Allowing the appeal of the Revenue the Court held that Urban improvement Trust constituted under Rajasthan Urban Improvement Act, 1959 is not local authority, hence not entitled to exemption. The High Court based its decision on the fact that functions carried out by the assessee are statutory functions and it is carrying on the functions for the benefit of the State Government for urban development. The said reasoning cannot lead to the conclusion that it is a Municipal Committee within the meaning of Section 10(20) Explanation Clause (iii). The High Court has not adverted to the relevant facts and circumstances and without considering the relevant aspects has arrived at erroneous conclusions. Judgments of the High Court are unsustainable. The functional test” as laid down in UOI v. R. C. Jain, (1981) 2 SCC 308 is not applicable after amendment of section 10(20) of the Act by Finance Act, 2002. (CA. No. 10577 of 2018, dt. 12-10-2018)

ITO v. Urban Improvement Trust (2018) 409 ITR 1 98 taxmann.com 237 (SC),
www.itatonline.org

31. S.11 : Property held for charitable purposes – Application of income – Any excess expenditure incurred by the trust/charitable institution in earlier assessment year allowed to be set off against income of subsequent years

    Affirming Delhi High Court’s view, (Subros Educational Society – in IT Appeal No. 382 of 2015 dt. 23rd Sept., 2015), that any excess expenditure incurred by the trust/charitable institution in earlier assessment year could be allowed to be set off against income of subsequent years, the Supreme Court dismissed the Miscellaneous Application of the Revenue. (Misc. Appl. No. 941 of 2018 dt. 16-4-2018)

    CIT (E) v. Subros Educational Society (2018) 303 CTR 1 / 166 DTR 257 (SC)

32. S.80IC : Special category States – An assessee who avails of deduction for a period of 5 years @ 100% of profits and gains is entitled to deduction on ‘substantial expansion’ for remaining 5 Assessment Years @ 25% (or 30% where the assessee is a company) and not @ 100%

    Allowing the appeal of the Revenue the Court held that an assessee who avails of deduction for a period of 5 years @ 100% of profits and gains is entitled to deduction on ‘substantial expansion’ for remaining 5 Assessment Years @ 25% (or 30% where the assessee is a company) and not @ 100% (Mahabir Industries v. PCIT (2018) 406 ITR 315 (SC) distinguished). CA. No. 7208 of 2018, dt. 20-8-2018) (AY. 2011-12- 20015-16)

    CIT v. Classic Binding Industries (2018) 407 ITR 429 (SC);
    www.itatonline.org

33. S.142(2A) : Inquiry before assessment – Special Audit –Limitation – Manipulation in dates by Department proved – Notices of SLP against order of High Court dismissing writ petition against Special Audit under S.142(2A) issued and directions of High Court order stayed

    The Supreme Court stayed the instructions of High Court order and issued notices to parties for hearing, in response to the writ filed by assessee seeking abatement of assessment as it becomes barred by limitation. As the assessee proved that the proposal for approval of audit under Section 142(2A) of the Act was moved on March 31, 2013, hence the order under Section 142(2A) could not be served on such date as claimed by Department. (SPL (C) No. 8384 of 2018 dt. 9-4-2018)(AY. 2009-10)

    Nokia India (P) Ltd. v. Add. CIT (2018) 255 Taxman 448 (SC)

    Editorial: Nokia India (P) Ltd. v. Add. CIT (2018) 92 taxmann.76) Delhi)(HC) is stayed

34. S.222 : Collection and recovery – Certificate to Tax Recovery Officer Income-tax dues, being in the nature of crown debts, do not take precedence even over secured creditors, who are private persons. Given S. 238 of the Insolvency and Bankruptcy Code, 2016 the Code will override anything inconsistent contained in any other enactment, including the Income-tax Act [Insolvency and Bankruptcy Code, 2016 S. 238]

    Dismissing the SLP of the Revenue the Court held that; Income-tax dues, being in the nature of Crown debts, do not take precedence even over secured creditors, who are private persons. Given S. 238 of the Insolvency and Bankruptcy Code, 2016 the Code will override anything inconsistent contained in any other enactment, including the Income-tax Act. Referred, Dena Bank v. Bhikhabhai Prabhudas Parekh and Co. & Ors. (2000) 5 SCC 694 and its progeny, making it clear that income-tax dues, being in the nature of crown debts, do not take precedence even over secured creditors, who are private persons. (SLP No. 6483/2018, dt. 10-8-2018).

    PCIT v. Monnet Ispat and Energy Ltd. (2018) 304 CTR 233 (SC),
    www.itatonline.org

35. S.260A : Appeal – High Court – Condonation of abnormal delay of 1,371 days in removing office objections: High Court refused to condone delay and held that Dept must “set its own house in order by sacking and removing the delinquent and negligent officials or penalising them otherwise so as to subserve larger public interest”. The Supreme Court reversed this, order holding that the High Court ought to have condoned the delay and not dismissed the appeal – Dept to pay costs of ₹ 1 lakh to be deposited with the Supreme Court Bar Association Lawyers’ Welfare Fund

    The appeal was filed by the Department (appellant herein)
    before the High Court againsrder which was been rejected by the High Court vide the impugned Judgment. The Supreme Court set aside the Order of the High Court observing “No doubt, there is a long delay in removing the objections, we are of the opinion that in a case like this the High Court should have condoned the delay in removing the office objectt
    the judgment of the Income Tax Appellate Tribunal (ITAT).However, the said appeal was defective and the appellant took abnormal time of 1,371 days in removing those defects. An application for condonation of delay was also filed. Since there was abnormal delay, the Registrar/Prothonotary
    & Senior Master of the Bombay High Court passed an Order dismissing the appeal
    for non-removal of office objections. The appellant herein took out a Notice of
    Motion against the aforesaid Oions and heard the matter on merits. However, for the said delay caused by the appellant, the appellant shall pay cost of Rupees one lakh within four weeks, which shall be deposited with the Supreme Court Bar Association Lawyers’ Welfare Fund. In view of the above, we condone the delay in removing office objections and remit the matter to the High Court for consideration of the case on merits. The appeal is allowed as indicated above.” (CA. No 10774 of 2018, dt. 26-10-2018).

    CIT v. Reliance Industries Ltd. (SC);
    www.itatonline.org

36. S.261 : Appeal – Supreme Court – Strictures – Delay of 596 days- Misleading statement about pendency of similar appeal – Petition was dismissed – Awarded cost of ₹ 10 lakh to be paid to the Supreme Court Legal Services Committee

    Dismissing the petition of the Revenue the Court held that there is an inadequate and unconvincing explanation given for the delay of 596 days in filing the petition. Secondly it is mentioned in the proforma for listing that a similar matter is pending in this Court. However, the office has given the report stating that the said case was decided by this court as far back as on 27th September, 2012. Court observed that as the petitioner has given a totally misleading statement and Union of India through the CIT has taken the matter so casually. Accordingly dismissing the petition, the Honourable Court directed the petitioner to pay cost of ₹ 10 lakh to the Supreme Court Legal Services Committee.

    CIT v. Hapur Pilkhuwa Development Authority (2018) 304 CTR 337/ 169 DTR 281 (SC)

37. Gold Control Act – Repeal of statute – Interpreattaion – Pending proceedings – Effect of repeal of a statute – Show cause notice will not survive – Given liberty to both parties to add to or amend or delete the questions in the Wealth Tax Reference within a period of eight weeks from today – Once this is done, the writ petitions will be taken up and decided on their merits. Considering these writ petitions are of 2005, we request the High Court to hear the same expeditiously – Appeals allowed and set aside the common impugned judgment of the High Court. Wealth tax references are set aside [General Clauses Act S.6A]

    Show cause notice was issued under Gold Control Act, which was challenged when the stay was continued and the Gold Control Act and itself was repealed. It was contended that as the Gold Control Act itself has been repealed without a saving clause, Section 6 of the General Clauses Act would not apply for the reason that the objects and reasons show that the Act was sought to be repealed without any saving clause. It was argued that upon the objects and reasons using the expression “regressive” and the fact that it has given rise to considerable dissatisfaction in the minds of the public as it has caused hardship and harassment to artisans and small self-employed goldsmiths. Accordingly the statement of objects and reasons clearly evinces a contrary intention as a result of which, nothing will survive the repeal of this Act. This being so, a show cause notice which has been upheld by the Delhi High Court would not survive. On behalf of the revenue it was contended that once there is a repeal simpliciter, without any savings clause, the whole object of such a repeal was so that the general rule under Section 6 would apply, as a result of which the law laid down in State of Punjab v. Mohar Singh, [1955] 1 SCR 893, would apply. Court held that having heard learned counsel for both sides, “we are of the view that the statement of objects and reasons makes it clear that over 22 years, the results achieved under the Act have not been encouraging and the desired objectives for which the Act has been introduced have failed. Following the advice of experts, who have examined issues related to the Act, the objects and reasons goes on further to state that this Act has proved to be a regressive measure which has caused considerable dissatisfaction in the minds of the public and hardship and harassment to artisans and small self-employed goldsmiths. Court also observed that, we are of the opinion that the repeal simpliciter, in the present case, does not attract the provisions of Section 6 of the General Clauses Act as a contrary intention is very clearly expressed in the statement of objects and reasons to the 1990 repeal Act. In this behalf, it would be apposite to refer to New India Assurance Co. Ltd. v. C. Padma and Another, (2003) 7 SCC 713 (para 10).

    This Court noticed that in a parallel instance of simpliciter repeal, Parliament realised the grave injustice and injury that had been caused to heirs of LRs of victims of accidents if their petitions were rejected only on the ground of limitation. This being the case, this Court found that a different intention had been expressed and, therefore, Section 6-A of the General Clauses Act would not in that situation apply. Court also observed that in a similar situation in the present case. In point of fact, on going through the impugned judgment, it is clear that every time an amendment was made to the Defence of India Rules and/or repeal of the said rules had taken place, there was always an in built savings clause. In fact, Section 116 of the Gold (Control) Ordinance No. 6 of 1968 also made it clear that it went to the extent, in sub-section 2 thereof, by serving show cause notices which, ordinarily, are not served even if Section 6 were to apply – See M.S. Shivananda v. Karnataka State Road Transport Corporation and Others, [1980] 1 SCR 684 following Director of Public Works & Anr. v. Ho Po Sang & Ors., [1961] 2 All. ER 721. This being the case, we are of the view that the show cause notice dated 1-6-1971, which is the subject matter of this appeal, no longer survives. In this view of the matter, the appeal is disposed of. Given the fact that the show cause notice and proceedings thereafter have now disappeared as a result of the repeal of the Gold Control Act, we give liberty to both parties to add to or amend or delete the questions in the Wealth Tax Reference within a period of eight weeks from today. Once this is done, the writ petitions will be taken up and decided on their merits. Considering these writ petitions are of 2005, we request the High Court to hear the same expeditiously. Appeals allowed and set aside the common impugned judgment of the High Court.” (CA. No. 10824 of 2018, 
    dt. 30-10-2018)

    Sushila N. Rungta v. TRO (SC);
    www.itatonline.org.

    Chartered Accountants Act, 1949

38. S.22 : Professional misconduct – A Chartered Accountant can be held guilty of professional misconduct even when he is acting as an individual in commercial dealings and is not acting as a Chartered Accountant nor discharging any function in relation to his practice as a Chartered Accountant. Under the chartered Accountants Act, any action which brings disrepute to the profession or the Institute is misconduct whether or not related to professional work

Apex court held that, a Chartered Accountant can be held guilty of professional misconduct even when he is acting as an individual in commercial dealings and is not acting as a Chartered Accountant nor discharging any function in relation to his practice as a Chartered Accountant. Under the chartered Accountants Act, any action which brings disrepute to the profession or the Institute is misconduct whether or not related to professional work. (CA No. 11034 of 2018, dt. 16-11-2018)

Council of ICAI v. Gurvinder Singh (SC),
www.itatonline.org