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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)
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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)
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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)
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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)
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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)
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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
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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)
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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
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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)
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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)
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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)
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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)
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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)
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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)
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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
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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
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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
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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]
