All India Income Tax Appellate Tribunal Members
7 Days Residential Refresher Course 2017
16th July 2017 to 23rd July, 2017

Inaugural Session

Hon’ble Shri G. D. Agarwal, President of the ITAT, in his welcome speech stated that Residential Refresher course for members of the ITAT was made possible only because of the Ministry of Law and Justice. He thanked the Hon’ble Minister and High Court of Bombay for extending support.

Shri Sushil Chandra, Chairman of CBDT, in his welcome address, congratulated the ITAT for organizing the Residential Refresher Course to Members of the ITAT. He acknowledged that the ITAT delivers brilliant judgments in interpreting the law. As maximum amendments are taking place in the Income-tax Act it is necessary for the members to be abreast with the new amendments, hence the Residential Refresher course is important. He stated that for collection of revenue, the right interpretation of the law is very important. He also stated that the eradication of black money is of topmost priority. He made an appeal that expectation from everyone would be that the law be interpreted rightly to curb the generation of black money and it is very clear that the legislature wants eradication of black money and the role of the ITAT in this regard is very important.

Shri Suresh Chandra, Law Secretary – Government of India, stated that the ITAT should use the technology to render speedy justice and the ITAT is an independent body rendering justice even in small places. He wished success to the conference.

Inaugural address of Hon’ble Justice Mr. N. H. Patil

Published in AIFTP Journal July 2017 P.8

Hon’ble Law Minister – Mr. Ravisankar Prasad.

Hon’ble Minister stated that Modi Government aims to make India an economic powerhouse, make India transparent, and help in doing business easily. He stated that Aadhaar is a viable digital identity.

Essence of digital India is to empower India. Its true power would be when even a woman in the rural area also has a phone in her hand. Digital technology is important and bridges the inequality gap. The technology should be affordable. He explained how the Aadhaar is important.He showed his Aadhaar card and explained the advantages of the Aadhaar.

Hon’ble Minister has stated that a lot of industries are coming to India, hence tax litigation will also become very important. He stated that more assessees should come under tax net. He also stated that fast tracking of the cases should be done and is desirable from the ITAT. He stated that India has done well in indirect taxes as well. No vote of dissent in deciding the rates of GST were seen and all will benefit from GST. He stated that Government’s ambition is to make India a great economic powerhouse. Honourable Minster stated that surely the ITAT members and the lawyers will add and help in the process of making of India. He stated that considering the request made by Surat Tax Bar Bench of ITAT, a Bench at Surat may be started very soon.

Hon’ble Mr. D. Manmohan, Vice President ITAT, proposed a Vote of Thanks

Technical Session

Expectation of stakeholders

Hon’ble President, Shri G. D. Agarwal chaired the session and welcomed the representatives of the Bar Associations and members. He stated that mostly the delay in delivering the judgment is due to lengthy arguments especially where stakes are high. He requested for suggestions from the stake holders for quick disposal of matters.

Mrs. Aarti Vissanji, President ITAT Bar Association Mumbai

On behalf of the Bar and on my own behalf I thank you for giving us this opportunity to voice our expectations from the Income Tax Appellate Tribunal. This open minded approach is an exceptional practice and deserves to be commended.

Our expectation can be summed up in a single sentence – An independent justice delivery system guided by the motto “Nishpaksh, Sulabh, Satwar Nyay”. I propose to share with you 3 points which in our view are likely impact our expectations.

From a modest beginning in the year 1941 the Tribunal has evolved into a model institution. Its contribution to the development of law and resolution of tax disputes can be measured by the fact that 82.5% of orders passed by the Tribunal have been affirmed by the High Courts. Nevertheless, the passage of time has somewhat altered the structure and working of the Tribunal. No doubt there are positive changes, but we have diagnosedsome changeswhich may have an effect on the future health of the Tribunal:

i) The first is the introduction of the quota system to reduce pendency – The current waiting time for an appeal to be heard and disposed of by the Tribunal has reduced from 6 years a decade ago to less than 2 years. Nevertheless, pendency remains a problem and to further reduce the gap between filing and disposal, a monthly quota of disposal has been prescribed. Two factors which we believe are contributory is the shortage of Members as well as the fact that increasingly complex issues which come up for consideration coupled with the rapidly developing tax law. In our perception, the pressure caused by the disposal quota impacts both the proceedings in courtrooms and the quality of orders and therefore, may not be the most ideal way to tackle this problem. It is a matter of pride when the Hon’ble Judges of the High Court hearing appeals for admission are heard to say “the judgment of the Tribunal cannot be faulted with.” We look forward to the time when the rate of orders passed by the Benches of the Tribunal being upheld by the higher Courts crosses 82.5%. At the same time, there are orders passed which are cryptic. Despite the conclusion being correct, the fate of such orders is a set aside and the appeals once heard get added to the pendency list. Second innings is a costly affair for an assessee in terms of time and monetary implications. The anxiety to meet targets could well be the cause.

Some alternatives which may be considered to deal with this problem – (a) Posting of seasoned Members at stations with high revenue and complex cases (b) Rationalization of Benches that is, the number of Benches at each station should match the need, that is, pendency of appeals. Excess Benches could be shifted to those stations where there is a shortage. This process should be appraised and monitored continuously (c) Recruitment process should be need based but posts should not be left vacant for long.

ii) Administration – Sufficient support staff and required infrastructure strengthens an institution. Vacancies in top positions weakens the institution. From past experience we can say that complete familiarity with the working of the institution and the persons manning the institution goes a long way to build the institution and this is possible if the practice of promotion from amongst the senior most Members is preserved. It is felt that the President must be selected from within the institution as an insider alone can feel the pulse of the institution. Benches of the Tribunal now exist across the country and there is an urgent need for the same level of uniformity and stability at every station.

iii) Recent amendments in the Act relating to the Tribunal may not be conducive to our expectations. Experienced Members are an asset to the institution. Tax laws are not simple, their complexity is increasing. New appointees must be allowed sufficient time to gain the experience needed to discern relevant facts and finer legal issues both in the course of the hearing and while disposing off a matter. Therefore, fixed tenure of 3 years for Members requires a relook.

The Mumbai Bar Association has been associated with the Tribunal for almost 60 years. The Bar has been an active supporter of this august institution and will continue to do so in future.

Mr. Ajay Wadhwa President ITAT Bar Association Delhi

“Satyamev Jayate” – Truth always triumps.

This one phrase encapsulates the essence of the vision and ideals of the judicial system in India, the supremacy of law and the omnipotence of justice. In the words of Mahatma Gandhi “there is a higher court than Courts of justice and that is the court of conscience”.

This is the expectation of every common man from not only the Income-tax Appellate Tribunal (Tribunal) but every institution dispensing justice.

On this touchstone, I say this, not only for myself but on behalf of all my colleagues in ITAT Bar Association, Delhi, whom I represent today, that this great and venerable institution, has upheld justice not only in its legal form but also as a concept of moral righteousness based on ethics, rationality, natural law, fairness, equality and equity.

More than 90% of the decisions delivered by the Tribunal have been upheld by the higher courts and it unequivocally enjoys the confidence of the Department and the tax paying public at large in its ability to deliver justice expeditiously, effectively and fairly.

But we all know that however perfect a system may be, there is always room for improvement and expectations are always from one who has the ability to deliver.

In Delhi alone, there are more than 200 stay granted matters involving high stakes that are pending for many many months. I am aware of several cases where such matters are pending for even two years or more. It is elementary that in a stay granted matter, the assessee does not or rather cannot seek adjournment. It is the Department that generally takes adjournment on some pretext or the other. We, at the level of the Bar have made umpteen efforts by writing to the concerned officers in the Department and even meeting them on one-to-one basis to solve this imbroglio. We are disheartened to report that the efforts have borne no results and the stay granted matters continue to languish. It is a pity that, the blame for delay in disposal of such critical appeals unwittingly falls at the door of the Tribunal.

We now expect the Tribunal to takes these matters in its hands and propose a simple solution for your kind consideration.

To begin with, at least in all stay granted matters, whenever the Department or the assessee seeks an adjournment, an interim order with suitable terms and conditions should be passed by the Bench and uploaded on the website of the Tribunal on that very day. This would be in line with the practice being followed by the High Court and the Supreme Court in every case before it since many years. Also, whenever a final order in respect of a stay granted matter is passed, the order should incorporate as an annexure, particulars of when the hearings took place and the nature of adjournments sought by both, the Department as well as the assessee. This will hopefully present a strong tool in the hands of the supervisory officers to goad the Departmental Representatives into action.

The other expectation from the Tribunal is to try, as far as possible, not to set aside the matters. Setting aside the matter pushes a case into the vortex of a black hole only to emerge four years later in an identical avatar.

The ITAT is well within its powers to call for a remand report within a stipulated period and render complete and substantive justice. I am sure, the Department would also welcome this move since setting aside of matters only clogs the already overstretched machinery of the Department with no tangible results.

The third wish relates to settling debatable issues at the very earliest and providing certainty. There are 1,414 transfer pricing and 1,009 international tax related disputes pending before the Tribunal in Delhi alone. We find that particularly in these matters, decisions taken by one Division Bench are being differentiated and dissected by other Benches thereby leading to confusion and chaos. Even otherwise, India being largely a common law nation the doctrine of stare decisis, has to and rather must prevail.

Our expectation from the Tribunal in the matter is that the decision of Division Bench must be followed unreservedly and the matter be left for the wisdom of a higher court to be the final arbiter.

Any difference in view must necessarily lead to a request for constitution of a Special Bench and all attempts should be made to settle the controversy expeditiously.

We expect to see the dream of paperless proceedings become a reality during the term of the current president of the Tribunal. I have, many at times seen Hon’ble Shri G.D. Agarwal become emotional seeing reams and reams of paper being wasted in Court proceedings.

Being the mother of all Tribunals in the country, the ITAT must lead the way to use Information Technology to its hilt and move towards SMART TRIBUNALS.

Delhi today has an unenviable distinction of having the largest pendency at 21,670 cases in the country. May I plead for the constitution of another Bench in Delhi to alleviate this problem?

Finally, we wish and hope that the ITAT engages a professional spokesman for itself. There is nobody who carries the message of the yeoman service rendered by this great institution in the dispensation of fair, equitable and expeditious justice. We are appalled at the introduction of the new rules for recruitment of the Members of the Tribunals that are clearly reflective of the obvious disconnect between the institution and the powers that matter. Recruiting Members of the Tribunal on a fixed tenure basis will compromise the impartiality and the fairness of this great institution and will seriously erode its competence and faith of the tax paying public.

Institutions are built brick-by-brick over many many years. We just hope and pray that the present dispensation does not go down in the annals of history as a bulldozer which destroyed this institution with a single stroke.

Finally, Hon’ble Law Secretary, an earnest appeal to your goodself, please have the President of the Tribunal from within the Institution.

Mr. Tushar Hemani, President of Income Tax Appellate Tribunal Bar Association, Ahmedabad “Expectations of the stakeholders from the Income Tax Appellate Tribunal”.

• For the first time in the history of ITAT, such an interactive programme has been arranged.
I sincerely request Hon’ble President to make this an annual event so that we can have an healthy exchange of ideas and concerns about the institution we all love and respect.

• The ITAT was established in 1941 so as to impart ‘Nishpaksh Sulabh Satvar Nyay’which means impartial, easy and speedy justice for one and all. In 75 years of its existence, the ITAT has created a niche for itself by imparting inexpensive justice which is free from the hurdles of procedural technicalities. The specialised nature of the proceedings, expert judges and knowledgeable arguing parties have all contributed in the success story of the ITAT so much so that ITAT is referred to as the ‘Mother Tribunal’ in Indian judiciary.

• If past performance is an indication of the future to follow, the glorious past of the ITAT has certainly increased the expectations of the stakeholders. Even today also, the expectations of the stakeholders remain the same:

– Impartial

– Easy

– Speedy, and

– Inexpensive Justice

• However, the question for introspection would be: Whether ITAT as an institution can be said to be meeting with these expectations? In my opinion, ITAT even today also imparts impartial, easy and inexpensive justice. However, it is the speed of justice which has raised some serious questions.

• Expectations and suggestions are two sides of a coin. My learned predecessor speakers from sister associations have already discussed at length the relevant issues and expectations. Therefore I don’t propose to repeat and reiterate the same. I simply adopt, support and endorse their views on those issues and expectations. My endeavor now would be to discuss the way forward so as to fulfill the expectations of all the stakeholders.

• No judicial system in the world is perfect. Ours is not an exception. The major problem that we all face today is the speed of justice. The average turnaround time for an appeal before the Tribunal is more than 3 years. If I have to pinpoint one reason for this delayed justice, it would probably be the infrastructure facility or lack thereof.

• Infrastructure is one major speed breaker in delivering justice. Number of appeals and complexities involved in such appeals have increased manifold. However, the infrastructure of the Courts, number of judges and support and back office staff have not increased in the same proportion. This has created tremendous load on the existing system and resultantly, the speed of delivering justice has suffered. Issues relating to number of judges, support and back office staff have already been dealt with my predecessor speaker, so my suggestions would be with respect to improving the physical and technological infrastructure. Some of the suggestions would be:

  • to establish world class infrastructure facilities and use of technology inside and outside the Courts to speed up the delivery of justice. Technology brings transparency with certainty. To begin with, we can have computers with efficient operators in the court rooms so that dates of hearing, order sheets, clubbing and consolidation, tagging and fixing of appeals can happen instantly.
  • to establish more e-courts so that standalone benches having huge establishment and running costs can be avoided. Moreover, e-courts can be conducted from large stations having multiple members and requisite infrastructure at no additional cost. Additionally, clubbing, tagging and consolidation based on the issues involved in the appeals can be done over many Benches.
  • to make an interactive and user friendly website of ITAT which takes care of e-filing of various appeals and applications in soft forms, automatic clubbing and grouping of appeals, automatic generation of notices of hearing, uploading of paper book, integration of order sheet entries with the appeals, service of orders in electronic form etc. Moreover, decisions should also be displayed and highlighted so that issues already decided by one bench can be used at other stations for speedy disposal of pending appeals involving similar issues.
  • to group and tag the pending appeals for the issues involved therein so that multiple appeals can be decided by deciding one issue.
  • to identify repetitive and multi-year appeals so that the same can be given priority hearing to avoid future appeals.
  • to identify issues pending before the lower authorities and decide them proactively and on priority basis so that such pending matters before the lower authorities can be uniformly decided in line with decision of the Tribunal.
  • to invite law interns from reputed institutions to help judges cope up with research and preparations.

• Apart from infrastructure, if I have to highlight one more factor affecting the speed of justice, then the same would be the practice of posting temporary Departmental Representatives (DRs) to argue complex and complicated matters. I am conscious that I have to state my expectations from Tribunal. However, Tribunal as an institution runs on three wheels; viz., Assessee, Department and Judges. If one of the wheels works less efficiently, the overall speed gets affected. And in any case, as one of the stakeholders, I am sure Department would take these suggestions positively and would try to find a solution in the larger interest of the Institution. Appeals involving International Tax and Transfer Pricing require specialised and permanent DRs for effective hearing. In absence of such dedicated permanent expert persons, adjournment culture blooms. Many a times, DRs are instructed not to proceed with International Tax and Transfer Pricing appeals unless they receive written submissions from TPO which also results into hearings getting postponed. My suggestion would be to discontinue the practice of posting visiting DRs for arguing complex appeals. Moreover, if permanent DRs having the requisite knowledge of International Tax and Transfer Pricing issues are posted at ITAT, the need for written submissions from TPO will also recede. That apart, even private professionals, after empanelment, can be appointed for arguing departmental appeals, which in the long run would benefit all the stakeholders.

• Expectations can someday be fulfilled provided one knows what they are. Now that the Tribunal has taken this initiative of getting to know the expectations of the stakeholders, I am very sure that very soon the same shall be fulfilled. I once again thank Hon’ble President ITAT, Shri G. D. Agrawal for inviting me to address this august gathering and hope to see more such events in times to come.

Shri Sushil Chandra, Chairman, CBDT

It is for the first time CBDT is called a stakeholder and is requested to express their expectation. The pendency is 92,000 and revenue involved may be of ₹ 3 lakh crore. He stated that CBDT has great expectations from the ITAT. Some of them are as under

• It will have to pave way for speedy justice. .

• The department is equally a partner as the assessee. The CIT DRs should be given equal treatment. It was reported that such is not the case.

• Only those cases should be kept on the board which would be disposed off.

• ITAT is the Supreme Court for facts, hence the ITAT has an onerous task of finding out the facts correctly.

– Our duty is to see that the interest of revenue should also be protected.

– The whole picture should be seen by the Members before deciding the issue.

– Miscarriage of justice should not be done. Procedure should not be seen but the substantive justice should be seen.

• In the area of international tax, ITAT has rendered very good judgments.

• No temporary Departmental Representatives shall be appointed from this year as all postings have been filled.

Dr . K. Shivaram, Sr. Advocate

We have few suggestions to Hon’ble Chairman, CBDT and Hon’ble Law Secretary.

1. Order giving effect to the order of the Apex Court and High Courts

From the reported cases, one will find that whenever the Apex Court or High Court has directed the Tribunal to refer the questions of law to High Court, to the best of our knowledge, no action has been taken by the revenue in most of the cases. The reason being that unless the revenue makes the application, the Tribunal cannot take up the reference suo moto to refer the matter to the High Court. This must have resulted into crores of rupees loss to the revenue. Even today when High Court reverses the order of the Tribunal and directs the Tribunal to decide according to law, unless the revenue moves the application before the Tribunal to taken up the matter, the Tribunal will not be able to take up the matter suo moto. There has to be some mechanism to find out the status of such matters.

2. Orders of the High Court accepted by the revenue

Earlier Board used to publish the list of judgments accepted by the revenue. Now it is not published. A year back in one of the matters relating to transfer pricing, revenue argued a matter and the same was admitted. In another matter, identical issue was argued without pointing out the earlier admitted matter and the matter was dismissed by passing detailed order. The said decision was accepted by the revenue. In another matter, once again the revenue wanted to argue, when the counsel brought all the facts. The Court directed the revenue to develop a system where by such things may not happen. ASG appeared, Chief Commissioner was called and the revenue has agreed that, they will post all the issues admitted and dismissed and accepted in the website of Income Tax Department under the head Legal corner. Thereafter the Court passed the order in the case of CIT v. TCL India Holdings Pvt. Ltd. (2016) 241 Taxman 138 (Mum.)(HC) on 12-7-2016. Unfortunately no steps have been taken. Whatever they have prepared for showing to the Court the same status prevails even today. There are instances where the revenue has not challenged the Special Bench matters and the judgment relying on the Special Bench was challenged. Pick and choose method is adopted.

He suggested that if CBDT can develop a system wherein all the questions admitted and dismissed and orders accepted are published in the website it will help the assessees as well as revenue.

Suggestions to Hon’ble Law Secretary

E-Benches of the Supreme Court.

We have made an appeal to have e-Bench of the Supreme Court linking all the High Courts, so that lawyer sitting at Guwahati can represent the matter before Supreme Court. This is the model of the e-Bench of the Tribunal which was started few years back, is functioning very satisfactorily. To start with, only SLP relating to tax matters can be taken up at the option of the assessees. If it works well it can be tried to other matters as well.

Single Member Bench up to ₹ 50 lakhs assessed income

In cases of penalty or interest even if the amount is only ₹ 25000, the matters have to be heard by division Bench, if the assessed income is more than ₹ 50 lakhs. If an amendment is made in the Act, giving the power to SMC Benches to dispose penalty or interest matters up to certain limit, it may help speedy disposal of the appeal matters.

Mr. Sumermal Surana, President of ITAT Bar Association Kolkata.

– Unnecessary appeals by the department may be be avoided.

– There has to be posting of regular Departmental Representatives in all the Benches.

Nilesh Vikamsey, President of the Institute of Chartered Accountants of India appreciated the Residential Refresher course organised by the ITAT. He stated that the Institute of Chartered Accountants of India will play a positive role in the administration of justice delivery systems by sending suggestions from time-to-time.

In response to the suggestions made by various speakers, Mr. G.D. Agarwal, President of the ITAT, stated as under:

Suggestions can be divided into two categories, Judicial and Administrative.

As regards administrative suggestions, the monthly quota should not be there, it is true but disposal is also important without deterioration of quality.

The next suggestion is that the number of Benches should be increased where there is large pendency.

For filling the vacancy, all efforts are being made.

There should be rationalisation in posting the members in a bigger station.

Stay granted matters – delay in disposal. We should find out some ways. One solution could be to file the synopsis or written submission which may help quick disposal of matters.

Fixing large number of appeals. General direction is to fix 20 to 25 appeals. Still 30 to 35 matters come on board due to adjournments etc. Only 6 appeals in a day are expected to be disposed of. However, attempts are being made to make it to 15 disposals a day.

Shri Sushil Chandra, Chairman of CBDT, stated that they have the list of matters which are accepted by the Board and he will consider the suggestions of Dr. K. Shivaram very positively.

Shri Suresh Chandra, Hon’ble Law Secretary stated that he has taken note of the various suggestions made by the various speakers. As regards the suggestions made by Dr. K. Shivaram, regarding linking of various High Courts and Supreme Court and to follow the model of e-Benches of the ITAT, he has stated that, he will discuss the same with the Hon’ble Law minister.

Shri D. Manmohan, Vice President proposed Vote of Thanks.

In the technical sessions various subjects of importance including international taxation was discussed by eminent professionals, retired members and the Judges.

Valedictory session on 23rd July, 2027 was addressed by Hon’ble Shri Justice M. S. Sanklecha and Hon’ble Justice Dr. S. Muralidhar

Disclaimer

Gist of the proceedings are prepared by the research team of AIFTP Journal Committee, for the benefit and education of the professionals who could not attend the Conference. Any error or omission if any, in the reporting of the proceedings is not intentional, neither the committee members nor the AIFTP or ITAT Bar Association or itatonline.org can be held responsible for the same.

Editorial Board

1. Evidence – Production of translated document at appellate stage

Document in Portuguese language, not objected at time of tendering in evidence. Document already presented before Trial Court. Translated version of already filed document, cannot be considered as additional evidence. There is no requirement of application under O. 41, R. 27, for production of translated version into English language. As original was already on record, thus provisions contained under Order XLI Rule 27 of the CPC was not attracted at all.

Chandreshwar Bhuthnath Devasthan v. Baboy Matiram Varenkar, AIR 2017 SC 17.

2. Offence by company – Vicarious liability

Accused, Director of Company, already resigned from company prior to presentation of cheques. The said fact substantiated by Form 32 submitted to Register of Companies. Neither cheques were issued by accused. Nor he was involved in day-to-day affairs of company. Absence of specific averments in complaint about his role in activities of company. It was held that proceedings against him liable to be quashed.

Ashoke Mal Bafna v. M/s. Upper India Steel Mfg. & Engg. Co. Ltd., Air 2017 Supreme Court 2854.

3. Will – Loss of original will – Evidence Act section 65, 68 & 73

Signature of testator on will appearing same with another signed document, on comparison of two. Two attesting witnesses testifying that testator was mentally and physically fit at time of execution of Will. No contrary evidence to raise doubt about execution of Will. Grant of Letter of Administration on basis of certified copy of Will, held proper.

Rakhal Dhar And Anr. v. Kumar Kanti Guha and Ors, Air 2017 Calcutta 139

4. Design – Definition – Scope : Designs Act, S.2(d)

Design is an idea or conception as to features of shape, configuration, pattern or ornament applied to an article. Although that idea, while still in the author’s head, may be potentially capable of registration, in fact, it must be reduced to visible form to be identifiable, and until it is so reduced there is nothing capable of registration. The design must be such that in the finished article the features of it ‘appeal to and are judged solely by the eye’. It does not relate features which are dictated by function. A mere mechanical device or a functional design is not registrable. While pattern or an ornament would ordinarily be applied to an article; shape and configuration becomes the article itself. Design in that sense relate to the non-functional features of the article. Therefore, by necessary corollary, a design which has functional attributes cannot be registered under the Designs Act.

ITC Ltd. v. The Controller of Patents and Designs & Ors., Air 2017 Calcutta 156.

5. Suit for declaration of title and possession – Distinction between a suit for cancellation of a deed

There is a clear and well marked distinction between a suit for cancellation of a deed affecting certain property and a suit for declaration that a particular document is inoperative as against the plaintiff. A suit for cancellation must be brought by a person who was a party to the deed or by a person who is otherwise bound by it in law. But a person who is neither party to the deed nor bound by it need not sue for its cancellation. Where the plaintiff seeks to establish title in himself but, cannot do so without removing an inseparable obstacle to such a deed to which he may be a party, he must get it cancelled. However, when he seeks to establish a title and finds himself threatened by a transaction between some parties, his remedy is to get a declaration that the decree or deed or transaction is invalid so far as he is concerned. When a person is a party to the deed, he can get over the effect of such deed, only in a manner provided under the Indian Contract Act, especially when third party interests are created. But when he is nominee of a party but in law is not a party to such deed, he can seek a declaration that such a deed is not binding on him, when no third party interest is created.

U. Vijaya Kumar v. Smt. Malini V. Rao., AIR 2017 (NOC) 616 (Kar).

6. Precedents – Conflict between decisions of Co-ordinate Benches: Constitution of India, Article 141

In case of conflict between the decisions of Co-ordinate Benches, it is not the later but the earlier one in point of time, which should be followed and applied by the Subordinate Courts to the facts and circumstances of a case before it, unless, ofcourse, earlier decision is considered and explained in the later decision.

Prakash Gobindram Ahuja v. Ganesh Pandharinath Dhonde and Others, AIR 2017 (NOC) 631 (Bom).

7. Mortgage by conditional sale or sale with condition to repurchase – Determination

There is a distinction between the two concepts, mortgage by a conditional sale and a sale with a condition to repurchase. The former is a mortgage, the relationship of debtor and creditor subsists and the right to redeem remains with the debtor. The latter is an out and out sale whereby the owner transfers all his rights in the property to the purchaser reserving a personal right to repurchase. The question to which category a document belongs presents real difficulty which can only be solved by ascertaining the intention of the parties on a consideration of the contents of a document and other relevant circumstances.

Smt. Rajamma and Others v. B. Renuka Murthy, AIR 2017 (NOC) 614 (Kar).

8. Hindu Law – Joint family property – Oral partition

In case of oral partition evidence of subsequent conduct of parties becomes material in law, to determine authenticity of such partition. Alleged oral partition between two brothers, of properties devolved on demise of their father. Evidence on record regarding exclusive enjoyment of property by defendant, with knowledge of plaintiff. Conduct of parties establish oral partition and enjoyment of two properties without demur by defendants for several decades.

T. Viswanatha Mehta v. Krishna Bai. AIR 2017 (NOC) 6462 (Mad.).

9. Gift deed – Registration –Beyond four months from date of execution of gift deed: Registration Act 1908, Ss. 23, 25.

Gift deed presented for registration beyond stipulated period of four months from date of execution of said deed. No exception circumstance contemplated under S. 25 for Act made out for extension to further period of four months. Gift deed itself thus being illegal. Plaintiff not entitled for declaration of title.

Sri Vivekananda Saha & Ors. v. Sri Sanatan Saha & Ors., Air 2017 (Noc) 484 (Cal.).

10. Foreign award – Enforcement of – Against parties who were not signatories to arbitration agreement

Object of S.48(1)(b) is to take within its compass parties against whom the award is sought to be invoked. International Arbitration Tribunal has jurisdiction to pass award against non-signatory party by applying ‘alter ego’ doctrine. Concept of “lifting the corporate veil” and application of “alter ego doctrine” have, judicially recognised in India.

Under sub-Section (1) of Section 48 of the said Act, enforcement of a foreign award may be refused only if such party furnishes proof in that regard. Use of the word “may” in the matter of enforcement of a foreign award in Section 48(1) of the said Act indicates availability of discretion with the Court in the said matter. However, use of the word “only” in the requirement of furnishing proof indicates the pre-condition in that regard. Thus, merely on the basis of pleadings between the parties before the Arbitrator and grounds raised by way of objection to the enforcement application, the enforcement of the foreign award is sought to be opposed. Separate incorporation and existence as a distinct legal entity are aspects leading to the application of the “alter ego” doctrine and hence mere fact of such separate incorporation would not amount to “proof” to deny enforcement of an award. To put it differently, the findings recorded by the International Arbitral Tribunal would constitute evidence in support of such conclusion and hence for purposes of refusal of enforcement, proof of a higher degree would be required.

Integrated Sales Services Limited v. Arun Dev S/o. Govindvishnu., Air 2017 (Noc) 4522 (Bom.).

 

All India Income Tax Appellate Tribunal Members
7 Days Residential Refresher Course 2017
16th July 2017 to 23rd July, 2017

Inaugural Session

Hon’ble Shri G. D. Agarwal, President of the ITAT, in his welcome speech stated that Residential Refresher course for members of the ITAT was made possible only because of the Ministry of Law and Justice. He thanked the Hon’ble Minister and High Court of Bombay for extending support.

Shri Sushil Chandra, Chairman of CBDT, in his welcome address, congratulated the ITAT for organizing the Residential Refresher Course to Members of the ITAT. He acknowledged that the ITAT delivers brilliant judgments in interpreting the law. As maximum amendments are taking place in the Income-tax Act it is necessary for the members to be abreast with the new amendments, hence the Residential Refresher course is important. He stated that for collection of revenue, the right interpretation of the law is very important. He also stated that the eradication of black money is of topmost priority. He made an appeal that expectation from everyone would be that the law be interpreted rightly to curb the generation of black money and it is very clear that the legislature wants eradication of black money and the role of the ITAT in this regard is very important.

Shri Suresh Chandra, Law Secretary – Government of India, stated that the ITAT should use the technology to render speedy justice and the ITAT is an independent body rendering justice even in small places. He wished success to the conference.

Inaugural address of Hon’ble Justice Mr. N. H. Patil

Published in AIFTP Journal July 2017 P.8

Hon’ble Law Minister – Mr. Ravisankar Prasad.

Hon’ble Minister stated that Modi Government aims to make India an economic powerhouse, make India transparent, and help in doing business easily. He stated that Aadhaar is a viable digital identity.

Essence of digital India is to empower India. Its true power would be when even a woman in the rural area also has a phone in her hand. Digital technology is important and bridges the inequality gap. The technology should be affordable. He explained how the Aadhaar is important.He showed his Aadhaar card and explained the advantages of the Aadhaar.

Hon’ble Minister has stated that a lot of industries are coming to India, hence tax litigation will also become very important. He stated that more assessees should come under tax net. He also stated that fast tracking of the cases should be done and is desirable from the ITAT. He stated that India has done well in indirect taxes as well. No vote of dissent in deciding the rates of GST were seen and all will benefit from GST. He stated that Government’s ambition is to make India a great economic powerhouse. Honourable Minster stated that surely the ITAT members and the lawyers will add and help in the process of making of India. He stated that considering the request made by Surat Tax Bar Bench of ITAT, a Bench at Surat may be started very soon.

Hon’ble Mr. D. Manmohan, Vice President ITAT, proposed a Vote of Thanks

Technical Session

Expectation of stakeholders

Hon’ble President, Shri G. D. Agarwal chaired the session and welcomed the representatives of the Bar Associations and members. He stated that mostly the delay in delivering the judgment is due to lengthy arguments especially where stakes are high. He requested for suggestions from the stake holders for quick disposal of matters.

Mrs. Aarti Vissanji, President ITAT Bar Association Mumbai

On behalf of the Bar and on my own behalf I thank you for giving us this opportunity to voice our expectations from the Income Tax Appellate Tribunal. This open minded approach is an exceptional practice and deserves to be commended.

Our expectation can be summed up in a single sentence – An independent justice delivery system guided by the motto “Nishpaksh, Sulabh, Satwar Nyay”. I propose to share with you 3 points which in our view are likely impact our expectations.

From a modest beginning in the year 1941 the Tribunal has evolved into a model institution. Its contribution to the development of law and resolution of tax disputes can be measured by the fact that 82.5% of orders passed by the Tribunal have been affirmed by the High Courts. Nevertheless, the passage of time has somewhat altered the structure and working of the Tribunal. No doubt there are positive changes, but we have diagnosedsome changeswhich may have an effect on the future health of the Tribunal:

i) The first is the introduction of the quota system to reduce pendency – The current waiting time for an appeal to be heard and disposed of by the Tribunal has reduced from 6 years a decade ago to less than 2 years. Nevertheless, pendency remains a problem and to further reduce the gap between filing and disposal, a monthly quota of disposal has been prescribed. Two factors which we believe are contributory is the shortage of Members as well as the fact that increasingly complex issues which come up for consideration coupled with the rapidly developing tax law. In our perception, the pressure caused by the disposal quota impacts both the proceedings in courtrooms and the quality of orders and therefore, may not be the most ideal way to tackle this problem. It is a matter of pride when the Hon’ble Judges of the High Court hearing appeals for admission are heard to say “the judgment of the Tribunal cannot be faulted with.” We look forward to the time when the rate of orders passed by the Benches of the Tribunal being upheld by the higher Courts crosses 82.5%. At the same time, there are orders passed which are cryptic. Despite the conclusion being correct, the fate of such orders is a set aside and the appeals once heard get added to the pendency list. Second innings is a costly affair for an assessee in terms of time and monetary implications. The anxiety to meet targets could well be the cause.

Some alternatives which may be considered to deal with this problem – (a) Posting of seasoned Members at stations with high revenue and complex cases (b) Rationalization of Benches that is, the number of Benches at each station should match the need, that is, pendency of appeals. Excess Benches could be shifted to those stations where there is a shortage. This process should be appraised and monitored continuously (c) Recruitment process should be need based but posts should not be left vacant for long.

ii) Administration – Sufficient support staff and required infrastructure strengthens an institution. Vacancies in top positions weakens the institution. From past experience we can say that complete familiarity with the working of the institution and the persons manning the institution goes a long way to build the institution and this is possible if the practice of promotion from amongst the senior most Members is preserved. It is felt that the President must be selected from within the institution as an insider alone can feel the pulse of the institution. Benches of the Tribunal now exist across the country and there is an urgent need for the same level of uniformity and stability at every station.

iii) Recent amendments in the Act relating to the Tribunal may not be conducive to our expectations. Experienced Members are an asset to the institution. Tax laws are not simple, their complexity is increasing. New appointees must be allowed sufficient time to gain the experience needed to discern relevant facts and finer legal issues both in the course of the hearing and while disposing off a matter. Therefore, fixed tenure of 3 years for Members requires a relook.

The Mumbai Bar Association has been associated with the Tribunal for almost 60 years. The Bar has been an active supporter of this august institution and will continue to do so in future.

Mr. Ajay Wadhwa President ITAT Bar Association Delhi

“Satyamev Jayate” – Truth always triumps.

This one phrase encapsulates the essence of the vision and ideals of the judicial system in India, the supremacy of law and the omnipotence of justice. In the words of Mahatma Gandhi “there is a higher court than Courts of justice and that is the court of conscience”.

This is the expectation of every common man from not only the Income-tax Appellate Tribunal (Tribunal) but every institution dispensing justice.

On this touchstone, I say this, not only for myself but on behalf of all my colleagues in ITAT Bar Association, Delhi, whom I represent today, that this great and venerable institution, has upheld justice not only in its legal form but also as a concept of moral righteousness based on ethics, rationality, natural law, fairness, equality and equity.

More than 90% of the decisions delivered by the Tribunal have been upheld by the higher courts and it unequivocally enjoys the confidence of the Department and the tax paying public at large in its ability to deliver justice expeditiously, effectively and fairly.

But we all know that however perfect a system may be, there is always room for improvement and expectations are always from one who has the ability to deliver.

In Delhi alone, there are more than 200 stay granted matters involving high stakes that are pending for many many months. I am aware of several cases where such matters are pending for even two years or more. It is elementary that in a stay granted matter, the assessee does not or rather cannot seek adjournment. It is the Department that generally takes adjournment on some pretext or the other. We, at the level of the Bar have made umpteen efforts by writing to the concerned officers in the Department and even meeting them on one-to-one basis to solve this imbroglio. We are disheartened to report that the efforts have borne no results and the stay granted matters continue to languish. It is a pity that, the blame for delay in disposal of such critical appeals unwittingly falls at the door of the Tribunal.

We now expect the Tribunal to takes these matters in its hands and propose a simple solution for your kind consideration.

To begin with, at least in all stay granted matters, whenever the Department or the assessee seeks an adjournment, an interim order with suitable terms and conditions should be passed by the Bench and uploaded on the website of the Tribunal on that very day. This would be in line with the practice being followed by the High Court and the Supreme Court in every case before it since many years. Also, whenever a final order in respect of a stay granted matter is passed, the order should incorporate as an annexure, particulars of when the hearings took place and the nature of adjournments sought by both, the Department as well as the assessee. This will hopefully present a strong tool in the hands of the supervisory officers to goad the Departmental Representatives into action.

The other expectation from the Tribunal is to try, as far as possible, not to set aside the matters. Setting aside the matter pushes a case into the vortex of a black hole only to emerge four years later in an identical avatar.

The ITAT is well within its powers to call for a remand report within a stipulated period and render complete and substantive justice. I am sure, the Department would also welcome this move since setting aside of matters only clogs the already overstretched machinery of the Department with no tangible results.

The third wish relates to settling debatable issues at the very earliest and providing certainty. There are 1,414 transfer pricing and 1,009 international tax related disputes pending before the Tribunal in Delhi alone. We find that particularly in these matters, decisions taken by one Division Bench are being differentiated and dissected by other Benches thereby leading to confusion and chaos. Even otherwise, India being largely a common law nation the doctrine of stare decisis, has to and rather must prevail.

Our expectation from the Tribunal in the matter is that the decision of Division Bench must be followed unreservedly and the matter be left for the wisdom of a higher court to be the final arbiter.

Any difference in view must necessarily lead to a request for constitution of a Special Bench and all attempts should be made to settle the controversy expeditiously.

We expect to see the dream of paperless proceedings become a reality during the term of the current president of the Tribunal. I have, many at times seen Hon’ble Shri G.D. Agarwal become emotional seeing reams and reams of paper being wasted in Court proceedings.

Being the mother of all Tribunals in the country, the ITAT must lead the way to use Information Technology to its hilt and move towards SMART TRIBUNALS.

Delhi today has an unenviable distinction of having the largest pendency at 21,670 cases in the country. May I plead for the constitution of another Bench in Delhi to alleviate this problem?

Finally, we wish and hope that the ITAT engages a professional spokesman for itself. There is nobody who carries the message of the yeoman service rendered by this great institution in the dispensation of fair, equitable and expeditious justice. We are appalled at the introduction of the new rules for recruitment of the Members of the Tribunals that are clearly reflective of the obvious disconnect between the institution and the powers that matter. Recruiting Members of the Tribunal on a fixed tenure basis will compromise the impartiality and the fairness of this great institution and will seriously erode its competence and faith of the tax paying public.

Institutions are built brick-by-brick over many many years. We just hope and pray that the present dispensation does not go down in the annals of history as a bulldozer which destroyed this institution with a single stroke.

Finally, Hon’ble Law Secretary, an earnest appeal to your goodself, please have the President of the Tribunal from within the Institution.

Mr. Tushar Hemani, President of Income Tax Appellate Tribunal Bar Association, Ahmedabad “Expectations of the stakeholders from the Income Tax Appellate Tribunal”.

• For the first time in the history of ITAT, such an interactive programme has been arranged.
I sincerely request Hon’ble President to make this an annual event so that we can have an healthy exchange of ideas and concerns about the institution we all love and respect.

• The ITAT was established in 1941 so as to impart ‘Nishpaksh Sulabh Satvar Nyay’which means impartial, easy and speedy justice for one and all. In 75 years of its existence, the ITAT has created a niche for itself by imparting inexpensive justice which is free from the hurdles of procedural technicalities. The specialised nature of the proceedings, expert judges and knowledgeable arguing parties have all contributed in the success story of the ITAT so much so that ITAT is referred to as the ‘Mother Tribunal’ in Indian judiciary.

• If past performance is an indication of the future to follow, the glorious past of the ITAT has certainly increased the expectations of the stakeholders. Even today also, the expectations of the stakeholders remain the same:

– Impartial

– Easy

– Speedy, and

– Inexpensive Justice

• However, the question for introspection would be: Whether ITAT as an institution can be said to be meeting with these expectations? In my opinion, ITAT even today also imparts impartial, easy and inexpensive justice. However, it is the speed of justice which has raised some serious questions.

• Expectations and suggestions are two sides of a coin. My learned predecessor speakers from sister associations have already discussed at length the relevant issues and expectations. Therefore I don’t propose to repeat and reiterate the same. I simply adopt, support and endorse their views on those issues and expectations. My endeavor now would be to discuss the way forward so as to fulfill the expectations of all the stakeholders.

• No judicial system in the world is perfect. Ours is not an exception. The major problem that we all face today is the speed of justice. The average turnaround time for an appeal before the Tribunal is more than 3 years. If I have to pinpoint one reason for this delayed justice, it would probably be the infrastructure facility or lack thereof.

• Infrastructure is one major speed breaker in delivering justice. Number of appeals and complexities involved in such appeals have increased manifold. However, the infrastructure of the Courts, number of judges and support and back office staff have not increased in the same proportion. This has created tremendous load on the existing system and resultantly, the speed of delivering justice has suffered. Issues relating to number of judges, support and back office staff have already been dealt with my predecessor speaker, so my suggestions would be with respect to improving the physical and technological infrastructure. Some of the suggestions would be:

  • to establish world class infrastructure facilities and use of technology inside and outside the Courts to speed up the delivery of justice. Technology brings transparency with certainty. To begin with, we can have computers with efficient operators in the court rooms so that dates of hearing, order sheets, clubbing and consolidation, tagging and fixing of appeals can happen instantly.
  • to establish more e-courts so that standalone benches having huge establishment and running costs can be avoided. Moreover, e-courts can be conducted from large stations having multiple members and requisite infrastructure at no additional cost. Additionally, clubbing, tagging and consolidation based on the issues involved in the appeals can be done over many Benches.
  • to make an interactive and user friendly website of ITAT which takes care of e-filing of various appeals and applications in soft forms, automatic clubbing and grouping of appeals, automatic generation of notices of hearing, uploading of paper book, integration of order sheet entries with the appeals, service of orders in electronic form etc. Moreover, decisions should also be displayed and highlighted so that issues already decided by one bench can be used at other stations for speedy disposal of pending appeals involving similar issues.
  • to group and tag the pending appeals for the issues involved therein so that multiple appeals can be decided by deciding one issue.
  • to identify repetitive and multi-year appeals so that the same can be given priority hearing to avoid future appeals.
  • to identify issues pending before the lower authorities and decide them proactively and on priority basis so that such pending matters before the lower authorities can be uniformly decided in line with decision of the Tribunal.
  • to invite law interns from reputed institutions to help judges cope up with research and preparations.

• Apart from infrastructure, if I have to highlight one more factor affecting the speed of justice, then the same would be the practice of posting temporary Departmental Representatives (DRs) to argue complex and complicated matters. I am conscious that I have to state my expectations from Tribunal. However, Tribunal as an institution runs on three wheels; viz., Assessee, Department and Judges. If one of the wheels works less efficiently, the overall speed gets affected. And in any case, as one of the stakeholders, I am sure Department would take these suggestions positively and would try to find a solution in the larger interest of the Institution. Appeals involving International Tax and Transfer Pricing require specialised and permanent DRs for effective hearing. In absence of such dedicated permanent expert persons, adjournment culture blooms. Many a times, DRs are instructed not to proceed with International Tax and Transfer Pricing appeals unless they receive written submissions from TPO which also results into hearings getting postponed. My suggestion would be to discontinue the practice of posting visiting DRs for arguing complex appeals. Moreover, if permanent DRs having the requisite knowledge of International Tax and Transfer Pricing issues are posted at ITAT, the need for written submissions from TPO will also recede. That apart, even private professionals, after empanelment, can be appointed for arguing departmental appeals, which in the long run would benefit all the stakeholders.

• Expectations can someday be fulfilled provided one knows what they are. Now that the Tribunal has taken this initiative of getting to know the expectations of the stakeholders, I am very sure that very soon the same shall be fulfilled. I once again thank Hon’ble President ITAT, Shri G. D. Agrawal for inviting me to address this august gathering and hope to see more such events in times to come.

Shri Sushil Chandra, Chairman, CBDT

It is for the first time CBDT is called a stakeholder and is requested to express their expectation. The pendency is 92,000 and revenue involved may be of ₹ 3 lakh crore. He stated that CBDT has great expectations from the ITAT. Some of them are as under

• It will have to pave way for speedy justice. .

• The department is equally a partner as the assessee. The CIT DRs should be given equal treatment. It was reported that such is not the case.

• Only those cases should be kept on the board which would be disposed off.

• ITAT is the Supreme Court for facts, hence the ITAT has an onerous task of finding out the facts correctly.

– Our duty is to see that the interest of revenue should also be protected.

– The whole picture should be seen by the Members before deciding the issue.

– Miscarriage of justice should not be done. Procedure should not be seen but the substantive justice should be seen.

• In the area of international tax, ITAT has rendered very good judgments.

• No temporary Departmental Representatives shall be appointed from this year as all postings have been filled.

Dr . K. Shivaram, Sr. Advocate

We have few suggestions to Hon’ble Chairman, CBDT and Hon’ble Law Secretary.

1. Order giving effect to the order of the Apex Court and High Courts

From the reported cases, one will find that whenever the Apex Court or High Court has directed the Tribunal to refer the questions of law to High Court, to the best of our knowledge, no action has been taken by the revenue in most of the cases. The reason being that unless the revenue makes the application, the Tribunal cannot take up the reference suo moto to refer the matter to the High Court. This must have resulted into crores of rupees loss to the revenue. Even today when High Court reverses the order of the Tribunal and directs the Tribunal to decide according to law, unless the revenue moves the application before the Tribunal to taken up the matter, the Tribunal will not be able to take up the matter suo moto. There has to be some mechanism to find out the status of such matters.

2. Orders of the High Court accepted by the revenue

Earlier Board used to publish the list of judgments accepted by the revenue. Now it is not published. A year back in one of the matters relating to transfer pricing, revenue argued a matter and the same was admitted. In another matter, identical issue was argued without pointing out the earlier admitted matter and the matter was dismissed by passing detailed order. The said decision was accepted by the revenue. In another matter, once again the revenue wanted to argue, when the counsel brought all the facts. The Court directed the revenue to develop a system where by such things may not happen. ASG appeared, Chief Commissioner was called and the revenue has agreed that, they will post all the issues admitted and dismissed and accepted in the website of Income Tax Department under the head Legal corner. Thereafter the Court passed the order in the case of CIT v. TCL India Holdings Pvt. Ltd. (2016) 241 Taxman 138 (Mum.)(HC) on 12-7-2016. Unfortunately no steps have been taken. Whatever they have prepared for showing to the Court the same status prevails even today. There are instances where the revenue has not challenged the Special Bench matters and the judgment relying on the Special Bench was challenged. Pick and choose method is adopted.

He suggested that if CBDT can develop a system wherein all the questions admitted and dismissed and orders accepted are published in the website it will help the assessees as well as revenue.

Suggestions to Hon’ble Law Secretary

E-Benches of the Supreme Court.

We have made an appeal to have e-Bench of the Supreme Court linking all the High Courts, so that lawyer sitting at Guwahati can represent the matter before Supreme Court. This is the model of the e-Bench of the Tribunal which was started few years back, is functioning very satisfactorily. To start with, only SLP relating to tax matters can be taken up at the option of the assessees. If it works well it can be tried to other matters as well.

Single Member Bench up to ₹ 50 lakhs assessed income

In cases of penalty or interest even if the amount is only ₹ 25000, the matters have to be heard by division Bench, if the assessed income is more than ₹ 50 lakhs. If an amendment is made in the Act, giving the power to SMC Benches to dispose penalty or interest matters up to certain limit, it may help speedy disposal of the appeal matters.

Mr. Sumermal Surana, President of ITAT Bar Association Kolkata.

– Unnecessary appeals by the department may be be avoided.

– There has to be posting of regular Departmental Representatives in all the Benches.

Nilesh Vikamsey, President of the Institute of Chartered Accountants of India appreciated the Residential Refresher course organised by the ITAT. He stated that the Institute of Chartered Accountants of India will play a positive role in the administration of justice delivery systems by sending suggestions from time-to-time.

In response to the suggestions made by various speakers, Mr. G.D. Agarwal, President of the ITAT, stated as under:

Suggestions can be divided into two categories, Judicial and Administrative.

As regards administrative suggestions, the monthly quota should not be there, it is true but disposal is also important without deterioration of quality.

The next suggestion is that the number of Benches should be increased where there is large pendency.

For filling the vacancy, all efforts are being made.

There should be rationalisation in posting the members in a bigger station.

Stay granted matters – delay in disposal. We should find out some ways. One solution could be to file the synopsis or written submission which may help quick disposal of matters.

Fixing large number of appeals. General direction is to fix 20 to 25 appeals. Still 30 to 35 matters come on board due to adjournments etc. Only 6 appeals in a day are expected to be disposed of. However, attempts are being made to make it to 15 disposals a day.

Shri Sushil Chandra, Chairman of CBDT, stated that they have the list of matters which are accepted by the Board and he will consider the suggestions of Dr. K. Shivaram very positively.

Shri Suresh Chandra, Hon’ble Law Secretary stated that he has taken note of the various suggestions made by the various speakers. As regards the suggestions made by Dr. K. Shivaram, regarding linking of various High Courts and Supreme Court and to follow the model of e-Benches of the ITAT, he has stated that, he will discuss the same with the Hon’ble Law minister.

Shri D. Manmohan, Vice President proposed Vote of Thanks.

In the technical sessions various subjects of importance including international taxation was discussed by eminent professionals, retired members and the Judges.

Valedictory session on 23rd July, 2027 was addressed by Hon’ble Shri Justice M. S. Sanklecha and Hon’ble Justice Dr. S. Muralidhar

Disclaimer

Gist of the proceedings are prepared by the research team of AIFTP Journal Committee, for the benefit and education of the professionals who could not attend the Conference. Any error or omission if any, in the reporting of the proceedings is not intentional, neither the committee members nor the AIFTP or ITAT Bar Association or itatonline.org can be held responsible for the same.

Editorial Board

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

    (1A) [***]

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Every one is as much bound in thought, word, deed, and mind, as a piece of stone or this table. That I talk to you now is as rigorous in causation as that you listen to me. There is no freedom until you go beyond Maya. That is the real freedom of the soul.

– Swami Vivekananda

All knowledge that the world has ever received comes from the mind; the infinite library of the universe is in our own mind.

– Swami Vivekananda

  1. S.2(14)(iii) : Capital asset – Agricultural land – Distance between the agricultural land and nearest municipality had to be measured to ascertain whether the land is an agricultural land or not. [S. 2(14)]
    The High Court held that the distance between the agricultural land and nearest municipality had to be measured to ascertain whether the land is an agricultural land or not and that in between agricultural land and nearest municipality, if there was mountain, or lake or private lands or Government properties, and in such other cases, where public had no access to reach municipality and if there was alternative public road route, distance had to be measured only through access road and not in straight line or horizontal plane and that land sold was agricultural land and situated at distance of more than 8 kms. from nearest Avadi Municipality and therefore profit on sale of such land was not liable to tax. (AY 2009-10)

    CIT v. Shakunthala Rangarajan (Smt.) (2017) 147 DTR 220 (Mad)(HC)

  2. S.2(22)(e) : Deemed dividend – Loan to a shareholder unless he is substantial shareholder addition cannot be made
    Dismissing the appeal of the revenue the Court held that it is only when payments are made by a company by way of advance or loan to a shareholder or payment to a concern in which shareholder is a member or partner and in which he has substantial interest, said amount of loan would be regarded as deemed dividend within meaning of section 2(22)(e) (AY. 2003-04).

    CIT v. Namdhari Seeds (2017) 79 taxmann.com 107 (Karn.) (HC)

  3. S.4 : Charge of income-tax – Accrual – Carbon receipts were neither sold and/or transferred during the year cannot be included as income [S. 5]
    Dismissing the appeal of the revenue, the Court held that; neither CIT(A) nor Tribunal be said to have committed any error in deleting the addition made by the AO as the carbon credits were neither sold nor transferred in favour of foreign companies in the year under consideration. No substantial question of law arises. (AY. 2009-10)

    PCIT v. Kalpataru Power Transmission Ltd. (2017) 293 CTR 484 (Guj. HC)

  4. S.4 : Charge of income-tax – Accrued interest on non-performing assets is not assessable [S. 145]
    Dismissing the appeal of the revenue, the Court held that; Accrued interest on non-performing assets is not assessable. (AY. 2007-08)

    CIT v. Raddi Sahakara Bank Niyamitha (2017) 395 ITR 652 (Karn.)(HC)

  5. S.4 : Charge of income-tax – Interest on non-performing assets cannot be recognised on accrual basis, assessee is bound by Reserve Bank of India Guidelines [S. 43D, 119, 145 , Reserve Bank of India Act, 1934, S. 45Q, Non-Banking Companies Prudential Norms (Reserve Bank) Directions, 1998]
    Dismissing the appeal of the revenue, the Court held that; interest on non-performing assets cannot be recognised on accrual basis, assessee is bound by Reserve Bank of India Guidelines. Therefore, notwithstanding the provisions of section 43D of the Act, since the provisions of the Section 43Q of Reserve Bank of India Act, 1934 had an overriding effect vis-a-vis income recognisation principles in the Companies Act, 1956, the Assessing Officer is bound to follow the direction of the Reserve Bank of India as far as income reognisation was concerned. (AY. 2010-11)

    PCIT v. Shri Mahila Sewa Sahakari Bank Ltd. (2017) 395 ITR 324 (Guj.) (HC)

  6. S.4 : Charge of income-tax – Interest on interim compensation received pending final disposal by the High Court is income chargeable to tax. [S. 145 , Code of Civil Procedure, S. 144]
    Dismissing the appeal of the assessee the Court held that interest on interim compensation received pending final disposal by the High Court is income chargeable to tax. The fact that the assessee may have to return the compensation and interest on the principle of restitution as provided under S. 144 of the Civil Procedure Code is not relevant because restitution is not a certainty. (ITA No. 17 of 2011, dated 1-8-2017)(AYs. 1998-99 to 2001-02)

    Premlata Purshottam Paldiwal (Smt.) v. CIT (Bom.)(HC), www.itatonline.org

  7. S.9(1)(vi) : Income deemed to accrue or arise in India – Royalty – Payment received by assessee on sale of shrink
    – wrapped software in India amounted to royalty as defined under Explanation 2 to section 9(1)(vi) [Article 12]
    The Tribunal had held that the payments received by assessee on sale of shrink-wrapped software in India amounted to royalty as defined under Explanation 2 to section 9(1)(vi) and under Article 12 of applicable DTAA thereby giving rise to an income chargeable to tax in India. The HC held that the questions of law are covered by Karnataka HC ruling in assessee’s own case CIT v. Synopsys International Ltd. (2013) 212 Taxman 454 (Karn.) (HC), and hence no questions of law arise for consideration and the appeal was dismissed. (AY. 2007-08)

    Synopsys International Ltd. v. ADIT (IT) (2016) 76 taxmann.com 118 ( Karn) (HC)

  8. S.10A : Free Trade Zone – Manufacture of computer software/information technology enabled services is entitled to deduction. Essential activity of data processing for transmission carried out in Special Economic Zone is entitle to deduction. [S. 10AA, 10B]
    Dismissing the appeal of the revenue , the Court held that; manufacture of computer software/information technology enabled services is entitled to deduction. Essential activity of data processing for transmission carried out in Special Economic Zone is also entitled to deduction. (AY. 2009-10)

    PCIT v. Amadeus India P. Ltd. (2017) 395 ITR 659/ 82 taxmann.com 203 (Delhi)(HC)

    PCIT v. Inter Globe Technology Quotient P. Ltd. (2017) 395 ITR 659/82 taxmann.com 203 (Delhi)(HC)

  9. S.11 : Property held for charitable purposes – Objects of trust in original trust deed and amended trust deed identical and more than 85 per cent of charges received from affluent patients spent on charitable medical treatment
    – Exemption is allowable –Depreciation – Allowance on capital expenditure. [S. 32]
    Dismissing the appeal of the revenue, the Court held that the Commissioner (Appeals) and the Appellate Tribunal had rendered a concurrent finding of fact that there had been no change in the objects clause of the assessee-trust by virtue of the amended trust deed. Merely because in rendering services to patients who could afford to pay, some income was generated, it would not result in the assessee ceasing to be a charitable trust. Further, the Department had not been able to show that the finding of the Appellate Authorities that 85 per cent of its income was applied to charitable purpose, was perverse. There was no question of the assessee taking double deduction on account of depreciation on assets the cost of which had already been exempted as application of income to charitable purposes. No question of law arose. (AY. 2008-09)

    CIT (E) v. Saifee Hospital Trust (2017) 395 ITR 225 (Bom.) (HC)

  10. S.11 : Property held for charitable purposes – Where as long as objects of trust were charitable in character and the purposes mentioned in Form No. 10 were for achieving objects of Trust, merely because the details were not furnished, the assessee could not be denied benefit of exemption.
    Dismissing the appeal of the revenue the Court held that as long as the objects of the trust are charitable in character and the purpose or purposes mentioned in Form No. 10 are for achieving the objects of the Trust, the exemption u/s. 11(2) cannot be denied merely because the details are not furnished.
    (AY. 2009-10, 2010-11)

    CIT v. Gokula Education Foundation (2017) 394 ITR 236/292 CTR 32 (Karn.)(HC)

    CIT v. Vidyaniketan Education & Cultural Trust (2017) 394 ITR 236/ 292 CTR 32 (Karn.)(HC)

  11. S.12A : Registration – Trust or institution – Charitable purpose – Dominant activity carried out by assessee
    – Trust for over 130 years was to take care of old, sick and disabled cows, incidental activity of selling milk which might result in receipt of money, by itself, would not make it trade, commerce or business
    –Registration cannot be withdrawn. [S. 2(15)]
    Dismissing the appeal of the revenue the Court held that the activity of milking the cows and selling the milk is almost compelled upon the trust, in the process of giving asylum to the cows. The activity to be considered in the nature of trade, commerce or business would in most cases have to be carried out on a regular basis with a view to earn the profit. The presence of the profit intent (even if it does not fructify) would normally be a sine qua non for the activity to be considered as trade, commerce or business. Therefore, in the present facts, it is not as though the keeping of the cows and milking them was with a view to carry out activity in the nature of trade, commerce or business to earn profits. (AY. 2008-09)

    DIT(E) v. Shree Nashik Panchvati Panjrapole (2017) 248 Taxman 67 / 295 CTR 214 (Bom.)(HC)

  12. S.12AA : Procedure for registration – Trust or institution – Religious activities carried out were minuscule in comparison to their main activity, hence cancellation of registration was not valid in law. [Ss. 11, 12, 13(1)(b)]
    Allowing the petition the Court held that where assessee-trust had established institution for benefit of all sections of society and religious activities carried out by it were minuscule in comparison to its main activity, Commissioner could not cancel registration of trust on ground of violation of provisions of section 13(1)(b). Cancellation of registration was held to be contrary to law. (AY. 2009-10)

    Shri Mahavir Sthan Nyas Samiti v. UOI (2017) 245 Taxman 101 (Patna)(HC)

  13. S.12A: Registration – Trust or institution – Commissioner cannot examine whether assessee is entitled to exemptions under S. 11 or 12 while considering the application for registration
    – Authority created under statute – Amount received by assessee to be used in discharge of objectives and functions provided for benefit of general public is entitled to registration. [Ss. 2(15), 11, 12AA]
    Dismissing the appeal of revenue the Court held that the CIT(E) while considering an application for registration under section 12AA, was not supposed to examine whether the assessee was entitled to exemptions under section 11 or 12 since that was within the jurisdiction of the Assessing Authority and not the Commissioner (E). Court also held that the assessees being statutory bodies, could not travel beyond the statutory functions prescribed. The primary purpose and predominant object of the assessees was to conduct sovereign and statutory functions assigned to them. They performed charitable activities during their life time. The assessees could not function beyond the authority conferred by the Uttar Pradesh Industrial Area Development Act, 1976. Whatever amount was received by the assessees under different heads, whether tax, rent, fee and sale consideration, was to be used in discharge of objectives and functions provided under the 1976 Act, for the benefit of the general public. Thus, the assessees were entitled to registration as charitable institutions.

    CIT (E) v. Greater Noida Industrial Development Authority (2017) 395 ITR 18 (All)( HC)

    CIT (E ) v. New Okhla Industrial Development Authority (2017) 395 ITR 18 (All) ( HC)

    CIT (E) v. Yamuna Expressway Industrial Development Authority (2017) 395 ITR 18 (All) (HC)

  14. S.12AA : Procedure for registration – Trust or institution – While granting the registration the Commissioner cannot apply the provisions of section 13. [Ss. 2(15), 11, 13]
    Dismissing the appeal, of the Revenue, the Court held that while granting registration CIT(E) had to be satisfied of two conditions while granting the registration under section 12AA, whether the objects of the assessee were charitable in nature and whether its activities were genuine. It could not have concluded on the basis that the assessee had not filed its returns in earlier years, that its activities were not genuine. It had further recorded that section 13 was to be considered by the Assessing Officer at the time of granting exemption under section 11 and not at the time of granting registration under section 12AA. (AYs. 2012-13 to 2014-15)

    CIT(E) v. Shri Shirdi Sai Darbar Charitable Trust (Dharmashala) (2017) 395 ITR 567 / 247 Taxman 260 (P&H)( HC)

  15. S.12AA : Procedure for registration – Trust or institution – Withdrawal of registration was held to be not justified. [Ss. 2(15), 12A]
    Dismissing the appeal of the revenue, the Court held that the CIT is not entitled to withdraw S. 12A registration on the ground that the activities of the trust are no longer charitable after the insertion of the proviso to S. 2(15). The registration can be withdrawn only if a finding is given that the activities of the institution are not genuine or that the activities carried out are not in consonance with the object of the institution. Followed DIT v. Khar Gymkhana (2016) 385 ITR 162 (Bom.) (HC). (ITA No. 43 of 2015, dt. 17-7-2017)

    CIT v. The Mumbai Metropolitan Regional Iron and Steel Market Committee (Bom)(HC), www.itatonline.org

  16. S.14A : Disallowance of expenditure – Exempt income –Shares held as stock-in-trade, no disallowance can be made. [R. 8D]
    Dismissing the appeal of the revenue the Court held that; in case of assessee, engaged in business of share trading, dividend income was treated as business income and shares held by assessee were treated as stock-in-trade, AO could not proceed to make disallowance under section 14A by applying Rule 8D.
    (AY. 2008-09)

    CIT v. G. K. K. Capital Markets (P) Ltd. (2017) 246 Taxman 52 (Cal.)(HC)

  17. S.23 : Income from house property – Annual value – Let out a portion of building at lesser rent to a related party, AO was justified to determine the annual value of the building at the value/rent received from unrelated party. [S. 22]
    Allowing the appeal of the revenue, the Court held that where the assessee had let out a portion of building on rent to a company in which he was a director at a value which was lesser than the value/rent at which the remaining portion of the building were let out to unrelated party, the AO was justified to determine the annual value of the building u/s. 23(1) at the value/rent received from unrelated party. (AY. 1996-97)

    CIT v. Amina Moidu (Smt.) (2017) 292 CTR 237 (Ker.)(HC)

  18. S.32 : Depreciation – Additional depreciation – In term of section 32(1)(iia), assessee can claim balance additional depreciation in assessment year which follows assessment year in which machinery has been bought and used for less than 180 days.
    [S. 32(1)(iia)]
    High Court held that, plain language of section 32(1)(iia) read along with the relevant proviso brings one to the conclusion that there is no limitation placed on the assessee claiming the balance of additional depreciation in the succeeding assessment year. Further, an amendment has been made to remove any doubt w.e.f. 1-4-2016 which is clarificatory in nature and therefore, would not apply prospectively. (AY. 2011-12)

    CIT v. Shri T. P. Textiles (P.) Ltd. (2017) 394 ITR 483 / 246 Taxman 324 (Mad.)(HC)

  19. S.32 : Depreciation – Plant – Mineral Oil Well constitutes Plant
    Allowing the appeal of the assessee the Court held that Mineral Oil Well constitutes Plant and not building. (AY. 1998-99)

    Niko Resources Ltd v. ACIT (2017) 395 ITR 301 (Guj.) (HC)

  20. S.36(1)(iii) : Interest on borrowed capital – Borrowed money was utilised for the purposes of business and giving interest free advances to its partners entitled to deduction
    Court held that there was no dispute that the borrowing was for business purposes, it was utilised in the business and the assessee had paid interest on it therefore, the interest so paid was deductible under section 36(1)(iii) of the Act. Accordingly, denial of deduction on any other ground was not tenable in law. Therefore, the interest amount paid by the assessee was liable to be deducted under section 36(1)(iii) of the Act. (AY. 1996-97)

    Ganpati Associates v. CIT (2017) 395 ITR 562 (All) (HC)

  21. S.36(1)(vii) : Bad debt – Accounts maintained for the purpose of income tax the amounts was written off
    – Bad debt is allowable as deduction
    Dismissing the appeal of the revenue, the Court held that; when assessee maintaining two sets of accounts, one for income-tax purposes and other for purposes of Companies Act. In corporate accounts, assessee made provision for bad debts and for income tax accounts, debts were written off. Since in the books maintained for income-tax purpose, the debts were written off, deduction was allowable.
    (AY. 2006-07)

    CIT v. Shriram Transport Finance Company Ltd. (2017) 246 Taxman 89 (Mad.)(HC)

  22. S.37(1) : Business expenditure – Brand promotion expenses was held to be allowable business expenditure
    The AO disallowed 10% from the expenditure on brand enhancement on the ground that it was allocable to the overseas owner/collaborator. The AO reasoned that any enhancement in the brand presence of the assessee invariably had a fall-out vis-a-vis brand value of the overseas IPR proprietor.

    On appeal, the CIT(A) and the Tribunal disagreed with the AO’s view.

    The High Court observed that the expenses were incurred by the assessee and that the arrangement inter alia between the assessee and the brand proprietor was such that specified required brands were made available in the assessee’s deals. The High Court further observing that the overseas owner did not set up any other licensee, in the area where the assessee operated, to operate as a rival and that under the Trade Mark Act, held that as long as the arrangement existed, the assessee, who was a licensee of the products, was entitled to claim them as business expenditure even though in the ultimate analysis they might have enhanced the brand of the overseas owner. (AY. 2003-04)

    PCIT v. Seagram Manufacturing (P.) Ltd. (2017) 245 Taxman 389 (Delhi)(HC)

  23. S.37(1) : Business expenditure – Capital or revenue – Expenses incurred on buyback of shares was to be allowed as revenue expenditure
    The AO disallowed the said expenditure on buy back of shares holding it as capital in nature. The CIT(A) allowed expenses incurred on printing, postage, advertising etc. but disallowed the other expenditures. The Tribunal relying on the decision of Hon’ble Bombay HC in case of CIT v. Hindalco Industries Ltd. ITA No. 517 of 2009 dt. 9-8-2012 held that the entire expenditure was to be allowed as revenue in nature. The HC held that since the issue was covered by jurisdictional HC, it upheld the Tribunal’s order. (AY. 2001-02)

    CIT v. Aditya Birla Nuvo (2017) 246 Taxman 202 (Bom.)(HC)

  24. S.37(1) : Business expenditure – Capital or revenue – Premium paid on pre-redemption of debentures was to be allowed as revenue expenditure
    The AO allowed the contention of assessee that the said expenses was revenue in nature, however concluded that 1/3rd expenditure shall be allowed in the current year and balance in subsequent two years. The CIT(A) relying on decision of Overseas Sanmar Financial Ltd. (86 ITD 602) allowed the expenditure. The Tribunal relying in the case of Grindwell Norton Ltd. (ITA 5512/M/2007) which was later ratified by HC in (ITA 694/2012 dated 24-12-2012, upheld the order of the CIT(A). The HC after placing reliance on the case of Grindwell Norton Ltd. dismissed the revenue’s appeal. (AY. 2001-02)

    CIT v. Aditya Birla Nuvo (2017) 246 Taxman 202 (Bom.)(HC)

  25. S.37(1) : Business expenditure –Capital or revenue – Expenditure incurred by assessee on technical and marketing knowhow, was to be allowed as revenue expenditure
    The AO bifurcated the technical know-how and marketing know-how separately and allowed the same as deferred revenue expenses. The CIT(A) placing reliance on the SC case of Kedarnath Jute Mfg. Co. Ltd. v . CIT (1971) 82 ITR 363 (SC) held that once the expenditure was allowed to be revenue expenditure, then it had to be allowed. The Tribunal held that CIT(A) had rightly held that expenditure was revenue in nature. On appeal, the HC held that order of Tribunal and CIT(A) were valid in law and dismissed the appeal of the revenue.
    (AY. 2000-01)

    CIT v. Aditya Birla Nuvo (2017) 246 Taxman 202 (Bom.)(HC)

  26. S.37(1) : Business expenditure –Privilege fees paid to Government for grant of lease was held to be allowable expenditure
    – Assessing Officer has no power to question the validity of Government enactment. [S. 40(a)(iib), Article 226]
    Dismissing the appeal of the revenue, against the judgement of single judge order, the Court held that, Privilege fees paid to Government for grant of lease was held to be allowable expenditure
    – Assessing Officer has no power to question the validity of Government enactment . Order passed by the Assessing Officer, the High Court can set aside the order. Amendment with effect from 1-4-2014 was held to be prospective in nature. (AY. 2009-10 to 2012-13)

    CIT v. Karnataka State Beverages Corporation (2017) 395 ITR 444/ 246 Taxman 280/ 294 CTR 142 (Karn.) (HC)

  27. S.37 : Business expenditure –Capital or revenue – One-time technical know-how fee and royalty at 2 per cent of net ex-factory selling price of the product for period of five years from the date of commencement of production is revenue in nature
    Following the decision of the Hon’ble Apex Court in the case of Alembic Chemical Works Co. Ltd. v. CIT [1989] 177 ITR 377 (SC), the High Court held that one-time technical know-how fee and royalty at 2 per cent of net ex-factory selling price of the product for period of five years from the date of commencement of production is revenue in nature as a concurrent finding was by Commissioner of Income-tax (Appeals) and Income Tax Appellate Tribunal that on termination of agreement, which was for a period of five years, assessee would return all relevant material relating to know-how acquired through agreement and that the right granted to an assessee was a non-exclusive right. (AY. 1988-89)

    UPCOM Cables Ltd.; CIT v. (2017) 292 CTR 280 / 147 DTR 33/78 taxmann.com 235 (All)(HC)

  28. S.37(1) : Business expenditure –Capital or revenue hotel business – expenditure on repair and on arranging for temporary entrance and exit during repair was held to be revenue expenditure
    Dismissing the appeal of the revenue, the Court held that expenditure by the Hotel on repair and on arranging for temporary entrance and exit during repair was held to be revenue expenditure. (AY. 2007-08)

    CIT v. Seaprincess Hotels and Properties P. Ltd. (2017) 395 ITR 511/ 246 Taxman 173 (Bom.)(HC)

  29. S.40(a)(ia) : Amounts not deductible – Deduction at source on fees for technical services
    – Payment of fees for transmission of electricity did not constitute payment for ‘technical service’, thus tax was not deductible u/s. 194J and therefore no disallowance can be made. [S. 194J]
    Dismissing the appeal of the revenue, the Court held that payment of fees for transmission of electricity did not constitute payment for ‘technical service’, thus tax was not deductible u/s. 194J and therefore no disallowance can be made. (AY. 2008-09)

    PCIT v. Madhyanchal Vidyut Vitran Nigam Ltd. (2017) 293 CTR 216 (All) (HC)

    PCIT v. U.P. Power Corporation Ltd. (2017) 293 CTR 216 (All) (HC)

  30. S.40A(2) : Expenses or payments not deductible – Excessive or unreasonable
    – Burden is on the revenue to establish that expenditure in excess of fair market value, disallowance is not automatic
    Dismissing the appeal of the revenue, the Court held that provisions of section 40A(2) are not automatic and can be called into play only if the Assessing Officer establishes that the expenditure incurred is, in fact, in excess of fair market value. (AY. 1997-98)

    CIT v. Parameswari (Smt. L.) (2017) 246 Taxman 126 (Mad.)(HC)

  31. S.41(1) : Profits chargeable to tax – Remission or cessation of trading liability
    – Stale demand drafts and pay orders for sums owed by assessee – Bank to customers cannot be assessed as liability still subsisting.
    Dismissing the appeal of the revnue, the Court held that the addition could not be made under section 41(1) of the Act, since the liability of the assessee-bank to pay back the amounts to the customers in respect of such stale demand drafts and pay orders does not cease in law. (AY. 2007-08)

    CIT v. Raddi Sahakara Bank Niyamitha (2017) 395 ITR 652 (Karn.)( HC)

  32. S.45: Capital gains – Development agreement – Amount to be received by the developer cannot be assessed as the development agreement itself did not survive later on. [S. 2(47)(v)]
    Dismissing the appeal of the revenue the Court held that Assessee-society entered into a development agreement of land. The assessee had only transferred its entitlement to additional FSI to the developer for reconstruction of building. However, once that agreement itself did not survive and this benefit was to flow from the agreement, the Tribunal concluded that in the light of the factual circumstances, when there was no benefit obtained by way of transfer of additional FSI and that could have been transferred only on demolition of old building, the ingredients of Section 2(47)(v) are not at all satisfied and attracted. (AY. 2009-10)

    CIT v. Bhatia Nagar Co-op. Society Ltd. (2017) 246 Taxman 387 (Bom.)(HC)

  33. S.50C : Capital gains – Full value of consideration – Stamp valuation –
    Provision governs valuation of property to determine capital gains but it has no
    application while determining ‘profits and gains of business or profession’. [S.
    43CA]
    The assessee was a builder/developer following the project completion method of accounting. During relevant assessment year, the assessee offered certain net profit on sale of flats as its business income. AO took a view that value of the flats had to be considered not on the basis of consideration received but on application of the provisions of section 50C. High Court held that, section 50C would not have any application while determining ‘Profits and gains of business or profession’ as its application is only limited to computation of income chargeable under the head ‘Capital gains’. Further, similar provision is inserted under the head ‘Business income’ in the form of section 43CA and which is effective from 1-4-2014. (AY. 2009-10)

    CIT v. Neelkamal Realtors & Erectors India (P.) Ltd. (2017) 246 Taxman 274 (Bom.)(HC)

  34. S.56 : Income from other sources – Builder developer – Section applies only to individuals and HUF and also, held that it seeks to tax the transferee of the property and not the transferor. [S. 56(2)(vii)(b)]
    The assessee was a builder/developer following the project completion method of accounting. During relevant assessment year, the assessee offered certain net profit on sale of flats as its business income. AO took a view value of flats sold was to be determined by applying provisions of section 56(2)(vii)(b)(ii). High Court held that said section applies to individuals and Hindu Undivided Family. It also held that it seeks to tax the transferee of the property for having given consideration less than the stamp value by ₹ 50,000/ or more for purchase of the property. (AY. 2009-10)

    CIT v. Neelkamal Realtors & Erectors India (P.) Ltd. (2017) 246 Taxman 274 (Bom.)(HC)

  35. S.68 : Cash credits – Identity, genuineness and creditworthiness of cash creditors were proved, addition was held to be not justified.
    Dismissing the appeal of the revenue, the Court held that when identity, genuineness and creditworthiness of cash creditors were proved just because AO found minor discrepancies in statements of cash creditors recorded addition was held to be not justified. (AY. 2008-09)

    CIT v. Deen Dayal Choudhary (2017) 293 CTR 468 (Raj HC)

  36. S.69A : Unexplained money –Evidentiary value of documents found – Merely on the basis of chart found in the possession of third party addition was held to be not justified. [S. 153C]
    The assessee is a part of a group of companies which were subject to search proceedings. In the course of search, a chart was found in the possession of a director of the group containing names with specified amounts. This chart formed the basis of the AO in assessing an amount as undisclosed income.

    On the basis of a remand report, the CIT(A) reduced the addition made by the AO. The ITAT was of the opinion that the particulars and details of the cheques etc. reflected in the chart, which formed the sole basis for addition, could not be attributed to it and accordingly deleted the addition.

    Aggrieved, the revenue appealed to the High Court which held that as the ITAT had correctly observed that the evidentiary value of these charts, as far as the assessee was concerned, was not conclusive given the fact that the assessee was neither the searched party nor was a party receiving notice under Section 153C of the Act and therefor the deletion was upheld. (AY. 2009-10)

    PCIT v. Phoenix Datatech Services (P.) Ltd. (2017) 245 Taxman 209 (Delhi) (HC)

  37. S.80G : Donation – Donation in kind is not eligible deduction
    Dismissing the appeal of the assesse, the Court held that donation made by way of clothes as they were in kind and not in cash, cheque or draft. According to the provision contained in Explanation 5 to section 80G, once the donation was of goods, no deduction was admissible.

    Nahar Spinning Mills Ltd. v. CIT (2017) 395 ITR 12/ 82 taxmann.com 154 (P&H)( HC)

  38. S.80-IA : Industrial undertakings – Generation of power for captive consumption
    – Rate of power generation is to be taken at rate supplied by Electricity Board to its consumers not at rate at which supplied to Electricity Board.
    [S. 80-IA(4)]
    Dismissing the appeal of the revenue, the Court held that the deduction under section 80-IA(4)of the Act, was allowable to the assessee for generation of power for captive consumption and that the rate of power generation at which the Electricity Board supplied power to its consumers, rather than the rate at which the power generating company supplied its power to the Electricity Board was to be taken as the price.

    PCIT v. Gujarat Alkalies and Chemicals Ltd. (2017) 395 ITR 247 (Guj.)(HC)

  39. S. 80-IA : Industrial undertakings – Initial assessment year is the year opted by assessee for claiming deduction and not year of commencement of eligible business
    – Deduction allowable without setting off losses or unabsorbed depreciation set off in earlier years against other business income
    – CBDT was directed not to file appeals where the circular was issued accepting the order of High Court. [S.80-IA(5)]
    Dismissing the appeal of the revenue, the Court held that; initial assessment year would be year opted by assessee for claiming deduction and not year of commencement of eligible business. Deduction is allowable without setting off losses or unabsorbed depreciation set off in earlier years against other business income. By the court : If an issue is covered by the judgment of the High Court, it is always open to the Department to take it on appeal to the Supreme Court and get the law settled once and for all. But, once a decision is taken at the level of the Board, why repeated appeals should be filed only to meet with the same fate as that of a decision, on which a circular has been issued. The Department shall take note of this for future guidance.
    (AY. 2011-12)

    CIT v. Best Corporation Ltd. (2017) 395 ITR 367 (Mad)(HC)

  40. S.80-IB(10) : Housing projects – Built-up area – Assessee’s project approved prior to 1-4-2005
    –Terrace or balcony to be excluded from built-up area – Conditions existing at the time of approval of project has to be complied with
    – Matter remanded to Tribunal.
    [S.80-IB(10)(a)(i)(c)(d), 14(a)]
    On appeal by the revenue the Court held that assessee’s project approved prior to 1-4-2005 hence terrace or balcony to be excluded from built-up area and conditions existing at the time of approval of project has to be complied with. The Tribunal relied on its order for the assessment year 2007-08 to hold that the assessee was eligible for the deduction under section 80-IB(10) of the Act. In respect of questions between the same parties, if a particular view was taken by the Tribunal in one assessment year, in the absence of any relevant circumstances otherwise, it was not appropriate for the Tribunal to re-examine the matter. The question as to whether or not the assessee satisfied all conditions required for deduction under section 80-IB(10) was not examined by the Tribunal because it was under the impression that the entire amendment made by the Finance Act, 2004 with effect from April 1, 2005 in section 80-IB(10) would be prospective and, therefore, there was no discussion or finding recorded by the Tribunal whether the project of the assessee was completed or obtained completion certificate. The Tribunal was to examine this in the light of other questions answered by this Court [Matter remanded. (AY. 2006-07, 2007-08, 2011-12 )

    CIT v. Arif Industries Ltd. (2017) 395 ITR 102/ 80 taxmann.com 374 (All)( HC)

  41. S.80-IB(10) : Housing projects – Proportionate deduction is eligible in respect of area below prescribed area
    The assessee is entitled to proportionate deduction under section 80-IB(10) of the Act,to the extent of profits attributable to units where the built-up area is below 1500 sq. ft. (AYs. 2007-08, 2009-10, 2010-11)

    PCIT v. Oceanus Dwellings P. Ltd. (2017) 395 ITR 376 (Karn.) (HC)

    PCIT v. Parkway Development (2017) 395 ITR 376 (Karn) (HC)

  42. S.80P : Co-operative society –Interest received from investment of surplus funds is not eligible deduction. [S. 80P(2)(d)]
    Allowing the appeal of the revenue, the Court held that the income by way of interest earned by deposit or investment of idle or surplus funds would not change its character irrespective of the fact whether such income or interest was earned from a schedule bank or a co-operative bank and thus section 80P(2)(d) of the Act would not apply in the facts and circumstances of the case.(AY. 2007-08 to
    2011-12)

    PCIT v. Totagars Co-op. Sale Society (2017) 395 ITR 611/ 83 taxmann.com 140 (Karn.)(HC)

  43. S.80P : Co-operative Societies – Co-operative society providing credit facilities to its members not within exception and entitled to special deduction
    Dismissing the appeal of the revenue the Court held that if the assessee is not a co-operative bank carrying on exclusively banking business and if it does not possess a licence from the Reserve Bank of India to carry on business, then it is not a co-operative bank. It is a co-operative society which also carries on the business of lending money to its members which is covered under section 80P(2)(a)(i) of the Income-tax Act, 1961, i.e., carrying on the business of banking for providing credit facilities to its members. It is entitled to the special deduction under section 80P of the Act. (AY. 2011-12 )

    CIT v. Shree Mahila Credit Soudhardha Sahakari Ltd. (2017) 395 ITR 287 (Karn.)(HC)

  44. S.90 : Double taxation relief – Entitle to credit for deemed dividend tax
    – DTAA–India – Sultanate of Oman [S. 263, Article 25]
    Dismissing the appeal of revenue, the Court held that the clarifications rendered by the Sultanate of Oman in its letter to the effect that under the company income tax law of Oman, dividend formed part of the gross income chargeable to tax and that the tax law of Oman provided income tax exemption to companies undertaking certain identified economic activities considered essential for the country’s economic development with a view to encouraging investments in such sectors, were to be regarded as conclusive. If the tax authorities had any doubts, they could not have proceeded to elevate them into findings, but addressed them to Omani authorities if not directly, then through the Indian diplomatic channels. In not doing so, but proceeding to interpret the laws and certificate of Oman authorities, the Department had fallen into error. Assessee is entitled to credit for deemed dividend tax. Revision order was held to be not valid. AY. 2010-11, 2011-12)

    PCIT v. Krishak Bharati Co-op. Ltd. (2017) 395 ITR 572/ 247 Taxman 317/ 295 CTR 181 (Delhi)( HC)

  45. S.92C : Transfer pricing – Adjustment made solely on the basis of assumption that expenditure incurred for sales promotion was higher side was de hors provisions of Chapter X of Act
    Dismissing the appeal of the revenue, the Court held that where TPO had not followed prescribed method under section 92C to benchmark international transaction and TP adjustment was made solely on basis of assumption that expenditure incurred for sales promotion of parent company was on higher side, said TP adjustment was de hors provisions of Chapter X of Act. (AY. 2006-07)

    CIT v. Johnson & Johnson Ltd. (2017) 247 Taxman 136 (Bom.)(HC)

  46. S.92C : Transfer pricing – Revenue authorities in remand proceedings could not issue a show cause notice to assessee proposing to reject certain comparables and take into consideration some new comparables. [S. 254(1)]
    Allowing the petition the Court held that where Tribunal remanded matter back with a direction to undertake fresh determination of ALP on basis of correct cost base of assessee, revenue authorities in remand proceedings could not issue a show cause notice to assessee proposing to reject certain comparables and take into consideration some new comparables. Accordingly show cause notice issued by the TPO was quashed. (AY. 2007-08)

    Li & Fung India Pvt. Ltd. v. ACIT (2017) 79 taxmann.com 451 (Delhi) (HC)

  47. S.92C: Transfer pricing – Arm’s length price – Functionally different company cannot be compared
    – Data should be of same financial year and services rendered of KPO and LPO cannot be compared with BPO
    Dismissing the appeal of the revenue, the Court held that Assessing Officer as comparables were either functionally or qualitatively different from the assessee’s business or the comparison was with a different financial year of the comparable, which was not in consonance with the mandate provided under rule 10B(4) of the Income-tax Rules, 1962 that the data used for comparability analysis should be of the same financial year. (AY. 2007-08)

    CIT v. PTC Software (I) P. Ltd. (2017) 395 ITR 176/ 75 taxmann.com 31 (Bom)( HC)

  48. S.92C : Transfer pricing – It is the duty of the TPO to only determine the ALP of the transaction and not to ascertain whether the expenditure is allowable or not [S. 37(1)]
    The High Court held that it is the duty of the TPO to ascertain only the ALP of the transaction and not to ascertain whether the expenditure is allowable or not under section 37 of the Act, which duty is that of the Assessing Officer. In fact, as found both by the Commissioner (Appeals) as well as the Tribunal, neither the method selected as the most appropriate method to determine the ALP was challenged nor the comparables taken by the assessee was challenged by the TPO. Therefore, the ad hoc determination of ALP by the TPO de hors section 92C cannot be sustained. (AYs. 2003-04 to
    2005-06)

    CIT v. Lever India Exports Ltd. (2017) 246 Taxman 133 / 292 CTR 393 /147 DTR 233 (Bom.)(HC)

  49. S.92C : Transfer Pricing – Arm’s Length Price – The TPO’s whimsical fixation of the royalty @ 2% instead of 3% as per the agreement, amounted to an arbitrary and unbridled exercise of power hence not justified
    Dismissing the appeal of the revenue, the Court held that where the Revenue admitted that the assessee entered into a royalty agreement with AE and assessee claimed benefit from such agreement, in form of increase in sales with no apparent increase in production, minimal product recalls and low after sales maintenance cost, and consequently, paid royalty in terms thereof, then, it was not for TPO to make TP adjustment in respect of royalty payment by reducing the rate of payment. Relying on the decision in CIT v. Walchand & Co. (P.) Ltd. (1967) 65 ITR 381 (SC) the Court held that the TPO should not decide the best business strategy for the assessee. Therefore, the TPO’s whimsical fixation of the royalty @ 2% instead of 3% as per the agreement, amounted to an arbitrary and unbridled exercise of power. (AY. 2010-11)

    PCIT v. R.A.K. Ceramics India (P.) Ltd. (2017) 246 Taxman 85 / 293 CTR 361 (AP) ( HC)

  50. S.92C : Transfer pricing – Arm’s length price – In an abnormal event like a strike, adjustment needs to be made to the profit margin of comparable company and not to the profit margin of the assessee
    During the TP assessment proceedings, the assessee had claimed for an adjustment in its profit margin on account of a strike which had an adverse impact on its production/sales. The TPO, however, was of the view that there was no effect of strike on manufacture and sale of the assessee and thus, rejected the assessee’s claim. This view was upheld by DRP. On appeal, the Tribunal observed that in an abnormal event like a strike, adjustment needs to be made to the operating profit margin of comparable company to bring both the international transactions and comparable costs at the same pedestal and such adjustment was not to be made in the operating profit margin of the assessee.

    On appeal to HC, affirming the view of Tribunal, the HC held that in an abnormal event like a strike, Rules 10(1)(e)(ii) & (iii) of the Income Tax Rules, 1962 states that adjustment was to be made to the profit margin of comparable company and not to the profit margin of the assessee.

    Honda Motorcycle & Scooters India (P.) Ltd. v. ACIT (2017) 292 CTR 323 (P&H)(HC)

  51. S.92C : Transfer pricing – Comparables – A party is not barred in law from withdrawing from its list of comparables a company found to have been included on account of mistake of fact
    Dismissing the appeal of the revenue, the Court held that a party is not barred in law from withdrawing from its list of comparables a company found to have been included on account of mistake of fact. The Transfer Pricing Mechanism requires comparability analysis to be done between like companies and controlled and uncontrolled transactions by carrying out of FAR analysis. The assessee’s submission in arriving at the ALP is not final. It is for the TPO to examine and find out the companies listed as comparables which are in fact comparable. (AY. 2008-09)

    CIT v. Tata Power Solar Systems Ltd. (2017) 245 Taxman 93 (Bom.)(HC)

  52. S.115BBE : Tax on income – Cash credits – Addition was made on the basis of information received from the bank, without giving an opportunity of hearing
    – Order was set-a-side. [Ss. 68, 131(1), Article 226]
    On the basis of information received from the bank u/s. 131(1) of the Act the AO treated the credit in the Bank as unexplained income and charged u/s. 115BBE of the Act. As no opportunity was given to the assessee, the assessee challenged the said order by fling writ petition. Allowing the petition the Court held that AO in the opening sheet of assessment order had simply written ‘various dates as per the assessment records’. This details does not explain the fact that any opportunity of hearing was given to the assessee. Thus, the assessee’s writ was allowed and the assessment order was set aside. Further, the AO was directed to pass fresh order after providing opportunity of hearing to the assessee.
    (AY. 2014-15)

    Lakshmanan Magendiran v. ITO (2017) 293 CTR 371 (Mad.) (HC)

  53. S.115JA : Book profit – Excess depreciation and made a provision towards land development
    – In current year these were written back/withdrawn – In computation of book profit under MAT provisions, reduction of provisions would be allowed only if book profit of earlier year was increased by amounts claimed as provisions, matter remanded to the Assessing Officer
    Appeal by the assessee the High Court held that section 115JA permits the reduction from book profit of any amount withdrawn from reserves or provisions and credited to the profit and loss account upon condition that the book profits for the year in which such provisions or reserves had been created had been correspondingly increased by such reserves or provisions. Therefore the HC held that the downward adjustment in current year was conditional upon satisfaction of the requirement whether the book profit of the earlier year when the reserve/provision was created, was increased by the amounts credited to the profit and loss account in that financial year. It was noted that there was no finding on this aspect in the lower authorities orders and hence remitted the matter back to the AO. (AYs. 1998-99, 1999-2000)

    V.G.P. Housing Pvt. Ltd. v. ACIT (2017) 245 Taxman 199 (Mad.)(HC)

  54. S.115JAA : Book profit – Deemed income – Tax credit – Surcharge and cess are part of income tax credit hence deductible from gross tax payable. [S. 115JB]
    Dismissing the appeal of the assessee, the Court held that both surcharge and cess were part of the Income-tax though they were payable in addition to the Income-tax at the rate provided in section 115JB of the Act. The provisions contained in sub-section 115JB, second proviso to sub-section 115JB, sub-section 115JB and sub-section 115JB of section 115JB of the Finance Act, 2008 provided for Income-tax being increased by the amount of surcharge and cess. The reason behind the increase of Income-tax by the amount of surcharge and cess had been spelt out on the basis whereof it could be said that the intention was that part of the amount realised by way of Income-tax was earmarked for being spent on education and higher education. The Appellate Tribunal was right in confirming the set-off of minimum alternate tax credit under section 115JAA brought forward by the assessee from earlier years against tax on the total income including the surcharge and education cess.
    (AY. 2008-09)

    SREI Infrastructure Finance Ltd. v. Dy. CIT (2017) 395 ITR 291 (Cal.)( HC)

  55. S.115JB : Book profits – The AO is not entitled to add to the “book profits” the amounts arising from sale of land which are directly credited to the Capital Reserve Account in the balance sheet rather than routing it through Profit and Loss Account in the manner provided as per Part II and Part III of Schedule VI to the Companies Act, 1956
    Dismissing the appeal of the Revenue, the Court held that the AO is not entitled to add to the “book profits” the amounts arising from sale of land which are directly credited to the Capital Reserve Account in the balance sheet rather than routing it through Profit and Loss Account in the manner provided as per Part II and Part III of Schedule VI to the Companies Act, 1956. Followed, Akshay Textiles Trading and Agencies Pvt. Ltd. ( ) 304 ITR 401 (Bom) (HC) (ITA No. 436 of 2015, dt. 18-7-2017)( AY. 2004-05)

    PCIT v. Bhagwan Industries Ltd. (Bom.)(HC), www.itatonline.org

  56. S.115WA : Fringe benefits – Charge of tax – Fringe benefits deemed to have been provided, clarification made by the Central Board of Direct Taxes cannot be said to be contrary to the provisions of the statute. [Ss. 115W, 119]
    Question raised before the Court was “whether the Appellate Tribunal has substantially erred in deleting the addition of respective amounts to the value of fringe benefit despite the fact that these expenses were deemed fringe benefit provided to the employees as per provisions of section 115W(2) clauses (A) to (Q) of the Income
    –tax Act, 1961? “.

    Court held that, clarification made by the Central Board of Direct Taxes No. 8 of 2005 (2005) 277 ITR 20 (St.) cannot be said to be contrary to the provisions of the statute. Orders of the Tribunal was upheld. (AYs. 2006-07 to 2008-09)

    Gujarat Chamber of Commerce and Industry v. UOI (2017) 395 ITR 457 (Guj.) (HC)

  57. S.119 : Central Board of Direct Taxes – Circulars though inconsistent with provisions of statutes is binding on authorities. [Ss.4 , 43D & 145]
    Dismissing the appeal of the revenue the High Court helf that circulars though inconsistent with provisions of statutes is binding on authorities. (AY. 2010-11)

    PCIT v. Shri Mahila Sewa Sahakari Bank Ltd. (2017) 395 ITR 324 (Guj.) (HC)

  58. S.127 : Power to transfer cases – Transfer of the case of the assessee from Delhi to Ludhiana was valid as the case was transferred for the purpose of centralisation of assessments after the search and seizure operation
    The High Court held that the transfer of the case of the assessee from Delhi to Ludhiana was valid as no fault can be found with the reason of transfer as stated in transfer order under section 127 which is for the purpose of centralisation of assessment as a result of search and seizure operation carried out and that following the decision of the Delhi High Court in the case of Surya Pharmaceuticals Ltd. v. ITO [2007] 295 ITR 427/[2008] 171 Taxman 163 (Delhi), it was held that the transfer which was made for the purpose of administrative convenience was valid.

    Ravneet Takhar v. CIT(2016) 76 taxmann.com 210 / (2017) 145 DTR 435 (Delhi) (HC)

  59. S.132 : Search and seizure – Certain records were not produced in spite of constant directions by Revenue, search was justified [S. 153A, Article 226]
    Dismissing the petition the Court held that, certain records were not produced in spite of constant directions by Revenue, search was justified. (AY. 2009-10)

    Aditya Narayan Mahasupakar v. CCIT (2017) 246 Taxman 106 (Orissa)(HC)

  60. S.132B : Application of seized or requisitioned assets – Person in respect of whom search conducted was beneficial owner of monies in such account, hence restraint order and direction for provisional attachment of such account was held to be valid. [S. 132, Article 226]
    Dismissing the petition the Court held that; person in respect of whom search conducted was beneficial owner of monies in such account, hence restraint order and direction for provisional attachment of such account was held to be valid. It is not necessary for separate search warrant in names of such persons. The Court also observed that the petitioners must state full facts within his knowledge when they approach the Court.

    Strategic Credit Capital P. Ltd. v. Ratnakar Bank Ltd. (2017) 395 ITR 391 / 81 taxmann.com 408 (Delhi)(HC)

    Veena Singh v. DI (Inv) (2017) 395 ITR 391/81 taxmann.com 408 (Delhi)(HC)

  61. S.133A : Power of survey –Voluntary declaration of unaccounted money after two months after survey
    – Retraction of statement after two years, addition as undisclosed income was held to be justified. [S. 69A]
    Allowing the appeal of the Revenue, the Court held that retraction made after two years was held to be not bona fide and there was no satisfactory explanation. H-ence addition was confirmed in respect of voluntary disclosure which was made after two months of survey. (AY. 2009-10)

    PCIT v. Avinash Kumar Setia (2017) 395 ITR 235 (Delhi)( HC)

  62. S. 143(2) : Assessment – Return filed as individual and revised in the status of HUF without variation in income
    – Participated in the proceedings – Cannot raise the plea that no notice was issued in the name of HUF. Assessment cannot be held to be bad in law. [S. 292BB]
    Allowing the appeal of the revenue, the Court held that in the current case, the assessee had itself filed a revised return with the status of HUF and not disputed the notice issued by AO and had co-operated during the assessment proceedings. Thus the HC held that the assessee had himself filed the return in the status of HUF coupled with provisions of Section 292BB of the Act, and hence the Tribunal was not right in declaring the assessment order as non-est. Hence the HC held in favour of the revenue and dismissed the assessee’s cross-objections. (AY. 2001-02)

    CIT v. Mangal Singh (2017) 246 Taxman 226 (P&H)(HC)

  63. S.144 : Best judgment assessment – When income is estimated other additions cannot be made on the basis of entries in the books of account
    Allowing the appeal of the assesseee the Court held that when income is estimated other additions cannot be made on the basis of entries in the books of account.

    Malpani House of Stones v. CIT (2017) 395 ITR 385 (Raj.)(HC)

  64. S.145A : Method of accounting – Valuation – Irrespective of the method of accounting followed, the unutilised Cenvat credit does not constitute income and cannot be directly added to the closing stock. The assessee is entitled to follow the exclusive method and value the closing stock by excluding the modvat credit [S. 145]
    Dismissing the appeal of the revenue, the Court held that

    (i) It is not disputed that the assessee was liable to excise duty. The assessee got credit in the excise duty already paid on the raw materials purchased by it and utilised in the manufacturing of excisable goods. The assessee was adopting the exclusive method i.e. valuing the raw materials on the purchase price minus (-) the Modvat credit. The same would be permissible. The Apex Court in the case of CIT v. Indo Nippon Chemicals Co. Ltd. (2003) 261 ITR 275 while affirming the order of High Court, has observed that the income was not generated to the extent of Modvat credit or unconsumed raw material.

    (ii) Merely because the Modvat credit was irreversible credit offered to manufacturers upon purchase of duty paid raw materials, that would not amount to income which was liable to be taxed under the Act. It is also held that whichever method of accounting is adopted, the net result would be the
    same.

    (iii) Considering the above, the amount of the unutilised Cenvat credit could not have been directly added to the closing stock. The Tribunal has not committed any error.(ITA No. 146 of 2015, dated 7-7-2017)(AY. 2008-09)

    CIT v. Dimond Dye Chem Ltd. (Bom.)(HC), www.itatonline.org

  65. S.147 : Reassessment – After the expiry of four years – No failure to disclose material facts
    – Reassessment was held to be in valid [S. 148]
    That the assessee is a Co-operative Bank registered under the Gujarat Co-operative Societies Act. After a detailed enquiries the AO passed an assessment order under section 143(3).Thereafter beyond the period of four years, the Assessing Officer has issued the impugned notice under Section 148. The reasons stated that on perusal of the records, it was noticed that the assessee bank has debited an amount to the P&L A/c on account of provision for overdue interest and this being merely a provision should be disallowed.

    In writ proceedings, the High Court observed that from the reasons recorded, it appeared that there was no allegation whatsoever that there was any failure on the part of the assessee in disclosing true and correct facts necessary for assessment. Following the decision of CIT v. Kelvinator of India Ltd. [2010] 320 ITR 561 the High Court quashed the notice under section 148. (AY. 2009-10)

    Sabarkantha District Central Co-operative Bank Ltd. v. DCIT (2017) 245 Taxman 96 (Guj.)( HC)

  66. S.147 : Reassessment – After the expiry of four years – Depreciation – There was no failure to disclose material facts, reassessment was held to be invalid. [Ss. 32, 43(1), 148]
    Allowing the petition the Court held that there was no fresh or tangible material warranting reopening of the assessments. The plea that the Assessing Officer inadvertently allowed the claim for depreciation for the assessment years 2008-09 to 2010-11 was, in the circumstances, unacceptable. The notices under section 148 and consequential orders were set aside. (AYs. 2008-09, 2009-10, 2010-2011)

    Avtech Ltd v. Dy. CIT (2017) 395 ITR 434/ 82 taxman 389 (Delhi) ( HC)

  67. S.147 Reassessment – After expiry of four years – Notice on the basis of mere suspicion was held to be bad in law. [S. 148]
    Allowing the petition the Court held that an unsubstantiated complaint could not be the sole basis for forming a belief that income of an assessee had escaped assessment. The material on the basis of which reassessment proceedings could have been initiated must be credible material which would have led to such belief. Since the Assessing Officer had failed to consider the objections filed by the assessee, the order passed by him rejecting the objections and the notice issued under section 148 could not be sustained (AY. 2008 -09)

    Rajiv Agarwal v. ACIT (2017) 395 ITR 255 (Delhi) (HC)

    Vijay Laxmi Agarwal v .ACIT (2017) 395 ITR 255 (Delhi) (HC)

  68. S.147 : Reassessment – After the expiry of four years – Approval was granted on the basis of quantum of income mentioned in proceedings
    – Reassessment was without application of mind hence bad in law. [Ss. 148, 151(1)]
    Allowing the petition, the Court held that the initiation of the case for reopening of the assessment was erroneous and without application of mind especially since the Assessing Officer had not examined the return filed, which would have revealed that the assessee had filed regular returns, had sufficient opening balance in his account and the withdrawals therefrom substantiated the donation made. Therefore, the reopening of the assessment was unsustainable in law and the notice issued under section 147 of the Act was to be quashed. (AY. 2010-11 )

    Shamshad Khan v. ACIT (2017) 395 ITR 265 (Delhi) (HC)

  69. S.147 : Reassessment – Unexplained investments – Re-opening notice merely on basis of one Sauda Chitthi seized from third party but not acted upon, was unjustified [Ss. 69, 148]
    Allowing the petition the Court held that in absence of any tangible material available to prima facie show that assessee had received any money in cash on account of sale consideration of land, re-opening notice merely on basis of one Sauda Chitthi seized from third party but not acted upon, was unjustified. (AY. 2009-10)

    Chintan Jadhavbhai Patel v. ITO (2017) 246 Taxman 361 (Guj.)(HC)

  70. S.147 : Reassessment –Reassessment in respect of income other than that in respect of which reason to believe recorded is permissible. [S. 148]
    Court held that reassessment in respect of income other than that in respect of which reason to believe recorded is permissible. (AY. 1996-97)

    CIT v. Sun Engineering Works P. Ltd. (1992) 198 ITR 297 (SC) and ITO v. K.L. Srihari (HUF0 (2001) 250 ITR 193 (SC) relied. (AY. 1996-97)

    Ganpati Associates v. CIT (2017) 395 ITR 562 (All) (HC)

  71. S.147 : Reassessment – Within four years – Where an issue has already been decided in favour of the assessee in preceding and subsequent assessment years, reopening on such issue is not permissible. [Ss.80IB, 148]
    The petitioner claimed deduction u/s. 80IB of the Act in respect of its industrial undertakings located in backward area. During the original assessment proceedings, the AO allowed the deduction u/s. 80IB of the Act after recording a categorical finding with regard to the fulfilment of requisite conditions prescribed u/s. 80IB of the Act.

    Subsequently, notices u/s. 148 of the Act were issued wherein the AO proposed to disallow the deduction already granted u/s. 80IB of the Act.

    On a writ petition, the HC held that the issue of allowability of deduction u/s. 80IB of the Act, has already been decided in favour of the assessee by the division bench of this court for preceding and subsequent assessment years. Therefore, reopening of the same issue for another year, is not justified.

    Prabhadevi Singhvi (Smt.) v. UOI (2017) 294 CTR 139 (Raj.)(HC)

  72. S.147 : Reassessment – loose papers seized in search & seizure – Writ Petition is filed to the High Court challenging re-assessment after order was passed
    – Alternate remedy of appeal to lower authorities was available – Writ petition dismissed [S.148, Art. 226]
    The assessee case was selected for reassessment based on certain loose papers found at the time of search & seizure. The reassessment order u/s. 147 was passed pursuant to which assessee filed a writ petition before the HC challenging the validity of reassessment proceedings. The main contention of the assessee was that a writ petition was pending before HC in some other case which arised out of same search & seizure operation and the notice of demand issued after the assessment was stayed in that case. Further, assessee placed reliance on recent judgment of SC in the case of Common Cause v. UOI (2017) 787 Taxman 245 (SC) and argued that assessment undertaken based on some loose papers which are inadmissible evidence cannot be sustained in law. Dismissing the petition the Court held that case of Common Cause (supra) relied upon by the assessee is with respect to the registration of FIR under Criminal Justice system and hence cannot assist assessee in the present case. Further, High Court held that when a statutory remedy of appeal was available to the assessee before the lower authorities, the High Court could not go into various aspects of the matter and entertain writ petition.

    Neeraj Mandloi v. ACIT (2017) 293 CTR 245 (MP) (HC)

  73. S.147 : Reassessment – Objection raised by the Assessing Officer was not disposed off by the Assessing Officer, order was held to be bad in law, Alternative remedy is not a bar to entertain the writ petition [Ss. 142(1), 148, Art. 226]
    Allowing the petition the Court held that objection raised by the Assessing Officer was not disposed by the Assessing Officer, order was held to be bad in law. Alternative remedy is not a bar to entertain the writ petition. Since the notice under section 142 itself stood vitiated for failure to issue a speaking order under section148 the further proceedings initiated by the Assessing Officer to proceed to pass an assessment order were unsustainable and therefore quashed.

    Goa State Co-operative Bank Ltd. v. ACIT (2017) 395 ITR 642 (Bom) (HC)

  74. S.147 : Reassessment – Borrowed satisfaction – Mere reproduction of investigation report in reasons recorded is not sufficient, in the absence of tangible material and reasons recorded, reassessment was held to be not valid. [Ss. 143(1), 148, 151]
    Dismissing the appeal of the revenue, the Court held that, The “reasons to believe” recorded were not reasons but only conclusions and a reproduction of the conclusion in the investigation report received from the Director (Investigation). It was a “borrowed satisfaction”. The expression “accommodation entry” was used to describe the information set out without explaining the basis for arriving at such a conclusion. The basis for the statement that the entry was given to the assessee on his paying “unaccounted cash” was not disclosed. Who was the accommodation entry giver and how he could be said to be a “known entry operator” were not mentioned. The source for all the conclusions was the investigation report. The tangible material which formed the basis for the belief that income had escaped assessment must be evident from a reading of the reasons. The reasons failed to demonstrate the link between the tangible material and the formation of the reason to believe that income had escaped assessment. The Assessing Officer had not independently considered the tangible material which formed the basis for the reasons to believe that income had escaped assessment. Reassessment was held to be not valid. (AY. 2004-05)

    PCIT v. Meenakshi Overseas P. Ltd. (2017) 395 ITR 677/ 82 taxmann.com 300 (Delhi) (HC)

  75. S. 147: Reassessment – Notice is deemed to be served if not returned as unserved
    –Reassessment proceedings was held to be valid. [Ss. 148, 282]
    Allowing the appeal of the revenue, the Court held that the notice sent by post to the assessee at his proper address would be deemed to have been delivered to him in the ordinary course, if not returned undelivered and such service was sufficient for purposes of section 148 of the Income-tax Act, 1961. The assessee’s reply to the notice under section 142(1), wherein it had claimed that it had not received any notice under section 148 revealed that it had knowledge of the notice for reassessment. The proceedings were not vitiated. Relied on Shimla Development Authority v. Smt. Santosh Sharma [1997] 2 SCC 637 (para 14) and Dr. Sunil Kumar Sambhudayal Gupta v. State of Maharashtra [2010] 13 SCC 657 (Para 14). (AY. 1996-97)

    CIT v. Privilege Investment P. Ltd. (2017) 395 ITR 147 (All.) (HC)

  76. S.147 : Reassessment – Pendency of block assessment – Reassessment was quashed.
    [Ss. 148, 158BC]
    Allowing the appeal of the assesse the Court held that once proceedings are initiated under S. 158BC for the block assessment on the same material initiating parallel proceedings under section 147 was held to be bad in law hence quashed. (AYs. 1994-95 to 1996-97)

    South Asian Enterprises Ltd. v. CIT ( 2017) 154 DTR 1 (Delhi) (HC)

  77. S.147 : Reassessemnt – Share premium – Reassessment was held to be not valid [S. 148]
    The High Court quashed the reassessment proceedings initiated by the Assessing Officer for the reason that the assessee had proved that he had not received any share capital nor any premium as alleged by the Assessing Officer and that the Assessing Officer merely brushed aside the explanations filed by the assessee without even considering the same. There was no basis of reopening the assessment and that therefore, it was held that the reopening is invalid.
    (AY. 2008-09)

    Sunbarg Tradelink (P) Ltd. v. ITO (2016) 74 taxmann.com 16 (2017) 292 CTR 222 (Guj.)( HC)

  78. S.148 : Reassessment – Notice – Writ against notice of reassessment was held to be not maintainable [S.147, Art. 226]
    The High Court held that the writ petition filed challenging the notice under section 148 cannot be entertained as it was found that none of the family members had disclosed any income prior to the date of issuance of notice under section 148 and it was not a case where the authority has exceeded its jurisdiction or the action is not based on any new material or that no reasons were recorded by the Assessing Officer or that reasons assigned are absolutely irrelevant or based on extraneous factors/circumstances.
    (AY. 2009-10)

    Vikramaditya Singh v. Dy. CIT (2017) 146 DTR 65 (HP)(HC)

    Virbhadra Singh v. Dy. CIT (2017) 146 DTR 65 (HP)(HC)

  79. S.148 : Reassessment – Notice – Writ against notice of reassessment was held to be not maintainable [S. 147, Art. 226]
    The High Court held that the writ petition filed challenging the notice under section 148 cannot be entertained as the contentions based on which the proceeding is challenged can be raised before the Assessing Officer and that it is not the case of the assessee that the Officer has not proceeded as per relevant provisions of the Act or is proceeding in the mater in defiance of the fundamental principles of judicial procedure, or has not/is not providing proper opportunity of hearing to the petitioner. (AY. 2009-10)

    Maruti Sah & Brothers v. ITO (2017) 291 CTR 409 / 145 DTR 406 (Uttarakhand)(HC)

  80. S.150 : Assessment – Order on appeal – Observation of Tribunal in AY. 1990-91 is not a finding or direction u/s. 150 and thus re-assessment proceedings are not sustainable. [Ss. 45(4), 147, 148, Art. 226]
    In appeal for the Assessment Year 1991-92 held that if at all the issue of capital gains arises, it shall arise in A.Y.1990-91 and not under A.Y.1991-92 which was the year under consideration before the Tribunal. Based on the observation AO issued notice u/s. 148 for reopening of assessment of A.Y.1990-91. On writ allowing the petition the Court held that, the observation of Tribunal is not a finding or direction u/s. 150 and thus reassessment proceedings are not sustainable. (AY. 1990-91)

    Kala Niketan v. UOI (2016) 293 CTR 178 (Bom.)(HC)

  81. S.153A : Assessment – Search – Assessee can claim deduction for first time before Appellate authorities even if it was not raised before the Assessing Officer at the time of filing of return or by filing revised return. [Ss. 139, 254(1)]
    Dismissing the appeal of the revenue, the Court held that assessee can claim deduction for first time before Appellate authorities even if it was not raised before the Assessing Officer at the time filing of return or by filing revised return. (AYs. 2003-04, 2006-07 to 2008-09)

    CIT v. B. G. Shirke Construction Technology P. Ltd. (2017) 395 ITR 371/ 246 Taxman 306/ 293 CTR 505 (Bom.) ( HC)

  82. S.153A : Assessment – Search –Assessment was completed on the date of search, no incriminating material was found pertaining to earlier assessment years, assessment was held to be invalid
    – Material disclosed prior to search, addition cannot be made. [Ss. 69, 132, 133A]
    Dismissing the appeal of the revenue, the Court held that, Assessment was completed on the date of search, no incriminating material was found pertaining to earlier assessment years, assessment was held to be invalid
    – Material disclosed prior to search addition cannot be made. (AYs. 2001-02 to 2004-05)

    PCIT v. Meeta Gutgutia Prop. M/s. Ferns ₹ N’ Petals (2017) 395 ITR 526 / 295 CTR 466/ 82 taxmnn.com 287 (Delhi)( HC)

  83. S.153A : Assessment – Search – No incriminating material was found, assessment completed on the date of search, assessment u/s. 153A was held to be invalid. [Ss. 80HHC, 132]
    Dismissing the appeal of the revenue, the Court held that when no incriminating material was found, assessment completed on the date of search, assessment u/s. 153A was held to be invalid. (AYs. 2000-01, 2001-02)

    PCIT v. Ram Avtar Verma (2017) 395 ITR 252 (Delhi) (HC)

  84. S.153C : Assessment – Income of any other person – Search and seizure
    – Satisfaction – Statement of director constitute material for issue of notice. [S. 132(4)]Allowing the appeal of the revenue the Court held that where assessee’s director stated that some cash seized at his residential and office premises belonged to the assessee, then such statement constitutes material for completion of proceedings u/s. 153C because, it was made during the course of search u/s. 132(4). (AY. 2008-09)

    PCIT v. Nau Nidh Overseas (P.) Ltd. (2017) 293 CTR 567 (Delhi) ( HC)

  85. S.158BC : Block assessment – Natural justice – Contention was not raised before any authority
    – Assessee was aware of the document, there is no violation of principle of natural justice
    –Unaccounted receipts and assets were found – Validity of search cannot be questioned
    – Order cannot be held to be biased only because the Assessing Officer was part of search party. [S. 132]
    Court held that contention of natural justice was not raised before any authorities and the assessee was aware of the document hence there is no violation of principle of natural justice. Documents seized revaling unaccounted receipts and assets hence the validity of search cannot be questioned Assessing Officer was part of the search party cannot be basis to hold that the order was biased. (BP. 1985-95 )

    Anuj Chawla v. CIT (2017) 395 ITR 52/247 Taxman 264/295 CTR 235 (Delhi)( HC)

  86. S.158BC : Block assessment – Foreign fund transfer – Failure to furnish credible evidence, addition was held to be justified. [Ss. 69A, 132]
    Court held that failure to furnish credible evidence of foreign fund transfer addition was held to be justified (BP. 1985-95 )

    Anuj Chawla v. CIT (2017) 395 ITR 52/247 Taxman 264/295 CTR 235 (Delhi)( HC)

  87. S.158BC : Block assessment – Amounts neither disclosed in the return nor in the block return, additions which are based on documents seized was held to be justified [S. 132]
    Court held that, amounts neither disclosed in the return nor in the block return, additions which are based on documents seized was held to be justified. (BP. 1985-95)

    Anuj Chawla v. CIT (2017) 395 ITR 52/247 Taxman 264/295 CTR 235 (Delhi)( HC)

  88. S.158BC : Block assessment – Loose papers – Revaluation of property – Addition was held to be not justified [S.132]
    Court held that randomly scribbled loose paper is not sufficient to warrant revaluation hence deletion of additions was held to be proper. (BP. 1985-95)

    Anuj Chawla v. CIT (2017) 395 ITR 52/247 Taxman 264/295 CTR 235 (Delhi)( HC)

  89. S.158BC : Block Assessment – Issue of notice under section under section 143(2) is mandatory for the purpose of assessment under Chapter XIV-B. [S. 143(2)]
    The High Court upheld the order of the Tribunal quashing the block assessment order passed under section 158BC of the Income-tax Act, 1961 for the reason that the issue of notice under section 143(2) is mandatory for block assessment proceedings following the decision of the Honourable Apex Court in the case of ACIT v. Hotel Blue Moon (2010) 321 ITR 362 (SC).

    CIT v. Monga Steels Pvt Ltd (2017) 146 DTR 1134 (All.)(HC)

  90. S.158BD : Block Assessment –Undisclosed income of any other person – Satisfaction note can be prepared even after assessment of person against whom search conducted. [S. 158BC]
    The satisfaction note could be prepared at either of the following stages : (a) at the time of or along with the initiation of proceedings against the person in respect of whom search was conducted under section 158BC of the Act;
    (b) along with the assessment proceedings under section 158BC of the Act; and (c) immediately after the assessment proceedings are completed under section 158BC of the Act of the person in respect of whom search was conducted
    (BP. 1-4-1986 to 1-8-1996)

    CIT v. Bipinchandra Chimanlal Doshi (2017) 395 ITR 632 (Guj)( HC)

  91. S.179 : Private company – Liability of directors – The principle of corporate veil can be lifted if the company is used as a means to evade tax or to circumvent the tax obligation and in that case, an individual shareholder may also be liable to pay the income-tax.
    The company named Hirak Biotech Limited, a public limited company was incorporated with three directors. On 20th March 2005, the petitioner was introduced as director and continued till 5th September 2005. The petitioner was also holding 98.33% of the shares of the company.

    An order u/s. 179 of the Act was passed on the petitioner on the ground that he has failed to prove that non-recovery of taxes cannot be attributed to any gross neglect, misfeasance or breach of duty on his part in relation to the affairs of the company. On special civil application, the HC, upholding the legality and validity of the impugned order, held that when the people start misusing the veil of corporate personality, then it becomes necessary for the courts to pierce the corporate veil and look who are the real beneficiaries. The HC also negated the petitioner’s contention that the affairs of the company were managed by other directors, by holding that the statue does not permit a director of a company to assign his office to be left to others and therefore, consequences he must suffer on account of such negligence. Further, even though the words ‘private limited’ are not used in the name of the company and therefore, contended to be out of S. 179, the HC held that a closer look at the affairs of the company, the manner in which the affairs proceeded with, all indicate that in actual terms the company has not acted as a public limited company in true sense.

    Ajay Surendra Patel v. DCIT (2017) 394 ITR 321 / (2017) 293 CTR 249 (Guj.)(HC)

  92. S.194A : Deduction at Source –Interest other than interest on securities
    – Workmen’s compensation – Insurance company should spread over interest on compensation from date of accident till date of actual realization and insurance company should refund claimant workman amount deducted as TDS
    Workmen’s Compensation Commissioner issued decree to pay compensation and interest from date of accident till date of actual payment/realisation. Insurance company did not spread over interest accrued which resulted in deduction of tax at source, while spreading over would not have invited TDS obligation. Court held that insurance company should spread over interest on compensation from date of accident till date of actual realisation and insurance company should refund claimant workman amount deducted as TDS.

    New India Assurance Co. Ltd. v. Bhupatsinh @ Falji Gopalji Vaghela (2017) 246 Taxman 96 (Guj.)(HC)

  93. S.194I : Deduction at source – Rent – Passenger service fees collected by airline operators for use of land and building cannot be termed as rent and hence not liable to deduct tax at source as rent. [S. 201(IA)]
    Dismissing the appeal of the revenue , the Court held that; that the assessee collected passenger service fees only from its embarking passengers for and on behalf of the airport operator. The payment of passenger service fees was for use of secured building and furniture. Therefore, the use of land or building in this case was only incidental. As the substance of the passenger service fees was not for use of land or building but for providing security services and facilities to the embarking passengers the payment could not be considered to be rent within the meaning of section 194I. Tax was not deductible at source on the payment. (AY. 2010-11)

    CIT (TDS) v. Jet Airways (India) Ltd. (2017) 395 ITR 230 (Bom.)( HC)

  94. S.201 : Deduction at source – Failure to deduct or pay – Tax paid by recipients of interest hence failure to deduct tax deductor is liable only to interest confined to period from date on which tax deductible to date of payment of tax. [Ss. 201(1) 201(IA) 221]Court held that ; when the recipients of interest has paid the tax for failure to deduct the tax deductor is liable only to interest confined to period from date on which tax deductible to date of payment of tax. (AY. 2001-02, 2002-03 )

    Ghaziabad Development Authority v. UOI (2017) 395 ITR 597 (All) ( HC)

  95. S. 201 : Deduction at source – Failure to deduct or pay – Interest – Penalty
    – Even if the deductee assessee has paid the tax dues, it would not alter the liability to charge interest under Section 201(1A) till the date of payment of taxes by the deductee /assessee. Further, the same would not even affect the liability for penalty under Section 271C. [Ss.2(43), 194C, 201(IA), 271C]
    The Assessing Officer held that the assessee was liable to deduct tax at source under section 194C and having failed to do so levied interest under section 201(1A). The assessee submitted that it was not liable to pay interest under section 201(1A) as the payee of the amounts in respect of which the tax was allegedly to be deducted at source had filed their returns declaring a nil income and on account of which no tax was in fact paid or payable by them. The CIT(A) and the Tribunal accepted the assessee’s stand ad accordingly held that the assessee was not liable to pay interest under section 201(1A).

    On appeal, the High Court held that even if the proviso to sub-section (1) is not retrospective, it would make no difference to the assessee’s case in view of the judgment of the Supreme Court in Hindustan Coca Cola Beverage (P.) Ltd. v. CIT [2007] 293 ITR 226 (SC) from which it was clear that even if the deductee assessee has paid the tax dues, it would not alter the liability to charge interest under Section 201(1A) till the date of payment of taxes by the deductee /assessee. Further, the same would not even affect the liability for penalty under Section 271C. Thus, even prior to the amendment on 1st July, 2012, the liability to pay interest under Section 201 (1A) was there even in cases where the deductee assessee had paid the tax dues. (AY. 2007-08 )

    CIT(TDS) v. Punjab Infrastructure Dev. Board (No 1 ) (2017) 394 ITR 195 / 245 Taxman 183 (P&H) (HC)

  96. S.201 : Deduction at source –Failure to deduct or pay – Issue of notice
    – Limitation – Petition was allowed. [S. 195]
    The AO issued the show cause notice dated 31-3-2011, for the period F.Y. 2001-02 to 2010-11, to the assessee asking it to show cause as to why it should not be deemed to be an assessee-in-default as it made payments on account of interconnection charges to various foreign entities without deduction of tax under Section 195 of the Act.

    In writ proceedings, High Court held that the entire issue was covered by the decision of Vodafone Essar Mobile Services Ltd. v. Union of India 2016 (385) ITR 436 (Del.) where it was held that a reasonable period was read into the Act, in relation to exercise of powers. Further, the only reason cited by the respondent,
    i.e. administrative convenience, could not outweigh the harsh nature of the consequence, which would expose resident payers to the onerous responsibility of maintaining books and documents for an uncertain period of time. Petition of the assessee was allowed. (AYs. 2002-2003 to 2011-12)

    Bharti Airtel Ltd. v. UOI (2017) 245 Taxman 80 / 291 CTR 254 (Delhi)( HC)

  97. S.201 : Deduction at source –Failure to deduct or pay – Matter was set-aside for verification.
    [S. 191]
    Allowing the appeal of the revenue, the Court held that it was an important aspect to be examined whether the recipient-assessee had directly paid tax or has no liability of tax at all. Since this aspect was not examined by the assessing authority, therefore, the Tribunal had rightly remanded the matter to the assessing authority to examine this aspect. The Explanation to section 191 has to be read into section 201(1). The deductor who fails to deduct Income-tax at source shall be deemed to be an assessee in default only when the assessee has also failed to pay such tax directly. Thus, it flows that there is no occasion to treat the deductor as an assessee in default unless the assessee has not paid the tax directly (AYs. 2003-04 to 2007-08)

    CIT (TDS) v. Sahara India Commercial Corpn. Ltd. (2017) 395 ITR 734 (All.)( HC)

  98. S.206C : Collection at source – Trading – Forest produce – Where assessee was engaged in importing timber and thereupon selling it to registered dealers in the country, assessee was required to collect tax at source from purchasers in terms of s. 206C at the time of sale
    The assessee was a timber merchant, mainly importing timber from other countries and were selling it to dealers in India. Since the assessee did not collect tax at source in terms of s. 206C of the Act from the purchasers to whom the imported timber was sold, the AO treated him to be assessee in default. In response to this, the assessee filed a writ petition before the HC. Dismissing the petition the Court held that where assessee was engaged in importing timber and thereupon selling it to registered dealers in the country, assessee was required to collect tax at source from purchasers in terms of s. 206C at the time of sale. (AYs. 2009-10 to 2013-14)

    Excellent Timber Imports & Exports (P) Ltd. v. ITO (2017) 293 CTR 201 (Ker.) ( HC)

  99. S.220 : Collection and recovery – Assessee deemed in default – Where TRO stayed the recovery of demand raised by the AO, subject to the petitioner making a monthly deposit till the date of CIT(A) Order, the HC directed to make the monthly deposit only till the date of CIT(A) Order or
    31st March 2017, whichever was earlier.
    The AO passed the Assessment Orders and raised tax demand of ₹ 141.76 crores. Against the said AO Order, the assessee filed appeal before the CIT(A) and parallely, the TRO stayed the recovery of tax of ₹ 141.76 crores subject to the payment of ₹ 21 crores in installment of ₹ 1.75 crores per month beginning from 25-1-2017 till the disposal of CIT(A) appeals.

    On filing writ against the TRO Order, the HC held that as the CIT(A) has commenced the hearing, there should not be a delay in disposing of the appeal before 31st March 2017. Further, the HC observed that there are doubts that the appeal would be specifically delayed with an ulterior object of collecting the revenue and thus held that, the petitioner would deposit an amount of ₹ 1.75 crores every month only till the date of CIT(A) Order or 31st March 2017, whichever was earlier. (WP No. 1515 of 2017) (AY. 2008-09 to 2014-15)

    Sinhgad Technical Education Society v. TRO (2017) 246 Taxman 26 / 293 CTR 109 (Bom) ( HC)

  100. S.221 : Collection and recovery – Penalty – Tax in default – Penalty can be imposed on arrears of tax excluding interest under section 220(2) [S. 2(43)]
    Dismissing the appeal of the revenue, the Court held that on reading the provisions of section 221 conjointly with the definition of “tax” as detailed under section2(43) of the Act, the irresistible conclusion that could be drawn was that the phraseology “tax in arrears” as envisaged in section 221 of the Act would not take within its realm the interest component. The Assessing Officer could impose penalty for default in making the payment of tax, but it should not exceed the amount of tax in arrears. Tax in arrears would not include the interest payable under section 220(2) of the Act.

    CIT v. Oryx Finance and Investment P. Ltd. (2017) 395 ITR 745 / 83 taxmann.com 194 (Bom.) (HC)

  101. S.222 : Collection and recovery – Certificate to Tax Recovery Officer – Attachment of property
    – Original assessee has already deposited/paid the entire amount due and payable under certificate along with the interest payable under section 220(2)
    – The order of TRO is bad in law. [S. 220 and R. 48 and 60 of Second Schedule]
    An order of attachment of property jointly owned by four persons including original assessee was passed by TRO, for an amount due and payable by original assessee in respect of certificate and interest payable under section 220(2). Despite order of attachment, original assessee along with co-owners transferred property in favour of assessee’s wife. After a period of 7 years of the sale transaction, TRO declared the sale deed as null and void. Court held that the original assessee has already deposited/paid the entire amount due and payable under certificate along with the interest payable under section 220(2), therefore, the order of TRO is bad in law.

    Nitaben Harishbhai Shah v. TRO (2017) 246 Taxman 346 (Guj.)(HC)

  102. S.234B : Advance tax – Interest – Income computed under section 115J prior to section 115JA, 115JB assessee is not liable to pay interest. [S. 115J, 115JA, 115JB, 234C]
    Allowing the appeal of the assesse the Court held that for the Assessment Year 1989-90 when neither of the two sections 115JA and115JB of the Act were in existence. The provision of section 115J of the Act was inserted with effect from April 1, 1988 and it remained in force up to March 31, 1991. At that time there was neither section 115JA nor section 115JB of the Act. The provisions under sections 115JA and 115JB were enforced by the Finance Act of 1996 with effect from April 1, 1997 and by the Finance Act, 2000 with effect from April 1, 2001 respectively. Therefore, income computed under section 115J of the Act for the period prior to enforcement of sections115JA and 115JB, would not attract interest under sections 234B and 234C of the Act. (AY. 1989-90)

    J.K. Synthetics Ltd v. CIT (2017) 395 ITR 647/ 82 taxmann.com 23 (All) (HC)

  103. S.234E : Fee – Default in furnishing the statements – Section cannot be said to be unreasonable and arbitrary in as much as it is on account of additional work burden which has fallen upon department due to fault of deductor to file statement within time, that a fee has been levied. [Art. 226]
    The assessee is a lower primary school. It was making salary payments to the teaching staff of the school after deducting tax at source and amount so collected was credited to the account of Income tax department. The assessee did not file statement in Form 24Q within the time prescribed in the relevant section. The department demanded late fee under section 234E for delay in filing TDS statement.

    On filing writ before the HC, the assessee challenged the validity of section 234E. Dismissing the petition the Court held that, section cannot be said to be unreasonable and arbitrary in as much as it is on account of additional work burden which has fallen upon department due to fault of deductor to file statement within time, that a fee has been levied.

    Sree Narayana Guru Smaraka Sangam Upper Primary School v. UOI (2017) 292 CTR 296 / 77 Taxman.com 244 (Ker.) (HC)

  104. S.245 : Refunds – Set off of refunds against tax remaining payable – Adjustment of refund without giving an opportunity of hearing was held to be breach of principles of natural justice hence bad in law. [Art. 226]
    Allowing the petition, the Court held that ; Adjustment of refund without giving an opportunity of hearing was held to be breach of principles of natural justice hence bad in law. (AY. 1994-95 )

    S. Narayanan v. CIT (2017) 395 ITR 271 (Mad.) (HC)

  105. S.245C : Settlement Commission – Settlement of cases – Conditions-Search and seizure action was for ten group companies
    – Settlement Commission accepting six companies petitions and rejecting four companies Applications was held to be not proper, there was no rational criteria for distinguishing
    – Order of settlement Commission was set aside. [Ss. 132, 153A, 245D]
    Allowing the petitions the Court held that the Settlement Commission did not give any rational criteria for distinguishing between the six companies in the group and the four assessees while rejecting the settlement applications, on a ground that was not urged by the Department, viz., the failure to disclose the manner of earning the undisclosed income.. The differential treatment of the four assessees forming part of the same group was not warranted. The order of the Settlement Commission was unsustainable. (AYs. 2008-09 -2015-16 )

    Bindals Dupex Ltd v. PCIT (2017) 395 ITR 128 (Delhi)(HC)

    Brina Gopal Traders P. Ltd. v. PCIT (2017) 395 ITR 128 (Delhi) (HC)

    Swabhiman Vyapaar P. Ltd. v PCIT (2017) 395 ITR 128 (Delhi)(HC)

    Tehri Pulp and Pape Ltd v. Pr. CIT (2017) 395 ITR 128 (Delhi)(HC)

  106. S.245D : Settlement Commission – Procedure – Limitation provided in section 245D(4A) is mandatory and thus Settlement Commission has to pass order within time period specified in aforesaid section. [S. 245D(4A)]
    A search was carried out at the premises of the assessee pursuant to which the assessee filed an application before the Settlement Commission offering additional undisclosed income. The assessee filed an application before the Settlement Commission on 6-2-2014. The Settlement Commission allowed application on 3-4-2014 u/s. 245D(2C) of the Act by holding that the application filed by the assessee was valid. Pursuant to such order, department filed a writ petition challenging the order passed by the Settlement Commission. The writ petition was disposed by the HC vide order dated 8-1-2016. No stay of Settlement Commission proceedings was given by the HC. The Settlement Commission passed an order on 27-5-2016 determining total income for relevant years and imposing penalty under relevant section. On writ petition filed by the assessee against the Settlement Commission order, the HC held that, the impugned order dated 27-5-2016 was passed beyond the limitation period prescribed under section 245D(4A) i.e. 18 months from the end of the month in which the application is made. HC further held that the proceedings before Settlement Commission were not stayed and that the delay caused in passing the order was also not attributable to the assessee, hence impugned order passed by the Settlement Commission is not sustainable in the eyes of law. (AY. 2006-07 to 2012-13)

    RNS Infrastructure Ltd. v. ITSC (2017) 292 CTR 195 / 147 DTR 21 /(2017) 77 Taxmann.com 103 (Kar.) (HC)

  107. S.245D : Settlement Commission – Settlement Commission could not accept additional income declared by assessee at the stage of hearing, merely on ground that it was difficult to ascertain nature of undisclosed income on basis of impounded documents [Ss. 133A, 245C]
    The AO conducted a survey under section 133A upon the assessee. Thereupon the assessee filed an application before the Settlement Commission requesting for settlement of cases for the Assessment Years 2011-12 to 2013-14 and declared a sum of ₹ 34 lakhs as undisclosed income. Later on, the assessee, at the stage of hearing of the application under section 245D(4), with the permission of the Settlement Commission, declared additional income of ₹ 56 lakhs, over and above what was already declared in the application for settlement which was accepted by the Settlement Commission. The revenue filed a writ before the HC, contending that the assessee cannot revise such income by a further declaration which would go to show that the initial disclosure of income itself was not accurate.

    The HC observed that the initial disclosure of undisclosed income of the assessee along with the application for settlement was total of ₹ 34 lakhs and later on, at the stage of hearing of application under section 245D(4), assessee made a substantial revision by offering an additional income of ₹ 56 lakhs to tax which was allowed by the Settlement Commission. The HC observed that the revision is not minor adjustments in the earlier disclosure as it can been seen that the further declaration was more than 150% of the initial disclosure. Therefore, HC held that the assessee’s plea that the revised declaration was allowed in spirit of settlement cannot be accepted. Further the HC held that the prime requirements of application under section 245C is to provide full and true disclosure of his income and if the assessee fails to do so then the application would be rejected. In the instant case as the revised declaration is far greater than the original declaration, it shows that the assessee had not made full and true disclosure and the application should be rejected. HC also observed that there is no stipulation for revision of an application filed under section 245C. In the result, the order of Settlement Commission was set aside. (AYs. 2011-12 to 2013-14)

    PCIT v. Shree Nilkanth Developers ( 2016) 73 taxmann.com 76 ( Guj.) (HC)

  108. S.245D : Settlement Commission – Income disclosed did not belong to assessee
    – Rejection of application was held to be justified – Writ is not maintainable [Ss.132, 245C, Art. 226]Settlement Commission dismissed the petition on the ground that income declared by the petitioner did not belong to him but was unaccounted money which was collected by another entity. Against the said order the Assessee filed the writ petition. Dismissing the petition the Court held that, unless there was a manifest unreasonableness or perversity in the Settlement Commission’s order, the Court could not substitute its reasoning for that of the Settlement Commission whose findings were based upon an analysis of the facts. It had found that the assessee’s concern ABC was unknown and was an amorphous entity and not a legal entity. It had also found that no evidence was brought in to substantiate the claim that the unaccounted money was in respect of “special and specific requirements of the customers/investors in the projects” and held that the money belonged to the group companies concerned. The findings of fact could not be reviewed like in an Appellate Court. The findings of fact rendered by the Settlement Commission could not be set aside or interfered with.

    Vishwa Nath Gupta v. PCIT (2017) 395 ITR 165/ 82 taxmann.com 382 (Delhi) (HC)

  109. S.253 : Appellate Tribunal – Jurisdiction – With reference to the location of the Assessing Officer [ITATR. 4(1 ]
    That jurisdiction was not to be determined with reference to the place where order under appeal was passed, but in accordance with Rule 4(1) of the Income-tax (Appellate Tribunal) Rules, 1963, with reference to the location of office of the Assessing Officer. Since the assessing authority of the assessee was at Gautam Budh Nagar, the Delhi Bench had jurisdiction to entertain the appeal.

    CIT (E) v. Greater Noida Industrial Development Authority (2017) 395 ITR 18 (All.)(HC)

    CIT (E) v. New Okhla Industrial Development Authority (2017) 395 ITR 18 (All.) (HC)

    CIT (E) v. Yamuna Expressway Industrial Development Authority (2017) 395 ITR 18 (All.)(HC)

  110. S.254(1) : Appellate Tribunal – Tribunal has the power to direct the Commissioner to grant registration [S.12A]
    Dismissing the appeal of the revenue the Court held that S. 254 of the Act, empowered the Tribunal to pass such orders as it deemed fit. Therefore, in all the matters, where an appeal was provided to the Tribunal, its power was co-extensive with that of the authorities whose orders were appealed against before the Tribunal. There was no such restriction under the statute and on the contrary, the statute conferred widest power upon the Tribunal. Thus the Tribunal rightly exercised the power conferred upon it, by directing the Commissioner to grant registration.

    CIT (E) v. Greater Noida Industrial Development Authority (2017) 395 ITR 18 (All.)(HC)

    CIT (E) v. New Okhla Industrial Development Authority (2017) 395 ITR 18 (All.) (HC)

    CIT (E) v. Yamuna Expressway Industrial Development Authority (2017) 395 ITR 18 (All)(HC)

  111. S.254(1) : Appellate Tribunal – A fresh claim can be made before the Appellate Authorities even if such claim was not made in the original / revised return of income. [Ss. 139, 153A]
    Dismissing the appeal of the revenue , the Court held that the assessee has a right to raise fresh claim before appellate authorities irrespective of the fact that such claims were not made in the original / revised return of income. The HC also held that the return furnished in response to notice u/s. 153A of the Act, is to be treated as return filed u/s. 139 of the Act and all the provisions of the Act which are applicable to return filed u/s. 139(1) of the Act, would also continue to apply to a return filed in response to a return u/s. 153A of the Act. (AYs. 2007-08, 2008-09)

    CIT v. B.G. Shirke Construction Technology (P.)
    Ltd. (2017) 293 CTR 505 / 246 Taxman 300 (Bom.) (HC)

  112. S.254(2) : Appellate Tribunal –Rectification of mistake apparent from the record
    – For purposes of filing a rectification application, the period of limitation of six months commences from the date of receipt of the order sought to be rectified by the assessee and not from the date of passing of the order [Central Excise Act, 1944, Ss. 34C, 35C, 37C]
    The assessee filed a rectification application and claimed that it was maintainable as it was filed within six months from the date of service of notice of the order, which was sought to be rectified. However, the learned CESTAT dismissed the said application considering the starting point of limitation of rectification as the date of the order sought to be rectified. Allowing the petition the Court held that for purposes of filing a rectification application, the period of limitation of six months commences from the date of receipt of the order sought to be rectified by the assessee and not from the date of passing of the order. Followed the ratio in D. Saibaba v. Bar Council of India AIR 2003 SC 2502. (TA No. 915 of 2016, dt. 25-1-2017)

    Liladhar T. Khushlani v. Commissioner of Customs Guj.)(HC), www.itatonline.org

  113. S.254(2) : Appellate Tribunal –Rectification of mistake apparent from the record
    – Limitation –There was no averment in the petition when the order was served, hence the application was dismissed on the ground that the petition was filed beyond period of limitation [ITAT R. 24, 25]
    When the matter came up for hearing before the Tribunal, there was no appearance on behalf of the assessee. The JCIT appeared for the revenue and argued the case. The Tribunal passed its order in favour of the revenue vide order dated 18-7-2011. Aggrieved by the dated 18-7-2011 passed by the Tribunal, the assessee filed an appeal which was stated to have been filed with delay. While matter stood, the assessee filed a miscellaneous to recall the ex parte order and to set aside and restore the same.

    The Tribunal finding that rectification application had been filed after expiry of period of four years from date of order, rejected same being barred by limitation.

    The High Court held that even if the period for filing an application for recalling the ex parte order had to be computed from the date of service of the order, no averments had been made in the miscellaneous petition as to when the order was served on the appellant. Accordingly the High Court dismissed the petition. (AY. 2007-08)

    S. P. Balasubrahmanyam v. ACIT (2017) 394 ITR 366 / 245 Taxman 146 (Mad.) (HC)

  114. S.255 : Appellate Tribunal –Jurisdiction – Single Member Bench – Income of assessee computed under minimum alternate tax provisions above ₹ 50 lakhs. Amendment effective from 1-6-2016 on date of deciding appeal
    – Matter to be heard by division Bench of Tribunal, matter remanded [Ss. 255(2), 255(3)]
    Allowing the appeals the Court held that the income of the assessee was assessed by the Assessing Officer at ₹ 12,74,720 but was computed under the minimum alternate tax provisions at ₹ 96,28,336 under section 115JB of the Act which was much above the limit prescribed under section 255(3) ₹ 50,00,000 as the provision of section of the Act. The appeal was decided on June 1, 2016 on which date the limit for hearing the appeal by a single Member of the Tribunal would be taken at S. 255(3) of the Act as amended by the Finance Act, 2016 was made operative from June 1, 2016 itself. The order passed by the single Member of the Tribunal was to be set aside and the matter was to be remanded to the Tribunal to be heard and decided afresh by a Division Bench of the Tribunal in accordance with section 255(2) of the Act. (AY. 2008-09)

    Gee City Builders P. Ltd v. CIT (2017) 395 ITR 160 (P&H) (HC)

  115. S.260A : Appeal – High Court –Common order – Revenue is not permitted to refer records relating to assessment in the matter of withdrawal of registration.
    [S. 12AA, 143]
    Dismissing the appeal of the revenue, the Court held that when common order is passed by the Tribunal, revenue is not permitted to refer records relating to assessment in the matter of withdrawal of registration, unless the said order is challenged before the Court. (AY. 2008-09)

    DIT(E) v. Shree Nashik Panchvati Panjrapole (2017) 248 Taxman 67 / 295 CTR 214 (Bom.)( HC)

  116. S.260A : Appeal – High Court – Tax effect below prescribed limit hence the appeal is not maintainable
    Tax effect below prescribed limit hence the appeal is not maintainable. Circular No. 21 of 2015, dated December 10, 2015 ([2015] 379 ITR 107 (St.).

    CIT v. Unique Mercantile Services P. Ltd. (2017) 395 ITR 429 (Guj.) (HC)

  117. S.260A : Appeal – High Court –Tribunal has no power to review – Against the dismissal of miscellaneous application to file writ petition and not appeal
    [S.254(2), Art. 226]
    Dismissing the appeal of the revenue , the Court held that where the Tribunal dismissed the Department’s miscellaneous application, as well as a second application, the review applications were not maintainable and the appropriate remedy was to file a writ petition.

    CIT v. Singhal Industries (2017) 395 ITR 264 (Raj.)(HC)

  118. S.263 : Commissioner – Revision of orders prejudicial to revenue – Dissolution of firm
    – Valuation of closing stock at cost price – Assumption that business comes to an end is not applicable where the business is continued after dissolution of firm
    – View of the Assessing Officer is possible view, hence revision is not permissible [Ss. 145(4), 145]
    Dismissing the appeal of the revenue, the Court held that valuation of closing stock at cost price is possible view. Assumption that business comes to an end is not applicable where the business is continued after dissolution of firm. View of the Assessing Officer is possible view, hence revision is not permissible. (AY. 1993-94)

    CIT v. Kwality Steel Suppliers Complex (2017) 395 ITR 1 (SC)

  119. S.263 : Commissioner – Revision of orders prejudicial to revenue – order covering issues not mentioned in show-cause notice is not permissible
    – Order passed by Assessing Officer after making enquiries cannot be said to be erroneous. [S. 90, 143(3)]
    Dismissing the appeal of the revenue , the Court held that order covering issues not mentioned in show-cause notice is not permissible and Order passed by Assessing Officer after making enquiries cannot be said to be erroneous, though no discussion in the order. Order of Assessing Officer granting double taxation relief was held to be justified. (AYs. 2010-11, 2011-12)

    PCIT v. Krishak Bharati Co-op. Ltd. (2017) 395 ITR 572/ 247 Taxman 317/ 295 CTR 181 (Delhi)( HC)

  120. S.263 : Commissioner – Revision of orders prejudicial to revenue – Cash credits
    – Share capital premium – Lack of proper enquiry – Revision was held to be valid [S.68, 147, 148]
    Dismissing the appeal of the assessee the Court held that where reassessment was made for purpose unconnected with issue of share capital/premium but issue of share capital at premium had also been examined by Assessing Officer in reassessment proceeding, revisional proceeding initiated by Commissioner alleging lack of proper enquiries as to issue of share capital/premium in course of reassessment proceedings was valid. Mere fact that assessment year in question is year of commencement of business cannot insulate it from an inquiry directed towards steps contemplated under section 68. (AY. 2008-09)

    Success Tours & Travels P. Ltd. v. ITO (2017) 247 Taxman 109/ 394 ITR 37/ (2017) 295 CTR 430 (Kol.)(HC)

  121. S.263 : Commissioner – Revision of orders prejudicial to revenue – Merger
    – Order of AO merged with that of CIT(A) and therefore revision is bad in law [S.11, 12, 12AA, 13]
    Dismissing the appeal of the revenue , the Court held that the order of AO merged with that of CIT(A) and therefore, revision jurisdiction cannot be assumed. (AYs. 2001-02 to 2005-06).

    CIT (E) v. Allahabad Agriculture Institute (2017) 246 Taxman 252 (All.)(HC)

  122. S. 263 : Commissioner – Revision of orders prejudicial to revenue – Assessing Officer assessed the income by making the addition, Commissioner cannot revise the order to increase the addition
    Dismissing the appeal of the revenue, the Court held that; where the Assessing Officer while dealing with the matter at the first instance conducted proper proceedings and arrived at a conclusion based on cogent reasons that had been placed on record. The only reason given to hold the order of the Assessing Officer to be erroneous and prejudicial to the interests of the revenue was that once the amount received from certain parties was considered the addition to income was not proper. Merely because a different view was possible interference under section 263 on this count could not be made. The order of revision was not valid.

    CIT v. Narottam Mishra (2017) 395 ITR 138 (MP) (HC)

  123. S.264 : Commissioner – Revision of other orders – Revised return – Intimation can be considered in revision application, Commissioner was directed to consider the revision application. [S. 12A, 143(1)]
    Dismissing the revision application Commissioner held that the intimation under section 143(1) was not an order of assessment for the purpose of section 264, whereas it was deemed to be a notice of demand under section 156 of the Act. On writ allowing the petition the Court held that section 143 had undergone certain changes with effect from June 1, 1999. The statute uses the word intimation and not order. It was in the light of the change in the statutory provision that one had to consider the scope and effect of the revisional powers under section 264 . Though not as a challenge to section 143(1) notice, when the assessee filed a revised return and sought for interference by the Commissioner, necessarily the claim had to be considered in accordance with law. Matter was remanded. (AY. 2013-14)

    Agarwal Yuva Mandal (Kerala) v. UOI (2017) 395 ITR 502/246 Taxman 78 (Ker.) (HC)

  124. S.264 : Commissioner – Revision of other orders – Search and Seizure – Assessment of third person
    – Under writ jurisdiction Court cannot examine whether documents seized were incriminating
    – Rejection of revision application was held to be justified [S. 153C, Art. 226 ]
    Held, dismissing the petitions, against the order u/s. 264, the Court held that in writ proceedings, it was difficult for the Court to examine the documents seized and determine if in fact the documents were incriminating for each of the assessees. The documents listed out in the satisfaction notes were not non-incriminating on a bare perusal. There was sufficient opportunity for both the assessees to demonstrate how they were not. But the assessees had failed to avail of the opportunity. In the writ jurisdiction, the Court has to be satisfied that the Commissioner’s orders were not unfair, unjust or irrational and were consistent with the basic procedural requirements. On none of these counts, did the orders of the Commissioner warrant interference. (AY. 2004 -05 to 2009-10)

    Ganpati Fincap Services P. Ltd. v. CIT (2017) 395 ITR 692 / 82 taxmann.com 408 (Delhi) (HC)

    Sushree Securities Pvt Ltd. v. CIT (2017) 395 ITR 692/82 taxmann.com 408 (Delhi) (HC)

    Shrey Infradevelopers Pvt Ltd v. CIT (2017) 395 ITR 692/82 taxmann.com 408 (Delhi) (HC)

  125. S. 271(1)(c) – Penalty –Concealment – Estimate of income of discounting of drafts
    – If the basis on which penalty is initiated by the AO and the basis on which the quantum is confirmed on merits by the Tribunal are different, penalty cannot be levied
    Allowing the reference of the assesee, the Court held that even the Tribunal had accepted the case of the assessee that he is carrying on the business of Draft Discounting. It is also observed that in many cases, the Tribunal has taken a view that in case of Draft Discounting, income is considered at ₹ 1/per thousand and in some cases, at ₹ 2/per thousand. In the present case, it considered it to ₹ 2/per thousand. The assessee, therefore, was not required to give any explanation as his case was accepted by the Tribunal in Appeal. As such, for all the above reasons, Explanation (1) to Section 271(1)(c) of the Act would not be attracted. (ITR No. 10 of 2001, dt. 6-7-2017)(AY.1982-83)

    Indermal Manaji v. CIT (Bom.)(HC), www.itatonline.org

  126. S.271(1)(c) : Penalty – Concealment – Protective assessment – Charge of concealment penalty cannot be levied where the order is passed on the basis of protective assessment [Ss.69, 132, 153C]
    Allowing the petition the Court held that ; Charge of concealment penalty cannot be levied where the order is passed on the basis of protective assessment. There could be a protective order qua assessment, but not a protective order in respect of penalty. Court also observed that apart from the averment made in the affidavit, no material was placed to show the dispatch, or receipt of the order by the assesse. (AY. 1994 -95)

    S. Narayanan v. CIT (2017) 395 ITR 271 (Mad.) (HC)

  127. S.271(1)(c) : Penalty – Concealment – Notice of penalty is not clear as to whether penalty is imposed for concealment or furnishing of inaccurate particulars of income, the order imposing penalty is not sustainable. [S.153A]
    In the return of income filed in response to notice u/s. 153A of the Act, the assessee offered to tax, cash payment made for the property. The disclosure was made voluntary and to buy peace. The voluntary disclosure did not find favour with the AO and he levied the penalty u/s. 271(1)(c) of the Act, on the ground of concealment or furnishing inaccurate particulars of income. On appeal, the CIT(A) and ITAT confirmed the levy of penalty. On further appeal, the HC, deleting the levy of penalty, held that, firstly, the notice of penalty should specifically mention as to whether the assessee has concealed the income or furnished inaccurate particulars of income. Secondly, sending of a printed form without specifying the grounds for levy of penalty, would not satisfy the requirement of law. Thirdly, if the assessee is not made aware of the ground on which penalty is levied, it defies the principles of natural justice.

    S. Chandrashekar v. ACIT (2017) 293 CTR 409 (Karn.)(HC)

  128. S.271(1)(c) : Penalty – Concealment – A deduction which is wrongly claimed on the advice of an accountant, would not invite levy of penalty. [S. 57]
    In the return of income, the assessee had claimed deduction towards expenditure incurred on travelling u/s. 57 of the Act. During the assessment proceedings, the assessee conceded the deduction so claimed on the ground that he was unable to produce necessary evidence in support of its claim and also, the accountant on whose advise the claim was made, was no longer in her service. The assessee also paid the tax and interest thereon. However, the AO, treated the disallowance of deduction u/s. 57 of the Act as concealment of income or furnishing of inaccurate particulars of income and levied penalty u/s. 271(1)(c) of the Act. On appeal, the CIT(A) confirmed the levy of penalty. On further appeal, the Tribunal deleted the levy of penalty. On further appeal, the HC, confirming the tribunal’s order, held that when the assessee realised that the expenditure claimed u/s. 57 of the Act was not tenable and was based on wrong professional advice of the accountant, offered the said claim to tax and paid the requisite tax and interest upon the same. On the said basis the HC held that the assessee could not be said to have either concealed or furnished inaccurate particulars of her income.

    CIT v. Anita Kumaran ( Smt.) (2017) 293 CTR 454 (Mad.)(HC)

  129. S.271D : Penalty – Takes or accepts any loan or deposit – Genuineness of the transaction was not in doubt
    – Levy of penalty was not justified [S. 269SS]
    Dismissing the appeal of the revenue, the Court held that the transaction was found to be genuine. The Assessing Officer had not doubted the transaction. In that view of the matter, both the Commissioner (Appeals) and the Tribunal had rightly deleted the penalty. (AY. 1994-95)

    CIT v. Panchsheel Owners Associations (2017) 395 ITR 380 (Guj.) (HC)

  130. S.271D : Penalty – Takes or accepts any loan or deposit – cash received from son for urgent necessity, penalty cannot be levied
    [S. 269SS]
    Allowing the appeal the Court held that ,penalty is not automatic under section 271D of the Income-tax Act, 1961 on mere violation of the provisions of section 269SS of the Act. The assessee explained that the amount received from his son was neither a loan nor a deposit within the meaning of section 269SS of the Act and it was received in cash in view of urgent necessity. A proper explanation had been rendered by the assessee for the transaction. Hence, the imposition of penalty under section 271D was not valid.

    Dr. Rajaram L. Akhani v. ITO (2017) 395 ITR 497 (Guj.)( HC)

  131. S. 282 : Service of notice – Service by post – Service of notice was returned with endorsement “addressee not found”, followed by an attempt at personal service and subsequent affixture would constitute substantial compliance of provisions of service of notice [Ss. 68, 263]
    Dismissing the appeal of the assessee, the Court held that service of notice was returned with endorsement “addressee not found”, followed by an attempt at personal service and subsequent affixture would constitute substantial compliance of provisions of service of notice. (AY. 2008 -09)

    Success Tours & Travels P. Ltd. v. ITO ( 2017) 247 Taxman 109/ 394 ITR 37/ (2017) 295 CTR 430 (Cal.)(HC)

  132. S.293 : Bar of suits in Civil Courts – Subject matter of Income-tax proceedings cannot also be the subject matter of civil proceedings
    Decree holder in possession of suit property filed appeal to High Court . The Court held that subject matter of Income-tax proceedings cannot also be the subject matter of civil proceedings.

    Anuj Chawla v. CIT (2017) 395 ITR 52/247 Taxman 264/295 CTR 235 (Delhi)( HC)

    Finance, Act, 2016 – Pradhan Mantri Garib Kalyan Yojana scheme

  133. S.199C : Unexplained Money –Where cash was seized from a person during demonetisation 2016 and he was not tried under any provision of law, he would be eligible to deposit amount under Pradhan Mantri Garib Kalyan Yojana scheme on or before 31-3-2007 [S. 69C]
    The assessee was travelling in a cab from Delhi carrying ₹ 30 lakhs in new currency notes. The cash amount was seized by police officials and handed over to Income-tax Officers. The assessee filed a writ against the action of the respondents in depriving him of the cash amount and a prayer to permit him to have his advocate present during his interrogation. He further asked, to not take any coercive action against him alleging on the aforesaid dispute and a liberty to avail the remedy under Pradhan Mantri Garib Kalyan Yojana, 2016 (PMGKY, 2016) by depositing the required tax, surcharge and penalty.

    On assessee’s writ, High Court observed that economic offences are very serious and the assessee was one of the persons eligible for availing the benefits of the PMGKY Scheme, therefore, the ITO could not deny him the benefits of such scheme. Further, it also directed the respondent to not take any coercive action against the assessee and permit him to take the assistance of a lawyer to be present at visible but not audible distance during his interrogation. However, the assessee’s plea for return of the seized amount was rejected.

    Vishal Jain v. State of Punjab (2017) 246 Taxman 213 / 293 CTR 137 (P&H (HC)

    Kar Vivad Samadhan Scheme, 1988

  134. S.91 : Immunity from prosecution and imposition of penalty in certain cases
    – Circulars are binding on the department – Protective assessment – Designated authority was justified granting the immunity from prosecution and penalty [Ss. 132, 153C]
    Allowing the petition the Court held that;. According to section 91 of the Finance (No. 2) Act, 1998, a designated authority was empowered to grant waiver from the imposition of penalty and interest in respect of the income, which was the subject matter of the declaration under the scheme. In the assessee’s case since the penalty and interest was levied on the tax arrears, as on March 31, 1998, the declaration issued by the designated authority, according to the circular issued by the Central Board of Direct Taxes, would cover the penalty and interest, determined at a later point in time. The Board’s circular was binding on the Department, especially, in the circumstances that sought to explain as to how the Scheme was to operate. Designated authority was justified granting the immunity from prosecution and penalty.
    (AY. 1994-95 )

    S. Narayanan v. CIT (2017) 395 ITR 271 (Mad.) (HC)

    Indian Penal Code, 1860

  135. S.193 : Punishment for false evidence – Offences and Prosecution – Giving false affidavits before Court, making deliberate false statements on oath and suppressing material facts in pleadings is grounds for prosecution. Registrar General was directed to forthwith file a written complaint before the concerned appropriate Court against the assessee [Code of Criminal Procedure, 1973 , Ss. 195, 197, 340]

The Court held that in the writ petition, the assessee has not only suppressed material facts in their petitions in the first place, but after this was pointed out in the Department’s counter-affidavit, the assessees were most casual in their response thereto making no attempt to justify the suppression of such material facts. The length of the respective rejoinders in both petitions only demonstrated the extent to which material facts within the knowledge of the assessee were not placed before the Court in the first instance. The conditions existed for initiation of action under section 340 of the Code of Criminal Procedure, 1973 against the assessees, since, the assessees had given false affidavits and made deliberate false statements on oath and also suppressed material facts in the pleadings with a clear attempt to mislead the Court. An inquiry should be made against the assessees in relation to the offences committed by them as contemplated by section 195(1)(b) of the 1973 Code. A prima facie case was made out for a complaint being filed against the assessees to be prosecuted under section 193 of the Indian Penal Code, 1860. The Registrar General was directed to forthwith file a written complaint before the concerned appropriate Court against the assessees under section 340 read with section 197 of the 1973 Code thereof.

Strategic Credit Capital P. Ltd. v. Ratnakar Bank Ltd. (2017) 395 ITR 391/81 taxmann.com 408 (Delhi)(HC)

Veena Singh v. DI( Inv) (2017) 395 ITR 391/81 taxmann.com 408 (Delhi)(HC)

  1. S.2(12A) : Books of account –Entries in loose papers/ sheets are irrelevant and inadmissible as evidence – Offences and prosecution – Settlement Commission [Ss.132, 143(3), 245D, Evidence Act, S. 34]
    Entries in loose papers/ sheets are irrelevant and inadmissible as evidence. Such loose papers are not “books of account” and the entries therein are not sufficient to charge a person with liability. Even if books of account are regularly kept in the ordinary course of business, the entries therein shall not alone be sufficient evidence to charge any person with liability. It is incumbent upon the person relying upon those entries to prove that they are in accordance with facts. Finding of Settlement Commission disregarding such evidence as inadmissible and unreliable. The materials in question were not good enough to constitute offences to direct the registration of a first information report and investigation therein. (C.B.I. v. V. C. Shukla (1998)3 SCC 410 (SC) followed).

    Common Cause (A Registered Society) v. UOI (2017) 394 ITR 220 (SC)

  2. S.4 : Charge of income–tax – Capital or revenue – Subvention received by assessee from parent company at time when assessee making losses, payment to protect capital investment was held to be not revenue receipt [Ss.2(24), 28(i)]
    On the question whether the subvention received by the assessee-company from its parent company in Germany in a situation where the assessee-company was making losses had to be treated as a capital or revenue receipt.

    Held, that the voluntary payments made by the parent company to its loss making Indian company could be understood to be payments made in order to protect the capital investment of the assessee-company. The payments made to the assessee-company by the parent company for the assessment years in question could not be held to be revenue receipts. (AY. 1999-2000, 2000-01, 2001-02)

    Siemens Pub. Communication Network Ltd v. CIT (2017) 390 ITR 1 / 291 CTR 22 / 244 Taxman 188 (SC)

  3. S.4 : Charge of income-tax –Capital or revenue receipt – Sales tax subsidy – Matter was remanded to High Court for consideration [S.28(i)]
    Allowing the appeal of the revenue, the matter was remanded to the High Court with a direction that the High Court shall admit the appeal and decide it on the merits. CIT v. Reliance Industries Ltd ( 2004) 88 ITD 273 (Bom.) (SB) (Trib.)

    CIT v. Nitco Tiles Ltd. (2017) 395 ITR 519/ 247 Taxman 308 (SC)

  4. S.9(1)(vii) : Income deemed to accrue or arise from India – Automated software – based communication system set up and maintained by assessee for use of its agents enabling them to access customer and documentation information – Payment received for providing said facility was held to be not taxable as fees for technical services – DTAA-India –Denmark. [Articles 13, 19]
    Dismissing the appeal of the revenue, the Court held that payments received by the assessee, a shipping company from its agents towards reimbursement of cost for maintaining a global vertically integrated telecommunication facility called Maersk Net system which enabled agents to co-ordinate cargos and ports of call for its fleet were not fees for technical services and changeable to tax in terms of Article 9 of the DTAA.

    DIT(IT) v. A. P. Moller Maersk A/S (2017) 392 ITR 186/ 246 Taxman 309 / 293 CTR 1 / 147 DTR 395 (SC)

  5. S.22 : Income from house property – Business income – The objects clause is not determinative. Income earned from sub-licences is required to be taxed under the head “Income from House Property”. [Ss. 27(iii)(b), 28(i), 269UA(f)]
    Dismissing the appeal of the assessee, the Supreme Court after analysing various sections and case laws the Court held that to determine whether income earned by the appellant from the shopping centre was required to be taxed under the head ‘business income’ or ‘income from house property’; the object clause, as contained in the partnership deed, would not be the conclusive factor. Matter has to be examined on the facts of each case as held in Sultan Bros. (P) Ltd. Even otherwise, the object clause which is contained in the partnership firm is to take the premises on rent and to sub-let. In the present case, reading of the object clause would bring out two discernible facts. The Tribunal had specifically adverted to this issue and recorded the finding that the assessee had not established that it was engaged in any systematic or organised activity of providing service to the occupiers of the shops or stalls so as to constitute the receipts as business income. The Tribunal being final fact finding authority and the assessee has not shown the finding was perverse. (AY. 2000-01)

    Raj Dadarkar & Associates v. ACIT (2017) 394 ITR 592/ 248 Taxman 1 (SC)

  6. S.35B : Export Markets Development Allowance –Commission paid to agent is held to be eligible for weighted deduction
    Allowing the appeal, the Court held that the finding of the High Court that the assessee had not put up a case that it had maintained branch or agency outside the country was clearly an erroneous finding and against the record. Although the assessee was not maintaining any branch office, it had paid commission to agent for export business and hence eligible for weighted deduction. (AY. 1983-84)

    Velvet Carpet and Co. Ltd v. CIT (2017) 395 ITR 515 (SC)

  7. S.37(1) : Business expenditure – Capital or revenue – Technical Know-how – Agreement crucial for setting up of plant project for manufacture of goods hence the payment was held to be capital in nature
    What is “capital expenditure” and what is “revenue” are not eternal verities but must need to be flexible so as to respond to the changing economic realities of business. The expression “asset or advantage of an enduring nature” was evolved to emphasise the element of a sufficient degree of durability, appropriate to the context. On facts the payment was made under the technical collaboration agreement for setting up of project for manufacture of goods hence the payment was held to be capital in nature. (AY. 1999-2000 to 2005-06)

    Honda Siel Cars India Ltd. v. CIT (2017) 395 ITR 713/ 295 CTR 569 /82 taxmann.com 212 (SC)

  8. S.37(1) : Business expenditure –Capital or revenue – Interest paid on loan taken for establishment of new unit capitalised in books was held to be revenue expenditure [Ss.32, 145]
    Dismissing the appeal of the Revenue, the Court held that the Tribunal was justified in allowing the expenditure incurred by the assessee towards the interest paid on loans taken and expenditure on other items connected with establishment of the unit which have been capitalized by the assessee but claimed as revenue expenditure. Court also observed that if the assessee has taken any depreciation on the amount of interest and other items which has been allowed as revenue expenditure that such depreciation should be reversed by the assessing authority. (AY. 2000-01)

    CIT v. Shri Rama Multi Tech Ltd. (2017) 393 ITR 371 / 151 DTR 169/ 295 CTR 233 (SC)

  9. S.80IA : Industrial undertakings – Any activity which brings a commercially new product into existence constitutes production. The process of bottling of LPG renders it capable of being marketed as a domestic kitchen fuel and, thereby, makes it a viable commercial product
    [Ss. 80HH, 80-I ]
    Dismissing the appeal of the revenue, the Court held that bottling of LPG, as undertaken by the assessee, is a process which amounts to ‘production’ or ‘manufacture’ for the purposes of Sections 80HH, 80-I and 80-IA of the Act, and the assessees are entitled to claim the benefit of deduction under the aforesaid provisions while computing their taxable income. The Court held that any activity which brings a commercially new product into existence constitutes production. (CA. No. 9295 of 2017, dt. 3-8-2017)

    CIT v. Hindustan Petroleum Corporation Ltd.(SC), www.itatonline.org

  10. S. 194A : Deduction at source – Interest on compensation awarded by the Motor Accident Claims Tribunal – Threshold limit of ₹ 50,000 for making deduction – High Court holding interest not to be taken at lump sum but having accrued from year to year from date of claim till deposit after apportionment among claimants – Interest so computed in hands of each claimant was, below threshold limit of ₹ 50,000 per year, considering the smallness of the amount the appeal was dismissed and the question of law left open
    Dismissing the appeal of the Revenue, the Court held that interest computed in hands of each claimant was below threshold limit of ₹ 50,000 per year. Considering the smallness of the amount the appeal was dismissed and the question of law is left open.

    CIT v. Hansaguri Prafulchandra Ladhani and Ors. (2017) 393 ITR 82/ 152 DTR 288 (SC)

    CIT v. Aruna Begum & Ors ( 2017) (2017) 393 ITR 82 / 152 DTR 288 (SC)

    CIT v. Mani Gopal & Ors ( 2017) (2017) 393 ITR 82 / 152 DTR 288 (SC)

  11. S.254(2) : Appellate Tribunal – Rectification of mistake apparent from the record – Non consideration of paper book filed is a mistake apparent from the record, Tribunal was directed to hear the appeal of the assessee afresh on the basis of documents which have been already found to be filed by the assessees
    Allowing the petition the Court held that Non consideration of paper book filed is a mistake apparent from the record. Tribunal was directed to hear the appeal of the assessee afresh on the basis of documents which have been already found to be filed by the assessee. (AY. 1996-97)

    Nisha Synthetics Ltd. v. CIT (2017) 145 DTR 345 / 291 CTR 328 (SC)

    Finance Act, 2016

    Finance Act, 2016 – Pradhan Mantri Garib Kalyan Yojna, 2016

  12. S.199A : Pradhan Mantri Garib Kalyan Yojna, 2016 – Legislative powers – Judicial review – Court declined to enter into or encroach upon policy making arena and suggest a different policy on ground that it was not within domain of Court – There is a distinction between assailment of the Constitutional validity of a policy and conception of framing of a better policy. [Ss. 199E, 199F Art. 32 ]
    Challenging the Section 199A of the Finance Act, 2016, Pradhan Mantri Garib Kalyan Yojna, 2016 the Petitioner urged for a different and better scheme which could have got more good money in banks and honest tax payers would have deposited amount. However Court declined to enter into or encroach upon policy making arena and suggest a different policy on ground that it was not within domain of Court, therefore there was no justification to issue notice in instant petition and accordingly it was dismissed

    Siddharth Mehta v. UOI (2017) 393 ITR 312 / 244 Taxman 289/ 148 DTR 248/ 293 CTR 365 (SC)

  13. Precedent – Dismissal of Special Leave Petition in limine – Not an affirmation of High Court. [S.40(a)(ia), 194C, 200 ]
    The fact that the Special Leave Petition against the decision of the High Court was dismissed by the Supreme Court would not
    amount to a confirmation of the view of the High Court.

    Palam Gas Service v. CIT ( 2017) 394 ITR 300/ 247 Taxman 379 / 151 DTR 1/ 295 CTR 1 (SC)

  14. Precedent – Law laid down by High Court is binding on all in the State
    The law laid down by the High Court is binding on all authorised in the State

    CIT v. Raghuvir Synthetics Ltd( 2017) 394 ITR 1/ 151 DTR 153/ 295 CTR 143 (SC)

  15. Res judicata – Need for consistency and certainty

While it is true that the principle of Res judicata would not apply to assessment proceedings under the Act, the need for consistency and certainty and existence of strong and compelling reasons for a departure from a settled position has to be spelt out for departure from settled position. Radhasoami Satsang v. CIT (1992) 193 ITR 321 (SC) followed.

Godrej & Boyce Manufacturing Co. Ltd v. Dy. CIT (2017) 394 ITR 449 / 247 Taxman 361/ 151 DTR 89/ 295 CTR 121 (SC).

Dear Professional Colleagues,

With you a Very Happy Raksha Bandhan and Janmashtami.

As you all know, GST has been rolled out w.e.f. 1st July, 2017 and now it’s a time to file the first return. In order to ensure smooth implementation of GST, 18 sectorial groups representing various sectors of economy, e.g., Banking Sector, Telecom, Textile etc. and containing Senior Officers of the Centre and the State are setup by the Government to timely respond to the issues and problems of their respective sector. The Cabinet Secretary, Government of India has asked the Secretaries of different Ministries/Departments to setup GST Facilitation Cell in their respective departments which will be in constant touch with the major industries and business associations relating to their respective departments.

The professional bodies including our Federation are also extending all their resources, expertise and efforts to make the GST transition as smooth as possible. A series of Conference and Seminars are being organised to educate the stake-holders, be it a professional or the businessman. It is our pious duty to support the Government for smooth implementation of GST. In the words of our Prime Minister, it is indeed a turning point in the country’s economy and unprecedented movement in the country’s history.

As per the news, 71 lakh Central and State taxpayers have migrated to GST system. Another 15.67 lakh new applications for registration have been received. The first tax return under the new GST regime will be filed till August 20, 2017. The return for July & August, 2017 will be filed in GSTR-3B Form. All major 25 banks, Private & Public have been authorised by RBI to collect taxes. The final GST return will have to be filed by September 05 instead of August 10. Companies have to file sales invoices for August by September 20 instead of September 10, earlier and sales return for September have to be filed by October 10, thus slight relaxation has been allowed for two months i.e., July & August 2017.

However, it is a matter of great concern that GSTR-3B Form does not provide any column for carry forward of credit from earlier regime of Central Excise Duty, Service Tax and VAT though the form provides for ITC eligible on procurement made during the month. Thus the registered dealers will be unable to adjust the tax paid against the tax liability. Taxpayers may have hundreds of crore of rupees stuck-up in ITC but they may still have to pay GST for July & August in full, potentially disrupting working capital flow. This may not have been the intention of the Government and it requires quick clarification.

It is also to be pointed out that the e-way Bill will be rolled out from October 1, 2017. Goods more than ₹ 50,000/- in value will have to be pre-registered on-line before they can be moved. There will be no check-post and the whole process will be technology driven with minimum human intervention.

It is also clarified that the legal services (including representational services) provided by an individual Advocate or a senior Advocate or a firm of Advocate (including LLP) provided to a business entity in taxable territory are covered under reverse charge mechanism. In so far as legal services are concerned these are covered under HSN Code 998211 to 998216. However, tax consultancy and preparation services are covered under the code 998231 and 998232. This means that the taxation consultancy and preparatory services are segregated from legal services. Therefore, the professionals who provides tax consultancy and prepares/files the returns will not fall under the reverse charge mechanism and they will have to collect the GST.

Friends in so far as Income-tax is concerned, linking of Aadhaar Card with PAN is made mandatory to e-file the income tax returns. If the same is not done then the PAN Card might be rendered invalid by December 2017. Mentioning of Aadhaar Numbers is also made mandatory for applying PAN w.e.f. July 1, 2017. Recently, the Income Tax Department has reportedly deactivated around 11.44 lakh PAN Cards. This move has been taken to check fake PAN cards and also to block multiple Permanent Account Number of a single assessee. The Government has also witnessed cases where citizens have got PAN Cards by providing false documents. Hence, the professionals have to direct their clients to surrender multiple PAN cards or fake PAN cards.

In so far as widening of tax base is concerned, as per official data released by Finance Ministry, there is a 25% growth in the number of income tax returns filed in current fiscal. Advance-tax (personal income tax) collections have also gone up by 41%. The number of returns filed as on 5-8-2017 stands at 2,82,92,955 as against 2,26,97,843 filed during the corresponding period of FY 2016-17, registering an increase of 24.7% compared to growth rate of 9.9% in the previous year. The above figures amply demonstrate the result of the Government’s commitment to fight the menace of black money.

It is also to be apprised that your Federation had filed a PIL before Hon’ble Delhi High Court, challenging Constitutional validity of provisions of sections 174, 183 and 184 of the Finance Act 2017 and the notification dated 1-6-2017 issued thereunder whereby the Government has sought to restructure and reorganise the Tribunals including eligibility, appointment, term of office, tenure, removal, retirement etc. In this PIL, Hon’ble Delhi High Court is pleased to issue the notice to the Department and the matter is listed for December 4, 2017.

Last but not the least, friends, we will be meeting very soon in Kolkata on 2nd & 3rd September, 2017. You are all invited to this Educative & Informative Conference organised by East Zone of AIFTP. Looking to the WhatsApp group created by Shri Kakraji, a lot of enthusiasm is being seen amongst the outstation members. This shows the activeness and involvement of the members and there lies the success of our Federation, more important is involvement of members and not merely the counting of members. My good wishes to entire organising committee of East Zone.

With Best Regards

Prem Lata Bansal
National President