155. S.2(14)(iii) : Capital asset –Agricultural land – Adventure in the nature of trade – Land was sold after a period of 16 months – Land shown as agricultural land in revenue records – Fact that said land had been sold to an industrial unit and had potential to be used for industrial purpose, could not be a determinative factor to treat profit earned by assessee on sale of agriculture land as business income – The intention of the purchaser cannot be the determinative factor to treat the profit earned by the assessee on sale of agriculture land as business income. [S.28(i), 45]

     Dismissing the appeal of the revenue the Court held that assessee was an agriculturist and, land owned by him had been shown as agricultural land in revenue records, land in question was sold by assessee after a period of 16 months from purchase and, thus, it could not be regarded as a case of ‘adventure in nature of trade’. Intention of purchaser could not be a determinative factor to treat profit earned by assessee on sale of agriculture land as business income. (AY. 2009-10)

     PCIT v. Heenaben Bhadresh Mehta. (2018) 257 Taxman 219 (Guj.)(HC)

156. S.2(14)(iii) : Capital Asset –Agricultural Land – Beyond 8 Kms. from nearest Municipality – Nursery – Land record showing the land as agricultural land – Sale consideration is exempt from tax [S.45]

     Dismissing the appeal of the revenue the Court held that land revenue records showed that land specified was agricultural land and distance from nearest municipality is beyond 8 kms., even though assessee ran a nursery on agricultural land, the fact that there was loss and income could not have made any difference to the nature and character of the land. (AY.2007 -08)

     PCIT v. P. S. Raghupathy (2018) 257 Taxman 225 (Mad.)(HC)

157. S.4 : Charge of income-tax – Accrual of income – Method of accounting – Gains arising on account of securitisation of lease receivables and credited to the Profit & Loss Account is a taxable receipt in the year of securitisation. [S.145]

     Dismissing the appeal of the assessee the Court held that gain arising on account of securitisation of lease receivables and credited to the Profit & Loss Account is a taxable receipt in the year of securitisation. Followed CIT v. T. V. Sunderam Iyengar (1996) 222 ITR 344 (SC). Argument that the entry represents hypothetical income and not real income and that the amount is assessable in subsequent years on receivable basis is not correct. Question of whether income can also be deferred to subsequent years under the “Matching concept” as per Taparia Tools Ltd. v. JCIT (2003) 260 ITR 102 (Bom.)/Taparia Tools Ltd. v. JCIT (2015) 372 ITR 605 (SC) left open. (AYs. 2002-03, 2003-04) (ITA No. 256 of 2016, dt. 17-9-2018)

     L & T Finanace Limited v. DCIT (2018) 304 CTR 954 (Bom.)(HC),
     www.itatonline.org

158. S.4 : Income chargeable to tax –Capital or revenue – Income from other sources – Interest on funds deposited with banks – Prior to commencement of commercial operations will be in nature of capital receipt and will be required to be set off against pre-operative expenditure capitalized under head capital work-in-progress – Cannot be taxed as income from other sources. [S.5, 56, 145]

     Dismissing the appeal of the revenue the Court held that as per loan agreement executed between consortium of banks and assessee all disbursements were to be deposited in trust and retention account was to be subject to strict control and verification by senior lenders and all disbursements were to be utilised solely for purpose of implementation of project and no other purpose. Funds were thus inextricably linked to setting up of mega road projects and interest earned on such borrowed funds could not be classified as income from other sources. Accordingly the interest received prior to commencement of commercial operations of specified mega projects will be in nature of capital receipt and will be required to be set off against pre-operative expenditure capitalised under head capital work-in-progress and cannot be taxed under head income from other sources.

     PCIT v. Road Infrastructure Development Corporation of Rajasthan Ltd. (2018) 257 Taxman 208 (Raj.) (HC)

     Editorial: SLP is granted to the revenue, PCIT v. Road Infrastructure Development Corporation of Rajasthan Ltd. (2018) 257 Taxman 186 (SC)

159. S.4 : Charge of income-tax –Capital or revenue – Interest from mobilisation advances made by it to contractor for purpose of facilitating smooth commencement and completion of work of construction – Receipts being intrinsically connected with construction business of assessee would be capital receipt and not income of assessee from any independent source [S.56]

     Assessee is engaged in construction and development business, received certain amount by way of interest from mobilisation advances made by it to contractor for purpose of facilitating smooth commencement and completion of work of construction. Allowing the appeal of the assessee the Court held that said receipt was adjusted against charges payable to contractor and, thus, resulted in reduction of cost of construction .Accordingly in view of decision in case of CIT v. Bokaro Steel Ltd. [1999] 236 ITR 315 (SC), receipts being intrinsically connected with construction business of assessee would be capital receipt and not income of assessee from any independent source.

     Roads & Bridges Development Corporation of Kerala Ltd. v. ACIT (2018) 257 Taxman 392 (Ker.)(HC)

160. S.4 : Charge of income-tax –Capital or revenue – Subsidy –Technology upgradation of existing units as well as to set up new units with latest technology to enhance their viability and competitiveness in domestic and international markets – Capital receipts [S.28(i)]

     Dismissing the appeal of the revenue the Court held that the subsidy was clearly for purpose of upgrading machinery and plant and for acquiring capital assets and not for purpose of day-to-day business operations of assessee, held that quantum of subsidy received by assessee was a capital receipt.

     CIT v. Gloster Jute Mills Ltd. (2018) 257 Taxman 512 (Cal.)(HC)

161. S.4 : Charge of income-tax – Interest on bank deposits out of share capital – Prior to commencement of business operations – Interest is not liable to be assessed as income from other sources – Interest income would go to reduce capital cost of project and was on capital account and same could not be taxed as income from other sources [S.56, 145]

     Dismissing the appeal of the revenue the Court held that interest earned before commencement of business operations was not liable to be taxed as same was eligible for deduction against public issue expenses incurred by company, interest income would go to reduce capital cost of project and was on capital account and cannot be assessed as income from other sources. (AY. 2011-12)

     PCIT v. Bank Note Paper Mill India (P.) Ltd. (2018) 256 Taxman 429 (Karn.) (HC)

162. S.4 : Charge of income-tax – Capital or revenue – Power subsidy received by assessee company from State Government under Power Intensive Industries Scheme, 2005, for setting up a new industrial unit in backward area was capital receipt and, thus, not liable to tax

     Dismissing the appeal of the revenue the Court held that power subsidy received by assessee-company from State Government under Power Intensive Industries Scheme, 2005, for setting up a new industrial unit in backward area was capital receipt and, not liable to tax. (AY. 2001-01, 2003-04)

     CIT v. Keventer Agro Ltd. (2018) 256 Taxman 437 (Cal) (HC)

163. S.10A : Free trade zone – For computing deduction if export turnover is arrived at after excluding certain expenses, said expenses should also be excluded from total turnover

     Dismissing the appeal of the revenue Court held that, while computing deduction if export turnover in numerator is to be arrived at after excluding certain expenses, said expenses should also be excluded in computing export turnover as a component of total turnover in denominator.(AY. 2010-11)

     PCIT v. Tesco Hindusthan Service Centre (P.) Ltd. (2018) 96 taxmann.com 74 (Karn.) (HC)

     Editorial: SLP of revenue is dismissed, PCIT v. Tesco Hindusthan Service Centre (P.) Ltd. (2018) 257 Taxman 92 (SC)

164. S.10AA : Special Economic Zones – Derived from – Surplus amount in freight export account and in insurance export account was derived from export activities eligible for deduction

     Dismissing the appeal of the revenue, the Court held that surplus amount in freight export account and in insurance export account was derived from export activities eligible for deduction. (AY. 2010-11)

     PCIT v. Vedansh Jewels (P.) Ltd. (2018) 97 taxmann.com 521/ 258 Taxman 155 (Raj.) (HC)

     Editorial: SLP of revenue is dismissed; PCIT v. Vedansh Jewels (P.) Ltd. (2018) 258 Taxman 154 (SC)

165. S.11 : Property held for charitable purposes – Institution imparting education in banking is entitled to exemption – Grant or refusal to grant exemption under S. 10(22) or 10(23C) is not relevant. [S. 2(15), 10(22), 10(23C), 12A]

     Dismissing the appeal of the revenue the Court held that institution imparting education in banking is entitled to exemption. Grant or refusal to grant exemption under S. 10(22) or 10 (23C) is not relevant. (AY. 2008-09)

     CIT v. Indian Institute of Banking and Finance. (2018) 408 ITR 558 (Bom.) (HC)

     Editorial: Order in Indian Institute of Banking and Finance v. DDIT (E) (2015) 39 ITR 323 (Mum.) (Trib.) is affirmed.

166. S.11 : Property held for charitable purposes – Amount paid to employing foreign personnel for imparting education in India, amount set apart for payment in previous year and paid in subsequent year, expenditure of earlier years adjusted against income of current year, amounts to application of income – When purposes of accumulation is mentioned in Form 10 charitable merely failure to give details – Exemption cannot be denied [Form 10]

     Dismissing the appeals of the revenue the Court held that amount paid to employing foreign personnel for imparting education in India, amount set apart for payment in previous year and paid in subsequent year, expenditure of earlier years adjusted against income of current year ,amounts to application of income. Court also held that when purposes of accumulation is mentioned in Form 10 charitable merely failure to give details, exemption cannot be denied (AY. 2008-09, 2009-10)

     CIT v. Ohio University Christ College (2018) 408 ITR 352 (Karn.) (HC)

     Editorial: Order in Dy. DIT v. Ohio University Christ College ( 2015) 44 ITR 291 (Bang.) (Trib.) is affirmed.

167. S.12A : Registration – Trust or institution – when there is no change in objects of Trust, registration cannot be cancelled on the ground that there was amendment in respect of appointment of chief trustees and manner of managing the trust[S.11, 12AA(3), 13]

     Dismissing the appeal, of the revenue the Court held that when there is no change in objects of Trust, registration cannot be cancelled on the ground that there was amendment in respect of appointment of chief trustees and manner of managing the trust.

     CIT(E) v. Sadguru Narendra Maharaj Sansthan (2018) 407 ITR 12 (Bom.) (HC)

168. S.13 : Denial of exemption –Trust or institution – Investment restrictions – Holding shares in a company – Denial of exemption to be restricted to income from shares to be taxed at marginal rate under S. 164(2) [S. 11, 13(1))(d)(iii), 164(2)]

     Dismissing the appeal of the revenue the Court held that denial of exemption to be restricted to income from shares to be taxed at marginal rate under S.164(2) of the Act.

     CIT v. Santokba Durlabhji Trust Fund. (2018) 406 ITR 457 (Raj.) (HC)

     Editorial: SLP is granted to the revenue; CIT v. Santokba Durlabhji Trust Fund (2018) 404 ITR 2 (St)

169. S.14A : Disallowance of expenditure – Exempt income – The expression “does not form part of the total income” in S. 14A envisages that there should be an actual receipt of the income, which is not includible in the total income – If no exempt income is received or receivable during the relevant previous year, no disallowance can be made [R.8D]

     Dismissing the appeal of the revenue the Court held that the expression “does not form part of the total income” in S.14A envisages that there should be an actual receipt of the income, which is not includible in the total income. If no exempt income is received or receivable during the relevant previous year, no disallowance can be made. Followed Chem Invest Ltd v. CIT (2015) 378 ITR 33 (Delhi) (HC) (749/2014 dt. 22-9-2015) ( ITA No. 51 of 2016, dt. 13-10-2016)

     PCIT v. Ballapur Industries Ltd. (Bom)(HC);
     www.itatonline.org

170. S.14A : Disallowance of expenditure – Exempt income –Disallowance cannot be made in excess of actual exempted income-Matter remanded [R.8D]

     Allowing the appeal of the assessee the Court held that the, AO as well as Appellate Authority disallowed expenses incurred by assessee bank in earning exempt income in excess to actual exempt income, same was per se absurd and hypothetical and therefore, matter was to be remanded back to AO. (AY. 2011-12 )

     Pragathi Krishna Gramin Bank. v. JCIT (2018) 256 Taxman 349 (Karn.)(HC)

171. S.23 : Income from house property – Annual value – Interest free security deposit – Interest offered as income from other sources –Notional interest on interest free deposit cannot be considered to determine annual letting value of property – Notional addition would amount to double taxation [S.22, 23(1)(b)]

     Dismissing the appeal of the revenue the Court held that once interest on interest free security deposits received by assessee from tenant was offered to tax as income from other sources, adding of notional interest on interest free security deposit to determine ‘Annual letting value’ of property would amount to double taxation. (AYs. 2004-05 to 2007-08)

     PCIT v. Karia Can Co. Ltd. (2018) 257 Taxman 189 (Bom.) (HC)

172. S.32 : Depreciation – Rate of depreciation – All equipment formed part of Life Saving Equipment – Denial of depreciation on computer is held to be not proper [IT Rules 1962, Appex. I, Part A III 3(Xia)(D)]

     Dismissing the appeal of the revenue the Court held that all equipment formed part of Life Saving Equipment. Denial of depreciation on computer is held to be not proper. Accordingly depreciation @ 40% is allowed on computer. (AY. 2012-13)

     CIT v. Vasantha Subramanian Hospitals Pvt. Ltd (2018) 408 ITR 176 (Mad.) (HC)

173. S.32 : Depreciation – Dumper and Volvo machines used by assessee for his own mining purposes as well as giving them on hire, were eligible for higher rate of depreciation

     Dismissing the appeal of the revenue the Court held that dumper and volvo machines, used by assessee for his own mining purposes as well as giving them on hire, were eligible for higher rate of depreciation. Expression used in sub-clause (ii) of clause 3 of Entry No. III of Appendix-1, namely motor buses, motor lorries and motor taxies is having wide amplitude and term motor lorries used therein, would include dumper and Volvo machines. (AY. 2011-12)

     PCIT v. Amar Singh Bhandari (2018) 258 Taxman 227 (Raj.)(HC)

174. S.32: Depreciation — Additional depreciation — Manufacturer –Ready mix concrete is an article which has been manufactured — Entitled to additional depreciation on plant and machinery used in manufacture of ready mix concrete. Transit Mixer and Trucks used to transport ready mix concrete whether plant and machinery involved in manufacture of ready mix concrete is question to be decided by Tribunal — Matter remanded [S.32(1)(iia) ]

     Court held that considering the high degree of precision and stringent quality control observed in the selection and processing of ingredients as also the specific entry in the Central Excise Tariff First Schedule, Heading 3824 50 10 which deals with “Concretes ready to use known as “Ready mix concrete”, though the ready mix concrete did not have a shelf-life, the final mixture of stone, sand, cement and water in a semi-fluid state, transported to the construction site to be poured into the structure and allowed to set and harden into concrete was a thing or article manufactured. Court also held that the assessee, though engaged principally in the business of construction, was entitled to additional depreciation under section 32(1)(iia) for the plant and machinery used in the manufacturing activity being the production of ready mix concrete. Court further observed that the question whether additional depreciation was permissible on the actual cost of transit vehicles acquired by the assessee in the previous year, had to be considered by the Tribunal. Whether the subject vehicles, in the nature of the process involved, qualified to be treated as plant and machinery was to be decided by the Tribunal. Matter remanded. (AY. 2006-07)

     Cherian Varkey Construction Co. (P.) Ltd. v. UOI (2018) 406 ITR 262 (Ker.) (HC)

175. S.32 : Depreciation – Carry forward and set-off of unabsorbed depreciation of A.Y 1999-2000 and A.Y 2000-01 against the profits of AY. 2009-10 – Eligible for carry forward and set-off. There is no conflict between CIT v. Hindustan Unilever Ltd. (2017) 394 ITR 73 (Bom.) & CIT v. Milton Pvt Ltd, CIT v. Confidence Petroleum India Ltd., because while the former is at the stage of final hearing, the latter is at the stage of admission. Accordingly, the request for reference to a larger Bench is not acceptable. Merely filing of an SLP would not make the order of this Court bad in law or give a licence to the Revenue to proceed on the basis that the order is stayed and/or in abeyance. Unabsorbed depreciation is allowed to be set off [S.32(2)]

     Question before the High Court was “Whether on the facts and circumstances of the case and in law, the Tribunal was justified in directing the Assessing Officer to allow carry forward and set-off of unabsorbed depreciation of A.Y 1999-2000 and A.Y 2000-01 against the profits of AY. 2009-10 without appreciating that as per the provisions of Section 32(2) as they stood prior to the amendment by Finance Act, 2001 w.e.f. 1-4-2002, such unabsorbed depreciation was eligible for carry forward and set-off against business profits only for a further period of eight years?”

     Department relied upon the orders in the case of CIT v. Milton Pvt Ltd. (ITA No. 2301 of 2013) and CIT v. Confidence Petroleum India Ltd. (ITA No. 582 of 2014), both of which were admitted on similar questions of law on 24th February, 2017 and 3rd April, 2017 respectively accordingly the matter may be referred to larger Bench.

     Honourable Court held that the issue referred above is concluded by the decision of Bombay High Court in CIT v. Hindustan Unilever Ltd (2017) 394 ITR 73 (Bom.) (HC), placing reliance upon the decisions of the Gujarat High Court in Dy. CIT v. General Motors India P. Ltd. (2013) 354 ITR 244 (Guj.) (HC) and the CBDT Circular No.14 of 2001 dt. 22-11-2001. Court also observed that the revenue was not able to point out any reason as to why the decision of the Gujarat High Court in General Motors (I) Ltd. (Supra) should not be followed. In the above facts, the appeal of the Revenue was dismissed. Court also observed appeals filed by the Revenue on identical question of law were not entertained by following the decisions, Hindustan Unilever Ltd. (Supra) CIT v. Arch Fine Chemicals Pvt. Ltd. (ITA No. 1037 of 2016 dt. 6-12-2016) CIT v. Bajaj Hindustan Ltd. (ITA No. 134 of 2016, 135 of 2016, 136 of 2016, 140 of 2016, 141 of 2016 and 148 of 2016) on 13th June, 2018 PCIT v. Hindustan Antibiotics Ltd., ITA No 1042 of 2015 dt. 20-2-2018. Court also held that merely filing of an SLP from the order of Hindustan Unilever Ltd. (supra) would not make the order of this Court bad in law or give a licence to the Revenue to proceed on the basis that the order is stayed and/or in abeyance. The Revenue is entitled to challenge the view taken by us following our decision in Hindustan Unilever (supra) by challenging this decision in the Apex Court. However, in the present facts, at this stage, there can be no question of our not following the order in Hindustan Unilever (supra). It may be pointed out that the Delhi High Court in Motor and General Fine Ltd. v. ITO (2017) 393 ITR 60 (Delhi)(HC) has also adopted the view of the Gujarat High Court in General Motors (supra). Unabsorbed depreciation is allowed to be set off. Accordingly the appeal of revenue was dismissed. (ITA – No 293 of 2016 dt. 3-8-2018)

     PCIT v. Associated Cable Pvt. Ltd. (Bom.)(HC) www.itatonline.org

176. Expenditure – Foreign education and training expenses of a partner – Held to be allowable as business expenditure as the post graduate course underwent was directly related to profession carried on by firm – Professional fee received by firm had substantially increased after completion of post graduate degree by said partner, several important contracts were secured by firm, which firm attributed to educational qualification and expertise acquired by said partner abroad

     Allowing the appeal of the assessee the Court held that the expenditure incurred on foreign education and training expenses of a partner is held to be allowable as business expenditure as the post graduate course underwent was directly related to profession carried on by firm and professional fee received by firm had substantially increased after completion of post graduate degree by said partner, several important contracts were secured by firm, which firm attributed to educational qualification and expertise acquired by said partner abroad. (AY. 2001-02)

     Aswathanarayana & Eswara v. Dy. CIT (2018) 258 Taxman 210 (Mad.)(HC)

177. S.37(1) : Business expenditure – Ad hoc disallowance of 5% – Tribunal is justified in holding that where the assessee had furnished names and PAN numbers of all vendors to whom it had paid repair and maintenance charges for their services addition by way of ad hoc disallowance of 5% of expenses is held to be not justified

     Dismissing the appeal of the revenue the Court held that Tribunal is justified in holding that where the assessee had furnished names and PAN numbers of all vendors to whom it had paid repair and maintenance charges for their services disallowance of ad hoc disallowance of 5% of expenses is held to be not justified. (AY. 2005-06)

     PCIT v. Rambagh Palace Hotels (P.) Ltd. (2018) 259 Taxman 31 (Delhi) (HC)

178. S.37(1) : Business expenditure – Capital or revenue – In view of fact that advanced technology software become obsolete within short intervals – Expenditure incurred on software expenses is held to be revenue expenditure.

     Dismissing the appeal of the revenue the Court held that in view of fact that advanced technology software becomes obsolete within short intervals. Expenditure incurred on software expenses is held to be revenue expenditure. (AY. 2000-01, 2001-02)

     CIT v. Lakshmi Vilas Bank Ltd. (2018) 258 Taxman 193 (Mad.)(HC)

179. S.37(1) : Business expenditure –Publicity expenses – Donations to support educational and social activities is held to be allowable as business expenditure

     Dismissing the appeal of the revenue the Court held that donations to support educational and social activities is held to be allowable as business expenditure

     PCIT v. Lord Chloro Alkali Ltd. (2018) 97 taxmann.com 513/ 258 Taxman 131 (Raj.) (HC)

     Editorial: SLP of revenue is dismissed. PCIT v. Lord Chloro Alkali Ltd. (2018) 258 Taxman 130 (SC)

180. S.37(1) : Business expenditure –Capital or revenue – Non-compete fee for five years – Allowable as revenue expenditure

     Allowing the appeal of the assessee the Court held that since payment made as non-compete fee did not entail any enduring benefits to assessee in its business, same was to be allowed as revenue expenditure. Followed, Empire Jute Co. Ltd. v. CIT (1980) 124 ITR 1 (SC). (AY. 2000-01)

     Asianet Communications Ltd. v. CIT (2018) 257 Taxman 473 (Mad.)(HC)

181. S.37(1) : Business expenditure – Capital or revenue – Abandoned projects – State Government ordered closure of implementation of said project – Same line of existing business – Allowable as business expenditure

     Allowing the appeal of the assessee the Court held that expenditure incurred for implementation of new project in same line of business which was abandoned as per the order of State Govt., since said project was in same line of existing business of assessee and there was no creation of any new asset of enduring nature, entire expenditure incurred on said project was to be allowed as revenue expenditure. (AY. 1998 -99, 1999-2000 )

     Tamil Nadu Magnesite Ltd. v. ACIT (2018) 257 Taxman 79 (Mad.) (HC)

182. S.40(a)(ia) : Amounts not deductible – Deduction at source – Interest – Payment for delayed allotment of land by Housing Corp. is not interest since there was neither any borrowing of money nor was there incurring of debt on part of assessee hence not liable to deduct tax at source – No disallowance can be made [S.2(28A), 194A]

     Dismissing the appeal of the revenue the Court held that payment for delayed allotment of land by Housing Corp. is not interest since there was neither any borrowing of money nor was there incurring of debt on part of assessee hence not liable to deduct tax at source. Accordingly no disallowance can be made. (AY. 2005-06)

     PCIT v. West Bengal Housing Infrastructure Development Corporation Ltd. (2018) 257 Taxman 570 (Cal.) (HC)

183. S.40(a)(ii) : Amounts not deductible – Rates or tax –Education cess is not part of tax. Accordingly, the same is allowable as a deduction and disallowance cannot be made CBDT Circular referred

     Court held that; education cess is not part of tax. Accordingly, the same is allowable as a deduction and disallowance cannot be made. CBDT Circular referred. (ITA No. 52/2018, dt. 31-7-2018) (AY. 2004-05)

     Chambal Fertilisers and Chemicals Ltd. v. JCIT (Raj)(HC),
     www.itatonline.org

184. S.40A(3) : Expenses or payments not deductible – Cash payments exceeding prescribed limits of ₹ 20,000 – Inflated purchase expenditure by raising bogus claims – Only profit element embedded there in should be brought to tax and not the entire expenditure [S.37(1), 145]

     Dismissing the appeal of the revenue the Court held that when Assessing Officer had doubted genuineness of expenditure, he would require bringing to tax profit element so avoided by assessee and not the entire expenditure. (AY. 2009-10)

     PCIT v. Juned B. Memon (2018) 256 Taxman 380 (Guj.) (HC)

185. S.40A(3) : Expenses or payments not deductible – Cash payments exceeding prescribed limits – Agricultural produce – Paddy from farmers – No disallowance can be made [R.6DD]

     Dismissing the appeal of the revenue the Court held that Agricultural produce i.e., Paddy purchased from the farmers by making cash payments exceeding prescribed limits, no disallowance can be made. S.40A(3) is a deeming provision and Rule 6DD exempts agricultural produce. (AY. 2001-02)

     CIT v. Keerthi Agro Mills (P.) Ltd. (2017) 405 ITR 192/ 87 taxmann.com 31 (Ker.) (HC)

     Editorial: SLP of revenue is dismissed; PCIT v. Keerthi Agro Mills (P.) Ltd. (2018) 257 Taxman 1 (SC)

186. S.41(1) : Profits chargeable to tax – Remission or cessation of trading liability – Liability is not written off in books of account – Addition cannot be made as cessation of liability

     Court held that as the assessee had not written off liability in books of account with respect to debtors and had carried forward and continued same liability addition cannot be made as cessation of liability (AY. 2009-10)

     PCIT v. Babul Products (P.) Ltd. (2018) 257 Taxman 100 (Guj.)(HC)

     Editorial: Order in Babul Products (P.) Ltd v. ACIT (2017) 167 ITD 402 (Ahd.) (Trib.) is affirmed.

187. S. 43(5) : Speculative transaction – Hedging – High Sea Sales – Not speculative – Allowable as business loss [S.28(i)]

     The assessee entered into contracts for purchase of raw materials, mainly crude oil, which was the raw material for refined oil on “High Seas Sale” basis and many times, looking to the market trend, the assessee had to cancel such contracts for sale of raw materials (crude oil). In the present assessment year it had resulted in a loss which the assessee claimed as a business loss. The Assessing Officer and the Commissioner (Appeals) rejected the claim of the assessee in its entirety, but the Tribunal recorded findings with respect of 32 transactions in favour of the assessee. On appeal dismissing the appeal of the revenue the Court held that the Tribunal was correct in allowing the claim of the assessee in respect of 32 transactions. (AY. 2009-10)

     ACIT v. Surya International (P.) Ltd. (2018) 406 ITR 274 (All) (HC)

188. S.43A : Rate of exchange – Actual cost – Depreciation – Notional fluctuation – Imported assets acquired in foreign currency – Fluctuation in rate of exchange – Adjustment can be made at each date of balance-sheet pending actual payment [S.32]

     Dismissing the appeal of the revenue the Court held that the Tribunal was justified in allowing the claim of depreciation on foreign exchange fluctuation which showed notional fluctuation. Adjustment can be made at each date of balance-sheet pending actual payment. (AY. 1993-94)

     CIT v. Phonex Lamps India Ltd. (2018) 406 ITR 550 (All.) (HC)

189. S.43B : Certain deductions only on actual payment – Service tax payable – Since services were rendered, liability to pay service tax in respect of consideration would arise only upon assessee receiving funds and not otherwise – liability claimed by assessee could not be disallowed

     Dismissing the appeal of the revenue the Court held that since services were rendered, liability to pay service tax in respect of consideration would arise only upon assessee receiving funds and not otherwise, thus, liability claimed by assessee could not be disallowed. (AY. 2006-07)

     PCIT v. Tops Security Ltd. (2018) 258 Taxman 161 (Bom.)(HC)

190. S.45 : Capital gains – Transfer – Development agreement not registered – General Power of attorney – Possession of property was given to the developer for specific purposes to develop the property – The development agreement clearly provides that nothing contained in the agreement shall be construed as grant of possession in part performance of the agreement under s. 2(47)(v), and 2(47)(vi) of the Act. Accordingly addition of ₹ 55 crore as full value of consideration for computing the capital gains is rightly deleted by the Tribunal – Taxability will be examined in the year in which the transfer of land as stock in trade has taken place and also value at that point of time will be examined independently [S.2(47)(v), 2(47)(vi) 45(2)]

     Dismissing the appeal of the revenue the Court held that possession of property was given to the developer for specific purposes to develop the property. The amount received by the Godrej Properties Ltd., shown as deposit. As per the agreement makes it clear that Godrej Properties Ltd. has been granted licence to enter the upon and develop the property and the possession of the land continued with the assessee. Further the development agreement clearly provides that nothing contained in the agreement shall be construed as grant of possession in part performance of the agreement under s. 2(47)(v), and 2(47)(vi) of the Act. Accordingly addition of ₹ 55 crore as full value of consideration for computing the capital gains is rightly deleted by the Tribunal. However taxability will be examined in the year in which the transfer of land as stock in trade has taken place and also value at that point of time will be examined independently. (AY. 2008-09)

     PCIT v. Fardeen Khan L/H Late Firoz Khan (2018) 169 DTR 209/ 304 CTR 299 (Bom.)(HC)

     Editorial: Fardeen Khan L/H Late Firoz Khan v. ACIT( 2015) 169 TTJ 398 (Mum.) (Trib.) is 
     affirmed.

191. S.47(xiii) : Capital Gains –Transaction not regarded as transfer – Conversion of firm in to company – Allotment of shares to erstwhile partners of the firm after three and half years – Exemption is not entitled [S.45, 47A]

     Allowing the appeal of the revenue the Court held that the reason assigned by the assessee was that the authorised share capital of the company was not increased suitably to make the allotment of these shares to the partners and the consideration for their intended allotment of shares in proportion to their share capital was credited in the “shareholders’ fund account” in the books of account maintained by the company. This was not a sufficient reason or excuse to delay the process of allotment of shares in the company in favour of the erstwhile partners to an unreasonably long period of about three and half years. The conditions laid down in section 47A were not complied with during the previous year 1999-2000 relevant to assessment year 2000-01. Accordingly the imposition of tax on capital gains on the assessee was valid. (AY. 2000-01)

     CIT v. Prakash Electric Company. (2018) 407 ITR 340 (Karn.) (HC)

192. S.48 : Capital gains – Property inherited under Will – Amount paid for discharge of encumbrances – Allowable as deduction [S. 45, 55]

     Dismissing the appeal of the revenue the Court held that when the property is inherited under Will, amount paid for discharge of encumbrances is allowable as deduction while computing capital gains .

     CIT v. Aditya Kumar Jajodia (2018) 407 ITR 107 (Cal.) (HC)

193. S.54 : Capital gains – Profit on sale of property used for residence – Consideration that arose in hands of HUF on sale of capital asset had been invested for purchase of new residential house in name of some of its members instead of assessee (HUF) – Deduction is allowable.[S.45]

     Dismissing the appeal of the revenue the Court held that consideration that arose in hands of HUF on sale of capital asset had been invested for purchase of new residential house in name of some of its members instead of assessee (HUF), deduction is allowable. (AY. 2009-10)

     PCIT v. Vaidya Panalalmanilal (HUF) (2018) 259 Taxman 19 (Guj) (HC)

194. S.54 : Capital gains – Profit on sale of property used for residence – Construction of residential house – Cost of land is also part of cost of residential house – Not necessary that same money from sale of residential asset must be used [S. 45]

     Allowing the appeal of the assessee the Court held that, cost of land is also form cost of residential house and it is not necessary that same money from sale of residential asset must be used for claiming exemption. (AY. 2010-11 )

     C. Aryama Sundaram. v. CIT (2018) 407 ITR 1 (Mad.) (HC)

195. S.56 : Income from other sources – Gifts from relatives – Maternal aunt – Gift need not be on a particular occasion – Addition cannot be made as income from other sources [S.56 (2)(v)68]

     Allowing the appeal of the assessee Court held that S.56(2)(v) of the Income-tax Act, 1961 was inserted by the Finance (No. 2) Act, 2004 with effect from April 1, 2005. As could be seen from the language of sub-clauses (a) and (b) of clause (v) of sub-section (2) of section 56, while under clause (a) which deals with a gift from any relative no occasion is envisaged, clause (b) dealing with money received from any other person, specifies the occasion of marriage. Accordingly the gift received form maternal aunt cannot be assessed as income from other sources or as cash credits for the reason that the assessee had offered an explanation supported by uncontroverted material showing transfer of the amount. (AYs. 2005-06 to 2008-09).

     Pendurthi Chandrasekhar v. DCIT (2018) 407 ITR 179 (T&AP) (HC)

196. S.68 : Cash credits – Share capital – Identity of the share applicant was established – Additions cannot be made on surmises without conducting any further inquiry

     Dismissing the appeal of the revenue the Court held that when identity of the share applicant was established, additions cannot be made on surmises without conducting any further inquiry. (AY. 2007-08)

     PCIT v. Himachal Fibers Ltd. (2018) 259 Taxman 4 (Delhi) (HC)

     Editorial: SLP of revenue is dismissed; PCIT v. Himachal Fibers Ltd. (2018) 259 Taxman 3 (SC)

197. S.68 : Cash credits – Capital gains – Penny stocks – Share transaction is supported by contract notes, bills, were carried out through recognised stockbroker of the Stock Exchange and all payments made to, and received from, the stockbroker, were through account payee instruments – A transaction fully supported by documentary evidences cannot be brushed aside on suspicion and surmises- Statement given earlier was retracted in cross examination-Brokers statement was recoded –Deletion of addition by the Tribunal is held to be justified [S.45,132(4) ]

     Dismissing the appeal of the revenue the Court held that, Share transaction is supported by contract notes, bills, were carried out through recognized stockbroker of the Stock Exchange and all payments made to, and received from, the stockbroker, were through account payee instruments. A transaction fully supported by documentary evidences cannot be brushed aside on suspicion and surmises. Statement given by the partner earlier was retracted in cross examination. The stockbrokers asserted that these transactions were genuine. Deletion of addition by the Tribunal is held to be justified. (ITA No. 620 of 2008 GA No. 2589 of 2008, 
     dt. 26-8-2008)

     CIT v. Alpine Investment (Cal)(HC), www.itatonline.org

198. S.68: Cash credits – Capital gains – Penny Stocks – If the transaction is supported by documents like contract notes, demat statements etc. and is routed through the stock exchange and if the payments are by account-payee cheques and there is no evidence that the cash has gone back to the assessee’s account, it has to be treated as a genuine transaction and cannot be assessed as unexplained credit, simply because in the sham transactions bank a/c were opened with HDFC bank and the appellant has also received short term capital gain in his account with HDFC bank does not establish that the transaction made by the appellant were non genuine [S.45]

     Dismissing the appeal of the revenue the Court held that if the transaction is supported by documents like contract notes, demat statements etc and is routed through the stock exchange and if the payments are by account-payee cheques and there is no evidence that the cash has gone back to the assessee’s account, it has to be treated as a genuine transaction and cannot be assessed as unexplained credit,simply because in the sham transactions bank a/c were opened with HDFC bank and the appellant has also received short term capital gain in his account with HDFC bank does not establish that the transaction made by the appellant were non-genuine. Considering all these facts the share transactions made through Shri P. K. Agarwal cannot be held as non-genuine. Consequently denying the claim of short term capital gain made by the appellant before the AO is not approved. (ITA No. 385/2011 & 603 of 2011 dt. 11-9-2017)

     CIT v. Pooja Agarwal (Smt) (Raj)(HC), www.itatonline.org

     CIT v. Jitendra Kumar Agarwal (Raj)(HC), www.itatonline.org

199. S.68 : Cash credits – Share application – Inability to produce share application – Addition cannot be made as cash credits

     Dismissing the appeal of the revenue the Court held that inability to produce share application, addition cannot be made as cash credits.

     CIT v. Jalan Hard Coke Ltd. (2018) 95 taxmann.com 330 (Raj.) (HC)

     Editorial: SLP of revenue is dismissed; CIT v. Jalan Hard Coke Ltd. (2018) 257 Taxman 91 (SC)

200. S.68: Cash credits – Share capital – If no cash is involved in the transaction of allotment of shares and it is a case of book adjustment, provisions of s. 68 treating it as unexplained cash credit are not attracted. Even if it were to be assumed that the subscribers to the increased share capital are not genuine, the amount of share capital would in no circumstances be regarded as undisclosed income of the company

     Allowing the appeal of the assessee the Court held that If no cash is involved in the transaction of allotment of shares and it is a case of book adjustment, provisions of S. 68 treating it as unexplained cash credit are not attracted. Even if it were to be assumed that the subscribers to the increased share capital are not genuine, the amount of share capital would in no circumstances be regarded as undisclosed income of the company. (ITA No. 246 of 2017, dt. 6-8-2018) (AY. 2012-13)

     V. R. Global Energy Pvt. Ltd. v. ITO (2018) 407 ITR 145 (Mad)(HC), www.itatonline.org

201. S.69A : Unexplained money – Search and seizure – Block assessment – Statement on oath – Merely on the basis that assessee in course of statement made under S. 132(4) had admitted that said jewellery belonged to him, could not be sustained, when in the course of assessment proceedings established that jewellery seized from him actually belonged to his employer – There is no requirement in law that evidence in support of its case must be produced by assessee only at time when seizure has been made and not during assessment proceedings [S.132(4), 158BC]

     Dismissing the appeal of the revenue the Court held that merely on the basis that assessee in course of statement made under S.132, had admitted that said jewellery belonged to him, could not be sustained, when in the course of assessment proceedings established that jewellery seized from him actually belonged to his employer. There is no requirement in law that evidence in support of its case must be produced by assessee only at time when seizure has been made and not during assessment proceedings. Accordingly the order of Tribunal deleting the addition is affirmed. (BP 1-4-1989 to 16-7-1999)

     CIT v. Rakesh Ramani. (2018) 256 Taxman 299 (Bom.) (HC)

202. S.69B : Amounts of investments not fully disclosed in books of account – Survey – Merely on the basis of statement in the course of survey offering additional income – Addition is held to be not justified [S.133A]

     Dismissing the appeal of the revenue the Court held that; except statement of director of assessee-company offering additional income during survey in his premises, there was no other material either in form of cash, bullion, jewellery or document in any other form to justify said statement, accordingly the deletion of addition is held to be valid.

     CIT v. Mantri Share Brokers (P.) Ltd. (2018) 96 taxmann.com 279 (Raj) (HC)

     Editorial: SLP of revenue is dismissed; CIT v. 
     Mantri Share Brokers (P.) Ltd. (2018) 257 Taxman 337 (SC)

203. S.69C : Unexplained expenditure – Survey – Undisclosed stock – When undisclosed purchases are discovered – Only profit embedded in transaction 
     can be added as income. [S.4, 133A, 145]

     Dismissing the appeal of the revenue, the Court held that when undisclosed purchases are discovered in the course of survey, only profit embedded in transaction can be added as income. Followed Vijay Trading v. ITO ( 2016) 388 ITR 377 (Guj.) (HC).

     PCIT v. Subarna Rice Mill (2018) 257 Taxman 509 (Cal.)(HC)

204. S.69C : Unexplained expenditure – Search – Work in progress –Valuation report of site engineer higher than work-in-progress recorded in the books of account – Addition is held to be not valid [S.69A,132]

     Dismissing the appeal of the revenue, the Court held that addition cannot be made on the basis of valuation report of site engineer higher than work-in- progress recorded in the books of account. Moreover, even if assume that the closing stock i.e., work-in-progress is in excess of that recorded/disclosed by the respondent, the same has to be added to the income only under section 69A. No question of law arises. (AY. 2009-10)

     CIT v. B.G. Shirke Construction Technology (P.) Ltd. (2018) 257 Taxman 561 (Bom.)(HC)

205. S.72 : Carry forward and set off of business losses – Dividend – where investments were business investments, carried forward business loss could be set off against dividend income earned from such business investment as even though dividend was classified under separate head, but same was very much part of income from business [S.56]

     Dismissing the appeal of the revenue, the Court held that where investments were business investments, carried forward business loss could be set off against dividend income earned from such business investment as even though dividend was classified under separate head, but same was very much part of income from business. Followed United Commercial Bank Ltd. v. CIT (1957) 32 ITR 688 (SC), CIT v. Cocanada Radhaswami Bank Ltd. (1965) 57 ITR 306 (SC). (AY. 1997-98)

     CIT v. Shriram Chits & Investments (P.) Ltd. (2018) 257 Taxman 395 (Mad.)(HC)

206. S.72 : Carry forward and set off of business losses – Search – Return is filed by assessee within reasonable time permitted by issue of notice under S.153A(1)(a), such return will be deemed to have been filed within time permitted under S.139(1) for benefit under S.139(3) to be availed of by assessee [S.80, 139, 153A]

     Allowing the appeal of the assessee the Court held that for purpose of carrying forward loss in terms of section 72, read with section 80, in a case where search operations have been conducted under section 132, time to file return within meaning of section 139(3) has to be regarded as reasonable time afforded by consequent notice issued under section 153A(1)(a), therefore, when return is filed by assessee within reasonable time permitted by such notice under section 153A(1)(a), such return would then be deemed to have been filed within time permitted under section 139(1) for benefit under section 139(3) to be availed of by assessee. (AY.2004-05)

     Shrikant Mohta. v. CIT (2018) 257 Taxman 43 (Cal.)(HC)

207. S.80P : Co-operative Societies – Agricultural enterprise – Tapping of toddy and vending it through licenced shops, eligible to claim deduction, however deduction cannot be claimed without filing a return by co-operative society [S. 80A (5), 80P(2)(iii)]

     Court held that regulatory under Abkari Act would not be a relevant factor in deciding as to whether assessee-society would be entitled to exemption as available under S. 80P. Court held that tapping of toddy was a traditional agricultural enterprise within State and, State also encouraged it, as distinguished from foreign liquor trade, accordingly the deduction is available to co-operative society. Court also held that deduction cannot be claimed without filing a return by co-operative society.

     Kuthuparamba Range Kalluchethu Vyavasaya Thozhilali Sahakarana Sangham Ltd. v. CIT (2018) 257 Taxman 151 (Ker.) (HC)

208. S.92C : Transfer pricing – Arm’s length price – Selection of comparables – Finding of fact by Tribunal that (i) the activities of the assessee and comparables are functionally different (ii) the extraordinary events such as merger/amalgamation would have an impact/effect on the profitability of comparable (iii) merely because both assessee and the comparable provide ITES services they do not become comparable, cannot be interfered, more particularly in the absence of the same being shown to be perverse – No question of law [S.260A]

     On appeal, the High Court held that the following finding of fact by Tribunal cannot be interfered with:

     (i) That the activities of the assessee and comparable (AT Ltd.) are functionally different and extra-ordinary events like merger / amalgamation would have an impact / effect on the profitability of comparable (AT Ltd.);

     (ii) Merely because both assessee and comparable provide ITES services, they do not become comparable as the nature of services provided, by use of information technology, is different.

     (iii) Not considering / excluding a comparable due to the reasons like comparables render different service (hence not a comparable) or adopts a different business model (hence to be excluded as comparable). (AY. 2008-09).

     PCIT v. Aptara Technology (P) Ltd. (2018) 303 CTR 805 / 168 DTR 14 (Bom.) (HC).

209. S.127 : Power to transfer cases – Kolhapur to Mumbai – On facts, mere ‘Absence of dissenting notice’ from officers of equal rank who had to agree to proposed transfer, would not constitute agreement – Order of transfer of case was set aside [S.127(2)(a)]

     Allowing the petition the Court held that it was undisputed that Centralisation Committee was not authority, envisaged under section 127(2) and moreover, revenue had not placed anything on record to show that Commissioner, Pune, had given a consent to request to Commissioner, Mumbai so as to constitute agreement as a pre-condition for invoking powers under section 127. On facts, mere ‘Absence of dissenting notice’ from officers of equal rank who had to agree to proposed transfer, would not constitute agreement, as envisaged under section 127(2)(a). Accordingly order was seta side

     Herambh Anandrao Shelke v. M. L. Karmakar, PCIT (2018) 257 Taxman 487 (Bom.)(HC)

210. S.132(4) : Search and seizure – Statement on oath – Block assessment – Declaration after search has no evidentiary value – Additions cannot be made on basis of such declaration [S. 158BC]

     Dismissing the appeal of the revenue the Court held that the Tribunal was justified in law in deciding that the letter dated January 15, 1998 of the assessee addressed to the Assistant Director about the disclosure of ₹ 80 lakh as income had no evidentiary value as stated under section 132(4). Court also observed that a bare reading of section 132(4) of the Income-tax Act, 1961, indicates that an authorised officer is entitled to examine a person on oath during the course of search and any statement made during such examination by such person (the person being examined on oath) would have evidentiary value under section 132(4). [BP. 1988-89 to 1998-99]

     CIT v. Shankarlal Bhagwatiprasad Jalan (2018) 407 ITR 152 (Bom.) (HC)

     Editorial: SLP of revenue is dismissed, CIT v. Shankarlal Bhagwatiprasad Jalan. (2018) 405 ITR 14 (St)

211. S.144C : Reference to dispute resolution panel – Foreign company – Order in remand proceedings – Even in partial remand proceedings from the Tribunal, the Assessing Officer is obliged to pass a draft assessment order under section 144C(1) of the Act – Order passed without passing a draft assessment order being violative of provisions of section 144C(1) is set aside [S.92C, 144C(1), 254(1)]

     Allowing the petition the Court held that order in remand proceedings and even in partial remand proceedings from the Tribunal, the Assessing Officer is obliged to pass a draft assessment order under section 144C(1) of the Act. Order passed without passing a draft assessment order being violative of provisions of section 144C(1) is set aside. ‘Fresh adjudication’ itself would imply that it would be an order which would decide the lis between the parties, may not be entire lis, but the dispute which has been restored to the Assessing Officer. The impugned order is not an order merely giving an effect to the order of the Tribunal, but it is an assessment order which has invoked section 143(3) of the Act and also section 144C of the Act. This invocation of section 144C of the Act has taken place as the Assessing Officer is of the view that it applies, then the requirement of section 144C(1) of the Act has to be complied with before he can pass the impugned order invoking section 144C(13) of the Act. Moreover, so far as a foreign company is concerned, the Parliament has provided a special procedure for its assessment and appeal in cases where the Assessing Officer does not accept the returned income. In this case, in the working out of the order of the Tribunal results in the returned income being varied, then the procedure of passing a draft assessment order under section 144C(1) of the Act is mandatory and has to be complied with, which has not been done. In the above view, the impugned order has been passed without complying with the mandatory requirements of section 144C of the Act which is applicable to a foreign company such as the assessee. Therefore, the impugned order is quashed and set aside. (AY. 2011-12)

     Dimension Data Asia Pacific PTE Ltd. v. Dy. CIT (2018) 257 Taxman 442 (Bom.)(HC)

212. S.147 : Reassessment – After the expiry of four years –Export oriented undertaking –Mentioning of wrong year of commencement of manufacture in Form 56G, when other materials furnished indicated correct year of commencement of manufacture is not a case of failure to disclose material facts – The proviso to S.147 cannot be invoked on the Assessing Officer’s omission or mistake – Reassessment notice is held to be not valid – Notice is not barred by limitation [S.10B, 148]

     Allowing the petition the Court held that , mentioning of wrong year of commencement of manufacture in Form 56G, when other materials furnished indicated correct year of commencement of manufacture is not a case of failure to disclose material facts. The proviso to S. 147 cannot be invoked on the Assessing Officer’s omission or mistake. Reassessment notice is held to be bad in law. (AY. 2010-11)

     MBI Kits International v. ITO (2018) 408 ITR 1 (Mad) (HC)

213. S.147 : Reassessment – Intimation – The AO cannot reopen on the basis of info received from DIT (Investigation) that a particular entity has entered into suspicious transactions without linking it to the assessee having indulged in activity which could give rise to reason to believe that income has escaped assessment – Such reopening amounts to a fishing inquiry. The AO has to apply his mind to the information received by him from the DDIT (Inv.) and cannot act on borrowed satisfaction [S.143(1), 148]

     Dismissing the appeal of the revenue the Court held that the submission of the Dept. that in view of Rajesh Jhaveri 291 ITR 500 (SC), the AO can reopen the assessment for “whatever reason” is preposterous. The AO cannot reopen on the basis of info received from DIT (Investigation) that a particular entity has entered into suspicious transactions without linking it to the assessee having indulged in activity which could give rise to reason to believe that income has escaped assessment. Such reopening amounts to a fishing inquiry. The AO has to apply his mind to the information received by him from the DDIT (Inv.) and cannot act on borrowed satisfaction. ITA No. 1297 of 2015, dt. 16-4-2018)

     PCIT v. Shodiman Investment Pvt. Ltd. (Bom)(HC), www.itatonline.org

214. S.147 : Reassessment – Unexplained money – Income Declaration Scheme, 2016 – Share premium and share capital –Disclosed by Gard Logistics Pvt. Ltd. as undisclosed income – Attempt to assess the same income as undisclosed income of the assessee would amount to double taxation – Reassessment is bad in law [S.69A, 143(1), 148]

     Allowing the petition the Court held that the amount which the Assessing Officer is proposing to add as undisclosed income has ben disclosed by Gard Logistics Pvt. Ltd. as undisclosed income under Income declaration scheme. Attempt of the Assessing Officer to assess the same income as undisclosed income of the assessee would amount to double taxation. Accordingly the reassessment is bad in law. Circulars and Notifications: Circular dt. 1-9-2016 (AY. 2010-11)

     M. R. Shah Logistrics (P.) Ltd. v. Dy. CIT (2018) 258 Taxman 103 (Guj.)(HC)

215. S.147 : Reassessment –Unexplained expenditure – Information received from Investigation Wing – Reassessment proceedings initiated on same ground in earlier assessment years had been set aside – There was no tangible material to justify impugned reassessment proceedings – Reassessment proceedings is quashed [S.69C, 148]

     Allowing the appeal of the assessee the Court held that merely on the basis of information received from Investigation Wing, the re-assessment proceedings cannot be initiated when the reassessment proceedings initiated on same ground in earlier assessment years had been set aside. There was no tangible material to justify impugned reassessment proceedings. (AY. 2010-11)

     Sky View Consultants (P.) Ltd. v. ITO (2018) 258 Taxman 331 (Delhi)(HC)

216. S.147 : Reassessment – Within four years – The assessment cannot be reopened on the ground that the AO lost sight of a statutory provision like section 50C. This amounts to a review. A.L.A. Firm v. CIT (1991) 189 ITR 285 (SC) distinguished on the basis that the reopening in that case was because the AO was unaware of a binding High Court judgment. Here it is not the case of the Revenue that the AO was not aware of S.50C at the time of passing the S.143(3) assessment order [S.50C, 143(3), 148]

     Dismissing the appeal of the revenue the Court held that the assessment cannot be reopened on the ground that the AO lost sight of a statutory provision like 50C. This amounts to a review. A.L.A. Firm v. CIT (1991) 189 ITR 285 (SC) distinguished on the basis that the reopening in that case was because the AO was unaware of a binding High Court judgment. Here it is not the case of Revenue that the AO was not aware of S. 50C at the time of passing the S. 143(3) assessment order. Court also observed that one must not lose sight that the reassessment proceedings are not proceedings to review of the order already been passed but only a power to reassess. As observed by the Supreme Court in CIT v. Kelvinator India Ltd. (2010) 320 ITR 561, ‘We must also keep in mind the conceptual difference between power to review and power to reassess’. (ITA No. 102 of 2016, dt. 23-7-2018) (AY. 2005-06)

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

217. S.147 : Reassessment – The revenue played a subterfuge in trying to cover up its omission and in ante dating the record – The court hereby directs the Chief Commissioner to cause an inquiry to be conducted as to the involvement of the officials or employee in the manipulation of the record, and take strict disciplinary action, according to the concerned rules and regulations. This inquiry should be in regard to the conduct of the concerned AO posted at the time, who issued the notice under S.147/148 as well as the officers who filed the affidavits in these proceedings [S.148]

     It goes without saying that whilst the “reasons” shown to the court and the petitioner may ipso facto not be faulted, yet the file tells a different story; they were not recorded before the impugned notice was issued. In fact, the revenue played a subterfuge, in trying to cover up its omission, and in ante dating the record, in the attempt to establish that such reasons existed, and this Court’s interference was not called for. In these circumstances, this Court hereby directs the Chief Commissioner concerned to cause an inquiry to be conducted as to the involvement of the officials or employee in the manipulation of the record in this case, and take strict disciplinary action, according to the concerned rules and regulations. This inquiry should be in regard to the conduct of the concerned AO posted at the time, who issued the notice under section 147/148 as well as the officers who filed the affidavits in these proceedings. The investigation and consequential action shall be completed within four months. The writ petition is allowed in the above terms; the impugned reassessment notice and all subsequent orders, made pursuant thereto are hereby quashed. The matter shall be listed for the revenue to report its action, to the court, in the form of an Action taken Report, on or before second Tuesday of January, 2019. The matter shall be listed before the Court on 15th January, 2019 for considering the said report. The writ petition is allowed, in the above terms and in terms of the above directions. No costs. (W.P.(C) 8907/2008, 
     dt. 16-8-2018)

     Prabhat Agarwal v. DCIT (2018) 172 DTR 282 (Delhi)(HC);
     www.itatonline.org

218. S.147 : Reassessment – Notice is issued on the basis of assessment order of earlier year – Earlier year order was set aside by CIT(A) before issue of reassessment notice – Reassessment notice is held to be bad in law [S.143(1), 148]

     Dismissing the appeal of the revenue the Court held that notice under S. 148 was issued to assessee on 9-3-2009 seeking to open assessment for assessment year 2006-07, based upon order of assessment for assessment year 2005-06. Assessment order passed for year 2005-06, had been set aside in appeal by order dated 13-1-2009 of CIT(A) and also given effect to by AO on 5-3-2009 and held that since 9-3-2009 when notice under S.148 was issued, Assessing Officer was aware of said order of CIT (A), accordingly AO could not have any reason to believe that income chargeable to tax had escaped assessment. (AY. 2006-07)

     DIT (IT) v. Atomstroyexport (2018) 95 taxmann.com 257 (Bom.)(HC)

     Editorial : SLP of revenue is dismissed; DIT (IT) v. Atomstroyexport (2018) 257 Taxman 30 (SC)

219. S.147 : Reassessment –Subsequently Assessing Officer desired to withdraw of notice without issuing any formal withdrawal of notice – The law does not recognise two parallel assessments – In the absence of withdrawal of the first notice of reassessment, the proceedings would survive – Second notice of Reassessment is held to be not valid [S.148]

     Allowing the petition the Court held that; a notice of reopening which is once issued would remain in operation unless it is specifically withdrawn, quashed or gets time barred. The first instance would be at the volition of the Assessing Officer as the person who had issued the notice. He can recall the notice for valid reasons and may even issue a fresh notice which is not impermissible in law. Nevertheless, there has to be an action of withdrawal. Mere intention, a stated intention or even an intention which is otherwise put in practice cannot be equated with withdrawal of the notice. By mere intention to abandon the proceedings arising out of the notice, the Assessing Officer cannot bring about the desired result of withdrawing the notice. Even the files did not show any such formal withdrawal of the notice with or without communication thereof to the assessee. The law does not recognise two parallel assessments. In the absence of withdrawal of the first notice of reassessment, the proceedings would survive making the subsequent notice of reopening invalid. (AY. 2010-11)

     Marwadi Shares and Finance Ltd. v. DCIT (2018) 407 ITR 49 (Guj.) (HC)

220. S.147 : Reassessment – Within four years – Disclosure in computation – The fact that the AO did not raise specific queries and is silent in the assessment order does not mean there is no application of mind – Reassessment is held to be bad in law [S.143(3), 148]

     Allowing the petition the Court held that computation is the basic document for making the S. 143(3) assessment. If there is a disclosure in the computation, it leads to the prima facie necessary inference that there is application of mind by the AO. The fact that the AO did not raise specific queries & is silent in the assessment order does not mean there is no application of mind ITO v. Techspan (2018) 404 ITR 10(SC) followed. (WP271-2018/) WP-278-2018 dt. 15-6-2018), (AY. 2013-14, 2014-15)

     State Bank of India v. ACIT (Bom)(HC);
     www.itatonline.org

221. S.148 : Reassessment – Notice – when department had correct address of assessee furnished in return of income, sending notice at incorrect address available with bank and then drawing presumption of service of notice on ground that notice was not received back unserved, could not be sustained [S.147]

     Allowing the appeal of the assesee the Court held that when department had correct address of assessee furnished in return of income, sending notice at incorrect address available with bank and then drawing presumption of service of notice on ground that notice was not received back unserved, could not be sustained. (AY. 1999-2000)

     Suresh kumar Sheetlani v. ITO (2018) 257 Taxman 338 (All.)(HC)

222. S.153 : Assessment – Limitation – When seven issues were before Tribunal, Tribunal remanding of only five issues – Time Limit specified in S.153(2A) is applicable not S.153 (3)(ii)of the Act – Order is held to be not valid [S. 153(2A), 153(3)(ii)]

     Allowing the petition the Court held that of the seven issues, the assessment in respect of five was set aside and the issues remanded for a fresh determination. Whether the remand was to the Transfer Pricing Officer or the Dispute Resolution Panel would not make a difference as long as what resulted from the remand was a fresh assessment of the issue. Clearly, therefore, the time-limit for completing that exercise was governed by section 153(2A). The assessment proceedings had to necessarily be completed by the Assessing Officer within the time-limit specified in section 153(2A) of the Act. In-as-much as the Assessing Officer failed to do so, the notice dated September 14, 2015 issued by the Assessing Officer and all proceedings consequential thereto including the order dated December 2, 2015 passed by the Assessing Officer were not valid. (AY. 2007-08)

     Nokia India P. Ltd. v. DCIT (2018) 407 ITR 20 (Delhi) (HC)

223. S.153A : Assessment – Search –Limitation – The time limit of 2 years u/s. 153B for framing search assessment orders applies only to the original order and not orders passed after remand. Period of limitation prescribed for completion of remand (nine months) constituted a special provision, which applies to every class of remand regardless whether they originate from assessments/re-assessments/revisions or search and seizure assessments. – The time limit for passing remand orders is governed by S.153(3)/erstwhile 153(2A) & not by S. 153B – Limitation begins (for any purpose under the Act) from the point of time when the departmental representative receives the copy of a decision or an order of the ITAT – The last date by which the remand order could have been worked out validly was 31-12-2016. Accordingly the impugned order pursuant to the remand dated 22-12-2017 and all consequential orders and actions are hereby quashed [S.153(2A), 153B, 254(1)]

     In all these writ petitions, the narrow question agitated by the assessees is that assessment order made on 22-12-2017 under Section 153A read with Section 254 of Income-tax Act, 1961 (hereinafter ‘the Act’) for Assessment Year 2005-06 and subsequent years (up to 2012-13) covered by search assessment, were barred and therefore, needs to be quashed. Allowing the petition the Court held that it is quite evident from the decision in CIT v. Odeon Builders Pvt. Ltd. (2017) 393 ITR 27 (FB) (Delhi)(HC) that limitation begins (for any purpose under the Act) from the point of time when the departmental representative receives the copy of a decision or an order of the ITAT. The evidence on record in this case clearly establishes that the concerned DR (a Commissioner ranking officer) nominated by the revenue received a copy of the ITAT order dated 30-3-2016. The starting point of limitation therefore was 31-3-2016. The next question is whether the non-obstante clause under Section 153 of the Act, which prescribes a specific period of limitation to complete a search assessment for the block period concerned, could override the general period of limitation. During the relevant period when the assessment was completed, the period prescribed was nine months (on account of substitution carried out by the amendment). The special provision under Section 153B of the Act in the opinion of the Court carves out a special period of limitation without which search/block assessments would not be completed. The entire provisions under Chapter XIV relating to block assessment, have been termed by the Supreme Court to be a complete code. At the same time, a specific period of limitation prescribed is for completion of original block assessments for the search and seizure proceedings. The period for issuing notice and completion of block assessment for all the concerned years (7 years) is within two years. Now, in the opinion of the Court, to apply that general two years limitation, the block reassessment proceeding after remand is not a feasible proposition. In the judgments in Nokia India (P) Ltd. v. Dy. CIT (2017) 85 Taxmann.com 291 (Del.) as well as CIT v. Bhan Textile P. Ltd., (2008) 300 ITR 176 (Del.) are relevant authorities. In PCIT v. PPC Business and Products P. Ltd., (2017) 398 ITR 71 (Del.), this Court emphasised the need to initiate the proceedings wherever the revenue wished to proceed further in case of search and seizure within the time and underlined that in case the assessments are not initiated and completed within the time prescribed, the valuable right accrues to the assessee. The general provision of two years, in the opinion of the Court, has been provided with one important objective i.e., to cater to a specific situation where upon search and seizure operation, if new material is found, already completed assessments are revisited. Had Parliament not prescribed such a specific period of limitation, possibly, the assessee’s concern would have successfully urged that search and seizure proceedings would be confined only to the concerned year in which the search operation took place. It was proposed to tide over such situation. The only provision that prescribed a period of limitation in respect of remands at the relevant time at least in this case is Section 153(2A). In that sense, that period of limitation prescribed for completion of remand (nine months) constituted a special provision, which applies to every class of remand regardless whether they originate from assessments/reassessments/revisions or search and seizure assessments. In these circumstances, completion of the assessment proceedings for the block period by the impugned order dated 22-12-2017 was clearly beyond the period of limitation. As noticed earlier, the last date by which the remand order could have been worked out validly was 31-12-2016. Accordingly the impugned order pursuant to the remand dated 22-12-2017 and all consequential orders and actions are hereby quashed. (W.P.(C) 4304/2018 & CM APPL.16759/2018, dt. 1-10-2018)

     Surendra Kumar Jain v. PCIT (2018) 408 ITR 328 (Delhi)(HC),
     www.itatonline.org

     Virendra Jain v . PCIT (2018) 408 ITR 328 (Delhi)(HC),
     www.itatonline.org

224. S.158BC : Block assessment – Unexplained expenditure –Cost of construction valuation report – Since no undisclosed income was detected as a result of search, and amounts in question had been found to have been entered in regular books of account of assessee, inquiry, if any, in respect of valuation of building was permissible only in course of regular assessment proceedings and, thus, addition made by Assessing Officer was to be deleted [S.69C]

     Dismissing the appeal of the revenue the Court held that Chapter XIV-B of Act is a complete code in itself and if assessment has to be made for undisclosed income, such undisclosed income should be out of result of search; since no undisclosed income was detected as a result of search, and amounts in question had been found to have been entered in regular books of account of assessee, inquiry, if any, in respect of valuation of building was permissible only in course of regular assessment proceedings and, thus, addition made by Assessing Officer was to be deleted.

     PCIT v. Rajni Developers (P.) Ltd. (2018) 89 taxmann.com 408 (Guj.) (HC)

     Editorial: SLP of revenue is dismissed PCIT v. Rajni Developers (P.) Ltd. (2018) 257 Taxman 258 (SC)

225. S.159 : Legal representatives – Reassessment – Notice issued in name of dead person is not enforceable in law – There is no statutory obligation on part of legal representative of deceased to immediately intimate death of assessee or take steps to cancel PAN registration – The proceedings under S. 159 can be invoked only if the proceedings have already been initiated when the assessee was alive and was permitted for the proceedings to be continued as against the legal heirs – The notice has to be, in substance and effect, in conformity with or according to the intent and purpose of the Act. Undoubtedly, the issue relating to limitation is not a curable defect for the revenue to invoke S. 292B. Accordingly the Court held the impugned notice is wholly without jurisdiction and cannot be enforced against the assessee [S. 147, 148, 292BB]

     Allowing the petition the Court held that , notice issued in name of dead person is not enforceable in law. Court also held that there is no statutory obligation on part of legal representative of deceased to immediately intimate death of assessee or take steps to cancel PAN registration. Court observed that, the proceedings under S. 159 can be invoked only if the proceedings have already been initiated when the assessee was alive and was permitted for the proceedings to be continued as against the legal heirs. The factual position in the instant case being otherwise, the provisions of S. 159 have no application. Court observed that the language employed in S. 292B is categorical and clear. The notice has to be, in substance and effect, in conformity with or according to the intent and purpose of the Act. Undoubtedly, the issue relating to limitation is not a curable defect for the revenue to invoke S. 292B. Accordingly the Court held the impugned notice is wholly without jurisdiction and cannot be enforced against the assessee. (AY. 2010-11)

     Alamelu Veerappan v. ITO (2018) 257 Taxman 72 /wwwitatonline.org. (Mad) (HC)

226. S.192 : Deduction at source – Salary – Bar against direct demand – If the deductor has deducted TDS and issued Form 16A, the deductee has to be given credit even if the deductor has defaulted in his obligation to deposit the TDS with the Government [S.205, 221]

     Allowing the petition the Court held that if the deductor has deducted TDS and issued Form 16A, the deductee has to be given credit even if the deductor has defaulted in his obligation to deposit the TDS with the Government revenue. (SCA No. 12965 of 2018, dt. 24-9-2018)

     Devarsh Pravinbhai Patel v. ACOT (Guj)(HC),
     www.itatonline.org

227. S.194C : Deduction at source – Contractors – Payment towards annual maintenance contracts for lifts and air conditioners is not technical services – Deduction of tax as contractor is justified payment cannot be treated as fees for technical services [S.194J, 260A]

     Dismissing the appeal of the revenue the Court held that the Tribunal had correctly held that the assessee had made payments only in respect of maintenance contracts which related to minor repairs, replacement of some spare parts, greasing of machinery, etc., which services did not require any technical expertise, and therefore, could not be categorised as “technical services” as contemplated under section 194J and that the assessee had correctly deducted the tax at source under section 194C which applied to payments made to contractors. No question of law arose. (AYs. 2000-01 to 2009-10)

     CIT v. Mumbai Metropolitan Regional Development Authority (2018) 408 ITR 111 (Bom) (HC)

228. S.194C : Deduction at source – Contractors – Licence fee paid to contractor by contractee and not vice versa – Not liable to deduct tax at source [S.201 (1)]

     Dismissing the appeal of the revenue the Court held that since payment of licence fee was made by contractee to contractor, provision of S.194C is not applicable.

     PCIT v. Hakmichand D & Sons (2018) 258 Taxman 208/97 taxmann.com 583(Guj.) (HC))

     Editorial: SLP of revenue is dismissed, PCIT v. Hakmichand D & Sons (2018) 258 Taxman 207 (SC)

229. S.194C : Deduction at source – Contractors – Persons responsible for paying – As per the agreement between the company and assessee that freight payment would be made by said company directly to truck owners and TDS deduction as applicable would be made by said company; since payment was not made by assessee, default in TDS was that of other company and not assessee – No disallowance can be made in the assessment of the assessee for failure to deduct tax at source. [S. 40(a)(ia), 204(iii)]

     Dismissing the appeal of the revenue the Court held that S. 194C, read with S. 204(iii), will come into operation only on payment made by assessee contractor and there was an agreement between said company and the assessee that freight payment would be made by said company directly to truck owners and tax deduction at source as applicable would be made by said company; since payment was not made by assessee, default in tax deduction at source was that of other company and not assessee. Accordingly no disallowance can be made in the assessment of the assessee.

     CIT v. Daulat Enterprises. (2018) 94 taxmann.com 261 (Raj.) (HC)

     Editorial: SLP of revenue is dismissed, CIT v. Daulat Enterprises (2018) 256 Taxman 422 (SC)

230. S.226 : Collection and recovery – Modes of recovery – Appeal – The AO is not justified in insisting on payment of 20% of the demand based on CBDT’s instruction dated 29-2-2016 during pendency of appeal before the CIT(A) – This approach may defeat & frustrate the right of the assessee to seek protection against collection and recovery pending appeal – Such can never be the mandate of law – CIT(A) is directed to hear the appeal expeditiously – During pendency of appeal the stay is granted [S. 220(6), 246]

     Allowing the petition the Court held that the AO is not justified in insisting on payment of 20% of the demand based on CBDT’s instruction dated 29-2-2016 during pendency of appeal before the CIT(A). This approach may defeat & frustrate the right of the assessee to seek protection against collection and recovery pending appeal. Such can never be the mandate of law. CIT(A) is directed to hear the appeal expeditiously – Pendency of appeal the stay is granted. (WP Nos. 2157 and 2160 of 2018, dt. 11-10-2018)

     Bhupendra Murji Shah v. DCIT (2018) 259 Taxman 45 (Bom)(HC)
     www.itatonline.org

231. S.244 : Refund – Interest on refund – The Dept. should bring some order and discipline to the aspect of granting refunds. All pending refund applications should be processed in the order in which they are received. It is the bounden duty of the Revenue to grant refunds generated on account of orders of higher forums and disburse the amount expeditiously. In the absence of a clear policy, the Courts may impose interest on the quantum of refund at such rates determined by the Court – Registrar of High Court is directed to forward copy of the order to the PCIT and the Chairperson – Central Board of Direct Taxes

     Allowing the petitions the Court observed that we hope and trust that all pending refund applications are processed in the order in which they are received by the Respondents. If refunds are generated on account of orders of Higher Forums, Authorities and Courts, then, it is the bounden duty of the Revenue to grant such refund and disburse the amount expeditiously. Court also observed that needless to clarify that in the absence of a clear policy, the Courts may then impose interest on the quantum of refund generated either by virtue of Court orders or by virtue of substantive proceedings arising out of refund applications. Eitherway, it is the Revenue who would have to pay interest on the delayed refund and as such rates determined by the Court. It is in these circumstances that we hope and trust that some order and discipline should be brought as far as this aspect is concerned. Let the copy of this order be forwarded to the Principal Commissioner-3 and the Chairperson – Central Board of Direct Taxes. The needful be done by the Registry officials within two weeks from today. (WP No. 2460 of 2018, dt. 1-10-2018)

     Sicom Ltd. v. DCIT (Bom)(HC),
     www.itatonline.org

232. S.244A : Refunds – Interest on refunds – Search and seizure – Tax dues appropriated from seized cash – Balance to be returned with interest [S. 132]

     Allowing the petition the Court held that when there was no tax liability, and after the order of assessment for assessment year 2011-12, i. e., December 31, 2012, there was no justification at all to retain the balance amount of ₹ 13,51,714. The assessee was entitled to a refund of the amount. He was also entitled to interest as per the Income-tax Act from April 1, 2013, i. e., after three months from the date of order of assessment for the assessment year 2011-12. (AY. 2011-12)

     Rajesh Vachhani v. CIT (2018) 408 ITR 94 (Guj.) (HC)

233. S.245BC : Settlement Commission – Chairman – Power – These Petitions have been filed challenging a somewhat curious and unforeseen development. We do not know in what circumstances the Chairman flew down to Mumbai and invited the members for discussion in relation to some cases or related issues. It would be highly risky if such discussions in relation to judicial orders and judicial matters are held in a closed-door meeting or in the privacy of the chambers of the members of the Settlement Commission. There is an uncalled for interference in judicial proceedings and none including the Chairman can direct a particular course of action to be taken or a particular order being passed in pending judicial proceedings. Court also observed that to avoid an allegation of the nature made in these Writ Petitions, the Chairman would be well advised not to chart this course hereafter. We leave the matter entirely to his wisdom and say nothing more. [Art, 226, 227]

     The apprehension of the petitioner in writ petition (L) No. 2769 of 2018 and Writ Petition (L) No. 2770 of 2018 is that they would not be treated fairly by the Settlement Commission in the pending proceedings, more-so in the light of the events that have transpired pursuant to a visit by the Chairman of the Settlement Commission in Mumbai on 2nd August, 2018. Court held that these petitions have been filed challenging a somewhat curious and unforeseen development. We do not know in what circumstances the Chairman flew down to Mumbai and invited the members for discussion in relation to some cases or related issues. It would be highly risky if such discussions in relation to judicial orders and judicial matters are held in a closed-door meeting or in the privacy of the chambers of the members of the Settlement Commission. There is a uncalled for interference in judicial proceedings and none including the Chairman can direct a particular course of action to be taken or a particular order being passed in pending judicial proceedings. Referring various case laws the Court observed that the guarantee of justice is ensured when there are public hearings and open sittings. In judicial matters and proceedings of that nature, the discussion in open Court, after questioning the respective parties/their advocates or their representatives ensures not only fairness but purity and sanctity of Judicial process. It is not that everybody gets an opportunity to preside over as a Judge or Member of quasi judicial/judicial Commission. The more the power, the greater the responsibility. Here the power comes with a trust. Litigants and parties trust the Judges and Members of judicial bodies and Commissions only because they are sure that they will not decide cases going by somebody’s interference or influence. Members of Judicial bodies have to act without fear or favour, affection or illwill. They have to uphold the Constitution and the Laws. The guarantee or assurance of justice is above everything and that is ensured by the Constitution of India. If independence and impartiality of a Judge is questioned, then, that sets the above guarantee and assurance at naught. We would remind all concerned of these salutary principles emerging from the Judgments of the Hon’ble Supreme Court. They have been summarised and referred in a recent order of this Court passed on 8th March, 2018 in three Writ Petitions being writ petition No. 13488 of 2017 (Suresh Hareshwar Naik & Ors. v. The State of Maharashtra & Ors.); WP. No.13353 of 2016 (Robert Marsalin Dias & Ors. v. The State of Maharashtra & Ors.) and WP No. 2759 of 2011 (Jagannath Kusaji Sawant v. State of Maharashtra & Ors.). Court also observed that, to avoid an allegation of the nature made in these writ petitions, the Chairman would be well advised not to chart this course hereafter. We leave the matter entirely to his wisdom and say nothing more. The writ petitions are disposed of. (WP Nos. 2769 and 2770 of 2018, 
     dt. 21-8-2018)

     Raghuleela Builders Pvt. Ltd. v. ITSC (2018) 407 ITR
     721(Bom.)(HC), (2018) 407 ITR 721;
     www.itatonline.org

234. S.246A : Appeal – Commissioner (Appeals) – Filed before wrong authority – Appeal for AY 2015-16 was filed before wrong authority ie Aayakar Seva Kendra [ASK] instead of CIT(A)] – CIT(A) to entertain the appeal filed (on merits) along with stay applications and pass orders on stay – Demand to be kept in abeyance till CIT(A) passed the relevant orders – Matter remanded

     On writ filed, the High Court instructed the assessee to file appeal for AY 2015-16 before the CIT(A) (which was earlier filed with Aayakar Seva Kendra (ASK) within ten days from receipt of High Courts order and CIT(A) to entertain it on merits, without law of limitation, and dispose off such appeal along with the other pending appeal for AY 2012-13 and stay applications; in the mean while the demand to be kept in abeyance. (W.P. No 5587 of 2018 & W. Misc P. No 6917 of 2018 dt. 4-4-2018, AYs 2012-13, 2015 -16)

     G.R.D. Trust v. DCIT (E) (2018) 255 Taxman 121 (Mad.) (HC)

235. S.246A : Appeal – Commissioner (Appeals) – Appealable orders – Deduction at source – Order determining amount of tax deduction at source is appealable order – Tribunal has failed to consider S.248 of the Act therefore its order is per incuriam – Matter set aside to decide in accordance with law. [S.195(2), 248, 254(1)]

     Allowing the appeal of the assessee the Court held that order determining amount of tax deduction at source is appealable order. Tribunal has failed to consider S.248 of the Act therefore suffers from infirmity and is per incuriam. Accordingly the matter set aside to decide in accordance with law. (AY. 2006 -07)

     Bangalore International Airport Ltd. v. ITO (IT) (2018) 257 Taxman 148 (Karn.)(HC)

236. S.251 : Appeal – Commissioner (Appeals) – Power of enhancement – In penalty appeal the CIT(A) cannot issue direction to the Assessing Officer for exploring the addition in assessment. [S.271(1) (c)]

     Dismissing the appeal of the revenue , the Court held that; in appeal arising out of order imposing penalty, matter pertaining to some other income escaping assessment does not fall within purview of expression ‘any matter arising out of proceedings in which order appealed against was passed’ in Explanation to S. 251 of the Act. Accordingly the direction issued by the CIT(A) to the Assessing Officer for exploring the addition in assessment which was quashed by the Tribunal is up held. (AY. 2007-08 to 2009-10)

     PCIT v. KPC Medical College & Hospital. (2018) 257 Taxman 159 (Cal)(HC)

     Editorial: Order in KPC Medical College & Hospital v. Dy. CIT (2015) 172 TTJ 204 (Kol) (Trib) is affirmed.

237. S.254(1) : Appellate Tribunal – Duties – The Appellate Tribunal should give independent reasons showing consideration of the submissions made on behalf of the assessee – An appellate order which affirms the order of the lower authority need not be a very detailed order – Nevertheless, there should be some indication in the order passed by the appellate authority of due application of mind to the contentions raised by the assessee in the context of findings of the lower authority which were the subject matter of the challenge before it.

     Question before the High Court “Whether in the facts and circumstances of the case and in law, the Tribunal was justified in dismissing the assessee’s appeal by merely recording that it accepts the view of the (CIT) Appeals?”

     Court held that we find that while discussing various issues, the Tribunal has not given any independent reasons showing consideration of the submissions made on behalf of the assessee. We are conscious of the fact that an appellate order which affirms the order of the lower authority need not be a very detailed order, nevertheless, there should be some indication in the order passed by the appellate authority, of due application of mind to the contentions raised by the assessee in the context of findings of the lower authority which were the subject matter of the challenge before it. In view of above, the interest of justice would be served if the impugned order is quashed and set aside and the appeals are restored to the Tribunal for fresh consideration. Therefore, both the appeals are allowed by way of remand. All contentions 
     are kept open. (ITA No. 643 of 2016, dt 26-11-2018)

     Cheryl J. Patel v. ACIT (Bom.)(HC);
     www.itatonline.org

238. S.254(1) : Appellate Tribunal – Duties – Passing the ex-parte order without ascertaining whether notice was duly served and assessee had avoided intentionally and deliberately to attend case of hearing would result in miscarriage of justice – Ex-parte order is set aside. [R. 24]

     Allowing the appeal of the assessee, the Court held that passing ex-parte order without ascertaining whether notice was duly served and assessee had avoided intentionally and deliberately to attend case of hearing would result in miscarriage of justice – Ex-parte order is set aside.

     Lalitnirman Business Development (P.) Ltd. v. ITO 259 Taxman 23 (Bom)( HC)

239. S.254(1) : Appellate Tribunal –Powers – While setting aside the order of Commissioner, the Appellate Tribunal cannot rewrite the Assessing Officer’s order and improve upon it. [S. 14A, 252, 263]

     Allowing the appeal of the assessee the Court held that the Tribunal’s findings amounted to supplying reasons in respect of the Assessing Officer’s order, on aspects, which were not expressly reflected in the assessment order. The Tribunal not only went into the merits of the Commissioner’s order, which could be considered as only indicative of what was missed out by the Assessing Officer, but also recorded its findings. It proceeded to hold that amounts due to drawbacks/incentives and foreign exchange fluctuations were to be considered and had been considered by the Assessing Officer but not the Commissioner. As a matter of fact, the Assessing Officer had recorded no observation or findings on those issues, nor the issue of the loans, which the assessee had received, or the amounts claimed by him as interest. Given those matters of record, it was difficult to validate the Tribunal’s approach reading into the Assessing Officer’s order, reasons which were not there. The Tribunal’s order itself disclosed that the Assessing Officer did not investigate into the question of advances given to others, having regard to the assessee’s claim for having taken loans, for which interest expenditure was claimed. The duty of the Commissioner was to record why revision was warranted. The Tribunal’s jurisdiction was not to rewrite the Assessing Officer’s order and improve upon it. The orders of the Tribunal were unsustainable and thus were to be set aside. (AY. 2011-12, 2012-13

     CIT v. Braham Dev Gupta (2018) 408 ITR 291 (Delhi) (HC)

240. S.254(1) : Appellate Tribunal – Powers – Tribunal cannot go beyond question in dispute – When the amounts could not have been added under section 68 , the Tribunal was not competent to make the addition under section 69A – The order of the Tribunal was vitiated in law – Matter remanded to the Tribunal [S.68, 69A]

     Allowing the appeal of the assessee the Court held that the use of the word “thereon” in section 254(1) of the Income-tax Act, 1961 is important and it reflects that the Tribunal has to confine itself to the questions which arise or are subject matter in the appeal and it cannot travel beyond that. The power to pass such order as the Tribunal thinks fit can be exercised only in relation to the matter that arises in the appeal and it is not open to the Tribunal to adjudicate any other question or issue, which is not in dispute and which is not the subject matter of the dispute in appeal. Accordingly, when the amounts could not have been added under section 68, the Tribunal was not competent to make the addition under section 69A. The order of the Tribunal was vitiated in law-Matter remanded to the Tribunal. (2001-02)

     Sarika Jain (Smt.) v. CIT (2018) 407 ITR 254 (All.) (HC)

241. S.254(2) : Appellate Tribunal –Rectification of mistake apparent from the record – Mere pendency of appeal in the High Court does not preclude the Tribunal’s power of rectification, (ii) Fact that there is difference of opinion between the two members of the Tribunal would, by itself, notmean that the error sought to be rectified is not apparent on the record & (iii) The Tribunal has no jurisdiction to recall an order based on submissions made and upon consideration of materials on record. The power of rectification are circumscribed with the condition that the same can be exercised for correcting error be of law or facts apparent on record. The jurisdiction to correct errors vested in the Tribunal is not akin to review powers

     Court held that, whatever be the correctness of these findings it cannot be stated that the Tribunal arrived at such findings without proper consideration of materials on record. Several issues were presented before the Tribunal and were examined before coming to such specific finding. The Tribunal could not have recalled the entire order under purported exercise of rectification powers. It is well settled through series of judgments of this Court and the Supreme Court that power of rectification are circumscribed with the condition that the same can be exercised for correcting error be of law or facts apparent on record. The jurisdiction to correct errors vested in the Tribunal is not akin to review powers. As noted, the Accountant Member, while showing inclination to exercise rectification powers, had not cited any reason in support of his opinion. Accordingly the petition is allowed. Court also observed that we are, prima facie, not inclined to accept both these legal contentions. Merely because the appeal is pending before the High Court, would not preclude, in our prima facie opinion, the Tribunal from exercising rectification powers. Nor can we lay down a general proposition of inviolable application that the moment there is a difference of opinion between two Members of the Bench of the Tribunal, it would automatically imply that the order does not suffer from any error apparent on the face of the record. However, with respect to the fundamental question whether there was an error which could have been rectified, we would like to examine the issue further. (SP No. 6337 of 2018, dt. 20-8-2018)

     Shambhubhai Mahadev Ahir v. ITAT (Guj) HC),
     www.itatonline.org

242. S. 254(2): Appellate Tribunal-Rectification of mistake apparent from the record – The ITAT should give priority to the hearing of Miscellaneous application – It should assign specific dates of hearing and inform parties well in advance – The ITAT should set right the lapses and put its house in order – None should be compelled to move the High Court and seek an out of turn hearing [S.254(1)]

     Allowing the petition the Court observed that the Miscellaneous Application is pending from 26th July, 2018. We are in the month of October, 2018 and the petitioner has no information as to when this application will be heard. In such state of affairs, we direct the Tribunal to give priority to this application and dispose it of as expeditiously as possible and, in any event, by 31st December, 2018. Court also observed that we have already indicated in our earlier orders and directions that the Tribunal should inform parties well in advance by assigning specific dates of hearing on these Miscellaneous Applications. They should be taken in the order in which they have been instituted/filed. None should be compelled to move this Court and seek an out of turn hearing. That would mean if somebody approaches this Court, gets a priority and expeditious hearing, others will have to wait for outcome of their Miscellaneous Applications for years together. This is not a happy scenario and it is for the Tribunal to set right the lapses and put its house in order. (WP No. 3104 of 2018. dt. 15-10-2018)

     Lupin Investment Pvt. Ltd. v. ITAT (Bom.)(Trib.),
     www.itatonline.org

243. S.254(2) : Appellate Tribunal-Rectification of mistake apparent from the record – Limitation – Delay of 4 months and 10 days – Though the Tribunal has no power u/s. 254(2) to condone delay in filing the MA, the High Court has power under Articles 226 and 227 of the Constitution of India to do substantial justice by condoning the delay. Injustice was done to the assessee because the Tribunal did not follow the binding judgment in CIT v. Manjunatha Cotton and Ginning Factory (2013) 359 ITR 565 (Karn.) (HC) on the issue of levy of penalty u/s. 271(1)(c). Accordingly, the delay in fling the MA deserves to be condoned [S.271(1)(c)]

     Allowing the petition the Court held that ; Though the Tribunal has no power u/s 254(2) to condone delay in filing the MA, the High Court has power under Articles 226 and 227 of the Constitution of India to do substantial justice by condoning the delay. Injustice was done to the assessee because the Tribunal did not follow the binding judgment in CIT v. Manjunatha Cotton and Ginning Factory (2013) 359 ITR 565 on the issue of levy of penalty u/s. 271(1)(c). Accordingly, the delay in fling the MA deserves to be condoned. (WP No. 25553/2018, dt. 12-7-2018) (AY. 2007-08)

     Muninaga Reddy v. ACIT (Karn.)(HC),
     www.itatonline.org

244. S.260A : Appeal – High Court – Notice of motion for disposal of appeal vis-a-vis pendency of appeal in the first round –Directions sought – To decide the second round of appeal basis decisions rendered by various Courts cannot be granted as the second round of proceedings have not yet culminated in a final order of the Tribunal [S.254 (1)]

     Held by the High Court that under the Act, it can exercise their Appellate jurisdiction in respect of appeals filed under Section 260A of the Act by the parties from the orders of the Tribunal passed under section 254 of the Act and since the second round of proceedings have not yet culminated in a final order under Section 254 of the Act, no directions can be given in respect of such matter not before the Court. (AY. 2008-09)

     Johnson & Johnson (P) Ltd. v. CIT (2018) 168 DTR 292 (Bom.)(HC)

245. S.260A : Appeal – High Court –Transfer pricing disputes with regard to exclusion and inclusion of comparables to determine Arm’s Length Price (ALP) would not necessarily give rise to substantial questions of law except if there is perversity of finding or failure to adhere to the settled principles of law while determining comparables. [S.92C]

     Dismissing the appeal of the revenue the Court held that Transfer Pricing disputes with regard to exclusion and inclusion of comparables to determine Arm’s Length Price (ALP) would not necessarily give rise to substantial questions of law except if there is perversity of finding or failure to adhere to the settled principles of law while determining comparables. (ITA No. 522 of 2016, dt. 24-9-2018)

     PCIT v. TIBCO Software (India) Pvt. Ltd. (2018) 305 CTR 482 (Bom.)(HC),
     www.itatonline.org

246. S.260A : Appeal – High Court – Subsequent event was not brought to the notice of High Court by revenue – Court held that there is no discipline in the manner the Dept. conducts matters. The Dept. should not take legal matters casually and lightly. There should be a dedicated legal team in the department. Lack of preparation is affecting the performance of the advocates. They do not have full records & do not have the assistance of officials who can give instructions. The Commissioner of income tax should devote more time to their work rather than attending some administrative meetings and thereafter boasting about revenue collection in Mumbai

     Honourable Court observed that when the matters were placed for ‘admission’ the revenue counsel was not briefed on the subsequent event of miscellaneous application. It was brought the notice by the Counsel appearing for the assessee to the subsequent development .We have no information as to whether prior to the decision of the Tribunal on this Miscellaneous Application, the Assessing Officer has already given effect to Tribunal’s initial or earlier order or otherwise. If the mistakes are corrected in the later order dated 13th January 2017, then, whether the Assessing Officer has given effect to that order also will be crucial and relevant for us. Court held that there is no discipline in the manner the Dept. conducts matters. The Dept. should not take legal matters casually and lightly. There should be a dedicated legal team in the department. Lack of preparation is affecting the performance of the advocates. They do not have full records & do not have the assistance of officials who can give instructions. The Commissioner of Income-tax should devote more time to their work rather than attending some administrative meetings and thereafter boasting about revenue collection in Mumbai. WP No. 1936 of 2018. & ITA No. 1320 of 2018, dt. 26-9-2018)

     PCIT v. Radan Multimedia Ltd. (Bom)(HC),
     www.itatonline.org

247. S.260A : Appeal – High Court – strictures – The Revenue has been selective in its approach. It picks either the assessee or the AYs pertaining to that assessee for challenging the orders in relation to them, before the higher forums. This results in revenue leakage or perpetuation of wrongs affecting adversely the collection of revenue. The public at large is at a loss to understand as to why the Department/Revenue consistently loses the battle in the higher Courts. This could be then termed as a deliberate or intentional act. If the Department of Revenue, Ministry of Finance, Government of India is going to conveniently overlook this and not bring the guilty persons to book by initiating disciplinary measures against them, then, no purpose will be served at all. This is not a short term exercise, but a major surgery which will have to be performed. If the Revenue Officials are prepared to take some bold decisions, then, only these state of affairs will improve and not otherwise

     Court observed that, on numerous occasions, this Court has brought to the notice of the Department of Revenue, Ministry of Finance, Government of India through the Commissionerates that the Revenue has been selective in its approach. It picks either the assessee or the assessment years pertaining to that assessee for challenging the orders in relation to them, before the higher forums.This results in revenue leakage or perpetuation of wrongs affecting adversely the collection of revenue. The public at large is at a loss to understand as to why the Department/Revenue consistently loses the battle in the higher Courts. This could be then termed as a deliberate or intentional act. If the Department of Revenue, Ministry of Finance, Government of India is going to conveniently overlook this and not bring the guilty persons to book by initiating disciplinary measures against them, then, no purpose will be served at all. We know that the Appeal for the prior Assessment Year may not be properly drafted or does not contain the relevant details, much less the precise question of law and if that is dismissed, there will be definitely an impact on the Appeal relating to the Assessment Year under consideration. Hence, this is not a short term exercise, but a major surgery which will have to be performed. If the Revenue Officials are prepared to take some bold decisions, then, only these state of affairs will improve and not otherwise. (ITA No. 370 of 2016, dt. 23-8-2018)(AY. 2009-10)

     PCIT v. International Biotech Park Ltd. (2018) 259 Taxman 14 (Bom.)(HC),
     www.itatonline.org

248. S.260A : Appeal – High Court – Transfer pricing – Determination of arm’s length price is question of fact – High Court will not interfere unless finding is perverse [S.92C]

     Dismissing the appeal of the asssessee the Court held that the contention of the assessee that while admitting under utilisation of the capacity of the assessee in this particular year, the Tribunal could not have computed the operating margins without proportionately reducing the quantum of depreciation, only finding its justification in the case of two comparables, was not tenable and the findings of the Tribunal could not be held to be perverse. The Tribunal was justified in its conclusion arrived at on the premise that the depreciation on the fixed assets need not be directly proportional to the utilisation of plant and machinery or production capacity. The premise of the Tribunal’s findings is not necessarily contrary to the finding in the case of the assessee that in this particular year, there was under utilisation of capacity in the case of the assessee. The claim of depreciation did not depend merely upon the extent of wear and tear of the plant and machinery. The findings or the premise taken by the Dispute Resolution Panel in the subsequent year did not render the findings in the previous years per se illegal or unsustainable. In the determination of the arm’s length price of an international transactions, the entire exercise is in the realm of a fact finding exercise and unless on the face of it, the findings of the Tribunal or the authorities below are found to be perverse and it can be said that the view taken by them is wholly unsustainable according to the legal provisions, no substantial question of law would arise in the matter. (AY. 2010-11)

     Indigra Exports Pvt. Ltd. v. DCIT (2018) 407 ITR 396 (Karn.) (HC) (HC)

249. S.263 : Commissioner – Revision of orders prejudicial to revenue – Third party statement not provided to the assessee, during revisional proceedings, basis which fresh enquiry directed – Order is invalid and remanded to the CIT for providing material and hearing objections

     Held by the High Court that the revisional order passed by CIT directing AO to conduct fresh enquire relying on third party statement, without providing such statement/material to assessee is not valid. Matter remanded to CIT to provide the assessee all the material to be relied by him and hear objections of assessee on such material. (ITA No 242 of 2018, dt 28-2-2018)

     Humboldt Wedag India (P) Ltd. v. CIT (2018) 305 CTR 452 / 167 DTR 241 (Delhi)(HC)

250. S.263 : Commissioner – Revision of orders prejudicial to revenue – Merger – Company non-existent on date of issue of order – Order void ab-initio [S.147]

     Assessee contended before the Tribunal that the order under S. 263 had been passed against an entity which did not exist in the eye of law and therefore the proceedings were vitiated. The Department’s contention was that during the proceedings under S. 147, the assessee did not raise any objection on that ground and therefore, it should not be permitted to raise the objection before the Tribunal. The Tribunal held that the notice and order were both in the name of a non-existent entity and therefore, void ab initio. On appeal, dismissing the appeal, that the assessee had ceased to exist as a result of the order of the court approving its merger with another company and the issuance of the notice under section 263 and the consequential order were in respect of a non-existent entity and void ab initio. (AY. 2009-10)

     CIT v. Kaizen Products (P.) Ltd. (2018) 406 ITR 311 (Delhi) (HC)

     Editorial: SLP of revenue is dismissed. CIT v. Kaizen Products (P.) Ltd ( 2018) 403 ITR 311 (St)

251. S.263 : Commissioner – Revision of orders prejudicial to revenue – Merger – When partial disallowance made by the AO is up held by the CIT(A), revision by the CIT to once again examine very same issue to disallow entire expenditure is not valid, as the issue is merged with the order of CIT(A) [S.37(1)]

     Dismissing the appeal of the revenue the Court held that when partial disallowance made by the AO is upheld by the CIT(A), revision by the CIT to once again examine very same issue to disallow entire expenditure is not valid as the issue is merged with the order of CIT(A). (AYs. 2008-09, 2009-10)

     PCIT v. H. Nagaraja (2018) 256 Taxman 335 (Karn.)(HC)

252. S.271(1)(c) : Penalty – Concealment – Disallowance of expenditure –merely because said claim was not accepted or was not acceptable to revenue, that by itself would not attract penalty

     Dismissing the appeal of the revenue the Court held that merely because expenditure is disallowed or claim was not accepted or was not acceptable to revenue, that by itself would not attract penalty. (AY. 1984-85)

     CIT v. U.P. State Bridge Corporation Ltd. (2018) 258 Taxman 64 (All) (HC)

     Editorial: SLP of revenue is dismissed CIT v. U.P. State Bridge Corporation Ltd. (2018) 258 Taxman 63 (SC)

253. S.271(1)(c) : Penalty – Concealment – Inadvertently claimed higher rate of 40% depreciation instead of 25%- Bona fide mistake – Deletion of penalty is held to be justified [S.32]

     Dismissing the appeal of the revenue the Court held that inadvertently claimed higher rate of 40% depreciation instead of 25% is a bona fide mistake. Deletion of penalty is held to be justified. (AY. 2004 -05)

     PCIT v. Bunge India Pvt. Ltd. (2018) 407 ITR 225 (Bom) (HC)

254. S. 271(1)(c) Penalty – Concealment – Appeal – If appeals with reference to the quantum proceedings have been admitted by the Court on substantial questions of law, it means that there were debatable and arguable questions raised and levy of penalty is not justified. Penalty also cannot be levied if the claim was as per judicial precedents prevalent at the time of filing the ROI. Also, there must be a finding that the details supplied by the assessee in its return were incorrect or erroneous or false

     Dismissing the appeal of the revenue the Court held that If appeals with reference to the quantum proceedings have been admitted by the Court on substantial questions of law, it means that there were debatable and arguable questions raised and levy of penalty is not justified. (PCIT v. Shree Gopal Housing and Plantation Corporation (2018) 167 DTR 236 (Bom.) (HC) is distinguished, CIT v. Nayan Builders and Developers (2014) 368 ITR 722 (Bom.) (HC) is followed). Penalty also cannot be levied if the claim was as per judicial precedents prevalent at the time of filing the ROI. Also, there must be a finding that the details supplied by the assessee in its return were incorrect or erroneous or false. (Refer CIT v. Advaita Estate Development Pvt. Ltd., ITA No. 1498 of 2014 dt. 17-2-2017 (Bom) (HC) www.itatonline.org (ITA No. 1133 of 2016, dt. 4-9-2018)(AY. 2003-04, 2004-05, 2005-06)

     PCIT v. Dhariwal Industries Ltd. (2018) 170 DTR 1 (Bom)(HC),
     www.itatonline.org

255. S.276C : Offences and prosecutions – Wilful attempt to evade tax – The burden of proving the absence of mens rea is upon the accused and such absence needs to be proved not only to the basic threshold of “preponderance of probability” but “beyond reasonable doubt”. In every prosecution case, the Court shall always presume culpable mental state and it is for the accused to prove the contrary beyond reasonable doubt. This presumption is a rebuttable one – Petition to quash the proceedings was dismissed. [S.133A, 271(1) (c), 277, 278E, Cr.P.C. S.561A]

     The assessment was done under S.144 and appeal was dismissed. Concealment penalty was paid by the assessee. On the basis of complaint by the Assessing Officer under S. 276C/277 of the Act, Special Magistrate issued process against the accused. Accused has filed the petition to u/s. 561A of the Cr. P.C before the High Court to quash the proceedings. Dismissing the petition, the Court observed that the burden of proving the absence of mens rea is upon the accused. The absence needs to be proved not only to the basic threshold of “preponderance of probability” but “beyond reasonable doubt”. In every prosecution case, the Court shall always presume culpable mental state and it is for the accused to prove the contrary beyond reasonable doubt. This presumption is a rebuttable one. The criminal court has to judge the case independently on the evidence placed before it. So complaint lodged by respondent and process issued thereon against petitioner does not suffer from any infirmity of law. (CRMC No. 205/2015, IA No. 01/2015, dt. 28-9-2018)

     Arun Arya v. ITO ( J & K ) (HC);
     www.itatonline.org

256. S.276C : Offences and prosecutions – Wilful attempt to evade tax – Pendency of appeal before CIT(A) – Stay – Alleged bogus purchases – During pendency of stay the criminal prosecution should not be launched and, if it has been already launched, the same shall not be proceeded. [S.246]

     Prosecution is launched on the footing that the return was filed, it was selected for scrutiny, assessment was completed and an order was passed assessing income of ₹ 2,49,10,960/-. When the appeal is pending for hearing, the Department proceeds on the footing that the assessee did not disclose his true and correct income while filing his return. The record was perused by the Sanctioning Authority and it came to the conclusion that certain transactions are not genuine but bogus. There were investigations also launched by the Directorate of Kolkata. This is a case where the tax was attempted to be evaded. On facts though on this show cause notice it is claimed that a hearing was granted, but the eventual order of sanction was not served. On writ, Court held that interest of justice would be served if we dispose of this writ petition by keeping larger and wider question open. In the event, the petitioner seeks a stay of the order passed by the Assessment Officer by making a stay application, then, during the pendency of such application, the criminal prosecution should not be launched and, if it has been already launched, the same shall not proceed. Thus, the ad interim stay granted by this Court would continue till the disposal of the application for stay by the First Appellate Authority. Petitioner will file this stay application within one week from the date of receipt of copy of this order. If that is filed and the Commissioner is seized of it, then, until the stay application is disposed of and the order on same is communicated to the petitioner, the prosecution launched pursuant to the order of sanction shall not proceed. (WP No. 761 of 2018, dt. 4-9-2018) (AY. 2014-15)

     Ramchandran Ananthan Pothi v. UOI (Bom.)(HC),
     www.itatonline.org

257. S.279 : Offences and prosecutions – Sanction – Chief Commissioner – Commissioner – The expression “amount sought to be evaded” in CBDT’s compounding guidelines dated 23-12-2014 means the amount of “tax sought to be evaded” and not the amount of “income sought to be evaded” –Directed the department to refund the excess amount paid by the assessee latest by 31-10-2018. [S. 271(1)(c), 276C]

     The Question for consideration is what would be the basic compounding charges that the petitioner must pay in order to avail the offer for compounding the offence. The primary facts are not in dispute. In the assessment of the petitioner’s return, an addition of ₹ 8.70 lakh came to be made. This gave rise to additional tax of ₹ 2.61 lakh. A penalty of ₹ 2.61 lakh at the rate of 100% of the tax sought to be evaded was also imposed in terms of section 271(1)(c) of the Act. The revenue calculated the compounding fees at ₹ 10,4900. On the basis of income ought to have been evaded which was paid under protest. The Assessee moved rectification application which was not disposed off. The assessee moved the petition before High Court. Allowing the petition the Court held that , the expression “amount sought to be evaded” in CBDT’s compounding guidelines dated 23-12-2014 means the amount of “tax sought to be evaded” and not the amount of “income sought to be evaded”. Accordingly the court directed the department to refund the excess amount paid by the assessee latest by 31-10-2018.) (SCA No. 8715 of 2018, dt. 17-9-2018)

     Supernova System Private Limited v. CCIT (2018) 305 CTR 326 (Guj.)(HC),
     www.itatonline.org

258. Strictures: Court is pained by the manner in which the authority has passed the order just ignoring the applicable Notification and throwing it to winds. The said order is nothing less than suffering from malice-in- facts as well as malice-in-law. The responsible officer deserves to pay the exemplary costs of ₹ 50,000 for passing such whimsical order from her personal resources or by deduction from salary

     After hearing the learned counsels, this Court is surprised and is pained by the manner in which the authority has passed the impugned reassessment order in the second round of assessment for the period 1-4-2011 to March 2012 just ignoring the applicable Notification and throwing it to winds. The said order is therefore nothing less than suffering from malice-in-facts as well as malice-in-law. Therefore, the said responsible officer deserves to pay the exemplary costs for passing such whimsical order and the writ petition deserves to be allowed. The 1st Respondent – Assessing Authority Ms. K. C. Sujatha, Deputy Commissioner of Commercial Taxes (Audit) – 2.4, Bengaluru, is directed to deposit the costs quantified at ₹ 50,000/- from her personal resources with the Registrar General of this Court within a period of one month from today, failing which, the same may be deducted from her salary by the Commissioner, Commercial Tax Department and the same to be paid to the Registrar General of this Court. The amount upon deposit shall be remitted to the ‘Prime Minister’s Relief Fund’, Delhi, for meeting the costs of relief to sufferers of natural disasters (W.P.Nos.60480/2016 & 62125-135/2016, dt. 24-9-2018)

     Kalyani Motors Pvt. Ltd. v. DCIT (Kar)(HC),
     www.itatonline.org

259. Interpretation – Precedent – Merely filing of an SLP would not make the order of this Court bad in law or give a licence to the Revenue to proceed on the basis that the order is stayed and/or in abeyance

Merely filing of an SLP would not make the order of this Court bad in law or give a licence to the Revenue to proceed on the basis that the order is stayed and/or in abeyance. ( ITA. No. 293 of 2016 dt. 3-8-2018)

PCIT v. Associated Cable Pvt. Ltd. (Bom.)(HC),
www.itatonline.org.