1. S.2(22)(e) : Deemed dividend – Transactions between group concerns being current and inter banking accounts, addition cannot be made as deemed dividend

    Allowing the appeal of the assessee the Tribunal held that transactions between group concerns being current and inter banking accounts, addition cannot be as loans and advances hence cannot be assessed as deemed dividend. (AY. 2008-09)

    Saamag Developers (P.) Ltd. v. ACIT (2018) 168 ITD 649 (Delhi) (Trib.)

  2. S.2(47)(v) : Transfer – Development rights – Transfer of development rights as per shareholder agreement with financial partner for development of integrated township by unregistered agreements, no liability of tax could be fastened on assessee on basis that possession of land had been handed over. [Ss.28(i), 45, Registration Act, 1908, S. 17(IA), Transfer Property Act 1882, S.53A]

    Allowing the appeal of the assessee, the Tribunal held that ; Transfer of development rights as per shareholder agreement with financial partner for development of integrated township by unregistered agreements, no liability of tax could be fastened on assessee on basis that possession of land had been handed over. (A.Y. 2008-09, 2012-13)

    Saamag Developers (P.) Ltd. v. ACIT (2018) 168 ITD 649 (Delhi) (Trib.)

  3. S.4 : Charge of income-tax –Capital or revenue – Book profit – Sales tax subsidy granted by the Government for purpose of setting up or expansion of mills would be capital receipt – Amended provisions treating subsidy or grant as income u/s. 2(24)(xvii) are prospective in nature and not applicable to assessment year prior to AY. 2016-17) [Ss.2(24)(xvii), 28(i), 115JB]

    Allowing the appeal of the assessee the Tribunal held that sales tax subsidy granted by the Government for purpose of setting up or expansion of mills would be capital receipt and the said receipts cannot be added to book profit. Amended provisions treating subsidy or grant as income u/s. 2(24)(xvii) are prospective in nature and not applicable to assessment year prior to AY.2016-17) (ITA Nos. 979/1001/17 /Hyd/ 17 dt. 20-4- 2018 (AY. 2006-07, 2013-14)

    Sanghai Industries Ltd v. ACIT (Hyd.) (Trib.) www.itat.nec.

  4. S.4 : Income chargeable to tax – Father died intestate – Property inherited as per S.8 of the Hindu Succession Act is assessable in his individual capacity and not as Karta of HUF [Hindu Succession Act, 1956, S.8]

    Assessee’s father died intestate leaving behind certain ancestral properties which was inherited under S.8 of Hindu Succession Act, said properties devolved on in his individual capacity and not as karta of HUF and accordingly income from these properties would be assessable in his individual capacity and not as Karata of HUF. (AY.2011-12)

    Mahaveer Yadav v. ITO (2018) 169 ITD 717 (Jaipur) (Trib.)

  5. S.4 : Charge of income-tax –Interest awarded under Land Acquisition Act is in nature of solatium and an integral part of compensation and receipt of same is a capital receipt whereas, interest awarded under the said Act is on account of delayed payment of compensation and is revenue receipt. [S. 10(37), Land Acquisition Act, 1894, S. 28, 34]

    Tribunal held that interest awarded under S.28 of Land Acquisition Act is in nature of solatium and an integral part of compensation and receipt of said compensation is a capital receipt whereas, interest awarded under S. 34 of Land Acquisition Act is on account of delayed payment of compensation and is revenue receipt. (AY. 2011-12)

    Dnyanoba Shajirao Jadhav v. (2018) 169 ITD 291 (Pune) (Trib.)

  6. S.6(5) : Residence in India –Deemed residence – Where status of assessee was taken as resident for computing his business income, his status would remain the same for salary income earned outside India. [S. 5]

    On appeal, the Tribunal held that the residential status of the assessee for the business income earned by him was taken as resident. Thus, the assessee ought to be treated as a resident for other sources of income as well in light of section 6(5) and hence the matter was remanded back to the CIT(A). (ITA No. 458/Asr./2016 dt. 24-2-2017) (AY. 2011-12)

    ITO v. Rajesh Joshi (2018) 163 DTR 137 (Asr.)(Trib.)

  7. S.9(1)(vi) : Income deemed to accrue or arise in India – Royalty – Domain name is an intangible asset which is similar to trademark. Consequently, income from services rendered in connection with such domain name registration is assessable as “royalty” – DTAA – India-USA [S. 115A, Article 12]

    Dismissing the appeal of the assessee the Tribunal held that domain name is an intangible asset which is similar to trademark. Consequently, income from services rendered in connection with such domain name registration is assessable as “royalty”, Therefore, the charges received by the assessee for services rendered in respect of domain name is royalty within the meaning of Clause (vi) read with Clause (iii) of Explanation 2 to Section 9(1) of Income-tax Act. (ITA No. 1878/Del./2017, dt. 3-4-2018)(AY. 2013-14)

    Godaddy.com LLC v. ACIT (Delhi)(Trib.), www.itatonline.org

  8. S.9(1) : Income deemed to accrue or arise in India – Company situated in UAE but having effective control and management situated in Germany could not claim benefit of the India-UAE tax treaty but it can claim benefits of the India-Germany tax treaty –DTAA – India-UAE-Germany [Articles 4, 8, 29]

    The assessee was a shipping company. It was denied the benefit of India-UAE DTAA shipping company by invoking Article 29 on grounds that the said company had got registration for doing its business in UAE whereas its place of effective control and management was situated outside UAE. In order to invoke Article 29 of India-UAE DTAA, what is to be established is that if assessee-company was not formed in UAE, it would not have been entitled for such benefits. It was noted that the entire share capital of the assessee company was held by German entities but then in Indo-German DTAA also same treaty protection with regards to taxability of shipping profits only in State of residents were available and hence the assessee company was to be formed in UAE or in Germany, would not have any material difference so far as non-taxability of said income in India is concerned. (ITA Nos. 7 to 9 (Rjt.) of 2011 dt. 28-11-2017) (AY. 2008-09)

    ITO (IT) v. Martrade Gulf Logistics FZCO-UAE (2018) 162 DTR 22 / 191 TTJ 575 (Rajkot)(Trib.)

  9. S.10A : Free Trade Zone – If the assessee suo motu makes the adjustment and offers higher income, Ss. 10A/10B deduction cannot be denied. Also, as such notional income is not “export turnover”, the condition in Ss. 10A/10B that foreign exchange must be brought to India does not apply [Ss. 10B, 92CA]

    Tribunal held that the assessee is not entitled to Ss. 10A/10B deductions in respect of transfer pricing adjustments applies only where the adjustment is made by the AO/TPO. If the assessee suo motu makes the adjustment and offers higher income, Ss. 10A/10B deduction cannot be denied. Also, as such notional income is not “export turnover”, the condition in Ss. 10A/10B that foreign exchange must be brought to India does not apply (Deloitte Consulting v. ITO in ITA No.157/Mum/2012 dt. 15-7-2015) (Mum) (Trib) is not followed as it is contrary to CIT v. iGate Global Solutions Ltd. (ITA No.453/2008, dt. 17-6-2014, (Karn.) (HC)). (ITA No. 1051/Pun/2015, dt. 12-3-2018)(AY.2011-12)

    Approva Systems Pvt. Ltd. v. DCIT (Pune)(Trib.), www.itatonline.org

  10. S.12AA : Procedure for registration – Trust or institution – Registration granted under section 12AA cannot be denied in the subsequent years when there is no change in the objects of the assessee only on the presumption that proviso to S.2(15) is applicable [2(15)]

    On appeal the Tribunal held the registration u/s. 12A of the Act is not annual but is for all the subsequent years until it is withdrawn u/s 12AA of the IT Act. Having granted registration for the A.Y 2007-08, holding that the assessee is not eligible for the registration for the A.Ys. 2009-10 onwards will amount to rejection or cancellation of the registration granted earlier and hence following the CBDT Circular No. 21 of 2016 it held that the CIT(E) ought not to have rejected the registration u/s. 12A of the Act for the subsequent assessment years even if it is presumed and accepted that the proviso to S. 2(15) of the Act is applicable to the assessee.With respect to the earlier years the Tribunal held that there is no change in the objects of the assessee from the earlier and in the subsequent assessment years and there is no finding that the assessee has carried on any activity not in accordance with its objectives and held that it is eligible to registration u/s. 12A w.e.f. A.Y. 2003-04 onwards (ITA Nos. 980.1008 dt. 31-10-2017) (AYs. 2003-04 to 2013-14)

    HMDA v. CIT(E) (2018) 161 DTR 82/191 TTJ 122 (Hyd.)(Trib.)

  11. S.14A : Disallowance of expenditure – Exempt income – Disallowance has to be made even if the assessee has not earned any tax free income on the investment – Revision was held to be valid
    [S. 263, R. 8D]

    Dismissing the appeal of the assessee against the revision order of the Commissioner of Income-tax , the Tribunal held that , Disallowance has to be made even if the assessee has not earned any tax free income on the investment. Tribunal held that Cheminvest Ltd. v. CIT (2015) 378 ITR 33 (Delhi) (HC) is not binding on the assessee as it is a non -jurisdictional High Court. CBDT ‘s Circular 5/2/2014 is accordance with Godrej & Boycee Manufacturing Co. Ltd v. Dy.CIT (2017) 394 ITR 449 (SC) & Maxopp Investment Ltd. v. CIT (2018) 402 ITR 640 (SC) (ITA No 218 (Asr) 2017 dt.12-4 02018 )(AY. 2012-13)

    Lally Motors India (P) Ltd v. PCIT (2018) 93 taxmann.com 39 (Amritsar) ( Trib) www.itatonline.org

  12. S.14A : Disallowance of expenditure – Exempt income – The AO has to first record satisfaction having regard to accounts of the assessee that the claim made by the assessee with regard to non-incurrence of any expenditure for the purpose of earning income is incorrect before proceeding to make any disallowance. [R.8D]

    The Tribunal held that the AO had not raised any query with the regard to disallowance under S.14A in the entire assessment proceedings. It is the duty of the AO to record satisfaction in terms of S.14A(2) read with Rule 8D(1) of the Rules, before proceeding to make disallowance as per Rule 8D(2) of the Rules. It is the duty of the AO first to disturb the stand of the assessee of not making any disallowance under S.14A by recording proper satisfaction having regard to the accounts of the assessee in terms of S.14A (2) of the Act read with Rule 8D(1) of the Rules which was not present in the present case and hence deleted the disallowance made under S. 14A (ITA No. 2212/Kol/2014 dt. 10-1-2018) (AY. 2010-11)

    IMC Ltd. v. Dy. CIT (2018) 191 TTJ 73 (Kol.)(Trib.)

  13. S.17(2) : Perquisite – Purchase of property from a company wherein the assessee is also director can not be assessed as perquisite in lieu of salary as there was no employer and employee relation ship [Ss.17(2)(iii), 50C]

    Assessee purchased the property from the Company. The value paid was less than the fair value of property as per the stamp valuation. AO treated the difference as perquisite in the hands of the assessee. On appeal allowing the appeal of the assessee, the Tribunal held that to treat any sum as a perquisite in lieu of salary as per S.17(2)(iii) it is incumbent on part of Assessing Officer to establish on record that a benefit in nature of salary is given by an employer to an employee; establishment of employer-employee relationship between assessee and company is essential. Tribunal also held that, the legal fiction created under S.50C in so far as it enables the Assessing Officer to adopt the value for stamp duty purpose as the deemed sale consideration cannot be extended to assess the buyer of the immovable properties to tax on the differential amount. Though, the Assessing Officer has consciously not referred to the provisions of S.50C, however, there is no room for doubt that applying the deeming fiction of S 50C, the Assessing Officer has adopted the stamp duty value as the deemed sale consideration while making the addition. Therefore the addition made of ₹ 1.95 crore is unsustainable in law. (AYs. 2010-11, 2012-13)

    Keshavji Bhuralal Gala v. ACIT (2018) 169 ITD 23 (Mum.) (Trib.)

  14. S.28(i) : Business income – Penny stock – Assessable as business income and not as short-term capital gains, deduction of donation was held to be allowable. [Ss. 35, 45]

    Allowing the appeal of the assessee the Tribunal that if the purchase of shares has been made solely and exclusively with the intention to resell at a profit and the purchaser has no intention of holding them, the transaction is an “adventure in the nature of trade” and the gains are assessable as “business profits” and not as “short-term capital gains” accordingly the deduction u/s. 35 was held to be allowable. Tribunal held that the AO was not justified in assessing the sale consideration as short term capital gains ( ITA No. 2572/Del./2016, dt. 22-3-2018.)(AY. 2011-12)

    Prem Jain (Smt.) v. ITO (Delhi)(Trib.), www.itatonline.org

  15. S.28(i) : Business income – Income from house property – Manufacturing activities were closed and premises given on lease, rental income is held to be assessable as business income and remuneration paid to directors is held to be allowable deduction. [S. 22, 37(1)]

    Allowing the appeal of the assessee, the Tribunal held that, though manufacturing activities were closed and premises given on lease, rental income is held to be assessable as business income since main activity of assessee is letting out the properties. As the rental income is assessed under the head Business income remuneration paid to directors is also held to be allowable deduction. Followed Rayala Corpn. P. Ltd v. ACIT (2016) 386 ITR 500/ 243 Taxman 360 (SC) (AY.2011-12)

    Bharat Tiles & Marble (P) Ltd. v. Dy. CIT (2018) 170 ITD 26 (Mum.)(Trib.)

  16. S.28(i) : Business loss – Advance to purchase of land – Loss incurred on account of irrevocable advance paid for purchase of land for construction of office is held to be allowable as business loss

    Tribunal held that the assessee did not acquired any capital asset, it simply paid advance amount to acquisition of capital asset such amount of loss was incidental to the business, hence allowable as business loss. (AY. 2006-2007 to 2008-2009)

    Dy. CIT v. Mcnally Bharat Engineering Co. Ltd. (2018) 191 TTJ 822 (Kol.)(Trib.)

  17. S.28(i) : Business loss – Retention money – Advances to the companies which are in nature of irrevocable which are written off in the books is allowable as business loss

    Advance money given as retention to the companies for contract. Neither the interest nor principle amount settled against the same by these companies. Said advances were in nature of irrevocable and having nexus with the business hence allowable as business loss. (AYs. 2006-2007 to 2008-2009)

    Dy. CIT v. Mcnally Bharat Engineering Co. Ltd. (2018) 191 TTJ 822 (Kol.)(Trib.)

  18. S.28(i) : Business loss – Government deposits written off is held to be allowable as business loss. [S.37 (i)]

    Government old deposits write of owing smallness of amount in books of accounts are allowed as business loss and the efforts involved in recovering the said amounts is allowable as business expenditure. (AYs. 2006-2007 to 2008-2009)

    Dy. CIT v. Mcnally Bharat Engineering Co. Ltd. (2018) 191 TTJ 822 (Kol.)(Trib.)

  19. S.28(i) : Business loss – Advance made to parties for purchase of goods, consumables which are written off in the books is held to be allowable as business loss.

    Advances given to various parties for purchase of goods, electrical installation, consumable stores which have nexus with business hence allowable as business loss. (AYs. 2006-2007 to 2008-2009)

    Dy. CIT v. Mcnally Bharat Engineering Co. Ltd. (2018) 191 TTJ 822 (Kol.)(Trib.)

  20. S.28(iv) : Business income – Value of any benefit or perquisites – Converted into money or not – Purchase of property from a company wherein the assessee is also director cannot be assessed as profit and gain of business or profession

    Allowing the appeal of the assessee the Tribunal held that, purchase of property from a company wherein the assessee is also director cannot be assessed as profit and gain of business or profession as the transaction relating to purchase had been shown as an investment activity by assessee in its books which was accepted by the revenue, therefore, if at all there was any benefit or perquisite, it could not be said to be arising from a business or exercise of a profession by assessee and hence could not have been treated as profit and gain of business or profession. (AYs. 2010-11, 2012-13)

    Keshavji Bhuralal Gala v. ACIT (2018) 169 ITD 23 (Mum.) (Trib.)

  21. S.32 : Depreciation – Toll bridge – BOT basis – Intangible asset, depreciation is allowable

    As per Circular No. 9 of 2014 issued by the Board, the assessee can claim amortisation of the expenditure also shows that the expenditure incurred by the assessee has to be treated as a capital expenditure by treating it as intangible asset. The expenditure has to be allowed as deduction in each year, so as to arrive at real profit. The provisions of depreciation or amortisation are only aimed at arriving at the true profit, though the methodology is different. The claim of depreciation was consistently being allowed, in which event, it may not be proper, for the interregnum period to disallow the claim of depreciation. (AYs. 2007-08 to 2009-10)

    Godavari Toll Bridge (P) Ltd. v. ACIT (2018) 163 DTR 17 / 191 TTJ 568 (Visakha)(Trib.)

  22. S.37(1) : Business expenditure – Expenses to keep its status of the company active was held to be allowable as business expenditure as business loss. [S. 28(i)]

    Allowing the appeal of the assessee the Tribunal held that expenses to keep its status of the company active was held to be allowable as business expenditure and as business loss. (AY. 2012-13)

    Kesha Appliances Pvt. Ltd v. ITO (2018) 63 ITR (Trib) 294 (Delhi) (Trib.)

  23. S.37(1) : Business expenditure – Bogus purchases – Payment through account payee cheques and consumption of goods broadly explained, purchases not bogus, however estimation of net profit at 5.76% was affirmed

    Tribunal held that mere appearance of purchase parties on sales tax department website, does not falsify that the purchases. The purchases by payment through account payee cheques and consumption of goods broadly explained said purchases cannot be held to be bogus purchases however net profit at 5.76% was confirmed. (AY. 2009-10)

    ACIT v. Pinaki D. Panani (Smt.) (2018) 61 ITR 7 (Mum.)(Trib.)

  24. S.37(1) : Business expenditure – Advertisement expenditure on project is held to be allowable though no income was offered during the year. [S. 145]

    Advertisement expenditure on project is held to be allowable though no income was offered during the year. (AY. 2013-2014)

    Dy. CIT v. Ramkay Wavoo Developers P. Ltd. (2018) 62 ITR 376 (Chen.)(Trib.)

  25. S.37(1) : Business expenditure – Freebies to doctors –Advertisement and sales promotion expenses incurred by the pharmaceutical company cannot be disallowed, on the basis circulars by Medical Council of India

    The Circular issued by the CBDT enlarging the scope of disallowance to the pharmaceutical companies was without any enabling notification or Circular of the Medical Council of India. Therefore a pharmaceutical company is outside the scope of the circular by the Medical Council of India or the CBDT, therefore expenditure on advertisement and sales promotion is allowable as business expenditure. (AY. 2010-11).

    Emcure Pharmaceuticals Ltd. v. Dy. CIT (2018) 62 ITR 744 (Pune)(Trib.)

  26. S.37(1) : Business expenditure – Capital or revenue – Debenture whether convertible or non convertible are in nature of loan at the time of issuance therefore expenditure incurred are allowable as business expenditure.

    Expenditure incurred on issue of foreign currency convertible bonds debentures at the time of issuance, expenditure are allowable as revenue expenditure. (AY. 2006-2007 to 2008-2009)

    Dy. CIT v. Mcnally Bharat Engineering Co. Ltd. (2018) 191 TTJ 822 (Kol.)(Trib.)

  27. S.37(1) : Business expenditure – Corporate entity – Administrative expenditure to maintain status of the company, is held to be allowable though the manufacturing activity of fragrance and flavours was discontinued. [S.57(iii)]

    Allowing the appeal of the assessee, the Tribunal held that Administrative expenditure to maintain the status of the company and for said purposes it was necessary to maintain clerical staff and secretary or accountant and incur incidental expensed is held to be allowable though the manufacturing activity of fragrance and flavours was discontinued. Tribunal also held that so long as the company is in operation and its name is not struck off from Registrar of Companies the administrative expenses will be allowable as deduction [Referred, CIT v. Ganga Properties Ltd. (1993) 199 ITR 94 (Cal.) (HC)] [AY. 2008-09, 2009-10]

    Sai Fragrance & Flavours (P.) Ltd. v. ACIT (2018) 169 ITD 235 (Mum.) (Trib.)

  28. S.37(1) : Business expenditure –Development rights – Payment made to shareholders to protect business interest was held to be allowable as business expenditure

    Dismissing the appeal of the revenue the Tribunal held that the payment was made to shareholders of SIPL for withdrawal of litigations and suits filed before High Court, so that the development of the said property could be smoothly undertaken without any hindrance, consequently, the expenditure was incurred to protect the business interest of the assessee and further to safeguard the assessee itself for further losses hence allowable as business expenditure . ( AY. 2008-09)

    DCIT v. Cowtown Land Development (P.) Ltd. (2018) 168 ITD 705 (Mum.) (Trib.)

  29. S.37(1) : Business expenditure – The assessee was doing major works for Govt. Departments and the said Departments also confirmed the authenticity of work and merely because the assessee could not produce the parties, purchases could not be held as non-genuine

    The assessee was a civil contractor carrying on contract of construction of roads and buildings. The AO issued notice to various parties in order to verify the genuineness of the purchases claimed to have been made by the assessee of construction material like bitumen, sand, and bricks. Since the assessee failed to produce the parties he disallowed the amount of  ₹ 1,97,55,357/- out of the total amount debited of ₹ 5,27,81,496/- claimed by the assessee on account of purchase. The CIT(A)) restricted the addition to ₹ 15,00,000/-.

    On appeal, the Tribunal held that the assessee had done major works for the Government departments and they confirmed the authenticity of the work. The assessee continuously declared a net profit in the range of 1.71% to 4.65% and the disallowance made by the AO if accepted would increase the net profit to the tune of 25.15% which was abnormal. The suppliers of these goods had no permanent place for carrying on the business. There were no defects in the books of account of the assessee. The disallowance confirmed by the CIT(A) of ₹ 15 lakh was to be reduced to ₹ 5 lakh (ITA No. 60 & Co. No. 10/Chd/2017 dt. 2-11-2017) (AY. 2011-12)

    IHR Associates v. Dy. CIT (2018) 61 ITR 70 (Chd)(Trib.)

  30. S.40(a)(ia) : Amounts not deductible – Deduction at source – Payment of commission to foreign agent – Not liable to deduct tax at source, hence, no disallowances can be made. [S.5(2)(b), 9(1)(i), 195]

    Dismissing the appeal of the revenue the Tribunal held that; payment of commission to foreign agent, the tax was not liable to be deducted hence no disallowances can be made .CBDT Circulars Nos. 7 dated 22-10-2009, 23 dated 23rd July 1969, 163 dated 29th May, 1975 and 786 dated 7th February, 2000 considered. (ITA Nos. 434 & 446/Agra/2015, dt. 11-4-2018)(AYs. 2010-11, 2011-12)

    ACIT v. Manufax (India) S. B. (Agra)(Trib), www.itatonline.org

  31. S.43(5) : Speculative transaction – Currency derivatives – Transactions through a recognised stock broker on recognised stock exchange, could not be termed as speculative transaction. [S.73]

    Allowing the appeal of the assessee the Tribunal held that; transactions of currency derivatives were conducted through a recognised stock broker, on a recognised stock exchange and which were duly supported by time stamped contract notes, same could not be termed as speculative transaction (AYs. 2013-14, 2014-15)

    Nand Nandan Agrawal v. DCIT (2018) 169 ITD 161 (Agra) (Trib.)

  32. S.45 : Capital gains – Business income – Land – Sale consideration received in respect of property received on dissolution of partnership of firm of his father was held to be assessable as capital gains and not as business income [Ss. 2(14), 28(i)]

    Allowing the appeal of the assessee the Tribunal held that sale consideration received in respect of property received on dissolution of partnership of firm of his father was held to be assessable as capital gains and not as business income. As regards expenditure incurred on levelling and construction of boundary wall, the matter was remanded to the AO for verification. (AY. 2010-11)

    Balkrishna P. Wadhwan. v. DCIT (2018) 169 ITD 693 (Mum.) (Trib.)

  33. S.45 : Capital gains – Index cost – Family arrangement – Family settlements entered into bona fide to maintain peace and harmony in the family are valid and binding on the authorities – Consideration received as part of family arrangement cannot be assessed as income from other sources [Ss. 48, 49, 54 56]

    Allowing the appeal of the assessee the Tribunal held that it is not necessary for the validity of a family arrangement that there must be existing legal claims & disputes between the family members. The possibility of future disputes is sufficient. Family settlements entered into bona fide to maintain peace and harmony in the family are valid and binding on the authorities. Consideration received as part of family arrangement cannot be assessed as income from other sources. Indexation was held to be allowable and exemption u/s. 54 of the income-tax Act. (ITA No. 5768/Mum/2017. Dt.
    28-2-2018)(AY. 2012-13)

    Kunal R. Gupta v. ITO (SMC) (Mum)(Trib), www.itatonline.org

  34. S.45 : Capital gains – Set off of capital loss – “Sham transaction”/ “Colourable device” – Sale of shares to son cannot be held to be colourable device if the transaction is within the four corners of law and valid

    Allowing the appeal of the assessee the Tribunal held that; the sale of shares in a Pvt. Ltd. Co. by the assessee to a relative (son) in order to book losses so as to set-off the capital gains from on sale of property cannot be rejected as a sham transaction / colourable device if the transaction is within the four corners of law and valid. The transactions carried by assessee are valid in law, cannot be treated as non-est merely on the basis of some economic detriment or it may be prejudicial to the interest of revenue. Further, if the period co-existed or permitted the assessee to set off her capital loss against the capital gains earned, would itself not give rise to the presumption that the transaction was in the nature of colourable device. We notice that the assessee has taken indexed cost of acquisition of share at ₹ 30,40,400/-. We notice that the Assessing Officer has not examined the same and accordingly direct him to verify the computation given by the assessee and allow set off of correct amount of Long Term Capital Loss against Long term capital gains. (ITA No. 7410/Mum/2012, dt. 9-3-2018)(AY. 2006-07)

    Madhu Sarda v. ITO (Mum.)(Trib.), www.itatonline.org

  35. S.45 : Capital gains – Cash credits – Share capital – Shares were issued at premium – Identity and PAN No was furnished addition cannot be made as undisclosed income. [Ss. 68, 133(6)]

    Dismissing the appeal of the revenue the Tribunal held that the fact that a Pvt. Ltd. co issued shares at an exorbitant premium is irrelevant if the assessee has proved the genuineness of the transaction. If the assessee has furnished necessary evidence to prove the identity of the share applicants and their PAN details, the department is free to proceed to reopen the individual assessments of the share applicants but it cannot be regarded as undisclosed income of the assessee. (ITA No. 1946/Mum./2016, dt. 28-2-2018)(AY. 2010-11)

    DCIT v. Alcon Biosciences P. Ltd. (Mum.)(Trib.), www.itatonline.org

  36. S.45 : Capital gains – Cash credits – Penny stocks – When the identity and genuineness of transaction is established merely because, the investigation department has alleged that there is a modus operandi of bogus Long Term Capital Gains scheme is not relevant if the same is not substantiated [Ss.10(38), 68]

    Allowing the appeal of the assessee the Tribunal held that capital gains from penny stocks cannot be assessed as unexplained cash credit u/s. 68 if the assessee has produced documentary evidence to prove the source, identity and genuineness of the transaction and the AO has not found any fault with it. The fact that the investigation dept. has alleged that there is a modus operandi of bogus LTCG scheme is not relevant if the same is not substantiated. (ITA No. 6235/Del/2017, dt. 19-3-2018)(AY. 2014-15)

    Meenu Goel v. ITO(SMC) (Delhi)(Trib.), www.itatonline.org

  37. S.45 : Capital gains – Sale of flats which was received from the developer for transfer of development rights was held to be assessable as capital gains, it was not a case where land was sold after converting in to stock-in-trade [S. 45(2)]

    Allowing the appeal of the assessee the Tribunal held that sale of flats which was received from the developer for transfer of development rights, which was let out and the rental income was offered as income from house property, the sale consideration was held to be assessable as capital gains, provision of S. 45(2) cannot be held to be applicable. (AYs. 2006-07 to 2010-11)

    Vikas Solvextracts (P.) Ltd. v. DCIT (2018) 168 ITD 692 (Kol.) (Trib.)

  38. S.48 : Capital gains – Computation – Tenancy rights – Value of tenancy rights to be considered for determination of cost of acquisition [Ss. 45, 49, 50C]

    Dismissing the appeal of the revenue the Tribunal held that value of tenancy rights to be considered for determination of cost of acquisition. The builder has given alternative flat to the assessee only by way of surrender of tenancy rights. Had there been no tenancy rights the builder would not have offered any flat to the assessee on ownership basis. Thus it is valuable right on which cost of acquisition has to be determined. Followed CIT v. Abrar Alvi (2001) 247 ITR 312 (Bom.) (HC). (ITA No. 3947/Mum/2016 dt 19-4-2018 Bemch “H”)(AY. 2007-08)

    ACIT v. Shree Krishna Pharmacy (Mum.) (Trib.)

  39. S.50B : Capital gains – Slump sale – Transfer of business division to its subsidiary against shares and debentures, was held to be not a ‘slump sale’ but an ‘exchange’; thus, provisions of section 50B would not be applied. [Ss.2( 42C), 45]

    Allowing the appeal of the assessee the Tribunal held that since transfer of undertaking was not for money but for equity shares and debentures, transaction was not a ‘sale’ but an ‘Exchange’ and, consequently, provisions of section 50B would not be applicable. The business Division transferred by the assessee as on a going concern basis where no cost of acquisition was possible to be attributed individual assets in that undertaking and therefore the charging of provisions of section 45 were not attracted. The provisions of section 50B are not applicable to this case as it is a case of slump exchange and not a slump sale. Accordingly, the order of Commissioner (Appeals) is set aside and the Assessing Officer is directed not to tax the amount of capital gains. (AY. 2008-09)

    Bennett Coleman & Co. Ltd. v. ACIT (2018) 168 ITD 631 (Mum.) (Trib.)

  40. S.54 : Capital gains – Profit on sale of property used for residence –Purchase of four flats merged in to one residential house – Entitle to exemption. [S.45]

    Dismissing the appeal of the revenue, the Tribunal held that, though the assessee has purchased four flats, merged into one unit the exemption is held to be available. The Inspector carried out spot verification and reported that though there are four flats but the same has been merged into one composite flat having a common entrance door, and was used as a residence. Followed CIT v. Devdas Naik (2014) 366 ITR 12 (Bom) (HC), ITO v. Sushila M. Jhaveri (2007) 107 ITD 327 (SB)(Mum)(Trib) (ITA No. 6884/Mum./2014 dt. 11-4 2018 (AY. 2009-10)

    ITO v. Kavita Gupta (Mum.) (Trib.)

  41. S.54 : Capital gains – Profit on sale of property used for residence – When entire capital gains is invested in a flat under construction, exemption cannot be denied on the ground that possession was not given [S.45]

    Dismissing the appeal of the revenue, the Tribunal held that when entire capital gains is invested in a flat under construction exemption cannot be denied on the ground that possession was not given. S.54(2) does not specify any condition that. (AY. 2013-14)

    ACIT v. M. Raghuraman (2018) 169 ITD 315 (Chennai) ( Trib)

  42. S.56 : Income from other sources – Fair market value of shares sold – Choice of method of valuation is with the assessee – AO has no jurisdiction to insist that the assessee should only a particular method for determining the value of shares. Rule of constancy must be followed by the AO. [S.56(2)(viiib) R.11UA]

    Dismissing the appeal of the revenue the Tribunal held that, for determining the fair market value of shares sold, Choice of method of valuation is with the assessee. AO has no jurisdiction to insist that the assessee should follow only a particular method for determining the value of shares. Until and unless the legislature amends the provision of the Act and prescribes only one method for valuation of the shares, the assessees are free to adopt any one method. Rule of constancy must be followed by the AO. (ITA No. 4854/Mum/2016 dt. 2-5-2018 Bench “C”) (AY. 2013-14)

    DCIT v. Ozoneland Agro Pvt. Ltd. (Mum) (Trb) www.itatonline.org

  43. S.56 : Income from other sources – Unquoted equity shares – Discounted cash flow method – Net asset value method – Option to adopt the method of valuation is with assessee – When no defect is found in valuation of shares arrived on basis of discounted cash flow method addition made by the AO on basis of net asset value method was to be set aside. [Ss.56(2)(vii)(b), R. 11UA]

    The assessee submitted valuation per equity share computed on the discounted cash flow method as per the certificate of Chartered Accountants wherein the value per shares was arrived at ₹ 54.98 per share. The AO did not accept said valuation and applied Net Asset Value method as per which value of share came to ₹ 26.69 per share. Applying the said value, the Assessing Officer made addition under S. 56(2)(vii)(b) of the Act. Tribunal held that the provisions of S. 56(2)(vii)(b) gives an options to assessee to adopt any of methods which can be compared with Net Asset Value Method and Assessing Officer shall adopt value whichever is higher. Accordingly the since discounted cash flow method is one of prescribed methods and, moreover, Assessing Officer had not found any serious defect in facts and details used in determining fair market value under said method, impugned addition made by him was deleted. (AY. 2014-15)

    ACIT v. Safe Decore (P.) Ltd. (2018) 169 ITD 328 (Jaipur) (Trib.)

  44. S.56 : Income from other sources – Redeemable non-cumulative preference shares could not be excluded from the ambit of S.56(2)(viib)

    The issue of shares more than fair market value, tax to be factored while determining net rate of return on investments, rate of return on preference shares issued by other companies for relevant period relevant material. The redeemable non-cumulative preference shares could not be excluded from the ambit of section 56(2)(viib).

    Microfirm Capital P. Ltd. v. Dy. CIT (2018) 62 ITR 109 (Kol.)(Trib.)

  45. S.56 : Income from other sources – Purchase of property from a company wherein the assessee is also director cannot be assessed as income from other sources, as the amendment to assess difference arising out of stamp duty value and actual sale consideration as income in case of sale of property for a consideration less than stamp duty value of property was incorporated into statute by Finance Act, 2013 with effect from 1-4-2014 [S. 56(2)(vii) ]

    Allowing the appeal of the assessee the Tribunal held that, Purchase of property from a company wherein the assessee is also director can not be assessed as income from other sources, as the amendment to assess difference arising out of stamp duty value and actual sale consideration as income in case of sale of property for a consideration less than stamp duty value of property was incorporated into statute by Finance Act, 2013 with effect from 1-4-2014. (AY. 2010-11, 2012-13)

    Keshavji Bhuralal Gala v. ACIT (2018) 169 ITD 23 (Mum) (Trib.)

  46. S.56 : Income from other sources – Under valuation of shares – The “fair market value” of shares acquired has to be determined by the taking the book values of the underlying assets and not their market values [S. 56(2)(viia), (R. 11UA)]

    Allowing the appeal of the assessee the Tribunal held that on the plain reading of above Rule, it is revealed that while valuing the shares the book value of the assets and liabilities declared by the TEPL should be taken into consideration. There is no whisper under the provision of 11UA of the Rules to refer the fair market value of the land as taken by the Assessing Officer as applicable to the year under consideration. Therefore, we are of the view that the share price calculated by the assessee of TEPL for ₹ 5 per share has been determined in accordance with the provision of Rule 11UA. (ITA Nos. 6964 and 722/Del/2017, dt. 7-3-2018)(AY. 2014-15)

    Minda SM Tecnocast Pvt. Ltd. v. ACIT (Delhi)(Trib.), www.itatonline.org

  47. S.68 : Cash credits – Share capital – Shell companies – Accommodation entries were routed through shell companies hence addition was held to be justified. [Ss. 131, 133(6)]

    Dismissing the appeal of the assessee the Tribunal held that the assessee set up a devise to introduce unaccounted money through various shell companies in the form of share capital at a premium. The manner of issue of the shares through these companies, the manner of providing confirmation on the letter pad, the manner of maintaining the annual accounts and the manner of submitting the bank accounts on the letter pad or on a computerised print out to give it a semblance of originality to defraud the revenue shows the whole picture how the accommodation entries are routed through shell companies as share capital to evade taxes. (ITA No. 4520/Del/2009 and 613/Del/2013, dt. 28-4-2018)(AY. 2006-07)

    Shaan Construction P. Ltd. v. ITO (Delhi)(Trib.), www.itatonline.org

  48. S.68 : Cash credits – Share application money – No adverse material was found in the course of search proceedings, hence addition was held to be not justified [S. 153A]

    Tribunal held that, during the course of search, no adverse material found to prove that the share application money received was bogus or non-genuine. As the assessee filed details in the form of bank statements books of account, PAN, confirmation etc. addition made by the AO was without any basis, deleted the addition. (AYs. 2007-08, 2009-10, 2010-11)

    Garuda Imaging & Diagnostics (P) Ltd. v. ACIT (2018) 191 TTJ 765 (Delhi)(Trib.)

  49. S.68 : Cash Credits – Share application money – AO failed to to make inquiry on documentary evidence produced by assesse, addition deleted

    The AO had not verified the documentary evidence filed by the assessee in order to prove the identity, creditworthiness and genuineness of the transaction. Filed evidence that the net worth of both the investor companies was substantial so as to make investment with the assessee. No material was produced on record that during the course of search, any material was found to prove that the assessee received any accommodation entries from the investor companies. The AO instead of issuing fresh notice u/s. 133(6) on the correct address of the investors, merely relied upon the fact that the earlier letter had been returned unserved. No coercive action had been taken for the production of investors; no adverse inference could be drawn against the assessee. (AY 2011-2012)

    Prabhatam Investment Pvt. Ltd. v. ACIT (2018) 61 ITR 352 (Delhi)(Trib.)

    ACIT v. Sindhu Holding Ltd. (2018) 191 TTJ 765 (Delhi)(Trib.)

  50. S.68 : Cash credits – Sale of shares – Offline transactions – Merely on the ground that six companies failed to reply to notices issued to them, addition was held to be not justified. [S. 133(6)]

    Allowing the appeal of the assessee, the Tribunal held that merely on the ground that six companies failed to reply to notices issued to them, addition was held to be not justified, when the assessee had furnished all the necessary details of six companies along with the permanent account numbers. (AY. 2012-13)

    Kesha Appliances Pvt. Ltd v. ITO (2018) 63 ITR (Trib.) 294 (Delhi) (Trib.)

  51. S.68 : Cash credits – Share application money – Existing share holders – Confirmation and other details were filed – Addition as undisclosed was held to be not justified

    Dismissing the appeal of the revenue, the Tribunal held that the assessee has furnished complete particulars such as, names address, permanent account numbers, confirmation letters, income tax returns and balance sheet, and all are existing shareholders therefore share application money cannot be assessed as undisclosed income of the assessee. (AY. 2010-11)

    ITO v. Dhanalaxmi Equipment P. Ltd. (2018) 63 ITR (Trib.) (S.N.)33 (Jaipur) (Trib.)

  52. S.69 : Unexplained investments – Remand report – Once the AO was satisfied in the remand proceedings and did not oppose not controverted the documents filed by the assessee, he cannot be said to be aggrieved by the Order passed by the CIT(A) considering his own remand report. [S.251]

    The assessee in the course of the assessment proceedings was required to explain the deposit of ₹ 33,09,240/- in its bank account with Union Bank of India, Fatehgarh Sahib. In the course of the assessment proceedings, it was noticed that the amounts have been deposited in HDFC Bank, Bassi Road, Sirhind, Fatehgarh Sahib which were explained to be on account of sale of HUF ancestral agricultural land at village Badhoshi Kalan to Shri Kamaljit Singh S/o Shri Sukhdev Singh of Mauli Vedwan sold by assessee’s brother Shri Darshan Singh wherein the assessee also had half a share. The claim was supported by way of affidavit. However, since the assessee despite a direction failed to produce the purchaser Shri Kamaljit Singh who did not respond even to the summons issued u/s. 131, the addition of ₹ 25,40,000/- cash deposit in the Union Bank of India and ₹ 10 lakh in HDFC Bank account was held to be not explained. On further appeal by the assessee, the CIT(A) deleted the impugned addition after relying upon the remand report and on consideration of the facts.

    On appeal by the Revenue, the Tribunal held that the occasion for the AO to file an appeal did not arise. Since the facts and evidences considered in the remand proceedings have not been rebutted by the AO in the present proceedings, the present appeal ought not to have been filed. The AO once satisfied in the remand proceeding cannot be said to be aggrieved by the order passed by the CIT(A) considering his own remand report and thus the appeal filed by the Revenue was dismissed (ITA No. 599/Chd/2017 dt. 10-1-2018) (AY. 2009-10)

    ITO v. Randhir Singh (2018) 163 DTR 10 (Chd.)(Trib.)

  53. S.69C : Unexplained expenditure – Bogus purchases – Supplier admitted the supply of goods and genuineness of transaction, therefore purchases cannot be treated as bogus purchases addition of 12.5% of the purchases was deleted

    Allowing the appeal of the assessee the Tribunal held that the fact that the supplier admitted to issuing bogus bills does not necessarily mean that he had issued accommodation bills to the assessee. There is subtle but very important difference in issuing bogus bills and issuing accommodation bills to a particular party. The difference becomes very important when a supplier in his affidavit admits supply of goods. As far as sales are concerned there is no doubt about the genuineness of such sales. It is also a fact that suppliers were paying VAT and were filing their returns of income. In response to the notices issued by the AO u/s. 133(6) of the Act, the supplier admitted the genuineness of the transaction. Accordingly, the purchases cannot be treated as bogus. Accordingly addition of 12.5% of purchases was deleted. ITA No. 1045/Mum/2016, dt. 13-4-2018)(AY. 2011-12)

    Shantivijay Jewels Ltd. v. DCIT ( Mum)(Trib), www.itatonline.org

  54. S.69C : Unexplained expenditure – Estimation of profits embedded in purchases at 12.5% is reasonable when the assessee failed to prove the purchases to be genuine and also failed to produce the selling parties during the course of the assessment proceedings. [S.145]

    Pursuant to search and seizure operations which revealed that the assessee was the beneficiary of accommodation entries, notices under section 133(6) of the Income-tax Act, 1961 were issued to two parties from whom the assessee claimed to have made purchases. Since the assessee failed to produce the parties before the AO and the purchases remained unverifiable, the AO rejected the books of account of the assessee under section 145 of the Income-tax Act, 1961 and held that the purchases shown by the assessee were not genuine and added them to the income of the assessee as unexplained expenditure in the hand of the assessee. The CIT(A) brought to tax profits at the rate of 12.5% amounting to ₹ 13,35,058/- embedded in such alleged bogus purchases to the tune of ₹ 1,06,80,467/-

    On appeal the Tribunal held that the purchases existed in the books of account of the assessee and the onus was on the assessee to prove that the purchases were genuine. Under these circumstances, the possibility of the assessee buying the material actually from the grey market at lower rates and obtaining corresponding bills from the parties to reconcile the quantitative records and books of account could not be ruled out. Hence the profits estimated by the CIT(A) at 12.5% was reasonable (ITA No. 1441 & 3133/Mum./2016 dt. 1-2-2018) (AY. 2007-08)

    ITO v. Prankit Exports (2018) 62 ITR 243 (Mum.)(Trib.)

  55. S.80-IA : Industrial Undertaking – Manufacturer of yeast setting up plant for generation of steam power and cooling power for maintaining temperature of yeast is entitled for deduction

    The scheme of section the deduction u/s. 80-IA provides for working out the profit on power generation undertaking as a separate industrial undertaking de hors any other business. For calculating the deduction u/s. 80-IA the profits of the eligible business must be worked out as if it were the only source of an assessee’s income. Therefore, Net profit percentage of the assessee’s yeast manufacturing business for arriving at the profits u/s. 80-IA in respect of the cooling power and steam power generation undertakings was contrary to s. 80-IA(5).

    Saf Yeast Co. P. Ltd. v. Dy. CIT (2018) 62 ITR 381 (Mum)(Trib.)

  56. S.80-IC : Special category States – Support services provided to IT companies by the assessee through its own staff is eligible for deduction

    Assessee was engaged in providing support services to the IT companies through online, onsite and offsite modes and all the work performed at the site of client was through the staff of the assessee. The assessee had its operational unit in Dehradun and was creating jobs in Dehradun, Uttaranchal bringing new IT call centres and BPO companies to Dehradun to deliver IT services. All the facilities to its clients were controlled and provided from Dehradun and activities undertaken by the assessee fell in the category of Information and Communication Technology Industry in clause No. 13 of Part C of Schedule Fourteenth. Hence the assessee fulfilled the conditions to claim deduction under section 80-IC (ITA Nos. 5856 of 2011, 4277, 5744 of 2012 & 2506 (Del.) of 2013 dt. 27-10-2017)(AY. 2007-08 to 2010-11)

    IMSI India (P.) Ltd. v. DCIT (2018) 191 TTJ 662 (Delhi )Trib.)

  57. S.80P : Co-operative societies – Interest earned by a co-operative Society from deposits kept with co-operative bank is deductible. [S.80P(4) ]

    Tribunal held that interest earned by a co-operative society from deposits kept with co-operative bank is deductible.

    Land End Co-operative Housing Society Ltd. (ITA No. 3566/Mum/2014 “A” dt. 15-1-2016 (AY. 2009-10)

    Nutan Laxmi Co-operative Housing Society Ltd. v. ITO (ITA No 7203/7204/Mum/2013 “B” dt. 24-8-2016 (AY. 2009-10, 2010-2010-11) Sea Grean Co-operative Housing Society Ltd. (ITA No. 1343 /Mum/ 2017 “ E” dt. 31-03 -2017 (AY. 2013-14)

    Merwanjee Cama Park Co-op. Housing Society Ltd. v. ITO (ITA No. 6139/Mum/2014
    dt 27-9-2017 “B”

    ITO v. Citiscape Co-operative Housing Society Ltd. (ITA No. 5435 & 5436/Mum/2017
    dt 8-12-2017 (SMC)

    Kaliandas Udyog Bhavan Premises Co-op. Society Ltd. v. ITO (ITA No. 6547/Mum/2017 dt 25-4-2018( AY.2014-2015) (SMC)

    Maratha Era Co-operative Housing Society Ltd. v. ITO (ITA No. 6996/Mum/2017 dt. 6-3 2018 “I”) (AY. 2014-15)

  58. S.92C : Transfer pricing – The “international transaction” as defined in S. 92F(v) has to be a genuine transaction. Transfer pricing provisions do not apply to non-genuine or sham transactions [S.92F(v)]

    Tribunal held that it is elementary that the ALP is determined of an ₹international transaction’, which has been defined in section 92B of the Act. The term ₹transaction’, for the purposes of the Chapter–X containing transfer pricing provisions, has been defined in clause (v) of section 92F to include an arrangement, understanding or action in concert. It shows that the ALP is always determined of an international transaction, which is genuine, but may be formal or in writing and whether or not intended to be enforceable by legal proceeding. If a transaction itself is not genuine, there can be no question of applying the transfer pricing provisions to it. In such an eventuality of a supposed genuine transaction turning out to be non-genuine, all the consequences which would have flowed for a real transaction, are reversed. In other words, certain deductions which would have been otherwise allowed in case of a genuine international transaction, are denied. Nitty-gritty of the matter is that only a declared and accepted genuine international transaction can be subjected to the transfer pricing regulations. If an international transaction is proved to be not genuine, the transfer pricing provisions are not triggered. (ITA No. 5921/Del/2010, dt. 11-4-2018)(AY. 2006-07)

    Mitchell Drilling India Private Limited v. DCIT (Delhi)(Trib.), www.itatonline.org

  59. S.92C : Transfer pricing – Arm’s length price – The TPO can not sit in judgment over the business model of the assessee and determine the ALP of the transactions with AEs at Nil

    Allowing the appeal of the assessee the Tribunal held that international transactions of information technology services availed has to be aggregated with other transactions being intrinsically linked to other international transactions undertaken by the assessee during the year and the same has to be benchmarked applying internal TNMM method as in the case of other international transactions. Further, we also reverse the order of TPO in holding that the assessee has not availed any services in view of various documents filed by the assessee and also certificate of Eaton China, which was filed during the course of TP proceedings evidencing not only the availment of services but also the basis of cost for such services. Similar services were availed by other Eaton group entities from Eaton China and its certificate that the same has also charged at the same rates as charged to the assessee. In the entirety of the above said facts and circumstances, we reverse the order of TPO/Assessing Officer in taking the value of international transactions of Information Technology Services availed at Nil and delete the adjustment made. (ITA No. 45/Pun/2013, dt. 12-3-2018)(AY. 2008-09)

    Eaton Fluid Power Limited v. ACIT (Pune) (Trib.), www.itatonline.org

  60. S.92C : Transfer pricing – Arm’s length price – A company having a calendar year ending, cannot be compared with the assessee having a financial year ending notwithstanding functional similarity between two companies

    The assessee was engaged in provision of information technology (IT) enabled back office support services in the nature of customized business/financial research support to Copal group. The assessee selected certain companies including Jindal Intellicom Ltd. in connection with the provision of ITES. The Tribunal held that Jindal Intellicom Ltd., having a calendar year ending, cannot be compared with the assessee having a financial year ending notwithstanding the functional similarity between the two (ITA No. 1865/Del/2014 dt. 9-1-2018) (AY. 2009-10)

    ITO v. Copal Research (I)(P.) Ltd. (2018) 162 DTR 129 / 191 TTJ 1000 / 90 taxmann.com 70 (Delhi) (Trib.)

  61. S.92CA : Reference to transfer pricing officer – CBDT’s Instruction No. 3/2003 is binding on the AO. Consequently, the ALP of international transactions where the quantum is less than ₹ 5 crore has to be determined by the AO and cannot be referred to the TPO. If such reference is made, it is invalid and the extended time for completing the assessment is not available to the AO. The assessment is void as it is time-barred [S.119, 144C]

    The Tribunal had to consider the following ground of appeal:

    “The reference to the Transfer Pricing Officer u/s. 92CA of the Income-tax Act, 1961 by the Assessing Officer was illegal being contrary to (i) the binding Instruction No. 3/2003, (ii) the provisions of Section 92CA and the binding decision of the Special Bench in the case of Aztec Software and Technology Services Ltd. 107 ITD 141 (Bang.) (SB). Consequently, the impugned assessment is time barred and, therefore, bad in law.”

    Tribunal held that CBDT’s Instruction No. 3/2003 is binding on the AO. Consequently, the ALP of international transactions where the quantum is less than ₹ 5 crore has to be determined by the AO and cannot be referred to the TPO. If such reference is made, it is invalid and the extended time for completing the assessment is not available to the AO. The assessment is void as it is time-barred.
    (ITA No. 4363/del./2010, dt. 23-3-2018)
    (AY. 2006-07)

    Calance Software Pvt. Ltd. v. DCIT (Delhi)(Trib.), www.itatonline.org

  62. S.92D : International Transactions – Amalgamation – On the date of the draft assessment order the assessee was not in existence, assessment order was a nullity and was not sustainable in the eyes of law

    The assessee merging in another company and not in existence on date of passing of draft assessment order and order of assessment. Thus the assessment order was not sustainable in the eyes of law. (AY. 2008-2009 & 2009-2010)

    JCB India Limited (formerly known as M/s. JCB Manufacturing Pvt. Ltd.) vs. Dy. CIT (2018) 61 ITR 148 (Del)(Trib.)

  63. S.140A : Self-assessment – Failure to pay self-assessment tax, penalty cannot be levied [S. 221]

    Allowing the appeal of the assessee, the Tribunal held that assessee’s failure to pay self-assessment tax within stipulated period, in view of fact that amended section 140A(3) with effect from 1-4-1989 levy of penalty was held to be not justified. (AY. 2009-10)

    Heddle Knowledge (P.) Ltd. v. ITO (2018) 169 ITD 304 (Mum.) (Trib.)

  64. S.143(2) : Assessment – Notice by an AO not having jurisdiction over the assessee is irrelevant –Assessment was held to be bad in law

    Notice by an AO not having jurisdiction over the assessee is irrelevant. If the proper AO does not issue the notice within the time limit, the assessment is null and void. The argument that the non-jurisdictional AO issued the s. 143(2) notice as per PAN or computerised system or internal procedure is not relevant as it violates the law (AY. 2006-07)

    ITO v. NVS Builders Pvt. Ltd. (Delhi)(Trib.), www.itatonline.org

  65. S.143(3) : Assessment – Survey – An admission of estimated income made during survey has no evidentiary value and is not binding on the assessee. The income has to be assessed as per the return of income and books of account. [S. 133A]

    Allowing the appeal of the assessee the Tribunal held that merely on the basis of admission made in the course of survey addition cannot be made. Order in Hiralal Maganlal 97 TTJ Mum 377 distinguished. CBDT Circular No. 286/2/2003 (Inv.) II dated 10-3-2003 referred. (ITA No. 795/Mum/2015, dt. 23-2-2018)(AY. 2006-07)

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

  66. S.144C : Reference to dispute resolution panel – AO has to adhere to mandatory requirement of the section – Even in remand proceedings the Assessing Officer has to first pass a draft assessment order before passing a final assessment order – Appeal before the Tribunal is held to be not maintainable. [Ss. 92C, 246A, 253]

    Assessing Officer has to adhere to mandatory requirement of section 144C(1) and first pass a draft assessment order before passing final assessment order even in remand proceedings.Tribunal held that, the AO has to adhere to mandatory requirement of S. 144C(1) and first pass a draft assessment order before passing final assessment order even in remand proceedings. Even if final assessment order is passed in contravention of any statutory provision appeal has to be filed before CIT(A) or appropriate Constitutional remedy. Appeal before Tribunal is not maintainable. (AY. 2012-13)

    STevapharm India (P.) Ltd. v. ACIT (2018) 169 ITD 619 (Delhi) (Trib.)

  67. S.145 : Method of accounting –Where then books of account is rejected and income is estimated, separate addition u/s. 40A(3), 68 or peak credit cannot be made. [Ss. 68. 145(3)]

    Allowing the appeal of the assessee the Tribunal held that when the books of account is rejected there is no justification for the authorities below to make addition of ₹ 6,92,25,000/- under section 40A(3) of the I.T. Act and addition of ₹ 7,12,15,150/- under section 68 of the I.T. Act. In view of the above discussion, we set aside the orders of the authorities below and delete both these additions. (ITA No. 4709/Del/2017, dt. 23-3-2018)(AY. 2013-14)

    Deepak Mittal v. ACIT (Delhi)(Trib.), www.itatonline.org

  68. S.147 : Reassessment – Income of any other person – Issue of notice u/s. 153C and did not continue with proceedings, again issuing a notice u/s. 148 is held to be bad in law [Ss.148, 153C]

    Allowing the appeal of the assessee, the Tribunal held that when the AO had issued a notice u/s. 153C to which the assessee had complied with. Thereafter the AO did not continue with the proceedings u/s. 153C. Subsequently the AO issued a notice u/s. 148, which was held to be bad in law. (ITA No. 3275/Mum/2015 & 3276/Mum/2015) (A.Y. 2003-04, 2005-06)

    Rayoman Carriers Pvt. Ltd. v. ACIT (Mum) (Trib.)

  69. S.147 : Reassessment – Bogus accommodation entries – Order was passed before expiry of four weeks of passing the orders of objection – Non-application of mind while recording reasons – Order was held to be bad in law [S. 148]

    Allowing the petition the Tribunal held that, passing the reassessment order before the expiry of 4 weeks of passing the order of objections renders the reassessment order void. Also, if the reasons state “bogus accommodation entries were provided/taken” and it is not clear whether the assessee has received or provided accommodation entries, it means there is no application of mind by the AO while recording reasons. (ITA No. 5780/Del./2014, dt. 6-4-2018)(AY. 2004-05)

    Meta Plast Engineering P. Ltd. v. ITO ( Delhi)(Trib), www.itatonline.org

  70. S.153A : Assessment – Search – On the date of search the company does not existed as it was merged with another company, hence the notice and assessment is held to be bad in law

    On the date of search the company does not existed as it was merged with another company, hence the notice and assessment is held to be bad in law. (AY. 2007-2008 – 2010-2011)

    Garuda Imaging & Diagnostics (P) Ltd. v. ACIT (2018) 191 TTJ 765 (Delhi)(Trib.)

    ACIT v. Sindhu Holding Ltd. v. ACIT (2018) 191 TTJ 765 (Delhi)(Trib.)

  71. S.201 : Deduction at source – Failure to deduct or pay – Limitation of two years prior to amendment, by Finance (No. 2) Act, 2014, with effect from 1-10-2014 and seven years thereafter [S. 201(3)]

    S. 201(3) as amended by Finance (No. 2) Act, 2014, with effect from 1-10-2014 provides for limit for passing order to be within seven years from end of financial year in which payment was made or credit was given and for earlier years said limitation period would be two years from end of year in which payment was made. (AY. 2009-10)

    Vodafone Cellular Ltd. v. DCIT (2018) 169 ITD 675 (Pune) (Trib.)

  72. S.234B : Interest – Advance tax – Book profit – In view of Explanation 1(v) of sub-section (1) of S. 234B, MAT credit has to be allowed from ‘assessed tax’ and, thereafter, interest to be computed

    Allowing the appeal of the assessee the Tribunal held that in view of Explanation 1(v) of sub-section (1) of S. 234B, MAT credit has to be allowed from ‘assessed tax’ and, thereafter, interest to be (AY. 2007-08)

    Ellenbarrie Industrial Gases Ltd. v. ITO (2018) 169 ITD 194 (Kol.) (Trib.)

  73. S.251 : Appeal – Commissioner (Appeals) – Powers – Fresh claim can be made before the appellate authorities if the assessee demonstrates that he was unable to make such a claim through a revised return. [S. 35D, 139(5)]

    Fresh claim can be made before the appellate authorities if the assessee demonstrates that he was unable to make such a claim through a revised return. Hence the matter was restored back to the AO. (ITA Nos. 30 to 32/Coch/2016 dt. 23-11-2017) (AYs. 2009-10 to 2011-12)

    HLL Lifecare Limited v. ACIT (2018) 191 TTJ 1(UO) (Kochi) (Trib.)

  74. S.253 : Appellate Tribunal –Registrar’s Court – The Registrar of the Tribunal has no jurisdiction to consider and decide on applications for condonation of delay. Only the Court/ Tribunal have the power. The order passed by the Registrar is ultra vires his power and non est in law. He should desist from passing such orders [S. 152(1).253(5)]

    Order passed by the Bench in ITA No. 6339/Mum/2017 in the case of Shri Hiten Ramanlal Mahimtura on lst May 2018 through order sheet.

    ORDER

    This appeal is barred by limitation by 21 days. While hearing the appeal. we observed that the Registrar has heard this preliminary issue of condoning the delay and passed order on
    8-3-3018 condoning the delay.

    The power of condoning the delay is with the Court/Tribunal under the Limitation Act as well as u/s. 253(5) r.w.s. 252(1) of the Income-tax Act.

    The petition of assessee has to be examined by the Court/Tribunal after hearing both the parties and after considering the reasons, facts etc.

    Hence, the order passed by the Registrar is ultra vires beyond his power. hence his order is non-est in the eyes of the law.

    Henceforth the Registrar should desist from passing such orders and he should put up all petitions before the Bench.

    The Registry is also directed to place this order before Hon’ble President for issuing necessary instructions. Copy of this order is sent to Registrar for compliance. The appeal as well as condonation Petition is adjourned to 19-6-2018. (ITA No. 6339/Mum/2017, dt. 1-5-2018)

    Hiten Ramanlal Mahimtura (Mum.)(Trib.), www.itatonline.org

  75. S.253 : Appellate Tribunal – Order passed in remand proceedings as per direction of Tribunal, appeal lies before CIT(A) and not before Tribunal [Ss. 144C, 246A]

    Tribunal held that, order passed in remand proceedings as per direction of Tribunal , appeal lies before CIT(A) and not before Tribunal. Even if final assessment order is passed in contravention of any statutory provision appeal has to be filed before CIT(A) or appropriate Constitutional remedy. Appeal before Tribunal is not maintainable. (AY. 2012-13)

    Tevapharm India (P.) Ltd. v. ACIT (2018) 169 ITD 619 (Delhi) (Trib.)

  76. S. 254(2A) : Appellate Tribunal – Interim stay – Contempt – Strictures passed against the Department for confronting, showing resentment and displeasure to the Tribunal for granting interim stay against recovery of demand. Petition of revenue was dismissed with costs of ₹ 20,000/- to be deposited in Prime Minister’s Relief Fund within 15 days of receipt of the copy of this order. [S. 11]

    The Tribunal held that department officials fully knowing that no useful purpose will be served either by moving the present application and even knowing that the present application was infructuous and non-maintainable even on the date of its filing, not only filed this application, but also insisted for arguments despite that the hearing on the main appeal had already been concluded on a previous date. The only motive behind this application is to confront and show resentment and displeasure to this Tribunal for granting interim stay against recovery in this matter. This application is therefore dismissed with costs of ₹ 20,000/- to be deposited in Prime Minister’s Relief fund within 15 days of receipt of the copy of this order. While ordering so, we are cautious that it will not result into any loss to the Govt. Exchequer but the movement of some funds from one branch of the Govt. to the other perhaps will convey the message of caution to the concerned officials. However, keeping judicial restraint, no contempt of court proceedings recommended at this stage. Strictures passed against the Department for confronting, showing resentment and displeasure to the Tribunal for granting interim stay against recovery of demand. The Dept. is showing open defiance of, disrespect of, or of open resentment to, orders of the Tribunal, which may prove be very dangerous for the sanctity of the courts of law/Justice dispensation system of the country. (MA No. 37/Chd/2018, dt. 6-4-2018)(AY. 2013-14)

    ITO (E) v. Chandigarh Lawn Tennie Association (Chan)(Trib), www.itatonline.org

  77. S.263 : Commissioner – Revision of orders prejudicial to revenue – Non est revised return cannot be revised as the assessment order itself is null and void

    Allowing the appeal the Tribunal held that, non est return cannot be revised as the assessment order itself is null and void. (AY. 2011-12)

    Hari Mohan Das Tandon (HUF) v. PCIT (2018) 169 ITD 639 (All) (Trib.)

  78. S.271(1)(c) : Penalty – Concealment – Wrong claim of depreciation by crediting capital subsidy to reserves instead of reducing from actual cost/WDV does not attract the penalty

    Allowing the appeal of the assessee the Tribunal held that the primary burden of proof is on the Revenue to show that the assessee is guilty of concealment/furnishing inaccurate particulars. Making an incorrect claim does not tantamount to furnishing inaccurate particulars by any stretch of imagination. Wrong claim of depreciation by crediting capital subsidy to reserves instead of reducing from actual cost/ WDV does not attract s. 271(1)(c) penalty. (ITA No. 4023/Del/2016, dt. 15-3-2018)(2009-10)

    Prafful industries (P) Ltd. v. DCIT (Delhi)(Trib.), www.itatonline.org

  79. S.271(1)(c) : Penalty – Concealment – Non-specification of limb in notice levy of penalty is held to be bad in law

In the penalty notice the AO has not mentioned under which limb penalty was initiated therefore the notice has its inception is bad in law the penalty levied was directed to be deleted. (AY. 2010-2011, 2011-2012)

Dy. CIT v. Sujata Bharadwaj (Smt.) (2018) 191 TTJ 17 (Jodh.)(UO)(Trib.)

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