65. S.2(14)(iii) : Capital asset –Agricultural land – Land entered in revenue records as agricultural land – Agricultural income from land declared and accepted by the revenue – Onus is on department to prove contrary – Profits on sale of land is not assessable to capital gains tax. [S.45]

    Dismissing the appeal of the revenue the Court held that if the land was recorded as agricultural land in the revenue records, the presumption that it was agricultural land and also when the agricultural income shown by the assessee was accepted by the revenue in earlier years. Referred Sarifabibi Mohamed Ibrahim v. CIT (1993) 204 ITR 631 (SC) (AY. 2010-11)

    CIT v. Ashok Kumar Rathi. (2018) 404 ITR 173 (Mad) (HC)

66. S.2(22)(e) : Deemed dividend –Current account – Advance to shareholder – Transactions between shareholder and company were in nature of current account addition cannot be made as deemed dividend

    Dismissing the appeal of the revenue the Court held that transactions between shareholder and company were in nature of current account addition cannot be made as deemed dividend. (AY. 2009-10)

    CIT v. Gayatri Chakraborty. (2018) 256 Taxman 156 (Cal.) (HC)

67. S.2(22)(e) : Deemed dividend –Trade advances which were in nature of commercial transactions cannot be assessed as deemed dividend

    Dismissing the appeal of the revenue the Court held that; trade advances which were in nature of commercial transactions cannot be assessed as deemed dividend.

    CIT v. Deepak Vegpro (P) Ltd. (2018) 161 DTR 170 / 300 CTR 98 (Raj.)(HC)

68. S.2(42C) : Slump sale – There was neither any plant, machinery, furniture and fixtures, nor was there any building in existence at time when land was sold. Therefore it was not a slump sale

    Dismissing the appeal of the revenue, the Court held that there was neither any plant, machinery, furniture and fixtures, nor was there any building in existence at time when land was sold. Therefore it was not a slump sale. (AY. 2004-05)

    PCIT v. Linde India Ltd. (2018) 254 Taxman 204 (Cal.)(HC)

69. S. 4 : Charge of income-tax –Capital or revenue – Business of real estate – Compensation received under Arbitration Award is held to be capital receipt

    Dismissing the appeal of the revenue the Court held that compensation received under Arbitration Award is held to be capital receipt. The purpose of the ultimate use of the assessee’s land when acquired was rendered irrelevant on account of the seller defaulting in its commitment. This rendered the amount expounded by the assessee immobile. The eventual receipt of the amounts determined as compensation or damages, therefore, fell into the capital stream.

    CIT v. Aeren R Infrastructure Ltd. (2018) 404 ITR 318 (Delhi) (HC)

70. S.10 (23C) : Educational institution – Merely because surplus profit earned in educational activities did not automatically presuppose a business activity that invalidated the exemption as long as surplus was utilised for charitable purposes [Ss.2(15), 10(23C)(via), 11(4A)]

    Dismissing the appeals and allowing the petition, the Court held that, merely because surplus profit earned in educational activities did not automatically presuppose a business activity that invalidated the exemption as long as surplus was utilised for charitable purposes. The assessee which maintained its eleven schools and the 120 satellite schools in furtherance of the education joint venture agreements with an educational purpose, that also was qualified as “charitable purpose” within the meaning of S.2(15) and was not in contravention of S. 11(4A). (AY. 1998-99, 2008-09 )

    DIT v. Delhi Public School Society (2018) 403 ITR 49 (Delhi) (HC)

71. S.10(34) : Dividend – Domestic companies – Tax on distribution of profits – Applicable only for amounts which suffered tax u/s. 115O does not apply to deemed dividends. [Ss. 2(22)(e), 115O]

    Dismissing the appeal the Court held that dividend will be exempt only for amounts which suffered tax u/s. 115O and does not apply to deemed dividend. (AY. 2005-06)

    Dr. T. J. Jaikish v. CIT (2018) 403 ITR 256 (Ker.) (HC)

72. S.10B : Export oriented undertakings – Processing done outside specified area – Mere location of the plant outside the export oriented unit and customs bonded area is not a disqualification to claim deduction – Entitled to exemption

    Dismissing the appeal of the revenue the Court held that the processing of the iron ore in a plant belonging to the assessee being in the nature of job work was not prohibited and formed an integral part of the activity of the export oriented unit; the mere fact that the plant was situated outside the bonded area was of no legal significance as the benefit of customs bonding is only for the limited purpose of granting benefit as regards customs and excise duty. The entitlement to deduction under the Act is to be looked into independently and the benefit would stand or fall on the applicability of S 10B. Hence the mere location of the plant outside the export oriented unit and customs bonded area was not a disqualification to claim deduction. (AYs. 2009-10, 2010-11, 2011-12)

    PCIT v. Lakshminarayana Mining Company. (2018) 404 ITR 522 (Karn.) (HC)

73. S.11 : Property held for charitable purposes – Corpus donation – Corpus donation on which it earned interest, in view of specific direction of donors that said interest would also form part of corpus and entitled to exemption [Ss.11(1)(d), 62, 63]

    Assessee received corpus donation on which it earned interest. Assessee’s claim for exemption on interest earned on corpus donation was rejected. Tribunal allowed the claim. On appeal dismissing the appeal of the revenue the Court held that in view of specific direction of donors that said interest would also form part of corpus, accordingly assessee’s claim for exemption under S.11 in respect of interest so earned was to be allowed. (AYs. 2007-08 to 2012-13)

    CIT(E) v. Mata Amrithanandamayi Math Amritapuri (2017) 85 taxmann.com 26 (Ker.) (HC)

    Editorial: SLP of revenue is dismissed, CIT (E) v. Mata Amrithanandamayi Math Amritapuri. (2018) 256 Taxman 62 (SC)

74. S.32 : Depreciation – Hospital equipments – Since assessee could neither sell said hospital equipment as scrap nor it could use them and same were also written off in its books of account, written down value of hospital equipment was to be allowed as depreciation [S.32(1)(iii)]

    Dismissing the appeal of the revenue the Court held that as per principle laid down in S. 32(1)(iii) where a plant and machinery is discarded/destroyed in previous year, amount of money received on sale as such or as scrap or any insurance amount received to extent it falls short of written down value is allowed as depreciation, provided same is written off in books of account. Since assessee could neither sell said hospital equipments as scrap nor it could use them and same were also written off in its books of account, written down value of hospital equipments was to be allowed as depreciation. (AY. 2007-08)

    CIT (E) v. Bhatia General Hospital (2018) 254 Taxman 285 (Bom.)(HC)

75. S.36(1)(vii) : Bad debt – Business loss – Finance company – Advances in form of equity participation to derive income Investment written off is allowable as bad debts [S.28(i)]

    Dismissing the appeal of the revenue the Court held that where monies were advanced through the mechanism of equity participation, the intention of the assessee was to derive income rather than to increase its investment on the capital side. If it were profits with the assessee from the investment it would have been on the revenue side of income and since it was the converse, the losses were properly and rightly claimed as bad debts by the assessee. Referred Badridas Daga v. CIT ( 1958) 34 ITR 10 (SC) and Associated Banking Corporation of India Ltd. v. CIT (1956) 56 ITR 1 (SC)

    CIT v. Industrial Finance Corporation of India Ltd. (2018) 404 ITR 629 (Delhi) (HC)

    Editorial: SLP of revenue is dismissed, CIT v. Industrial Finance Corporation of India Ltd. (2018) 401 ITR 171 (St.)(SC)

76. S.37(1) : Business expenditure – Capital or revenue – Expenses on restructuring of business is held to be allowable as revenue expenditure

    Dismissing the appeal of the revenue the Court held that, expenses on restructuring of business is held to be allowable as revenue expenditure.

    PCIT v. Akzo Noble India Ltd. (2018) 256 Taxman 1 (Cal.)(HC)

77. S.37(1) : Business expenditure – Allocation of expenses – Difference between “Res Judicata” and “Consistency Principle” explained. While “Res Judicata” does not apply to income –tax matters, the principles of consistency does. If the revenue has accepted a practice and consistently applied and followed it, the Revenue is bound by it. The Revenue can change the practice only if there is a change in law or change in facts and not otherwise [S.143(3)]

    The question raised by the revenue before the High Court is “whether on the facts and circumstances of the case and in law, the Tribunal was justified in deleting the disallowances made u/s. 37(1) without appreciating the facts of the case and legal matrix as clearly brought out by the AO and the CIT(A)? “ Dismissing the appeal of the revenue the Court held that the impugned order of the Tribunal records the fact that the revenue Authorities have consistently over the years i.e., for the 10 years prior to Assessment Years 2007-08 and 2008-09 and for 4 subsequent years, accepted the principle that all expenses which have been incurred are attributable entirely to earning professional income. Therefore, the revenue allowed the expenses to determine professional income without any amount being allocated to earn capital gain. In the subject assessment year, the Assessing Officer has deviated from these principles without setting out any reasons to deviate from an accepted principle. Moreover, the impugned order of the Tribunal also records that the revenue was not able to point out any distinguishing features in the present facts, which would warrant a different view in the subject assessment year from that taken in the earlier and subsequent assessment years. Accordingly the Court held that though the principle of res judicata does not apply to income-tax matters, the principles of consistency does. If the revenue has accepted a practice and consistently applied and followed it, the revenue is bound by it. The revenue can change the practice only if there is a change in law or change in facts and not otherwise. (ITA No. 280 of 2016, dt. 28-6-2018) (AY. 2008-09)

    PCIT v. Quest Investment Advisors Pvt. Ltd. (2018) 96 taxman.com 157 (Bom.)(HC), www.itatonlineorg

78. S.37(1) : Business Expenditure – Commission – Expenditure incurred was reasonably linked with its business which was confirmed by the parties hence allowable as business expenditure

    Dismissing the appeal of the revenue the Court held that Commission expenditure incurred was reasonably linked with its business which was confirmed by the parties hence allowable as business expenditure. (AY. 2006-07)

    CIT v. Mohan Export India Pvt. Ltd. (2018) 403 ITR 207/162 DTR 247 (Delhi) (HC)

79. S.37(1) : Business expenditure – Commission paid to related directors of the assessee company is held to be allowable as business expenditure

    Dismissing the appeal of the revenue the Court held that Commission paid to related directors of the assessee company is held to be allowable as business expenditure as the assessee had been paying commission to agents regularly year after year; that it was not doubted by revenue and same was accepted; further, that receipts of same were duly shown by commission agents in their balance sheet and profit and loss accounts and that they had paid tax thereon, which was also accepted by revenue. (AY. 1994-95)

    CIT v. Hind Nihon Proteins (P.) Ltd. (2018) 254 Taxman 210 (Delhi)(HC)

80. S.40(a)(ia) : Amounts not deductible – Deduction at source – No contract between assessee and parties of hired vehicles on freight basis for transportation on behalf of principal – Not liable to deduct tax at source [S.194C]

    Dismissing the appeal of the revenue the Court held that there was no contract between assessee and parties of hired vehicles on freight basis for transportation on behalf of principal, accordingly the assessee is not liable to deduct tax at source. (AY. 2008-09)

    CIT v. Shark Roadways Pvt. Ltd. (2018) 405 ITR 78 (All. Amounts not deductible – Deduction at source – Non-resident – Commission – Obligation to deduct tax at source arises only if the sum is chargeable to tax in India, even after insertion of Explanation 2 to S.195(1) by Finance Act 2012 with retrospective effect from 1-4-1962

    Dismissing the appeal of the revenue the Court held that Explanation 2 to S. 195(1) inserted by Finance Act 2012 with retrospective effect from 1-4-1962 has bearing while ascertaining payments made to non-residents is taxable under the Act or not. However, it does not change the fundamental principle that there is an obligation to deduct TDS only if the sum is chargeable to tax under the Act. If the conclusion is arrived that such payment does not entail tax liability of the payee under the Act, s. 195(1) does not apply. Relied G.E. India Technology Centre P. Ltd. v. CIT (2010) 327 ITR 456 (SC). (TA No. 290 of 2018, dt. 9-4-2018)

    PCIT v. Nova Technocast Pvt. Ltd. (2018) 94 taxman.com 322 (Guj.)(HC), www.itatonline.org

81. S.40(a)(ia) : Amounts not deductible – Deduction at source – A co-operative society formed for the welfare of the employees of the Life Lnsurance Corporation and all members of assessee is not liable to deduct tax at source – Decision of jurisdictional High Court is binding on the AO [S. 194A]

    Allowing the petition the Court held that; a co-operative society formed for the welfare of the employee of the life insurance corporation and all members of assessee is not liable to deduct tax at source. Court also observed that; Coimbatore District Central Bank Ltd. v. ITO (2016) 382 ITR 266 (Mad) (HC) which the respondent has not gone through the decision, copy of which was filed by the petitioner along with their reply to the show-cause notice. The Assessing Officer was bound by the decision rendered by the jurisdictional High Court. It is stated that as on date there is no appeal by the revenue as against the decision. That apart, in the assessee’s own case for the previous assessment years, the Tribunal has held in favour of the petitioner assessee. Mere pendency of an appeal would not amount to an order of stay. Therefore, even assuming appeals have been presented as long as orders passed by the Tribunal has not been stayed or set aside, it is binding upon the Assessing Officer. (AY. 2015-16)

    LIC Employees Co-operative Bank Ltd. v. ACIT (2018) 254 Taxman 119 (Mad.)(HC)

82. S.40(a)(ia) : Amounts not deductible – Deduction at source – Caual workers – Labour payment to one or two persons on site for disbursing same among labourers – In absence of any contract to carry out any work with a specified person there is no liability to deduct tax at source. [S.194C]

    Dismissing the appeal of the revenue the Court held that the assessee handed over labour payment to one or two persons on site for disbursing same among labourers. There was no contract between assessee and any specified person for carrying out any work. In absence of any contract to carry out any work with a specified person provisions of S. 194C would not be attracted and, hence, there would be no liability to deduct tax at source. (AY. 2007-08)

    PCIT v. Swastik Construction (2018) 254 Taxman 163 (Guj.)(HC)

83. S.40A(3) : Expenses or payments not deductible – Cash payments exceeding prescribed limits – 20% expenditure – Purchase of land as stock-in-trade – Villagers paid the amount in cash in the absence of banking facilities. Deletion of addition was held to be justified [R.6DD(h)]

    Dismissing the appeal of the revenue the Court held that the payment of cash was made to villagers for purchase of land as stock-in-trade. Villagers were paid the amount in cash in the absence of banking facilities. Deletion of addition was held to be justified

    CIT v. Ace India Abodes Ltd. (2018) 162 DTR 118 (Raj.)(HC)

84. S.43A : Rate of exchange – Foreign currency – Foreign exchange fluctuation on loan liability on fixed asset being notional and no actual payment was made would not require any adjustment in the cost of the fixed assets on accrual basis, as the S.43A is amended w.e.f. 1st April, 2003 [S.37(1)]

    Dismissing the appeal of the revenue the Court held foreign exchange fluctuation on loan liability on fixed asset being notional and no actual payment was made would not require any adjustment in the cost of the fixed assets on accrual basis as the S.43A is amended w.e.f. 1st April, 2003. Referred CIT v. Woodward Governor India P. Ltd (2009) 312 ITR 254 (SC) (AY. 2003-04) (ITA No. 1129 of 2015 dt. 18-4-2018)

    PCIT v. Spicer India Ltd (Bom.) (HC) www.itatonline.org

85. S.45 : Capital gains – Business income – Investment in shares – Intention of assessee at time of purchase of shares is paramount – Gain arising on sale of shares which was held as investment is assessable as capital gains and not as business income [S.28(i)]

    Dismissing the appeal of the revenue the Court held that intention of assessee at time of purchase of shares is paramount; if assessee had clear intention of being an investor and held shares by way of investment, assessee is investor and any gain arising out of transfer of shares should be treated as ‘capital gains’ and not ‘business income’. (AY. 2005-06)

    PCIT v. Bhanuprasad D. Trivedi (HUF)(2017) 87 taxmann.com 137 (Guj) (HC)

    Editorial: SLP of revenue is dismissed, PCIT v. Bhanuprasad D. Trivedi (2018) 256 taxman 66 (SC)

86. S.45 : Capital gains – Business Income earned on sale of floor of building was held to be assessable as capital gains and not as business income – The assessee was not a property dealer but a member of the Indian Revenue Service, working with the department itself. Only a portion of the property was sold. Profit on sale of land is held to be assessable as capital gains [S. 2(13)]

    Dismissing the appeal of the revenue the Court held that Income earned on sale of floor of building was held to be assessable as capital gains and not as business income. Major portion of the developed building was to remain with the assessee after construction. Sale of one unit therefrom per se would not have constituted an adventure in the nature of trade. There is substantial gap in time between the day of acquisition of the asset and its development and part-sale. The assessee was not a property dealer but a member of the Indian Revenue Service, working with the department itself. Only a portion of the property was sold. Ratio in G. Venkataswami Naidu & Co. & Co. v. CIT [1959] 35 ITR 549 (SC) has followed.

    CIT v. Surjeet Kaur (2018) 254 Taxman 214 (Cal.)(HC)

87. S.45(2) : Capital gains – Conversion of a capital asset into stock-in-trade – Capital gains to be computed on sale up-to-date of conversion of land into stock-in-trade and profit on sale of stock in trade to be assessed as business income or loss. Capital gains to be set-off against business loss [S.28(i)]

    Dismissing the appeal of the revenue the Court held that when a capital asset is converted into stock-in-trade, capital gains to be computed on sale up-to-date of conversion of land into stock-in-trade and profit on sale of stock-in-trade to be assessed as business income or loss. Capital gains to be set off against business loss. (AY. 2009-10)

    CIT v. Essorpe Mills Ltd. (2018) 404 ITR 323 (Mad) (HC)

88. S.48 : Capital gains – Computation – Payment of liquidated damages in discharge of liability under earlier agreement to sell is held to be allowable expenditure –The expression “expenditure” used in clause (i) in S. 48 should be given the same meaning as used in S.37(1), except that the expenditure may also be capital in nature. Settlement of a claim and payment made can amount to expenditure [Ss. 37(1), 45]

    Allowing the appeal of the assessee the Court held that payment of liquidated damages in discharge of liability under earlier agreement to sell is held to be allowable expenditure. The expression “expenditure” used in clause (i) in S 48 should be given the same meaning as used in S.37(1), except that the expenditure may also be capital in nature. Settlement of a claim and payment made can amount to expenditure. (AY.1994-95)

    Kaushalya Devi (Dec.) Through LR v. CIT (2018) 404 ITR 136 (Delhi) (HC)

89. S.54F : Capital gains – Investment in a residential house – Relief is available if unutilised sale consideration deposited in capital gains account scheme within due date of filing belated tax return under S. 139(4) [Ss.45, 54B]

    For claiming exemption under S. 54B and 54F it is not necessary that investment should have been made within original due date of filing return under S. 139(1), even belated return u/s. 139(4) is also eligible for exemption.

    PCIT v. Shankar Lal Saini. (2018) 253 Taxman 308 (Raj.)(HC)

90. S.68 : Cash credits – Only on the ground that loan was not found to be reflected in balance sheet of donor addition cannot be made as cash credit. Assessee had demonstrated genuineness of transaction as well as reliability and creditworthiness of donor, said addition was unjustified

    Dismissing the appeal of the revenue the Court held that when the assessee had demonstrated genuineness of transaction as well as reliability and creditworthiness of donor, therefore merely on the ground that loan was not found to be reflected in balance sheet of donor addition cannot be made as cash credit. (AY. 2005 -06)

    PCIT v. Bhanuprasad D. Trivedi (HUF)( 2017) 87 taxmann.com 137 (Guj.) (HC)

    Editorial: SLP of revenue is dismissed, PCIT v. Bhanuprasad D. Trivedi (2018) 256 taxman 66 (SC)

91. S.68 : Cash credits – Survey –Addition of undisclosed income cannot be made on the basis of (a) entries in diary found during survey & (b) admission of director in s. 133A survey if assessee has filed a retraction and alleged that the entries/statement were recorded under pressure. Statement u/s. 133A is merely information simplicitor and not evidence per se. Addition cannot be sustained if the Dept. has not investigated the matter and found material to support the addition. [S.133A]

    Dismissing the appeal of the revenue the Court held that addition of undisclosed income cannot be made on the basis of (a) entries in diary found during survey & (b) admission of director in s. 133A survey if assessee has filed a retraction and alleged that the entries/ statement were recorded under pressure. Statement u/s. 133A is merely information simplicitor and not evidence per se. Addition cannot be sustained if the Dept. has not investigated the matter and found material to support the addition. (TA No. 612/2018, dt. 12-6-2018) (AY. 2011-12)

    PCIT v. Texraj Realty P. Ltd. (2018) 95 taxman.com 102 (Guj)(HC), www.itatonline.org

92. S.68 : Cash credits – Sub-contract – Outstanding credits payable to sub-contractors where tax was deducted at source could not be added treating same as unexplained cash credit – If addition is upheld it will lead to very abnormal to a govt contractor

    Dismissing the appeal of the revenue the Court held that, outstanding credits payable to sub contractors where tax was deducted at source could not be added treating same as unexplained cash credit. If addition is upheld it will lead to very ubnormal to a govt contractor. (AY. 2007-08)

    PCIT v. Swastik Construction (2018) 254 Taxman 163 (Guj.)(HC)

93. S.68 : Cash credits – Firm – Partner – Capital introduced by the partner was duly reflected in the books of account maintained by him, addition cannot be made in the assessment of the firm

    Dismissing the appeal of the revenue the Court held that Capital introduced by the partner was duly reflected in the books of account maintained by him, addition cannot be made in the assessment of the firm. (AY. 2010-11)

    PCIT v. Vaishnodevi Refoils & Solvex (2018) 253 Taxman 135 (Guj.) (HC)

94. S. 69C : Unexplained expenditure – Bogus Purchases – Purchases cannot be treated as Bogus if (a) they are duly supported by bills, (b) all payments are made by account payee cheques, (c) the supplier has confirmed the transactions, (d) there is no evidence to show that the purchase consideration has come back to the assessee in cash, (e) the sales out of purchases have been accepted & (f) the supplier has accounted for the purchases made by the assessee and paid taxes thereon [S.143(3)]

    Dismissing the appeal of the revenue the Court held that purchases cannot be treated as bogus if (a) they are duly supported by bills, (b) all payments are made by account payee cheques, (c) the supplier has confirmed the transactions, (d) there is no evidence to show that the purchase consideration has come back to the assessee in cash, (e) the sales out of purchases have been accepted & (f) the supplier has accounted for the purchases made by the assessee and paid taxes thereon.

    PCIT v. Tejua Rohitkumar Kapadia (2018) 94 Taxmann.com 324 (Guj.)(HC)

    Editorial: SLP of revenue is dismissed PCIT v. Tejua Rohitkumar Kapadia (2018) 94 taxmann.com 325 (SC), www.itatonline.org

95. S.80IA : Industrial undertakings – Distribution of electricity – Penalty recovered from suppliers for delay in execution of contracts, unclaimed balances of contractors, rebate from power generators, interest on fixed deposits for opening letter of credit to Power Grid Corporation is includible in profits – Miscellaneous recovery from employees, difference between written down value and book value of released assets, commission for collection of electricity duty, rental income is not part of profits

    Court held that the penalty recovered from suppliers and contractors for delay in execution of works contract, unclaimed balances outstanding pertaining to security deposits and earnest money deposits of contractor written back in the books of account, rebate from power generators, interest income (fixed deposit for opening of letter of credit to Power Grid Corporation Ltd. had to be taken into account while computing the deduction under S. 80IA(4) of the Act. Court also held that, miscellaneous recovery from employees, the difference between the written down value/book value of released assets, commission from collection of electricity duty, and rental income could not be taken into account while computing the deduction under S.80IA(4) of the Act (AYs. 2006-07 to 2008-09)

    Hubli Electricity Supply Co. v. DCIT (2018) 404 ITR 462 (Karn.) (HC)

96. S.80IB(10) : Housing projects – Date of commencement – Merely securing approval of Local Authority is not step towards development, actual date of construction is relevant. Project completed in year 2001 therefore balconies to be excluded [S.80IB(10)(c)

    Dismissing the appeal of the revenue the Court held that the mere securing of approval from the local authority did not lead to any step towards development and therefore, it was the actual date of construction of the project which was determinative for the purpose of deduction under section 80IB(10)(c). Court also held that the balconies could not be taken into account for calculation of built-up area of 1000 sq. feet limit for construction undertaken prior to April 1, 2005.

    CIT v. Padmini Infrastructure (P.) Ltd. (2018) 405 ITR 27 (Delhi) (HC)

97. S.92C : Transfer pricing – Comparable – While determining ALP of components and parts exported to AE which are used in manufacturing of two wheelers the same cannot be compared with sale of finished goods in domestic market

    Dismissing the appeal of the revenue the Court held that while determining ALP of components and parts exported to AE which are used in manufacturing of two wheelers the same cannot be compared with sale of finished goods in domestic market. ( AYs. 2005-06, to 2007-08)

    CIT v. Keihin Fie (P) Ltd. (2018) 255 Taxman 191 (Bom.) (HC)

    Editorial: Keihin Fie (P) Ltd. v. ACIT (2015) 57 taxmann.com 287 (Pune) (Trib.) is affirmed

98. S.92C : Transfer pricing Arm’s Length Price – Selection of comparables – Functional dissimilarities and distinction in services provided has to be excluded [S.92CA]

    Dismissing the appeal of the revenue the court held that finding of fact given by the Tribunal that functional dissimilarities and distinction in services provided has to be excluded. (AY. 2011-12)

    CIT v. B. C. Management Services Pvt. Ltd. (2018) 403 ITR 45/253 Taxman 128 (Delhi) (HC)

99. S.139 : Return of income – Delay of 37 days – Change of auditor –CBDT was directed to condone the delay of 39 days in filing of return. [S. 119(2)(b)]

    Allowing the petition the Court held that when the assessee had satisfactorily explained reasons for delay in filing return of income, approach of 1st respondent should be justice oriented so as to advance cause of justice. Accordingly the delay of 37 days in filing return of income should not defeat claim of assessee. Once authority had been conferred with discretion to condone delay, application seeking condonation of delay of 37 days could not be rejected for such reasons as assigned by 1st respondent Accordingly the petition was allowed. (AY. 2014-15)

    Regen Powertech Private Ltd. v. CBDT (2018) 165 DTR 187 / 255 Taxman 100 (Mad.) (HC)

100. S.139 : Return – Delay in filing of return – Reasonable cause – Court directed the CBDT to reconsider the application for condonation of delay as the circumstances were beyond the control of the assessee. [Ss.80AC, 80IB, 119]

     Allowing the petition the Court held that delay in filing the return was as the assessee was searching for his brother who was swept away while crossing flooded river. As the circumstances were beyond the control of the assessee the CBDT was directed to reconsider the application for condonation of delay. (AY. 2007-08)

     Babulal Mohanraj Jain v. CBDT (2018) 253 Taxman 170 (Bom.) (HC)

101. S.139 : Return of income – Delay due to crashing of computer system – Application which was filed for condonation of delay was rejected, after six years of filing of petition was held to be not justified – CIT was directed to condone the delay and hear the matter expeditiously with the observation that delay in disposing the application after six years of filing of the petition has to be viewed seriously while rendering substantial justice to parties [S.119(2)(b)]

     Application of the assessee for condonation of delay in filing the return was dismissed after six years of filing of the application. On writ the Court directed the CCIT to condone the delay and hear the matter expeditiously. Court also observed that delay in disposing the application after six years of filing of the petition has to be viewed seriously while rendering substantial justice to parties. (AY. 2006-07)

     PDS Logistics International (P) Ltd. v. CCIT (2018) 164 DTR 222/93 taxmann.com 194 (Karn.) (HC)

102. S.143(2) : Assessment – Notice – One return is filed pursuant to notice issued u/s. 148, issue of notice u/s. 143(2) is mandatory. [Ss. 139, 144, 148]

     Dismissing the appeal of the revenue the Court held that once a return was filed, issuance of notice under section 143(2) to the assessee was mandatory prior to making an assessment. The question of making an assessment ex parte without issuing a notice under section 143(2) did not arise. The assessee had filed a return pursuant to the notice under section 148 notwithstanding that it might not have filed a return under section 139 for any assessment year in question. (AY. 2003-04)

     CIT v. Staunch Marketing Pvt. Ltd. (2018) 404 ITR 299 (Delhi) (HC)

103. S.143(2) : Assessment – Notice – Limited scrutiny – The CBDT Circulars which restrict the right of the AO in limited scrutiny cases apply only in cases where the AO seeks to do comprehensive scrutiny to find if there is potential escapement of income on other issues. However, if the S. 143(2) notice seeks information on whether the share premium is from disclosed sources and is correctly offered to tax, the AO can also inquire into whether the premium exceeds the FMV and is taxable u/s. 56(2)(viib) of the Act [S.56(2) (viib)]

     The petitioner challenged the notice issued u/s. 143(2) of the Act wherein information on whether the share premium is from disclosed sources and is correctly offered to tax, the AO can also inquire into whether the premium exceeds the FMV and is taxable u/s. 56(2)(viib) of the Act. Dismissing the petition the Court held that; The CBDT Circulars which restrict the right of the AO in limited scrutiny cases apply only in cases where the AO seeks to do comprehensive scrutiny to find if there is potential escapement of income on other issues. However, if the 
     S.143(2) notice seeks information on whether the share premium is from disclosed sources and is correctly offered to tax, the AO can also inquire into whether the premium exceeds the FMV and is taxable u/s. 56(2)(viib) of the Act. (WP(C). No. 3485 of 2018, dt. 22-5-2018) (AY. 2015-16)

     Sunrise Academy of Medical Specialities (India)Private Limited v. ITO (2018) 94 taxman.com 181 (Ker.)((HC), www.itatonline.org

104. S.145 : Method of accounting –Valuation of stock – Tribunal taking only market rate one day later for determining valuation of stock-in-trade is held to be not consistent with law – Tribunal was directed to reconsider valuation of closing stock on the basis of principles established by law

     Allowing the appeal of the assessee the Court held that Tribunal taking only market rate one day later for determining valuation of stock-in-trade is held to be not consistent with law. Tribunal was directed to reconsider valuation of closing stock on the basis of principles established by law. Cost or market whichever is less. (AY. 2010-11)

     Shri Ram Kutir Khandsari Udyog P. Ltd. v. CIT (2018) 404 ITR 185 (All.) (HC)

105. S.145 : Method of accounting –Licence fee – Merely on the basis of billing, income cannot be assessed unless the income accrues to the assessee – Rule of constancy is followed [S.5]

     Dismissing the appeal of the revenue the Court held that the manner in which the assessee has reflected his income by following mercantile system of accounting cannot be found fault with as the amounts attributable to the period post 31st March is income which has not accrued during the previous year relevant to subject assessment year. This is so as it is not due during the period for which the revenue seeks to bring it to tax. The appellant has not been able to show that the method followed by the respondent does not correctly bring out the income chargeable to the tax. The obligation in respect of the license fees billed for the entire calendar year is yet to be discharged at the end of the previous year related to the subject assessment year and would be due only in the next previous year related to the next assessment year. (Referred CIT v. Nagri Mills Co. Ltd. (1981) 131 ITR 257(Guj.) (HC) and CIT v. Excel Industries Ltd (2013) 358 ITR 295(SC)) (AYs. 2004-05, 2006-07, 2008-09)

     PCIT v. C.U. Inspections India (P.) Ltd. (2018) 254 Taxman 137 (Bom.)(HC)

106. S.145 : Method of accounting – Mere fact that books of account were not supported by vouchers of payments received from patients, same could not be a ground to reject assessee’s books of account and to make addition on estimate basis

     Allowing the appeal of the assessee the Court held that mere fact that books of account were not supported by vouchers of payments received from patients, same could not be a ground to reject assessee’s books of account and to make addition on estimate basis (AY. 2003-04)

     Dr. Prabhu Dayal Yadav. v. CIT (2018) 253 Taxman 191 /162 DTR 12 (All.) (HC)

107. S.147 : Reassessment – After the expiry of four years – Income forming subject matter of appeal – Reassessment is held to be not valid [Ss. 148, 151]

     Assessments cannot be reopened under section 147 of the Income-tax Act, 1961 by the Assessing Officer in relation to income arising out of a matter which was the subject matter of an appeal. Accordingly, that the investment agreement dated August 12, 2009 being the subject-matter of the appeals before the Appellate Tribunal and, thereafter, before the court, it was not open to the Assessing Officer to treat it as the foundation for forming an opinion that income chargeable to tax had 
     escaped assessment in the context thereof. (AY. 2010-11)

     Anne Venkata Vishnu Vara Prasad v. ACIT (2018) 405 ITR 491 (T&AP) (HC)

     Yelamanchili Venkta Ramana v. ACIT (2018) 405 ITR 491 (T&AP) (HC)

108. S.147 : Reassessment – After the expiry of four years – Notice is not mentioning of failure to disclose material facts – Reassessment is not valid [Ss. 148, 151]

     Allowing the petition the Court held that the Assessing Officer did not even state either in the notices dated March 31, 2017 issued under section 148 of the Act or in the letters dated September 22, 2017 and October 11, 2017 furnishing reasons for issue of such notices, that the assessee had failed to disclose fully and truly all material facts necessary for assessment. Further, she did not also mention that she had reason to believe that the income chargeable to tax which had escaped assessment would amount to or was likely to be ` one lakh or more. The notice issued beyond four years of assessment was not valid. (AY. 2010-11)

     Anne Venkata Vishnu Vara Prasad v. ACIT (2018) 405 ITR 491 (T&AP) (HC)

     Yelamanchili Venkta Ramana v. ACIT (2018) 405 ITR 491 (T&AP) (HC)

109. S.147 : Reassessment – After the expiry of four years – Income from Mushroom Cultivation as Agricultural Income. The ground that the petitioner had failed to disclose all the relevant material was not incorporated in the reasons supplied to the petitioner – Court directed the Counsel to furnish the compilation of judgments on reassessment proceedings to the Commissioner to study the same. Even for reopening the assessment within four years there are certain jurisdictional requirements that must exist before the power of reassessment is exercised. Strictures passed against the AO for making comments which are highly objectionable and bordering on contempt and for being oblivious to law. [Ss. 2(1A), 10(1), 148]

     Allowing the petition the Court held that the reassessment proceedings to deny the exemption u/s. 10(1) of the Act in respect of Mushroom Cultivation was held to be not valid as there no failure on the part of the assessee to disclose the relevant material facts. In the course of original assessment proceedings the assessee has disclosed fully and truly all material facts. Court also directed the Counsel to furnish the compilation of judgments on reassessment proceedings to the Commissioner to study the same. Even for reopening the assessment within four years there are certain jurisdictional requirements that must exist before the power of reassessment is exercised. Court also passed strictures against the AO for making comments which are highly objectionable and bordering on contempt and for being oblivious to law. (WP No. 1000 of 2017 dt.13-3-2018)(AY. 2011-12) (WP No 1001 of 2017 11-4-2018 (AY. 2013-14)

     Zuari Foods and Farms Pvt. Ltd. v. ACIT (Bom.)(HC), www.itatonline.org

110. S. 147 : Reassessment – After the expiry of four years – Information from investigation wing – No averment of failure on part of the assessee to disclose fully and truly all material facts necessary for assessment – Reassessment is held to be not valid [S.148]

     Dismissing the appeal of the revenue the Court held that there was no averment of failure on part of assessee to disclose fully and truly all material facts necessary for assessment. Merely on the basis of information from investigation wing, reassessment was held to be not valid (ITA No. 117 of 2016 dt. 23-8-2017)(AY. 2005-06)

     PCIT v. Light Carts P. Ltd (2018) 404 ITR 574 (All.) (HC)

111. S.147 : Reassessment – After the expiry of four years – Transfer of shares – There was no failure to disclose material facts – Reassessment is bad in law [S. 148, R.40B]

     Allowing the petition the Court held that; if the primary facts were placed before the Assessing Officer he would have been in a position to take a decision thereupon, and it could not amount to failure on the part of the assessee to withhold to furnishing the material particulars. The assessee had placed on record the necessary information for the purpose of assessing the income as regards the transfer of shares. Production of Form 29B under Rule 40B was a requirement at the time of original assessment and during the scrutiny assessment, the assessee was specifically called upon to respond to certain queries, which the assessee did what was sought to be done by the Assessing Officer in reopening of the assessment by issuing notice under S.148 after a period of four years was on a mere change of opinion and the reason of non –furnishing of the form was only an attempt to exercise a non-existent power. The assessee did not fail to disclose all the material facts necessary for the assessment. Referred Gemini Leather Store v. ITO ( 1975) 100 ITR 1(SC) (AY.2010-11)

     Dempo Brothers Pvt Ltd. v. ACIT (2018) 403 ITR 196 (Bom.) (HC)

112. S.147 : Reassessment – Recording of reasons is mandatory – Capital gains – Inflated cost of indexation of land – The Assessing Officer cannot supply reasons from any material or grounds outside the reasons recorded by him – Notice issued without application of mind is held to be in valid [S.148]

     Allowing the petition the Court held that recording of reasons is a mandatory requirement before the Assessing Officer can issue notice for reopening an assessment. The notice must succeed or fail on the basis of reasons so recorded and the Assessing Officer cannot supply reasons from any material or grounds outside the reasons recorded by him. Court observed that at all stages the Assessing Officer exhibited absolute non-application of mind to the facts and materials on record. The notice for reopening of assessment was therefore, based on reasons which were the product of such non -application of mind. Accordingly the notice was quashed. (AY. 2009-10)

     Vithalbhai G. Prajapati v. ITO (2018) 404 ITR 732 (Guj.) (HC)

113. S.147 : Reassessment – Accommodation entries – Non application of mind – Merely on the basis of DIT (Inv.) without verification, reassessment is held to be bad in law [S.148]

     Dismissing the appeal of the revenue the Tribunal held that merely on the basis of DIT (Inv.) without verification is without application of mind hence the reassessment is held to be bad in law. (AY. 2003-04)

     CIT v. SNG Developers Ltd. (2018) 404 ITR 312 (Delhi) (HC)

114. S.147 : Reassessment – Bogus purchases – Even the assessment which is completed u/s. 143(1) cannot be reopened without proper ‘reason to believe’. If the reasons state that the information received from the VAT Dept that the assessee entered into bogus purchases “needed deep verification”, it means the AO is reopening for doing a ‘fishing or roving inquiry’ without proper reason to believe, which is not permissible. [S.143(1), 148]

     Dismissing the appeal of the revenue the Court held that even the assessment which is completed u/s. 143(1) cannot be reopened without proper ‘reason to believe’. If the reasons state that the information received from the VAT Dept. that the assessee entered into bogus purchases “needed deep verification”, it means the AO is reopening for doing a ‘fishing or roving inquiry’ without proper reason to believe, which is not permissible. Court also observed that, before closing, we can only lament at the possible revenue loss. The law and the principles noted above are far too well-settled to have escaped the notice of the Assessing Officer despite which if the reasons recorded fail the test of validity on account of a sentence contained, it would be for the Revenue to examine reasons behind it. (Tax A No. 541 of 2018, dt. 7-5-2018) (AY. 2009-10 )

     PCIT v. Manzil Dineshkumar Shah (2018) 95 taxman.com 46 (Guj.) HC), www.itatonline.org

115. S.147 : Reassessment – Recorded reason was dated 31st March 2010 where as notice u/s. 148 was issued on 30th March 2010 – Recording of reasons before issue of notice is mandatory hence reassessment was held to be bad in law [S.148]

     Dismissing the appeal of the revenue the Court held that even before recording reasons on 31st March 2010, under his signature, a notice u/s. 148 was already issued on 30th March, 2010, therefore Tribunal was right in holding that even if case made out in affidavit belatedly filed by AO was correct, it would not advance case of revenue. Court observed that the process of recording reasons as per mandate of Sub-Section (2) of S. 148 was completed when AO signed reasons on 31st March, 2010, thus, even before recording reasons under his signature, a notice u/s. 148 was already issued on 30th March, 2010, therefore reassessment was held to be bad in law.

     CIT v. Blue Star Ltd. (2018) 162 DTR 302/301 CTR 38 (Bom.) (HC)

116. S.147 : Reassessment – Reopening of assessment based on assessment of subsequent assessment year without any new material is found, reassessment was not valid. [Ss. 80IA, 148]

     Dismissing the appeal of the revenue the Court held that Reopening of assessment based on assessment of subsequent assessment year without any new material is found, reassessment was not valid. (AYs. 2007-08, 2008-09 )

     CIT v. Jai Prakash Associates Ltd. (2018) 403 ITR 41 (All.) (HC)

117. S.147 : Reassessment – Change of opinion – Unexplained investment – Reasons not recorded – Reassessment on the basis of report of departmental valuer is held to be bad in law [S.148]

     Dismissing the appeal of the revenue the Court held that reassessment on the basis of report of departmental valuer is held to be bad in law (AY. 1991-92).

     CIT v. P. Nithilan (2018) 403 ITR 154 (Mad.) (HC)

118. S.148 : Reassessment – Notice – Issue of notice at old address after expiry of period of limitation, in spite of change in the official record by updating PAN data base – Reassessment is held to be bad in law [Ss.147, 292BB]

     Allowing the appeal of the assesesee the Tribunal held that reassessment notice under S. 148(1) was issued against assessee after expiry of period of limitation at old address of assessee which was already changed by assessee before date of issuance of said reassessment notice in official record by updating PAN database, it could be said that there was no service of reassessment notice upon assessee. Accordingly reassessment proceeding is held to be bad in law. (AY. 2009-10)

     Ardent Steel Ltd. v. ACIT ( 2018) 302 CTR 362/166 DTR 33 (Chhattisgarh) (HC)

119. S.151 : Reassessment – Sanction for issue of notice – If the AO reopens the assessment by obtaining the sanction of the Commissioner of Income-tax instead of the Additional Commissioner of Income-tax, there is a breach of S. 151 which 
     renders the reopening void [Ss.147, 148]

     Dismissing the appeal of the revenue the Court held that if the AO reopens the assessment by obtaining the sanction of the Commissioner of Income-tax instead of the Additional Commissioner of Income-tax, there is a breach of S. 151 which renders the reopening void. (ITA No. 904 of 2016, dt. 25-7-2018)(AY. 2004-05)

     CIT v. Aquatic Remedies Pvt. Ltd. (Bom.)(HC) www.itatonline.org

120. S.153A : Assessment – Search –When search operations are conducted u/s. 132, the obligation of the assessee to file any return remains suspended till such time that a notice is issued for such purpose u/s. 153A(1)(a). If the return is filed within the reasonable time permitted by such notice u/s. 153A(1)(a), the return is deemed to have been filed within the time permitted u/s. 139 (1)/ 139(3) and loss can be carried forward. [Ss.72, 80, 139(1), 139(3)]

     Allowing the appeal of the assessee the Court held that when search operations are conducted u/s. 132, the obligation of the assessee to file any return remains suspended till such time that a notice is issued for such purpose u/s. 153A(1)(a). If the return is filed within the reasonable time permitted by such notice u/s. 153A(1)(a), the return is deemed to have been filed within the time permitted u/s. 139(1)/139(3) and loss can be carried forward. (ITAT No. 20 of 2015, dt. 25-6-2018) (AY. 2004 -05)

     Shrikant Mohta v. CIT (2018) 95 taxman.com 224 (Cal)(HC), www.itatonline.org

121. S.153C : Assessment – Income of any other person – Search – No satisfaction was recorded stating that how seized material belonged to the assessee. In the absence of any incriminating material, notice was held to be invalid [S. 132]

     Dismissing the appeal of the revenue the Court held that, as no satisfaction was recorded stating that how seized material belonged to the assessee. Accordingly in the absence of any incriminating material, notice was held to be invalid. (AY. 2009-10)

     CIT v. N. S. Software (FIRM) (2018) 403 ITR 259 (Delhi) (HC)

122. S.158BD : Block assessment – Undisclosed income of any other person – Recording of satisfaction can be done even after assessment of person searched, however must be recorded within reasonable time. Recording of satisfaction was done after nine months after assessment of person searched is held to be bad in law [S.158BC]

     Dismissing the appeal of the revenue the Court held that recording of satisfaction can be done even after assessment of person searched, however must be recorded within reasonable time. On facts recording of satisfaction was done after nine months after assessment of person searched is held to be bad in law. (CIT v. Calcutta Knitwears (2014) 362 ITR 673 (SC)) [B. P. 1992-93 to 2001-02]

     CIT v. Jitendra H. Modi HUF (2018) 403 ITR 110 (Guj) (HC)

123. S.179 : Private company – Liability of directors – Before the Assessing Officer assumed jurisdiction, efforts to recover the tax dues from the company should have failed and such efforts and failure of recovery ought to have been mentioned in the notice, howsoever briefly. No distinction can be made between professional or paid directors and directors holding a large shareholding stake in the company

     Allowing the petition the Court held that the Act made no distinction between professional or paid directors and directors holding a large shareholding stake in the company. S.179(1) only gave jurisdiction to the AO to proceed against a company when he was unable to recover the dues of the company from it. It was not, therefore, open to the Assessing Officer to read conditions into S. 179(1) and ignore the strict rule of interpretation of fiscal statutes which prohibited reading anything in the statute not expressed therein. That before the Assessing Officer assumed jurisdiction, efforts to recover the tax dues from the company should have failed and such efforts and failure of recovery ought to have been mentioned in the notice, howsoever briefly. (AY. 2011-12)

     Mehul Jadavji Shah v. DCIT (2018) 403 ITR 201 (Bom.) (HC)

124. S.192 : Deduction at source – Salary – Commission paid to non-executives/independent directors could not be treated as salary and, not liable to deduct tax at source [S.15]

     Dismissing the appeal of the revenue the Court held that Commission paid to non-executives/independent directors could not be treated as salary and, not liable to deduct tax at source. (AY. 2006-07 to 2010-11)

     CIT v. Zee Entertainment Enterprises Ltd. (2018) 254 Taxman 370 (Bom.)(HC)

125. S.194J : Deduction at source – Fees for professional or technical services – Since no income was reflected in balance sheet and Profit & Loss account of HSL towards payment made by assessee and it was reimbursement of expenses incurred on cost to cost basis by assessee, it could not be treated as in default. If there is no income embedded in a payment TDS provision would not apply as the TDS is only an alternative method of collection of taxes [Ss. 201, 201(IA)]

     Dismissing the appeal of the revenue the Court held that Since no income was reflected in balance sheet and Profit & Loss account of HSL towards payment made by assessee and it was reimbursement of expenses incurred on cost-to-cost basis by assessee, it could not be treated as in default. Court also observed that if there is no income embedded in a payment, then TDS provisions would not apply as TDS is only an alternative method of collection of taxes; reimbursement cannot be deducted out of bill amount for purpose of TDS. Under the circumstances, the assessee falls outside the scope of S. 194J read with S. 200 during the relevant assessment years. Consequently, the provisions of S. 201 and 201(1A) are not attracted. Circular No. 715, dated 3-8-1995 (AY. 2008-09 to 2010 -11)

     CIT v. Kalyani Steels Ltd. (2018) 254 Taxman 350/163 DTR 513 (Karn.)(HC)

126. S.221 : Collection and recovery – Assessee deemed in default –Pendency of appeal before CIT(A) – Attachment of bank account and recovery of amount – Recovery of the amount was held to be without following the due process of law – Stay was granted and directed the revenue to refund 85 per cent of tax recovered [S. 156]

     When the first appeal was pending. Revenue has attached bank account and recovered the amount. On writ allowing the petition the Court directed the revenue to refund 85% of tax recovered without following the due process of law. On facts notice under S. 221 was issued on 6-2-2017 and dispatched on 16-2-2017. Notice was received by assessee on 17-2-2017. Attachment of bank account of assessee on first working day after that and withdrawal of amount in Bank. Stay was granted. (AY. 2014-15)

     Sunflower Broking Pvt. Ltd. v. DCIT (2018) 403 ITR 305 (Guj.) (HC)

127. S.226 : Collection and recovery – Modes of recovery – The ITO (TDS) Bhagalpur cannot act arbitrarily and extend favour to the Mining Department and release their bank account and decide to attach the bank account of the petitioner and recover the tax liability from the bank account of the petitioner in proceedings u/s. 226(3) – Department was directed to refund the amount collected within three months along with interest, failure to which the department was directed to pay the cost of ` 1 lakh which shall be paid from the pocket of the ITO [S.226(3)]

     By issuing the notice u/s. 226(3) to the assessee the ITO (TDS) attached the bank account and recovered the amount. On writ allowing the petition the Court held that after closure scrutiny of the entire facts and circumstances of the case, we notice that neither the Income-tax Department nor the Mines Department has come out with any corrective measures to refund the excess amount or the amount deducted from the bank account of the petitioner and as such we hereby direct the Income Tax Department to forthwith return the amount recovered from the bank account of the petitioner as we are of the considered view that the action of the Department is illegal, arbitrary and totally unauthorised in the peculiar facts and circumstances, since amount was recovered by the respondent Income Tax Department therefore the Department is liable to pay the said amount with interest at the rate applied by the Income Tax Department while calculating the dues from the date of recovery from petitioner’s bank account till the date of refund. In the event of failure to refund the said amount within a period of three months from today, they are liable to pay the cost of ` 1 lakh also which shall be recovered from the pocket of the ITO of the Income Tax Department at the same time we notice the lapses on the part of the Mines and Geology Department as for whose lapse the petitioner has to suffer not only uncalled for litigation but has to face the ordeal of the litigation and as such we direct for payment of the cost of the one lakh by the Mines and Geology Department within a period of three months. We direct that after refund of the amount recovered from the bank account of the petitioner, the Income Tax Department may pursue the matter for recovery in accordance with law against the Mines and Geology Department and take all legal recourse which is admissible under the law including under S. 276B and 276BB of the Act.

     Sainik Food (P) Ltd. v. PCIT (2018) 164 DTR 265 (Pat.) (HC)

128. S.251 : Appeal – Commissioner (Appeals) – Powers – Once penalty order was set aside by revisional authority, it was thereafter not open for Commissioner (Appeals) to still examine merits of such an order and declare his legal opinion on same. [Ss.264,271(1)(c)]

     During pendency of appeal, assessee filed a revision petition against order of penalty passed by Assessing Officer before Commissioner. He also made a communication to CIT(A) before whom his appeal was pending conveying his wish to withdraw appeal .Commissioner allowed assessee’s revision petition. Despite revisional order passed by Commissioner cancelling penalty, CIT(A) proceeded to decide appeal on merits and dismissed same. Tribunal set aside order passed by CIT(A). On appeal by the ITO dismissing the appeal the Court held that once penalty order was set aside by revisional authority, it was thereafter not open for CIT(A) to still examine merits of such an order and declare his legal opinion on same. (AY. 2011-12)

     Nitin Babubhai Rohit v. Dharmendra Vishnubhai Patel (2018) 254 Taxman 103 (Guj.)(HC)

129. S.254(1) : Appellate Tribunal – Tribunal has no power of enhancement – Tribunal cannot take back benefits granted to assessee by Assessing Officer. Therefore, direction of Tribunal to Assessing Officer to determine depreciation or business loss of each year and carry forward lower of two for adjustment under section 115JA, which would result in enhancement of assessment, was not justified [S.115JA]

     Allowing the appeal of the assessee the Court held that Tribunal has no power of enhancement – Tribunal cannot take back benefits granted to assessee by Assessing Officer. Therefore, direction of Tribunal to Assessing Officer to determine depreciation or business loss of each year and carry forward lower of two for adjustment under section 115JA, which would result in enhancement of assessment, was not justified. Followed Mcorp Gobal (P) Ltd v. CIT (2009) 309 ITR 434 (SC), Hukumchand Mills Ltd. v. CIT (1967) 63 ITR 232 (SC) (AY. 1999-2000)

     Sanmar Speciality Chemicals Ltd. v. ITO (2018) 256 Taxman 46 (Mad)(HC)

130. S.254(1) : Appellate Tribunal –Additional claim – Block assessment – The fact that the second proviso to S. 158BC(a) prohibits an assessee who is subjected to search from filing a revised return of income does not mean that the assessee is prohibited from raising an additional claim before the appellate authorities [S.158BC]

     Question before the High Court was “ Whether on the facts and in the circumstance of the case and in law, the Tribunal was justified in holding that as the appellant had not excluded or reduced lease rentals from the depreciation offered to tax while filing the return of undisclosed income for the block period it was not entitled to do so later on in view of second proviso to section 158BC of the Act ?”

     Court held that, “We note that the prohibition in Second Proviso to Section 158BC(a) of the Act of filing a revised return of income before the Assessing Officer would not prohibit a Assessee from raising the additional claim before Appellate Authorities as held by this Court in CIT v. Pruthvi Brokers and Shareholders P. Ltd. (2012) 349 ITR 336(Bom) (HC). This on consideration of the decision of the Supreme Court in National Thermal Power Co. Ltd. v. CIT (A) 229 ITR 384 (SC) and Goetze (India) Ltd. v. CIT (2016) 284 ITR 323 (SC). In fact, in Goetze (India) Ltd., the Apex Court after holding that Assessing Officer has no power to entertain claim for deduction otherwise than by filing revised return of income by assessee, clarified that the same would not fetter the appellate authority from entertaining a claim not made before the Assessing Officer”. In the above view, the substantial question of law is answered in favour of the appellant assessee and against the respondent revenue.

     However, the merits of the claim made by the appellant in respect of the additional grounds urged before the Tribunal would be required for consideration by the Tribunal. (AY. 1985-86 to 1995-96) (ITA No. 118 of 2003, dt. 10-7-2018)

     Alok Textile Industries Ltd. v. DCIT (Bom)(HC), www.itatonline.org

131. S.254(1) : Appellate Tribunal – Stay – While deciding an application for stay of demand, the Appellate Tribunal can only consider the prima facie case of merits. It cannot give a final finding on the merits and decide the appeal itself. [Central Excise Act, S.35]

     Court held that while deciding an application for stay of demand, the Appellate Tribunal can only consider the prima facie case of merits. It cannot give a final finding on the merits and decide the appeal itself. WP No. 5704 of 2014, dt. 13-11-2017)

     Maharashtra State Road Transport Corporation v. CST (2018) (12) G.S.T.L.140 (Bom)(HC), www.itatonline.org

132. S.254(1) : Appellate Tribunal – limitation – Tribunal considering appeal from order of assessment and dismissal of appeal from order of revision without considering on merit is held to be not valid. [S.263]

     Court held that order passed by the Tribunal on the ground of limitation without going into the merits of the case was unjustifiable when the issue was considered on the merits while adjudicating the consequential orders. (AY. 2006-07 to 2008-09)

     Hubli Electricity Supply Co. v. DCIT (2018) 404 ITR 462 (Karn.) (HC)

133. S.254(1) : Appellate Tribunal – Duties – Additional grounds – Tribunal must consider additional grounds raised on question of law arising from facts on record

     Allowing the appeal of the assessee the Court held that the Tribunal has the discretion to allow or not to allow a new ground to be raised. But where the Tribunal is only required to consider a question of law arising from the facts which are on record in the assessment proceedings such a question should be allowed to be raised when it is necessary to consider that question in order to correctly assess the tax liability of an assessee.

     Ravindra Arora v. ACIT (2018) 404 ITR 452 (Raj.) (HC)

     Praveen Arora v. ACIT (2018) 404 ITR 452 (Raj.) (HC)

134. S.254(2) : Appellate Tribunal –Rectification of mistake apparent from the record – If there is no discussion whatsoever by the Tribunal of the various case laws detailed in the submissions filed by the assessee, the order is non-speaking and has to be recalled. The Tribunal should take into account the material and case laws relied upon by the assessee during the hearing

     Allowing the petition the Court held that if there is no discussion whatsoever by the Tribunal of the various case laws detailed in the submissions filed by the assessee, the order is non-speaking and has to be recalled. The Tribunal should take into account the material and case laws relied upon by the assessee during the hearing. (WP-1833-2018, dt. 3-2-2018) (AY. 2007-08)

     Amore Kewels Private Ltd. v. DCIT (Bom)(HC), www.itatonline.org

135. S.254(2) : Appellate Tribunal –Rectification of mistake apparent from the record – While dealing with the application for rectification, the Tribunal where it finds is an error apparent on record then it should recall the original order and place the appeal for consideration of the issue on merits before the Regular bench – It is not appropriate to dispose of the controversy on merits of the submission while disposing of the Rectification application [S.11(1)]

     Allowing the petition the Court held that while dealing with the application for rectification, the Tribunal where it finds an error apparent on record then it should recall the original order and place the appeal for consideration of the issue on merits before the Regular Bench. It is not appropriate to dispose of the controversy on merits of the submission while disposing of the Rectification application. Order of the Tribunal was quashed. Matter remanded to the Tribunal to decide the matter as per law. (Referred Safari Mercantile (P) Ltd. v. ITAT (2016) 386 ITR 4 (Bom) (HC); Gyan Constructions v. ITAT (2015) 55 taxmann.com 479 (Bom) (HC) (WP No. 1340 of 2018 dt 28-6-2018)

     Universal Education v. ITAT (Bom.) (HC) www.itatonline.org.

136. S.260A : Appeal – High Court – Transfer pricing – Appeals against exclusion or inclusion of comparables to determine ALP of tested parties should not be filed in a ritualistic manner. Any inclusion or exclusion of comparables per secannot be treated as a question of law unless it is demonstrated to the Court that the Tribunal or any other lower authority took into account irrelevant consideration or excluded relevant factors in the ALP determination that impact significantly – The counsel of the Revenue is directed to serve a copy of this order on the Principal Chief Commissioner of Income Tax within the State of Maharashtra for necessary action [S.92C]

     Dismissing the appeal of the revenue the Court held that appeals against exclusion or inclusion of comparables to determine ALP of tested parties should not be filed in a ritualistic manner. Any inclusion or exclusion of comparables per se cannot be treated as a question of law unless it is demonstrated to the Court that the Tribunal or any other lower authority took into account irrelevant consideration or excluded relevant factors in the ALP determination that impact significantly. Court also observed that we hope the above observations would be kept in mind both by the revenue and the assessee who seek to prefer appeals from the orders of the Tribunal on Transfer Pricing particularly inclusion/exclusion of comparables. The Commissioner of Income Tax and the assessee in general would do well to also review the appeals filed and withdraw the same, in case the only challenge therein is to finding of facts, if the same is without evidence of any perversity or is in the face of settled legal position. The counsel of the revenue is directed to serve a copy of this order on the Principal Chief Commissioner of Income Tax within the State of Maharashtra for necessary action (ITA No. 1384 of 2015, dt. 26-6-2018)(AY. 2008 -09)

     PCIT v. Barclays Technology Centre India Private Ltd. (2018) 95 taxman.com 170 (Bom)(HC), www.itatonline.org

137. S.260A : Appeal – High Court – Advocate – Objection taken to SMS from Dept. Advocate that what Court is “pressurising me to do is both wrong and unethical. No Advocate of any worth would stoop so low. Sorry I am not able to comply with this rather unusual demand”. The SMS is contrary to the statement made by the learned Additional Solicitor General. The SMS either stems from not understanding our view or it is a made up indignation so as to accuse us of pressurising him to do an activity not expected of an Advocate. It appears to be in the second category as the SMS appears to give a completely different twist to the facts as stated to him by associate. Copy of order sent to CBDT Chairman

     Court held that Objection taken to SMS from Dept. Advocate that what Court is “pressurising me to do is both wrong and unethical. No Advocate of any worth would stoop so low. Sorry I am not able to comply with this rather unusual demand”. The SMS is contrary to the statement made by the learned Additional Solicitor General. The SMS either stems from not understanding our view or it is a made up indignation so as to accuse us of pressurising him to do an activity not expected of an Advocate. It appears to be in the second category as the SMS appears to give a completely different twist to the facts as stated to him by Associate. Copy of order sent to CBDT Chairman. (ITA No. 130 of 2016, dt. 2-8-2018) (AY. 2009-10, 2010-11)

     PCIT v. Starflex Sealing India Pvt. Ltd. (No. 2) (Bom.)(HC), www.itatonline.org

138. S.260A : Appeal – High Court – Strictures passed against the revenue for not following the assurance given earlier

     Strictures passed against the revenue for not following the assurance given earlier – Court observed that “We are pained at this attitude on the part of the State to obtain orders of admission on pure questions of law by not pointing out that an identical question was considered by this Court earlier and dismissed by speaking order. Revenue has not carried out the assurance which was made earlier. Revenue should give proper explanation why assurance given earlier is not being followed. It is time responsibility is fixed and the casual approach of the revenue in prosecuting its appeals is stopped”. (ITXA-130-2016 & ITXA-151-2016 (SR.7), dt. 27-6-2018)

     PCIT v. Starflex Sealing India Pvt. Ltd. (Bom.)(HC), www.itatonline.org

139. S.260A : Appeal – High Court – Representation by departmental advocates – Court observed that advocates representing revenue must be utmost careful whilst making statement on instructions, as same are accepted by Court, without question. Court also observed that it is appropriate to suggest to CBDT to consider holding of a training programme, where leading advocates could address domain – expert on ethics, obligation and standard expected of advocates before they start representing State, as it would ensure that revenue is properly represented to serve greater cause of justice and fair play [S.119]

     Court observed that it is appropriate to suggest to CBDT to consider holding of a training programme, where leading advocates could address domain-expert on ethics, obligation and standard expected of advocates before they start representing State, as it would ensure that revenue is properly represented to serve greater cause of justice and fair play – It is primary duty of Assessing Officer to up date Counsel with regard to all facts involved in matter, more particularly facts which may have transpired after passing of impugned order of Tribunal so as to avoid unnecessary delays in disposing of cases pending before Court. The ASG and the Registry is directed to forward a copy of this Order to the Chairman, CBDT. The ASG is expected to interact and advise the CBDT in respect of the issues referred to hereinabove to enable proper representation by the advocates on behalf of the revenue-Matter remanded. (AY.2001-02)

     PCIT v. Grasim Industries Ltd. (2018) 256 Taxman 79 (Bom.)(HC)

140. S.260A : Appeal – High Court – Territorial jurisdiction of High Court – Assessment order and penalty order passed by Assessing Officer at New Delhi – First Appeal adjudicated by Commissioner (Appeals), New Delhi and second appeal by Tribunal at New Delhi – Punjab and Haryana High Court has no territorial jurisdiction to adjudicate appeal [Ss.80HHC, 271(1)(c)]

     Dismissing the appeal of the revenue the Court held that; the Assessing Officer who passed the assessment order and the penalty order was based at New Delhi and the first appeal was adjudicated by the Commissioner (Appeals), New Delhi and the second appeal by the Tribunal at New Delhi. Court held that, the Punjab and Haryana High Court had no territorial jurisdiction to adjudicate upon the litigation over an order passed by the Assessing Officer at New Delhi. The appeal was returned to the Department for filing before the competent court of jurisdiction in accordance with law (AY. 2001-02)

     CIT v. Nectar Lifescience Ltd. (2018) 405 ITR 566 (P&H) (HC)

141. S.260A : Appeal – High Court – Transfer pricing – Substantial questions of law – Comparables- Arm’s length price –‘Transfer Pricing Adjustments’ should become final with a quietus at the hands of the final fact finding body, i.e., the Tribunal. The ITAT’s findings of fact cannot be challenged in the High Court unless it is shown that the findings are ex facie perverse and unsustainable and exhibit total non-application of mind by the Tribunal to the relevant facts of the case and evidence before it [S.92C]

     Dismissing the appeal of the revenue the Court held that Transfer Pricing Adjustments on the basis of the comparables are a matter of estimate of broad and fair guess-work of the authorities based on relevant material. The exercise of fact finding or ‘Arm’s Length Price’ determination or ‘Transfer Pricing Adjustments’ should become final with a quietus at the hands of the final fact finding body, i.e., the Tribunal. The ITAT’s findings of fact cannot be challenged in the High Court unless it is shown that the findings are ex-facie perverse and unsustainable and exhibit total non-application of mind by the Tribunal to the relevant facts of the case and evidence before it. (I.T.A.No.536/2015, dt. 25-6-2018) (AY. 2006-07)

     PCIT v. Softbrands India P. Ltd. (2018) 94 taxman.com 426 (Karn.)(HC), www.itatonline.org

142. S.260A : Appeal – High Court – Limitation – The time limit for filing an appeal to the High Court begins from the date of receipt of the order by the officer entitled to file the appeal. The fact that the ITAT may have dispatched the order earlier is not relevant. The fact that the officer may be aware of the ITAT’s order owing to collateral proceedings is also not relevant

     Court held that the time limit for filing an appeal to the High Court begins from the date of receipt of the order by the officer entitled to file the appeal. The fact that the ITAT may have dispatched the order earlier is not relevant. The fact that the officer may be aware of the ITAT’s order owing to collateral proceedings is also not relevant. (ITA No. 30 of 2011, dt. 17-5-2018) (AY. 1997-98)

     DIT (IT) v. Hyundai Heavy Industries Co. Ltd. (2018) 94 taxman.com 208/256 taxman 147 (Uttarakhand)(HC), www.itatonline.org

143. S. 263 : Commissioner – Revision of orders prejudicial to revenue – Limitation – If the authority issuing the show-cause notice lacks jurisdiction and if the notice is clearly barred by law, writ is maintainable – Notice issued by the PCIT is quashed [Art. 226]

     Allowing the petition the Court held that a writ petition to challenge a S. 263 notice is maintainable if the authority issuing the show-cause notice lacks jurisdiction and if the notice is clearly barred by law. As per Alagendran Finance 162 Taxman 465 (SC), the two year limitation period stipulated u/s. 263(2) runs from the date of the original assessment and not from the date of reassessment when the S. 263 notice deals with issues which are not subject matter of reassessment proceedings. Notice issued by the PCIT is quashed (W. A. N o . 1092 of 2017, dt. 14-6-2018) (AY. 2012-13)

     Indira Industries v. PCIT (2018) 95 taxman.com 103 (Mad)(HC), www.itatonline.org

144. S.263 : Commissioner – Revision of orders prejudicial to revenue – Exclusion of the deduction allowed u/s. 80IB while quantifying the deduction u/s. 80HHC – Two views possible – Revision was held to be not valid. [S.80HH]

     Allowing the appeal of the assessee the Court held that the view taken by the Assessing Officer was clearly supported by decisions of the Madhya Pradesh and Bombay High Courts. The view taken by the Assessing Officer was a plausible view. If it resulted in loss of revenue, it could not be treated as prejudicial to the interests of the Revenue for the purpose of invoking the power under S.263 of the Act. Moreover, the fact that two views existed was evident from the order of reference passed by the Full Bench.

     Agasthiya Granite P. Ltd. v. ACIT (2018) 403 ITR 279 (Mad.) (HC)

145. S.271(1)(c) : Penalty – Concealment – Capital gains – Claiming exemption under S.10(38) with a note that reserved its right to carry forward the loss – Deletion of penalty is held to be justified [Ss.10(38), 45]

     Dismissing the appeal of the revenue the Court held that the assessee had claimed exemption under S. 10(38) with a note that it reserved its right to carry forward the loss of ` 80.64 crore, under the bona fide belief that under S.10(38) the loss was not required to be considered. It could not be stated that the act of the assessee in giving the note was with some ulterior intention or concealment of income or giving inaccurate particulars. Deletion of penalty is held to be justified. (AY. 2008-09)

     DIT (IT) v. Nomura India Investment Fund Mother Fund. (2018) 404 ITR 636 (Bom.) (HC)

     Editorial: SLP of revenue is dismissed DIT (IT) v. Nomura India Investment Fund Mother Fund (2018) 401 ITR 172 (St)(SC)

146. S. 271(1)(c) Penalty – Concealment – “sale and lease back” – Quantum of revenue appeal was admitted and pending for final hearing –Merely using the words that there is concealment of income and / or furnishing inaccurate particulars of income is not sufficient. The same should be particularised by the AO with a finding as to what particulars of income has been concealed or what particulars of income are inaccurate. The words ‘concealment’ or giving ‘inaccurate particulars of income’ have to be read strictly before penalty provisions can be invoked [S.32]

     Question before the High Court was “Whether in the facts and circumstances of the case and in law, the Tribunal was justified in deleting the penalty levied under Section 271(1)(c) of the Act?” In the quantum appeal of the revenue was admitted on following questions of law “Whether on the facts and in the circumstances of the case and in law, the Tribunal was justified in allowing depreciation on assets given on sale and lease back basis when the transactions were purely financial transactions?”. Dismissing the appeal of the revenue the Court held that, mere using the words that there has concealment of income and / or furnishing inaccurate particulars of income would not in the absence of same being particularised, lead to imposition of penalty. It is only when the specified officer of the Revenue is satisfied that there has been concealment of particulars of income or furnishing inaccurate particulars of income that the occasion to explain the conduct in terms of Explanation I to Section 271(1)(c) of the Act would arise. (CIT v. Zoom Communication Pvt. Ltd. (2015) 371 ITR 570 (Delhi) (HC) is distinguished) (ITA No. 1363 of 2015, dt. 4-6-2018) (AY. 1995-96, to 1997-98)

     CIT v. L & T Finance Ltd. (Bom.)(HC), www.itatonline.org

147. S.271AAA : Penalty – Search initiated on or after 1st June, 2007 – Manner in which undisclosed income earned was not satisfied – Deletion of penalty was held to be not valid [S. 132(4)]

     Allowing the appeal of the revenue the Court held that; the appellate authorities misdirected themselves in holding that the conditions under S. 271AAA(2) were satisfied by the assessee. The second condition for availing of the immunity from penalty was that the assessee should have specified in the statement under S. 132(4) the manner in which such income stood derived. The assessee had merely stated that the sums advanced were undisclosed income. However, she had not specified how she had derived that income and under what head it fell (rent, capital gains, professional or business income out of money lending, source of money, etc.). Unless such facts were mentioned with some specificity, it could not be said that the assessee had fulfilled the requirement that she had in her statement under S. 132(4), “substantiated the manner in which the undisclosed income was derived”. The order of the appellate authorities deleting the penalty was erroneous. (AY. 2009 -10)

     CIT v. Ritu Singal (2018) 403 ITR 97 (Delhi) (HC)

148. S. 275 : Penalty – Bar of limitation – Concealment – Notices issued after period of limitation as per first limb of S.275(1)(a) hence barred by limitation [Ss. 271(1)(c), 275 (1)(a)]

     Allowing the petition the Court held that the time limit under the second limb was six months from the end of the month in which the order of the Commissioner (Appeals) was received. For the assessment year 2011-12 the order under S.143(3) was passed on December 30, 2016. Therefore, the limitation for initiation of penalty proceedings under S. 275(1)(a) was on or before March 31, 2017, in terms of the first limb of the provision. According to the second limb of the provision, though it was six months from the end of the month in which the order of the Commissioner (Appeals) was received, in the assessee’s case the proviso to S. 275(1)(a) would be attracted and the period would be one year from the date on which the order was passed by the Commissioner (Appeals). The assessees had preferred the appeals before the Commissioner (Appeals) on February 1, 2017, and at that point of time, when the penalty notices under S. 271(1)(c) were issued, the appeals were pending. Therefore, the Assistant Commissioner had lost out on the limitation aspect with regard to the first limb of S. 275(1)(a), as the penalty notices had been issued on September 11, 2017 and September 14, 2017, which were after March 31, 2017, which would be the period of limitation for initiating penalty proceedings under S. 275(1)(a). (AYs. 2011-12 to 2015-16)

     J. Srinivasan v. ACIT (2018) 404 ITR 51 (Mad.) (HC)

149. S.276B : Offences and prosecutions – Failure to pay to the credit tax deducted at source – Non-Executive Chairman is not involved in day-to-day affairs of company – Managing Director admitting liability and entering into negotiations with revenue – Prosecution of non-executive Chairman is held to be not valid [Ss.2(35), 278AA]

     Allowing the petition the Court held that non-executive chairman is not involved in day-to-day affairs of company. Managing Director admitting liability and entering into negotiations with revenue. Prosecution for failure to pay to the credit tax deducted at source of Non-Executive Chairman is held to be not valid. It was contended that as per S.276B, of the Act, a person who is incharge of and is responsible to the company for the conduct of the business of the company can be prosecuted. The test laid down by S.276B is entirely different and distinct from that laid down by S.2(35) of the Act. S 2(35) is relevant only for imposing a penalty on a person and is not relevant for deciding whether he should be prosecuted for an offence under the Act.

     Kalanithi Maran v. UOI (2018) 405 ITR 356 (Mad.) (HC)

150. S. 279 : Offences and prosecutions – Sanction – Show cause notice –Writ against show cause notice is premature and not maintainable – It is not necessary for the authority to issue a show cause notice before granting an order of sanction. [Ss. 276(c)(1), 277, Art. 226]

     Dismissing the petition the Court held that the writ petition against show cause notice is premature and not maintainable. The proceeding was only in the form of a show-cause notice and therefore, the assessee had to respond to it and it could not be questioned in a writ petition. However, there was no necessity for the authority to issue a show-cause notice before granting an order of sanction as it was an administrative act. Nevertheless, the Principal Director (Investigation) had issued the show-cause notice with a view to provide an opportunity to the assessee, of which he had to avail. Hence, the show-cause notice need not be interfered with in a writ petition under Article 226 of the Constitution. The Principal Director (Investigation) was one of the authorities enumerated in the proviso to S.279(1) and therefore, had sufficient jurisdiction to issue the show-cause notice under S.276C(1). (AY. 2017-18)

     Krishnaswami Vijayakumar v. DIT (2018) 404 ITR 442 (Mad) (HC)

151. S.281 : Certain transfers to be void – Tax Recovery Officer could not declare a transaction of transfer as void, if revenue wants to have transaction nullified, it must go to civil court to seek declaration to that effect [S. 222, Second Schedule, R.11]

     Allowing the petition the Court held that Tax Recovery Officer could not declare a transaction of transfer as void, if revenue wants to have transaction nullified, it must go to Civil Court to seek declaration to that effect. However since in instant case notice under Rule 2 of Second Schedule was served on defaulter assessee and sale transactions executed by said defaulter with instant petitioner took place thereafter, it would not be open to petitioner to claim benefit of proviso to S. 281(1) of the Act. The orders impugned in these writ petitions are quashed to the extent indicated above. The stand of the respondent in declining to lift the attachment already made is sustained. The order of the respondent declaring the transactions in question as null and void is quashed.

     D. S. Senthilvel v. TRO (2018) 256 Taxman 179 (Mad.) ( HC)

152. S. 281 : Certain transfers to be void – Transfer of property by legal heirs of original assessee – Tax recovery officer has no power to declare transfer is void- Department was granted liberty to file a civil suit to declare the sale transaction and sale deed executed in favour of the petitioner, null and void [S. 222, 226]

     Court held that the Tax Recovery Officer could not declare the transfer of the property null and void according to the provisions of the 1961 Act. granting liberty to the petitioner to approach the Tax Recovery Officer under Rule 11 of the Second Schedule seeking adjudication of its claim was set aside and the Department was granted liberty to file a civil suit to declare the sale transaction and sale deed executed in favour of the petitioner, null and void.

     Agasthiya Holdings Pvt. Ltd. v. CIT (2018) 403 ITR 288 (Mad.) (HC)

153. S.282 : Service of notice –Reassessment – Service of notice at the factory premises of the assessee on the security guard was held to be valid, though “service” of notice u/s. 147/148 is not a mere procedural requirement, but a condition precedent for initiation of proceedings, the service upon a person who was not authorised to receive notice does not render the proceedings null and void if the assessee complied and entered appearance [Ss. 148, 292B]

     Question before the Court was “Whether the Income Tax Appellate Tribunal is justified in law in holding that service of notice at the factory premises of the assessee on the security guard was not proper service under the provisions of Section 282(2) of the Income-tax Act, 1961?” After considering the various case laws on the subject the High Court answered the question in favour of the revenue and held that the assessment proceedings under Section 147/148 of the Act are not invalid or void for want of proper service of notice. However, an order of remand is required to be passed as the Tribunal has not adjudicated and decided the appeal filed by the respondent-assessee on merits. (ITA No. 805/2005, dt. 31–2018)(AY.1995-96)

     CIT v. Sudev Industries Limited(Delhi)(HC), www.itatonline.org

Wealth-tax Act, 1957

154. S.7 : Net wealth – Value of assets – Valuation of all assets and the valuation operated not on a year -to-year basis but for a four year cycle. The only exception was that where jewellery included gold or silver or any other alloy, the valuation of gold had to be undertaken annually – Deletion of addition was held to be justified.[Wealth-tax Rules, 1957, 18, 19]

Dismissing the appeals of the revenue the Court held that it was evident that a conjoint reading of Rules 18 and 19 of the Wealth-tax Rules, 1957, required valuation of all assets and the valuation operated not on a year-to-year basis but for a four year cycle. The only exception was that where jewellery included gold or silver or any other alloy, the valuation of gold had to be undertaken annually. Only because the search was an event which per se could not have compelled the assessees to go in for fresh valuation, unless there was a compulsion in law to do so. The assessees acted within their rights in relying upon the prevailing valuation, which had ended on March 31, 2012.

PCWT v. Padma Dalmia (2018) 403 ITR 150 (Delhi) (HC)

PCWT v. Raghu Hari Dalmia (2018) 403 ITR 150 (Delhi) (HC)