessing sharp legal acumen and was very hardworking personality and fully dedicated to his professional commitments. Recognizing his talent, the High Court designated him as Senior Advocate in 1990. Though he was ailing for last about one month but he never lost the touch and thread till last of his work. He set standards of exemplary character and conduct to be emulated by young members of the Bar.

The profession has been rendered poor, indeed, by his sad and sudden departure. We have lost an advocate of unique qualities.

Sad demise of Dr. N. M. Ranka has resulted in an irretrievable loss not only to his family but to the fraternity as a whole. He is survived by his wife, three daughters and a son Justice

J. K. Ranka, former Judge of this Court. His grandsons Shri Siddharth Ranka and Shri Sambhav Ranka are continuing the law tradition in the Ranka family.

The great personality, who by his accomplishments has enhanced the esteem and majesty of the institution, whose heartrending departure, we have assembled here to mourn, indeed has by his character, conduct and deeds, set for us landmarks to be achieved.

On behalf of my colleagues and on my own behalf, I share the sentiments expressed and the tributes paid to the departed soul by learned representatives of the Bar and offer our heartfelt condolences to the members of the bereaved family. I pray the Almighty to provide strength and courage to the bereaved family to bear the loss and grant eternal peace to the departed soul.

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May I now request you all to pay homage to the departed soul by standing in silence for two minutes.

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As a mark of respect, the Court shall not sit for rest of the day.

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A copy of the resolution be forwarded to the bereaved family.

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1. Words and phrases – Word ‘Accident’ under terms of insurance policy – Does not include death due to encephalitis malaria caused by mosquito bite

   At one end of the spectrum is the theory that an accident postulates a mishap or an untoward happening, something which is unexpected and unforeseen. This understanding of what is an accident indicates that something which arises in the natural course of things is not an accident. This is the basis for holding that a disease may not fall for classification as an accident, when it is caused by a bodily infirmity or a condition. A person who suffers from flu or a viral fever cannot say that it is an accident. Of course, there is an element of chance or probability in contracting any illness. Even when viral disease has proliferated in an area, every individual may not suffer from it. Getting a bout of flu or a viral illness may be a matter of chance. But a person who gets the flu cannot be described as having suffered an accident: the flu was transmitted in the natural course of things. To be bitten by a mosquito and be imbued with a malarial parasite does involve an element of chance. But the disease which is caused as a result of the insect bite in the natural course of events cannot be regarded as an accident. Particularly, when the disease is caused in an area which is malaria prone. On the other hand, there may well be instances where a bodily condition from which an individual suffers may be the direct consequence of an accident. A motor car accident may, for instance, result in bodily injuries, the consequence of which is death or disability which may fall within the cover of a policy of accident insurance. Hence, it has been postulated that where a disease is caused or transmitted in the natural course of events, it would not be covered by the definition of an accident. However, in a given case or circumstance, the affliction or bodily condition may be regarded as an accident where its cause or course of transmission is unexpected and unforeseen. The death of the insured in the present case was caused by encephalitis malaria. The claim under the policy is founded on the hypothesis that there is an element of uncertainty about whether or when a person would be the victim of a mosquito bite which is a carrier of a vector borne disease. In light of these statistics, the illness of encephalitis malaria through a mosquito bite cannot be considered as an accident. It was neither unexpected nor unforeseen. It was not a peril insured against in the policy of accident insurance. The interpretation placed on the terms of the insurance policy was manifestly incorrect and that the impugned order of the National Commission is unsustainable.

   The Branch Manager National Insurance Co. Ltd v. Smt. Mousumi Bhattacharjee & Ors, AIR 2019 Supreme Court 1570.

2. Dishonour of Cheque – Cheques issued in pursuance of agreement to sell – constitutes a legally enforceable debt – Complaint cannot be quashed: Negotiable Instruments Act, S. 138

   In present case, cheques were issued under and in pursuance of the agreement to sell. Though it is well settled that an agreement to sell does not create any interest in immovable property, it nonetheless constitutes a legally enforceable contract between the parties to it. A payment which is made in pursuance of such an agreement is hence a payment made in pursuance of a duly enforceable debt or liability for the purposes of Section 138. The question as to whether there was a dispute as contemplated in clause 4 of the agreement to sell which obviated the obligation of the purchaser to honour the cheque which was furnished in pursuance of the agreement to sell to the vendor, cannot be the subject matter of a proceeding u/s. 482 and is a matter to be determined on the basis of the evidence which may be adduced at the trial. The finding of the High Court that the cheques were not issued for creating any liability or debt, but ‘only’ for the payment of balance consideration and that in consequence, there was no legally enforceable debt or other liability cannot be acceptable. Hence, order of the High Court quashing complaint u/s. 138 of Negotiable Instrument Act holding that accused did not owe any money to complainant was erroneous and unsustainable.

   Ripudaman Singh v. Balkrishna, AIR 2019 Supreme Court 1625.

3. Deficiency in service – Delay in handling–over possession of flat – Refund of amount – Consumer Protection Act, Ss. 2(1)(g), (r)

   Purchaser entered into an agreement with builder for purchase of a flat. Builder obtained Occupancy Certificate after delay of more than 2 years. One side clauses in agreement constitute unfair trade practice and cannot bind purchaser. Purchaser justified in terminating agreement and cannot be compelled to accept possession. Purchaser entitled to refund of entire amount deposited by him with interest @ 10.7% p.a.

   Pioneer Urban Land & Infrastructure Ltd. v. Govindan Raghavan, AIR 2019 Supreme Court 1779.

4. Probate of will – Succession Act, 1925, S.222 – Evidence Act 1872, S.68

   Executors, son and daughter-in-law of testator. Will written by testator in his own handwriting. At time of execution of will, he was in good physical health and sound state of mind without any undue influence or coercion. No objection from near relatives. Signature of all attesting witnesses recognized and exhibited by one living witness. Executors entitled to grant of probate of Will.

   In Re: In the Goods of Dhirendra Mohan Das AIR 2019 Patna 94.

5. Secondary evidence – Photostat copy of pro-note produced as originals not Traceable – Evidence Act 1872, S.65 Comparison of signatures – Evidence Act 1872, S. 73

   Plaintiff stating that he had handed over original pro-note and receipt to his counsel but those were not found in his custody. Attesting witness stating that pro-note was attested on 6-5-2004, had seen original pro- note. Report regarding loss of original lodged on 21-3-2003. Story put forward by plaintiff that originals had lost from custody of his counsel, falsified. Failure of plaintiff to prove loss of original pro-note and receipt. Execution and attestation of same could not be read into evidence.

   Comparison of signatures from Photostat copy with standard signatures is impermissible.

   Gurdial Singh v. Dalveer Kaur AIR 2019 Punjab and Haryana 66.

6. Word “trespass” – Means unlawful interference with one’s person, property or rights

   A “trespass” is an unlawful interference with one’s person, property or rights. With reference to property, it is a wrongful invasion of another’s possession. If a person enters on the land of another under an authority given him by law, and while there, abuses the authority by an act which amounts to a trespass, he becomes a trespasser ab initio, and may be sued as if his original entry were unlawful. Instances of an entry under the authority of the law are the entry of a customer into a common inn, of a reversioner to see if waste has been done, or of a commoner to see his cattle.

   Indira v Arulmighu Apparswami Kovil and another AIR 2019 (NOC) 175(MAD).

7. Benami transaction – Burden lies on defendant to prove his claim – Benami Transaction (Prohibition) Act 1988, S.3 :

Plaintiff and defendant purchased parts of suit property from its co-owners, husband and wife respectively – Plea of defendant that as property was originally purchased by parents of wife as stridhan, husband is only trustee as per Dowry Prohibition Act, therefore, transaction between plaintiff and husband is prohibited under S.3 of Benami Transactions Act. No evidence by defendant to prove that property was purchased by parents of wife. Burden lies on defendant to prove his claim of benami transaction and not no plaintiff to disprove same – Plaintiff entitled to partition and separate possession.

Syriapushpam v. Sulochana. AIR 2019 Madras 143.

1. S. 4 : Charge of income-tax – Incentives by way of excise duty refund and sales tax – Encourage setting up of new industrial unit in area which was devastated by earthquake – Capital receipts not exigible to tax

   Relying on the decision of Special Bench in the case of Reliance Industries Ltd. (2004) 88 ITD 273 (SB) (Mum) (Trib), and the decision of co-ordinate Bench of the Tribunal in the case of assessee’s group concern, Welspun Steel Ltd. (ITA No. 7630/M/211 dated 18th December, 2015), Tribunal held that incentives by way of excise duty refund and sales tax incentives given to assessee to encourage setting up of new industrial unit in area which was devastated by earthquake were capital receipts not exigible to tax. (AYs. 2008-09, 2009-10, 2010-11, 2011-12)

   Welspun India Ltd. v. Dy. CIT (2019) 69 ITR 617 (Mum)(Trib.)

2. S. 4 : Charge of income- tax – Capital or revenue – Compensation received as a termination of business activity is held to be capital receipt [S.28(i)]

   Dismissing the appeal of the revenue, the Tribunal held that compensation received as a termination of business activity is held to be capital receipt. (AY. 2011-12)

   DCIT v. Rishabh Infrastructure (P.) Ltd. (2019) 176 ITD 150 (Raipur) (Trib.)

3. S. 4 : Charge of income-tax – Association of persons – Mutuality – Assessee has not claimed the benefit of mutuality – AO can- not suo motu assessed the part of income as mutuality [S.2 (31)(v)]

   The Tribunal held that the assessee AOP had carried on its activities on commercial basis without making any distinction between members or non-members and had never claimed any benefit under mutuality. Accordingly the AO was unjustified in treating assessee as mutual entity suo motu and treating the part of receipt as mutuality. (AY. 2008-09 to 2015-16)

   Film Nagar Cultural Center v. DCIT (2019) 175 ITD 712 (Hyd) (Trib.)

4. S. 10(37) : Capital gains – Agricultural land – Acquired by Government – Enhanced compensation including interest received would be eligible for exemption [S 45, Land Acquisition Act, 1894, S.28]

   Allowing the appeal of the assessee the Tribunal held that, where the Agricultural land is acquired by Government, enhanced compensation including interest received by the assessee is exempt from the tax. Accordingly TDS amount that was deducted on account of enhanced compensation was to be refunded. (AY. 2011-12)

   Baldev Singh v. ITO (2019) 176 ITD 1 (Delhi) (Trib.)

5. S.12AA : Registration – Trust or institution – Power of the CIT is to register or refuse to register the Trust but cannot qualify the Trust as ‘general public utility trust’ – Tribunal directed the trust to be registered under section 12AA of the Act without any qualification [S. 2(15), 11, 12, 13]

   The CIT(E) has passed an order under section 12AA of the Act directing the registration of the trust as ‘general public utility trust’. It was argued that CIT(E) was supposed to register the trust or refuse to register the trust but there was no necessity to qualify it as ‘general public utility trust’. The taxpayer argued that the exemption under sections 11, 12 and 13 would be available only after the AO was satisfied with the genuineness of the activities carried out. The AO would every year examine whether the activities of assessee fell within the ambit of section 2(15) or not. Thereby it was submitted that order of CIT(E) should be modified and trust should be registered without any qualification. The Tribunal held that provisions of section 12AA of the Act provided that if the CIT(E) is satisfied with the object of the trust and genuineness of the activities, an order is needed to be passed in writing accepting or rejecting the trust. Thus the power of the CIT is to register or refuse to register the Trust but cannot qualify the Trust as ‘general public utility trust’. The Tribunal held that it is the AO who has to examine every year the activities of the Trust whether they fall within the clauses of charitable activities. Thereby the Tribunal directed the trust to be registered under section 12AA of the Act without any qualification. Thus the appeal of taxpayer was allowed.

   Tata Community Initiatives Trust v. CIT(E) (2019) 69 ITR 96 (SN) (Delhi) (Trib.)

6. S. 12AA : Registration – Trust or institution – CIT(A) cannot question registration granted by CIT (E) [S. 251]

   Assessee was a Resident Welfare Association enjoying registration u/s. 12AA of the Act. The assessee being a trust registered under Section 12AA of the Act has claimed the entire income receipt as exempt u/s. 11 of the Act. The AO and CIT(A) has held that assessee has wrongly claimed registration u/s. 12AA of the Act and taxed the entire income receipt of the appellant. The Tribunal held that the CIT(E) is authorized to decide the allowability of registration u/s. 12AA of the Act and the CIT(A) has no authority to question the authority of CIT(E.) for granting registration u/s. 12AA of the Act.

   Srishti Resident Welfare Association v. ACIT (2019) 69 ITR 9 (SN)(Delhi)(Trib.)

7. S. 14A : Disallowance of expenditure – Exempt income – Stock-in-trade – Dividend received incidentally – No disallowance can be made [R.8D]

   Allowing the appeal of the assessee the Tribunal held that even though dominant purpose of acquiring shares is not relevant for purpose of invoking provisions under section 14A, yet shares held as stock-in-trade stand on a different pedestal in relation to shares that were acquired with an intention to acquire and retain controlling interest in investee company. Accordingly where assessee purchased shares as stock-in-trade for purpose of trading, mere fact that assessee incidentally received dividend on those shares as declared by investee company, no disallowance can be made. Ratio in Maxopp Investment Ltd v. CIT (2018) 402 ITR 640 (SC). (AY.2008-09)

   Nice Bombay Transport (P.) Ltd. v. ACIT (OSD) (2019) 175 ITD 684 (Delhi) (Trib.)

8. S. 14A : Disallowance of expenditure – Exempt income – No exempt income during assessment year – No disallowance can be made [R.8D]

   Dismissing the appeal of the revenue the Tribunal held that there was no exempt income earned by assessee during assessment year hence no disallowances can be made. (AY. 2014-15).

   ACIT v. Janak Global Resources (P.) Ltd. (2019) 175 ITD 365 (Chd.) (Trib.)

9. S. 36(1)(vii) : Bad debt – Deposits written off for premises taken on lease for business purposes was allowable as a deduction [S.36(2)]

   On appeal by the Department, the Tribunal observed that the premises for which the security deposits were given were used for business purposes and the Ld. AO, in the alternative, had opined the said expenditure to be capital in nature which demonstrated that, the genuineness of the same was not under doubt by the AO. Accordingly, it was held that as the expenditure did not bring into existence any new asset or benefit of enduring nature and expenses being incurred during the course of business, it was revenue in nature and allowable as a deduction to the assessee. (AY. 2011-12)

   ACIT v. Sodexo Food Solutions India P. Ltd. (2019) 69 ITR 119 (Mum.)( Trib.)

10. S. 40(b)(v) : Amounts not deductible – Partner – Remuneration – Book profit – Despite quantum not specified in partnership deed remuneration paid to partners is held to be allowable

    AO held that since quantum of remuneration had not been stated in partnership deed, which was mandatory condition remuneration paid to partner was disallowed by the AO which was confirmed by the CIT (A). On appeal the Tribunal held that S. 40(b)(v) provides is that in case payment of remuneration made to any working partner is in accordance with terms of partnership deed and does not exceed aggregate amount as laid down in subsequent portion of section, deduction is permissible. On fact partnership deed specifically provided that salary/remuneration was to be computed as per S. 40(b)(v) of the Act. Accordingly harmoniously interpreting provisions of S. 40(b)(v) as well as clauses of partnership deed, claim of remuneration paid to partners was to be allowable. (AY. 2014-15).

    Unitec Marketing Services. v. ACIT (2019) 175 ITD 90 (Mum) (Trib.)

11. S. 41(1) : Profits chargeable to tax – Remission or cessation of trading liability – Business of bottling-cum-manufacturing of soft drink – Advances/deposits towards security against bottles & cases – Written off – Addition cannot be made as remission or cessation of liability [S. 32]

    Allowing the appeal of the assessee the Tribunal held that amount received as advance or deposit was written off cannot be assessed as remission or cessation of liability. (AY. 2007-08)

    Poona Bottling Company (P.) Ltd. v. ACIT (2019) 175 ITD 634 (Pune) (Trib.)

12. S.44AD: Presumptive taxation – gross receipts – Assessee partner in firm receiving remuneration and interest – Interest and salary not business income – Assessee not eligible for presumptive taxation [S.28(v), 40(b)]

    The Tribunal held that while 28(v) taxes the interest & salary received from a partnership firm as business income to the extent the same is allowable as deduction u/s. 40(b) to the firm, this ‘per se’ would not translate such salary & interest to ‘gross receipts’/ ‘turnover’ (for the purpose of section 44AD) to the business of being partners in firm. In other words, it cannot be construed as gross receipts or turnover of business independently carried on by a partner. Dismissing the appeal of the assessee, the Tribunal upheld the order of the Ld. AO disapproving of application of section 44AD of the Act to the salary/interest income of the assessee. (AY. 2012-13)

    A. Anand Kumar v. ACIT (2019) 69 ITR 82 (SN) (Chennai) (Trib.)

13. S. 45 : Capital gains – Non refundable entry fee – Right which is not enforceable by law, cannot be regarded as a capital asset – Actionable claim right cannot be assessed as capital gains – In order to attract the provisions of capital gains it is axiomatic that there has to be an income derived by the assessee on transfer of a capital asset [S.2(47)]

    The AO treated the actionable claim right as capital asset and taxed the same upon exercise of right in March 31, 2014, being the date when set-off was allowed by DoT. CIT(A) upheld the order of the AO. On appeal the Tribunal held that set off of non-refundable entry fee paid by group company UW to DoT in 2008, against the fresh spectrum fee payable by assessee towards allocation of telecom licenses cannot be regarded as ‘transfer’ under S. 2(47) of the Act. Further Tribunal rejected Revenue’s stand that consequent to the set off, capital asset acquired by assessee was extinguished and thus there was a ‘transfer’ under S. 2(47) of the Act of a short term capital asset (being held for a period less than 36 months). Tribunal held that ‘right’ which is not enforceable by law, cannot be regarded as a ‘capital asset’, thus holds that assessee had not acquired any capital asset from UW under the Actionable Claim agreement since UW did not hold such asset at any point of time. Tribunal ruled in favour of the assessee. (AY. 2014-15)

    Telenor (India) Communications Pvt. Ltd. v. CIT (2019)197 TTJ 1 / 173 DTR 65 (Delhi) (Trib.)

14. S. 45: Capital gains – cash credits – Bogus accommodation entries – Penny stock – Sale of shares – Purchase by account payee cheque – Transaction was credited in DMAT account – Opportunity of cross examination was not given – Sale transaction cannot be treated as bogus merely on the basis of suspicious or surmises – Addition was deleted – Estimation of commission was also deleted [S. 10 (38), 68, 69C, 132(4)]

    On the basis of information from Investigation Wing the AO added amount of long-term capital gain as cash credits and also estimated commission. CIT(A) affirmed the order of the AO. On appeal by the assessee, allowing the claim of the assessee the Tribunal held that the shares were purchased by account payee cheque, transaction was credited in DMAT account, opportunity of cross-examination was not given. Accordingly the sale transaction cannot be treated as bogus merely on the basis of suspicious or surmises. Estimation of commission was also deleted. (AYs. 2013-14, 2015 -16)

    Meghraj Singh Shekhawat. v. DCIT (2019) 175 ITD 693 (Jaipur) (Trib.)

15. S. 45 : Capital gains – sub-tenancy right-capital asset – Gains on surrender is liable to capital gains tax and not income from other sources [S. 14, 55(2), 56]

    Assessee received certain sum as consideration for transferring his sub-tenancy rights. AO assessed the same as income from other sources. CIT (A) held that the amount is assessable as capital gains. On appeal by revenue, dismissing the appeal of the revenue the Tribunal held that like tenancy right, a sub-tenancy right is also a capital asset and liable to be chargeable as capital gains and not as income from other sources. (AY. 2014-15)

    ACIT v. Dr. Jayesh Keshrichand Shah. (2019) 175 ITD 751 (Mum.) (Trib.)

16. S. 45 : Capital gains – Retirement – Amount received as share value of assets of firm on his retirement are not liable to be taxed either as capital gains nor as business income [S. 2(14), 2(47), 28(v)]

    Allowing the appeal of the assessee the Tribunal held that amount received as share value of assets of firm on his retirement are not liable to be taxed either as capital gains nor as business income. (AY. 2012-13)

    James P. D’Silva. v. DCIT (2019) 175 ITD 533 (Mum.) (Trib.)

17. S.45 : Capital gains – Leasehold rights – Assessable as capital gains – Cannot be claimed as exempt on the ground that it was in respect of agricultural land – Market value on allotment of land [S.48, 50C]

    Assessee had received leasehold right in a plot of land by way of an additional compensation allotted by State Government in pursuance of compulsory acquisition of agricultural land long ago in year 1965, belonging to assessee’s late father. Assessee had sold said leasehold rights for a consideration of certain amount and, accordingly, computed long term capital gains on said transfer. During course of assessment proceedings, assessee had taken an alternative plea that since original compensation was exempt from tax because of nature of land acquired being agricultural land then additional compensation received in subsequent year would also be exempt from tax. AO rejected assessee’s plea and computed capital gains on transfer of leasehold rights in property.

    Tribunal held that It was a right of assessee in a land belonging to his father against which assessee was allotted leasehold right in a plot and said right could not be considered as agricultural land transferred during year therefore, consideration received on account of transfer of such leasehold right was assessable to tax under head ‘capital gain’. (AY. 2007-08)

    Pyaribai K. Jain v. Add. CIT (2019) 175 ITD 177 (Mum) (Trib.)

18. S. 45 : Capital gains – Long term capital gains – Lease – Entire consideration was paid when site was originally allotted in 2001 – Date of holding to be computed from the date of allotment and not from the date of absolute conveyance was made and entitle to deduction u/ s. 54F of the Act. [S. 2(42A, 2(47), 54, 54F]

    Assessee acquired a property from a building society under a lease-cum-sale agreement dated 22-3-2001. Entire consideration was paid when site was originally allotted in 2001. Absolute conveyance was made on 31-8-2014. Assessee sold the site and building on 3-12-2014 and claimed the sale as long term capital gains. AO treated the transaction as short term considering the date of conveyance i.e., 31-8-2014. On appeal the Tribunal held that date of holding to be computed from the date of allotment and not from the date of absolute conveyance was made on 31-8-2014. Followed CIT v. Dr. Shakuntala ITA No. 117 of 2006, dt. 19-9-2007 (Karn.) (HC) and CIT v. A Suresh Rao (2014) 223 Taxman 228 (Karn.)(HC). (AY. 2015-16)

    Bhatkal Ramarao Prakash. v. ITO (2019) 175 ITD 144 (Bang) (Trib.)

19. S. 45(2) : Capital gains – Conversion of a capital asset in to stock-in-trade – Date of conversion of capital asset into stock-in-trade has to be determined either on basis of entry passed in books of account of assessee or intention of assessee to exploit capital asset as stock-in-trade for its business purpose [S.45]

    Assessee applied for permission from local authority for plan sanction in year 1994. Local authority gave permission for construction of project in year 1998. Thereupon, assessee entered into development agreement with ‘B’ developers – Since construction of project was completed in assessment year 2008-09, capital gains arising therefrom was offered to tax in said year. Assessing Officer took a view that date on which assessee had filed his application to local authority was to be taken as date of conversion of capital asset into stock-in-trade. Tribunal held that for purpose of section 45(2), date of conversion of capital asset into stock- in-trade has to be determined either on basis of entry passed in books of account of assessee or intention of assessee to exploit capital asset as stock-in-trade for its business purpose. Since assessee had filed an application before local authority in year 1994 seeking permission for development of land, Assessing Officer was right in coming to conclusion that conversion of capital asset into stock-in-trade said to have been taken place in said year itself. So far as year of taxability of capital gain was concerned, since project was completed in all respects in assessment year 2008-09 and thereupon revenue from said project had been recognised, capital gain was payable in assessment year 2008-09. (AYs. 2001-02 to 2008-09)

    Puran Ratilal Mehta v. ACIT (2019) 175 ITD 190 (Mum.) (Trib.)

20. S. 45(4) : Capital gains – Distribution of capital asset – Retiring partner – The revaluation of asset being land held by the partnership firm which results into enhancement of value of asset and this enhanced amount credited in capital account of partners and when a retiring partner takes amount in his capital account including enhanced value of asset, it does not give rise to capital gains [S. 2(14) 45]

 There was difference of opinion amongst the members and the reference was made to third member. The two questions referred for consideration is as under:

”1. Whether on the facts and in the circumstances of case, where on revaluation of asset being land held by the partnership firm which resulted into enhancement of value of asset and this enhanced amount credited in capital account of partners and when a retiring partner takes amount in his capital account including enhanced value of asset, it gives rise to Capital Gain under section 45(4) r.w. Section 2(14) of the Income-tax Act.”

2. “Whether on the facts and in the circumstances of the case, is there any transfer of capital asset on dissolution of firm or “other wise” with in the meaning of Section 45(4) r.w. Section 2(14), in case the money equivalent is paid by partnership firm to the retiring partner and whether this money equivalent to enhances portion of the asset revalued constitutes capital asset for the purpose of Section 45(4) r.w. Section 2(14) of the Income-tax Act.”

Third member held that, the revaluation of asset being land held by the partnership firm which results into enhancement of value of asset and this enhanced amount credited in capital account of partners and when a retiring partner takes amount in his capital account including enhanced value of asset, it does not give rise to capital gains. Both the questions are answered in favour of the assessee. (ITA Nos. 3526 & 3527 MUM/2012, dt. 10-1-2019) (AYs. 2006-07 to 2007-08)

D. S. Corporation v. ITO (TM) (Mum) (Trib.) www.itatonline.org

21. S. 47 (iii) : Capital gains – Transaction not regarded as transfer – Gift – Transfer of shares made as gift without consideration are not taxable under provisions of capital gains – Income chargeable under capital gains tax can not be assessed as income from other sources [S.45]

    Where the company is permitted by its Memorandum/Articles of Association to make a gift, transfer of shares by way of gift are valid, permissible and genuine and there is no requirement of a gift deed. Such gifts are exempt as per S. 47(iii) of the Act. Followed Prakriya Pharmacem v. ITO (2016) 238 Taxman 185 (Guj) (HC). Income chargeable under capital gains tax can not be assessed as income from other sources. (AY. 2012-13)

    Jayneer infrapower & Multiventures (P.) Ltd. v. DCIT (2019) 176 ITD 15 (Mum) (Trib.)

22. S. 50 : Capital gains – Depreciable assets – Block of assets – Brought forward business loss and long term capital loss can be set off against short term capital gain computed under section 50 on sale of factory building being depreciable asset [S.72, 74 ]

    Dismissing the appeal of the revenue the Tribunal held that brought forward business loss and brought forward long term capital loss can be set off against short term capital gains arising as per section 50 on sale of factory building being a depreciable asset. Followed CIT v. Manali Investments [2013] /219 Taxman 113 (Mag.) (Bom) (HC). (AY. 2011-12)

    ITO v. Smart Sensors & Transducers Ltd. (2019) 176 ITD 104 (Mum.) (Trib.)

23. S. 50B : Capital gains – Slump sale – As per sale deed, possession of only land and building was handed over and there was no transfer of furniture, fixtures and other equipments – Transaction cannot be regarded as slump sale [S. 45, 50C ]

    In return of income, the assessee-company claimed slump sale of asset of the company at ₹ 2.25 crore. However, as per the stamp valuation authority, value was adopted at ₹ 4.18 crore. The Assessing Officer adopted the value under section 50C and made addition to assessee’s income. Which was confirmed by the CIT(A). Affirming the decision of lower authorities the Tribunal held that the sale deed did not say anything about furniture and fixtures and other gadgets and also as per the deed only vacant possession of building and had been handed over by assessee and no other articles machinery etc. Accordingly the sale cannot be considered as slump sale. (AY. 2010-11)

    Manish Films (P.) Ltd. v. ITO (2019) 175 ITD 121 (Indore) (Trib.)

24. S. 50C : Capital gains – Full value of consideration – Stamp valuation – AO is obliged to compute the capital gains by taking the valuation arrived at by the DVO in place of the actual consideration received by the assessee – The assessee is entitled to challenge the correctness of the DVO’s valuation before the CIT(A) and the Tribunal – The DVO has to be given an opportunity of hearing [S.45]

    S. 50C is a deeming provision and the AO is obliged to compute the capital gains by taking the valuation arrived at by the DVO in place of the actual consideration received by the assessee, the assessee is entitled to challenge the correctness of the DVO’s valuation before the CIT(A) and the Tribunal. The DVO has to be given an opportunity of hearing. (ITA No. 2107/ Ahd/17, dt. 1-4-2019). (AY. 2013-14)

    Lovy Ranka v. DCIT (Ahd) (Trib.), www.itatonline.org

25. S. 50C : Capital gains – Full value of consideration – stamp valuation – The adoption of stamp valuation as the sale consideration is not justified in absence of any evidence that the sale consideration was more than the value shown in the agreement – The AO has not brought on record that the property under sale not under various encumbrances and the assessee was having the absolute marketable title of the said property – Addition is held to be not valid [S.45]

    Tribunal held that the adoption of stamp valuation as the sale consideration is not justified in absence of any evidence that the sale consideration was more than the value shown in the agreement. The AO has not brought on record that the property under sale was not under various encumbrances and the assessee was having the absolute marketable title of the said property. Addition is held to be not valid. (ITA No. 2243/Mum/2015, dt. 8-3-2019) (AY. 2011-12)

    Sir Mohd. Yusuf Trust v. ACIT (Mum)(Trib.), www.itatonlie.org

26. S. 54F : Capital gains – Investment in a residential house – Belated construction or possession would not be a ground to deny claim of exemption – Two separate flats purchased by assessee had two separate entrances, treated as one residential house – Entitled to exemption [S.45]

    Dismissing the appeal of the revenue the Tribunal held that belated construction or possession would not be a ground to deny claim of exemption. Two separate flats purchased by assessee had two separate entrances, treated as one residential house. Entitled to exemption. (AY. 2013-14)

    ITO v. Saroj Rani Gupta (Smt.) (2019) 176 ITD 109 (Kol.) (Trib.)

27. S.54F : Capital gains – Investment in a residential house – Construction activities of the new house started before the date of sale of original asset – Beneficial provision and should be liberally interpreted – Entitle to exemption [S. 45]

    Allowing the appeal of the assessee, Tribunal held that an assessee who has purchased a house property is entitled to exemption u/s. 54F despite the fact that construction activities of the new house has started before the date of sale of the original asset. Beneficial provision and should be liberally interpreted. (Followed CIT v. Bharti Mishra (2014) 265 CTR 374 (Delhi) (HC) & CIT v. Kuldeep Singh (2014) 270 CTR 561 (Delhi)(HC) followed) (ITA No. 2630/Del/2015, dt. 30-4-2019)(AY. 2011-12)

    Kapil Kumar Agarwal v. DCIT (Delhi)(Trib), www.itatonline.org

28. S. 54F : Capital gains – Investment in a residential house – Capital Gains Scheme Account – Bank account was opened only for the purpose of depositing compensation received in his hand and the amount was utilised for purchase of plot of land and partial construction thereon – Entitle to exemption [S.45]

    Assessee received certain compensation on compulsory acquisition of his land by RIICO. In return of income, assessee offered said receipts to tax as long term capital gains and claimed exemption under section 54F on account of sale consideration deposited in Capital Gain Account Scheme 1988. AO held that the said account was not a Capital Gain Scheme Account and, therefore, denied exemption under section 54F of the Act. On appeal the Tribunal held that the entire compensation stood deposited in savings bank account maintained with HDFC bank which was opened specifically for purpose of depositing compensation received by assessee and withdrawals had been limited to extent of purchase of plot of land and partial construction. Therefore, assessee’s claim for deduction under section 54F could not have been denied on ground that amount of compensation received had not been deposited in Capital Gains Account. Further, fact that said bank account of assessee was attached by Department, there was no way assessee could have met deadline for constructing new house, being three years from date of transfer of original asset. Accordingly claim of deduction was allowed. (AY. 2009-10)

    Goverdhan Singh Shekhawat. v. ITO (2019) 175 ITD 272 (Jaipur) (Trib.)

29. S. 54F : Capital gains – Investment in a residential house – Investment in single house but bifurcated with two door numbers for ground and first floor – New house purchased in the joint name of wife and son entitled to deduction – Property need not be purchased by assessee in his own name for claiming exemption [S. 2 (47), 45]

    Assessee sold a house site in previous year and invested sale proceeds in another property and claimed exemption under section 54F. AO disallowed the claim on the ground that as per description of property purchased by assessee it consisted of two doors and he was of view that assessee purchased two house properties, hence could not be allowed deduction under section 54F. On appeal Tribunal held that entire property constituted single house but was bifurcated with two door numbers for ground and first floor with common entrance in ground floor only to earmark share of beneficiaries. Accordingly entitle to deduction. Tribunal also held that for claiming deduction of capital gains under section 54F, new residential house need not be purchased by assessee in his own name. Assessee purchased new house in joint names of himself, his wife and son, he would be entitled to benefit of deduction under section 54F. (AY. 2015-16)

    Bhatkal Ramarao Prakash. v. ITO (2019) 175 ITD 144 (Bang) (Trib.)

30. S. 56 : Income from other sources – Fair Market Value – DCF method – Closely held company – The fact that the company is loss-making does not mean that shares cannot be allotted at premium. The DCF method is a recognised method though it is not an exact science & can never be done with arithmetic precision. The fact that future projections of various factors made by applying hindsight view cannot be matched with actual performance does not mean that the DCF method is not correct [S. 56(2)(viib), Rule 11UA.]

    The fact that the company is loss-making does not mean that shares cannot be allotted at premium. The DCF method is a recognised method though it is not an exact science & can never be done with arithmetic precision. The fact that future projections of various factors made by applying hindsight view cannot be matched with actual performance does not mean that the DCF method is not correct. (ITA Nos. 6453 & 6454/Del/2018, dt. 15-3-2019) (AY. 2013-14 and 2014-15)

    India Today Online Pvt. Ltd. v. ITO (Delhi)(Trib), www.itatonline.org

31. S. 56 : Income from other sources – Share premium – For purpose of sub-rule (2) of Rule 11UA, an auditor cannot be accountant of assessee-company [S.44AB, 56(2) (viib), 288(2)]

    For purpose of sub-rule (2) of rule 11UA, an auditor cannot be accountant of assessee- company, therefore, where person who valued shares of assessee-company was none other than person who signed audit report under section 44AB. Assessing Officer was justified in ignoring valuation report submitted by assessee and determining fair market value on basis of NAV. Share of ₹ 10 was valued at ₹ 400 i.e. Premium of ₹ 390 was rejected. Tribunal also observed that share was valued at ₹ 100 per share as on 2-2-2012 and on 15-11-2013 at ₹ 400 per share. (AYs. 2014-15, 2015-16)

    Kottaram Agro Foods (P.) Ltd. v. ACIT (2019) 175 ITD 159 (SMC) (Bang) (Trib.)

32. S. 68: Cash credits – Share Capital – identity, creditworthiness and genuineness of the share applicants by producing the PAN details, bank account statements, audited financial statements and Income Tax acknowledgments and the investors have shown the source of source & personally appeared before the AO in response to s. 131 summons – Addition cannot be made as cash credits [S. 131, 133(6)]

    AO made contribution to share capital of the assessee as cash credits, which was affirmed by the CIT(A). On appeal by the assessee the allowing the appeal the Tribunal held that the assessee has discharged its onus to prove the identity, creditworthiness and genuineness of the share applicants by producing the PAN details, bank account statements, audited financial statements and Income Tax acknowledgments and the investors have shown the source of source & personally appeared before the AO in response to s. 131 summons. The judgement in PCIT v. NRA Iron & Steel (2019) 103 taxmann.com 48 (SC) is distinguished on facts stating that in the said decision the AO had made extensive enquiries and from that he had found that some of the investor companies were non-existent which is not the case in the assessee.) (ITA. No. 1494/ Kol/2017, dt. 5-4-2019)(AY. 2012-13)

    Baba Bhootnath Trade & Commerce Ltd. v. ITO (Kol.)(Trib), www.itatonline.org

33. S. 68: Cash credits – Bank statement cannot be considered as books maintained by assessee – Addition is held to be not valid.

    Allowing the appeal of the assessee the Tribunal held that,Bank statement cannot be considered as books maintained by assessee. According the addition as cash credit was deleted. Followed CIT v. Bhaicahnd H. Gandhi (1983) 143 ITR 67 (Bom) (HC), Mehul Vyas v. ITO (2017) 164 ITD 296 (Mum) (Trib). (AY 2008-09)

    Satish Kumar v ITO (2019) 198 TTJ 114/ 175 DTR 121 (Asr) (Trib)

34. S.68: cash credits – Bank statement is not books of account Sale of shares – Addition on the basis of bank statement treating the statement as books of account is held to be not valid – Natural justice – Statement of third parties cannot be relied upon without giving an opportunity of cross examination. [S.2(12A, 44AA, 45, 69, 69A, 143(3)]

    AO assessed the long term capital gains on sale of shares as cash credit u/s 68 of the Act and alleged commission u/s 69C of the Act on the basis of bank statement issued by the Bank which was confirmed by the CIT(A). On appeal the Tribunal held that addition on the basis of bank statement treating the statement as books of account is held to be not valid. Tribunal also held that statement of third parties cannot be relied upon without giving an opportunity of cross examination. Accordingly addition was deleted. Referred. Sheraton Apparels v. ACIT (2002) 256 ITR 20 (Bom) (HC) (AY. 2015-16)

    Amitabh Bansal. v. ITO (2019) 175 ITD 401 (Delhi) (Trib.)

35. S. 68 : Cash credits – Bogus Share Capital – Merely presenting of documents & making payment through bank or appearance by director before the AO & admitting fact of share application made is in itself not sufficient to justify the genuineness of the transaction – It is against human probability that anyone will invest and pay share premium in a company without net worth or future prospectus – All applicants with common address are being controlled remotely by one person. These applicants are all paper companies not having sufficient worth and created for providing entries of share application money or share capital or loans by way of accommodation entries – Credit worthiness is not established – Addition is held to be justified.

    Allowing the appeal of the revenue the Tribunal held that merely presenting of documents & making payment through bank or appearance by director before the AO & admitting fact of share application made is in itself not sufficient to justify the genuineness of the transaction. It is against human probability that anyone will invest and pay share premium in a company without net worth or future prospectus. All applicants with common address are being controlled remotely by one person. These applicants are all paper companies not having sufficient worth and created for providing entries of share application money or share capital or loans by way of accommodation entries. Creditworthiness is not established. Addition is held to be justified. (Followed PCIT v. NDR Promoters Pvt. Ltd. (2019) 410 ITR 379 (Delhi) (HC) & PCIT v. NRA Iron & Steel Pvt. Ltd. 2019) 103 Taxmann.com 48 (SC) followed). (ITA No. 4778/Del/2013, dt. 8-3-2019)(AY. 2006-07).

    ITO v. Synergy Finlease Pvt. Ltd. (Delhi)(Trib.), www.itatonline.org

36. S. 80IB : Industrial undertakings – Ownership of property is not a condition for claiming deduction

    On appeal by the Department, the Tribunal relying on the decision of the Hon’ble Gujarat High Court in the case of CIT v. Radha Developers (2012) 341 ITR 403 (Guj) (HC) held that ownership of land was not a prerequisite for claiming deduction u/s. 80IB of the Act and therefore, deduction was allowable. (AY. 2007-08, 2010-11)

    DCIT v. AG8 Ventures Ltd. (2019) 69 ITR 35 (SN) (Indore) (Trib.)

37. S. 80IB(10) : Housing projects – Obtaining occupation certificate is not a mandatory requirement in order to ascertain whether building was completed or not for purpose of deduction under section 80-IB(10)

    Tribunal held that the occupation certificate is not a mandatory requirement in order to ascertain whether building was completed or not for purpose of deduction under section 80-IB(10). (AYs. 2001-02 to 2008-09)

    Puran Ratilal Mehta v. ACIT (2019) 175 ITD 190 (Mum.) (Trib)

38. S. 80IC : Special category States – Manufacture – Wooden Sleepers and planks made into planks – Amounts to manufacture – Entitled to deduction [S. 2(29BA)]

    Tribunal held that original products used by the assessee were wooden planks, evafoam, thermocol, adhesive tape, pneumatic, stapler pins, and nails. The final product obtained in the process by the assessee was wooden crates which were a distinct and separate article different from all the products that went into the manufacture and was recognised as a distinct product by the Central Excise and value added tax classification which had assigned the product a specific code and serial number respectively in the Central Excise and value added tax Schedules. In terms of the Uttarakhand Value Added tax Act, 2005, wooden crates were recognized as a distinct product and item. Similarly the assessee had been registered as manufacturer with the District Industries Centre and registered as a factory under the Factories Act. The assessee had been granted exemption from excise duty which was only granted to manufacturing units. The term as defined by section 2(29BA) would include any activity that results in the creation of an article or object that was new and distinct from the raw material that went into its manufacture and having a different name, character, use and/ or integral structure. The wooden crates were completely distinct from the planks, nails, fevicol, foam etc. that were used to make them and they had a use of their own. The change brought in the wooden planks by hand by the labourers using small cutters would amount to manufacture of a product, the wooden crates, by the assessee. Further when four Departments of the Government had considered the assessee a manufacturing unit, another Department of the Government could not take a contrary view or a view inconsistent with the view taken by the other Departments of the Government. (AY. 2012-13)

    ITO v. Rudra Woodpack P. Ltd. (2019) 70 ITR 169 (Delhi) (Trib)

39. S. 90 : Double taxation relief – Interest – Royalty – Levy of surcharge and 3% education cess on tax computed – Held to be not valid – DTAA – India – UAE [Art. 2(1), 11, 12 ]

    Allowing the appeal of the assessee the Tribunal held that Article 2(1) of the India-UAE DTAA provides that the taxes covered shall include tax and surcharge thereon. Education cess is nothing but an additional surcharge & is also covered by the definition of taxes. The Tribunal held that the provisions of India-UAE Double Taxation Avoidance Agreement are pari materia with the provisions of India-Singapore DTAA, which was subject matter of consideration in DIC Asia Pacific Pte Ltd v. ADIT (2012) 18 ITR 358 (Kol) (Trib). Accordingly the appeal of the assessee is allowed. Tribunal also referred following cases in support, Capgemini SA v. Dy.CIT (IT)-2 (1) [13-7-2016] [2016] 72 taxmann.com 58 (Mum.) (Trib.), Dy. DIT v. J. P. Morgan Securities Asia (P.) Ltd. [23-10-2013] [2014] 42 taxmann.com 33 (Mum.) (Trib.), Dy.DIT (IT)-1(1) v. BOC Group Ltd. [30-11-2015] [2015] 64 taxmann.com 386 (Kol)(Trib.), Everest Industries Ltd. v. JCIT [31-1- 2018], [2018] 90 taxmann.com 330 (Mum)(Trib.), Soregam SA v. Dy.DIT(IT) [30-11-2018] [2019] 101 taxmann.com 94 (Delhi) (Trib.), and Sunil V. Motiani v. ITO (IT)(1) [27-02-2013] [2013] 33 taxmann.com 252 (Mum) (Trib.). (ITA No. 2043/ Hyd/18, dt. 29.03.2019)(AY. 2012-13)

    R. A. K. Ceramics v. DCIT(2019) 176 DTR 345/ 199 TTJ 273 (Hyd.)(Trib.), www.itatonline.org

40. S. 92C Transfer pricing – It is mandatory for the AO to determine the arm’s length price (ALP) of the international transactions by following one of the prescribed methods – He is not entitled to follow any other method or to resort to estimation – The failure
    – to follow one of the prescribed methods makes the entire transfer pricing adjustment unsustainable in law – The legal infirmity cannot be cured by restoring the issue to the TPO – The TPO cannot be allowed another innings to rectify the mistake [S.254(1)]

    Tribunal held that, it is mandatory for the AO to determine the arm’s length price (ALP) of the international transactions by following one of the prescribed methods. He is not entitled to follow any other method or to resort to estimation. The failure to follow one of the prescribed methods makes the entire transfer pricing adjustment unsustainable in law. The legal infirmity cannot be cured by restoring the issue to the TPO. The TPO cannot be allowed another innings to rectify the mistake. (ITA No. 1182/MUM/2017, dt. 16-1-2019)(AY. 2012-13).

    CLSA India Private Ltd v. DCIT (Mum.)(Trib.), www.itatonline.org

41. S. 115A : Foreign companies – Tax – Royalty – In terms of technology license agreement entered into by assessee an Italy based company with its Indian AE effective from 1-4-2008, being covered by sub- clause (AA) of section 115A(1)(b), rate of tax on royalty received by assessee will be 10.50 per cent – DTAA – India-Italy [S.90(2), 195A]

    Tribunal held that rate of tax on Royalty on three wheelers received by assessee an Italy based company from its Indian AE, pursuant to technology licence agreement entered between assessee and its AE in India, effective from 1-4-2008, being covered by sub-clause (AA) of section 115A(1)(b), will be 10.50 per cent.

    Piaggio & C.S.P.A. v. DIT (2019) 175 ITD 304 (Pune) (Trib.)

42. S.115JB: Book profit – Not following the Accounting Standard – AO Must modify the book profit as per Accounting Standards as per provisions of Companies Act

    Dismissing the appeal of the assessee the Tribunal held that AO must modify book profit for computation of MAT in case company has not followed Accounting Standards as per provisions of Companies Act. (AY. 2013-14)

    Gati Ltd. v. ACIT (2019) 175 ITD 310 (Hyd.) (Trib.)

43. S. 133A : Power of survey – Sworn statement – Addition cannot be made only on the basis of statement of managing director recorded u/s. 131 during survey, without any corroborative evidence. [S. 131, 132(4), 143(3), Evidence Act, 1878, S. 18]

    Dismissing the appeal of the revenue the Court held that addition cannot be made only on the basis of statement of managing director recorded u/s 131 during survey, without any corroborative evidence. Assessing Officer could not make additions to income of assessee-company only on basis of sworn statement of its managing director recorded under section 131 during course of survey without support of any corroborative evidence. Circular CBDT Circular in F. No. 286/98/2013-IT (Inv.II) dated 18-12-2014. (AY. 2014 -15)

    ITO v. Toms Enterprises (2019) 175 ITD 607 (Cochin) (Trib.)

44. S. 153 : Assessment – Limitation – Order of assessment passed within time but dispatched after expiry of time limit, Assessment held to be barred by limitation [S. 153(2A)

    The Assessment Order was passed on December 30, 2011 (i.e. within the time limit of passing order), however, the same was dispatched on January 09, 2012 (i.e., after the time limit of passing order). The assessee contended that the order passed by the AO is barred by limitation as the same was dispatched after the time limit. The Ld. CIT(A) held that the order of assessment was within time. On an appeal to Tribunal, the Tribunal held that the date of dispatch of the order of assessment was to be construed as the date of the order of assessment and therefore, the order of assessment was held to be barred by limitation. (AYs. 2001-02 to 2003-04).

    Globe Transport Corporation v. ACIT (2019) 69 ITR 69 (SN) (Bang.)(Trib.)

45. S. 194C : Deduction at source – Contractors – Payments to artists – Participation in reality show – Payments made do not fall with in the ambit of S. 194J as professional fees – [S. 194J, 201(1)] 

    Allowing the appeal of the assessee the Tribunal held that payments to various artists like singers, musicians etc who participated in reality shows hosted by it as guests or judges, tax was required to be deducted rightly deducted tax at source under S. 194C and provisions of S.194J is not applicable hence ley of interest is not valid. (AY. 2010-11)

    Malayalam Communications Ltd. v. ITO (2019) 175 ITD 433 (Cochin) (Trib.)

46. S. 201: Deduction at source – Shortfall in deposit of TDS – Adjusted against the excess deposit in earlier years – No interest u/s. 201(1A) – Net result after adjustment is excess deposit of TDS by assessee [S. 201(IA), 245]

    Assessee made ad hoc payment of TDS on estimated basis. On finalisation of bills of the contractors and sub-contractors, the actual TDS liability was determined. Thus, there was shortfall in payment of TDS for some years and excess deposit for some years. The AO did not adjust the excess deposit against the shortfall and raised the demand including interest u/s. 201(1A) of the Act. The Tribunal held that the stand taken by revenue was contrary to the communication issued by the CPC (TDS) which stated that excess deposit of TDS can be adjusted against the shortfall. The Tribunal further relied on Section 245 of the Act and held that the assessee was entitled for adjustment of the excess deposit of TDS made in earlier year against the TDS payable for subsequent years and directed the AO to recompute the amount payable/refundable to the assessee.

    Steel Authority of India Ltd v. DCIT (TDS) (2019) 69 ITR 88 (SN) (Kol.)(Trib.)

47. S. 201 : Deduction at source – Failure to deduct or pay – Date of tendering of cheque for payment of Government dues could be deemed to be date of payment of tax – Delay in remittance of said amount to Government account by Bank, no interest can be levied [S. 201(IA)]

    Tribunal held that for purpose of levy of interest under section 201(1A) for late deposit of TDS, date of tendering of cheque for payment of Government dues could be deemed to be date of payment of tax and where bank causes delay in remittance of said amount to Government account, no interest can be levied under section 201(1A) from assessee. Followed CIT v. K. Kalpana Saraswathi v. P. S. S. Somasundram Chettiar 1980 AIR 512 (SC) CBDT Circular No. 261 [F. No. 385/61/79-IT (B)], dated 8-8-1979, date of tendering of cheque for payment of Government dues would be deemed to be the date of payment of such taxes. The aforesaid CBDT circular was applicable to all Government dues, and made no distinction whether the payment was by way of TDS, advance tax, self- assessment tax etc. (AY. 2008-09)

    Oil and Natural Gas Corporation Ltd. v. DCIT (2019) 176 ITD 124 (Mum.) (Trib.)

48. S. 201 : Deduction at source – Failure to deduct or pay – limitation – Non-residents – Additional grounds – Royalty – Fee for technical services – In cases of payments made to non-residents, an order passed after one year from the end of the financial year in which the proceedings were initiated is void ab initio and liable to be quashed [S. 9(1)(vi), 9(1)(vii), 201(1) 201(3) 201(4), 254(1)]

    Appellate Tribunal admitted additional grounds on limitation. Referred Special Bench Mahindra & Mahindra Ltd v. Dy. CIT (2009) 122 TTJ 577/(2010) 122 ITD 216 (SB)(Mum) (Trib) affirmed in DIT(IT) v. Mahindra & Mahindra Ltd. (2014) 365 ITR 560 (Bom) (HC). The AO passed the order dt. 6-2-2014 where as the order should have been passed on or before 31-03 2013 i.e. with in one year from the end of the financial year in which proceedings u/s. 201 are initiated. Tribunal held that since, the order is beyond the period of limitation the same is void ab initio and subsequent proceedings arising there form are vitiated. The departmental representative argued that the time limit specified in S. 201(3) & 201(4) for passing orders does not apply to cases where payments are made to non-residents. Allowing the appeal and additional grounds the Tribunal held that in cases of payments made to non-residents also an order passed after one year from the end of the financial year in which the proceedings were initiated is void ab initio and liable to be quashed. As the order passed by the AO u/s. 201(1) and 201(IA) is held to be void-ab initio, the subsequent proceedings arising therefrom are vitiated and the appeals of the revenue are dismissed. (ITA Nos. 1669, 1670 & 1671/PUN/2014, dt. 5-4-2019) (AYs. 2008-09, 2009-10, 2010-11)

    Atlas Copco (India) Ltd v. DCIT (Pune)(Trib.), www.itatonline.org

49. S. 251 : Appeal – Commissioner (Appeals) – Powers – CIT(A) is not empowered to dismiss appeal for non-prosecution and is obliged to dispose of appeal on merits by passing a speaking order [S.250]

    Tribunal held that when an appeal is filed, Commissioner (Appeals) is duty bound to dispose of appeal through a speaking order on merits on all points which arose for determination in appellate proceedings, including on all grounds of appeal. Accordingly CIT(A) is not empowered to dismiss appeal for non-prosecution and is obliged to dispose of appeal on merits. Matter remanded. Followed CIT v. Premkumar Arjundas Luthra (HUF) (2016) 240 taxman 133 (Bom)(HC) (AY. 2011-12)

    Swati Pawa (Ms.) v DCIT (2019) 175 ITD 622 (Delhi) (Trib.)

50. S. 254(2): Appellate Tribunal – Rectification of mistake apparent from the record – Penalty – Though the High Court observed that Tribunal’s decision of reducing the penalty as a “way to bypass the minimum limit” and the Tribunal was in error in granting the relief, the same does not constitute a “mistake apparent from the record” so as to enable the Tribunal to revisit its decision [S.271(1)(c)]

    Dismissing the miscellaneous application of the Revenue the Tribunal held that though the High Court faulted the Tribunal’s decision of reducing the penalty as a “way to bypass the minimum limit” and the Tribunal was in error in granting the relief, the same does not constitute a “mistake apparent from the record” so as to enable the Tribunal to revisit its decision. (MA No. 166/Ahd/18 Arising out of ITA No.: 210/ Ahd/15, dt. 3-4-2019)(AY. 2010-11)

    ITO v. Devendra J. Kothari(2019) 176 DTR 289/ 199 TTJ 1 (Ahd.)(Trib.), www.itatonline.org

51. S. 254(2) : Appellate Tribunal – Rectification of mistake apparent from the record – Strictures – The insinuation of the Dept that ITAT passes order in a state of oblivion displays a totally irresponsible and cavalier approach on the cusp of contempt and deserving exemplary cost to purge the same. Referring in a deriding manner that the ITAT started with the grounds of appeal, displays the naiveté of revenue authority purporting to be critical examiner of ITAT verdict, which is uncalled for – I express deep anguish at this approach of the department and hope that revenue will disband this cavalier and naïve approach while insinuating about the functioning of the ITAT without verifying their record [S. 147]

    The Tribunal held that the insinuation of the Dept that ITAT passes order in a state of oblivion displays a totally irresponsible and cavalier approach on the cusp of contempt and deserving exemplary cost to purge the same. Referring in a deriding manner that the ITAT started with the grounds of appeal, displays the naiveté of revenue authority purporting to be critical examiner of ITAT verdict, which is uncalled for. I express deep anguish at this approach of the department and hope that revenue will disband this cavalier and naïve approach while insinuating about the functioning of the ITAT without verifying their record. (M.A. Nos. 605 & 606/Mum/2018, dt. 22-2-2019) (AY. 2003-04 & 2004-05)

    ITO v. Rayoman Carriers Pvt. Ltd.(Mum.)(Trib.), www.itatonline.org

52. S. 254(2): Appellate Tribunal – Rectification of mistake apparent from the record – Employees of statutory corporations cannot be regarded as employees of State or Central Government – Failure to deduct tax at source under bona fide belief – Held not liable to pay penalty – AO filed miscellaneous application – Held miscellaneous application is not maintainable – Tribunal cannot recall its previous order in an attempt to rewrite the same [S.10(10AA) 192, 201(1), 201(IA)]

    On appeal filed before the Tribunal, the assessee contended that the provisions of section 201(1) and 201(1A) were not attracted because the non deduction of tax at source by KPTCL was under the bona fide belief that it was not obliged to deduct tax at source on payments in excess of ₹ 3 lakh towards unutilised leave period as it believed that its employees were employees of State Government. The Tribunal held that the obligation of the assessee was only to make a bona fide estimate of the salary. In the facts and circumstance of the instant case, the assessee had made such an estimate. The assessee’s obligation under section 192 was, therefore, properly discharged and hence proceedings under section 201(1) and 201(1A) were quashed. Revenue filed miscellaneous petition against the impugned order of the Tribunal quashing the orders under sections 201(1) and 201(1A). The Tribunal in its order referred to several decisions wherein it has been held that estimate of income under the salary, if it is bona fide, then the payer cannot be treated as an ‘assessee-in-default’. Therefore, there is no merit in allegations in the miscellaneous petition. Besides the above, there is also an allegation that the revenue was prevented from assisting the Bench by differentiating the cases relied by the assessee on the contention of the assessee that it was a state. As already said, the Tribunal has already accepted the contention of the revenue that the assessee is not a State. The allegations that the revenue was prevented from arguing is, therefore, not correct for the reason the argument was accepted by the Tribunal. (AY. 2013-14)

    ITO (OSD) (TDS) v. Karnataka Power Transmission Corpn. Ltd. (2019) 175 ITD 130 (Bang.) (Trib.)

53. S. 263 : Commissioner – Revision of orders prejudicial to revenue – Reassessment – Invalid reassessment order cannot be revised – Revision u/s. 263 cannot be made if reassessment u/s. 147 was invalid, as reassessment was made without issue of notice u/s. 143(2) [S.143(2), 147]

    Original return of Income was filed on 20-10-2007 at NIL income. The notice under section 148 of the Income-tax Act, was issued on 25-3-2014 after recording the reasons and taking prior approval from the competent authorities. The assessee in response to the statutory notice vide letter dated 10-4-2014 submitting therein that the original return filed may please be treated as return filed in response to the notice under section 148 of the I.T. Act and also requested to provide reasons recorded, which were duly provided to it. The assessee also filed its objections which were disposed off. The AO issued statutory notice which were complied by the assessee and filed details as called for. The AO after discussing the case with the assessee, accepted the returned income and completed the reassessment order under section 147/143(3) of the I.T. Act, 1961, dated 30-6-2014. The Ld. Pr. CIT also noted that as there is no statutory notice under section 143(2) prescribed in the Act and only non-statutory notice is prescribed, the purpose of which is to intimate the assessee that the case has been selected for scrutiny and the notices issued on dated 11-6-2014 and 19-6-2014 clearly proves that the case of the assessee has been selected for scrutiny, such show cause notices are nothing but notice under section 143(2). of the I.T. Act. It is also noted by the Ld. Pr. CIT that even though no formal notice under section 143(2) was issued by the AO, in the letters dated 11-6-2014 and 19-6-2014 it was specifically mentioned that in the absence of the requisite details the assessment would be completed under section 144 of the I.T. Act. The AO has not examined this issue in the light of seized material. Therefore, re-assessment order was found to be erroneous in so far as prejudicial to the interests of the Revenue because AO failed to look into the seized material. The Order was set aside and restored to the file of AO with a direction to examine the seized material and confront the same to the assessee and pass the order in accordance with law. On appeal the Tribunal held that as notice under section 143(2) was not issued, the reassessment order is invalid, bad in law and non-est and an invalid reassessment order cannot be revised under section 263 of the Act. (AYs. 2007-08, 2009-10)

    Supersonic Technologies Pvt. Ltd. v. PCIT (2019) 175 DTR 30/ 69 ITR 585 / 197 TTJ 889 (Delhi) (Trib.)

    Superior Buildwell P. Ltd v. PCIT (2019) 175 DTR 30/ 69 ITR 585 / 197 TTJ 889 (Delhi)(Trib)

54. S. 263 : Commissioner – Revision of orders prejudicial to revenue – Reassessment – Merger – Since the second round of reassessment proceedings were on the same set of facts as the first round, the same were dropped by the AO and thus the first reassessment order stood merged with the second – Thus, the said order cannot be revised under Section 263 of the Act since only the valid reassessment order can be revised [S.143(1), 147, 148 ]

    Assessee filed return of income and was processed under Section 143(1) of the Act. Subsequently the case was reopened under Section 147 on the allegation of accommodation entry taken. The AO after due enquiry accepted the returned income vide reassessment order. The assessee’s case was again reopened under Section 147 based on the same reasons for reopening as issued during first reassessment proceedings. Subsequently, the AO issued order dropping the said reassessment proceedings. The Principal CIT initiated revision proceedings under Section 263. The Tribunal held that the since the second round of reassessment proceedings were on the same set of facts as the first round, the same were dropped by the AO and thus the first reassessment order stood merged with the second. Thus, the said order cannot be revised under Section 263 of the Act since only the valid reassessment order can be revised. (AY. 2009-10)

    Sri Balaji Forgings (P) Ltd. v. PCIT (2019) 175 DTR 57 / 197 TTJ 915 (Delhi.)(Trib.)

55. S. 263 : Commissioner – Revision of orders prejudicial to revenue – unsold flats held as stock in trade – Notional value – In view of contrary decisions of High Court, issue as to whether notional income on unsold flats held by assessee–builder as stock-in-trade in its books of account should be assessed as income from house property is a debatable issue, and hence order of Assessing Officer for not bringing unsold flats to tax at notional letting value under head ‘Income from Other Sources’ which was one of possible views – Revision is not valid [S.22, 23 28(i)]

    Allowing the appeal of the assessee the Tribunal held that In view of contrary decisions of High Court, issue as to whether notional income on unsold flat held by assessee-builder as stock-in- trade in its books of account should be assessed as income from house property is a debatable issue, and hence order of Assessing Officer for not bringing unsold flats to tax at notional letting value under head ‘Income from Other Sources’ which was one of possible views- Revision is not valid. CIT v. Ansal Housing Finance & Leasing co. Ltd. (2013) 354 ITR 180 (Delhi) (HC). Neha Builders (P.) Ltd. (2007) 164 Taxman 342 (Guj) (HC) (AY. 2013-14)

    S.D. Corporation (P.) Ltd. v. PCIT (2019) 175 ITD 164 (Mum) (Trib.)

56. S. 271AAB : Penalty – Search initiated on or after 1st July, 2012 – Levy of penalty is not mandatory – Merely on the basis of surrender the levy of penalty is not justified. As regards cash found in the Course of search which was not disclosed in the books of account, levy of penalty was confirmed

    Levy of penalty under S. 271AAB is not based on addition made and investigation/enquiry conducted during the course of assessment proceedings, rather it is based on search conducted on the assessee. Even if it is assumed that primary charge of undisclosed income has to be read along with ancillary conditions, where the AO has not stated the specified charge at the time of initiation of penalty proceedings, such uncertain charge at the stage of initiation of penalty proceedings can be made good with a clear cut charge in the penalty order. Merely on the basis of surrender the levy of penalty is not justified. As regards cash found in the course of search which was not disclosed in the books of account, levy of penalty was confirmed. (AY. 2014-15)

    Rambhajo’s v ACIT (2019) 198 TTJ 142/ 175 DTR 161 (Jaipur) (Trib)

57. S. 271B : Penalty – Failure to get accounts audited – Accommodation entries – Gross amount received to be considered for computing monetary limits of ₹ 40 lakh and not the commission earned by him – levy of penalty is held to be justified [S. 44AB]

Dismissing the appeal of the assessee the Tribunal held that assessee, engaged in providing accommodation entries to entry seekers on commission basis, gross amount received had to be taken into consideration for computing monetary limit of ₹ 40 lakhs as specified under section 44AB and not commission income earned by him. Accordingly the levy of penalty is held to be justified. (AY. 2002-03, 2006-07, 2007-08)

Mukesh Choksi v. ACIT (OSD) (2019) 175 ITD 394 (Mum) (Trib.)   

1. S. 4 : Charge of Income-tax – Capital or Revenue – Capital subsidy in terms of shareholders’ agreement from foreign company for investment in share capital of joint venture company — Capital receipt not liable to tax as Revenue receipt [S. 28(i)]

   Allowing the appeal of the assessee the Court held that capital subsidy in terms of shareholders’ agreement from foreign company for investment in share capital of joint venture company is capital receipt not liable to tax as Revenue receipt. (AY. 2002-03) (TCA. No 159 of 2009 dated 6-3-2019)

   Sundaram Finance Ltd. v. ACIT (2019) 413 ITR 298 (Mad.)(HC)

2. S. 10(23C) : Educational institution – Receipt exceeded more than 1 crore – Purchase of land for further extension of school building – Eligible for exemption [S. 10(23C)(vi)]

   Assessee educational society filed application for grant of registration under section 10(23C)(vi). CIT(E) denied the exemption on ground that no evidence that assessee had utilised its income for educational purpose was adduced. Tribunal held that the assessee had utilised its income for purchase of land for further extension of school building, thus, assessee was held to be covered within provisions of section 10(23C)(vi) of the Act. On appeal High Court up held the order of Tribunal. (AY. 2012-13 to 2015-16)

   CIT (E) v. Managing Committee, Arya High School, Mausa, Punjab (2019)

   Editorial : SLP of revenue is dismissed, CIT (E) v. Managing Committee, Arya High School, Mausa, Punjab (2019) 261 Taxman 450 (SC)

3. S. 10A : Free trade zone – Re computation of a claim already made is permissible- Language of S. 80A(5) does not restrict the correction or modification of claim before the AO. [S. 80A(5)]

   The assessee claimed exemption u/s. 10A in respect of its income earned from the business of providing outsourcing services. In the course of assessment proceedings, the assessee sought to revise the claim of exemption by making certain other allowances and disallowances. The AO refused to take cognizance of such claim on the ground that under section 80A(5), no new claims can be entertained, which were not made in the original return of income. Dismissing the appeal of the Revenue the Cout held that in the present case was that of recomputation of a claim already made. It was not a new claim at all. Therefore, the department ought to have taken cognizance of the same, especially considering the fact that it did not dispute the merits of such claim. (AY. 2009-10)

   PCIT v. Oracle (OFSS) BPO Services Ltd. (2019) 174 DTR 353/307 CTR 97/102 taxmann.com 396 (Delhi)(HC)

4. S. 10B : Export oriented undertakings – Deemed exports – Export through third parties – Entitled to deduction

   Allowing the appeal of the assessee High Court held that, deemed export of goods through parties is entitle to deduction. Followed PCIT v. International Stones India (P) Ltd (2018) 95 taxmann.com 287 (Karn) (HC) (AY. 2008-09 to 2011-12)

   Metal Clousers (P.) Ltd v. Dy.CIT (2019) 102 taxmann.com 71 / 261 Taxman 162 (Karn) (HC)

   Editorial : SLP of revenue is dismissed Dy. CIT v. Metal Closures (P.) Ltd. (2019) 261 Taxman 161 (SC)

5. S. 11 : Property held for charitable purposes – Application of income – Excess of expenditure of earlier years adjusted against income of relevant accounting year, amounts to application of income —
   adjustment will have to be excluded from the income of the trust under section 11(1)(a) [S.11(1) (a), 12]

   Dismissing the appeal of the Revenue the Court held that excess of expenditure of earlier years adjusted against income of relevant accounting year, amounts to application of income. Accordingly adjustment will have to be excluded from the income of the trust under section 11(1)(a) (AY. 2011-12)

   CIT v. Chalassani Education Trust. (2019) 412 ITR 343 (Karn)(HC)

6. S. 12AA : Procedure for registration – Trust or institution- Violation of S. 13 is not a ground for cancellation of registration. [S. 13]

   Where the assessee Trust had entered into a transaction with a person referred to in section 13 and therefore there was a violation of section 13(1), its effect was to be seen by the AO while carrying out the assessment. Such a violation was not a ground for cancellation of registration. The only grounds for cancellation of registration under section 12AA are where it is discovered that the activities of the Trust are not genuine or they are not being carried out in accordance with the objects of the Trust.

   PCIT v. Ashoka Education Foundation (2019) 174 DTR 377/262 Taxman 440 (Bom.)(HC)

7. S. 12AA : Procedure for registration – Trust or institution – Society imparting training to various officers /officials involved in criminal justice – No profit motive – Entitle for registration. [S.2(15), 12A]

   Dismissing the appeal of the Revenue the Court held that assessee society was constituted by Government for imparting training to various officers / officials involved in criminal justice system with no profit motive at all and whatever funds were generated or received in aid, were utilised for aforesaid public purpose. Entitle for registration. (AY. 2010-11)

   CIT (E) v. Institute of Correctional Administration (2019)103 taxmann.com 84 (P&H)(HC)

   Editorial : SLP of revenue is dismissed, CIT (E) v. Institute of Correctional Administration (2019) 261

   Taxman 556 (SC)

8. S. 14A : Disallowance of expenditure – Exempt income – Explanation offered cannot be rejected arbitrarily by the AO [R. 8D]

   Dismissing the appeal of the Revenue the Court held that, explanation of assessee and amount offered to tax under said section could not have been rejected by Assessing Officer in arbitrary manner.

   PCIT v. Hero Corporate Service Ltd. (2019) 103 taxmann.com. 199/ 262 Taxman 30 (Delhi) (HC)

   Editorial: SLP of revenue is dismissed, PCIT v. Hero Corporate Service Ltd. (2019) 262 Taxman 29 (SC)

9. S. 14A : Disallowance of expenditure – Exempt income – Not recorded the satisfaction for not accepting the disallowance – Deletion of addition is held to be justified [R.8D]

   Dismissing the appeal of the Revenue the Court held that the assessee has made suo motu disallowance, however the AO applied the Rule 8D(2) of the Act. Tribunal held that the AO has not recorded the satisfaction for not accepting the disallowance hence, deleted the addition. Order of Tribunal is affirmed by High Court. (ITA No. 237 of 2017, dt. 2-4-2019) (AY. 2009-10).

   PCIT v. Bajaj Finance Ltd. (Bom)(HC), www.itatonline.org 

10. S. 14A : Disallowance of expenditure – Exempt income – Applicability of Rule 8D is not mandatory in every case where assessee earns tax free dividend income – Rule 8D cannot be invoked and applied unless Assessing Officer records his dissatisfaction regarding correctness of claim made by assessee in relation to expenditure incurred to earn exempt income [S.10(34), R.8D]

    The assessee had made self disallowance of certain expenditure in order to earn said income. AO without examining and referring to the disallowance or recording his dissatisfaction on disallowance made, invoked Rule 8D of 1962 Rules as if it was mandatory. CIT (A) and Tribunal deleted the addition. On appeal by the Revenue dismissing the appeal of the Revenue, Court held that unless Assessing Officer records his dissatisfaction regarding correctness of claim made by assessee in relation to expenditure incurred to earn exempt income Rule 8D cannot be invoked. This is the mandate and pre condition imposed by sub-section (2) to section 14A of the Act. Rule 8D is in the nature of best judgment determining, i.e., determination in default and on rejection of the explanation of the assessee in relation to expenditure incurred to earn exempt income. Rule 8D is not applicable by default but only if and when the Assessing Officer records his satisfaction and rejects the explanation of the assessee regarding the disallowance of expenditure. In the present case the assessment order proceeds on a wrong assumption that rule 8D would apply to all cases and is mandatory. Finding of the Tribunal affirming the order of the Commissioner (Appeals) is in accordance with the law. (AY. 2010-11).

    PCIT v. Vedanta Ltd. (2019) 261 Taxman 179 (Delhi)(HC)

11. S. 14A : Disallowance of expenditure – Exempt income – Unless and until there is receipt of exempt income for concerned assessment year, section 14A is not attracted [R. 8D]

    Unless and until there is receipt of exempt income for concerned assessment year, section 14A is not attracted. Circular No 5/2014, dt. 11-2-2014 is considered.

    PCIT v. Vardhman Chemtech (P.) Ltd. (2019) 261 Taxman 233 (P&H)(HC)

12. S. 14A : Disallowance of expenditure – Exempt income – When there is no exempt income shown during the year no disallowance can be made [R.8D]

    Dismissing the appeal of the Revenue, the High Court Held that when there is no exempt income shown during the year, no disallowance can be made. (AY. 2008-09)

    CIT v. DLF Home Developers Ltd. (2019) 411 ITR 378 (Delhi) (HC)

13. S. 23 : Income from house property – Annual value – Standard rent – Illegal tenant – Deposit of certain compensation on monthly basis in Court, could not form basis to make addition to assessee’s rental income in respect of other tenants who are protected under Rent Control Act. [S. 22, Delhi Rent Control Act]

    Dismissing the appeal of the Revenue the Court held that deposit of certain compensation on monthly basis in Court in respect of one of the tenant who occupied the premises illegally, could not form basis to make addition to assessee’s rental income in respect of other tenants who are protected under Rent Control Act. (AYs. 2003-04 to 2006-07)

    PCIT v. Seth Properties. (2019) 262 Taxman 124 (Bom) (HC)

14. S. 28(i) : Business income – Interest income – Interest on amount advanced to contractor assessable as business income and not as income from other sources. [S. 56]

    Dismissing the appeal of the Revenue the Court held that interest earned by assessee on sums lent to contractor constituted its business income and not as income from other sources. (AY. 2010-11, 2011-12).

    PCIT v. Nabinagar Power Generating Co. (P.) Ltd. (2019) 103 taxmann.com 225 / 262 Taxman 9 (Delhi) (HC)

    Editorial : SLP of revenue is dismissed, PCIT v. Nabinagar Power Generating Co. (P.) Ltd. (2019) 262 Taxman 8 (SC)

15. S. 28(i) : Business loss – Revaluation of obsolete inventories – Valuation was supported by technical experts – Allowable as business loss [S. 145]

    Assessee reduced value of 313 obsolete items of its stocks and spares which were not used for past five years or more by 50 per cent, which was done on basis of recommendation of committee of experts appointed by the Board of the assessee company. The assessee claimed loss on account of such evaluation of obsolete inventory. The AO disallowed the loss, which was affirmed by the Tribunal. On appeal the Court held that technical evaluation was conducted on the basis of recommendation of the Committee hence the loss on revaluation is held to be allowable as business loss.

    Hindustan Newsprint Ltd v. ACIT (2019)262 Taxman 334 (Ker)(HC)

16. S. 36(1)(iii) : Interest on borrowed capital – Investment in share capital of sister concern, with a view to earn dividend income – Expenditure incurred is held to be allowable as deduction

    Dismissing the appeal of the revenue the Court held that Tribunal found that assessee had made investment which would yield income in form of dividend and therefore, investment was made for purpose of earning income. Accordingly the expenditure incurred for earning such income had to be allowed. (AY. 2008-09)

    PCIT v. Premier Finance & Trading Co. Ltd. (2019) 262 Taxman 341 (Bom) (HC)

17. S. 37(1) : Business expenditure – Completion contract method – Compensation paid to allottees of flat who refuse to take up the allotment due to change in Regulation of Municipal Corporation – Allowable as business expenditure – Interest and guarantee commission — Service Charges — Held to be deductible [S.145 ]

    Court held that the unsold flats that had been surrendered to the assessee were part of its stock-in-trade. In view of Accounting Standard 2, the compensation paid subsequent to the completion of the project was an “extraordinary item”. It was not “cost” of completion of the project and, therefore, such compensation could not be added to the value of the stock-in-trade of the assessee. Accounting Standard 2 governs valuation of inventories. “Cost” comprises all of the costs of purchase, costs of completion and other costs incurred “in bringing the inventories to their present location and condition”. That which was not relevant to bringing the stock to its present condition or location cannot be a part of its value. The mere fact that the space buyer’s agreement or the allotment letter did not mandate payment of compensation would not come in the way of the assessee treating such payment as “revenue expenditure”. The assessee had a plausible explanation for making such payment of compensation to protect its “business interests”. While it was true that there was no “contractual obligation” to make the payment, it was plain that the assessee was also looking to build its own reputation in the real estate market. Further the mere fact that the recipients treated the payment as capital gains in their hands in their returns would not be relevant in deciding the issue whether the payment by the assessee should be treated as “business expenditure”. The payment made by the assessee to the allottees of the flats for their surrendering the rights therein should be allowed as business expenditure of the assessee. That Accounting Standard 2 would apply to interest and guarantee commission and, with the assessee following the completed contract method, the expenditure incurred subsequent to the completion of the project could not be attributed to work and had to be allowed only as revenue expenditure. That the service charges were incurred after the completion of the project and would not be part of the capital work- in-progress. Having been incurred at a stage subsequent to the completion of the project it had to be shown as revenue expenditure and was rightly allowed as such by the Tribunal. (AY. 1995-96 to 2009-10)

    Gopal Das Estates and Housing Pvt. Ltd. v. CIT (2019) 412 ITR 489 (Delhi)(HC)

18. S. 37(1) : Business expenditure – Capital or revenue – Preoperative expenditure – new line of business- Business abandoned subsequently – Allowable as revenue expenditure.

    Allowing the appeal of the assessee the Court held that the proper test to be applied was not the nature of the new line of business, which was commenced by the assessee, but unity of control, management and common fund. This issue was never disputed by the Assessing Officer or the appellate authorities. The authorities had concurrently held that it was the assessee who had commenced the business and the assessee would mean the assessee- company as a whole and not a different entity. Therefore, when there was commonality of control, management and fund, those would be the decisive factors to take into consideration and not the new line of business, namely, the textile business. Before the Commissioner (Appeals) a specific ground had been raised stating that the Assessing Officer ought to have appreciated that the decisive factors for allowance were unity of control, management, interconnection, interlacing, interdependent, common fund, etc., and if the above factors were fulfilled, then the expenditure should be allowed even if the project was a new one. The Commissioner (Appeals) did not give any finding on such a ground raised by the assessee. Therefore, it was incorrect on the part of the Department to contend that such a question was never raised before the appellate authorities (AY. 2000-01).

    Chemplast Sanmar Ltd. v. ACIT (2019) 412 ITR 323 (Mad.)(HC)

19. S. 37(1) : Business expenditure- Employee Stock option Plan (ESOP) – Expenditure incurred on allotment of shares under Employee Stock option Plan (ESOP) is held to be allowable as business expenditure

    Dismissing the appeal of the Revenue the Court held that expenditure incurred on allotment of shares under Employee Stock option Plan (ESOP) is held to be allowable as business expenditure (AY. 2008-09).

    PCIT v. Lemon Tree Hotels (P.) Ltd. (2019)104 taxmann.com 26/ 262 Taxman 312 (Delhi) (HC)

    Editorial: SLP is granted to the revenue, PCIT v. Lemon Tree Hotels (P.) Ltd. (2019) 262 Taxman 311 (SC)

20. S. 37(1) : Business expenditure – on-compete fee paid by assessee to founder of transferor company constituted business expenditure

    Dismissing the appeal of the Revenue the Court held that Non-compete fee paid by assessee to founder of transferor company constituted business expenditure. (AY. 2001-02 )

    ITO v. Smartchem Technologies Ltd. (2019) 103 taxmann.com 359 /262 Taxman 192 (Guj.) (HC)

    Editorial: SLP of revenue is allowed, ITO v. Smartchem Technologies Ltd. (2019) 262 Taxman 191 (SC)

21. S. 37(1) : Business expenditure – Foreign travelling expenditure of trustee on tourist visa – Held to be allowable

    Dismissing the appeal of the Revenue the Court held that the trustee had gone to various countries to expand business of trust and mere fact that he went on tourist visa could not be a ground to conclude that no business was transacted. Deletion of addition is held to be justified. (AY. 2005-06)

    CIT v. Swadeshi Internationals (2019) 261 Taxman 430 (Karn.)(HC)

22. S. 37(1) : Business expenditure – Consultancy charges – Statement – Retraction – Merely on the basis of statement recorded in the course of search, which was retracted – No disallowance can be made without bringing on record independent material [S.132(4)]

    Dismissing the appeal of the Revenue the Court held that merely on the basis of statement recorded in the course of search, which was retracted, with in a short time by filing an affidavit. Subsequently his further statement was recorded he reiterated the stand taken in affidavit. Court held that no disallowance of consultancy charges can be made without bringing on record independent material.

    CIT v. Reliance Industries Ltd. (2019) 261 Taxman 358 (Bom.)(HC).

23. S. 37(1) : Business expenditure – Illegal Commission- Volcker Committee Report – No finding that the assessee had made payment – Deletion of addition held to be justified

    Assessee claimed deduction towards payment for purchase of oil. Revenue claimed that assessee had paid illegal commission to State Oil Marketing Organization, an Iraqi government agency for purchase of oil; therefore, such expenditure was not allowable. However, Commissioner (Appeals) observed that except for Volcker Committee Report there was no evidence that assessee had paid any such illegal commission, that even in said report, there was no finding that assessee had made illegal payments and that payments were made by an agent. Tribunal confirmed view of Commissioner (Appeals) Dismissing the appeal of the Revenue the Court held that since entire issue was based on appreciation of evidence, no question of law arose for consideration from Tribunal’s order allowing payment for purchase of oil (AY. 2002-03) (ITA No. 5769/M/2013 dt. 16-9-2015)

    CIT-LTU v. Reliance Industries Ltd. (2019) 261 Taxman 283 (Bom.)(HC)

24. S. 37(1) : Business expenditure–Capital or revenue – Copyright expenses – Only licence to use copyright – Allowable as revenue expenditure

    Dismissing the appeal of the Revenue the Court held that the assessee had only one license to use copyright –Allowable as revenue expenditure. (AY. 2012-13 )

    PCIT v. Mobisoft Telesolutions Pvt. Ltd. (2019) 411 ITR 609 (P&H)(HC)

25. S. 40(a)(ia): Amounts not deductible – Deduction at source – Payment gateway charges paid to a bank for swiping credit cards are in the nature of fees for banking services and not “commission” or “brokerage” – Not liable to deduct tax at source – No disallowances can be made [S.194H, 195(3)]

    Dismissing the appeal of the Revenue the Court held that payment gateway charges paid to a bank for swiping credit cards are in the nature of fees for banking services and not “commission” or “brokerage”. Accordingly, no TDS is deductible from the said charges u/s. 194H and no disallowance u/s. 40(a)(ia) can be made (CIT v. JDS Apparels (P) Ltd (2015) 370 ITR 454 (Delhi)(HC) followed) (ITA 136/2019, dt. 25-3-2019) (AY. 2009-10)

    PCIT v. Make My Trip India Pvt. Ltd. (Delhi)(HC), www.itatonline.org

26. S. 40(a)(ia) : Amounts not deductible – Deduction at source – Payee filed the return and offered the sum received from the assessee – Second proviso to section 40(a)(ia) has retrospective effect from 1-4-2010 – No disallowances can be made [S. 194J, 201]

    Dismissing the appeal of the Revenue the Court held that where assessee made payments and deducted tax at source but failed to deposit such tax deducted at source to government account within due date of filing return for relevant years, since assessee had filed documents in evidence to show that payee had filed return and offered sum received from assessee to tax, impugned disallowance made under section 40(a)(ia) was to be deleted. (AY. 2011-12)

    CIT v. Bhanot Construction & Housing Ltd. (2019) 261 Taxman 262 (Delhi)(HC)

27. S.40(a)(ia) : Amounts not deductible – Deduction at source – Recipients of the interest income had included the income in their return and paid taxes thereon – No disallowance can be made – Second proviso inserted by Finance Act 2012 has retrospective effect [S. 201(1)]

    Dismissing the appeal of the Revenue the Court held that the Tribunal is right in holding that recipients of the interest income had included the income in their return and paid taxes thereon. No disallowance can be made. Second proviso inserted by Finance Act 2012 has retrospective effect. (AY. 2012-13 )

    PCIT v. Mobisoft Telesolutions Pvt. Ltd. (2019) 411 ITR 607 (P&H)(HC)

28. S. 41(1) : Profits chargeable to tax – Remission or cessation of trading liability – Timber business – Discontinuation of business for more than 10 years – Showing the creditors – Application of common sense principles – Burden of proof on assessee to show subsistence of liability – Liable to be taxed as profits of business

    Dismissing the appeal of the assessee the Court held that lapse of ten years of time, coupled with fact that there was a change of business altogether by assessee, and fact that debts had become time barred and no creditor made any claim for recovery from assessee during any of these years, even up to now. Assessing authority is justified in the amount as cessation of liability. When a trading liability ceased de facto and de jure and whether or not such trading liability could be said to have ceased in law so as to apply section 41(1) depended upon the facts and circumstances of each case. (AY. 2003-04)

    West Asia Exports & Imports (P.) Ltd. v. ACIT (2019) 412 ITR 208 / 262 Taxman 372 (Mad.)(HC)

29. S. 43D : Public financial institutions – Method of accounting – Accrual of income – Real income theory – Interest on NPAs – Even though the special provision in S. 43D for taxing interest income on NPAs on receipt basis does not apply to NBFCs, it does not mean that NBFCs have to offer interest on bad or doubtful debts to tax on accrual basis. Such interest is not taxable on the real income theory [S.145]

    Dismissing the appeal of the Revenue the Court held that even though the special provision in S. 43D for taxing interest income on NPAs on receipt basis does not apply to NBFCs, it does not mean that NBFCs have to offer interest on bad or doubtful debts to tax on accrual basis. Such interest is not taxable on the real income theory. (ITA No. 237 of 2017, dt. 2-4-2019) (AY. 2009-10)

    PCIT v. Bajaj Finance Ltd. (Bom)(HC), www.itatonline.org 

30. S. 44BB : Mineral oils – Presumptive tax – Reimbursement of custom duty, service tax paid earlier would not form part of the aggregate amount and not includible in gross receipts [S.2(24), 5, 9, 43B]

    Dismissing the appeal of the Revenue the Court held that the amount reimbursed to the assessee (service provider) by ONGC (service recipient), representing service tax paid earlier by the assessee to the Government of India, would not form part of the aggregate amount referred to in clauses (a) and (b) of sub-section(2) of Section 44BB of the Act (DIT v. Mitchell Drilling International Pvt. Ltd. (2016) 380 ITR 130 (Delhi) (HC) CBDT Circular No. 4/2008 dt. 28-4-2008 (2008) 300 ITR 92 (St) & Circular No. 1/2014 dt 13-1-2014 (2014) 360 ITR 53 (St) is followed). Accordingly the appeals are to be listed before the Division Bench, hearing appeals under Section 260-A of the Act, for its disposal in terms of this order. (ITA No. 40 of 2012. Dt. 12-4-2019) (AY. 2004 05)

    DIT (IT) v. Schlumberger Asia Services Ltd. (2019)104 taxmann.com 353 / 177 DTR 126 (FB)) (Uttarakhand)(HC), www.itatonline.org

31. S.45 : Capital gains – Transfer – Joint Development agreement (JDA) – In the absence of registration, agreement did not fall under S.53A of the Transfer of Property Act – Not liable to capital gains tax [S.2(47)(v) Transfer of Property Act, 1882 S. 53A]

    Dismissing the appeal of the Revenue the Court held that in absence of registration of joint development agreement, agreement did not fall under section 53A of Transfer of Property Act, 1882 and, consequently, section 2(47)(v) did not apply. Accordingly not liable to capital gains tax. (AY. 2007-08)

    P CIT v. Chuni Lal Bhagat (2019) 103 taxmnn.com 378 /262 Taxman 210 (P&H) (HC)

    Editorial: SLP of revenue is dismissed, PCIT v. Chuni Lal Bhagat. (2019) 262 Taxman 209 (SC)

32. S.45 : Capital gains – Penny Stocks – What is intriguing that the company had meagre resources and reported consistent losses. The astronomical growth of the value of company’s shares naturally excited the suspicions of the Revenue – The company was even directed to be delisted from the stock exchange – The assessee’s argument that he was denied the right to cross-examine the individuals whose statements led to the inquiry and ultimate disallowance of the long term capital gains claim is not relevant in the wake of findings of fact- [S.68, 260A]

    The assessee acquired shares at ₹ 12 per share and within 19 months sold at ₹ 720 per share and reported capital gain of ₹ 13,33.956. All authorities held that when the company suffered heavy losses how there could be astronomical growth in value of the shares and the company was directed to be delisted from the stock exchange. Accordingly exemption from capital gain was denied. Appeal by the assessee it was contended that he was denied the right to cross-examination of the two individuals whose statements led to the inquiry and ultimate disallowance of the long term capital gain. Dismissing the appeal the Court held that AO CIT(A) and the ITAT have all consistently rendered adverse findings. Court also observed that,what is intriguing is that the company (M/s Kappac Pharma Ltd.) had meagre resources and in fact reported consistent losses. In these circumstances, the astronomical growth of the value of company’s shares naturally excited the suspicions of the Revenue. The company was even directed to be delisted from the stock exchange. Having regard to these circumstances and principally on the ground that the findings are entirely of fact, this court held that no substantial question of law arises. (ITA 220/2019 & CM No. 10774/2019, dt. 8-3-2019) (AY. 2014-15)

    Udit Kalra v. ITO (2019) 16 DTR 249/ 308 CTR 50 (Delhi)(HC), www.itatonline.org

33. S. 45(4) : Capital gains – Distribution of capital asset – Retirement of partner – Amount received by a partner on her retirement from a partnership firm is not liable to capital gains tax [S.45]

    Dismissing the appeal of the Revenue the Court held that amount received by a partner on her retirement from a partnership firm was not liable to capital gains tax. (AY. 2006-07)

    Hemlata S. Shetty (Smt.) v. ACIT (2019) 262 Taxman 324 (Bom) (HC)

34. S. 45(4) : Capital gains – Distribution of capital asset – Retirement of partner – If new partners come into the partnership and bring cash by way of capital contribution and the retiring partners take cash and retire, the retiring partners are not relinquishing their interest in the immovable property. What they relinquish is their share in the partnership – As there is no transfer of a capital asset, no capital gains or profit can arise [S.45]

    Dismissing the appeal of the Revenue the Court held that if new partners come into the partnership and bring cash by way of capital contribution and the retiring partners take cash and retire, the retiring partners are not relinquishing their interest in the immovable property. What they relinquish is their share in the partnership. As there is no transfer of a capital asset, no capital gains or profit can arise. (CIT v. A. N. Naik (2004) 265 ITR 346 (Bom) (HC) distinguished, Dynamic Enterprises (2013) 359 ITR 83 (FB) (Karn) (HC) followed). (ITA No. 137 of 2017, dt. 26-3-2019) (AY. 2010-11)

    PCIT v. Electroplast Engineers (Bom)(HC), www.itatonline.org

35. S. 50C : Capital gains – Full value of consideration- stamp valuation – Without hearing objections of assessee, that Fair Market Value of capital asset as per ‘Guidance Value’ cannot be determined by authorities – Matter remanded to the Assessing Officer [S.45. 48]

    Allowing the appeal of the assessee the Court held that provision of section 50C only enables revenue to adopt Guidance Value declared by State for payment of stamp duty as Fair Market Value under section 48, but that Guidance Value cannot, ipso facto, be taken as valuation for purpose of computing Capital Gains Tax liability in hands of assessee/ seller. S.50C(2) itself provides for reference to Departmental Valuation Officer (DVO) if assessee objects to invoking of section 50C (1). However an assessee cannot be denied an opportunity to raise his objections even against presumptive Fair Market Value under section 50C(1) or report of DVO under section 50C(2) and Assessing Authority or Appellate Authorities, whose powers are co-extensive with those of Assessing Authority, cannot refuse to meet those objections point by point. Accordingly the matter was remanded to the Assessing Officer to pass the order after considering the objections of the assessee. (AY. 2012-13)

    Jagannathan Sailaja Chitta v. ITO (2019) 262 Taxman 427 (Mad.) (HC)

36. S. 50C : In the return of income, the asses – Stamp valuation – Entire consideration was invested in bonds – The assessee cannot avoid the impact of S. 50C by claiming that his S. 54EC investment is large enough to cover the deemed consideration based on stamp duty valuation – Such interpretation renders S. 50C redundant [S.45, 48. 54EC]

    The assessee declared capital gains of ₹ 21,19,344 and claimed exemption u/s 54EC of the Act. The stamp authorises valued the share of the appellant at ₹ 76,17,702. AO determined the capital gains at ₹ 49,47,344. The assessee contended that entire sale consideration of ₹ 25 lakhs was invested in specified bonds and deeming provision of S.50C is not applicable. CIT (A) allowed the appeal. Tribunal affirmed the view of the AO. On appeal the High Court held that the assessee cannot avoid the impact of S. 50C by claiming that his S. 54EC investment is large enough to cover the deemed consideration based on stamp duty valuation. Such interpretation renders S. 50C redundant. Order of Tribunal is affirmed. (AY. 2008-09) (ITA No. 981 of 2016, dt. 12-3-2019)

    Jagdish C. Dhabalia v. ITO (2019) 176 DTR 417 / 308 CTR 295 (Bom)(HC), www.itatonline.org

    Mehul Jagdish Dhabalia v. ITO (2019) 176 DTR 417 / 308 CTR 295 (Bom) (HC). www.itatonline.org

37. S. 54F : Capital gains – Capital asset – Investment in a residential house – Booked a flat in January 1981 – Right in the flat was sold in the year 2005 – Allowable deduction [S.2(14), 45]

    AO rejected assessee’s claim on ground that assessee had sold a flat which was in nature of residential unit and therefore, S. 54F would

    not apply. Tribunal held that the assessee had booked a flat far back in January, 1981 and till time, she sold her rights in flat in year 2005, completion of construction was nowhere in sight. Tribunal thus taking a view that it was not a case of sale of residential property, allowed assessee’s claim for deduction. High Court affirmed the order of the Tribunal. (AY. 2006-07)

    CIT v. Kalpana Hansraj (2019) 261 Taxman 294 (Bom.)(HC)

38. S.68 : Cash credits – Shares at a premium – Genuineness, creditworthiness and identity of investors are established –Addition cannot be made as cash credit

    Dismissing the appeal of the Revenue the Court held that when genuineness, creditworthiness and identity of investors are established- Addition cannot be made as cash credit on ground that shares were issued at excess premium. (AYs. 2012-13, 2013-14)

    PCIT v. Chain House International (P.) Ltd. (2018) 98 taxmann.com 47 (2019) 307 CTR 19 (MP) (HC)

    Editorial: SLP of revenue is dismissed, PCIT v. Chain House International (P.) Ltd. (2019) 262 Taxman 207 (SC)

39. S. 68: Cash credits – Bogus Share Capital – Merely because the investment was considerably large and several corporate structures were either created or came into play in routing the investment in the assessee through a Mauritius entity would not be sufficient to brand the transaction as colourable device – The assessee cannot be asked to prove the source of source

    Dismissing the appeal of the Revenue the Court held that merely because the investment was considerably large and several corporate structures were either created or came into play in routing the investment in the assessee through a Mauritius entity would not be sufficient to brand the transaction as colourable device. The assessee cannot be asked to prove the source of source. (PCIT v. NRA Iron & Steel (2019) 103 Taxmann.com 48 (SC) is referred) (ITA No. 1502 of 2016, dt. 26-3-2019)

    PCIT v. Aditya Birla Telecom Ltd. (Bom.)(HC), www.itatonline.org

40. S. 69C : Unexplained expenditure – Bogus purchases – Trader in fabrics – Entire purchases cannot be added without disturbing the sales – Addition is to be restricted to the extent of G. P. rate [S.145]

    Dismissing the appeal of the Revenue the Court held that even if the purchases are bogus, the entire purchase amount cannot be added. As the department had not disputed the assessee’s sales & there was no discrepancy between the purchases and the sales, the purchases cannot be rejected without disturbing the sales in case of a trader. The addition has to be restricted to the extent of the G.P. rate on purchases at the same rate of other genuine purchases (N. K. Industries Ltd v. Dy. CIT (2016) 72 taxmann.com 289/(2017) 292 CTR 354 (Guj.), (HC) N. K. Proteins v. Dy. CIT (2017) 250 Taxman 22 (SC) referred.(ITA 1004 of 2016, dt. 11-2-2019)

    PCIT v. Mohommad Haji Adam (Bom)(HC), www.itatonline.org
    

41. S. 69C : Unexplained expenditure – Bogus purchases – Sundry creditors – Only profit element embedded in credits can be taxed Restricted to 25% of element of profit [S.37, 69A]

    The AO added outstanding credits in the name of various alleged bogus purchases.

    The CIT (A) restricted the additions to the profit element of 25 per cent. Both the assessee and the Department filed appeals before the Tribunal both of which were rejected. Dismissing the appeal of the revenue High Court upheld the order of the Tribunal. (Referred N. K Proteins Ltd. SLP No. (C) 769 of 2017, Vijay Proteins Ltd v. CIT (2018) 409 ITR 3 (St)(SC), N. K. Industries Ltd v. Dy. CIT (2016) 72 taxmann.com 289 (Guj.) (HC))

    CIT v. Nandkishor Huaschand Jalan. (2019) 412 ITR 357 (Guj)(HC)

42. S. 74 : Losses – Capital gains – Carry forward – Loss determined in pursuance of a return filed for earlier assessment year u/s. 139 can only be carried forward [S.139]

Petitioner filed an application before Authority for Advance Rulings (AAR) seeking answer as to whether it was entitled to carry forward accumulated capital losses, in terms of section 74 of the Act. AAR held that petitioner was not entitled to carry forward accumulated losses because they were not ‘assessee’ who had claimed a loss in earlier assessment year by filing return of income. Aggrieved by the order of the AAR the petitioner filed the writ petition. Dismissing the petition the Court held that before a carry forward loss can be claimed by assessee, it is necessary that a loss has been determined in pursuance of a return filed for earlier assessment year under section 139. As the petitioner had not filed any return of income claiming loss for earlier assessment year, order passed by AAR is affirmed. (Referred K. V. K. Raju v. CIT (2001) 252 ITR 754 (AP) (HC)

Aberdeen Institutional Commingled Funds LLC. v. AAR. (2019) 262 Taxman 346 (Bom) (HC)

43. S. 80-I : Industrial undertakings – Deduction under section 80-I should be given on profit without reducing deduction under section 80HH. [S.80HH]

    Dismissing the appeal of the Revenue the Court held that deduction under section 80-I should be given on profit without reducing deduction under section 80HH. (AY. 1994-95)

    CIT v. Hindustan Lever Ltd. (2019)103 taxmann. com 88 (Bom.) (HC)

    Editorial: SLP of revenue is dismissed; CIT v. Hindustan Lever Ltd. (2019) 261 Taxman 547 (SC)

44. S. 80IA :Industrial undertakings – Infrastructure development
    – Where the assessee had sold many units, it was entitled to deduction under S. 80-IA even if the Authority’s approval came later on [S.80IA(4)(iii)]

    Where the assessee had sold 21 units located in the Industrial Park and those units were also operational, it was entitled to the deduction under section 80IA(4) which is available to the assessees who begin to develop, operate and maintain industrial parks. The date of certificate from the local authority is not to be taken as the date of commencement. Followed Ganesh Housing Corporation Ltd v. Under Secretary (2011) 399 ITR 441 (Guj) (HC). Appeal of revenue is dismissed. (A.Y. 2007-08)

    PCIT v. Kolte Patil Developers Ltd. (2019) 175 DTR 280/ 307 CTR 704 (Bom.)(HC)

45. S. 80-IA : Industrial undertakings – Infrastructure development – Captive power – Valuation of electricity provided to another unit should be at rate at which electricity distribution companies were allowed to supply electricity to consumers.

    Dismissing the appeal of the Revenue the Court held that for computing deduction profits arising from captive consumption of electricity, valuation of electricity provided to another unit should be at rate at which electricity distribution companies were allowed to supply electricity to consumers.

    CIT v. Reliance Industries Ltd. (2019) 261 Taxman 358 (Bom.)(HC)

46. S.92C : Transfer pricing – Arm’s length price – Comparable – Merger and Amalgamation had taken place in a company
    – Cannot be selected for comparable – Securities and stock broker cannot be compared with merchant banker – Interest earned on margin money deposited with AE for broking services for futures and options should be factored in to determine ALP

    Dismissing the appeal of the Revenue the Court held that while determining the Arm’s length price, Merger and Amalgamation had taken place in a company cannot be selected for comparable. Securities and stock broker cannot be compared with merchant banker. Interest earned on margin money deposited with AE for broking services for futures and options should be factored in to determine ALP. (AY. 2006-07)

    PCIT v. J. P. Morgan India (P) Ltd (2019) 261 Taxman 404 (Bom) (HC)

47. S. 92CA Reference to transfer pricing officer – Transfer Pricing – Jurisdiction of Transfer Pricing Officer – In specified domestic transactions Transfer Pricing Officer has no jurisdiction unless specific reference is made to him by Assessing Officer – High Court can consider issue of jurisdiction though alternative remedy is available. [S. 40A (3A), 92BA(i) 92C, 92E, Art.226] Art. 226]

    Allowing the petition the Court held that in specified domestic transactions Transfer Pricing Officer has no jurisdiction unless specific reference is made to him by Assessing Officer. Accordingly the order of the Transfer Pricing Officer was quashed in so far as it recommended an adjustment of the arm’s length price towards payment of creditors in the demerger process of a sum of ₹ 57.54 crore. Court also held that it can consider issue of jurisdiction though alternative remedy is available. However in respect of the adjustment made by the Transfer Pricing Officer towards payment of subscription fees, even though the assessee may have certain arguable points, that by itself, would not enable the High Court to bypass the entire statutory scheme of assessment, appeal and revision. The order dealing with the balance after deducting ₹ 57.54 crore would not be interfered with. (AY. 2015-16) (WP. No 3386 of 2018 dt. 15-3-2019 )

    Times Global Broadcasting Company Ltd. v. UOI (2019) 413 ITR 42 (Bom) (HC)

48. S. 115JB : Book profit – Banking – Insurance – Electricity company – Are not company bound by provisions of Companies Act – (Pre-amendment by Finance Act, 2012) – Provision is not applicable to a banking company, insurance & electricity cos- The mechanism provided for computing book profit in terms of S. 115JB(2) is wholly unworkable for a banking company- When the machinery provision fails, the charging section also fails – Provision is not applicable – The anomaly was removed by the Finance Act, 2012 – However, the amendments are neither declaratory nor clarificatory but make substantive and significant legislative changes which are applicable prospectively

    Dismissing the appeal of the Revenue the Court held that Banking, Insurance and Electricity companies are not companies bound by provisions of Companies Act. (Pre amendment by Finance Act, 2012) Provision is not applicable to a banking company (also insurance & electricity cos). The mechanism provided for computing book profit in terms of S. 115JB(2) is wholly unworkable for a banking company. When the machinery provision fails, the charging section also fails- The anomaly was removed by the Finance Act, 2012 – However, the amendments are neither declaratory nor clarificatory but make substantive and significant legislative changes which are applicable prospectively.(Followed Kerala State Electricity Board v. Dy CIT (20110) 329 ITR 91 (Ker)(HC)). (ITA No. 1196 of 2013 and 1175 of 2013, dt. 16-4-2019)

    CIT v. Union Bank of India (Bom)(HC).
    www.itatonline.org

49. S. 115JB : Book profit – While computing book profit, provision made for payment of wealth tax could not be included in it as section 115JB only refers to income-tax paid or payable or provisions made therefor – No question of law. [S.260A]

    Section 115JB pertains to special provision for payment of tax by certain companies. As is well known, detailed provisions have been made to compute the book profit of the assessee for the purpose of the said provision. Explanation 1 contains list of amounts to be added while computing assessee’s book profit under section 115JB. In plain terms, clause (a) as noted above refers to amount of income-tax paid or payable or the provision made therefor. The legislature has advisedly not included wealth tax in this clause. By no interpretative process, the wealth tax can be included in clause (a). Clause (c) would include the amount set aside for provisions made for meeting liabilities other than ascertained liabilities. For applicability of this clause, therefore, fundamental facts would have to be brought on record which in the present case, the revenue has not done. In fact, the entire thrust of the revenue’s argument at the outset appears to be on clause (a) which refers to the income- tax which according to the revenue would also include wealth tax. This question, therefore, is not required to be entertained. (AY. 2002-03) (ITA No. 5769/M/2013 dt 16-9-2015)

    CIT-LTU v. Reliance Industries Ltd. (2019) 261 Taxman 283 (Bom.)(HC)

50. S.145 : Method of accounting Construction business – Percentage completion method Brokerage expenditure – Allowable in the year when the expenditure is incurred [S.37(1)]

    Dismissing the appeal of the Revenue the Court held that when the assessee follows percentage completion method, brokerage expenditure is allowable in the year when the expenditure is incurred. (AY. 2008-09)

    CIT v. DLF Home Developers Ltd. (2019) 411 ITR 378 (Delhi) (HC)

51. S.145 : Method of accounting – Mercantile system – Legal steps taken for enhancement of rent – Rent claimed before the arbitrator should be shown as accruing when the matter is pending before the Arbitration [S.22, 23]

    When the assessee has taken legal steps to recover the enhancement of rent. Rent claimed before the arbitrator should be shown as accruing when the matter is pending before the Arbitration. There cannot be protective assessment of income relating to one year in another assessment year. (AYs. 1985-86, 1996-97 to 2002-03 )

    CIT v. Punalur Paper Mills Ltd. (2019)411 ITR 563 (Ker)(HC)

52. S. 147 : Reassessment – After the expiry of four years – Outstanding creditors for more than 10 years – Capital gains – Where the assessee had made the due disclosure, assessment could not be reopened after four years from the end of the Assessment year [S. 41(1), 45, 115-O]

    A notice for reopening of assessment was issued beyond a period of our years from the end of the relevant assessment year on three grounds. With respect to the first ground of cessation of liability, the assessee had transferred the outstanding interest in inter-branch accounts to the P&L Account. Since all the relevant details with respect to this issue were already filed in the course of original assessment, there was no failure on the part of the assessee to disclose truly and fully all material facts. With respect to the second ground, the assessee had in the original return of income offered a capital gains of ₹ 4.68 crore to tax, which was erroneously written as ₹ 44.68 crore in the assessment order. The assessee filed a rectification application before the AO which was accepted and the mistake rectified. In the reopening notice, the AO has contradicted himself by saying that the correct amount of capital gain was not offered to tax. Reopening cannot be sustained on this ground either. In the third ground, the AO argued that in calculating dividend distribution tax, the assessee was allowed to deduct only the dividend received from the subsidiaries in the given financial year. With respect to this ground too, the assessee had truly and fully disclosed all the relevant facts in the original assessment proceedings. The reopening was therefore to be quashed. (Referred Dr. Amin’s Pathology Laboratory (2001) 252 ITR 673 (Bom.) (HC) Raymond Woollen Mills Ltd. v. ITO (1999) 236 ITR 34 (SC) (WP No. 3588 of 2018 dt. 17-1-2019) (AY. 2011-12)

    State Bank of India v. ACIT (2019) 175 DTR 335/103 taxmann.com 164 (Bom.)(HC)

53. S. 147 : Reassessment – With in four years – Where the AO had questioned the assessee with respect to a particular income but not dealt with it in the order, reopening on the ground of taxability of the same income would amount to a change of opinion [S.148]

    In the course of assessment proceedings, the AO had questioned the assessee regarding the taxability of certain interest income. In its reply, the assessee gave details of such income and also answered as to why such income was not taxable. Assessment was sought to be reopened on the ground that the interest income was liable to tax. Held that once the AO had in the course of the original assessment questioned the assessee regarding the taxability of a particular income and not brought the same to tax, reopening to tax the same income would amount to a change of opinion. It is irrelevant that in the assessment order, the AO had not dealt with this aspect in detail. (AY. 2013-14).

    Rubix Trading (P) Ltd. v. ITO (2019) 174 DTR 1(Bom.)(HC)

54. S. 147 : Reassessment – Failure to disclose material facts – If the AO had the information during the assessment proceeding, irrespective of the source, but chooses not to utilise it, he cannot allege that the assessee failed to disclose truly and fully all material facts & reopen the assessment [S.148]

    Allowing the petition the Court held that; the fact that the assessee did not disclose the material is not relevant if the AO was otherwise aware of it. If the AO had the information during the assessment proceeding, irrespective of the source, but chooses not to utilize it, he cannot allege that the assessee failed to disclose truly and fully all material facts & reopen the assessment. (WP No. 3546 of 2018, dt. 5-4-2019) (AY. 2011-12)

    Rajbhushan Omprakash Dixit v. DCIT (Bom.) (HC) www.itatonline.org

55. S. 147 : Reassessment – Notice – Non-disposal of objection by observing that it was not feasible to pass separate speaking order in respect of objections raised – It is mandatory to decide objections one way or other – Not curable defects
    – Non-adjudication of objections after receiving same, would render consequential actions and orders illegal. [S. 144, 148]

    AO issued notice under S. 148 – Assessee filed objections. After receipt of objections, drastically on next day, revenue passed impugned order of assessment. Reason for not considering objections was that it was not feasible to pass separate speaking order in respect of objections raised. On writ allowing the petition the Court held that it is mandatory to decide objections one way or other, it cannot be said that non-decision thereof would be curable. Non-adjudication of objections after receiving same, would render consequential actions and orders illegal. (AY. 2006-07, 2007-08)

    Raninder Singh v. CIT (2019) 261 Taxman 214 (P&H)(HC)

56. S. 148 : Reassessment – Notice to dead person – Assessment order is held to be invalid [S.147]

    Allowing the petition the Court held that as per settled law, notice for reopening of assessment against a dead person is invalid. The fact that the AO was not informed of the death before issue of notice is irrelevant. Consequently, the S. 148 notice is set aside and order of assessment stands annulled. Followed Alamelu Veerappan v. ITO (2018) 257 Taxman 72 (Mad) (HC) followed). (WP No. 404 of 2019, dt. 5-4-2019) (AY. 2007-08)

    Rupa Shyamsundar Dhumatkar v. ACIT (Bom)(HC), www.itatonline.org

57. S.148 : Reassessement – Recorded reasons not communicated – Produced before the Tribunal – Reassessment is bad in law [S.147]

    Dismissing the appeal of the Revenue the Court held that Tribunal is justified in quashing the reassessment order on ground that reasons recorded by assessing authority for reopening were never communicated to assessee though same were produced before Tribunal. (AY. 2009-10)

    PCIT v. Ramaiah (2019) 103 taxmann.com 201 / 262 Taxman17 (Karn.) (HC)

    Editorial : SLP of revenue is dismissed. PCIT v. Ramaiah (2019) 262 Taxman 16 (SC)

58. S.148: Reassessment – Notice in the name of deceased assessee – For acquiring jurisdiction to reopen an assessment, notice should be issued in name of living person, i.e., legal heir of deceased assessee – S292B could not be invoked to correct a fundamental/substantial error – Notice is held to be bad in law. [S.147, 292B, 292BB]

    The petitioner, who is the legal heir challenged the issue of notice on the ground that it was without jurisdiction on the ground that it was issued in the name of deceased assessee. Allowing the petition the court held that, the issue of a notice under section 148 is a foundation for reopening of assessment. The sine qua non for acquiring jurisdiction to reopen an assessment is that such notice should be issued in the name of the correct person. This requirement of issuing notice to a correct person and not to a dead person is not merely a procedural requirement but is a condition precedent to the impugned notice being valid in law. Accordingly a notice which has been issued in the name of the dead person is also not protected either by provisions of section 292B or section 292BB. Therefore, both the impugned notice dated 29-3-2018 and the order dated 13- 11-2018 was quashed and set aside. (AY. 2011-12)

    Sumit Balkrishna Gupta. v. ACIT (2019) 262 Taxman 61 (Bom)(HC)

59. S. 148 : Reassessment – Notice – Notice against dead person – Merely because in response to notice issued against Jayantilal Harilal Patel petitioner had informed Assessing Officer about death of assessee and asked him to drop proceedings – it could not, by any stretch of imagination, be construed as petitioner having participated in proceedings and, therefore, provisions of section 292B would not be attracted – Notice is held to be invalid. [S. 2(7)/ 2(29), 159, 147 292B]

    Original assessee, namely Jayantilal Harilal Patel died on 24-6-2015. AO issued a notice under section 148 in name of Jayantilal Harilal Patel to reopen assessment. Petitioner being heir and legal representative of Jayantilal Harilal Patel informed AO that Jayantilal Harilal Patel had already expired and, therefore, notice in his name was not valid. He also enclosed death certificate. AO disposed of objections raised by petitioner stating that since original assessee’s son-legal heir had received notice and replied to it, he had participated in proceedings and, thus, defect in issue of notice was automatically cured as per provisions of section 292B. Accordingly, Assessing Officer continued with reassessment proceedings against Jayantilal Harilal Patel. On writ allowing the petition the Court held that merely because in response to notice issued against Jayantilal Harilal Patel petitioner had informed Assessing Officer about death of assessee and asked him to drop proceedings, it could not, by any stretch of imagination, be construed as petitioner having participated in proceedings and, therefore, provisions of section 292B would not be attracted. Accordingly the issued under section 148 was to be treated as invalid. (AY. 2011-12)

    Chandreshbhai Jayantibhai Patel v. ITO (2019) 261 Taxman 137 (Guj.)(HC)

60. S. 147 : Reassessment – Bogus share capital – Though the reopening is based on information supplied by the investigation wing, the reasons do not specify that the investment was non- genuine – The AO cannot reopen to investigate into the source of genuineness and creditworthiness of the investors as it falls within the realm of fishing enquiries which is wholly impermissible in law [S.68, 148]

    Allowing the petition the Court held that the reasons only refer to a simple piece of information supplied to the Assessing Officer by the Investigation Wing, stating that the assessee company had received share application money of ₹ 49.99 Crores from First land. To reiterate, this information is nothing which the Assessing Officer did not have at his command when the Assessment was framed. The reasons do not specify that the information supplied to the Assessing Officer by the Investigation Wing, suggested that such investment was no genuine. In this context, Assessing Officer refers to the requirement of verifying the genuineness of investor and requirement of further investigation. These observations in para 3 of the reasons, would not further the case of the Revenue, these being no information with the Assessing Officer, prima facie, indicating that the investments were not genuine. The investigation into the source of genuineness and creditworthiness of the investor company would fall within the realm of fishing enquiries, which is wholly impermissible in law in the context of the reopening of the assessment. For such reasons, impugned notice is set aside. Petition is allowed.(WP No. 3618 of 2018. dt. 7-3-2019).

    Nu Power Renewable Pvt. Ltd. v. ACIT (Bom)(HC), www.itatonline.org

61. S. 153C : Assessment – Income of any other person – Search – A satisfaction note is sine qua non and must be prepared by the Assessing Officer before he transmits the records to the Assessing Officer who has jurisdiction over such other person – Not furnishing the reasons for satisfaction – Proceedings is held to be invalid

    Allowing the petition the Court held that, a satisfaction note is sine qua non and must be prepared by the Assessing Officer before he transmits the records to the Assessing Officer who has jurisdiction over such other person. the note would disclose that it was only a note prepared for initiating proceedings under section 153C. It neither had any heading or title, to indicate that it was a satisfaction recorded nor did the contents suggest the satisfaction of the Assessing Officer. Hence, the note was incomplete. This aspect went to the root of the matter. Hence proceedings initiated under section 153C of the Act were without jurisdiction and were vitiated in law. (AY. 2008-09)

    SVK Minerals. v. DCIT (2019) 411 ITR 709 (Karn) (HC)

    Shyamraj Singh v. DCIT (2019) 411 ITR 709 (Karn) (HC)

62. S. 194C : Deduction at source – Contractors – Annual Maintenance Contract in respect of various specialised hospital equipments – Not be in nature of fees for technical services – Deduction of tax at source as contractor – Held to be proper [S.194J]

    Dismissing the appeal of the Revenue the Court held that Annual Maintenance Contract in respect of various specialised hospital equipments is not be in nature of fees for technical services hence deduction of tax at source as contractor is held to be proper. (Followed CIT v. Grant Medical Foundation (2015) 375 ITR 49 (Bom) (HC)

    CIT v. Asian Heart Institute and Research Centre (P.) Ltd. (2019) 262 Taxman 395 (Bom)(HC)

63. S. 220 : Collection and recovery – Assessee deemed in default – Stay – Non-speaking order – Directing to pay 20 per cent of demand during pendency of appeal is set aside

    Assessee’s application for interim stay of recovery of demand was disposed of with a conditional order to pay 20 per cent of tax demand made by Assessing Officer relying wholly on CBDT instruction No. 1914, dated 21-3-1996. PCIT also confirmed said order without even hearing assessee. Allowing the petition the Court held that, since no speaking order was passed by revenue authorities while directing assessee to deposit 20 per cent of demand amount and impugned order was passed relying wholly on CBDT instruction no. 1914, dated 21-3-1996, impugned order being mechanical and passed without application of mind was to be set aside and matter was to be remanded back for disposal afresh.

    Shriram Finance. v. PCIT (2019) 262 Taxman 220 (Mad) (HC)

64. S. 226 : Collection and recovery – Assessee deemed in default – Stay – Strictures – Recovery proceedings were stayed – Revenue was directed to re deposit the amount withdrawn from the Bank – Order set aside – Court also expressed dismay at the conduct of the Officers of the Revenue – The desire to collect more revenue cannot be at the expense of Rule of law – Revenue to pay cost of ₹ 50,000 to the Petitioner for the unnecessary harassment [S. 10(23FB), 10(35), 220(6), 226(3), 245, 281B]

    The petitioner is a trust established under Indian Trust Act 1882 and granted a certificate of registration by the SEB as venture capital Fund and the petitioner is entitle exemption u/s. 10 (23FB) of the Act. Earlier years the Appellate Tribunal decided the issue in favour of the assessee and the assessee is entitle to huge amount of refunds. When the stay application was pending vefore the CIT, The AO passed provisional attachment u/s. 281B of the Act, attached the Bank Accounts u/s. 226(3) of the Act and also adjusted the refunds u/s. 245 of the Act. On writ the Court held that Revenue authorities should apply the law equally to all and not be over zealous in seeking to collect revenue ignoring the statutory provisions as well as binding decisions. The petitioner is being singled out for unfair treatment. Accordingly recovery proceedings were stayed. Revenue was directed to re deposit the amount with drawn from the Bank. Order set aside. Court also observed as under “we have to express our dismay at the conduct of the Officers of the Revenue in this matter. We pride ourselves as a State which believes in rule of law. Therefore, the least that is expected of the Officers of the State is to apply the law equally to all and not be over zealous in seeking to collect the revenue ignoring the statutory provisions as well as the binding decisions of this Court.” Revenue was also directed to pay cost of ₹ 50,000 to the Petitioner for the unnecessary harassment. (WP No. 543 of 2019, dt. 26-3-2019) (AY. 2016-17)

    Milestone Real Estate Funds v. ACIT (Bom) (HC), www.itatonline.org

65. S. 226: Collection and recovery – Assessee deemed in default – Stay – Rejection of stay application by a single line order stating petition rejected – Order set aside and directed the tax authorities to pass speaking order [S.220]

    AO passed an order of assessment under section 143(3). Against said order, assessee preferred an appeal before Commissioner (Appeals). Assessee also filed a stay petition before Assessing Officer seeking to stay recovery of disputed tax demand till disposal of appeal before Commissioner (Appeals). AO however passed an order calling upon assessee to pay 15 per cent of tax demand. Thus, assessee preferred an application before Revenue seeking for stay of demand of entire disputed tax. Revenue rejected said application by a single line order stating ‘Petition rejected, Assessing Officer to collect eligible demand’. On writ the Court held that since order of assessment did not reach its finality, assessee was entitled to file stay petition before Appellate Authority and canvas all points in support of their stay petition, therefore, in view of fact that revenue rejected assessee’s application by a single line order, without stating any reason or finding as to why application was liable to be rejected, impugned order was to be set aside with a direction to revenue to decide assessee’s application on merit and in accordance with law. (AY. 2012-13)

    Archit Khemka v. PCIT (2019) 261 Taxman 108 (Mad.)(HC)

66. S. 226 : Collection and recovery Stay of demand – The CBDT’s Circulars & Instructions are in the nature of guidelines & cannot substitute or override the basic tenets – The AO is required to assist a taxpayer in every reasonable way – Even if the assessee has not specifically invoked the three parameters for grant of stay, it is incumbent upon the AO to do so & pass a speaking order [S.220(3), 220(6)]

    The Court held that the ‘trinity’ of prima facie case, financial stringency & balance of convenience are basic tenets which are indispensable in consideration of a stay petition. The CBDT’s Circulars & Instructions are in the nature of guidelines & cannot substitute or override the basic tenets. The AO is required to assist a taxpayer in every reasonable way. Even if the assessee has not specifically invoked the three parameters for grant of stay, it is incumbent upon the AO to do so & pass a speaking order (WP. No. 3849 of 2019 and 4278 of 2019, dt. 13-2-2019) (AY. 2018- 19 )

    Kannammal (Mrs.) v. ITO (Mad)(HC), www.itatonline.org

    Jayanthi Seeman v. PCIT (Mad)(HC), www.itatonline.org

67. S. 234B : Interest – Advance tax – Sub-section (2A) to section 234B introduced by the Finance Act, 2015 is not retrospective and would be applicable to all proceedings in which orders are pending and/or in which orders under section 245D(4) are passed on or after 1-6-2015. [S. 234B (2A), 245D(4)]

    The Settlement Commission under section 245D(4) settled the case and had directed for levy of interest on the enhanced amount under sub-section (2A) to section 234B. The assessee filed the petition and contended that sub-section (2A) to section 234B introduced by the Finance Act, 2015 is not retrospective and would not be applicable as the petitioner had filed the application for settlement before sub-section (2A) to section 234B was enacted and Sub- section (2A) to section 234 B was inserted by the Finance Act, 2015 with effect from 1-6-2015. Dismissing the petition the Court held that, Sub- section (2A) to section 234B introduced by the Finance Act, 2015 is not retrospective and would be applicable to all proceedings in which orders are pending and/or in which orders under section 245D(4) are passed on or after 1-6-2015.

    Orchid Infrastructure Developers (P.) Ltd. v. UOI (2019) 261 Taxman 389 (Delhi)(HC)

68. S. 244A : Refunds – Interest on refunds – Refund of excess tax collected was withheld and refunded by department after a huge delay merely on ground of pendency of appeal filed by Revenue – Entitled to interest however not entitle to interest on interest [S.243, 244]

    Assessee’s claim for refund of excess tax collected was withheld and refunded by department after a huge delay merely on ground of pendency of appeal filed by Revenue. On writ the Court held that, since there was no stay granted by Appellate Authorities, assessee would be entitled to compensation by way of interest for such delay but assessee would not be entitled to interest on interest which was awarded as compensation. (AY. 2002 -03)

    Nirma Specific Family Trust. v. ACIT (2018) 100 taxmann.com 262 (Guj) (HC)

    Editorial: SLP of assessee for interest on interest is dismissed, Nirma Specific Family Trust. v. ACIT (2019) 262 Taxman 304 (SC)

69. S. 250 : Appeal – Commissioner (Appeals) – Guidelines for disposal of appeals – Incentive to CIT(A) – Target of disposal
    – Enhancement and penalty – Impermissible and invalid – Portion of Central Action Plan prepared by CBDT which gives higher weightage for disposal of appeals by quality orders i.e., where order passed by Commissioner (Appeals) is in favour of Revenue was to be set aside [S.119]

    Allowing the petition the Court held that the CBDT is empowered to lay down broad guidelines for disposal of appeals by CIT(A). However, it cannot offer ‘incentives’ to CIT(A) for making enhancement and levying penalty. Such policy transgresses the exercise of quasi-judicial powers & is wholly impermissible and invalid u/s. 119. The ‘Incentives’ have the propensity to influence the CIT(A) and they will be tempted to pass an order in a particular manner so as to achieve a greater target of disposal. Portion of Central Action Plan prepared by CBDT which gives higher weightage for disposal of appeals by quality orders i.e. where order passed by Commissioner (Appeals) is in favour of revenue was to be set aside. (WP No. 3343 of 2018, dt. 11-4-2019)

    Chamber of Tax Consultants v. CBDT (2019) 104 taxmnn.com 397 (Bom)(HC), www.itatonline.org
    

70. S. 253 : Appellate Tribunal – Territorial jurisdiction – Assessee situated at Moga within jurisdiction of Amritsar Bench – Order passed by Appellate Tribunal at Chandigarh without territorial jurisdiction – Order is null and void – Matter to be sent to Amritsar Bench for disposal [S.254(1)]

    The assessee-society filed an appeal before the Chandigarh Bench of the Tribunal against the order of the Commissioner (E) rejecting grant of registration under section 12AA of the Income-tax Act, 1961. The Tribunal directed the Commissioner (E) to grant registration and registration was granted. At that point of time, it was found that since the assessee was situated at Moga and the territorial jurisdiction was that of the Amritsar Bench of the Tribunal instead of the Chandigarh Bench. The Department filed an application stating that the order passed by the Chandigarh Bench Tribunal was without jurisdiction as the case falls within the territorial jurisdiction of Amritsar Bench. The application was dismissed. On appeal the Court held that if the Tribunal lacked territorial jurisdiction, the order passed was a nullity being without jurisdiction. The decision being right or wrong would not affect the jurisdiction of the Tribunal. The orders passed by the Chandigarh Bench of the Tribunal was set aside and the matter was sent to the Amritsar Bench of the Tribunal to decide the appeal afresh. (AY. 2009-10)

    CIT v. Baba Amarnath Educational Society (2019) 412 ITR 234 (P&H)

71. S. 254(1) : Appellate Tribunal – Duties – Non-speaking orders – The CIT(A) allowed the claim of expenditure and depreciation after verification of merits – Tribunal was not right in law in reversing the said conclusion without examination – Mater reminded – Liberty is granted to the assessee to bring the issue of reassessment after disposal of appeal by the Appellate Tribunal [S.260A]

    Allowing the appeal of the assessee the Court held that when the CIT(A) allowed the claim of expenditure and depreciation after verification of merits the Tribunal was not right in in law reversing the said conclusion without examination – Mater reminded. Liberty is granted to the assessee to bring the issue of reassessment after disposal of appeal by the Appellate Tribunal. (AY. 2006 -07)

    Shirpur Gold Refinery Ltd v Dy.CIT (2019) 262 Taxman 390 (Bom) (HC)

72. S. 254 (1): Appellate Tribunal – Power – Ex-parte order – Tribunal has statutory power to recall its order if it is satisfied that respondent has failed to appear before it for sufficient cause at time of hearing and to restore appeal [ITAT R. 25]

    Allowing the appeal the Court held that the Appellate Tribunal has statutory power to recall its order if it is satisfied that respondent has failed to appear before it for sufficient cause at time of hearing and to restore appeal. It cannot be said that Tribunal has no authority of law to consider application of assessee for recall of an order by which appeal was decided ex parte. (AY. 2005-06 and 2011-12)

    Dr. Gopal Dass Agarwal v. CIT (2019) 261 Taxman 158 (All.)(HC)

73. S. 254(1) : Appellate Tribunal- Powers – Payments prohibited by law – Reinsurance payments to non-Residents is not prohibited by law — The Tribunal has no power to exceed an order of remand by the High Court- Tribunal must decide issues raised in appeal — Tribunal has no power to declare Transaction illegal under different statute — Matter remanded to decide in accordance with law [S.37(1), 40(a)(i), Insurance Act, 1938, S. 2(16B), 101A, 114A]

    The Tribunal has no power to exceed an order of remand by the High Court. Tribunal must decide issues raised in appeal. Tribunal has no power to declare Transaction illegal under different statute. Reinsurance payments to non-Residents is not prohibited by law. Matter remanded to decide accordance with law. The Tribunal had no jurisdiction to declare any provisions of the regulations to be inconsistent with the provisions of the Insurance Act. This was wholly outside the purview of the Tribunal. The Tribunal did not consider the correctness of the order passed by the Assessing Officer or that of the Commissioner (Appeals). Therefore, the Tribunal could not have held that the Assessing Officer rightly disallowed the reinsurance premium under section 40(a)(i). This finding was not supported with any reasons. (AY. 2009-10)

    Note: Order in Dy. CIT v. Cholamandalam Ms. General Insurance Co. Ltd. (2018) 12 ITR (Trib)- OL 540 (Chennai) (Trib) is set aside and matter remanded.

    Cholamandalam Ms. General Insurance Co. Ltd. v. DCIT (2019) 411 ITR 386 (Mad.) (HC)

74. S. 254(2A): Appellate Tribunal – Stay- Appeal could not be decided by Tribunal due to pressure of pendency of cases and delay in disposal of appeal was not attributable to assessee in any manner-Interim protection of stay could continue beyond 365 days [S. 254(1)]

    Dismissing the petition of the Revenue the Court held that wherever appeal could not be decided by Tribunal due to pressure of pendency of cases and delay in disposal of appeal was not attributable to assessee in any manner, interim protection of stay could continue beyond 365 days. (AY. 2011-12)

    PCIT v. Comverse Network Systems India (P.) Ltd. (2019) 103 taxmann.com 313/ 262 Taxman 100 (P&H) (HC)

    Editorial: SLP of revenue is dismissed, PCIT v. Comverse Network Systems India (P.) Ltd. (2019) 262 Taxman 99 (SC)

75. S. 263 : Commissioner – Revision of orders prejudicial to revenue – Assessment after detailed enquiry – Income from house property – Income from other sources – Notice of revision is not valid [S. 143(3)]

    The Assessing Officer after scrutiny passed the order of assessment accepting the assessee’s declaration of rental income as well as computation of income from other sources. The Commissioner issued a notice of revision on the grounds that the rental income was too low and there had been excess deduction of expenses. On a writ petition to quash the notice. Court held that, the opinion that the rental income was low was based on comparison. The comparison was wholly erroneous. Firstly, the Commissioner merely proceeded to record that both the immovable properties, namely, the mall managed by the assessee-company and one managed by G, were situated in the nearby locality, without giving the distance between the two properties and without even prima facie ascertaining their respective locations. The Commissioner also merely adopted the respective municipal taxes of the two properties as the basis for considering commercial rental value of these properties. Regarding the expenditure the Assessing Officer had carried out detailed inquiry during the course of assessment proceedings. Merely because the Commissioner held a different belief that would not permit him to take the order in revision. Clearly a case of full inquiry had been made by the Assessing Officer before he made up his mind.

    This was not a case where there were no inquiries or no germane inquiries having been made. The notice of revision was not valid. (AY. 2013-14)

    Aryan Arcade Ltd. v. CIT (2019) 412 ITR 277 (Guj.) (HC)

76. S. 263 : Commissioner – Revision of orders prejudicial to revenue – Doctrine of merger – Where 80-IC deduction was originally denied by the AO on one ground which was subject matter of CIT(A) and the disallowance was deleted by CIT(A) – CIT could not invoke revision jurisdiction to deny the deduction on another ground. [S.80IC]

    In the return of income, the assessee claimed deduction u/s. 80-IC in respect of income from oil wells by describing itself as a mineral based industry. The deduction was denied by the AO on the ground that each well did not constitute a separate ‘undertaking’. The order of the AO was reversed by the CIT(A) and deduction was granted. Subsequently, the assessment order was sought to be revised by the Commissioner on the ground that the AO had not examined whether the assessee was a mineral based industry or not. Held that so far as the issue of deduction u/s. 80-IC was concerned, the order of the AO had merged with the order of the CIT(A) in terms of clause (c) of Explanation 1 to S. 263(1) as the AO and the CIT(A) had already adjudicated on the eligibility of the assessee to such deduction. The AO had proceeded on the basis of the information that the assessee was a mineral based industry. Furthermore, since the AO had already denied the deduction, there was no financial prejudice to the Revenue. Therefore, the proceedings u/s. 263 were wrongly initiated. (AY. 2005-06, 2006-07)

    Oil India Ltd. v. P CIT (2019) 175 DTR 185/ 307 CTR 403 /103 taxmann.com 339 (Gau.)(HC)

77. S. 263 : Commissioner – Revision of orders prejudicial to revenue – Bogus purchases and depreciation – Revision is held to be not valid [S.32, 69C]

Dismissing the appeal of the Revenue the court held that the Tribunal has given finding that the assessee has produced copies of invoices and challans, proof of payments, bank statements, transportation payments, vouchers for movement of goods etc, accordingly revision was held to be not valid.

CIT v. Century Plyboards (I) Ltd. (2019) 103 taxmann.com 178 / 262 Taxman 14 (Cal.) (HC)

Editorial: SLP of revenue is dismissed, CIT v. Century Plyboards (I) Ltd. (2019) 262 Taxman 13 (SC)

78. S. 271(1)(c) : Penalty – Concealment – Depreciation – Voluntary withdrawal of claim during course of assessment proceedings – Does not mean that assessee accepted guilt or giving wrong or false explanation – Levy of penalty is not justified [S.32]

Allowing the appeal the Court held that giving up the claim of depreciation under section 32 would not automatically entail penalty under section 271(1)(c). The imposition of penalty was neither automatic nor was expected to be imposed even if the bona fide explanation of the assessee was not accepted by the statutory authorities. There was no concealment on the part of the assessee. The purchase of the three pay loaders in question on the last day of the previous year was supported by the production of purchase invoices before the assessing authority. Even if the assessee was confused during the course of the assessment proceedings about the place of delivery, whether at T or P, it could not be said that the assessee’s statement was false because there was no rebuttal of the fact that the pay loaders were available ready for use at Chennai port before the last day was over on March 31, 2000. The assessee produced the relevant evidence before the assessing authority as well as the Commissioner (Appeals). For reasons best known to the assessee he gave up the claim for depreciation but that did not mean that the assessee admitted the guilt of giving a wrong explanation or a false explanation or having concealed his income or filing inaccurate particulars. There was absence of mens rea or guilty animus on the part of the assessee. No material brought on record by the assessing authority indicated or proved guilty animus on the part of the assessee. The order of the Tribunal restoring the penalty imposed by the Assessing Officer was set aside. (AY. 2000-01)

B. Loganathan. (2019) v. ITO 412 ITR 642 (Mad)(HC)

79. S. 271(1)(c) : Penalty – concealment – capital gain exemption claimed – Quantum addition is confirmed – Full disclosure was made – No mala fide intention – Deletion of penalty is held to be justified

Dismissing the appeal of the Revenue the Court held that though quantum additions were confirmed up to stage of Tribunal. The assessee had made full disclosures were made by assessee and issue was not free from doubt and on the basis of legal advice.

PCIT v. Samir Suryakant Sheth. (2019) 103

taxmann.com 197 / 262 Taxman 28 (Guj) (HC)

Editorial: SLP of revenue is dismissed, PCIT v. Samir Suryakant Sheth. (2019) 262 Taxman 27 (SC)

80. S. 271(1)(c) : Penalty – Concealment – Debatable issue
    – Merely because the addition is confirmed levy of penalty is not justified – Deletion of penalty on the sole ground that the High Court has admitted the Appeal and framed substantial questions of law, it cannot be said that the entire issue is debatable one and under no circumstances, penalty could be imposed.

Dispute between the assessee and the Department is with regard to payment of purchase of flat whether deduction u/s. 54F is available. The assessee had made bona fide claim. Neither any income nor any particulars of income were concealed. The Tribunal deleted the penalty on the sole ground that quantum appeal is admitted by the High Court. Dismissing the appeal of the revenue the Court held that merely because the addition is confirmed levy of penalty is not justified. relied on CIT v. Reliance Petroproducts Pvt. Ltd. (2010) 322 ITR 158 (SC). Court also observed that Merely because the High Court has admitted the Appeal and framed substantial questions of law, it cannot be said that the entire issue is debatable one and under no circumstances, penalty could be imposed. Referred, CIT v. Dharamshi B. Shah (2014) 366 ITR 140 (Guj.)

(HC)) (ITA No. 169 of 2017, dt. 19-3-2019) (AY. 2006-07)

PCIT v. Rasiklal M. Parikh (Bom)(HC), www.itatonline.org

81. S. 271AAA : Penalty – Search initiated on or after 1st June, 2007 – Manner of earning the undisclosed income to be given in the statement under 132(4) only if a question is asked to that effect-Deletion of penalty is held to be justified [S. 132(4)]

    As per sub-section (2) of section 271AAA, no penalty is leviable under sub-section (1) if the assessee in his statement recorded under section 132(4) admits the undisclosed income, specifies the manner in which such income has been earned and satisfies certain other conditions. Held that where the assessee had admitted the undisclosed income but not specified the manner in which such income was earned in his statement under section 132(4), penalty under the section was still not leviable since the Officer had not asked a question requiring the assessee to specify the manner in which such income was earned. Appeal of Revenue is dismissed.

    PCIT v. Phoenix Mills Ltd. (2019) 175 DTR 433/307 CTR 700 (Bom.)(HC)

82. S. 271C : Penalty – Failure to deduct tax at source – Pendency of appeal before Appellate Tribunal – Revenue authorities should be restrained from passing any order imposing penalty [S.201, 206AA]

    On account of assessee’s failure to deduct tax at source, AO raised demand under S. 201 and during pendency of appellate proceedings, he initiated penalty proceedings under S. 271C of the Act. On writ the Court has directed that so long as appeal was pending before Tribunal, revenue authorities should be restrained from passing any order imposing penalty on assessee under sections 271C and 206AA of the Act. (AY. 2018-19)

    Uber India Systems (P.) Ltd. v. JCIT (2019) 262 Taxman 133 (Bom)(HC)

83. S. 271C : Penalty – Failure to deduct at source – Delay in paying whole or part of tax deducted at source – Reasonable cause – Penalty can be waived or reduced – Interpretation – When there is ambiguity interpretation in favour of assessee is to be adopted [S.194C, 276C(1), 273B]

    Question before the Full Bench was whether for delay in paying whole or part of tax deducted at source, penalty can be waived or reduced. Court held that S. 271C (1) of the Income- tax Act, 1961 deals with penalty in cases of deduction of tax at source. Under the first clause, i. e., clause (a), penalty is for failure to deduct tax at source, as required by or under the provisions of Chapter XVII-B and under no other circumstances. Under the second clause, i.e., clause (b), penalty is for failure to pay the whole or any part of the tax, as further clarified by the words which follow the said stipulation, i.e., “as required by or under, (i) sub-section (2) of section 115-O; or (ii) second proviso to section 194B.” Except for the failure with respect to the above two instances, no other instance is mentioned under clause (b) to attract payment of penalty.

    Section 115-O is part of Chapter XII-D and it does not come within the purview of any deduction under Chapter XVII-B envisaged under clause (a) of section 271C(1). Section 194B, on the other hand, definitely comes under Chapter XVII-B. The Chapter contains various instances of deduction of tax at source. In so far as the law makers have taken a conscious decision to identify only section 194B of Chapter XVII-B of the Act (leaving the payment of tax deducted in respect of other instances in the very same Chapter) to be liable to penalty, the instances covered by clause (a) of section 271C(1) cannot be read into clause (b) of section 271C(1). In other words, it is not for the court to rewrite the law or question the legislative wisdom of the law makers in this regard. However, a doubt may arise as to whether there was any intent on the part of the law makers to let the defaulters go scot free, if penalty cannot be levied upon them for non-payment even after deduction of tax, which is a more serious lapse than the failure to deduct tax. The situation has been taken care of by Parliament, in section 276B of the Act, providing for prosecution in specific circumstances. Even in a case where there is some delay in effecting payment of tax, if proper and sufficient reasons are shown for the delay involved, the mitigating circumstances can very well be considered by the competent authority, who can waive the penalty (wherever penalty can be legally imposed) or reduce it to an appropriate extent. This is the mandate of section 273B. Once the burden is discharged by the person or assessee as to the existence of good and sufficient reason for not complying with the stipulation under section 271C, it is for the authorities to consider with proper application of mind, whether the penalty is to be waived or reduced, based on the facts and circumstances. Section 271C of the Income-tax Act is quite categorical. Its scope and extent of application is discernible from the provision itself, in unambiguous terms.

    Circular No. 551 dt. 23-1-1990 (1990) 183 ITR 7 (St) deals with the circumstances under which section 271C was introduced in the statute book, for levy of penalty. On deduction of tax, if there is delay in remitting the amount to the Revenue, it has to be satisfied with interest as payable under section 201(1A) of the Act, besides the liability to face the prosecution proceedings, if launched in appropriate cases, in terms of section 276B of the Act. This alone has been sought to be explained in the Circular issued by the CBDT. Even according to the CBDT, no penalty is envisaged under section 271C of the Act for non-payment of the tax deducted at source. Court also observed that, it is settled law that if the interpretation of a fiscal enactment is in doubt, the construction most beneficial to the subject or assessee should be adopted, even if it results in obtaining an advantage to the subject or assessee.

    Note : U. S. Technologies International Pvt. Ltd. v. CIT (2010) KHC 6118 ; and Classic Concepts Home India Pvt. Ltd. v. CIT (2016) 383 ITR 626 (Ker) (HC) is overruled.

    Lakshadweep Development Corporation Ltd. v. ACIT (TDS) (2019) 411 ITR 213 (FB) (Ker) (HC)

84. S. 276C : Offences and prosecutions – Wilful attempt to evade tax – None of the authorities gave clear finding about evading tax wilfully – Minor lapse on the part of the assessee of not mentioning stock, undisclosed income in the facts of this case do not attract launch of prosecution- Prosecution proceedings were quashed [S.277, 278B]

    Allowing the petition to quash the prosecution proceedings the Court held that none of the authorities gave clear finding about evading tax wilfully. Minor lapse on the part of the assessee of not mentioning such a stock, undisclosed income in the facts of this case do not attract launch of prosecution under S. 276-C (i) and 277 read with S. 278-B of the Act. Accordingly, application is allowed by quashing and setting aside the impugned criminal proceedings launched by respondent and Rule is made absolute.

    N. R. Agrwal Industries Ltd v. JCIT(2019) 173 DTR 145 (Guj) (HC)

85. S. 281 : Certain transfers to be void – Attachment of property – Transfer of property before assessment order was passed- Transfer is not void – Order of attachment by Tax recovery Officer is held to be void – [S. 156, 220 to 232, Second Schedule, R. 2, 4, 16(2), 48]

    On a writ petition challenging the order of attachment the Court held that the guarantor had filed a return of income on July 31, 2009. His case was selected for scrutiny. Notices under section 143(2) were issued in September 2010 and February 2011. A notice under section 142(1) was issued on February 23, 2011. The order of assessment was passed only on December 27, 2011 under section 143(3). Consequently, the demand notice under section 156 was issued only on December 27, 2011, giving the managing partner of the guarantor thirty days’ time. Even if the period of thirty days was counted from the date of the notice, i.e., December 27, 2011, the notice period would expire on January 26, 2012. Therefore, the managing partner of the guarantor became an assessee- in-default in terms of section 220(4) only on January 26, 2012. The tax recovery certificate was issued on January 9, 2014. The order of attachment was issued on March 14, 2018. But the mortgage was created by the guarantor in favour of the bank on July 11, 2011, much before the order of assessment was passed under section 143(3) on December 27, 2011. Hence the creation of the mortgage could not be said to have automatically become void in terms of section 281(1) merely because of the pendency of the proceedings under sections 143 and 142. It required something more to be done, but it was not done in this case. As a matter of fact even an investigation under Rule 11 was not carried out. Therefore, the order of attachment was illegal. On the date on which the order of attachment was passed, the property had already been sold by the bank, in exercise of the power conferred upon the bank under the 2002 Act. The order of attachment was set aside. The Sub-Registrar was to proceed to register the sale certificate issued by the bank upon compliance with the necessary formalities. (AY. 2009-10)

    ICICI Bank Ltd. v. TRO (2019)411 ITR 518 (T&AP) (HC)

    Black Money (Undisclosed Foreign Income and Assets) and Imposition Act, 2015. (2015) 375 ITR 1(St),

86. S.50 : Punishment for failure to furnish return of income – Where the assessee did not disclose its foreign assets in the course of search as well as in the settlement commission proceedings, he was liable to prosecution under the provisions of Black Money Act. [S. 55, 71, ITA, S.153A]

In its return of income, the assessee did not disclose its 4 bank accounts maintained in a foreign bank which were inherited by him from his mother. The details of such accounts were found in the course of search and seizure. Assessee’s subsequent application to settlement commission was rejected on account of failure to make true and honest disclosure. The assessment was finally completed u/s. 153A considering the 4 bank accounts maintained outside India. In the proceedings under the Black Money Act, the assessee argued that he was prevented from making disclosure under the Black Money Act (S. 71) as the proceedings were pending u/s. 153A of the Act. It was further argued that the Black Money Act came into force on 1st April, 2016 and could not be given a retrospective effect. Held that the Authorities had invoked sections 50 and 55 of the Black Money Act and not section 71 to prosecute the petitioner. Further, the Petitioner had the opportunity to make disclosure under the Search as well as the Settlement proceedings, but it chose not to do so. The failure to disclose under section 153A of the IT Act, 1961 was punishable under the Black Money Act. Further, the failure to disclose on the part of the Petitioner was subsequent to the coming into force of the Black Money Act. It could therefore not be said that a retrospective effect was sought to be given to the Black Money Act. The assessee was liable for violation of the provisions of Black Money Act. Writ petition to quash the prosecution proceedings was dismissed. (AYs. 2009-10 to 2015-16)

Shrivardhan Mohta v. UOI (2019) 175 DTR 161/307 CTR 396/102 taxmann.com 273 (Cal.) (HC)

Editorial: Refer Black money Act, Circulars, clarification etc. (2015) 375 ITR 1(St), (2015) 374 ITR 35(St),(2015) 375 ITR 97(St), (2015) 375 ITR 128(St) , (2015) 378 ITR 8 (St)

1. S. 12AA : Procedure for registration – Trust or institution – Bogus donation – Appellate Tribunal remanded the matter for grant of opportunity to assessee to cross examine representative of donor – High Court quashing cancellation of registration on the ground that single instance of bogus donation cannot be the sole ground for cancellation of registration Order of High Court is set aside and the Commissioner directed to decide on merits [S. 12AA(3), 80G(5) (vi)]

   Allowing the appeal of the Revenue the Court held that the Appellate Tribunal remanded the matter for grant of opportunity to assessee to cross examine representative of donor, the High Court quashed cancellation of registration on the ground that single instance of bogus donation cannot be the sole ground for cancellation of registration. Order of High Court was set aside and the Commissioner directed to decide on merits. (Note Judgment of Calcutta High Court is reported in (2019) 411 ITR 236.

   CIT v. Jagannath Gupta Family Trust (2019) 411 ITR 235 (SC)

2. S. 14A : Disallowance of expenditure – Exempt income – In the absence of any exempt income no disallowance can be made [R.8D ]

   In the absence of any exempt income, no disallowance is permissible (CIT v. Essar Teleholdings Ltd. (2018) 401 ITR 445 (SC) followed, Cheminvest Ltd v. CIT (2015) 378 ITR 33 (Delhi)(HC) approved). (SLP No. 2755/2019, dt. 16-2-2018)

   PCIT v. Oil Industries Development Board (2019) 262 Taxman 102 (SC), www.itatonline.org
   

   Editorial: PCIT v. Oil Industries Development Board (2019) 103 taxmann.com 325 (Delhi)(HC) is affirmed. (ITA No. 187/2018 dt 16-2-2018)

3. S. 43B : Deductions on actual payment – Interest payable to Banks – Conversion of unpaid interest into funded interest Loan – Not allowable as deduction – Explanation 3C to section 43B inserted with retrospective effect from 1-4-1989 by the Finance Act, 2006.

   Allowing the appeal of the Revenue the Court held that conversion of unpaid interest into funded interest Loan is not allowable as deduction in view of Explanation 3C to section 43B inserted with retrospective effect from 1-4-1989, by the Finance Act, 2006. (AY. 2001-02)

   CIT v. Gujarat Cypromet Ltd. ( 2019) 412 ITR 397 (SC)

   Editorial: Decision in CIT v Gujarat Cypromet Ltd. (2019] 412 ITR 398 (Guj.) (HC) reversed.

4. S. 80HHD : Convertible foreign exchange – Hotel – Tour operator – Double deduction under Chapter VIA – Entitlement of deduction under diverse provisions in respect of same income – Matter referred to larger Bench [ S.80IA ]

   The question before the High Court was whether an assessee was entitled to claim deductions under diverse provisions in respect of same income, if assessee qualified under various provisions. i.e. S. 80HHD and 80-IA. Following the judgment in EIH Ltd v. CIT (2011) 338 ITR 503 (Cal.) (HC) the Court held that if assessee was entitled to claim deduction under more than one head, the assessee must be left free to do so, subject to deduction not being more than income earned under such head. Issue had been referred to a larger bench for reconsideration in ACIT v. Micro Labs Ltd (2016) 380 ITR 1 (SC). Following the same SLP of Revenue is was allowed and matter directed to be listed along with SLP (Civil) No. 19005/ 2012.

   PCIT v. E.I.H. Ltd. (2019) 262 Taxman 6 (SC)

   Editorial : Refer PCIT v. E.I.H. Ltd. (2019) 103 taxmann. com 203 (Cal.) (HC) / 262 Taxman 7 (Cal.) (HC)

5. S. 139AA : Quoting of Aadhaar number – From assessment years 2019-20, linkage of PAN with Aadhaar card is mandatory

   High Court had permitted the assessee to file Income tax returns for the assessment year 2018-19 without linking their Aadhaar and PAN numbers and also directed that Income Tax Department would not insist on

   production of their Aadhaar number. When the High Court passed the order the matter was spending before the Supreme Court. Thereafter Supreme Court decided the matter and upheld vires of section 139AA of the Act. In view thereof, linkage of PAN with Aadhaar card was mandatory. As the assessment for the assessment year 2018-19 was completed, for the subsequent assessment years Income tax Return shall be filed in conformity to Supreme Court order.

   UO v. Shreya Sen (2019) 262 Taxman 370 /174

   DTR 265/ 306 CTR 609 (SC)

   Editorial : Shreya Sen v. UOI ( 2018) 257 taxman

   95/ 407 ITR 37 (Delhi) (HC) (para 3) reversed.

6. S. 142(2C) : Inquiry before assessment – Special audit – AO is entitle to suo motu extend the time without an application by the assessee – The amendment by FA 2008 was intended to remove an ambiguity and is clarificatory in nature – There exists a presumption of retrospective application in regard to amendments which are of a procedural nature – Orders of High Courts set aside and matter remanded to Appellate Tribunal to decide on merits. [S. 142, 153A, 153B]

   The Division Bench of the Delhi High Court in a batch of appeals filed by the Revenue against the order of Tribunal came to the conclusion that prior to insertion of the expression “suo motu” with effect from 1 April 2008 in Section 142(2C), the Assessing Officer had no jurisdiction to extend time for the submission of the report of an auditor appointed under

   sub-section (2A) of his own accord. As a consequence, it was held that the assessment which was made under Section 153A, in respect of the assessment in question was barred by limitation. The assessee contended that the Assessing Officer had no jurisdiction or authority under section 142(2C), as it stood prior to 1st April 2008 to extend time for the submission of the audit report of the auditor appointed under the provisions of sub section (2A). In essence, the submission is that the assessing officer was authorised to extend time (not exceeding 180 days) from The date on which a direction under sub-section (2A) was received by the assessee, only on an application made by the assessee and for any good and sufficient reason. If the assessee made an application, the Assessing Officer would have no jurisdiction to extend time. Revenue adopted a contrary position submitting that even before 1st April, 2008, the jurisdiction of the assessing Officer to extend time for submission of audit report was not confined to a situation in which the assessee had made an application for extension. Consequently, the incorporation of a provision for a suo motu exercise of power by the Assessing Officer, with effect from 1st April 2008 by the Finance Act 2008 was only intended to remove an ambiguity and was clarificatory in nature. Allowing the appeal of the Revenue the Court held that the AO who has fixed the time in the first instance must necessarily, as an incident of the authority to fix time, be entitled to suo motu extend time without an application by the assessee. The amendment by FA 2008 was intended to remove an ambiguity and is clarificatory in nature. There exists a presumption of retrospective application in regard to amendments which are of a procedural nature. Order of High Court was set aside and matter restored to the file of Appellate Tribunal to decide on merits. (CA. No. 3211 of 2019, dated 26-3-2019).

   CIT v. Rama Kishan Dass (2019) 103 taxmann.com 4 14 /276 DTR 225/ 307 CTR 777 (SC), www.itatonline.org.

   Editorial: Order in CIT v. Bishan Swaroop Ram Kishan Agro Pvt. Ltd. (2011) 203 Taxman 326 (Delhi) (HC) is reversed.

7. S. 147: Reassessment – Change of opinion – High Court was directed to decide whether requirement of S.148 was satisfied or not [S.143(1), 143(3)]

   Allowing the appeal of the Revenue the Court held that, High Court should decide (i) validity of S. 148 notice where assessment is made u/s 143(1) & not u/s 143(3), (ii) whether notice can be said to be based on change of opinion if there is no foundation to form any such opinion, (iii) Whether requirements of S. 148 are satisfied, namely, that it contains the facts constituting the “reasons to believe” and furnishes the necessary details for assessing the escaped income and (iv) whether finding recorded by ITAT on merits is legally sustainable. (CA No. 3450 of 2019, dt. 08.04.2019)(AY. 1999-00).

   PCIT v. Nokia India Pvt. Ltd. (2019) 413 ITR 146/ 176 DTR 291 / 308 CTR 20 (SC), www.itatonline. org

   Editorial: Order in ( ITA No. 854 of 2016 dt. 21-04 2017 ) PCIT v. Nokia India Pvt. Ltd. ( Delhi) (HC) is set aside

8. S. 245D : Settlement Commission- Power – Settlement Commission does not have power to reduce or waive interest statutorily payable under S. 234A, 234B, and 234C of the Act – Matter remanded to Settlement Commission. [S. 154, 234A, 234B, 234C, 245D(4), 245D(6), 245F]

   Settlement Commission while passing the order u/s 245D(4) made certain addition and also waived the interest levied u/s. 234A, 234B and 234C of the Act. On rectification application filed by the Revenue the Settlement Commission partly allowed the application. Being aggrieved by the order of Settlement Commission the assessee filed two writ petitions before the High Court. High Court set aside the rectification order passed by the Settlement Commission. Being aggrieved Revenue filed two petitions before the High Court. High Court reversed the waiver of interest in terms of Settlement Commission‘s direction contained in its order dated 11-10-2002. On appeal the Court held that, when Settlement Commission passed first order disposing of assessee’s application, issue with regard to powers of Commission was not settled by any decision of Apex Court. Decisions in CIT v. Anjum M. H. Ghaswala (1997) 252 ITR 1 (SC)
   and Brij Lal v. CIT ( 2010) 328 ITR 477 (SC), were rendered after Settlement Commission passed order in present case. Therefore, Commission had no occasion to examine issue in question in context of law laid down by this Court in those two decisions. High Court instead of going into merits of issue, should have set aside original order passed by Commission and remanded case to Commission for deciding issue relating to waiver of interest payable under Ss 234A, 234B, and 234C afresh. High Court failed to see that order of Commission was already set aside by High Court itself in first round in light of law laid down by in case of Brij Lal wherein, it was laid down that Commission had no power to pass orders u/s 154. Order passed by Settlement Commission to the extent it decided issue in relation to waiver of interest was set aside and case was remanded to Commission to decide issue afresh. Settlement Commission in exercise of its power under Sections 245-D(4) and (6) does not have the power to reduce or waive interest statutorily payable under Sections 234-A, 234-B and 234-C except to the extent of granting relief under the circulars issued by the Board under Section 119 of the Act.

   Kakadia Builders Pvt. Ltd. v. ITO (2019) 412 ITR 128 / 175 DTR 305 / 307 CTR 369 / / 262 Taxman 268 (SC)

   Editorial: Refer Kakadia Builders Pvt. Ltd. v. ITO (2014) 362 ITR 342 (Guj) (HC)

9. S. 260A : Appeal – High Court – Where High Court does not dismiss appeal in limine but has dismissed it after hearing both parties, in such a situation, High Court should frame questions and answer them by assigning reasons accordingly one way or other – Matter remanded – Duty to record reasons. [S. 260A(4), 260A(5)]

   Allowing the appeal of the Revenue the Court held that; where High Court does not dismiss appeal in limine but after hearing both parties, in such a situation, High Court should frame questions and answer them by assigning reasons accordingly one way or other by exercising powers under sub-sections (4) and (5) of section 260A of the Act. Accordingly the matter was remanded. Every order or judgment which decides a lis between parties must contain the reasons or grounds for arriving at a particular conclusion. Indeed, what is decisive for deciding the case is not the conclusion alone but the reasons or grounds assigned in support of such conclusion, which results in reaching such conclusion. In order to decide whether or not an order is legally sustainable, the Appellate Court is entitled to know what impelled the Court below to pass such order in favour of one party and against the aggrieved party. (AY. 1987-88 to 4-9-1997)

   CIT v. Rashtradoot (HUF) (2019) 412 ITR 17 /262 Taxman 360 / 175 DTR 265/ 307 CTR 375 (SC)

   Editorial: Arising from the order of High Court in CIT v. Rashtradoot (HUF) (2019) 104 taxmann.com 3 ( Raj) (HC)

10. S. 260A : Appeal – High Court – Revision – Amortisation of preliminary expenses – Bank – Expenses in relation to initial public offer – Revision was quashed by Appellate Tribunal and upheld by High Court – Matter remanded to High Court to frame question of law and decide the matter [S. 35D, 263 ]

    Allowing the appeal of the Revenue, the Court held that firstly, the High Court did not frame any substantial question of law as required under section 260A of the Act though it heard the appeal bipartite. In other words, the High Court did not dismiss the appeal in limine on the ground that it did not involve any substantial question of law. Secondly, the High Court dismissed the appeal without deciding any issue arising in the case saying that it was not necessary. Thirdly, the main issue involved in this appeal with regard to the applicability of section 35D of the Act to the assessee was not decided. The High Court should have framed the substantial question of law on the applicability of section 35D of the Act in addition to other questions and then answered them in accordance with law. Since the issue with regard to applicability of section 35D of the Act to the assessee was already pending consideration before the High Court in appeal, both the appeals should be decided together. (AY. 2007-08)

    CIT v. Yes Bank Ltd. (2019) 412 ITR 459 / 307 CTR 593/ 175 DTR 409 (SC)

    Editorial: Decision in CIT v. Yes Bank Ltd (ITA No. 599 of 2015 dated 1-8-2017 (Bom) (HC) is set aside.

11. S. 260A : Appeal – High Court – Without admitting the appeal and framing any question of law and dismissing it is not in conformity with the mandatory procedure – High Court is directed to hear the appeal following the mandatory procedure [S. 260A(2) (C), 260A(3)]

    Allowing the appeal of the Revenue the Court held that there is a distinction between questions proposed by the appellant for admission of the appeal (u/s. 260 A(2)(c)) and the questions framed by the Court (u/s. 260 A(3)). The High Court has to formulate substantial question of law and only thereafter hear the appeal on merits. If the High Court is of the view that the appeal does not involve any substantial question of law, it should record a categorical finding to that effect & dismiss the appeal in limine. However, it cannot, without admitting the appeal and framing any question of law, issue notice to the respondent, hear both parties on the questions urged by the appellant and dismiss it. This is not in conformity with the mandatory procedure prescribed in S.260A of the Act. (CA No. 3968 of 2019, dated 16-4-2019) (AY. 2008-09)

    PCIT v. A. A. Estate Pvt. Ltd (2019) 176 DTR 441/

    308 CTR 193 (SC), www.itatonline.org

12. S. 260A : Appeal – High Court – Defunct companies – The fact that the assessee company stands dissolved as a defunct company u/s. 560(5) of the Companies Act, 1956 does not mean that income- tax proceedings & appeals become infructuous. The liability against such companies has to be dealt with in accordance with s. 506(5) proviso (a) of the Companies Act and Chapter XV of the Income Tax Act which deal with “liability in special cases” and “discontinuance of business or dissolution”

    High Court dismissed the appeal of the Revenue on the ground that Court held that since the respondent Company stands dissolved as a result of the order passed by the Registrar of the Companies under Section 560(5) of the Companies Act, the appeal filed against such Company which stands dissolved does not survive for its consideration on merits. Court held that the fact that the assessee company stands dissolved as a defunct company u/s 560(5) of the Companies Act, 1956 does not mean that income-tax proceedings & appeals become infructuous. The liability against such companies has to be dealt with in accordance with s. 506(5) proviso (a) of the Companies Act and Chapter XV of the Income Tax Act which deal with “liability in special cases” and “discontinuance of business or dissolution”. Order of High Court is set aside and High Court directed to decide the appeal within six months. (CA No. 2922 of 2019, dated 12-3-2019)

    CIT v. Gopal Shri. Scrips Pvt. Ltd (2019) 175 DTR 412/ 307 CTR 596/ 262 Taxman 356(SC), www.itatonline.org
    

13. S. 260A : Appeal – High Court – Delay of 224 days – Ex-Chairman’s health ailment was sufficient cause – Delay was condoned and High Court is directed to hear the appeal on merits

    The assessee’s appeal was delayed by 224 days. High Court refused to condone the delay. On appeal to Supreme Court the Apex Court held that, Ex-Chairman’s health ailment was sufficient cause. Accordingly the delay was condoned and High Court is directed to hear the appeal on merits.

    Aakash Lavlesh Leisure (P.) Ltd. v. ITO (2019) 262 Taxman 2 (SC)

    Editorial: Aakash Lavlesh Leisure (P.) Ltd. v. ITO (2019) 103 taxmann.com 247/ 262 Taxman 4 (Bom) (HC)

14. S. 261 : Appeal – Supreme Court – Binding precedent – Merger – Interpretation – Review – Special Leave Petition was dismissed against High Court order in limine without giving any reasons, review petition filed by appellant, in High Court would be maintainable. [Art. 136, 141]

Allowing the appeal the Court held that, in case of an order refusing Special Leave to appeal, either a non-speaking order or a speaking one, the order of High Court, Tribunal or Authority below could not be said to be have merged with the order of the Supreme Court rejecting Special Leave Petition. Therefore review petition filed by appellant in High Court would be maintainable in a case where the Special Leave Petition was dismissed against a High Court order in limine without giving any reasons. However on an appeal having been preferred or a petition seeking leave to appeal having been converted into an appeal before Supreme Court, jurisdiction of High Court to entertain a review petition is lost as provided by sub-rule (1) of rule 1 of order 47 CPC. (CA No. 2432 of 2019, dated 1-3-2019).

Khoday Distilleries Ltd. v. Sri Mahadeshware Sahakara Sakkare Kharkhane Ltd. (LB) (2019) 262 Taxman 279/ 176 DTR 273/ 308 CTR 1 (SC), www.itatonline.org

This issue of the All India Federation of Tax Practitioners Journal is dedicated to Late Dr. N. M. Rankaji, Senior Advocate and Past President of AIFTP who passed away recently. He was a member of the Editorial Board of the Journal. On the passing away of Respected Rankaji, a dedicated life has come to an end. Rankaji was a man of versatile gifts and genial personality. His life was a life of unveiling. So far as the Federation is concerned, it is a great loss for all of us. Rankaji was a pillar of the Federation. Personally, the passing away of Respected Rankaji is a great loss to me. I was always fortunate to have his love and affection towards me. In fact he endeared himself to one and all with whom he came into contact. I can only say that though he has left this soil, but there is a fragrance left behind, which will never die away.

On 5th of July, 2019, the whole Nation would be applauding the first lady Finance Minister of India presenting the Union Budget in Parliament. After the landslide victory of the BJP in the last general elections there are lot of expectations of the people of the country from the Finance Minister to be fulfilled in this budget. Economic reforms, tax relief, simplification of corporate tax structure have been an age old demand that people want to be met in the Union Budget 2019. There are lot of expectations from the new Finance Minister that the basic slab rate and the exemption limit under the Income Tax Act shall be revised giving relief to the tax payers in the scenario of inflation. Special attention needs to be given to the real estate sector to help the real estate sector which is facing a lot of difficulties. The Finance Minister shall have a tough time inasmuch as she shall have to, on the one hand try to fulfil the expectations of the people in general and on the other hand, take measures for the increase in the revenue collection as well as for the economic growth of the country.

So far as the Goods & Services Tax is concerned, lot needs to be done to simplify the procedures as well as lowering the tax rates.

It will be interesting to watch and see as to how the Finance Minister meets the challenges and expectations of the people qua the economic growth of the Country as well as enhanced revenue collection.

Dr. Ashok Saraf
National President, AIFTP

A Tribute

The Late Dr. N. M. Ranka, Sr. Advocate, a legend in the tax profession who followed the principles of Mahatma Gandhiji, was not only a role model for tax professionals but also good human being who possessed the humble attributes of humility, patience and respect for others.

Dr. N. M. Ranka, Senior Advocate, one of the tallest figures in the Tax Bar has left for his Heavenly Abode on 30-5-2019. My first memory of interaction with Dr. N. M. Ranka was in the year 1994 when Shri P. C. Joshi was elected as the President of the All India Federation of Tax Practitioners (AIFTP). Since then I had been closely associated with the late Dr. N. M. Ranka in various spheres under the umbrella of the AIFTP such as the educational activities, the Journal and various other publications of the AIFTP.

When Dr. N. M. Ranka was elected as the National President of the AIFTP, he insisted upon my nomination as the Dy. President of the AIFTP. In three years of his tenure as the President of the AIFTP, I had the pleasure of interacting closely with him and got acquainted with many of his admirable qualities.

In the year 2000, the AIFTP had arranged a National Convention at Jaipur. When we reached Jaipur to attend the conference, Dr. N. M. Ranka was personally present early in the morning to receive the delegates at the Railway Station. This is a reflection upon his simplicity and his humble nature. Dr. N. M. Ranka was a firm believer in spreading knowledge by arranging seminars and publications. Out of the 35 or more educational books published by the AIFTP, a lion’s share of the contribution can be credited to his academic inputs as well as his unwavering administrative support. Dr. N. M. Ranka was also the first person to guide us whenever the AIFTP embarked upon any endeavour of public interest through litigation or otherwise and the Federation has gained greatly through his experience and guidance.

The office premises of the AIFTP was acquired in the year 2001 in his tenure as president. Having its head office in the commercial capital in the heart of Mumbai has helped the AIFTP to be a forerunner in disseminating knowledge and education and the Federation today has more than 7,500 members from across the Country. Dr. N. M. Ranka was one of founders who had initiated the ITAT Bar Association’s Co-ordination Committee and pursued the National Executive of the AIFTP to adopt the code of ethics which is an integral part of the Constitution of the AIFTP, which was subsequently adopted by many leading professional organisations in India including the illustrious ITAT Bar Association, Mumbai.

Dr. N. M. Ranka started the ‘Ranka Trust Memorial Moot Court Competition’ in association with the Rajasthan University. Even today his legacy is preserved and flourishing in the form of the participation of more than a hundred law colleges from across the country, which is undoubtly proving instrumental in the development of the legal profession. I have had the opportunity of attending one of the Moot Court competitions as a guest of honour and am proud to have contributed in that capacity to his vision.

Dr. N. M. Ranka has always persevered in his quest to spread knowledge and education. He always advised the members of AIFTP to arrange seminars and lectures in remote places of the Country so that even a tax practitioner who is practicing at taluka level can benefit and gain knowledge from the senior members of the tax profession and be well Equipped to deal with the complex situations. Dr. N. M. Ranka was actively involved with and connected to various educational institutions through which he actively participated in the process of grooming of the youth that will shape the destiny of this country. He was a person who not only preached simplicity but also followed the same. By donating his body to the hospital for the education of medical students, he has became immortal.

Dr. N. M. Ranka was a soft spoken person who could be very firm on his views when the issues related to values and ethics. His passion for propagation of learning is symbolised by his present to me of two marble idols of the goddess Saraswati, the goddess of learning. I have kept one at home and another one at the office and offer the goddess my prayers every day in the morning. He was so involved in the development of our profession that he used to call me on an almost fortnightly basis to discuss about the activities of AIFTP and of the ITAT and its bar, etc.

It is very difficult to believe that Dr. N. M. Ranka is no more with us. It is a great loss to the tax profession and a personal loss to me as well. He was like an elder brother to me and a steadfast anchor who used to support all the educational and knowledge spreading activities of the AIFTP. Tax professionals across the country have paid a rich tribute to late Dr. N. M. Ranka, showing him tremendous love and respect.

In his ‘Vision to AIFTP’ in ‘40 years of Milestones and Beyond’ published in the year 2016, he

wrote as under :—

Gandhian Values : There is need to reiterate Gandhian values. We must translate his ideals into real life. Let us have an “Inner Revolution” and transform ourselves. Let each one of us, evolve ways and means whereby to change the work culture and mindset for public good and in public interest. What is required is : Unity of thoughts, unity of understanding and unity of action to achieve the goal as envisaged in the Constitution with due regard of DUTIES, dignity, liberty and humanity. Future is bright. Maintain its dignity, honour and reputation. Serve Humanity. JOIN IN SACRED CAUSE, BE CLEAN HUMAN BEING – “ INSAAN”. (Pg. 83)

Last part of his vision was ‘Solemn Pledge’. “Life is a success. Not by prosperity, not by pleasure of the flesh, but by a clean soul, when death itself would be deliverance. Soul is immortal. Keep it pure. Let us pledge to be honourable members of the unique Federation. Spread it. Enhance its glory. Serve tax fraternity with Humanity. Service to distressed tax payers and tax practitioners is Service to Divinity. Be helpful to all members of the Federation and treat them as members of your expanded family. It would give you utmost satisfaction of life. Property may be destroyed and money may lose its purchasing power, but character, health, knowledge and good judgment will always be in demand under all conditions” (Pg. 90)

As a member of the AIFTP, a real Tribute to the Late Dr. N. M. Ranka, Sr. Advocate shall be to follow his vision and to continue his legacy of imparting both technical and ethical education.

“We, as the members of the Federation mourn the sad demise of Dr. N. M. Ranka and express our heartfelt condolences to the members of his family. May his soul eternally rest in peace“.

Dr. K. Shivaram
Chairman, Editorial Board