DIRECT TAXES – Supreme Court

Research Team

1. S.2(14)(iii): Capital asset – Agricultural land – agricultural lands converted for non- agricultural purpose – though land was converted, assessee continued agricultural operations- Income derived from agricultural operations declared by assessees were accepted by revenue – Hence no capital gain.Assessee was the owner of agricultural lands which were later converted for non-agricultural purpose. Assessee sold its lands duly converted for non-agricultural purposes to M/s. ELT Corporate Services Pvt. Ltd., and others. The agreement and the sale deeds disclose that the lands sold are converted lands. The AO and CIT(A) held that hat the lands sold by the assessees are capital assets and the capital gains income is chargeable to tax. The ITAT deleted the addition on the ground that there was no change in the physical characteristics of the lands and that the assessees have been carrying on agricultural activity even after they got the lands converted for non-agricultural purposes. The ITAT further held that mere inclusion of land without any infrastructure development does not convert the land into non-agricultural land. The High Court observed that ITAT is the last fact finding authority and the finding of Tribunal that lands sold by assessees were agricultural land being based on evidence on record, did not call for any interference. The Apex Court upheld the view of the High Court and dismissed the SLP filed by the Revenue.(AY. 2008-09) (SLP APPEAL (C) NO(S). 3179 OF 2023dt. 10-02-2023)

   CIT v. M.R. Seetharam [2023] 292 Taxman 548 (SC)/[2023] 453 ITR 757 (SC)[10-02-2023]

2. S. 2(15) : Charitable purpose – Imparting education – Surplus in educational activities – Alleged excess remuneration to trustee employees – Revenue has no power to sit in the armchair of an assessee – Exemption cannot be denied.The assessee-trust is running various institutions offering degree/training in various academic courses in Bangalore and was granted registration under section 12A(a) of the Act. Exemption was claimed on the entire income as it was engaged in education. For the year under consideration, the lower authorities denied the claim of exemption of the assessee on two substantial grounds i.e. a) remuneration paid to two trustees as a professor and an administrative officers were not in proportion to pay scale of professors and it was done to divert funds by assessee & b) Incidental profit earning would not constitute ‘charitable purpose’. The High Court observed that the Revenue cannot sit in the armchair of an assessee and decide the pattern of working, methodology to be adopted for whole administration of the educational trust including the payment structure of salary/ remuneration to be paid to the professors/ administrative staff. These aspects would not come within the purview of the authorities to decide the income tax liability merely on suspicion that the assessee is claiming huge expenditure to get the corresponding benefits of allowable deduction. With regard to the second aspect of incidental profits, the Hon’ble Court observed that where the object of trust or institution is, relief to the poor, education or medical relief, it will constitute ‘charitable purpose’ even if it incidentally involves in carrying of commercial activities.

   Department preferred an SLP where the Hon’ble Apex Court declined to interfere with the High Court’s judgment and dismissed the SLP.

   (SLP APPEAL (C) NO(S). 11198 OF 2022 dt. 03.03.2023) (AY. 2009-10 & 2010-11)

   CIT v. Krupanidhi Education Trust [2023] 150 taxmann.com 359 (SC)/[2023] 293 Taxman 2 (SC)/[2023] 453 ITR 750 (SC)[03-03-2023]

3. S.9: Income deemed to accrue or arise in India-Commission – Assessee-company was not liable to deduct TDS on payment of commission to foreign agents since non-resident agent was carrying on the business of selling Indian goods outside India.In this case, the AO completed assessment under section 143(3) after making certain disallowance towards commission paid to non-resident agents and demurrage over despatch of iron ore on ground that assessee had failed to deduct tax at source – High Court by impugned order held that since non-resident agent were carrying on business of selling Indian goods outside India, commission so earned by them could not be said to be income which had accrued and/or arisen in India and, thus, assessee was not liable to deduct TDS on payment of commission and demurrage. SLP filed by Revenue against order of High Court was dismissed. [A.Y. 2009-2010 & 2010-2011]

   Pr. CIT v. Vedanta Ltd. [2023] 291 TAXMAN 205 (SC)/[2022] 448 ITR 732 (SC)

4. S.13 – Denial Of Exemption- Trust or institution – SLP dismissed as withdrawn against order of High Court that where assessee- trust failed to produce any application or other documents to prove that advance given to proprietary concern of wife of managing trustee was for purchase of timber for proposed construction of a medical college, it could be concluded that there was a diversion for personal benefit of an interested party as mentioned in section 13(3) and, thus, amounts so advanced was rightly treated as income in hands of assessee.Assessee-trust filed its return of income declaring nil income. AO noted that certain amount had been advanced to a proprietary concern of wife of managing trustee and sought to disallow advances so made. Assessee claimed that amount had been advanced for purchase of timber for proposed construction of a medical college, however, it failed to produce any application or other documents which ought to have been submitted to Governmental authorities or Medical Council of India for proposal for setting up of medical college. High Court held that since assessee failed to produce any documents to prove genuineness of its claim, it could be concluded that in garb of purchase of timber, advance amounts had been diverted for personal benefit of an interested party as mentioned in section 13(3) and, thus, amounts so advanced had rightly been treated as income of assessee-trust. SLP filed by the assessee against the order of the High Court was dismissed as withdrawn. [A.Y. 2012-2013]

   Ilahia Trust v. CIT [2023] 291 TAXMAN 200 (SC)

5. S.32: Depreciation- Since activity of mining, mineral processing for exports, shipping etc. carried out by assessee-company amounted to production of iron- ore, assessee was entitled for additional depreciation in respect of machinery used in mining.It was held that since the activity of mining, mineral processing for exports, shipping etc. carried out by the assessee-company would amount to the production of iron-ore, the assessee was entitled to additional depreciation in respect of machinery used in mining. SLP filed by Revenue against the order of the High Court was to be dismissed. [A.Y. 2009-2010 & 2010-2011]

   Pr. CIT v. Vedanta Ltd. [2023] 291 Taxman 205 (SC)/[2022] 448 ITR 732 (SC)

6. S. 36(1)(va): Any sum received from employees – Employee’s contributions (PF/ESI) not deposited in respective fund within stipulated time – liable to be disallowed. [S. 2(24), 43B]Allowing the appeal of the Revenue the Court held that, contributions to provident fund and Employees’ State Insurance, which are not deposited in respective fund within stipulated time, is not allowable as deduction. Followed Checkmate Services P. Ltd (CIVIL APPEAL NO. 9009 OF 2002 dt. 29.11.2022)

   Pr. CIT v. Strides Arcolab Ltd. [2023] 450 ITR 129 (SC)/[2023] 147 taxmann.com 202 (SC)/[2023] 291 Taxman 530 (SC) [29-11-2022]

7. S.37 (1): Business Expenditure- Losses incurred by the assessee- company due to foreign exchange fluctuation on export proceeds were to be allowed as business expenditure.It was held by the High Court held that the loss suffered by the assessee on account of foreign exchange difference as on the date of the balance sheet was an item of expenditure under section 37(1) and therefore, forex loss incurred by the assessee-company on export proceeds was to be allowed as business expenditure. SLP filed by the Revenue against the order of the High Court was dismissed. [A.Y. 2009-2010 & 2010-2011]

   Pr. CIT v. Vedanta Ltd. [2023] 291 TAXMAN 205(SC)/[2022] 448 ITR 732 (SC)

8. S.37(1): Business Expenditure– Education cess claimed by assessee-company as deduction under section 37(1) was to be disallowed since as per Explanation 3 to the provision of section 40(a)(ii) inserted by Finance Act, 2022 with effect from 1-4-2005 surcharge or cess forms a part of ‘tax’The Supreme Court held that Explanation 3 to section 40(a)(ii) inserted by Finance Act, 2022 with effect from 1-4-2005, made it clear that any surcharge or cess forms part of ‘tax’ and same could not be allowed as deduction while computing profits and gains of business of assessee, therefore, Education Cess claimed by the assessee was not allowable as a deduction under section 37(1). [A.Y. 2004-2005]

   Jt. CIT v. Chambal Fertilizers & Chemicals Ltd [2023] 291 Taxman 438 (SC)[14-12-2022]

9. S.40 (a)(iib): Amounts Not Deductible – Surcharge on sales tax or turnover tax paid by assessee-company to State Government was not a ‘fee or charge’ coming within scope of section 40(a)(iib).Assessee-company, engaged in wholesale and retail trade of beverages, had debited its profit and loss account with respect to amount of surcharge on sales. AO made disallowance of such surcharge under section 40(a)(iib). Supreme Court held that surcharge on sales tax was introduced only as an increase in tax payable and such increase could not be equated with ‘fee or charge’ and thus surcharge on sales tax or turnover tax paid by assessee-company was not ‘fee or charge’ coming within sweep of section 40(a)(iib). Review petition filed by Revenue was dismissed. [A.Y. 2014-15 & 2015-16]

   ACIT v. Kerala State Beverages Manufacturing and Marketing Corporation Ltd [2023] 291 TAXMAN 357 (SC)[16-11-2022]

10. S. 79 : Carry forward and set off losses – Change in share holding – Companies in which public are not substantially interested – Losses lapsed cannot be considered for purposes of computation of deduction. [S. 80IA]Assessee-company was engaged in business of providing cellular telecommunication services. During the year 2001-02, there was change in shareholding due to which carried forward losses prior to 2001 would lapse as per the provisions of section 79. Accordingly assessee made a claim of 100% deduction u/s 80IA for the first time in A.Y. 2005-06. Assessing Officer rejected the claim of assessee on the ground that section 79 would not come into play for the purpose of deduction to be claimed u/s 80IA and hence the carried forward losses prior to 2001 would be set off against the profits and therefore no profits would be available for the claim of 100% deduction. This was upheld by the Commissioner (Appeals) and the Tribunal. Hon’ble High Court observed that business loss of assessee prior to 2001-02 had already lapsed and hence same could not be notionally carried forward and set off against profit for year under consideration in computing deduction under section 80-IA. The Hon’ble Apex Court concurred with the view of the Hon’ble High Court and accordingly dismissed the assessee’s SLP.

    (SLP (CIVIL) DIARY NO(S). 7912 OF 2023 dt. 29-03-2023)(AY. 2005-06)

    ACIT v. Vodafone Essar Gujarat Ltd. [2023] 149 taxmann.com 1 (SC)/[2023] 453 ITR 755 (SC)[29-03-2023]

11. S. 80HHC: Export business – If an assessee has claimed deduction of profit or gains u/s 80IB, deduction to that extent is not to be allowed u/s 80HHC. [S. 80IB]High Court by impugned order held that if an assessee has claimed deduction of profit or gains under section 80-IB, deduction to that extent is not to be allowed under section 80HHC. SLP preferred by the assessee was dismissed.

    (AY. 2001-02 & 2003-04) (SLP APPEAL (C) NO(S). 16293 OF 2015 dt. 20-01-2023)

    Broadways Overseas Ltd. v. CIT [2023] 147 taxmann.com 482 (SC)/[2023] 292 Taxman 33 (SC)/[2023] 453 ITR 774 (SC)[20-01-2023]

12. S. 115 JB: Book Profit: Income derived from sale of agricultural land in rural area, not coming under section 2(14)(iii)(a) and (b), has to be added to profit and loss account.The Kerala High Court held that income derived from the sale of agricultural land in rural area, not coming under section 2(14)(iii) (a) and (b), would not be income or revenue derived from land, however, it has to be added to profit and loss account and would be reflected in book profits for assessment under section 115JB & there will be no downward adjustment filled by the assessee was to be allowed & issue will be heard by the Supreme Court. [A.Y. 2006-2007]

    Harrisons Malayalam Ltd. v. CIT [2023] 291 TAXMAN 196 (SC)/[2022] 449 ITR 391 (SC)[21-11-2022]

13. S. 127: Power to transfer cases – When there is enough material garnered from third parties to establish a nexus it would be sufficient to uphold such transfer. [S.133A]A search and survey operation under section 133A was conducted at different places in Kolkata, Delhi, Indore, Bhopal etc. The search and survey resulted in gathering of evidences indicating as to how key persons were involved in large scale collection of illegal money through various means/entities and the same was being used in elections and hawala transactions. Evidences were found indicating inter-linked transaction and close association with assessee. Further, mobile phones of the involved persons and the copy of chat as was seized and subsequently shared with the assessee, clearly identifies the appellant’s active role in unaccounted money transfer and also his links with the persons involved in the unaccounted money transfer.

    Revenue thus sought to centralize assessment for all of them in Delhi in order to have co- ordinated investigation for the entire group. A writ petition was filed before the Hon’ble High Court to consider whether there were grounds for transfer as emanating from the reasons recorded. It was opined that if reasons exist for transfer, the scope of interference of the Writ Court against such an administrative exercise u/s 127 is narrow and limited and the Courts will exercise utmost restraint in stepping into the realm of administrative matters which are best to be left to the decision of the authorities. The Court observed that there are adequate reasons for transfer. The assessee preferred an SLP before the Hon’ble Apex Court, wherein it was observed that since no merit was found in SLP filed by assessee against order of High Court, same was to be dismissed. (SLP APPEAL (C) NO(S). 4348 OF 2023, dt. 13/03/2023)

    Kamal Nath v. PCIT [2023] 149 taxmann.com 370(SC)/[2023] 292 Taxman 240 (SC)/[2023] 453 ITR 748 (SC)[13-03-2023]

14. S.143(1A): Additional Tax- Loss claimed by assessee in its return was reduced on account of disallowance of depreciation made by AO – assessee did not attempt to evade tax- AO could not levy additional tax on assessee under section.It was held that provision of section 143(1A) had deterrent effect of preventing tax evasion and should be made to apply only to tax evaders and, thus, section 143(1A) was to be invoked only where it was found on facts that lesser amount stated in return filed by assessee was a result of an attempt to evade tax lawfully payable by assessee. [A.Y. 1991-1992]

    Steel & Industrial Forgings Ltd. v. Dy. CIT [2023] 291 Taxman 448 (SC)/[2022] 449 ITR 164 (SC) [21-09-2021]

15. S.147: Reassessment – After the expiry of four years – Mandatory to show that there was failure on the part of assessee and there are non- disclosure of material facts required for assessment – reasons indicated change of opinion – basis for re- opening was due to mistake of the Assessing Officer that resulted in under assessment. [S. 148]Assessment u/s 143(3) was completed in the case of the assessee. However, the assessment was sought to be re-opened beyond four years without bringing on record any failure on the part of the assessee to disclose material facts/ material. The Hon’ble Apex Court observed that the conditions precedent for re-opening of the assessment beyond four years were not satisfied. The re-assessment was on change of opinion. There are no allegations of suppression of material fact. Under the circumstances, no error has been committed by the High Court in setting aside the re-opening notice under section 148 of the Income-tax Act. Accordingly the Special Leave Petition was dismissed. (SLP APPEAL (C) NO. 12643 OF 2022 dt. 10.10.2022)(AY. 2012-13)

    ACIT v. CEAT Ltd. [2022] 449 ITR 171 (SC)/[2023]146 taxmann.com 108 (SC)/[2023] 291 Taxman 435(SC) [10-10-2022]

16. S. 148: Reassessment – Notice u/s.148 issued on same issue already considered by PCIT in 263 proceedings – quashed. [S. 263]The assessment was completed u/s.143(3). Thereafter the PCIT issued a notice u/s 263 on the issue of diminution in the value of investment in a subsidiary of the assessee recorded in the books of the assessee. Section 263 proceedings were invoked since the diminution in value of investment was recorded as loss and thereafter added back this deduction under normal provisions of the Act but the same was not added while computing income under MAT provisions u/s 115JB of the Act. The assessee filed its response and explained that there was no error in the original assessment order. Accordingly, the PCIT dropped the proceedings. However, the case of the assessee was reopened on two issues, which included the issue already taken up by the ld. PCIT. Honourable High Court held that since PCIT granted approval for reopening an issue which was already considered in the proceedings u/s 263 and thereafter such revisionary proceedings were dropped. Reopening notice was quashed. The Hon’ble Apex Court upheld the view of the Hon’ble High Court and dismissed the SLP preferred by the Department.(SLP (CIVIL)DIARY NO(S). 34646 OF 2022 dt. 02.01.2023)(AY. 2012-13)

    ACIT v. Godrej & Boyce Manufacturing Co. Ltd. [2023] 453 ITR 14 (SC) /[2023] 150 taxmann.com 463 (SC) [02-01-2023]

17. S.148: SLP dismissed – Notice under section 148 cannot be issued prior to the recording of reasons for reopening the assessment.Assessing Officer issued a notice under section 148 seeking to reopen assessment in case of assessee-company. High Court by impugned order held that since notice under section 148 was issued prior to recording of reasons for reopening assessment, said notice being without jurisdiction, deserved to be quashed. SLP filed by Revenue against impugned order of High Court was dismissed.

    Pr. CIT v. Tata Sons Ltd [2023] 291 TAXMAN 354 (SC)/[2022] 449 ITR 166 (SC)[06-09-2022]

18. S.148: Reassessment – Notice: During pendency of proceedings under section 154, it was not permissible for revenue to initiate reassessment proceedings under section 147/148.Assessment reopened under section 148 quashed and set aside by Tribunal by holding that since proceedings under section 154 initiated against assessee were pending, no proceedings under section 147/148 could have been initiated. On appeal by revenue, High Court allowed appeal and remanded matter to Tribunal by observing that as proceedings under section 154 were beyond period of limitation prescribed under section 154(7), said notice was invalid and therefore, reopening proceedings under section 147/148 would be maintainable. The Supreme Court held that proceedings under section 154 were not subject-matter before High Court and there was nothing on record that notice under section 154 was withdrawn on ground that same was beyond period of limitation prescribed under section 154(7). Therefore, proceedings initiated under section 154 could be said to have been pending and Tribunal was right in holding that it was not permissible for Revenue to initiate reassessment proceedings under section 147/148. The impugned order of the High Court was quashed and set aside and the order of Tribunal was to be restored.

    S. M. Overseas (P.) Ltd. v. CIT [2023] 291 TAXMAN 441 (SC)/[2023] 450 ITR 1 (SC)[07-12-2022]

19. S.148: Reassessment- Notice: Reopening notice being a clear case of change of opinion, was not permissible in law.Assessment of the assessee-company was completed under section 143(3). Subsequently, a reopening notice was issued against assessee on issues of allowability of deduction of mark- to-market loss on restatement of outstanding forward contracts. It was found that grounds on which assessment was reopened were already verified by Assessing Officer while completing assessment under section 143(3). Madras High Court by impugned order held that in absence of new facts coming to knowledge of Assessing Officer subsequent to original assessment proceedings, reopening of assessment based on same materials was a clear case of change of opinion, and, thus, liable to be quashed. SLP filed by Revenue against impugned order of High Court was dismissed. [A.Y. 2013-2014]

    Jt. CIT v. Cognizant Technology Solutions India (P.) Ltd [2023] 291 TAXMAN 526 (SC)/[2023] 452 ITR224 (SC)[03-01-2023]

20. S.148: Reassessment – Notice – Alternate Remedy – Writ maintainableAssessee-firm received a notice under section 148A(b). Assessee responded thereto and raised objections which were decided vide order passed under section 148A(d). Along with order, assessee was also served with notice under section 148. Assessee challenged order passed under section 148A(d) along with notice issued under section 148 on ground that response filed by assessee to notice under section 148A(b) had not been considered. High Court by impugned order held that where proceedings had not even been concluded by statutory authority, Writ Court should not interfere at such a pre-mature stage and, therefore, interference by High Court in exercise of jurisdiction under article 226/227 of Constitution at this intermediate stage was not warranted. It was noted that provisions of reopening under Act had undergone an amendment by Finance Act, 2021 and consequently matter of jurisdictional pre-conditions for issue of notice under section 148 would require a deeper and in depth consideration. Hence, observation made by High Court in impugned order that writ petition would not be maintainable in view of alternative remedy was set aside.

    Red Chilli International Sales v. ITO [2023] 291 TAXMAN 524 (SC)/[2023] 452 ITR 222 (SC)[03-01-2023]

21. S.148: Reassessment-Notice – Where the Assessing Officer in original assessment was aware of issue of expenses incurred on advertisement and marketing by assessee, reopening to take another view that said expenditure were not deductible in view of Explanation 1 to section 37(1) was not permissible.Assessee-company was engaged in businessof selling hair care products,etc. Assessing Officer sought to reopen assessment in case of assessee on ground that advertisement and marketing expenditure incurred by assessee was not deductible in view of Explanation 1 to section 37(1), as assessee was prohibited from advertising under provisions of Indian Medical Council Act, 1956 read with Indian Medical Council (Professional Conduct, Etiquette and Ethics) Regulations, 2002. High Court by impugned order held that since Assessing Officer in original assessment was aware of issue of expenses incurred on advertisement and marketing by assessee and assessee had filed all requisite details as called for by Assessing Officer, he could not reopen the assessment basedthe on very same material to take another view. SLP filed by Revenue against the impugned order of High Court was dismissed. [A.Y. 2012-2013]

    ITO v. Rich Feel Health & Beauty (P.) Ltd [2023] 291 TAXMAN 203 (SC)[18-11-2022] (2023) 146 taxman.com 288

22. S. 151: Sanction for issue of notice – Only appropriate authority to give sanction for the purpose of initiating reassessment proceedings. [S.148]One of the grounds questioned the validity of re-opening proceedings when the approval under section 151 of the Income-tax Act, 1961 (the Act) was invalid. In the instant case, sanction has been given by Additional Commissioner of Income-tax (ACIT), Joint Commissioner of Income-tax and not Principal Commissioner. The Hon’ble High Court observed that since four years had expired from the end of the relevant assessment year as provided under section 151(1) of the Act, it is only the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner who could have accorded the approval and not anyone else. Aggrieved by the order of the Honourable High Court, Department preferred an SLP before the Honourable Apex Court. The Honourbale Apex Court dismissed the SLP.

    (SLP (CIVIL) DIARY NO(S). 29286 OF 2022 dt. 25.11.2022)(AY. 2015-16)

    DCIT v. Sidhmicro Equities (P.) Ltd. [2023] 453 ITR 35 (SC)/[2023] 150 taxmann.com 461 (SC)[25-11-2022]

23. S. 151 : Sanction for issue of notice – Mechanical way of recording satisfaction which accords sanction for issuing notice under section 148 is unsustainable. [S.148]Notice u/s 148 was issued by the Assessing Officer on the basis of certain reasons recorded. While according sanction, the Joint Commissioner, Income Tax has only recorded so “Yes, I am satisfied”. The Hon’ble High Court observed that a mechanical way of recording satisfaction by the Joint Commissioner, which accords sanction for issuing notice under section 148, is clearly unsustainable. As far as explanation to Section 151, brought into force by Finance Act, 2008 is concerned, the same only pertains to issuance of notice and not with regard to the manner of recording satisfaction. That being so, the said amended provision does not help the revenue. Accordingly the appeal of the Department was dismissed. Department preferred an SLP before the Hon’ble Apex Court. The Hon’ble Apex Court upheld the view of the High Court and dismissed the SLP.(Petition(S) For Special Leave To Appeal (C) No. 18489 Of 2015 Dt. 08.07.2015)

    CIT v. S. Goyanka Lime and Chemical Ltd. [2023] 150 taxmann.com 245 (SC)/[2023] 453 ITR 242 (SC) [08-07-2015]

24. S.158BFA: Block Assessment- Interest-Penalty- ‘other than searched persons’, was liable to pay interest under section 158BFA, even in the absence ofany notice under section 158BC and even for the period prior to 1-6-1999: Proviso appended to section 113 by Finance Act, 2002, is to operate prospectively with effect from 1-6-2002 and, thus, the assessee was not liable to pay the surcharge.As the assessee was ‘other than searchedpersons’, the assessee was liable to pay interest under section 158BFA for late filing of return under section 158BC even in the absence of any notice under section 158BC and even for the period prior to 1-6-1999.

    In view of the order of the Supreme Court in CIT v. Vatika Township (P.) Ltd. [2014] 49 taxmann.com 249/227 Taxman 121/367 ITR 466/2015 (1) SCC 1, proviso appended to section 113 by Finance Act, 2002 is to operate prospectively with effect from 1-6-2002 & assessee was not liable to pay a surcharge under proviso to section 113 for the relevant block period.

    K.L. Swamy v. Commissioner of Income-tax [2023] 291 TAXMAN 502 (SC)/[2023] 451 ITR 1 (SC)

25. S.194C: Deduction At Source – Contractors – Deduction of tax at source under section 194C was required to be made on reimbursement of expenditure in absence of evidence.The Assessee – company was engaged in thebusiness of generation and distribution of power. It paid certain amount to the clearing and forwarding agent, which included reimbursement of expenditure. It contended that no tax was to be deducted at source on such reimbursement. Calcutta High Court by the impugned order held that since assessee had failed to produce any document in support to its contention, it was liable to deduct tax at source even in respect of reimbursements which had been incurred by agent. SLP dismissed as withdrawn. [A.Y. 2005-2006]

    Surendra Commercial & Exim (P.) Ltd. v. ITO [2023] 291 TAXMAN 202 (SC)[14-11-2022]

26. S.194H: Deduction At Source – Commission of Brokerage: TDS provisions under section 194H were not attracted on discounts given by assessee- telecommunication Company on the sale of prepaid SIM cards to distributors- SLP admitted.Bombay High Court by the impugned order held that TDS provisions under section 194H were not attracted on discounts given by the assessee-telecommunication company on the sale of prepaid SIM cards to distributors. SLP was admitted against the order of the High Court.

    CIT (TDS) v. Vodafone Cellular Ltd [2023] 291 TAXMAN 447 (SC)[25-11-2022]

27. S. 260A : Appeal – High Court – Jurisdiction of High Court – jurisdiction the assessing officer who passed the assessment order.The sole issue was whether the Court has any territorial jurisdiction to adjudicate upon a lis over an order passed by the Assessing officer situated in a different state. It was observed that appeals against every decision of ITAT shall lie only before the High Court within whose jurisdiction the assessing officer who passed the assessment order is situated. Even if the case or cases of an assessee are transferred in exercise of power under section 127 of the Act, the High Court within whose jurisdiction the assessing officer has passed the order, shall continue to exercise the jurisdiction of appeal. (SLP APPEAL(C) NO. 7019 OF 2017 dt. 14-11-2022) (AY. 2001-02)

    CIT v. Balak Capital (P.) Ltd. [2022] 449 ITR 394 (SC)/[2022] 145 taxmann.com 607 (SC)/[2023] 291 Taxman 198 (SC)

28. S.263: Commissioner- Revision of order prejudicial to revenue- where due enquiry was made by AO during assessment proceeding revision was not justified.Assessee-company, was engaged in the business of financing and trading in shares, filed return declaring operating loss. During assessment proceeding, Assessing Officer recorded that he had examined Demat account in order to verify share trading activities & sale, purchase and closing stocks were also examined. High Court by impugned order held that since due enquiry was made by Assessing Officer during assessment proceedings and he had applied his mind while accepting assessee-company’s claim of operating loss, which was a possible view, there was no basis to invoke section 263 to revise assessment order on ground that books of account and transaction accounts of share trading carried out by assessee vis-a-vis Dmat accounts had not been examined by Assessing Officer during course of assessment proceedings. SLP filed by Revenue against impugned order was dismissed. [A.Y. 2011-2012]

    Pr. CIT v. Cartier Leaflin (P.) Ltd. [2023] 291 Taxman 446 (SC)/[2023] 452 ITR 242 (SC)[25-11-2022]

29. S. 271(1)(c) : Penalty – Concealment – Merely because VAT Authorities accepted cash sales, the same is not a sufficient ground to hold that the cash sales were genuine. [S. 68]Assessee was running the business of manufacturing of essential oil. The case was taken up for scrutiny assessment and it was found that the assessee had shown cash sales of Rs. 3 crores and Valued Added Tax (VAT) of Rs. 12 lakhs was remitted to Sales Tax Authorities on the cash sales made. The Assessing Officer asked the assessee to justify the cash sales. The assessee provided the sale bills and mentioned that such sales formed a part of VAT returns. The assessee further explained that the names and addresses given by buyers were never verified by the assessee. The Assessing Officer observed that the parties to whom cash sales had been allegedly made could not be traced at the addresses. The cash bills were of specific amount of Rs. 6 lacs and rupees three lacs only. In view of the above discrepancies amongst others, penalty was levied in the hands of the assessee. The Tribunal allowed the appeal of the assessee mainly on the ground that the assessee had substantiated its explanation by sale bills, sale tax Challan and sale tax order passed by the VAT Authorities. The Hon’ble High Court opined that merely because the VAT Authorities had accepted the cash sales by the respondent in itself, is not a sufficient ground to hold that the cash sales set up by the respondent were genuine. The Assessing Officer was liable to independently look into the cash sales to come to a conclusion as to whether the said sales were genuine or not and accordingly ruled in favour of revenue. SLP preferred by the assessee against the order of the Hon’ble High Court, the Hon’ble Supreme Court concurred with the view of the lower authorities and accordingly dismissed the SLP. (SLP (CIVIL) DIARY NO. 40915 OF 2022 dt. 13-02-2023)

    J.M.J. Essential Oil Company v. CIT [2023] 148 taxmann.com 448 (SC)/[2023] 292 Taxman 314 (SC)/[2023] 453 ITR 754 (SC)[13-02-2023]