145. S.2(14)(iii) : Capital gains –Capital asset – Agricultural land – Mere conversion of land by the purchasers into non-agricultural and its uncultivation for long time would not make land considered as non-agricultural
     

     Tribunal held that merely because purchasers converted land to non-agricultural and it remained uncultivated for long time, would not make it as non-agricultural at time of selling of land. Land sold could not be treated as a capital asset u/s. 2(14). (AY. 2010-11)

     Mohit Suresh Harchandrai v. ACIT (2017) 164 ITD 1 (Mum.)(Trib.)

146. S.4 : Charge of income-tax – Capital or revenue – Interest subsidy received under Technology Upgradation Fund Scheme is capital receipt
     

     The Tribunal held that receipt of subsidy under the West Bengal Incentive Scheme, 2000 is a capital receipt not chargeable to tax. (AY. 2007-08)

     Dy. CIT v. Gloster Jute Mills Ltd. (2017) 185 TTJ 339 (Kol.)(Trib.)

147. S.9(1)(vii) : Income deemed to accrue or arise in India – Fees for technical services – Assessee should be eligible to benefits of India-UK tax treaty, as long as entire profits and partnership firm were taxed in UK
     

     This appeal was filed by the assessee against the final assessment order passed by the Assessing Officer (AO) under section 143(3) r.w.s. 144C(13) of the Income-tax Act, 1961 in pursuance to the order of the Dispute Resolution Panel (DRP) u/s. 144C(5). The assessee is an LLP incorporated under the laws of United Kingdom (UK). In its ROI the assessee initially offered to tax a sum as income attributable to work performed in India by the Permanent Establishment (PE) of the assessee in India. The AO held that assessee was not entitled for benefits under India-UK Tax Treaty on ground that assessee was fiscally transparent entity not liable to tax in UK in its own right. The DRP upheld order of AO. The Tribunal held that in case of earlier years wherein the Tribunal has decided this issue in favour of assessee by holding that it is eligible for the benefits of India-UK DTAA, as long as entire profits and the partnership firm are taxed in UK whether in the hands of the partnership firm though the taxable income is determined in relation to the personal characteristics of the partners, or in the hands of the partners directly. In the year before Tribunal, there is no dispute on facts that ultimately tax has been paid either by the said firm or by its partners in UK, as a result the Tribunal held that the assessee was entitled to claim benefits of India UK-DTAA. Having held that assessee was entitled to claim benefits of DTAA, Tribunal found it appropriate to examine the taxability of income (fee) received by the assessee in terms of Articles of DTAA since the definition provided in DTAA appeared to be more restrictive or narrower as compared to the definition as has been provided u/s. 9(1)(vii) of the Act, as has also been held in number of cases. (AY. 2011-12)

     Linklaters LLP v. Dy. CIT (IT) (2017) 49 CCH 287 / 185 TTJ 525 (Mum.)(Trib.)

148. S.10(5) : Leave travel concession – Foreign travel – Leave travel concession is exempt only if employee undertakes journey to any place in India [S. 192 ]
     

     Assessee bank provided benefit of Leave Travel Concession (LTC) to its employees. During TDS assessment proceedings, the AO noticed that LTC benefit was not available to employees of corporate office as foreign destination was involved and places of travel were not situated in India.

     Held that as per provisions of s. 10(5), only that reimbursement of travel concession or assistance to an employee is exempted which was incurred for travel of individual employee or his family members to any place in India. S. 10(5) r.w. Rule 2B no way provides that assessee is at liberty to claim exemption out of his total ticket package spent on his overseas travel and part of journey within India. Therefore, LTC paid by assessee to employees involving foreign travel as well would not qualify for exemption u/s. 10(5).)(AY. 2013-14, 2014-15)

     State Bank of India v. ACIT (2017) 164 ITD 645 (Jaipur)(Trib.)

149. S.10(23C) : Educational activities – Surplus arising from activities of assessee after meeting expenses incurred for educational activities – would not disentitle assessee to benefit of provision of section 10(23C)(iiiad)
     

     Held that assessee received 85.37% of total fees from recognised courses and 14.63% from unrecognised courses which was also wholly for purpose of educational activities and hence the assessee received the total annual fee from the educational activities carried on by it imparting various courses. Therefore the activities of the trust fell within the ambit of education activities. If surplus made by the trust was utilised and consumed for the purposes of furtherance of its object of education, the trust would also be considered as existing for the purpose of educational purpose only. (AY. 2008-09)

     Multipurpose Education Society Radio Elective Institute v. DDIT (E) (2017) 55 ITR 26 (Mum.)(Trib.)

150. S.10A : Free trade zone – Providing business process management and information technology enabled services to its parent company – Assessee entitled to exemption

     Held that Explanation 2(b) to section 10A ‘computer software’ means any customised electronic data or any product or service of similar nature as notified by the CBDT. The TPO in respect of the AY. 2006-07 categorically recorded that the assessee had provided the services mentioned in section 10A to its parent company. The CIT(A) observed that the assessee submitted a summary of invoices and copy of the forms that the same assessee submitted to the Software Technology Parks of India authorities along with a copy of invoices raised and the documents were also submitted during the course of assessment proceedings. Therefore, the assessee could be said to have proved the actual development or export of the software. Assessee is thereby entitled for exemption.
     (AY. 2006-07)

     ITO v. WNS Mortgage Service P. Ltd. (2017) 55 ITR 63 (Delhi)(Trib.)

151. S.10B : Export oriented undertakings – Processing of iron ore through plant and machinery located outside bonded area – No violation of any condition provided under section 10B – Benefit of deduction allowable
     

     Held that customs bonding was not a requirement or a condition precedent for granting exemption under section 10B of the Act. Hence, deduction under section 10B could not be denied merely on the ground that the iron ore excavated from the mining area belonging to the export oriented unit was got processed through its plant and machinery outside the bonded area. Further raw material and finished product belonged to the assessee and the finished product was exported by the assessee. Therefore, there was no violation of any condition as provided under section 10B of the Act for the claim of benefit of deduction. (AYs. 2009-10, 2011-12)

     Lakshminarayana Mining Company v. Dy. CIT (2017) 55 ITR 55 (Bang.)(Trib.)

152. S.10B : Export oriented undertakings – Disallowance made entitled to enhanced deduction. [S.40(a)(i)]
     

     The Tribunal held that the CBDT has accepted vide Circular No. 37 of 2016 dated 2nd November, 2016 that enhanced profit linked deduction under Chapter VI-A is admissible on the profits enhanced by the disallowances made by the revenue under sections 32, 40(a)(ai), 40A(3), 43B, etc.

     The Tribunal further held that section 10B is profit linked deduction and hence, the same has to be allowed keeping in view the spirit of the said circular. Disallowance under section 40(a)(i) is a statutory disallowance and hence, enhanced profits due to such disallowance are to be considered for deduction under section 10B. Tribunal followed CIT v. Gem Plus Jewellery (I) Ltd. (2010) 233 CTR 248 (Bom.) Appeal by revenue is dismissed and the Co. of assessee is allowed. (AY. 2010-11)

     ITO v. Anthelio Business Technologies (P) Ltd. (2017) 185 TTJ 698 (Mum.)(Trib.)

153. S.11 : Property held for charitable purposes – Distribution of books to anganwadis profit margin was determined with consultation of State Government, exemption cannot be denied. [S. 2(15)
     

     Assessee took over State resource centre for adult education with assistance of Government. Assessee to procure books for which cost received from Government and distribute them to anganwadis. Tribunal held that mere buying and selling not commercial activity. Profit margin determined with consultation of State Government and not assessee therefore the assessee is not carrying commercial activity hence exemption not to be denied. (AY. 2010-11)

     ITO(E) v. Society for Promotion of Audit Continuing Education (Space) (2017) 55 ITR 56 (Hyd.)(Trib.)

154. S.11 : Property held for charitable purposes – Generation of surplus from year-to-year cannot be basis to hold that assessee society exists for the purpose of profit, exemption cannot be denied [S.13]
     

     The Tribunal held that mere generation of surplus from year-to-year cannot be basis to hold that assessee society exists for the purpose of profit.

     The exemption claimed under section 11 cannot be denied because the surplus has been ploughed back and utilised for the purpose of promotion of education through setting up educational institution operating them and also upgrading them from time to time for further benefits to the students at large.

     Contribution made to Jaipur National University qualified as application of income in compliance with the provisions of section 11 and the same cannot be basis for denial of exemption under section 11.

     The salary paid to members of family is commensurate with qualifications and experience as well as area of their responsibility in terms of management and day-to-day affairs of the assessee society, there is no violation in terms of section 13 and the exemption under section 11 cannot be denied.

     The travel expenses of its office bearers to Hong Kong and China are allowable as it has contributed in the growth and development of students therefore exemption under section 11 cannot be denied. (AYs. 2010-11, 2011-12)

     ACIT v. Mahima Shiksha Samiti (2017) 185 TTJ 425 (JP)(Trib.)

155. S.13 : Denial of exemption –Trust or institution – Investment restrictions – Tax can be levied only to the extent trustee derived benefit and not the entire trust income – Trustee and his wife are personal guarantors to bank and not getting any benefit, direct or indirect from trust, exemption cannot be denied. [S. 11]
     

     Investment was made in flat and was registered in the name of trustee and his wife. Out of the total investment, part investment was made by trustee and his wife. On sale of the flat, trust (assessee) was entitled to the share of profit to the extent of its investment. Held that amount of profit had to be taxed as per the provisions of section 13(1)(c) but the entire exemption could not be denied. Relying on CBDT Circular No. 387 dated July 6, 1984 it was held that tax will be leived at MMR only on part of income which had forfeited exemption under the provisions. Trustee and his wife are personal guarantors to bank and not getting any benefit, direct or indirect from trust, exemption cannot be denied. (AY. 2008-09)

     ITO (E) v. Future Education and Research Trust (2017) 55 ITR 66 (Kol.)(Trib.)

156. S.14A : Disallowance of expenditure – Exempt income – Own funds – Presumption that tax free investments was made out of own funds, no disallowance can be made
     

     The Tribunal held that assessee having own funds, it will be presumed that tax free investments was made out of own funds, hence no disallowance under section 14A r.w.r. 8D could be made. However, suo motu disallowance made by assessee was liable to be sustained towards administrative expenses. (AY. 2008-09)

     Axis Bank Ltd. v. ACIT (2017) 185 TTJ 722 (Ahd.)(Trib.)

157. S.24 : Income from house property – Brokerage, electricity expenses, legal expenses and bank charges are not eligible while calculating annual rental value [S. 23]
     

     Assessee earned rental income from house property and while calculating annual vale, claimed expenditure towards brokerage, society charges, electricity expenses, legal expenses and bank charges. Tribunal held that such expenditure were not permissible u/ss. 23 and 24 for the purpose of working of annual rental value. (AY. 2009-10)

     Ranjeet D. Vaswani v. ACIT (2017) 164 ITD 551 (Mum.)(Trib.)

158. S.32 : Depreciation – Carry forward and set off – Effect of amendment to section 32(2) by Finance Act, 2001 – assessee entitled to carry forward and set off against profits and gains without any limit whatsoever
     

     Held relying on decision of General Motors 354 ITR 244 (Guj. HC) that any unabsorbed depreciation available to an assessee on 1st April 2002 will be dealt with in accordance with the provisions of section 32(2) as amended by the 2001 Act. Circular No. 14 of 2001 clarified that the restriction of 8 years has been dispensed with. (AY. 2010-11)

     ITO v. Schott Glass India Pvt. Ltd. (2017) 55 ITR 28 (Mum.)(Trib.)

159. S.32 : Depreciation – Carry forward and set off – Effect of amendment to section 32(2) by Finance Act, 2001 – assessee entitled to carry forward and set off against profits and gains without any limit whatsoever
     

     Held relying on decision of General Motors 354 ITR 244 (Guj. HC) that any unabsorbed depreciation available to an assessee on 1st April 2002 will be dealt with in accordance with the provisions of section 32(2) as amended by the 2001 Act. Circular No. 14 of 2001 clarified that the restriction of 8 years has been dispensed with. (AY. 2006-07)

     Petrofils Co-operative Ltd. v. ACIT (2017) 55 ITR 22 (Ahd.)(Trib.)

160. S.32 : Depreciation – Additional depreciation – Condition to be seen in the initial year [S. 32(1)(iia)]
     

     The Tribunal held that only condition imposed by section 32(1)(iia) is that the plant and machinery must be new at the time of installation to be eligible for additional depreciation. The condition for allowing additional depreciation only in the initial year ceased to exist, therefore the additional depreciation even in the second and subsequent years have to be allowed on the original cost of the asset. (AY. 2007-08)

     Dy. CIT v. Gloster Jute Mills Ltd. (2017) 185 TTJ 339 (Kol.)(Trib.)

161. S.32 : Depreciation – Unabsorbed depreciation carry forward can be set off against the profits on non eligible unit [Ss.10B, 70]
     

     The Tribunal held that provisions of section 10B have to be regarded as deduction provision, therefore unabsorbed depreciation of the EOU which is eligible for deduction under section 10B can be set off against the profits on non-eligible unit. (AY. 2007-08)

     Dy. CIT v. Gloster Jute Mills Ltd. (2017) 185 TTJ 339 (Kol.)(Trib.)

162. S.37(1) : Business expenditure – Disallowance of professional fees – Expenditure incurred voluntarily and without any necessity would be allowable so long as it had been incurred for promoting business of assessee
     

     Assessee was individual who was a film actor by profession. There was a subsisting professional relationship between assessee and Star India Pvt. Ltd. and the impugned arrangement was to be viewed from the prism of a principal – client relationship. Assessee has earned a sum of ₹ 60 crores from Star India Pvt. Ltd., which is a part of the total professional receipts for the year under consideration. In terms of the Artist Service Agreement assessee was to shoot for 104 episodes but no shooting took place for 52 episodes on account of a decision of Star India Pvt. Ltd., whereas the consideration for the entire episodes was paid to the assessee in advance. The loss suffered by Star India Pvt. Ltd. was sought to be recouped with the earnings from the sponsorship of Kolkata Knight Riders Cricket Team for which assessee incurred ₹ 10 crores on behalf of Star India Pvt. Ltd.. The assessee filed return of income declaring total income, which was subject to scrutiny assessment whereby total income had been assessed, after making certain additions/disallowances. The Commissioner of Income Tax CIT(A), allowed partial relief. The assessee claimed that CIT(A) was not justified in confirming action of the Assessing Officer (AO) disallowing amount being professional fees returned to Star India Pvt. Ltd. and reasons given by both CIT(Appeals) and the AO were incorrect, erroneous and invalid. It was held by the Tribunal that it was not legal necessity to spend expenditure which was determinative of its allowability, rather, it was existence or otherwise of commercial expediency which guides allowability of expenditure u/s. 37(1). From point of view of commercial expediency, it was abundantly clear that assessee had longstanding professional relationship with Star India Pvt. Ltd. and there was nexus between impugned expenditure and purpose of business. There was no challenge to bona fides of expenditure incurred and same could be understood to have been incurred wholly and exclusively for purposes of business within meaning of section 37(1). Expression “wholly and exclusively” used in section 10(2)(xv) did not mean that expenditure had to be “necessarily” incurred. Expenditure incurred voluntarily and without any necessity would be allowable so long as it had been incurred for promoting business of assessee as a result the assessee’s appeal was allowed. (AYs. 2009-10, 2010-11)

     Shah Rukh Khan v. ACIT (2017)164 ITD 18/ 49 CCH 253 185 TTJ 289 /150 DTR 25 (Mum.)(Trib.)

163. S.37(1) : Business expenditure – Failure of assessee to fulfil its obligation in nature of default of business obligation – compensation paid was held to be as business expenditure [S. 145]
     

     The Tribunal held that the liability was already in existence in terms of the agreement between the parties that in the event of failure to deliver the completed constructed area, the assessee would be liable to make good for the losses and damages to the other party. The liability to pay the compensation and damages is also a certain liability as per the terms and conditions of the agreement between the parties though the quantum was to be determined through arbitration. In the case on hand, the failure of the assessee to fulfil its obligation is in the nature of default of business obligation and therefore the compensation payable/paid by the assessee would become an allowable claim being the business loss/expenses in order to carry out their business/obligation and therefore the said claim of deduction is in the revenue field.
     (AY. 2005-06)

     Canara Housing Development Company v. JCIT (2017) 165 ITD 76 (Bang.) (Trib.)

164. S.37(1) : Business expenditure – Expenditure incurred on construction of houses which were donated to people affected from flood was held to be not allowable as deduction
     

     It was held by the Tribunal that the expenditure was incurred by the assessee voluntarily. In order to claim deduction under section 37(1) conditions to be satisfied are that an item of expenditure should not be an item of expenditure described in sections 30 to 36 and should not be described as capital expenditure or personal expenses of the assessee. It should be laid out or expended wholly and exclusively for the purpose of business or profession. Needless to mention, all the three conditions should be cumulatively satisfied. The only dispute is regarding satisfaction of the condition that the expenditure was laid out and expended wholly and exclusively for the purpose of business. Onus lies on the assessee to prove that the expenditure was incurred for the purpose of business. Mere bald assertion that the expenditure was incurred for promoting business cannot be accepted without establishing the nexus between expenditure and business. Therefore, it amounts to application of income voluntarily towards charity which cannot be allowed as a deduction. (AYs. 2011-12, 2012-13 )

     Kanhaiyalal Dudheria v. JCIT (2017) 165 ITD 14 (Bang.) (Trib.)

165. S.37(1) : Business expenditure – No proof to show that penalty levied is not for breach of law – Disallowance was held to be justified
     

     When nothing was brought on record to show that the penalty was not paid for breach of any provisions of the law, the sum debited to the P&L a/c as expenditure was not allowed as a deduction. (AYs. 2011-12, 2012-13)

     Kanhaiyalal Dudheria v. JCIT (2017) 165 ITD 14 (Bang.) (Trib.)

166. S.37(1) : Business Expenditure – Capital or revenue – Advertisement expenditure in connection with change of name was held to be revenue expenditure
     

     The Tribunal held that expenditure on advertisement in connection with change of name was allowable as revenue expenditure. (AY. 2008-09)

     Axis Bank Ltd. v. ACIT (2017) 185 TTJ 722 (Ahd.)(Trib.)

167. S.40(a)(ia) : Amounts not deductible – Deduction at source – Payments made towards simple supervision charges for supervising movement of coal from colliery to avoid pilferage while loading into trucks – Not professional services – No obligation to deduct TDS
     [S. 194J]
     

     Held that payments were made only to supervise the movement of coal from the colliery in order to avoid pilferage while loading the coal into trucks. Such persons are employed to carry out the supervision job which was more of a watchman job. This admittedly does not warrant any possession of any professional skill so as to fall within the ambit of Section 194J. Payment were made towards simple supervision charges which did not fall under the category of professional services as defined in section 194J and hence, no obligation to deduct TDS.
     (AY. 2006-07)

     Snowtemp Commercial Pvt. Ltd. v. ITO (2017) 55 ITR 41 (Kol.)(Trib.)

168. S.40(a)(ia) : Amounts not deductible – Deduction at source amounts paid by way of reimbursement of expenses do not constitute income in the hands of the recipient- Not liable to deduct tax at source. [S. 194C]
     

     Dismissing the appeal of the revenue, the Tribunal held that amounts paid by way of reimbursement of expenses do not constitute income in the hands of the recipient. Consequently, the payer is under no obligation to deduct TDS u/s. 194C and no disallowance of the expenditure can be made u/s. 40(a)(ia). CBDT Circular No. 715 dated 8-8-1995 distinguished. (I.T.A. No.224l/Coch/20 16, dt. 15-6-2017) (AY. 2011-12)

     ACIT v. St. Mary’s Rubbers Private Ltd. (Cochin)(Trib.), www.itatonline.org

169. S.43(1) : Actual Cost – Purchase of second hand windmill at enhanced cost – Satisfaction of Assessing Officer that the main purpose of transfer was to reduce tax liability – Purchase of second hand windmill at enhanced cost – Assets already depreciated in hands of seller – Conditions for invoking Explanation 3 to section 43(1) satisfied – Order of AO is justified [S. 32]
     

     Held allowing the appeal of department that the depreciated value of windmill in the hands of the seller was negligible at the time of sale. AO correctly invoked Explanation 3 to section 43(1) as it came to conclusion that the main purpose of transfer was reduction of tax liability. AO had adopted a fair method of multiplying the average generation per year with per unit cost of electricity generated. This was the method adopted by the assessee for valuing 4 windmills offered by it as collateral for raising the loan from the bank except for the difference in unit rate. Hence, conditions for invoking Explanation 3 to section 43(1) of the Act was satisfied and order of AO was to be reinstated. (AY. 2009-10)

     Sabithamani (V.)(Smt.) v. ACIT (2017) 55 ITR 17 (Chennai)(Trib.)

170. S.45 : Capital gains – Joint venture agreement – Possession as well as development rights were given to the developer – Taxable in year in which development agreement executed [S.2(47)(v), Transfer of Property Act, S. 53A]
     

     The assessee had entered into a joint venture agreement for development of land owned by him. In terms of the said agreement possession as well as development rights were given to the developer. In consideration of the said agreement, the assessee received certain cash and certain percentage of the constructed area.

     It was held by the Tribunal that the legal ownership continued with the owners to be transferred to the developer at a future distant date really does not affect the applicability of section 2(47)(v). The transferee was undisputedly willing to perform its part of the contract, in this circumstance it is held that there is transfer under section 2(47)(v). Thus, the possession and control of the property was already vested with the transferee and the impugned development agreement had not been duly cancelled and it was still in operation, it has to be decided that there is a transfer under section 2(47)(v). One has to see the real intention of the parties. Entering into the property and handing over of the possession was instantaneous thus entire conspectus of the case has attracted the provision of section 45 on fulfilment of conditions laid down in section 53A of the Transfer of Property Act. (AY. 2007-08)

     Sumeru Soft (P.) Ltd. v. ITO (2017) 165 ITD 48 (Chennai) (Trib.)

171. S.50C : Capital gains – Full value of consideration – Stamp valuation – The AO is not entitled to make an addition to the sale consideration declared by the assessee if the difference between the valuation adopted by the Stamp Valuation Authority and that declared by the assessee is less than 10%. [S. 45]
     

     Allowing the appeal of the assessee , the Tribunal held that the AO is not entitled to make an addition to the sale consideration declared by the assessee if the difference between the valuation adopted by the Stamp Valuation Authority and that declared by the assessee is less than 10%. (ITA No. 7545/Mum/2014, dt. 25-1-2017)(AY. 2010-11)

     John Fowler (India) Pvt. Ltd. v. DCIT ( Mum.)(Trib.), www.itatonline.org

172. S.50C : Capital gains – Full value of consideration – Stamp valuation – Unregistered sale, value declared by assessee is to be adopted –Matter remanded for verification [Ss. 45, 48]
     

     It was held by the Tribunal that , the sale transaction in question is not registered with stamp value authorities, then full value of consideration has to be accepted as declared by the assesse and not the stamp valuation. Matter remanded for verification. (AY. 2006-07)

     Jastinder Singh Vedi v.DCIT (2017) 165 ITD 7 (Delhi) (Trib.)

173. S.54F : Capital gains – Investment in residential house – Deduction could not be denied merely on ground that assessee was not an individual or HUF [Ss. 45, 161]
     

     Assessee, a private non-discretionary trust, created for sole beneficiary of “V”. During relevant year, it earned capital gain on sale of flat. The AO rejected the claim for deduction u/s. 54F on ground that said deduction allowable only to individual or HUF.

     Tribunal held that by virtue of S 161 that assessee trust had been assessed for the income that was for benefit of sole beneficiary. Accordingly it held that the assessee was principally entitled to deduction u/s. 54F. Therefore it cannot be said that since an AOP and not an individual or HUF, exemption/deduction should be denied. (AY. 2012-13)

     Balgopal Trust v. ACIT (2017) 164 ITD 584 (Mum)(Trib.)

174. S.68 : Cash credits – Unexplained investment – Share capital – Addition was held to be justified as the assessee has not proved the source of investment by producing the evidences [Ss. 69, 69C]
     

     Dismissing the appeal of the assessee the Tribunal held that NDTV indulged in a clear cut case of “abuse of organization form/legal form and without reasonable business purpose” and therefore, no fault can be found with the order of the AO in charging to tax ₹ 642 crores by recharacterizing the conditions according to its economic substance and imposing the tax on the actual controlling Indian entity. There is no doubt that the transaction used principally as a device for the distribution/ diversion of sum to the Indian entity. The beneficial owner of the money is the assessee. Accordingly the addition was confirmed. Detailed observation P. No. 385 of the order)(ITA No. 1212/Del/2014, dt. 1-7-2017)(AY. 2009-10)

     New Delhi Television Ltd. v. ACIT (Delhi)(Trib), www.itatonline.org

175. S.68 : Cash credits – Unexplained credits in bank account – Only income should be brought to tax
     

     Held that only income should be brought to tax and not the credits in the bank account. Considering the transactions in the bank account, there were receipts as well as payments and these could be treated as business transactions and the net profit could be brought to tax. Accordingly, AO to estimate the profits on gross receipts at 8% or profit as declared by the assessee in his own business whichever was higher (AY. 2009-10)

     Katikaneni Prem Kumar v. ITO (2017) 55 ITR 49 (Hyd.)(Trib.)

176. S.68 : Cash Credit – Addition of the basis that cash credit represented accommodation entries – Parties have replied to the notice addition was deleted
     

     The Tribunal held that the addition sustained by CIT(A) on wrong assumption of factual position that notices were not served on six parties whereas notices were served upon all the six parties and replies were received from four of these, was liable to be deleted. (AY. 2004-05)

     Espirit Finco (P) Ltd. v. ITO (2017) 185 TTJ 162 (SMC) (Delhi)(Trib.)

177. S.69 : Unexplained investments –Income from undisclosed sources – Premium money on sale of cigarettes – In the absence of any conclusive material premium money collected by the retailers or whole sale buyers towards advertisement and sales promotion addition was held to be not justified [Ss.4, 145(2) ]
     

     Allowing the appeal of the assessee, the Tribunal held that in the absence of any conclusive material premium money collected by the retailers or whole sale buyers towards advertisement and sales promotion addition was held to be not justified (AY. 1984-85 to 1986-87 )

     GTC Industries Ltd. v. ACIT ( 2017) 154 DTR 1 (SB) (Mum.) (Trib.)

178. S.90 : Double taxation relief – Assessee being a tax resident of Singapore liable for taxation on its shipping income only in Singapore and not in India- DTAA-India – Singapore [Art. 8]
     

     The Tribunal held that the assessee being a tax resident of Singapore liable for taxation on its shipping income only in Singapore and not in India.

     The Tribunal further held that even if the entire journey is undertaken by a shipping company through and through charter arrangement or joint service arrangement, the benefit of Art. 8 of India-Singapore DTAA cannot be denied as it would still fall within the ambit and scope of operation of ships. (AY. 2008-09)

     APL Co. Pte Ltd. v. ADIT (IT) (2017) 185 TTJ 305 (Mum.)(Trib.)

179. S.92C : Transfer Pricing – Segmental Accounting – Benchmarking of transactions – Profit Level Indicator – Computation – Assessee producing tubes for pharmaceutical packaging and solar trail activity exception to its regular business – Loss incurred in solar trial run-up – Excludible in determining profit level indicator
     

     Assessee’s regular business was production of tubes for pharmaceutical packaging and the solar trial activity was an exception to its regular business. Assessee has made provisions for impairment of assets of ₹ 13.90 crore according to Accounting Standard-28. Expenses were exceptional. DRP directed the Transfer Pricing Officer to exclude the losses in the solar trial run-up in computing the profit level indicator. Expenses and Income under the head ‘non-operating transactions’ had to be excluded for arriving at the correct profit level indicator. Held by ITAT that there was no need to interfere with the order of DRP with regard to computation of profit level indicator. It had rightly held that the solar trial activity was an extraordinary item and was not part of the regular business of the assessee and that there was impairment of assets. (AY. 2010-11)

     ITO v. Schott Glass India Pvt. Ltd. (2017) 55 ITR 28 (Mum.)(Trib.)

180. S.92C : Transfer Pricing – Arm’s Length Price – Benchmarking of Transactions – TPO taking a contradictory stand in succeeding year in remand proceedings – TPO to make fresh exercise for determining ALP
     

     Held that TPO in succeeding year concluded that payments made for group services were for day-to-day SAP running costs, payment for SAP licences and maintenance & upgradation. Transactions were aggregated with manufacturing and trading since it was closely linked and hence was aggregated without any separate benchmarking. Since TPO had taken a contrary stand in the succeeding year in remand proceedings he was to do a fresh exercise in the light of its remand report in order to determine the ALP for international transaction.
     (AY. 2007-08)

     Kennametal India Ltd. v. ACIT(LTU) (2017) 55 ITR 14 (Bang.)(Trib.)

181. S.115JB : Book profit – Disallowance under section 14A r/w Rule 8D – not applicable for MAT calculation [S. 14A, R.8D]
     

     Held that disallowance u/s. 14A read with Rule 8D cannot be added while computing book profit u/s. 115JB. That the disallowance is only for purpose of computing taxable income of the assessee in the normal course. (AY. 2012-13)

     Powermatic Packaging P. Ltd. v. ITO (2017) 55 ITR 7 (Chennai)(Trib.)

182. S.115JB : Book Profit – Profit from sale of fixed assets cannot be included as part of book profit
     

     The Tribunal held that profit on sale of fixed assets cannot be included as part of book profit for the purpose of section 115JB. (AY. 2007-08)

     Dy. CIT v. Gloster Jute Mills Ltd. (2017) 185 TTJ 339 (Kol.)(Trib.)

183. S.115WA : Fringe Benefit – Expenses incurred by partners was held to be not liable to Fringe Benefit Tax
     

     The Tribunal held that partners cannot be said to be employees of the firm. Therefore, expenditure incurred by the partners is not liable to FBT. Tribunal sent the matter back to the AO. (AY. 2008-09 & 2009-10)

     GDPA Fasteners v. ACIT (2017) 185 TTJ 706 (Asr.)(Trib.)

184. S.145 : Method of Accounting – Non-maintenance of stock register and decline in GP rate – Addition was held to be not justified. [S. 145(3)]
     

     The Tribunal held that the assessee had produced quantitative inventory of stock based on physical stock taking and explained the decline in GP rate and also offered plausible explanation for other defects pointed out by the AO, its books of account could not be rejected on the ground of non-maintenance of stock register or the reduction in GP rate. Addition made by the AO by applying a higher GP rate is not sustainable. (AY. 2009-10)

     Fine Switchgears v. ACIT (2017) 185 TTJ 488 (SMC) (Asr.)(Trib.)

185. S.147 : Reassessment – After the expiry of four years – Full & True disclosure – Reassessment was held to be bad in law [S. 148]
     

     The Tribunal held that in earlier year the claim of the assessee was examined in detail and thereafter only the benefit of deduction was allowed. Similarly in this year also the query was raised by the AO which was replied by the assessee. It is well-settled law that reopening based upon change of opinion of the AO is not permissible in the eyes of law. Thus, the reopening was not valid.
     (AY. 2002-03)

     ACIT v. Tata Chemicals Ltd. (2017) 185 TTJ 123 (Mum.)(Trib.)

186. S.147 : Reassessment – Non disposal of objections – Matter was set aside [S. 148]
     

     The Tribunal held that the objections raised by the assessee were not disposed by the AO. Therefore, the issue is set aside and restored to the AO for de novo determination of the issue on merits in accordance with law. (AY. 2008-09)

     ACIT v. I&E Trade Cosultants (P) Ltd. (2017) 185 TTJ 760 (Mum.)(Trib.)

187. S.147 : Reassessment – Change of opinion – Reassessment on same facts was held to be not valid
     [S. 148]
     

     The Tribunal held that issues regarding additional depreciation and disallowance under section 43B having been thoroughly examined by AO in original assessment under section 143(3), reopening of assessment under section 147 on those issues on the same facts was invalid being based on mere change of opinion. (AYs. 2008-09, 2009-10)

     ACIT v. Mangalam Cement Ltd. (2017) 185 TTJ 97 (JP)(Trib.)

188. S.147 : Reassessment – Reassessment solely made on the basis of information received from investigation wing as assessee was beneficiary of accommodation entries – No material against the assessee contrary to defence put up by assessee during assessment proceedings – No cross-examination allowed to the assessee – Reassessment was held to be not valid [Ss. 133(6), 148]
     

     Held that during the course of assessment proceedings all the details like loan confirmations, PAN, bank statements, Form 16, balance sheet & profit and loss a/c including ledger and income tax returns filed. Also, loan creditors appeared before AO in response to notice issued u/s. 133(6). Assessing Office merely relied on the information received from the investigation wing that assessee was one of the beneficiaries of the accommodation entries without bringing any material against the assessee on record contrary to the defence put up by the assessee. Futher, no cross-examination was allowed to the assessee and information was used against the assessee in violation of natural justice. Reopening held not valid. (AY. 2008-09, 2010-11 2012-13)

     ITO v. Reliance Corporation (2017) 55 ITR 69 (Mum.)(Trib.)

189. S.192 : Deduction at source – Salary – Payment made to Radio Jockeys being professional income is liable to deduct tax u/s. 194J and not u/s. 192. [S.194J]
     

     The Tribunal held that the payments have been shown as part of professional income by the RJs in their respective returns and the same have been accepted as such by their respective AOs. There was no justification on the part of AO to change the relationship of the assessee and RJs from professional consultant to employee by any inappropriate reading of terms of the agreement.

     Tribunal further held that RJs having shown such payment as professional income and also charged service tax from the assessee, assessee was obliged to deduct TDS under section 194J and not under section 192. (AYs. 2011-12,
     2012-13)

     ITO v. Entertainment Network (I) Ltd. (2017) 185 TTJ 178 (Mum.)(Trib.)

190. S.194C : Deduction at source – Contractors – Purchase of printed packing material – Contract of ‘sale’ and not ‘work’ is not liable to deduct tax at source
     

     Revenue claimed that the transaction towards obtaining the packing material from the suppliers was in the nature of contract rather than in the nature of purchase of material and hence S.194C would applicable.

     Dismissing the appeal of the revenue, the Tribunal held that from the invoices raised by the supplier it is noted that the printed packing material so supplied to the assessee are subjected to various taxes viz., excise duty, VAT, and CST on the sale price. Thus, in the totality of the circumstances, the transaction on account of supply of printed packing material to the assessee was in pursuance of a contract for a ‘sale’ and not a contract for ‘work’ as alleged. Consequently, provisions of section 194C do not get triggered in the facts of the case. (AY. 2012-13)

     DCIT v. Aroma De France (2017) 165 ITD 1 (Ahd.) (Trib.)

191. S.194H : Deduction at source – Discount to advertising agency – Not liable to deduct tax at source
     

     The Tribunal held that no TDS is required to be deducted in respect of the discount allowed by the assessee (broadcaster) to the advertising agency out of the payments received by it on the sale of air time. (AYs. 2011-12, 2012-13)

     ITO v. Entertainment Network (I) Ltd. (2017) 185 TTJ 178 (Mum.)(Trib.)

192. S.195 : Deduction at source – Non-resident – Only right to use computer and does not have PE in India, not liable to deduct tax at source – DTAA-India – Singapore [S.90]
     

     The Tribunal held that under the agreement the assessee has only a right to use the computer software. The consideration received from the assessee for the use of software is not royalty but business receipts in the hand of NPL. Since, NPL does not have a PE in India, the said business income cannot be taxed in India and consequently there was no obligation on the assessee to deduct TDS under section 195.
     (AY. 2010-11)

     I.T.C. Ltd. v. ADIT (IT) (2017) 185 TTJ 145 (Kol.)(Trib.)

193. S.201 : Deduction at source – Failure to deduct or pay – Shortfall in remittance on interest payments to term depositors to government account – Assessee using CBS software – No liability if assessee able to establish shortfall in remittance
     

     Held that assessee was using CBS software. If the assessee was able to establish that short remittance was only a notional provision which would reverse afterwards then no tax deducted at source liability could be imposed on the assessee. Matter remitted to the AO for fresh consideration. (AY. 2012-13)

     State Bank of India v. ITO (2017) 55 ITR 62 (Bang.)(Trib.)

194. S.206AA : Requirement to furnish Permanent Account Number Foreign companies – Tax – Fees for Technical Services – Payments made to non-resident and TDS deducted as specified u/s. 115A(1)(b) – Section 206AA cannot be applied on the contention that non-resident does not have PAN. [S.115JA(1)(b)]
     

     Held allowing the appeal that the payment was made towards fees for technical services to a non-resident not having PAN through banking channels as approved by RBI and payment was well covered under provisions of section 115A(1)(b) and therefore special rate of tax i.e., 11.33% was applicable and was rightly deducted by assessee. Provisions of section 206AA could not be made applicable to that payment. Hence, claim towards short deduction to be deleted. (AY. 2011-12)

     Quick Flight Ltd. v. ITO (2017) 55 ITR 31 (Ahd.)(Trib.)

195. S.254(2) : Appellate Tribunal – Rectification of mistake apparent from the record – The period of limitation for filing a rectification application is six months from the end of the month in which the “order is passed” and not from the date of “receipt of the order”. Liberal view is taken it can be considered from the date of uploading of the order
     

     Dismissing the appeal of the assessee the Tribunal held that the period of limitation for filing a rectification application is six months from the end of the month in which the “order is passed” and not from the date of “receipt of the order”. Even if a liberal view is taken, it can be considered as the date of uploading of the order on the ITAT website. The uploaded orders can be accessed by the assessee and constitutes service of the order upon the assessee. Application was dismissed as barred by limitation. (M.A.No. 05/Hyd/2017, dt. 12-7-2017)(AY. 2007-08)

     Srinivas Sashidhar Chaganty v. ITO (Hyd.)(Trib.), www.itatonline.org

196. S.254(2) : Appellate Tribunal – Rectification of mistake apparent from the record – The amendment by the Finance Act, 2016 w.e.f. 1-6-2016 to specify the time limit of 6 months to file a rectification application applies even to applications filed with respect to appeal orders passed prior to the date of the amendment. The Tribunal has no power to condone the delay in filing a Miscellaneous Application
     

     Dismissing the rectification application of the Revenue the Tribunal held that (i) The date of order passed by the Tribunal is 22-3-2013 and the revenue has filed these applications on 28-2-2017 which are clearly beyond a period of six months as provided in Section 254(2). At this juncture, it would be prudent to reproduce the relevant provisions as contained in Section 254(2) of the Income-tax Act, 1961.

197. S.254.(1) The Appellate Tribunal may, after giving both the parties to the appeal an opportunity of being heard, pass such orders thereon as it thinks fit
     

     (1A) [***]

     (2) The Appellate Tribunal may, at any time within six months from the end of the month in which the order was passed, with a view to rectifying any mistake apparent from the record, amend any order passed by it under sub-section (1), and shall make such amendment if the mistake is brought to its notice by the assessee or the Assessing Officer:

     (ii) It is to be noted that the earlier period of ‘four years’ has been substituted with ‘six months’ by the Finance Act, 2016 with effect from 1-6-2016. However, we find that no distinction has been made in this section between orders passed before 1-6-2016 and orders passed after 1-6-2016. Moreover, the Tribunal order was dated 22-3-2013 and therefore, the revenue had ample time to go through the same and pin point the mistakes in the order but it has failed to do so. Therefore, we find no force in these miscellaneous petitions primarily because of the reason that the Statute does not authorize us to entertain any petition which has been filed u/s. 254(2) at any time beyond a period of six months from the date of the order. The Tribunal has been given power to admit an appeal after the expiry of the relevant period, if it is satisfied that there was sufficient cause for not presenting it within that period as per Section 253(5). However, this Tribunal is not enshrined with such powers in respect of a miscellaneous petition filed u/s. 254(2) of the Income-tax Act. If we are not given that power, then it is not expected from us to exercise such power which is not provided in the Act. The Tribunal, being creation of law, is bound by the statutory provisions and our jurisdiction is simply to interpret and follow the statute. There is no scope for us to import any word into the Statute which is not there. Such importation would be nothing but to amend the statute. We therefore hold that the condonation of delay of these petitions is beyond our jurisdiction, hence rejected. Similar view has been taken by the Mumbai Tribunal in the cited order. Hence, finding the petitions time barred, we dismiss the same. (M.A.No.103 to 108/Mum/2017 arising out of ITA Nos. 8247, 8249, 8177, 8229,8 242 & 8228/Mum/2011, dt. 25-4-2017)(AY. 2009-10)

     DCIT v. Hita Land Private Limited (Mum)(Trib), www.itatonline.org

198. S.263 : Commissioner – Revision of orders prejudicial to revenue – Capital gains – Slump sale – Sale of Manufacturing Unit – Exclusion of intangible assets would still be covered under the section 50B in case the transferee in same business as assessee – Revision was held to be not valid [Ss. 45 , 50B]
     

     The assessee declared long-term capital gain sarising from slump sale of its manufacturing unit of edible oil which was not accepted by the Commissioner under the order passed u/s. 263.

     The Commissioner had observed that in the excluded item’s list of the slump sale, the name/trade name/logs/trade mark were included. Therefore, it is not a slump sale.

     The Tribunal held that the view of the Commissioner had to be rejected for the simple reason that the purchaser of the manufacturing unit of the edible oil was already in the same business and wanted to sell the products manufactured from said unit after the closing date in their own name and brand and so they were not keen to buy the name/trade name/logos/trade mark/product name etc. of the assessee, so, the assessee excluded the same from the transaction. So, therefore, exclusion of the said intangibles cannot in any way affect the slump sale of the manufacturing unit as a going concern in the facts and circumstances of this case. Revision order was cancelled. (AY. 2009-10)

     Ambo Agro Products Ltd. v. PCIT (2017) 165 ITD 20 (Kol.) (Trib.)

199. S.263 : Commissioner – Revision of orders prejudicial to revenue – Income determined by AO not in excess of income shown in accounts of assessee even after disallowance of provision for gratuity – Order not prejudicial to the interest of revenue [S. 40A(7)]

     Held that provision for gratuity was not an allowable deduction in terms of the provisions of Section 40A(7). Therefore, Commissioner rightly disallowed the provision of gratuity. Further held that section 11(4) is attracted only where the property held under trust includes a business undertaking. Since the assessee did not have any business undertaking section 11(4) will not be attracted. Provision for gratuity had been disclosed in books. Total income determined even after disallowance of provision for gratuity was nil. Disallowance of provision for gratuity did not result in a situation where income determined by AO was in excess of income as shown in the accounts of assessee. Commissioner has erred in invoking section 263 since order passed by AO was not prejudicial to the interests of revenue. (AY. 2011-12)

     Malankara Orthodox Syrian Church Medical Mission Hospital v. DDIT (E) (2017) 55 ITR 53 (Cochin)(Trib.)

200. S.263 : Commissioner – Revision of orders prejudicial to revenue – Sale of shares to non-resident and investment in residential property – Failure by AO to enquire into applicability of notification of RBI on sale of shares by resident to non-resident – Revision was held to be justified [S.54F]
     

     Held that order passed by AO was cryptic. The claim of assessee regarding the consideration received on sale of shares was accepted by AO. However, he neither enquired nor applied his mind to the applicability of the notification to sale of shares by resident to non-resident. Further, the claim of the assessee regarding grant of exemption under 54F was not examined by AO. No enquiry as to whether the condition laid down in section 54F was complied was not seen by AO. Commissioner had rightly invoked the provisions of section 263. (AY. 2011-12)

     Ravi Kannan v. ACIT (2017) 55 ITR 38 (Chennai)(Trib.)

201. S.263 : Commissioner – Revision of orders prejudicial to revenue – Cannot direct the AO to initiate penalty proceedings u/s. 271(1)(c) [S. 271(1)(c)]
     

     The Tribunal held that CIT is not competent to direct the AO to redo the assessment with a view to initiate and levy penalty under section 271(1)(c) in respect of erroneous claim of deduction under section 10B. (AYs. 2008-09, 2010-11)

     Easy Transcription & Software (P) Ltd. v. CIT (2017) 185 TTJ 504 (Ahd.)(Trib.)

202. S.263 : Commissioner – Revision of orders prejudicial to revenue –Lack of proper enquiry – Justified in setting aside the assessment to make de novo assessment
     

     The Tribunal held that AO having made no perceptible enquiry in discharge of his quasi judicial function in making assessment which may reveal any application of mind to claims made by assessee, CIT was justified in setting aside assessment and directing the AO to make de novo assessment. (AY. 2008-09, 2010-11)

     Easy Transcription & Software (P) Ltd. v. CIT (2017) 185 TTJ 504 (Ahd.)(Trib.)

203. S.263 :Commissioner – Revision of orders prejudicial to revenue- Assessing officer had made adequate enquiry in the original assessment proceedings – Revision was held to be not valid
     

     The Tribunal held that the issue raised by the CIT in his notice under section 263 has been adequately enquired and thoroughly examined by the AO during the course of assessment proceedings and he has taken one of the legally possible views as per judicial pronouncements available at that particular point of time. Therefore, the order passed by the CIT under section 263 is not sustainable. (AY. 2010-11)

     Goldjyoti Polymers v. CIT (2017) 185 TTJ 366 (Ahd.)(Trib.)

204. S.271(1)(c) : Penalty – Concealment – Deduction under wrong advice and incorrect understanding of law, penalty is not leviable.
     [S. 80IA]
     

     Held that assessee had disclosed all facts in respect of the claim to deduction under section 80IA according to the return and the statement of total income. Assessee had also furnished Form 10CCB and report was duly certified by chartered accountant. Under wrong advice and incorrect understanding of law the assessee had made the claim. It was advised by a tax consultant that the income generated from infrastructural contract work qualified for deduction. Assessee had offered an explanation which was not found altogether untrue or false. Assessee should not be penalised under section 271(1)(c). Accordingly penalty was to be deleted. (AY. 2006-07)

     Johnson Enterprises Ltd. v. ITO (2017) 55 ITR 6 (Ahd.)(Trib.)

205. S.271(1)(c) : Penalty – Concealment – AO recording well-reasoned satisfaction before invoking provisions, levy of penalty was held to be proper [S. 274]
     

     Tribunal held there was no reasonable or bona fide cause for failure to declare income in the return to get out of rigours of section 271(1)(c). There was no infirmity in the notice issued by AO wherein AO has clearly framed alternate charges for levying penalty under section 271(1)(c) at the stage of issue of notice. Merely because, AO had mentioned alternate charges at the stage of issue of notice which was preliminary stage of initiating penalty, proceedings could not be held to be vitiated. AO had clearly recorded a detailed satisfaction after application of mind in the assessment order that assessee has not disclosed the income earned. It could not be held that the assessee was not aware of the charge framed by the AO in which he was burdened for initiating penalty proceedings u/s. 271(1)(c).(AY. 2011-12)

     Mahesh M. Gandhi v. ACIT (2017) 55 ITR 36 (Mum.)(Trib.)

206. S. 271(1)(c) : Penalty – Change of head of Income – Penalty is not leviable
     

     Held that there was only change of head of income by AO from short term capital gains income on account of investment in shares and securities declared by the assessee to business income by AO and there was no addition to the income of the assessee. Since there was only a change of head of income and no evidence was brought on record that assessee’s claim was not bona fide, penalty was liable to be deleted. (AY. 2008-09)

     Pushpavati Khushalchand Mehta (Ms.) v. ITO (2017) 55 ITR 12 (Mum.)(Trib.)

207. S.271(1)(c) : Penalty – Concealment – Assessee’s father filed return on basis of Form 16 and by mistake omitted interest on savings a/c and fixed deposits – No proof that explanation of assessee false and not bona fide – Levy of penalty was held to be not justified
     

     Held that assessee’s father filed the return based on Form 16 and by mistake he omitted to include interest on savings and fixed deposits. Explanation of assessee that his father inadvertently omitted to include interest in the return was bona fide and genuine. Lower authorities did not prove that the explanation of assessee was false. Conduct of assessee did not show that there was deliberate concealment of income. Penalty therefore is deleted.
     (AY. 2010-11)

     Sachidanand Padgaonkar v. ITO (2017) 55 ITR 44 (Mum.)(Trib.)

208. S.271(1)(c) : Penalty – Concealment – Assessee making a bona fide claim to deduction u/s. 54F relying upon certain decisions – Claim not allowed does not amount to furnishing inaccurate particulars – Penalty not sustainable [S. 54F]
     

     Held allowing the appeal that assessee had only made a bona fide claim to deduction u/s. 54F relying upon certain deductions. Thereby reliance was placed on decision of Reliance Petroproducts 322 ITR 158 (SC) for that a mere making of a claim which is not sustainable in law will not amount to furnishing inaccurate particulars regarding the income of assessee. (AY. 2007-08)

     Veerappan Sivakumar v. ITO (2017) 55 ITR 4 (Chennai)(Trib.)

209. S.271(1)(c) : Penalty – Concealment – Notice not clearly specifying charge for levy of penalty – Further, Penalty in earlier years dropped on similar additions – Penalty is not sustainable [S.274]
     

     Held that while recording satisfaction of penalty, AO was not sure about the charge for levy of penalty. In the notice issued u/s. 274, AO had mentioned both the charges for levy of penalty i.e., furnishing inaccurate particulars of income and concealment of income. Thus, notice did not clearly specify the charge for levy of penalty. Therefore notice issued u/s. 274 rws 271(1)(c) was bad in law and penalty proceedings were therefrom were vitiated. Therefore, penalty be dropped. Further, penalty on similar additions were dropped in earlier years. Hence, penalty be dropped. (AY. 2007-08, 2008-09)

     Vidyanath Urban Co-operative Bank Ltd. v. ACIT (2017) 55 ITR 61 (Pune)(Trib.)

210. S.271(1)(c) : Penalty – Concealment – Withdrawal of debatable claim and addition to income – Levy of penalty was not justified
     

     The Tribunal held that assessee having withdrawn the debatable claim of deduction by filing a revised return and offered sound explanation to assail the addition made by the AO, penalty under section 271(1)(c) is not sustainable. (AY. 2011-12)

     Dy. CIT v. Renu Agarwal (Smt.) (2017) 185 TTJ 36 (Jp)(UO)(Trib.)

211. S.271(1)(c) : Penalty – Concealment – concealment of income and furnishing of inaccurate particulars of income – as per provisions of the Act, the satisfaction has to be recorded by the Assessing Officer before initiating penalty proceedings as to under which limb the case of assessee falls
     

     Assessee had offered additional income on account of on-money on sale of plots. The Assessing Officer (AO) had accepted the same and had initiated penalty proceedings under section 271(1)(c) of the Act. The Commissioner of Income Tax CIT(A) upheld the penalty levied and issued enhancement notice to the assessee during the course of the proceedings. The order of the CIT(A) was challenged by the assessee. Assessee claimed that, CIT(A) erred in directing levy of penalty on ground that assessee had concealed its income and also misrepresented facts of case, on appeal it was held by the tribunal that, where concealment of income and furnishing of inaccurate particulars of income were two different connotations, then as per provisions of the Act, satisfaction had to be recorded by AO before initiating penalty proceedings as to under which limb case of assessee falls. In absence of same, it causes prejudice to right of reasonable opportunity to be allowed to assessee before levy of penalty u/s. 271(1)(c). It was further held that in cases where penalty proceedings had been initiated on different footing and CIT(A) reversed same, there is change in opinion and basis for levy of penalty for concealment varies. In such circumstances, there is no merit in levy of penalty under section 271(1)(c) of the Act Accordingly, court allowed the claim of assessee. (AYs. 2003-04 to 2007-08)

     Kanjaiyalal D. Jain v. ACIT (2016) 48 CCH 469 / (2017) 150 DTR 1 / 185 TTJ 553 (Pune)(Trib.)

212. S.271AAB : Penalty – Absence of proper show cause notice – Notice issued under section 271(1)(c) and not under section 271AAB, levy of penalty was held to be not valid [S. 271(1)(c)]

The Tribunal held that opportunity of being heard has been given to the assessee only in respect of the proceedings initiated under section 271(1)(c) of the Act. No opportunity has been given to the assessee in respect of the penalty to be levied under section 271AAB of the Act. The order passed by the AO is against the principles of natural justice of providing the proper opportunity to the assessee. The Tribunal quashed the order of AO.

The Tribunal further held that AO has not specified in the notice in respect of which clause the penalty is going to be levied on the assessee. The provisions of section 271 AAB are not mandatory which means that the penalty has to be levied on each and every case wherever the assessee has made default as stated under clauses (a), (b) and (c) of the Act. On this basis also the Tribunal set aside the order of CIT(A) and deleted the penalty levied on the assessee. (AY. 2014-15)

Kamal Kishore Chandak v. ACIT (2017) 185 TTJ 265 (Luck.)(Trib.)