1. S.2(47)(v) : Transfer-Development agreement – If the entire consideration is not received by the assessee and physical possession of the property is not parted with, there is no transfer [S. 45, 54EC]

    Dismissing the appeal of the revenue, the Court held that; immovable property can be regarded to have been transferred on the date of execution of the Development Agreement and irrevocable General Power of Attorney only if the terms indicate that complete control is given to the developer. If the entire consideration is not received by the assessee and physical possession of the property is not parted with, there is no transfer u/s. 2(47)(v). ( ITA No. 139 of 2015, dt. 20-11-2017)(AY. 2008-09)

    CIT v. Dr. Arvind S. Phake (Bom)(HC); www.itatonline.org

  2. S.4 : Charge of income-tax –Diversion of income by overriding title – Company formed for purpose of procuring tender and not for execution work, receipt cannot be treated as income of assessee [S. 2(24)]

    Allowing the appeal the Court held that; Company was formed for purpose of procuring tender and not for execution work, receipt cannot be treated as income of assessee as there was diversion of income at the source itself and therefore, there was diversion of income by overriding title. The receipt of amount of  ₹ 12,09,55,137 could not be treated as income of the assessee and it was diversion of income by overriding title.

    Soma TRG Joint Venture v. CIT (2017) 398 ITR 425 (J&K)(HC)

  3. S.4 : Charge of income-tax – Capital or revenue – Non-compete fee paid to an acknowledged personality to prevent her from competing with the business was a capital receipt

    Assessee, president of M/s. Tara Sinha McCann Erickson (P) Ltd. (‘TSME’), an advertising agency also held 51 per cent shares of the company. During the assessment year, the assessee resigned from TSME. Upon her retirement, she received ₹ 3,15,31,750 towards entering into a non-compete agreement which was treated by her as a capital receipt. HC observed that the assessee was an acknowledged personality in the advertising field in India. HC further observed that the assessee had the potential and stature to take away a substantial number, if not all, of the clients and the employees of TSME. The non-compete fee paid to her could not, therefore, be termed as a camouflage or a well-orchestrated plan to avoid payment of tax.

    CIT v. Tara Sinha (Mrs.) (2017) 158 DTR 193 (Delhi)(HC)

  4. S. 10A : Free trade zone –Deduction to be allowed on profit increased by amount of disallowance [S. 40(a)(v)]

    Dismissing the appeal of the revenue the Court held that deduction to be allowed on profit increased by amount of disallowance. Followed CIT v. Gem Plus Jewellery India Ltd. (2011) 330 ITR 175 (HC) (AY. 2008-09)

    PCIT v. Lionbridge Technologies (P) Ltd. (2017) 158 DTR 397 / 68 taxmann.com 101 (Bom.)(HC)

  5. S.10BA : Export of wooden articles or things – Modification and beautification of semi-finished furniture for export is entitled to deduction

    Dismissing the appeal of the revenue, the Court held that modification and beautification of semi-finished furniture for export is entitled to deduction.

    CIT v. Manglam Arts (2017) 398 ITR 594 (Raj.)(HC)

  6. S.11 : Property held for charitable purposes – Filing of Form 10 during re-assessment benefit of accumulation was available. [S. 139(4), 148]

    Dismissing the appeal of the revenue, the Court held that form 10 was filed during re-assessment by assessee-trust, benefit of accumulation was available because such filing would be considered within time allowed for furnishing return of income under section 139(4) . Followed, CIT v. Nagpur Hotel Owners’ Association (2001) 247 ITR 201 (SC). (AY. 2000-01, 2001-02)

    CIT v. Sakal Relief Fund (2017) 248 Taxman 31/295 CTR 561 / 152 DTR 89 (Bom.)(HC)

  7. S.12AA : Procedure for registration – Trust or institution – Charitable purposes – Preservation of environment including watersheds, forests and wildlife has a direct causal connection to the activity of preservation of environment hence the assessee is entitle to registration [S.2(15)]

    Dismissing the appeal of the revenue the Court held that the charitable purposes includes preservation of environment including watersheds, forests and wildlife. The activity carried out by the assessee had a direct causal connection to the activity of preservation of environment. The assessee is entitled to registration. (AY. 2012-13)

    CIT (E) v. Water and Land Management Training and Research Institute (2017) 398 ITR 283 (T &AP) (HC)

  8. S.12AA : Procedure for registration – Trust or institution – Income derived by assessee by way of fees from students for running educational institution is income derived which was applied for aims and objects of assessee hence is entitled to registration

    The Commissioner failed to mention the exact enquiry report sent by the Departmental authorities to ascertain the basis on which they did not recommend registration to the assessee. Thus, the Tribunal rightly directed the Commissioner to grant registration to the assessee. No illegality or perversity could be demonstrated by the Department in the findings recorded by the Tribunal. (AY. 2012-13)

    CIT(E) v. Lord Krishna Charitable Trust (2017) 398 ITR 370 (P&H)(HC)

  9. S.14A : Disallowance of expenditure – Exempt income – When there is no exempt income, no disallowance can be made [R.8D]

    Dismissing the appeal of revenue the Court held that, when there is no exempt income, no disallowance can be made. Merely because tax auditor had suggested in tax audit report that there ought to be such disallowance, it could not be a ground to make disallowance. (AY. 2011-12)

    PCIT v. IL & FS Energy Development Company Ltd. (2017) 250 Taxman 174 / 297 CTR 452 (Delhi)(HC)

  10. S.14A : Disallowance of expenditure – Exempt income – Recording of satisfaction is mandatory – Remanding the matter to CIT(A) is not justified [R.8D]

    Allowing the appeal of the assessee the Court held that recording of satisfaction is mandatory, once this mandatory was itself not fulfilled, the question of remanding the matter to the Commissioner (Appeals) and to call for a remand report from the Assessing Officer for the purposes of rectifying this jurisdictional defect would not arise. (AY. 2009-10)

    Eicher Motors Ltd. v. CIT (2017) 398 ITR 51 (Delhi)(HC)

  11. S.22 : Income from house property – letting of building including charges for air conditioning is assessable as income from house property and not as income from other sources. [S.32, 56]

    Dismissing the appeal of the revenue, the court held that the property was part of stock-in-trade of the assessee and also that the assessee did not claim any depreciation on the air-conditioning plant to the extent it was used for letting out the air-conditioned building. The assessee had not claimed depreciation to that extent. Therefore, the rent receipt which also includes air conditioning charges was income from house property. (AY. 1997-98)

    CIT v. DLF Universal Ltd. (No.1) (2017) 398 ITR 708 (Delhi) (HC)

  12. S. 36(1)(vii) : Bad debt – Advance to suppliers for business which was lying outstanding for number of years was written off was held to be allowable as deduction, though the suit was not filed for recovery of the said amounts. [S. 28(i)]

    Dismissing the appeal of the revenue the Court held that advance to suppliers for business which was lying outstanding for number of years was written off was held to be allowable as deduction, though the suit was not filed for recovery of the said amounts.

    PCIT v. Rajasthan State Beverages Corpn. Ltd. (2017) 250 Taxman 32 (Raj.)(HC)

    Editorial : SLP of revenue is dismissed, PCIT v. Rajasthan State Beverages Corporation Ltd. (2017) 250 Taxman 16 (SC)

  13. S.37(1) : Business Expenditure – Foreign exchange losses due to fluctuation in the rate of foreign exchange as on balance sheet date are deductible. [S. 145]

    Dismissing the appeal of the revenue the Court held that the AO had failed to consider the judgment of Supreme Court in case of Woodward Governor India (P.) Ltd. (2009) 312 ITR 254 (SC), wherein it was held that loss suffered by the assessee, maintain accounts regularly on mercantile system and following accounting standards prescribed by the ICAI, on account of fluctuation in the rate of foreign exchange as on the date of balance sheet was an item of expenditure under S.37(1) not withstanding that the liability has not been discharged in the year in which the fluctuation in the rate of foreign exchange occurred. (AY. 2008-09)

    PCIT v. Lionbridge Technologies (P) Ltd. (2017) 158 DTR 397 / 68 taxmann.com 101 (Bom.)(HC)

  14. S.37(1) : Business expenditure – Expenses incurred over and above 6 per cent by an assessee being an asset management company was allowable as a deduction [S.260A]

    Regulation 52(5) of the Securities and Exchange Board of India (Mutual Funds) Regulations, 1996 states that any expense other than those specified in sub-regulations (2) and (4) shall be borne by the asset management company. Further, any excess over the 6 per cent initial issue expense shall also be borne by the asset management company. HC held that where it is accepted that the assessee is an asset management company, the assessee is statutorily liable to bear the expenses over and above 6 per cent. High Court held that the order of the Tribunal allowing deduction of such expenses incurred by the assessee did not give rise to any substantial question of law.

    CIT v. ING Investment Management (India) (P) Ltd. (2017) 157 DTR 153 / 298 CTR 582 (Bom.)(HC)

  15. S.37(1) : Business expenditure – Liquidated damages in the nature of penalty for delaying delivery or late completion of terms and conditions of order was held to be allowable as business expenditure

    Dismissing the petition the Court held that liquidated damages in the nature of penalty for delaying delivery or late completion of terms and conditions of order was held to be allowable as business expenditure. (AY. 2010-11)

    PCIT v. Mazda Ltd. (2017) 250 Taxman 510 (Guj.)(HC)

  16. S.37(1) : Business expenditure –Payment made as per agreement for joint production of film was held to be allowable as business expenditure

    Dismissing the appeal of the revenue, the Court held that payment made as per agreement for joint production of film was held to be allowable as business expenditure. (AY. 2006-07)

    CIT v. Dharma Productions (P.) Ltd. (2017) 248 Taxman 465 / 297 CTR 24 / 153 DTR 105 (Bom.)(HC)

    Editorial: Order in Dharma Productions (P.) Ltd v. Dy. CIT (2014) 42 taxmann.com 8 (Mum) (Trib) is affirmed.

  17. S.37(1) : Business expenditure – Commission – Disallowance of commission only on the ground that supply was made to Govt. department would not be sustainable – Matter remanded

    Allowing the appeal the Court held that disallowance of commission only on the ground that supply was made to Gov. department would not be sustainable. Matter remanded . (AY. 2005-06)

    Brijbasi Hi-Tech Udyog Ltd. v. CIT (2017) 248 Taxman 92/ 154 DTR 69 (All.)(HC)

  18. S.37(1) : Business expenditure — Employees’ stock option plan — Once option given and exercised by employee liability is ascertained it is not contingent liability hence allowable as business expenditure

    Dismissing the appeal of the revenue the Court held that as regards employees stock option plan, once option given and exercised by employee liability is ascertained it is not contingent liability hence allowable as business expenditure (AY. 2007-08)

    CIT v. New Delhi Television Ltd. (2017) 398 ITR 57 (Delhi)(HC)

    Editorial: SLP is granted to revenue CIT v. New Delhi Television Ltd. (2017) 396 ITR 71 (St.)

  19. S.40(a)(ia) : Amounts not deductible – Deduction at source – A party cannot be called upon to perform an impossible act i.e. to comply with a provision not in force at the relevant time but introduced later by retrospective amendment. S. 40(a)(ia) disallo-wance can be made only if the royalty falls under Explanation 2 to s. 9(1)(vi) but not if it falls under Explanation 6 to s. 9(1)(vi) [S. 9(1)(vi), 194C, 194J, 195]

    Dismissing the appeal of the revenue the Court held that a party cannot be called upon to perform an impossible act i.e., to comply with a provision not in force at the relevant time but introduced later by retrospective amendment. S. 40(a)(ia) disallowance can be made only if the royalty falls under Explanation 2 to s. 9(1)(vi) but not if it falls under Explanation 6 to s. 9(1)(vi) (ITA No. 397 of 2015. dated 29-1-2018)

    CIT v. NGC Networks (India)(Pvt. Ltd. (Bom)(HC), www.itatonline.org

  20. S.40(a)(ia) : Amounts not deductible – Deduction at source – Contractor – sub-contractor – No disallowance can be made due to human mistake Form 15J was filed before the Assessing Officer instead of Commissioner [S.194C, 292B]

    Dismissing the appeal of the revenue, the Court held that no disallowance can be made due to human mistake Form 15J was filed before the Assessing Officer instead of Commissioner (AY. 2008-09)

    CIT v. Shridhar Shantinath Patravali (2017) 248 Taxman 550 (Karn.)(HC)

  21. S.40(a)(ia) : Amounts not deductible – Deduction at source – Transport charges – Deposited tax deducted at source before due date of filing of return – No disallowance can be made –Amendment to Section 40(a)(ia) by Finance Act, 2010 with effect from 1-4-2010 would also apply for the AY. 2009-10 [Ss. 139(1), 194C]

    Allowing the appeal of the assessee the Court held that assessee has deposited tax deducted at source before due date of filing of return therefore no disallowance can be made as the amendment to section 40(a)(ia) by Finance Act, 2010 with effect from 1-4-2010 would also apply for the AY. 2009-10. (AY. 2009-10)

    Allahabad Wholesale Central Coop. Store Ltd. v. P CIT (2017) 248 Taxman 302/ 157 DTR 357 (All.)(HC)

  22. S.40(b)(i) : Amounts not deductible – Partner – Book profit – Once cash advances was assessed as business income the same has to be taken in to consideration for the purpose of book profit [Ss.28(i), 133A]

    Allowing the appeal of the assessee the Court held that once cash advances was assessed as business income the same has to be taken in to consideration for the purpose of book profit. It was not open to the Department to contend that the amount of ₹ 1,55,289 was part of business income while computing the tax payable but not so for the purposes of Section 40(b) of the Act. The character of the income would not change depending upon the section to be applied.

    National Sales Corporation v. ITO (2018) 400 ITR 463 (Bom.) (HC)

  23. S.41(1) : Profits chargeable to tax – Remission or cessation of trading liability – Principal amounts of loan was written off was being capital nature hence not taxable [S.28(iv)]

    Dismissing the appeal of revenue the Court held that principal amounts of loan was written off as per BIFR order, was being capital nature hence not taxable. Ratio in Solid Containers Ltd. v. Dy.CIT( 2009) 308 ITR 417 (Bom.)(HC) is considered. (AY. 2006-07)

    CIT v. Graham Firth Steel Products (I) Ltd. (2017) 250 Taxman 235 (Bom.)(HC)

  24. S.45 : Capital gains – Penny stocks – Merely because appreciation in value the capital gains cannot be assessed as income from undisclosed sources [S. 69]

    Dismissing the appeal of the revenue the Court held that the fact that the appreciation in the value of the shares is high does not justify the transactions being treated as fictitious and the capital gains being assessed as undisclosed income if (a) the shares are traded on the Stock Exchange, (b) the payments and receipts are routed through the bank, (c) there is no evidence to indicate it is a closely held company and (d) the trading on the Stock Exchange was manipulated in any manner. (ITA No. 95 of 2017, dt. 18-1-2018)(AY. 2008-09)

    PCIT v. Prem Pal Gandhi ( 2018) 401 ITR 253 (P & H) (HC)

  25. S. 45 : Capital gains – Business income – Investment in shares – As explained in Circular No. 6, dated 29-2-2016, in respect of listed shares and securities held for a period of more than 12 months immediately preceding date of its transfer has to be assessed as capital gains [S. 28(i)]

    Dismissing the appeal of the revenue, the Court held that as explained in circular No. 6, dated 29-2-2016, in respect of listed shares and securities held for a period of more than 12 months immediately preceding date of its transfer, if assessee desires to treat income arising from transfer thereof as capital gain, same shall not be put to dispute by Assessing Officer subject to condition that consistent view of the assessee in subsequent years also. (AY. 2006-07)

    PCIT v. Ramniwas Ramjivan Kasat (2017) 248 Taxman 484 (Guj.)(HC)

  26. S.45 : Capital Gains – Cost of flats received on entering into a development agreement would be the cost of construction of the built-up area

    Co-owners of a property including the assessee entered into an agreement with Ansal Properties & Industries Ltd. on 2nd May, 1984 whereby the building on the land was to be demolished and an apartment complex was to be constructed thereon. It was agreed that the co-owners would get built-up area of 89,136 sq. ft. which constituted 56% of total built-up area and 44% of the built up area would belong to Ansals. The entire cost of construction was to be met by Ansals. Assessee sold his share of the flats and offered capital gains on such sale. HC held that there was no transfer of the title to the land by the assessees in favour of Ansals but what was transferred under the collaboration agreement was only 44 per cent of the land owned by them in exchange for 56 per cent of the built-up area. Further, the assessee not only transferred the flats to buyers but the proportionate right in the appurtenant land as well. HC held that the consideration for the transfer of 44 per cent land was the cost of construction of the 56 per cent built up area. HC held that the cost of flat would be equal to costs of construction of 56 per cent of the built up area and the cost of acquisition of land would be the market value of land as on 1st April 1981.

    CIT v. Siddharth Pratap Chand (2017) 398 ITR 316/159 DTR 199 (Delhi)(HC)

  27. S.45(2) : Capital gains – Conversion of a capital asset in to stock-in-trade – Land is converted into stock-in-trade – Capital gains is to be computed up to the date of conversion in to stock in trade and for a period thereafter as business income [Ss. 28(i), 45]

    On appeal by revenue, dismissing the appeal the High Court held that when the land is converted in to stock-in-trade, capital gains is to be computed up to the date of conversion in to stock in trade and for a period thereafter as business income. Assessing Officer should apply provisions of section 45(2) and compute capital gains up to date of conversion into stock-in-trade, and thereafter on actual sale of land, i.e., difference between value of sale and stock-in-trade, was to be considered as business income. (AY. 2011-12)

    CIT v. Essorpe Holdings (P.) Ltd. (2017) 249 Taxman 222 (Mad.)(HC)

  28. S.50 : Capital gains – Depreciable assets – Block of assets – Once depreciation is allowed on an asset it would remain a business asset and any profit earned on sale of such asset would be taxed [Ss.2(11), 45]

    Dismissing the appeal of the assessee the Court held that once depreciation is allowed on an asset it would remain a business asset and any profit earned on sale of such asset would be taxed. High Court held that; the tribunal was right in holding that an asset cannot move out of the block of assets once depreciation is allowed on that particular asset and that since initially depreciation was allowed on both the galas, even though subsequently one gala was not used for the business of the assessee, the same continued to be a part of block of assets on which depreciation was allowed and the gain on sale of such asset should be taxed under section 50. (AY. 1991-92)

    Meena V. Pamnani (Smt.) v. CIT (2017) 159 DTR 1/ 251 Taxman 100 (Bom.) (HC)

  29. S.54B : Capital gains – Land used for agricultural purposes – Though the document is registered in the name of spouse wife exemption cannot be disallowed – Revision was held to be not valid [S. 45, 50C, 54F, 263 ]

    Allowing the appeal of the assessee the Court held that the fact that the investment and document is registered is made in the name of the spouse (wife) is not a ground for disallowing exemption from capital gains u/s. 54B if the funds utilised for the investment belong to the assessee. Revision was held to be not valid. (ITA No. 20/2016, dt. 8-12-2017)

    Mahadev Balai v. ITO (Raj)(HC); www.itatonline.org

  30. S.54F : Capital Gains – Investment in a residential house – Receipt of multiple flats on conveying land under a joint development agreement would not disentitle assessee from the benefits [S. 45]

    Assessee owned a plot of land. A joint development agreement was entered into and the plot of land was conveyed to a builder and the assessee received certain flats. The issue before the High Court was as to whether receipt of more than one flat by the assessee disentitled him from making a claim u/s. 54F. High Court held that all the flats received were a product of one development agreement of the same piece of land being transferred. Therefore, even if flats/apartments received were in different blocks and different towers as long as they were in the same address/location, the assessee was entitled to benefit of S. 54F. HC also held that the amendment in S. 54F w.e.f. 1st April, 2015 would be prospective in nature.

    CIT v. Gumanlal Jain (2017) 160 DTR 221 (Mad.)(HC)

  31. S.68 : Cash credits – Long term capital gains – Evidence of contract and payment through Banks – Addition cannot be made solely on the basis that late recording in Demat Pass book – Order of Tribunal set aside [Ss. 45, 254(1), 260A]

    Allowing the appeal of the assessee the Court held that evidence of contract and payment through banks hence addition cannot be made solely on the basis that late recording in Demat Pass book. – Order of Tribunal set aside as it has considered only part of evidence and not entire evidence. (AY. 2005-06)

    Amita Bansal (Ms.) v. CIT (2018) 400 ITR 324 (All) (HC)

  32. S. 68 : Cash credits – Penny stocks – Capital gains – Assessee had indulged in a dubious share transaction meant to account for the undisclosed income in the garb of long term capital gain. The gain has accordingly to be assessed as undisclosed credit [S. 45]

    Dismissing the appeal of the assessee the Court held that the assessee has not tendered cogent evidence to explain how the shares in an unknown company worth ₹ 5 had jumped to ₹ 485 in no time. The fantastic sale price was not at all possible as there was no economic or financial basis to justify the price rise. The assessee had indulged in a dubious share transaction meant to account for the undisclosed income in the garb of long term capital gain. The gain has accordingly to be assessed as undisclosed credit. (ITA No. 18/2017, dt. 10-4-2017)( AY. 2006-07)

    Sanjay Bimalchand Jain v. P. CIT (Bom.)(HC); www.itatonline.org

  33. S. 68 : Cash credits – Sale of shares – When purchase of shares were accepted as genuine in the year of sale consideration cannot be assessed as cash credits

    Dismissing the appeal of the revenue , the Court held that when purchase of shares were accepted as genuine in the year of sale consideration cannot be assessed as cash credits. (AY. 2006-07)

    PCIT v. Ramniwas Ramjivan Kasat (2017) 248 Taxman 484 (Guj.)(HC)

  34. S.68 : Cash credits – Share capital – Reliance on statements of third parties who have not been subjected to cross-examination is not permissible. Voluminous documents produced by the assessee cannot be discarded merely on the basis of statements of individuals contrary to such public documents

    Dismissing the appeal of the revenue the Court held that the companies which invest share capital cannot be treated as bogus if they are registered and have been assessed. Once the assessee has produced documentary evidence to establish the existence of such companies, the burden shifts to the Revenue to establish their case. Reliance on statements of third parties who have not been subjected to cross-examination is not permissible. Voluminous documents produced by the assessee cannot be discarded merely on the basis of statements of individuals contrary to such public documents. (ITA No. 66 of 2016, dt. 10-4-2017)

    PCIT v. Paradise Inland Shipping Pvt. Ltd.( 2018) 400 ITR 439 (Bom)(HC)

  35. S.69 : Unexplained investments – Sale and purchase of shares carried out on stock exchange and appearing in the demat account where the settlement was made through account payee cheque cannot be treated as non-genuine [S.45]

    Assessee had sold shares on which he earned a short term capital gain. AO carried out investigations which revealed that the entire share transactions were bogus and mere accommodation entries obtained from an entry provider Shri P. K. Agarwal from Kolkata. High Court upheld the genuineness of the transaction as the shares were purchased and sold through the demat account, payments were made by way of an account payee cheque. Further, AO had also not made any inquiries as to whether the transactions were not genuine.

    CIT v. Jitendra Kumar Agarwal (2017) 160 DTR 198 / 299 CTR 524 (Raj.)(HC)

    CIT v. Pooja Agarwal (Smt.) (2017) 299 CTR 524 / 160 DTR 198 (Raj.)(HC)

  36. S. 80IA : Industrial undertakings –Only losses of the years beginning from the initial assessment year are to be brought forward for set-off against profits of the eligible unit. Losses of earlier years which are already set off against income cannot be brought forward notionally for set-off. The fiction in s. 80-IA(5) is created only for a limited purpose and cannot be extended [S.80-IA(5)]

    Dismissing the appeal of the revenue , the Court held that only losses of the years beginning from the initial assessment year are to be brought forward for set-off against profits of the eligible unit. Losses of earlier years which are already set off against income cannot be brought forward notionally for set-off. The fiction in
    S. 80-IA(5) is created only for a limited purpose and cannot be extended. (ITA No. 707 of 2014, dt. 14-6-2017)(AY. 2009-10)

    CIT v. Herculers Hoists Ltd. (Bom)(HC); www.itatonline.org

  37. S.80IC : Special category States – “initial assessment year” and “substantial expansion” – There can be more than one initial assessment year – Substantial expansion is also eligible to deduction – Circular explaining the provision is also relevant to interpretation of the section

    After analysing the provisions, the Court held that appeals are allowed and orders passed by the Assessment Officer as well as the Appellate Authority and the tribunal, in the case of each one of the assessees, are quashed and set aside, holding as under:

    (a) Such of those undertakings or enterprises which were established, became operational and functional prior to 7-1-2003 and have undertaken substantial expansion between 7-1-2003 up to 1-4-2012, should be entitled to benefit of Section 80-IC of the Act, for the period for which they were not entitled to the benefit of deduction under Section 80-IB.

    (b) Such of those units which have commenced production after 7-1-2003 and carried out substantial expansion prior to 1-4-2012, would also be entitled to benefit of deduction at different rates of percentage stipulated under Section 80-IC.

    (c) Substantial expansion cannot be confined to one expansion. As long as requirement of Section 80-IC(8)(ix) is met, there can be number of multiple substantial expansions.

    (d) Correspondingly, there can be more than one initial Assessment Year.

    (e) Within the window period of 7-1-20013 up to 1-4-2012, an undertaking or an enterprise can be entitled to deduction @ 100% for a period of more than five years.

    (f) All this, of course, is subject to a cap of ten years [Section 80-IC(6)].

    (g) Units claiming deduction under Section 80-IC shall not be entitled to deduction under any other Section, contained in Chapter VI-A or Section 10A or 10B of the Act [S. 80 IB(5)] ( ITA No. 20/2015, dt. 28-11-2017)

    Stovekraft India v. CIT(2017) 160 DTR 378/ ( 2018) 300 CTR 5 / 400 ITR 225 (HP)(HC)

  38. S. 80P : Co-operative societies –Primary agricultural credit society are entitled to the exemption [S.80P(4)]

    The assessee was a “primary agricultural credit society”, engaged primarily in the principal business of providing financial assistance to its members who were agriculturists. A primary agricultural credit society need not be treated as a primary co-operative bank. S. 80-P(4) denies benefit of the provision to any co-operative bank other than a primary agricultural credit society. HC held that primary agricultural credit societies, registered as such were entitled to exemption under Section 80-P.

    CIT v. Veerakeralam Primary Agricultural Co-operative Credit Society (2017) 156 DTR 178 (Mad.)(HC)

  39. S.92C : Transfer Pricing – Arm’s Length Price – Unless it is not shown that the selection of TNMM as the Most Appropriate Method is perverse, the same cannot be challenged

    Dismissing the appeal of the revenue, the Court held that the Comparable Uncontrolled Price (CUP) method is not the Most Appropriate Method for determining the Arm’s Length Price (ALP) in respect of the transactions of (sales of goods and sales commission) with Associated Enterprises (AEs) if there are geographical differences, volume differences, timing differences, risk differences and functional differences. If it is not shown that the selection of TNMM as the Most Appropriate Method is perverse, the same cannot be challenged. (ITA No. 1131, 1102, 1100 of 2015, dt. 7-3-2018) (AY. 2006-07, 2007-08, 2009-10)

    PCIT v. Amphenol Interconnect India P. Ltd. (Bom)(HC), www.itatonline.org

  40. S.92C : Transfer pricing – Arm’s Length Price – Corporate guarantee – When no expenditure was incurred for providing guarantee to bank for the loan given to subsidiaries applying the rate of 2.5% by the TPO was held to be not justified

    Dismissing the appeal of the Revenue, the Court held that when no expenditure was incurred for providing guarantee to bank for the loan given to subsidiaries applying the rate of 2.5% by the TPO was held to be not justified. (AYs. 2003-04 to 2006-07)

    CIT v. Reliance Industries Ltd. ( 2018) 161 DTR 420 (Bom) (HC)

  41. S.92C : Transfer Pricing – Arm’s length price – Corporate guarantee is not to be determined on basis of comparison with bank guarantee hence addition was held to be not justified

    Dismissing the appeal of the Revenue, the Court held that the arm’s length price of corporate guarantee could not be determined on the basis of comparison with the bank guarantee hence deletion of addition was held to be justified. (AY. 2008-09)

    CIT v. Glenmark Pharmaceuticals Ltd. (2017) 398 ITR 439 (Bom.)(HC)

  42. S.92C : Transfer pricing – Arm’s Length Price – Outstanding receivable from debtors – Deletion was held to be justified [S.92B]

    Dismissing the appeal of the Revenue, the Court held that any further adjustment only on the basis of the outstanding receivables would have distorted the picture and re-characterised the transaction which was impermissible. The focus of the Assessing Officer was on just one assessment year and the figure of receivables in respect of that assessment year could hardly reflect a pattern that would justify the Transfer Pricing Officer to conclude that the figure of receivables beyond 180 days constituted an international transaction by itself. (AY. 2010-11)

    PCIT v. Kusum Healthcare P. Ltd. (2017) 398 ITR 66 (Delhi)( HC)

  43. S.115JB : Book profit– Disallowance of expenditure on exempt income – Amount disallowed u/s. 14A of the Act cannot be added to arrive at book profit for purposes. [S. 14A, R.8D]

    Dismissing the appeal of the revenue the Court held that, the amount disallowed u/s. 14A of the Act cannot be added to arrive at book profit for purposes of S. 115JB. (ITA No. 337 of 2013, dt. 10-2-2015) (AY. 2007-08)

    CIT v. Bengal Finance & Investment Pvt. Ltd. (Bom.)(HC); www.itatonline.org

  44. S.133A : Power of Survey – Statement is not conclusive – In absence of any contrary evidence or explanation the same can be acted upon [S. 32]

    On appeal, the High Court held that a statement made under Section 133A of the Act is not bereft of any evidentiary value. It may not be conclusive but in the absence of any contrary evidence or explanation as to why the statement made under Section 133A of the Act is not credible, it can be acted upon. As a result the High Court upheld the order of the AO denying depreciation allowance to the Assessee. (AY. 1996-97)

    Pebble Investment & Finance Ltd. (2017) 156 DTR 247 (Bom.)(HC)

  45. S.139 : Return of income – Return of income filed within time showing the taxable income, can be revised showing the loss Tribunal was justified in allowing the carry forward of speculation loss [Ss. 139(1), 139(5)]

    Dismissing the appeal of the Revenue, the Court held that once a return was revised under section 139(5) within time prescribed, original return filed under section 139(1) would not survive – Accordingly, Tribunal was justified in allowing assessee’s claim for carry forward of speculation loss. (AY. 2005-06)

    PCIT v. Babubhai Ramanbhai Patel (2017) 249 Taxman 470 (Guj.)(HC)

  46. S.139 : Return – Revised return – Return filed u/s. 139(1) or u/s. 139(4) within extend period of one year from the end of the relevant assessment year or before completion of assessment, which ever is earlier can be revised –Amendment with effect from April 1, 2017 is retrospective in nature – Matter set aside to Assessing Officer. [Ss. 139(1), 139(4), 139(5)]

    Allowing the appeal of the assessee, the Court held that; Return filed u/s. 139(1) or u/s. 139(4) within extended period of one year from the end of the relevant assessment year or before completion of assessment, whichever is earlier can be revised. Section 139(5) was amended by Finance Act, 2016, with effect from April 1 2017. The amendment was intended to confer a benefit on the assesssee and has retrospective application.

    DIT(E) v. Medical Trust of the Seventh Day Adventists (2017) 398 ITR 721 (Mad.) (HC)

  47. S.144C : Reference to dispute resolution panel – Issuance of draft assessment orders by assessing officer mandatory, without following the procedure the passing of the order was held to be invalid and consequently demand notices and penalty proceedings also invalid [Ss. 156, 271(1)(c)]

    Allowing the petition, the Court held that ; failure by the Assessing Officer to adhere to the mandatory requirement of Section 144C(1) and pass draft assessment orders had invalidated the final assessment orders, the consequent demand notices and penalty proceedings. The legal position was unambiguous and the final assessment order stood vitiated for failure to adhere to the mandatory requirements of first passing the draft order. (AYs. 2007-08, 2008-09)

    Turner International India P. Ltd. v. Dy. CIT (2017) 398 ITR 177 (Delhi)(HC)

  48. S.145 : Method of accounting – Where revenue had modified or substituted method of valuation of closing stock in particular year, same methodology would also have to be applied for valuation of opening stock for that year [S.154, 254(2)]

    Allowing the petition of the Court held that; where Revenue had modified or substituted method of valuation of closing stock in particular year, same methodology would also have to be applied for valuation of opening stock for that year. Court also held that rejection of the application for rectification by the Tribunal on the ground that the said arguments was not raised was held to be not justified, the Tribunal ought to have allowed the rectification application of the petitioner. (AY. 2003-04)

    Veera Exports v. ACIT (2017) 248 Taxman 478 (Guj.)(HC)

  49. S.145 : Method of Accounting – Merely because the gross profit is low cannot be the ground to reject the books of account

    Dismissing the appeal of the Revenue, the Court held that merely because the gross profit is low cannot be the ground to reject the books of account. (AY. 2007-08)

    PCIT v. Purshottam B. Pitroda (2017) 248 Taxman 118 (Guj.)(HC)

  50. S.145 : Method of Accounting – Loss on derivatives arising as a result of change in method and adoption of AS-31 allowable [S.28(i)]

    Assessee changed his method of accounting and started following Accounting Standard 31 and consequently claimed deduction in respect of loss on derivative contracts. High Court held that once it is accepted that the AS applies to the assessee and it was legally entitled to follow the same, the loss on derivatives had to be allowed.

    CIT v. Olam Agro India Ltd. (2017) 251 Taxman 120 (Ker.)(HC)

  51. S.147 : Reassesment – With in four years – Audit objection – Reply of Assessing Officer to audit objection opposing the reassessment, Apex Court Judgment was not available – Reassessment was held to be bad in law [S. 80IB, 148]

    Dismissing the appeal of the Revenue, the Court held that the Assessing Officer has objected to the audit objection, Apex Court judgment was not available when the notice for reopening was issued. Change of opinion, therefore reassessment was held to be bad in law (ITA No. 606 of 2015, dt. 24-2-2018)(AY. 2004-05)

    CIT v. Rajan N. Aswani (Bom.)(HC), www.itatonline.org

  52. S.147 : Reassessment – Non furnishing the copy of recorded reasons is not mere procedural lapse, reassessment was held to be bad in law – There was no estoppel against an assessee, on account of participating in the proceedings, as long as it had raised an objection in writing regarding the failure by the Assessing Officer to follow the prescribed procedure [Ss.148, 292BB(1)]

    Dismissing the appeals of the Revenue, the Court held that Non-furnishing the copy of recorded reasons is not mere procedural lapse, reassessment was held to be bad in law. According to the proviso to Section 292BB(1)there was no estoppel against an assessee, on account of participating in the proceedings, as long as it had raised an objection in writing regarding the failure by the Assessing Officer to follow the prescribed procedure. No question of law arose. (AY.1999-2000 to 2004-05 )

    PCIT v. Jagat Talkies Distributors (2017) 398 ITR 13 (Delhi)(HC)

  53. S.153 : Assessment – Time limit- When the assessment was set aside the same has to be completed within limitation period, it is not necessary that entire assessment order is set aside – Order passed was held to be beyond period of limitation hence quashed. [S. 153(2A)]

    Allowing the appeal of the assessee the Court held that when the assessment was setaside the same has to be completed within limitation period, it is not necessary that entire assessment order is set aside. Accordingly order passed was held to be beyond period of limitation hence quashed. (AY. 2007-08)

    Nokia India (P) Ltd. (2017) 251 Taxman 85 / 298 CTR 334 (Delhi)(HC)

  54. S.153 : Assessment – Reassessment – Limitation period between vacation of stay and receipt of order by Income-tax Department is not excluded hence the order of reassessment passed is barred by limitation. [Ss. 147, 148]

    Allowing the petition, the Court held that ; the Revenue could not take advantage of the fact that it received a copy of the order dated November 9, 2016 of the Court only on December 2, 2016 to contend that the assessment order having been passed on January 30, 2017 within 60 days of the date of the receipt of the order of the High Court, was not issued beyond the period stipulated under Section 153(2) of the Act read with the proviso to Explanation 1 thereof. The order dated November 9, 2016 was passed in the presence of counsel for the Revenue and, therefore, the Revenue clearly was aware of the order on that date itself. The order dated January 30, 2017 was time-barred. (AY. 2006-07)

    Saheb Ram Om Prakash Marketings P. Ltd v. CIT (2017) 398 ITR 292 (Delhi)(HC)

  55. S.153A : Assessment – Search –Assessment can be made only on the basis of incriminating evidence found during search, whether assessment u/s. 143(1) or 143(3) does not make any difference [Ss. 132, 143(1), 143(3)]

    Dismissing the appeal of the Revenue the Court held that; the scope of assessment under section 153A was limited to the incriminating evidence found during the search and no further. Section 153A of the Income-tax Act, 1961 did not make any distinction between the assessment conducted under section 143(1) and Section 143(3). (AY. 2002-03, 2003-04)

    CIT v. SKS Ispat and Power Ltd. (2017) 398 ITR 584 (Bom.)(HC)

  56. S.158BE : Block Assessment – Time limit – Search of factory completed in May 1997 and last panchanama drawn on 14-8-1997. Subsequent restraint orders for purpose of seizure, hence the assessment order passed on 16-8-1999 was held to be barred by limitation [Ss. 132, 158BC]

    Allowing the appeal, the Court held that the search proceeding continued up to August 16, 1997, but the subsequent restraint orders were only for the purpose of seizure, no further search material was found and specifically the panchanama drawn on that date, and therefore, the assessment order passed under Section 158BC on August 16, 1999 was barred by limitation. The order passed by the Tribunal and the Assessing Officer were set aside.

    Mohd. Yasin v. CIT (2017) 398 ITR 33 (Raj.)( HC)

  57. S.158BE : Block assessment –Time limit – Panchanama – when nothing new is found in second panchanama limitation cannot be extended [Ss. 153A, 153B]

    Dismissing the appeal of the Revenue, the Court held that when nothing new is found merely visiting the premises on the pretext of concluding the search but not actually finding anything new for being seized could not give rise to a second panchanama. In such event, there would be no occasion to draw up a panchanama at all. The second visit by the search party to the premises on May 15, 2007 did not result in anything new being found that belonged to any of the searched parties. The second visit and the panchanama drawn up on that date could not lead to postponement of the period for completion of assessment with reference to section 153B(2)(a). The assessments were barred by limitation (AYs. 2001-02 – 2006-07)

    PCIT) v. J. H. Business India P. Ltd. (2017) 398 ITR 71 (Delhi)( HC)

  58. S.179 : Private Company – Liability of directors – without giving an opportunity to prove that non-recovery of tax due against company could not be attributed to any gross negligence, misfeasance or breach of duty on her part in relation to affairs of company, provision could not be invoked against directors

    Allowing the petition the Court held that without giving an opportunity to prove that non-recovery of tax due against company could not be attributed to any gross negligence, misfeasance or breach of duty on her part in relation to affairs of company, provision could not be invoked against directors. (AY. 2004-05)

    Susan Chacko Perumal v. ACIT (2017) 249 Taxman 501 (Guj.)(HC)

  59. S.194H : Deduction at source – Commission or brokerage –Principal-to-principal – Discount did not amount to a payment hence not liable to deduct tax at source. [S. 201, 201-IA, 271, Contract Act, S. 182]

    An obligation to deduct tax at source arises only if the relationship is that of “principal and agent” and if a “payment” is made. As the relationship between the assessee and the distributor was that of “principal-to-principal” and as the “discount” did not amount to a “payment”, there was no liability to deduct TDS. Contention regarding provisions of Section 271 of the Act, in view of our answer in favour of assessee, this issue is also required to be answered in favour of assessee. Even otherwise as rightly held by the Supreme Court in
    CIT v. Eli Lilly & Co. (India) P. Ltd. the penalty could not have been levied in all the appeals filed by assessee Coca Cola. (ITA No. 205/2005, dt. 11-7-2017)

    Hindustan Coca Cola Beverages Pvt. Ltd. v. CIT (Raj)(HC); www.itatonline.org

  60. S.206AA : Requirement to furnish Permanent Account Number –where the non-resident payee is resident in a territory with which India has a Double Taxation Avoidance Agreement, the rate of taxation would be as dictated by the provisions of the treaty-DTAA–India-Singapore [Ss. 4, 5, 90, Art. 12]

    Allowing the petition, the Court held that the requirement (pre-amendment) that TDS should be deducted at 20% on payments to non-residents even though the income is chargeable to tax at a lower rate under the DTAA is not acceptable because the DTAA has primacy over the Act. Section 206AA (as it existed) has to be read down to mean that where the non-resident payee is resident in a territory with which India has a Double Taxation Avoidance Agreement, the rate of taxation would be as dictated by the provisions of the treaty. (WP No. 5908/2015, dt. 5-2-2018)

    Danisco India Private Ltd. v. UOI (Delhi)(HC), www.itatonline.org

  61. S. 222 : Collection and recovery – Certificate to Tax Recovery Officer – TRO was not permitted to bring property for sale because of limitation period, it would be assessee’s duty to pay tax [Schedule II, Rule 68B]

    Allowing the petition the Court held that ; since there was an order of attachment in year 2003, but property was not sold within 3 years from date of attachment, same could no more be sold by Revenue. Therefore the order of attachment passed by TRO and consequential proceeding of Sub-Registrar were to be quashed and Sub-Registrar was to be directed to remove encumbrance made in respect of said property. Court also held that since the TRO was not permitted to bring property for sale because of limitation period, it would be assessee’s duty to pay tax.

    T. Subramanian v. TRO (2107) 249 Taxman 170 (Mad.)(HC)

  62. S. 226 : Collection and recovery – Stay of proceedings – Deduction at source – Appeal pending before CIT(A) – Refusal to extend stay merely because the assessee had funds was held to be not proper, when the Board has given instructions that stay must be granted on paying 15% of tax in dispute when appeal is pending before CIT(A) [S. 225, Art. 226]

    Allowing the petition the Court held that earlier stay granted and extended from time-to-time on the basis of a binding Central Board of Direct Taxes circular which directs officers of the Revenue to grant stay till the disposal of the first appeal on payment of 15 per cent disputed amount. This circular was completely ignored. Merely having funds, i.e., no financial hardship, would not by itself justify the deposit where a prima facie case was made out. Nowhere had the delay in disposal of the pending appeals before the appellate authority been attributed to the assessee. The petition was adjourned and ad interim stay was granted restraining the authorities from taking any coercive steps to recover the amount of ₹ 43.79 crores or any part thereof being the outstanding demand in respect of the pending appeals before the Commissioner (Appeals) till the next date. (AY. 2000-01 to 2012-2013)

    Vodafone India Ltd. v. CIT (2018) 400 ITR 516 (Bom.) (HC)

  63. S.226 : Collection and recovery – Stay – PCIT & ACIT directed to pay personal costs for filing frivolous writ petition to challenge ITAT stay order [S. 254(2A)]

    Dismissing the petition of the revenue , the Court held that raising unsustainable, illegal and high pitched demands and enforcing coercive recovery and challenging stay orders shows utterly irresponsible and unfair behaviour. Thereafter, seeking adjournments by the Dept. of the hearing in the ITAT adds insult to injury. Irresponsible and unco-ordinated manner of the Dept. strongly deprecated. PCIT & ACIT directed to pay personal costs for filing frivolous writ petition to challenge ITAT stay order. (WP No 12913 / 2017 dt. 9-1-2018)

    ACIT v. Epson India Pvt. Ltd. (Karn. (HC), www.itatonline.org

  64. S.226 : Collection and recovery – Recovery of the amount in dispute as soon as the order passed by the Appellate Authority, though the limitation period for filing an appeal was not over cannot be said to be illegal, though it may not be proper. [S. 226(3), 237, 240]

    Dismissing the petition, the Court held that ; recovery of the amount in dispute as soon as the order passed by the Appellate Authority, though the limitation period for filing an appeal was not over, cannot be said to be illegal, though it may not be proper. Appeal was disposed of and was communicated on 30-3-2017. Demand was recovered from bank account of assessee on very next day i.e., 31-3-2017. Court also held that although assessee’s appeal was pending before Tribunal, it was not entitled for refund of amount recovered at this stage, as a matter of right, since neither section 237 nor section 240 would come to their rescue as on date. (AYs. 2009-10, 2010-11, 2013-14)

    Chennai Central Co-operative Bank Ltd. v. ACIT (2017) 248 Taxman 366 (Mad.)(HC)

  65. S. 234B : Interest – Advance tax –Assessee was under no obligation to pay advance tax and the liability arose only on account of retrospective amendment to the law after the conclusion of the previous year relevant to the subject assessment year

    Dismissing the appeal of the Revenue, the Court held that the Tribunal was right in deleting the interest charged under Section 234B of the Income-tax Act, 1961 on the basis that at the time of making the payment of advance tax the assessee was under no obligation to pay advance tax and the liability arose only on account of retrospective amendment to the law after the conclusion of the previous year relevant to the subject assessment year. (AY. 2008-09)

    CIT v . Glenmark Pharmaceuticals Ltd. (2017) 398 ITR 439 (Bom)(HC)

    Editorial: SLP is granted to the Revenue CIT v. Glenmark Pharmaceuticals Ltd. (2017) 397 ITR 30 (St.)

  66. S.253 : Appellate Tribunal –Delay of 1,631 days – Chartered Accountant engaged in the matter, was unaware of the fact that an appeal could be filed against the order of the Commissioner to the Tribunal – Delay was condoned [Ss.12AA, 254(1)]

    Allowing the petition the Court held that Chartered Accountant engaged in the matter, was unaware of the fact that an appeal could be filed against the order of the Commissioner to the Tribunal. Hence the delay of 1631 days, was condoned. Tribunal was directed to decide the issue on merits.

    United Christmas Celebration Committee Charitable Trust v. ITO (2017) 249 Taxman 372 (Mad.)(HC)

  67. S.254(1) : Appellate Tribunal –Duties – Adopting a short-cut in rendering order, large portions were lifted verbatim from order of Assessing Officer as well as from remand order of High Court setting out facts, reasoning and conclusion was held to be not proper, matter was once again set aside to the Tribunal

    Allowing the petition, the Court held that ; adopting a short-cut in rendering order, large portions were lifted verbatim from order of Assessing Officer as well as from remand order of High Court setting out facts, reasoning and conclusion was held to be not proper, matter was once again set aside to the Tribunal.

    Arun Malhotra v. P CIT (2017) 248 Taxman 317 (Delhi)(HC)

  68. S.254(2) : Appellate Tribunal –Rectification of mistake apparent from the record – Where an application for rectification was rejected, second application cannot be made on same grounds

    Dismissing the appeal of the Revenue, the Court held that, where an application for rectification was rejected, second application cannot be made on same grounds. (AYs. 2006-07, 2007-08)

    PCIT v. Navjivan Roller Flour and Pulse (2017) 398 ITR 62 (Guj.)(HC)

  69. S.255 : Appellate Tribunal – Third member – Third member has to decode specific points referred for his opinion and he cannot sit in appeal over entire matter and take decision independently [S. 255(4)]

    Allowing the appeal of the Revenue, the Court held that third member has to decode specific points referred for his opinion and he cannot sit in appeal over entire matter and take decision independently. Accordingly the order and approach of the third member was patently erroneous, illegal, impermissible and constitutionally unsustainable in law rendering the order passed by the Regular Bench, unsustainable. The President of the Tribunal was to nominate another Bench to take a decision on the matter.

    CIT v. Sahara India Ltd. (2017) 398 ITR 301 (All)(HC)

  70. S.260A : Appeal – High Court –Administrative reasons cannot be the ground for filing defective appeal – Repetitive notice of motions cannot be filed for recall of speaking orders – Dismissal of appeal was held to be justified. [Bombay High Court (Original side) Rules, 1980, R. 986]

    The Department’s appeal to the High Court for setting aside an order of the Appellate Tribunal dated November 19, 2015, was rejected by the Prothonotary and Senior Master under Rule 986 of the Bombay High Court (Original Side) Rules, 1980. The first notice of motion taken out by the Department was dismissed on April 22, 2016, after hearing the parties and passing a speaking order. Thereafter, the Department took another notice of motion to recall the order dated April 22, 2016, which was rejected by a speaking order dated August 19, 2016. On the third notice of motion: Dismissing the notice of motion, the Court held that the Department failed to remove the office objections which had resulted in the appeal itself being rejected by the Prothonotary and Senior Master. Administrative difficulties could not be a reason for filing an appeal which was defective. It was not the case of the Department that any new evidence was discovered after the passing of the order or that there was any mistake apparent on record which justified the review of the order. Repeated applications for recall of speaking orders passed after hearing the parties could not be filed.

    CIT (E) v. Maharashtra Industrial Development Corpn. (2017) 398 ITR 29 (Bom.)(HC)

    Editorial: SLP of revenue is dismissed; CIT(E) v. Maharashtra Industrial Development Corpn. (2017) 397 ITR 1 (St)

  71. S.260A : Appeal – High Court –Review petition is not to be barred even when SLP preferred against order of which review is sought, has been dismissed as withdrawn

    The assessee preferred SLP against the judgment of the High Court. After some arguments, the assessee sought permission to withdraw the Special Leave Petition with liberty to move the High Court in a review petition. The respondent raised a preliminary objection to the very maintainability of the review petition on the ground that the Special Leave Petition (SLP) preferred against the order of which review was sought having been dismissed, the Court could not review its judgment. Dismissing the objection the Court held that, review petition is not to be barred even when SLP preferred against order of which review is sought has been dismissed as withdrawn.

    Kanoria Industries Ltd. v. UOI (2017) 249 Taxman 267 (Delhi)(HC)

  72. S. 271(1)(c) : Penalty – Concealment – Admission of appeal by High Court – There can be no universal rule to the effect that no penalty can be levied if quantum appeal is admitted on a substantial question of law [S.260A]

    Admitting the appeal of the Revenue, the Court held that the law in CIT v. Nayan Builders & Developers (2014) 368 ITR 722 (Bom.)
    does not mean as a matter of rule that in case where the High Court admits an appeal relating to quantum proceedings ipso facto i.e., without anything more, the penalty order gets vitiated. The question of entertaining an appeal from an order imposing / deleting penalty would have to be decided on a case-to-case basis. There can be no universal rule to the effect that no penalty can be levied if quantum appeal is admitted on a substantial question of law. In fact, the admission of an appeal in quantum proceedings, if arising on a pure interpretation of law or on a claim for deduction in respect of which full disclosure has been made, may, give rise to a possible view, that admission of appeal in the quantum proceedings would suggest no penalty can be imposed as it is a debatable issue. However, it cannot be a universal rule that once an appeal from the order of the Tribunal has been admitted in the quantum proceedings, then, ipso facto the issue is a debatable issue warranting deletion of penalty by the Tribunal. There could be cases where the finding of the Tribunal in quantum proceedings deleting addition could be perverse, then, in such cases, the admission of appeal in quantum proceedings would indicate that an appeal against deletion of penalty on the above account will also warrant admission (ITA No. 701 of 2015, dated 6-2-2018)(AY. 2006-07)

    PCIT v. Shree Gopal Housing & Plantation Corporation (Bom.)(HC), www.itatonline.org

  73. S.271(1)(c) : Penalty – Concealment – The requirement to obtain previous approval of the IAC is mandatory as it is to safeguard the interests of the assessee against arbitrary exercise of power by the AO, however before approval opportunity must be given to explain the specific charge is not mandatory [S. 274]

    On reference by assessee the Court held that the requirement to obtain previous approval of the IAC is mandatory as it is to safeguard the interests of the assessee against arbitrary exercise of power by the AO. Non-compliance may vitiate the penalty order. However, the requirement in s. 274 that the assessee must be given a reasonable opportunity of being heard cannot be stretched to the extent of framing a specific charge or asking the assessee an explanation in respect of the quantum of penalty proposed to be imposed. There was no arbitrary exercise of discretion and the reasons are recorded after taking into consideration the explanation submitted by the assessee. The exercise of jurisdiction in respect of quantum of penalty is neither unjust nor beyond jurisdiction. (ITR No. 21 of 2008, dated 22-7-2017)

    Maharaj Garage & Company v. CIT ( 2018) 400 ITR 292 (Bom)(HC)

  74. S.271(1)(c) : Penalty – Concealment – In the absence of any overt act, which disclosed conscious and material suppression, invocation of Explanation 7 to s. 271(1)(c) in a blanket manner could not only be injurious to the assessee but ultimately would be contrary to the purpose for which it was engrafted in the statute. Deletion of penalty was held to be justified. [S. 92C, 271(1)(c ), Expl. 7]

    Dismissing the appeal of the revenue, the Court held that in the absence of any overt act, which disclosed conscious and material suppression, invocation of Explanation 7 to s. 271(1)(c) in a blanket manner could not only be injurious to the assessee but ultimately would be contrary to the purpose for which it was engrafted in the statute. It might lead to a rather peculiar situation where the assessees who might otherwise accept such determination may be forced to litigate further to escape the clutches of Explanation 7. (ITA 460/2016, C.M. APPL.26591/2016, dt. 22-8-2016)(AY.2007-08)

    PCIT v. Verizon India Pvt. Ltd. (Delhi)(HC); www.itatonline.org

  75. S.271(1)(c) : Penalty – Concealment – The AO must specify whether the charge is of concealment of particulars of income or furnishing of inaccurate particulars thereof and which one of the two is sought to be pressed into service. He is not permitted to club both by interjecting an ‘or’ between the two

    Dismissing the appeal of the revenue, the Court held that penalty can be levied only where the charge is unequivocal and unambiguous. The AO must specify whether the charge is of concealment of particulars of income or furnishing of inaccurate particulars thereof and which one of the two is sought to be pressed into service. He is not permitted to club both by interjecting an ‘or’ between the two. The ambiguity in the show-cause notice compounded by the confused finding of the AO that he was satisfied that the assessee was guilty of both renders the proceedings void (K. P. Madhusudhanan 251 ITR 99 (SC) & MAK Data 358 ITR 593 (SC) distinguished. (ITA No. 684 of 2016, dt. 13-7-2017)

    PCIT v. Baisetty Revathi(AP)(HC); www.itatonline.org

  76. S.271AAA : Penalty – Search initiated on or after 1st June, 2007 – Additional condition of having to substantiate manner in which undisclosed income was earned, only if revenue raises question regarding manner in which undisclosed income was earned while recording assessee’s statement. The cancellation of penalty was justified [S.132(4)]

    Dismissing the appeal of the Revenue the Court held that the additional condition of having to substantiate manner in which undisclosed income was earned, only if Revenue raises question regarding manner in which undisclosed income was earned while recording assessee’s statement. the Commissioner (Appeals) was specific that no question was put to the assessee while recording his statement under section 132, regarding the manner of deriving the undisclosed income hence the cancellation of penalty was justified.
    (AY. 2010-11)

    PCIT v. Mukeshbhai Ramanlal Prajapati (2017) 398 ITR 170(Guj) (HC)

  77. S.276C : Offences and prosecutions – Wilful attempt to evade tax – Depreciation on land – A claim in the return which is scrutinised by the auditors and the directors cannot be considered as a mere accounting mistake, hence order of the learned Magistrate is upheld. [S. 277, CRPC, 1973, S. 397]

    Dismissing the revision application of the petitioner the Court held that claim of depreciation was made in the return which is scrutinised by the auditors and the directors cannot be considered as a mere accounting mistake, hence order of the learned Magistrate is upheld. (CRL. REVP 16 /2015 dt. 23-11-2017)

    Ambience Hospitality Pvt Ltd v.Dy .CIT ( 2018) 161 DTR 36 ( Delhi) (HC)

  78. S.276CC : Offences and prosecutions – When High Court has given direction to consider the application for compounding, pendency of appeal against conviction could no longer be a reason for refusing consideration for compounding of offence

    Allowing the petition, the Court held that; When High Court has given direction to consider the application for compounding,pendency of appeal against conviction could no longer be a reason for refusing consideration for compounding of offence, within meaning of clause 4.4(f) of Guidelines dated 16-5-2008.

    Government of India, Ministry of Finance, Department of Revenue (CBDT) v. R. Inbavalli (2017) 249 Taxman 476 (Mad.)(HC)

  79. S.279 : Offences and prosecutions – Compounding of offences – Guidelines on compounding of offences dated 23-12-2014 prescribing eligibility conditions and the formula for calculating the compounding fee are valid or unreasonable [Ss.119, 276, 277, 278]

    The Guidelines of 2014, under which the last application for compounding was made, and was accepted to be in the prescribed format, has enured to the benefit of the petitioner and the application has rightly been processed under these Guidelines. The petitioner has not raised a challenge either to the 2008 Guidelines or 2003 Guidelines. It is only after the charges were framed in the criminal proceedings and after filing the applications for compounding and after compounding charges have been determined as per the formula prescribed in the 2014 Guidelines, that the challenge has been raised by the petitioner. The petitioner having voluntarily agreed and undertaken to the department to pay the compounding charges and to withdraw his appeal, ought to be directed to be bound down by the same. It is a settlement process voluntarily invoked by the petitioner in order to escape criminal prosecution under the Act. Since an accused may have to suffer severe consequences for non-payment of tax, if he is held to be guilty, it is not open to him to challenge the reasonableness of the same. The petitioner had consciously undertaken to abide by the decision of the Committee constituted for compounding the offences. (W.P.(C) 6268/2017, dt. 23-1-2018)

    Vikram Singh v. UOI ( 2017) 394 ITR 746/ 247 Taxman 212 (Delhi)(HC)

  80. Interpretation – Binding precedent – Interpretations given by High Courts and Tribunals cannot be ignored by the Assessing Officers

    Allowing the reference of the assessee, the Court states that in fact, the written submission of Revenue, states “Litera leges, certainty concept and the concept that there is no equity on fiscal law irrespective of any judgment of any Honourable Court or Tribunal to go by cannot be given to the aforesaid interpretations given in this written submission”

    The above submission that decision of Court and/or Tribunal interpreting a provision is to be ignored by the Assessing Officer, if accepted, will ring the death knell of Rule of law in the country. The Assessing Officer is bound by the views of the Court. The above submission ignores the hierarchical system of jurisprudence in our country. (ITA No. 25 of 2000, dt. 23-2-2018)(AY. 1993-94)

    Bajaj Auto Fianance Ltd. v. CIT (Bom.)(HC), www.itatonline.org

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