Tribunals Research Team

  1. S.2(14) : Capital asset – Gains arising on sale of land held for long time as investment and offered to Wealth-tax [S. 45]

    AO disputed chargeability of gains arising on sale of land under head ‘capital gains’.

    On appeal, the Tribunal observed that the assessee had sold only few plots during the year as against the large land portfolio and there was considerable time lag between the purchase and sale of land. It was also noticed that land/properties have been declared as capital investment by the assessee all along and that some agricultural produce were recorded in 7/12 extract and therefore the assessee earned some money by way of yield on such investments. The land held prior to selling was shown as investment and subjected to wealth-tax which further underscores the intention of the assessee to hold the properties as capital asset. It was also observed that the assessee has declared the acquisition of land in its books as investment over a period of time. The Tribunal held that an element of borrowed funds in the acquisition of assets in the present case did not alter the position. Therefore, the Tribunal held that the assessee was entitled to hold certain class of assets as capital asset even while he is dealing with the asset of similar nature in business with commercial objectives. (AY 2011-12)

    Hiteshkumar Ashok Kumar Vaswani v. JCIT (2017) 157 DTR 167 /165 ITD 505 / (2018) 191 TTJ 495 (Ahd.)

  2. S.2(15) : Charitable purpose – Amended proviso of S.2(15) has no application vis-a-vis the clause other than object of general public utility i.e., in relation to the educational activities of the Society for Participatory Research in Asia [Ss. 2(15) & 11]

    The Tax Department has been consistently accepting the stand of the assessee in the preceding years that the participatory research activities of the assessee fall within the scope of education as envisaged u/s. 2(15) as well as u/s. 10(22) and simply because assessee’s income from education is confined to distance learning course fee of ₹ 20.65 lakhs out of total receipts of ₹ 21.45 crores. Proviso to 2(15) cannot be invoked to deny claim of exemption under Se.11 & 12 (ITA No. 1553/Del/2015 dt. 17-2-2017) (AY. 2010-11).

    Society for Participatory Research in Asia v. ITO (2017) 157 DTR 85 (Delhi) (Trib.)

  3. S.2(22)(e) : Deemed dividend – Transfer by book entries cannot be considered as cash payment hence addition cannot be as deemed dividend

    Dismissing the appeal of the Revenue the Tribunal held that transfer by book entries cannot be considered as cash payment hence addition cannot be as deemed dividend. (AY. 2010-11)

    ACIT v. Siddharth Gupta (2017) 165 ITD 369 (Delhi) (Trib.)

  4. S.2(29A) : Long-term capital asset – The period of holding shall be computed from the date when the specific flat is earmarked and allotted by the builder in favour of the assessee and not from the date of registration of flat [S.2(42A), 45]

    During the year in October / December 2009, the assessee sold two flats and offered long term capital gain. For the purpose of computing the period of holding, the assessee treated the date of booking of flats i.e., September 2005 as the relevant date and not the date of registration of flat i.e., March 2008. The AO held that period of holding shall be computed from the date of registration of flat and thus, treated the gain on sale of flat as short term capital gains. On appeal, the CIT(A) disproved the action of the AO. On further appeal, the Tribunal held title, interest and rights in the flats was created when specific flat was earmarked and allotted by the builder in favour of the assessee i.e. in September 2005 and hence, the period of holding shall be computed from the said date. (AY. 2010-11)

    ACIT v. Yogesh Agencies & Investments Pvt. Ltd. (2017) 58 ITR 83 (Mum.) (Trib.)

  5. S.4 : Income chargeable to tax – Mutuality – A club whose membership is also open to the persons from the public and whose management is looked after by officials of HUDA is eligible to claim the benefits of mutuality

    Dismissing the appeal of the revenue, the Tribunal held that; there cannot be said to be straight jacket formula to say that in every mutual concern the members must be entitled to a share in the surplus. Since the affairs of the assessee trust are controlled by the serving officers of HUDA, hence it has to pass through greater scrutiny as the chances of it crossing the thin line between the mutuality and commerciality are very high. However, at this stage, so far the Assessment Years under consideration are concerned, the Revenue could not point out the taint of commerciality in the contribution, management and application of the surplus collected through contributions and subscriptions from the members and for price of the facilities availed by its members, hence, the same cannot be said to be taxable income of the society. (ITA No. 1084/Chd/2009, dt. 26-9-2017)(AY. 2006-07)

    ITO v. Gyamkhana Club (Chd.)(Trib.), www.itatonline.org

  6. S.5 : Scope of total income – Accrual – Seafarer – Services were rendered outside India on a foreign ship salary receipts shall not include income as same was credited in NRE account maintained in Indian Bank

    Allowing the appeal of the assessee, the Tribunal held that salary accrued to a non-resident for services rendered outside India on a foreign ship shall not be included in total income, as the salary has been credited in NRE account maintained with an Indian Bank by seafarer. (AY. 2012-13)

    Asim Kumar Bera v. DIT (2017) 166 ITD 592 (Kol.)(Trib.)

  7. S.5 : Scope of total income – Salary earned by the foreign employer for services rendered outside India directly credited to NRE bank account of the non-resident seafarer in India cannot be brought to tax in India in terms of section 5 [S.5]

    Assessee, a Marine Engineer was engaged with ‘W’ Ltd., Hongkong in the capacity as a Master and earned salary therefrom in US dollars. The said salary was earned outside India and since he was a non-resident the said income was not chargeable to tax in India. Circular No. 13/2017 dt. 11th April 2017 shows that the salary accrued to a non-resident seafarer for services rendered outside India on a foreign going ship shall not be included in the total income merely because the said salary has been credited in the NRE account maintained with an Indian Bank by seafarer. (ITA No. 67/Kol/2016 dt. 2-6-2017) (AY. 2011-12).

    Shyamal Gopal Chattopadhyay v. DDIT (2017) 189 TTJ 327 (Kolkata Trib.) / (2017) 165 ITD 437 (Kolka) (Trib.)

  8. S.10A – Export – Newly Established Undertaking in Free Trade Zone – Net interest can be disallowed

    The assessee received interest on bank deposits amounting to ₹ 1,05,04,361/- and the AO during the course of assessment proceedings disallowed the deduction claimed by the assessee u/s. 10A of the IT Act,1961 in respect of this interest income treating it as income from other sources. The CIT(A) held that such interest income did not have a first degree nexus to the export. However, he held that only net interest i.e,. interest income after reducing interest paid, could be excluded while determining the business income derived from export. The CIT(A) worked out the disallowance in respect of interest at ₹ 30,17,944/-. The appeal has been filed by the department and assessee before the Tribunal. The Tribunal held that only net interest should be disallowed in the claim of deduction u/s. 10A. (ITA Nos. 7547&6691/Mum./2014} (A.Y 2010-11) (6-9-2017)

    Balaji Export Co. v. ACIT (2017) 59 ITR 36 (Mum.)(Trib.)

  9. S. 12A : Registration –Trust or institution – Exemption cannot be denied to a trust if it had obtained registration during the pendency of appeal before CIT(A) [S.11 ]

    The AO held that the assessee was only affiliated to SNDP Yogam and was not independently registered either under the relevant Kerala State Act or the Income-tax Act and hence the provisions of Section 167B of the I.T. Act were applicable and thus the whole income of the assessee from all the institutions were to be taxed at the maximum marginal rate. The assessee contended that once the registration u/s. 12A was granted to the assessee even at a later date, the same was applicable for pending assessment proceedings for the earlier assessment years. The assessee also contended that CITs power to grant registration is not with retrospective effect and the assessee has filed petition before the CBDT for the condonation of delay in filing application for registration under Section 12A, and it is mentioned therein that there is a chance that registration would be granted to the assessee with retrospective effect by the CBDT. The assessee has also contended in the additional grounds that since it is running individual education institution the assessee is also eligible for exemption u/s. 10(23C). On appeal the Tribunal held that the AO was not justified in taking a stand that registration u/s. 12A was not applicable to the assessee for the AYs under dispute and the condonation petition for delay in filing the application for registration u/s. 12A for the AYs under dispute has not yet been decided by the CBDT and the total incomes of the assessee were to be assessed as per commercial principles. (ITA Nos. 503 to 506 & 569/ Coch/ 2016 dt. 1-3-2016) (AYs. 2006-07 to 2009-10 & 2011-12).

    SDNP Yogam v. ADIT(E) (2017) 186 TTJ 277/161 ITD 1 (Cochin) (Trib.)

  10. S.14A : Disallowance of expenditure – Exempt income – Satisfaction to be recorded by the Assessing Officer, it cannot be substituted by recorded satisfaction of Commissioner of Income-tax (Appeals) [S. 251, R.8D]

    Allowing the appeal of the assessee, the Tribunal held that though the power of CIT(A) is co-terminus with that of Assessing Officer, it is Assessing Officer who has to record his satisfaction with regard to correctness of assessee’s claim before proceeding to disallow expenditure under section 14A and satisfaction to be recorded by Assessing Officer under section 14A(2) cannot be substituted by satisfaction recorded by First Appellate Authority. (AY. -11)

    Arnav Gruh Ltd. v. DCIT (2018) 168 ITD 518 (Mum) (Trib.)

  11. S.14A : Disallowance of expenditure – Exempt income – Suo motu disallowance, wrongly offered to tax – AOs should assess taxable income and compute the tax liability of taxpayers in accordance with law and should not take undue advantage of the ignorance of the assessee – Matter remanded back to AO for verification [R.8D]

    Allowing the appeal of the assessee, the Tribunal held that suo motu disallowance, wrongly offered to tax. AO should assess taxable income and compute the tax liability of taxpayers in accordance with law and should not take undue advantage of the ignorance of the assessee. Matter remanded back to AO for verification AO would be well within his powers to assess the income below the amount offered by the assessee in the return of income, if the facts of this case and law applicable thereon so demands. (AYs. 2009-10, 2010-11)

    Rupee Finance and Management Pvt. Ltd. v. DCIT (2017) 57 ITR 205 (Mum.) (Trib.)

  12. S.14A : Disallowance of expenditure – Exempt Income – Fixed terms debt Scheme – Interest on overdraft cannot be disallowed [R.8D ]

    Assessee having invested in the fixed maturity plans of various mutual funds which are basically fixed terms debt scheme, the same are not tax free investments and therefore the interest on the overdraft account could not be disallowed under the provisions of S. 14A of the Act. (AY. 2009-10)

    Allen Career Institute v. JCIT (2017) 190 TTJ 823 (Jaipur) (Trib.)

  13. S.23 : Income from house property – Common Areas Maintenance Charges and non-occupancy charges paid by the assessee to the Society are deductible from the rent while computing the annual letting value [S. 22]

    Dismissing the appeal of the revenue the Tribunal held that; Common Areas Maintenance Charges and non-occupancy charges paid by the assessee to the Society are deductible from the rent while computing the annual letting value. (ITA No. 4776/Mum/2014, dt. 1-11-2017) (AY. 2010-11)

    DCIT v. Yogen D. Sanghavi(Mum)(Trib) ; www.itatonline.org

  14. S.28(iv) : Business income –Amalgamation – There was no business transaction in amalgamation, surplus of assets over liability of subsidiary company resulting from said amalgamation was not taxable [S.28(i)]

    Allowing the appeal of the assessee the Tribunal held that where 100 per cent owned subsidiary company of assessee was amalgamated with assessee-company and there was no business transaction in amalgamation, surplus of assets over liability of subsidiary-company resulting from said amalgamation was not taxable. (AY. 2003-04)

    Sundaram Finance Ltd. v. ACIT (2017) 165 ITD 563 (Chennai) (Trib.)

  15. S.28(iv) : Business income – Value of any benefit or perquisites – Converted into money or not – Concession of duty on import of capital goods conditional on certain quantum of export, still be a concession on capital account hence cannot be assessed as business income [S.4]

    Dismissing the appeal of the Revenue the Tribunal held that ; since the concession was linked to the import of capital goods, though conditional on fulfilling export obligation, was a concession on the capital account. The assessee was also not allowed to use the import entitlement in any manner other than for import of capital goods. There was no benefit or perquisite that accrued to the assessee on account of this transaction and it did not have any component of revenue nature and hence, the provisions of Section 28(iv) would not apply. (AYs. 2001-02, 2004-05, 2006-07 )

    ACIT v. India Cements Ltd. (2017) 165 ITD 496 (Chennai) (Trib.)

  16. S.28(iv) : Business income – Value of any benefit or perquisites –Converted in to money or not – Only fact that the assessee attended annual day celebrations and addressed to employees of the Company which gifted a villa to the assessee in Dubai does not amount to rendering of professional services or carrying out brand endorsement activities and hence the value of villa cannot be brought to tax u/s. 28(iv) [S. 28(iv)]

    Assessee, an actor by profession received a villa as simple unilateral gratuitous act of gift from ‘N’ a friend of the assessee and Executive Director/ Chairman of ‘PJSC’, a Dubai based Company on account of love and affection towards the assessee. The AO held that PJSC was using the assessee’s brand image which was corroborated by the fact that he attended the annual day celebrations of PJSC and hence brought the value of the villa to tax u/s. 28(iv). The CIT(A) upheld the stand of the AO. On appeal, the Tribunal held that the assessee had merely addressed the employees of PJSC at the annual day celebrations and he did not give any stage performance. Also, the gift was offered to assessee in 2004 whereas the annual day took place in 2007 and that the assessee was under no obligation to attend the same and undertake any sort of brand endorsements for PJSC and hence the gift received was not taxable in the hands of the assessee u/s. 28(iv) (ITA No. 8555/M/2011 & 80/M/2012 dt. 18-8-2017) (AY. 2008-09).

    Shah Rukh Khan v. ACIT (2017) 189 TTJ 547 / 84 taxmann.com 209 (Mum.) (Trib.)

  17. S.32 : Depreciation – Advertising Company – Hoarding is entitled to 100 per cent depreciation

    Dismissing the appeal of the Revenue, the Tribunal held that hoardings is entitled to 100 per cent depreciation. (AY. 2010-11)

    DCIT v. Vantage Advertising P. Ltd. (2018) 61 ITR 564 (Kol.) (Trib.)

  18. S. 32(1)(ii) – Depreciation – Intangible asset – Right to collect toll

    Assessee has expended on development, construction and maintenance of infrastructure facility i.e., road out of its own funds and after the end of specified period, it has to transfer the said infrastructure facility to the State Government free of charge. In consideration thereof assessee was granted the right to collect toll from motorists who use the said infrastructure facility in nature and the same cannot be amortised over the period for which the assessee can collect the toll.

    The Tribunal held that the right to collect toll granted to the assessee in consideration of developing, constructing and maintaining the infrastructure facility i.e., road and transferring the same to the State Government free of charge after the specified period is an intangible asset eligible for depreciation under section 32(1)(ii). {ITA Nos. 1452 to 1457/Pun. 2014} (30-6-2017)

    Ashoka Infrastructure Ltd. v. ACIT (2017) 189 TTJ 749 (Pun.)(Trib.)

  19. S.32 : Depreciation – Right to operate the toll road/bridge – Commercial rights which is entitled to deprecation [S.32(1)(ii)]

    Tribunal held that right to operate the toll road /bridge and collect toll charges in lieu of investment made by it in implementing the project is an intangible asset in the nature of licence or akin to licence as well as a business or commercial rights, which is entitled to depreciation. (AY. 2011-12)

    ACIT v. Progressive Constructions Ltd. ( 2018) 161 DTR 289 (SB) (Hyd.) (Trib.)

  20. S.35 : Scientific research expenditure – Due to retrospective cancellation of approval, donor’s claim of deduction could not be denied [S. 35(1)(ii)]

    Tribunal held that when institution was enjoying approval on date of receipt of donation, on retrospective cancellation of approval of concerned institution, weighted deduction claimed by assessee in respect of donation could not be denied. (AY. 2012-13)

    Deviyani Dilip Patel (Smt.) v. ITO (2017) 165 ITD 598 (Chennai) (Trib.)

  21. S.37(1) : Business expenditure – Capital or revenue – Annual lease premium paid for acquiring mining rights on land was capital expenditure.

    Allowing the appeal of the Revenue, the Tribunal held that Annual lease premium paid for acquiring mining rights on a land was capital expenditure. Tribunal also held that if the payment is capital in nature, expenditure cannot be allowed on staggered basis. Even for the purpose of spreading over period of lease, it is essential that the expenditure should be in the nature of revenue expenditure. (AY. 2008-09 to 2012-13)

    ACIT v. K.R. Kaviraj. (2018) 168 ITD 491 (Beng.) (Trib.)

  22. S.37(1) : Business expenditure – Entire expenses incurred on abandoned project development is allowable even if the assessee had amortised the same over a period of five years in its books

    Entire expenses incurred on abandoned project development is allowable even if the assessee had amortised the same over a period of five years in its books. (AY. 2008-09)

    Royal Calcutta Turf Club v. DCIT (2017) 158 DTR 92 / 189 TTJ 433 / 59 ITR 656 (Kol.) (Trib.)

  23. S.37(1) : Business expenditure –Capital or Revenue – Expenditure incurred on purchase of plastic cans and crates, for the purposes of transportation of milk, is allowable as revenue expenditure

    Dismissing the appeal of the Revenue, the Tribunal held that expenditure incurred on purchase of plastic cans and crates, for the purposes of transportation of milk, is allowable as revenue expenditure. (AY. 2012-13)

    ACIT v. Tirumala Milk Products Pvt. Ltd. (2017) 59 ITR 137 (SN)(Visakha)(Trib.)

  24. S.37 : Business Expenditure – Bogus Purchases – Books of account of assessee not rejected – Disallowance of purchases not proper [S.133(6)]

    Dismissing the appeal of the Revenue, the Tribunal held that merely because the suppliers had not appeared before the AO or CIT(A), it could not be concluded that the purchases were not made by the assessee. This is the case where books of account of the assessee had not been rejected and the AO had not brought on record anything which may prove that the evidences submitted by the assessee was bogus. Relying on the Bombay High Court decision in the case of Nikunj Exim Enterprises Pvt. Ltd. 372 ITR 619, the Hon’ble Tribunal deleted the addition of disallowing the purchases made by the Assessee. (A.Y. 2011-12)

    ACIT v. Skylark Builders SSJC (Ghatkopar) (2017) 58 ITR 77( SN) (Mum.) (Trib.)

  25. S.45 : Capital gains – Real income – An amount which is payable only on fulfilment of conditions does not create an enforceable right and has to be excluded while computing capital gains [S. 48]

    Allowing the appeal of the Revenue the Court held that the scheme of the Act is to assess real income and not hypothetical income. The word “accrue” in “full value of consideration received or accruing” in S. 45 means that the assessee has a legally enforceable right to receive the sum. An amount which is payable only on fulfilment of conditions does not create an enforceable right and has to be excluded while computing capital gains. (ITA No. 5097/Mum/2015, dt. 1-11-2017)(AY. 2010-11)

    Gordhandas S. Garodia, (late). v. DCIT (Mum.)(Trib.) www.itatonline.org

  26. S.45 : Capital gains – Purchase and sale of shares – Average holding period was 72 days hence income earned was held to be assessable as capital gains and not as business income [S.28(i)]

    Dismissing the appeal of the Revenue, the Tribunal held that the assessee has invested his own funds in purchase of shares, in view of fact that he entered into delivery based transactions and, moreover, average holding period of shares was around 72 days, income earned on sale of those shares was liable to tax as short term capital gain. (AY. 2010-11)

    ACIT v. Jignesh Madhukant Mehta. (2017) 165 ITD 646 (Mum.) (Trib.)

  27. S.45(4) : Capital gains –Distribution of capital asset – Revaluation of assets on retirement – On retirement the accounts are settled of retiring partners without distribution of capital assets, provisions of S. 45(4) cannot be invoked [S. 45]

    Allowing the appeal of the assessee the Tribunal held that on retirement accounts of retiring partners are settled by revaluing the assets without distribution of capital assets and firm continued to the business, provision of S. 45(4) cannot be invoked. (AY. 2009-10)

    Mahul Construction Corporation. v. ITO (2018) 168 ITD 120 (Mum.) (Trib.)

  28. S.47(iv) : Capital gains –Transaction not regarded as transfer – Subsidiary – A subsidiary of a subsidiary (step-down subsidiary) is also a subsidiary of the parent. Consequently, transfers between the holding company and the step-down subsidiary are not “transfers” which can give rise to capital gains or loss. [Ss.45, 48, Companies Act, S. 4(1)(c), 108]

    The Tribunal held that; the term ‘subsidiary company’ is not defined under the Income-tax Act and so will have to be given the meaning in s. 4(1)(c) of the Companies Act. A subsidiary of a subsidiary (step-down subsidiary) is also a subsidiary of the parent. Consequently, transfers between the holding company and the step-down subsidiary are not “transfers” which can give rise to capital gains or loss. Accordingly the Tribunal held that the transaction of sale of shares of M/s. Zandu Realty by the assessee to M/s. Emami Rainbow Niketan Ltd. is not regarded as a transfer in view of Sec.47(iv) of the Act. Hence, the question of computing either capital loss or capital gain does not arise. Thus, the assessee is not entitled to carry forward the capital loss of ₹ 25 crores as claimed. (AY. 2010-11)

    Emami Infrastructure Ltd. v. ITO (Kol.)(Trib.), www.itatonline.org

  29. S.48 : Capital gains – Computation –Indexation – Government securities indexation benefit is available [S. 45]

    Assessee sold Government Securities and claimed indexation benefit on such sale which resulted into loss. Assessing Officer denied the indexation benefit holding that the Government securities were in the form of bonds and debentures as per third proviso to S. 48 of the Act. On appeal the Tribunal held that, since bonds and debentures are distinguishable from Government Securities as per third proviso, indexation benefit was held to be allowable. (AY. 2003-04)

    Sundaram Finance Ltd. v. ACIT (2017) 165 ITD 563 (Chennai) (Trib.)

  30. S.50 : Capital gains – Depreciable assets – Block of assets – Once the asset forms a part of the block of asset and such block of assets ceased to exist at the end of the previous year the provisions of Section 50 of the ITA becomes applicable and capital gains on depreciable assets should be computed accordingly [S. 43]

    The AO reopened the assessment since according to him, short term capital loss on demolition of asset does not constitute a transfer of capital asset and hence the set off of such short term capital loss against long term capital gains has resulted into income escaping assessment. The CIT(A) upheld the action of the AO. On appeal the Tribunal held that the depreciation have been claimed in the earlier years on the same building and it forms a part of the block of asset. Since the asset was demolished during the year the difference between the written down value and the salvage received has to be treated as short term capital loss/ gain, as the case may be. (ITA No. 1421/Hyd/2016 dt. 12-5-2017) (AY. 2003-04).

    Sidamshetty Ramesh (HUF) v. ITO (2017) 154 DTR 82/187 TTJ 498 (Hyd.)(Trib.).

  31. S.50B : Capital gains – Slump sale – Transfer of individual assets to sister concern without transfer of undertaking or business activity as a whole cannot be considered as slump sale [Ss. 2(19AA), 2(42C)]

    Allowing the appeal of the assessee, the Tribunal held that since assessee had neither transferred an undertaking or any part of an undertaking, or a unit or division of undertaking or a business activity taken as a whole, but what had been transferred was an individual asset, viz., business leads, which did not constitute a business activity on its own, view taken by Assessing Officer that amount received by assessee was liable to be characterised as a consideration received pursuant to a slump sale as per provisions of section 50B, could not be upheld. (AY. 2003-04)

    L&T Finance Ltd. v. DCIT (2018) 168 ITD 52 (Mum) (Trib.)

  32. S.50C : Capital gains – Full value of consideration – Stamp valuation – Agreement to sell entered much before the date of transfer of property – first and second proviso inserted by Finance Act, 2016 w.e.f. 1-4-2017, should be treated as curative in nature and with retrospective effect from 1st April 2003 [S. 45]

    Allowing the appeal of the assessee, the Tribunal held that first and second proviso inserted by Finance Act, 2016 w.e.f. 1-4-2017, should be treated as curative in nature and with retrospective effect from 1st April 2003, i.e. the date effective from which section 50C was introduced. Thus the matter was restored back to the AO with a direction that in case he finds that a registered agreement to sell, as claimed by the assessee, was actually executed on June 29, 2005 and the partial sale consideration was received through banking channels, the Assessing Officer, so far as computation of capital gains is concerned, will adopt the stamp duty valuation, as on June 29, 2005, of the property sold as it existed at that point of time. (AY. 2008-09)

    Dharamshibhai Sonani v. ACIT (2017) 57 ITR 669 (Ahd.) (Trib)

  33. S.54 : Capital gains – Profit on sale of property used for residence – If entire consideration was paid within three years the assessee is entitle to exemption [Ss.45, 54F]

    Allowing the appeal of the assessee the Tribunal held that, if agreement for purchase of new residential house is made and entire purchase price is paid within three years from the date of transfer of the old asset, exemption u/s. 54 is available. It is not required that the house must be completed within 3 years. The requirement in s. 54(2) that the capital gains should be deposited in the CGAS scheme is merely an enabling provision. If the assessee shows during assessment proceedings that the capital gains have been reinvested in the new residential house, exemption cannot be denied merely the amount was not deposited in the CGAS. (ITA No. 272/Chd/2017, dt. 5-2-2018)(AY. 2013-14)

    Seema Sabharwal v. ITO (Chd.)(Trib.), www.itatonline.org

  34. S. 54 : Capital gains – Profit on sale of property used for residence – Acquisition of new flat in an apartment under construction should be considered as a case of “Construction” and not “Purchase”. The date of commencement of construction is not relevant for purpose of claiming exemption [S. 45]

    Allowing the appeal of the assessee, the Court held that, acquisition of new flat in an apartment under construction should be considered as a case of “Construction” and not “Purchase”. The date of commencement of construction is not relevant for purpose of S. 54. The fact that the construction may have commenced prior to the date of transfer of the old asset is irrelevant. If the construction is completed within 3 years from the date of transfer, the exemption is available. (I.T.A. No. 6108/Mum/2017, dt. 18-12-2017)(AY. 2013-14)

    Mustansir I Tesildar v. ITO (2018) 61 ITR 465 (Mum)(Trib)

  35. S.54 : Capital gains – Investment in new residential property – Demolition of new asset in subsequent year for construction of commercial property – Exemption cannot be denied [S. 45]

    Allowing the appeal of the assessee the Tribunal held that subsequent demolition of new asset, for construction of commercial property exemption cannot be denied. (AY. 2012-13)

    Vikas Kumar v. DCIT (2017) 166 ITD 481/ 189 TTJ 587 (Hyd.) (Trib.)

  36. S.54F : Capital gains – Investment in a residential house – As per development agreement landowner received three residential units on same location, assessee would be entitled to exemption in respect of all units (position prior to 1-4-2015) [S. 2(47)(v), 45, Transfer of Property Act, 1882 , S. 53A]

    As per development agreement, assessee got 3 constructed flats to her share, at same location in pursuance of development agreement, assessee was eligible for exemption, however since, legal heirs had sold two flats in subsequent year within 3 years from date of acquisition, amount of capital gains exempted in respect of two flats would be brought to tax in such subsequent year. ( AY. 2007-08)

    ITO v. Sureddy Venkata Ramanamamma. (Smt.) (2017) 165 ITD 574 /190 TTJ 665 (Visakha) (Trib.)

  37. S. 56 : Income from other sources – Advance receipt cannot be taxed as gifts or income merely because the person who has paid the amount has not initiated any legal proceedings to recover the amount [Ss. 28(i), 56(2)(vi)]

    Allowing the appeal of the assessee the Tribunal held that the Advance receipt cannot be taxed as gifts or income merely because the person who has paid the amount has not initiated any legal proceedings to recover the amount. (ITA No . 3738/Mum/2013/3739/Mum/2013 Bench “B” dt. 12-11-2017 (AY. 2008-09, 2009-10)

    Nilesh Janardan Thakur v. ITO (2018) 168 ITD 143 (Mum) (Trib.)

  38. S.56 : Income from other sources – Amount received at the time of retirement from partnership firm after surrendering her right, title and interest, same was said to be received for consideration and, thus, same could not be taxable in hands of assessee [S. 2(47)(i), 2(47)(ii), 45, 56(2)(vi)]

    Allowing the appeal of the assessee, the Tribunal held that amount received at the time of retirement from partnership firm after surrendering her right, title and interest, same was said to be received for consideration and, thus, same could not be taxable in hands of assessee. (AY. 2008-09)

    Vasumati Prafullachand Sanghavi (Smt.) v. DCIT (2018) 168 ITD 585 (Pune) (Trib.)

  39. S. 68 : Cash credits – Share capital – Merely because its directors are not produced personally before the AO, addition cannot be made unless the AO demonstrates with specific evidence that the assessee has really obtained accommodation entries by showing cash deposited linked to the investors

    Dismissing the appeal of the Revenue the Tribunal held that merely because its directors are not produced personally before the AO, addition cannot be made unless the AO demonstrate with specific evidence that the assessee has really obtained accommodation entries by showing cash deposited linked to the investors. Revenue alleged that the Companies are of the Mr. Parvin Kumar Jain. The Tribunal held that when the assessees representative attended for cross-examination the Directors were not present hence no cognizance can be taken as regard the statement of Mr. Pravin Kumar Jain before investigation wing. (ITA Nos 3754/ 3755/3756 / 2017 dt 14 -11-2017 Bench ‘ E.’ (AYs. 2008-09 to 2012-13) (AY. 2008-09)

    ITO v. Shreedham Construction Pvt. LTD. (Mum.) (Trib.) www.itatonline.org.

  40. S. 68 : Cash Credits – Share capital – Shareholders did not respond to summons cannot be the basis to treat the share capital as bogus [S.133(6)]

    Allowing the appeal of the assessee, the Court held that, if the assessee has discharged the initial onus regarding the identity, credit worthiness and genuineness, the onus shifts to the AO to bring material or evidence to discredit the same. The fact that the shareholders did not respond to s. 133(6) summons is not sufficient to draw an adverse inference. There must be material to implicate the assessee in a collusive arrangement with person who are accommodation entry providers. (ITA No. 5955/Del/2014, dt. 23-2-2018)(AY. 2010-11)

    Umbrella Project Pvt. Ltd. v. ITO (Delhi)(Trib.), www.itatonline.org

  41. S.68 : Cash credits – Share premium can be assessed as undisclosed income if directors are allotted the shares at par and other at premium without any justification [S.69]

    Dismissing the appeal of the assessee, the Tribunal held that, share premium received can be assessed as undisclosed income if (a) directors are allotted shares at par while others are allotted at premium, (b) the high premium is not justified by a valuation report, (c) the high premium is not supported by the financials, (d) based on financials the value of shares is less and no genuine investor would invest at the premium, (e) there are discrepancies & abnormal features which show transaction as “made up” to camouflage real purpose. (ITA No. 665/Bang/2017, dt. 9-2-2018)(AY. 2008-09)

    Cornerstone Property Investments Pvt. Ltd. v. ITO (Bang)(Trib.), www.itatonline.org

  42. S.68 : Cash credits – Sale of shares – Long term capital gains cannot be assessed as cash credits [S. 45]

    Allowing the appeal of the assessee the Tribunal held that; where the assessee has carried out all the purchases and sales transaction through registered SEBI broker and the AO himself has accepted purchases of shares in preceding previous year and all the transactions were evidenced and supported with bills and vouchers, the AO could not make an addition u/s. 68 by rejecting the long term capital gains shown by the assessee on sale of shares. (ITA No. 3028 to 3023/Mum/2011 dt. 17-11-2016) (A.Ys. 2002-03 to 2006-07)

    Anjali Pandit (Smt.) v. ACIT (2016) 188 TTJ 645 (Mum.) (Trib.)

  43. S.69 : Undisclosed income – search – Disclosure made in the course of search and seizure proceedings – Retraction of statement was held to be not valid – Addition was held to be justified [Ss. 132(4), 133A, 153C]

    Allowing the appeal of the Revenue, the Tribunal held that admission was made in the course of search proceedings on the basis of loose sheet which was subsequently retracted cannot be accepted as valid retraction as the retraction was not based on any corroborative evidence. (ITA Nos. 2525 & 2526 /Mum/ 2015 Bench “H” dt. 15-1-2017 ( AY. 2010-11, 2011-12)

    DCIT v. Studio Aethetic Health & Hospitality Pvt. Ltd. (Mum.) (Trib.) www.itatonline.org

  44. S.69 : Unexplained investments – Purchase of shares – The assessee did not discharge its primary onus to prove as to why he deviated from the normal course of conduct while dealing in securities and hence the addition made by the AO was upheld (S. 45)

    Information received from the investigation wing that the assessee was engaged in earning commission income in lieu of providing these bogus accommodation entries. The shares were claimed to have been purchased on the stock exchange and the value increased owing to bonus shares and stock split. The intermediary was never registered on the stock exchange at the time of the purchase of shares and there was no record of the transaction of purchase of shares on the stock exchange. Further, the assessee could not explain the reason for delay of more than six months in making the payment for purchase of shares during which the price of the shares increased substantially. This was against the normal course of conduct of activities of share transactions business on the stock market. The onus was on the assessee to prove as to why he deviated from the normal course of conduct while dealing in shares which he failed to discharge and hence the addition made by the AO was upheld (ITA No. 866/Mum/2016 dt. 15-9-2017) (AY. 2008-01)

    Rohit Jayantilal Shah v. ITO (2017) 59 ITR (T) 299 (Mumbai) (Trib.)

  45. S.69A : Unexplained moneys – Gross weight of jewellery disclosed in regular returns was in excess of gross weight of jewellery found in search, no seizure/addition was permissible. [S. 132]

    Allowing the appeal of the assessee the Tribunal held that, if gross weight of jewellery disclosed in regular returns was in excess of gross weight of jewellery found in search, no seizure/addition was permissible. CBDT Instruction No. 1961, dated 11-5-1994 (AY. 2012-13)

    Nawaz Singhania (Mrs.) v. DCIT (2018) 168 ITD 478 (Mum.) (Trib.)

  46. S.69B: Undisclosed investments – On money – Mere admission of amounts recorded in pen drive as additional unexplained income would not lead to drawing of adverse inference that unexplained investment was made by assessee for purchase of property, particularly when no evidence was produced to justify said payment by assessee [Ss. 132(4),147]

    Tribunal held that, mere admission of amounts recorded in pen drive as additional unexplained income would not lead to drawing of adverse inference that unexplained investment was made by assessee for purchase of property, particularly when no evidence was produced to justify said payment by assessee. Ex-employee of Hiranandani in course of his cross-examination had clearly stated that neither he was aware of person who had made entry in pen drive, nor had with him any evidence that assessee had paid any cash towards purchase of flat. (AY. 2007-08)

    Anil Jaggi. v. CIT (2018) 168 ITD 599 (Mum) (Trib.)

  47. S.69C : Undisclosed income –Bogus purchases – Non service of notice cannot be the basis to confirm the addition as bogus purchases considering other evidences purchases cannot be assessed as alleged bogus purchases [Ss. 37(1), 145]

    Allowing the appeal of the assessee, the Tribunal held that the fact that s. 133(6) notices could not be served upon the alleged vendors and they were not physically available at the given addresses does not falsify the claim of the assessee that the purchases are genuine if the assessee has produced other evidence and made payments through banking channels, addition confirmed by the CIT(A) was deleted. (AYs. 2009-10, 2010-11)

    Prabhat Gupta v. ITO (Mum.)(Trib.), www.itatonline.org

  48. S.69C : Unexplained expenditure – Purchase of shares out of speculative income which was accepted by revenue, addition cannot be made as unexplained expenditure

    Allowing the appeal of the assessee, the Tribunal held that assessee purchased shares in preceding year mainly out of speculation income which was shown as short-term capital gains by the assessee in her return and assessed and accepted by AO in the assessment for that year, hence, the impugned addition u/s. 69 cannot be sustained. (ITA Nos. 3028 to 3023/Mum/2011 dt. 17-11-2016) (A.Y. 2002-03 to 2006-07)

    Anjali Pandit (Smt.) v. ACIT (2016) 188 TTJ 645 (Mum.) (Trib.)

  49. S.80IA : Industrial undertaking – Income from advertisements on foot over bridges and bus shelters is entitled to deduction

    Dismissing the appeal of the Revenue, the Tribunal held that income from advertisements on foot over bridges and bus shelters is entitled to deduction. (AY. 2010-11)

    DCIT v. Vantage Advertising P. Ltd. (2018) 61 ITR 564 (Kol.) (Trib.)

  50. S. 80-IA : Industrial undertakings – Infrastructure development – develop, operate and maintain the rail systems for smooth movement of goods from factory till nearest railway station – Deduction was allowed in first year, and cannot be disallowed in subsequent year

    Assessee entered into agreements with the railway authorities to develop, operate and maintain the rail systems for smooth movement of goods from factory till nearest railway station – Overall profits of the assessee have increased due to such commercial benefits and the same should have been treated as revenue of the rail systems, thus eligible for benefit u/s. 80-IA – Deduction u/s. 80-IA was allowed in first year and in subsequent years, it cannot be disallowed on same ground. (AYs. 2009-10, 2010-11)

    Ultratech Cement Ltd. v. ACIT (2017) 153 DTR 153 (Mum.) (Trib.)

  51. S.92C : Transfer pricing – Arm’s length price – Method of accounting – TPO has no jurisdiction to comment on the method of accounting followed by the assessee [S.145]

    Dismissing the appeal of the Revenue, the Tribunal held that only role assigned to TPO is to find out as to whether international transaction is at arm’s length or not and he is not supposed to take decision about accounting policy to be followed by assessee, nor he should comment upon as to how to compute income if an assessee follows a particular method of accounting. (AY. 2002-03)

    DCIT v. Hazaria Cryogenic Engineering & Construction Management (P.) Ltd. (2018) 168 ITD 344 (Mum.) (Trib.)

  52. S.92C : Transfer Pricing – Arm’s length price – Transfer pricing provision will be applicable. Assessee carrying on insurance business [S.44]

    Tribunal held that there being no specific reference to Section 92 in section 44, provisions relating to transfer pricing u/s. 92 would apply to assessees carrying on insurance business. (AY. 2002-03)

    ACIT v. Max New York Life Insurance Company Ltd. (2017) 167 ITD 540 /190 TTJ 137 (Delhi) (Trib.)

  53. S.92C : Transfer Pricing – Arms’ Length Price – Comparison- company using its own software and having copyrights is not comparable to a company engaged in business of software solutions and consultancy services

    A company providing any consulting IT services, end-to-end solutions, having revenue from software production addition to software development and a company using its own software and having copyrights is not comparable to a company engaged in business of software solutions and consultancy services.(AY. 2008-09)

    Aircom International (India) Pvt. Ltd. vs. DCIT (2017) 84 taxmann.com 218 / 189 TTJ 682 (Delhi) (Trib.)

  54. S.92C : Transfer Pricing – Arm’s Length Price – Reselling of finished goods – RPM was the most appropriate method

    Where assessee was directly engaged in reselling finished goods purchased from its Associated Enterprise (‘AE’), without making any value additions, RPM was the most appropriate method.

    ACIT v. Akzo Nobel Car Refinishes India (P.) Ltd. (2017) 84 taxmann.com 199 / 189 TTJ 535 (Delhi) (Trib.)

  55. S.92C : Transfer Pricing – Arm’s Length Price – Specific services cannot be specified as stewardship services

    Where services rendered by the Associated Enterprise (‘AE’) were to meet specific need of the assessee, it was erroneous to classify such services as stewardship services and the assessee evidenced with a number of documentary evidences, the receipt of services, charges paid for the same were to be treated at arm’s length. (AY. 2009-10)

    DCIT v. Akzo Nobel India Ltd. (2017) 189 TTJ 715 (Kol.) (Trib.) ?

  56. S.93 : Transactions resulting in transfer – Non-residents – Capital gains – For invoking S.93 to tax a resident, there should be transfer of assets by a resident to non-resident, and not where a non-resident had transferred assets to a resident – DTAA-India – Mauritius [Ss. 90, 201(1), 201(IA), Article 13(4)]

    AT&T group formed a joint venture with Birla group and made investment through its Mauritius company Apex. Apex was holding shares of an Indian company Idea. Later on, assessee-TIL acquired entire shareholding of Apex and, thus, Apex became wholly owned subsidiary of assessee . During relevant year, Apex sold shares of Idea to a Birla group company. The AO invoked the provision of S. 93 and held that capital gains out of sale of shares by “Äpex” had to be taxed in the hands of the assessee. CIT(A) also confirmed the order of the AO. On appeal the Tribunal held that since in instant case, a non-resident company had transferred property i.e., shares to a unrelated resident company, deeming provision of Section 93 could not be invoked. As far as applicability of tax treaty provision vis-a-vis section 93 was concerned, DTAA would prevail over local Act, as provided in Section 90(2). (AY. 2007-08)

    Tata Industries Ltd. v. ACIT (2018) 168 ITD 340 (Mum.) (Trib.)

  57. S.145 : Method of accounting – Low gross profit – Books of account could not have been rejected merely on increase or decrease in GP/NP [S. 145(3)]

    Tribunal held that; mere low profit by itself is no ground for rejection of books of account of the assessee. There was no reason to reject the
    books of account u/s. 145(3) of the Act. (AY. 2011-12)

    DCIT v. British Health Products (I) Ltd. (2017) 165 ITD 1 / 188 TTJ 377 (TM) (Jaipur)(Trib.)

  58. S.145 : Method of accounting – Developer – Percentage completion method – Accounting Standards AS-1, AS-7 & AS-9, the Guidance Note on Accounting for Real Estate Transactions issued by the ICAI – Percentage of revenue recognised by the CIT(A) was held to be justified [S. 145(2)]

    Tribunal held that the AO has not disputed the fact that the assessee is required to carry out the specified development activities and also the application of percentage of completion method of recognition of revenues but has missed this finer nuance of interconnection between the economic substance of the transaction and application of percentage completion method of recognition of revenues while analyzing the guidance note issued by the ICAI and which has been rightly appreciated by the learned CIT(A). The stage of development of the township project has been determined by the assessee at 45.73% with reference to entire land and development cost for the whole project and is not in dispute before us. The total revenues in respect of executed sale deeds till 31-3-2012 comes to ₹ 5,44,46,105 and 45.73% thereof comes to ₹ 2,48,98,204 and after allowing credit for revenues already recognised in the previous year amounting to ₹ 37,59,918, the revenues for the year have been rightly determined by the learned CIT(A) at ₹ 2,11,38,286 and we hereby affirm his findings in this regard. (ITA Nos. 105, 119, 172, 106 & 120 /JP/2017, dt. 22-12-2017)(AY. 2012-13)

    Vastukar Township Pvt. Ltd. v. DCIT (Jaipur)(Trib.), www.itatonline.org

  59. S.145 : Method of accounting – Sales Tax refund had to be taken into consideration while determining the total business receipts/turnover and the estimation of net profit rate had to be determined accordingly. [S. 41(1)]

    Where books of account are rejected and net profit rate had been estimated by the AO, the receipt on account of sales tax refund had to be taken into consideration while determining the total business receipts/turnover and the estimation of net profit rate had to be determined accordingly. The Tribunal, further upheld the net profit rate of 8% estimated made by the CIT(A) as being reasonable. (AY. 2008-09)

    ACIT v. Mohd. Construction Co. (2017) 187 TTJ 200 (Jaipur) (Trib.)

  60. S.147 : Reassessment – Non-speaking order disposing of Assessee’s objection against reassessment – Reassessment was held to be invalid [Ss. 68, 148]

    Allowing the appeal of the assessee the Tribunal held that the Assessing Officer had not passed a speaking order in disposing of the assessee’s objections against the notice under section 148 before proceeding with the assessment. Hence the subsequent assessment order was bad in law and was quashed. (AY. 2006 07)

    Veer Vardhman Finance Investment Pvt. Ltd. v. DCIT (2018) 61 ITR 669 (Delhi) (Trib.)

  61. S.151 : Reassessment – Sanction for issue of notice – Mechanical approval was held to be bad in law [Ss. 147, 148]

    Allowing the cross objection of the assessee the Tribunal held that the grant of approval by the CIT with the words “Yes. I am satisfied” proves that the sanction is merely mechanical and he has not applied independent mind while according sanction as there is not an iota of material on record as to what documents he had perused and what were the reasons for his being satisfied to accord the sanction to initiate the reopening of assessment u/s. 148 of the Act. (AY. 2005-06)

    ITO v. Virat Credit & Holdings Pvt. Ltd. (Delhi)(Trib.), www.itatonline.org

  62. S.153A : Assessment – Search– Assessment framed for assessment year relevant to previous year covering the search period is not valid and void ab initio, assessment can be framed only for six assessment years relevant to the previous year in which the search was conducted or requisition was made

    Assessment u/s. 153A can be framed for six assessment years immediately preceding the assessment year relevant to the previous year in which the search was conducted or requisition was made. In the instant case, the search took place on 10-8-2006 i.e. relevant to AY. 2007-08 and hence assessment u/s. 153A could have been framed for the 6 assessment years which precedes AY. 2007-08 i.e. AYs. 2001-02 to 2006-07. Since the assessment for the year under consideration i.e. AY. 2007-08 was also framed u/s. 153A, the same was not valid in law and was void ab initio. (AY. 2007-08).

    Sohan Lal Arora v. ACIT (2017) 186 TTJ 522 /152 DTR 233 (Chd.)(Trib)

  63. S.153A : Assessment – Search – Assessing Officer has no jurisdiction to assess the long term capital gains as income from other sources as no incriminating material qua long term capital gains was found during search. [S. 132]

    Allowing the appeal of the assessee the Tribunal held that; assessment year was not pending on the date of search and no incriminating material qua long term capital gains was found during the search, AO had no jurisdiction to assess the long term capital gains as income from other sources in the assessment u/s. 153A of the Act. (AYs. 2002-03 to 2006-07)

    Anjali Pandit (SMT.) v . ACIT (2016) 188 TTJ 645 (Mum.) (Trib.)

  64. S.201 : Deduction at source –Failure to deduct or pay – When the ITO (TDS) had not ascertained as to whether taxes had been paid or not by recipient of income, he could not initiate proceedings to declare deductor as assessee-in-default [Ss. 10(10AA), 191, 192, 201(IA)]

    The Assessing Officer treated the assessee as an assessee in default under sections 201/201(1A) for short deduction of tax due to allowing the exemption under section 10(10AA)(i) beyond the maximum limit of ₹ 3 lakhs. Tribunal held that, ITO (TDS) had not ascertained as to whether taxes had been paid or not by recipient of income, he could not initiate proceedings to declare deductor as assessee-in-default , therefore the invocation of the jurisdiction is null and void ab initio. Such invocation of jurisdiction is, accordingly, cancelled. (AY. 2015-16)

    Aligarh Muslim University v. ITO (2017) 165 ITD 652/189 TTJ 794 (Agra) (Trib.)

  65. S.253 : Appellate Tribunal – Withdrawal –Tribunal cannot refuse to give permission to withdrawal of appeal to the appellant

    Allowing the appeal the Tribunal held that ; Petitioner/ Plaintiff is the ‘dominus litis’ and it is open to him to pursue or abandon his case. Withdrawal cannot be denied except when the person making the prayer has obtained some advantage/benefit which he seeks to retain (ITA No. 189/Mum./2011, dt. 18-11-207)(Ay. 2007-08)

    Sainath Enterprises v. ACIT (TM) (Mum.)(Trib.) www.itatonline.org

  66. S.263 : Commissioner – Revision of orders prejudicial to revenue – CIT cannot treat the AO’s order as being erroneous and prejudicial to the interest of revenue without conducting an enquiry and recording a finding – Explanation 2 to s. 263 inserted w.e.f. 1-6-2015 does not override the law as interpreted by the various High Courts

    Allowing the appeal of the assessee, the Tribunal held that Explanation 2 to S. 263 inserted w.e.f. 1-6-2015 does not override the law as interpreted by the various High Courts whereby it is held that the CIT cannot treat the AO’s order as being erroneous and prejudicial to the interest of revenue without conducting an enquiry and recording a finding. If the Explanation is interpreted otherwise, the CIT will be empowered to find fault with each and every assessment order and also to force the AO to conduct enquiries in the manner preferred by the CIT, thus prejudicing the mind of the AO, This will lead to unending litigation and no finality in the legal proceedings which cannot be the intention of the legislature in inserting the Explanation. (ITA No. 3205/Del/2017. Dt. 29-11-2017)(AY. 2014-15)

    Amira Pure Foods Pvt. Ltd. v. PCIT (Delhi)(Trib.); www.itatonline.org

  67. S.271(1)(c) : Penalty – Concealment – Satisfaction was not recorded in absolute term – Levy of penalty was held to be not justified. [S. 274]

    Allowing the appeal of the assessee the Tribunal held that; if the AO has not recorded any satisfaction in absolute terms whether the assessee has concealed particulars of income or has furnished inaccurate particulars of income, the levy of penalty is invalid. The judgment of the Bombay High Court in Maharaj Garage cannot be read out of context or in a manner to mean that there is no need for mentioning the specific limb of section 271(1)(c) of the Act for which the penalty was intended to be imposed, as such issue never came up for consideration before the High Court. (ITA No. 1339/mum/2016, dt. 19-1-2018)(AY. 2010-11)

    Indrani Sunil Pillai v. ACIT ( Mum.)(Trib.) www.itatonline.org

  68. S.271(1)(c) : Penalty – Concealment – When show cause notice does not strike out the inappropriate words, levy of penalty was held to be not justified. [S. 274]

    Tribunal held that when the show cause notice issued in the present case u/s. 274 of the Act does not specify the charge against the assessee as to whether it is for concealing particulars of income or furnishing inaccurate particulars of income. The show cause notice u/s. 274 of the Act does not strike out the inappropriate words. In these circumstances, we are of the view that imposition of penalty cannot be sustained. The plea of the learned Counsel for the assessee which is based on the decisions referred to in the earlier part of this order has to be accepted. We therefore hold that imposition of penalty in the present case cannot be sustained and the same is directed to be cancelled. (I.T.A No. 956/Kol/2016, dt. 1-12-2017)(AY. 2010-11)

    Jeetmal Choraria v. ACIT (Kol.)(Trib.) www.itatonline.org

  69. S. 271(1)(c): Penalty – Concealment – Additional ground was raised before the Tribunal – Failure to specify the charge the levy of penalty was held to be invalid. The argument that the assessee was made aware of the specific charge during the proceedings is of no avail. S. 292BB does not save the penalty proceedings from being declared void. [Ss. 254(1), 274, 292BB]

    Allowing the appeal the Tribunal held that ; Additional ground on jurisdiction issue was admitted. Tribunal held that concealment of particulars of income” and “furnishing of inaccurate particulars of income” referred to in s. 271(1)(c) denote two different connotations. It is imperative for the AO to make the assessee aware in the notice issued u/s. 274 r.w.s. 271(1)(c) as to which of the two limbs are being put-up against him. The failure to do so is fatal to the penalty proceedings. The argument that the assessee was made aware of the specific charge during the proceedings is of no avail. S. 292BB does not save the penalty proceedings from being declared void. (ITA Nos. 1596 &1597/Mum/2014, dt. 1-9-2017)(AYs. 2005-06, 2006-07)

    Orbit Enterprises v. ITO ( Mum.)(Trib.), www.itatonline.org

  70. S.271(1)(c) : Penalty – Concealment – Notice not specifying the specific charge – Levy of penalty was held to be not justified

    Allowing the appeal of the assessee, the Tribunal held that, levy of penalty without specifying a specific charge was held to be valid. The law in Maharaj Garage & Co. (Bom.) that it is not necessary for the penalty notice to frame a specific charge cannot be followed in the context of whether the notice should specify ‘concealment’ v. ‘inaccurate particulars’ because the judgment does not consider SSA’s Emerald Meadows (SC) and is contrary to Samson Perinchery (Bom)(HC). (ITA No. 5006/Del/2013, dt. 21-11-2017.)(AY. 1997-98)

    Aditya Chemicals Ltd. v. ITO (Delhi)(Trib.); www.itatonline.org

  71. S.271(1)(c) : Penalty – Concealment – Notice not specifying specific charge – Concealment of income and furnishing of inaccurate particulars are distinct and separate charges. A nebulous notice which contains both charges is null and void ab initio [S. 274]

    Allowing the appeal of the assessee , the Tribunal held that notice should specify the specific charge. Concealment of income and furnishing of inaccurate particulars are distinct and separate charges. A nebulous notice which contains both charges is null and void ab initio. (ITA No. 118/Agra/2015, dt. 19-9-2017)(AY. 2008-09)

    Sachin Arora v. ITO (Agra)(Trib.) ; www.itatonline.org

  72. S.271(1)(c) : Penalty – Concealment – Change of method of computation of ALP by TPO cannot be the ground to levy of concealment penalty. [S. 92C 271(1)(c), Expl. 7]

    Allowing the appeal of the assessee, the Tribunal held that; under Explanation 7 to S.. 271(1)(c), the onus on the assessee is only to show that the ALP is computed in accordance with the scheme of s. 92 C in good faith and due diligence. The fact that the TPO changes the method of computation of ALP does not mean it is a fit case for imposition of penalty if there is no dishonesty is found in the conduct of the assessee. ( ITA No. 2647/Del/2016, dt. 31-10-2017) (AY. 2010-11)

    Halcrow Consulting India Pvt. Ltd. (Delhi)(Trib); www.itatonline.org

Comments are closed.