Research Team

87. S.2(14)(iii) : Capital asset – Agricultural land – Classified as dry land for which Kishtu had been paid – Adjacent land was divided into plots for sale cannot be the ground to reject the claim of the assessee. [S.45, 260A]

    Assessee sold agricultural land and claimed exemption. AO rejected the claim on the ground that the assessee had not utilised land for agricultural purpose. Tribunal held that records were showing that lands were agricultural land, classified as dry land for which Thisthu had been paid. Tribunal also held that the merely because of adjacent land was divided into plots for sale was not a reason to held that land sold by assessee was for purpose of development land in question cannot be treated as capital asset. Order of Tribunal is up held by the High Court. (AY.2012-13)

    CIT v. Venkateswara Hospital (2019) 106 taxmann. com 282 / 264 Taxman 90 (Mad)(HC)

    Editorial: SLP of revenue is dismissed, CIT v. Venkateswara Hospital (2019) 264 Taxman 89 (SC)

88. S. 2(22)(e) : Deemed dividend – Income cannot be taxed in the hands of the shareholders unless it is shown that the monies have been received by them.

    Where provisions of deemed dividend were invoked in the hands of the borrower company on account of the fact that the same shareholders held substantial interest in the lending and the borrowing company, the amount of deemed dividend cannot be brought to tax in the hands of the said shareholders unless it is shown that they have actually received the money. (AY. 2006-07)

    Ramesh V. v. ACIT (2019) 177 DTR 105 / 104 taxmann.com 292 (Mad.)(HC)

89. S. 4 : Charge of income-tax – Subsidy from foreign company – Capital receipt not liable to tax .

    Allowing the appeal of the assessee the Court held that in order to set up a joint venture in insurance sector, a foreign company gave capital subsidy to assessee in order to enable it to contribute its share in share capital of joint venture company, amount of subsidy so received was to be regarded as capital receipt not liable to tax. (AY. 2002-03)

    Sundaram Finance Ltd. v. ACIT (2019) 262 Taxman 465 / 413 ITR 298 (Mad)(HC)

90. S. 4 : Charge of income-tax – Capital or revenue–Sale of shares upon open offer – Additional consideration paid in terms of open offer due to delay in making offer and dispatch of letter offer – Capital receipt.

    Dismissing the appeal of the revenue the Court held that the additional amount received by the assessee was part of the offer from the sale of shares made by it. The additional sum was part of the sale price and retained the same character as the original price of the share. The additional receipt of the assessee relatable to this component was a capital receipt.

    CIT v. Morgan Stanley Mauritius Co. Ltd. (2019) 413ITR332/308CTR139(Bom)(HC)

91. S. 5 : Scope of total income – Accrual – Method of ccounting  – Amount retained under contract to ensure there are no defects in execution of contract – Amount retained did not accrue hence cannot be taxed on accrual basis. [S.145]

    Dismissing the appeal of the revenue the Court held that by the specific terms of the contract itself, the awarder was entitled to retain the amounts so as to rectify any defects arising in the period in which as per the terms of the contract the amount was retained. There could be no accrual found on the completion of contract, since the assessee’s right to such amount would depend on there being no defects arising in the subsequent period during which the awarder was enabled retention of such amounts. (AY. 2002-03 to 2005-06)

    CIT v. Chandragiri Construction Co. (2019) 415 ITR 63 (Ker)(HC)

92. S. 10AA : Special economic zones – Reconstruction – Sole proprietorship was not been shifted to firm – Only Capital received from sole proprietorship- Not a reconstruction – Entitle to exemption. [S.10AA(4)(iii)]

    Sole proprietor has introduced his capital to partnership. AO denied the exemption on the ground that it was reconstruction of business. On appeal the Tribunal held that apart from capital received from proprietorship concern, huge amount of fresh capital had also been introduced to the firm and assets appearing in balance sheet of old concern i.e. sole proprietorship, had not been shifted to the firm hence it is not a reconstruction.

    High Court up held the order of the Appellate Tribunal. (AY. 2007-08)

    PCIT v. Green Fire Exports (2019)106 taxmann. com 32 / 263 Taxman 676 (Raj) (HC)

    Editorial: SLP of revenue is dismissed, PCIT v. Green Fire Exports (2019) 263 Taxman 675 (SC)

93. S. 10AA : Special economic zones – Conditions in section 10AA(4) are to be satisfied on a unit wise basis and not on an entity basis – Once the claim was allowed in the first year, it could not be denied in the third year. [S.10AA(4)]

    An assessee which had existing units in an SEZ and was claiming benefits under section 10AA, set up a new unit in the SEZ, with new plant and machinery and sought exemption under section 10AA on the profits earned from the said new units. The AO denied such exemption in the third year of claim on the ground that the new unit was formed by splitting or reconstruction of the existing business. Held that the conditions stipulated under section 10AA have to be satisfied on a unit wise basis and not on an entity basis. Simply because the assessee was carrying on the same business through existing units does not mean that the new unit, setup with new plant and machinery, will said to have been formed by splitting or reconstruction of business. Further, once the claim was allowed in the first year, it could not be denied in the third year. Accordingly, the issue was to be decided in assessee’s favour. (AY. 2013-14)

    PCIT v. Macquarie Global Services (P) Ltd. (2019) 178 DTR 27 / 102 taxmann.com 272 (Delhi)(HC)

94. S. 11 : Property held for charitable purposes – Registration granted – AO cannot revisit objects again while examining compliance with S.11 of the Act. [S.2(15), 12A]

    Dismissing the appeal of the revenue the Court held that once registration was granted to assessee trust under S. 12A the AO while examining compliance with S. 11 cannot revisit objects of assessee again. Followed ACIT v. SuratCityGymkhana(2008)370ITR214(SC).

    (AY. 2008-09)

    DIT(E) v. Gemological Institute of India (2019) 105 taxmann.com 179 / 263 Taxman 349 (Bom) (HC)

    Editorial: SLP of revenue is dismissed on the ground of low tax effect DIT(E) v. Gemological Institute of India (2019) 263 Taxman 348 (SC)

95. S. 14A : Disallowance of expenditure – Exempt income – Interest – Disallowance can be only on net interest on the loan. [R.8D]

    Dismissing the appeal of the revenue the Court held that disallowance can be only on net interest on the loan. (AY. 2008-09)

    CIT v. Jubiliant Enterprises P. Ltd. (2019) 416 ITR 58 (Bom) (HC)

    Editorial: SLP is granted to the revenue, CIT v. Jubiliant Enterprises P. Ltd. (2017) 397 ITR 32(St)

96. S. 14A : Disallowance of expenditure – Exempt income – AO cannot reject the disallowances offered by the assessee, without adducing any reasons.[R.8D]

    High Court held that the AO cannot reject the disallowances offered by the assessee, without adducing any reasons.

    PCIT v. Moonstar Securities Trading and Finance Co. (P.) Ltd. (2019) 105 taxmann.com 274 / 263 Taxman 459 (Delhi) (HC)

    Editorial: SLP of revenue is dismissed, PCIT v. Moonstar Securities Trading and Finance Co. (P.) Ltd. (2019) 263 Taxman 458 (SC)

97. S. 14A : Disallowance of expenditure – Exempt income – In absence of any exempt income disallowance cannot be made. [R.8D]

    Affirming the order of the Tribunal the Court held that In absence of any exempt income disallowance cannot be made. Followed CheminvestLtd.v.CIT(2015)378ITR33(Delhi)

    (HC) (AY. 2013-14)

    PCIT v. GVK Project and Technical Services Ltd. (2019)106 taxmann.com 180 / 264 Taxman 77 (Delhi)(HC)

    Editorial: SLP of revenue is dismissed, PCIT v. GVK Project and Technical Services Ltd. (2019) 264 Taxman 76 (SC)

98. S. 14A : Disallowance of expenditure – Exempt income – Disallowance cannot be made when there is no income exempt from tax. [R. 8D]

    Dismissing the appeal of the revenue the Court held that, disallowance cannot be made when there is no income exempt from tax. Referred Maxopp Investment Ltd. v. CIT (2018) 402 ITR 640 (SC) (AY. 2009-10)

    PCIT v. Caraf Builders and Constructions Pvt. Ltd. (2019) 414 ITR 122 / 261 Taxman 47 (Delhi) (HC)

99. S. 28(i) : Business income – Income from house property – Shopping mall – Commercial exploitation – Facilities and services – Income derived by assessee by letting out shops in mall had to be assessed as income from business and not as income from house property. [S. 22]

    Court held that the assessee had earned income not merely by letting out shop rooms but also by providing amenities and facilities at shopping mall. Such amenities and facilities were special facilities for running shopping mall and were meant to attract customers and provide them comfort and convenience of shopping. Accordingly the income derived by assessee by letting out shops in mall had to be assessed as income from business and not as income from house property. (AY. 2009-10)

    CIT v. Oberon Edifices & Estates (P.) Ltd. (2019) 263 Taxman 377 (Ker.)(HC)

100. S. 28(i) : Business loss- Speculative transaction – Damages – Palm oil – Damages paid for not honouring commitments to take delivery against some purchase orders placed on foreign sellers – Allowable as business loss – Not speculative loss. [S.43(5)]

     Assessee did not honour its commitment to take delivery against some purchase orders placed on foreign sellers consequent upon price of palm oil declining. Damages paid was claimed as business loss. AO held that the loss is speculative loss. Tribunal allowed the loss as business loss. Dismissing the appeal of the revenue High Court held that when a party in breach accepts claim for damages, what actually happens is disposal of a dispute and not any settlement of kind that is envisaged by word settled used in S 43(5). Accordingly up held that order of the Tribunal.

     CIT v. Ambo Agro Products (P.) Ltd. (2018) 257 Taxman 156 (Cal) (HC)

     Editorial: SLP of revenue is dismissed, CIT v. Ambo Agro Products (P.) Ltd. (2019) 264 Taxman 167(SC)

101. S.28(i) : Business loss – Bank guarantee – Loss due to encashment of bank guarantee is allowable as business loss.

     Dismissing the appeal of the revenue the Court held that loss due to encashment of bank guarantee is allowable as business loss. (AY. 2002-03 to 2005-06)

     CIT v. Chandragiri Construction Co. (2019) 415 ITR 63 (Ker) (HC)

102. S.28(i) : Business Loss – Embezzlement of cash by director – Recovery of amount or outcome of pending criminal prosecution against director before Metropolitan Magistrate is irrelevant – Allowable as deduction. [S.36(2), 37(1)]

     Dismissing the appeal of the revenue the Court held that the embezzlement by one of the directors or an employee of the business of the assessee during the ordinary course of business would be a business loss irrespective of the criminal prosecution of the director or employee. The final outcome of the criminal proceedings or recovery of the amount in question would not determine the claim of the assessee in the assessment year 2012-13 when it was written off as a business loss. The Tribunal had rightly held it to be a business loss as it was treated to be only a pilferage of the assessee-company’s funds by a director on the board of the company. (AY. 2012-13)

     PCIT v. Saravana Selvarathnam Trading And Manufacturing Pvt. Ltd. (2019) 415 ITR 146 (Mad) (HC)

103. S. 32 : Depreciation – Additional depreciation – Revision of orders prejudicial to revenue – Tribunal allowed assessee’s claim for additional depreciation by following order of jurisdictional High Court – Revision is held to be not valid. [S.263]

     AO allowed assessee’s claim for additional depreciation. CIT passed revision order and directed the AO to reframe assessment. Tribunal setaside the revisional order. High Court affirmed the order of Tribunal following the jurisdictional High Court in CIT v. Continental Ware Housing Corporation (Nhava Sheva Ltd. (2015) 374 ITR 645
     (Bom) (HC) and CIT v. Murli Agro Products Ltd (2014) 49 taxmann.com 172 (Bom) (HC). Revenue authorities, however, pointed out that Tharnataka High Court in
     Canara Housing Development Co. v. Dy CIT (2014) 49 Taxmann.com 98 (Karn)(HC) on similar issue had taken a different view. High Court held that the Tribunal was bound by decision of jurisdictional High Court. (AY.2006-07)

     PCIT v. Jitendra J. Mehta (2019) 104 Taxman.com 448 / 263 Taxman 6 (Bom) (HC)

     Editorial: SLP of revenue is dismissed, PCIT v. Jitendra J. Mehta (2019) 263 Taxman 5 (SC)

104. S.32 : Depreciation – Unabsorbed depreciation – Carry forward and set off – Eligible and for carry forward and set off against business profits. [S.32(2)]

     Dismissing the appeal of the revenue the Court held that the Tribunal was justified in directing the Assessing officer to allow carry forwardand set off unabsorbed depreciation against the business profits. (Followed General Motors India(P)Ltd()354ITR244(Guj)(HC)PCITv. AssociatedCables(P)LtdITANO293of2016dt 02-08-2018, CIT v. Confidence Petroleum (I) Ltd ITA No 582 of 2014 CIT v. Milton’s (P) Ltd ITA No 2301 of 203, Times Guaranty Ltd. v. Dy DIT, ITA No 841 of 2011 and 842 of 2011 of 2011) (AY. 2008-09)

     CIT v. Associated Cables (P.) Ltd. (2019) 105taxmann.com 113 / 263 Taxman 251 (Bom) (HC)

     Editorial: SLP of revenue is dismissed; CIT v. Associated Cables (P.) Ltd. (2019) 263 Taxman 250 (SC)

105. S. 32 : Depreciation – Intangible asset – Non-compete fee – The expression “or any other business or commercial rights of similar nature” used in Explanation 3 to sub-section 32(1)(ii) is wide enough to include non-compete rights – Eligible for depreciation. [S.32(i(ii)]

     Dismissing the appeal of the revenue the Court held that, rights acquired under a non-compete agreement gives enduring benefit & protects the assessee’s business against competition. The expression “or any other business or commercial rights of similar nature” used in Explanation 3 to sub-section 32(1)(ii) is wide enough to include non-compete rights , hence eligible depreciation. Followed (2018)PCIT v. Ferromatic Milacron India (P) Ltd (2018) 99 Taxman.com 154 (Guj)(HC) (ITA No. 556 of 2017, dt. 11.06.2019)

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

106. S. 35 : Scientific research – Weighted deduction – Research and Development – Expenditure on development of “Research and Development’ facility was allowable even though approval of concerned Ministry of Central Government was under consideration or awaited. [S.35(2AB)]

     Assessee submitted that approval from concerned Ministry of Central Government for year in question was under active consideration and awaited. The Revenue disallowed assessee’s claim on the ground that it did not produce approval from the prescribed authorities for the current year. However, such approval was available for both the periods prior and subsequent to the current year. On appeal to the Tribunal, the assessee produced Form 3CM approving the in-house Research and Development facility. The approval was from 1-4-2003 to 31-3-2005. The Tribunal held that the approval received for the subsequent years as such should be looked into for the earlier years on retrospective basis. The Tribunal granted weighted deduction. On appeal by the revenue dismissing the appeal the Court held that the assessee could not be punished for bureaucratic delay and since approval was on record for period anterior and posterior to year in question, claim of weighted deduction was allowable under section 35(2AB). (AY. 2003-04)

     CIT v. TVS Electronics Ltd. (2019) 263 Taxman 164 (Mad)(HC)

107. S. 36(1)(vii) : Bad debt – Held to be allowable though the principal amount debited to the principal amount never appeared as a debt on account of trade.

     Following the order in ITA No 1024 of 2018 dt 13-08 2018, in assesses own case appeal of the revenue is dismissed. Order of Tribunal allowing the bad debt is affirmed. (AY. 2003-04)

     PCIT v. Gujarat Lease Financing Ltd. (2019) 105 taxmann.com 156 263 Taxman 351 (Guj) (HC)

     Editorial: SLP of revenue is dismissed, PCIT v. Gujarat Lease Financing Ltd. (2019) 263 Taxman 350 (SC)

108. S.37(1) : Business expenditure – Capital or revenue – Replacement of components of existing machinery to maintain efficiency and production capacity – Held to be revenue expenditure.

     Dismissing the appeal of the revenue the Court held that replacement of components of existing machinery to maintain efficiency and production capacity is held to be revenue expenditure. (AY. 2009-10)

     CIT v. Gujarat Narmada Valley Fertilizer and Chemicals Ltd. (2019) 416 ITR 144 (Guj)(HC)

109. S. 37(1) : Business expenditure – Capital or revenue – Legal and professional expenses – Litigation expenses – Buy back of shares – Allowable as revenue expenditure.

     Assessee company debited legal and professional expenses incurred in relation to buyback of shares of company from its shareholders which pertained to reduction of share capital of company. AO held that expenditure incurred partook character of capital nature. Tribunal held that expenses incurred were in connection with existing business of assessee company and cannot be held to be enhance capital structure. High Court affirmed the order of the Tribunal. (AY. 2004-05)

     PCIT v. Bayer Vapi (P) Ltd. (2019) 264 Taxman 182 (Guj)(HC)

110. S. 37(1): Business expenditure – Cash credits – Bogus purchases – Despite admission by the assessee that the purchases were mere accommodation entries, the entire expenditure cannot be disallowed. Only the profit embedded in the purchases covered by the bogus bills can be taxed. The GP rate disclosed by the assessee cannot be disturbed in the absence of incriminating material to discard the book results. [S.68, 69,143(3)]

     The AO had made the addition on the ground that the assessee’s purchases were found to be bogus. The entire purchase amount was therefore, added to the assessee’s income. The Tribunal, however, restricted to the said sum of Rs.2,21,600/-. The Tribunal recorded that the AO has not rejected either the purchases or the sales made out of the said purchases. The Tribunal therefore, was of the opinion that the addition should be restricted to 10% of the total purchases. On appeal the High Court held that the Tribunal held that the Department had not rejected the instance of the purchases since the sales out of purchase of such raw material was accounted for and accepted. With above position, the Tribunal applied the principle of taxing the profit embedded in such purchases covered by the bogus bills, instead of disallowing the entire expenditure. Accordingly the order of Tribunal is affirmed. (ITA No. 413 of 2017, dt. 15.07.2019) (AY. 2005-06)

     PCIT v. Paramshakti Distributors Pvt. Ltd. (Bom) (HC),
     www.itatonline.org

111. S. 37(1) : Business expenditure – Cost of print and publicity – cost of production – Feature films – Expenditure were incurred after production and certification of film by Censor Boardwas – received – Not governed by Rule 9A – Allowable as revenue expenditure. [R.9A, 9B]

     AO held that expenditures were incurred by the assessee after issuance of certificate of Censor Board and, hence, he disallowed the assessee’s claim holding that such expenditure was not allowable deduction in terms of rule 9A and rule 9B. CIT(A) held that any expenditure which was not allowable under rule 9A could not be granted in terms of S. 37(1) of the Act. Tribunal allowed the claim of the assessee. On appeal by the revenue the Court held that expenditure on cost of print and publicity were incurred after production and certification of film by Censor Board was received. Accordingly the said expenditure is not governed by Rule 9A hence allowable as revenue expenditure. Court also held that even if the Commissioner’s contention that the expenditure would fall within rule 9A has to be accepted, there would be no implication of the assessee’s tax liability, since in the instant case, the feature film was exhibited long before the completion of 90 days period before the end of financial year. Even as per rule 9A, such expenditure was otherwise allowable. Be that as it may, on interpretation of the relevant statutory provisions, the Tribunal is absolutely correct. (AY. 2006-07, 2009-10)

     CIT v. Dharma Productions (P.) Ltd. (2019) 263 Taxman 585 / 308 CTR 809 / 177 DTR 321 (Bom.) (HC)

112. S.40(a)(ia) : Amounts not deductible – Deduction at source – Rejection of Books ofaccount – Estimation of profit @ 8% of turnover – No disallowance can be made u/s 40 of the Act. [S.145(3)]

     Court held that once the books of account were rejected and the profit was estimated at 8 per cent. of the turnover, the books of account could not be relied upon for the purpose of making addition under the provisions of S. 40 of the Act. (AY. 2004 -05)

     ACIT v. Salauddin (2019) 414 ITR 335 (Pat)(HC)

113. S. 41(1) : Profits chargeable to tax – Remission or cessation of trading liability – Cash credits – Liabilities doubted – Cannot be taxed u/s 41(1) [S.68]

     In the balance sheet the assessee had shown huge amount of sundry creditors. The AO doubted the genuineness of creditors appearing in balance sheet and taxed the said amount u/s 41(1) of the Act. Tribunal upheld the addition. On appeal allowing the appeal of the assessee the Court held that if existence of liabilities was doubted, same could have been disallowed in year in which it was claimed, or could have been treated as unexplained cash credit in hands of assessee under S. 68, but same could not be taxed under S. 41(1), inasmuch as if liability itself was not genuine, question of remission or cessation thereof would not arise. (AY.2010-11)

     Dattatray Poultry Breeding Farm (P.) Ltd. v. ACIT (2019) 263 Taxman 324 (Guj) (HC)

114. S. 43B : Certain deductions on actual payment – Payment of interest on delayed payment of custom duty is part of duty – Allowable as deduction in the year of payment.[S.37(1)]

     Dismissing the appeal of the revenue the Court held that Payment of interest on delayed payment of custom duty is part of duty – Allowable as deduction in the year of payment. Followed Mahalaxmi Sugar Mills Co v. CIT (1980)123ITR429(SC)(ITANo.809of2017,dt. 27.08.2019) (AY. 2007-08)

     PCIT v. M. J. Export Pvt. Ltd. (Bom)(HC), www.itatonline.org

115. S. 45(4) : Capital gains – Conversion of firm to Pvt. Ltd. company – revaluation and transfer of assets from firm to company – Same partners as share holders – No dissolution of firm – No transfer – Not liable to capital gains tax. [S.2(47), 45]

     Dismissing the appeal of the revenue the court held that when the firm converted in to company by revaluation of assets from firm to company and the partners remained as share holders there is no transfer as contemplated under S. 2(47) and 45(4) of the Act. Accordingly not liable to capital gains tax. Followed CIT v. Texspin Engineering and Manufacturing Works (2003) 263 ITR 345 (Bom) (HC)
     (AY. 2009-10)

     CIT v. Ram Krishnan Kulwant Rai Holdings P. Ltd. (2019) 416 ITR 123 (Mad) (HC)

116. S. 45(4) : Capital gains – Retirement – Allotment to a partner of his share in assets of partnership after deduction of liabilities is not transfer – Not liable to capital gains tax. [S.2(47) (vi)]

     Allowing the appeal of the assessee the Court held that, when a partner retires and there is transfer of his interests in the partnership assets to him towards his share in the assets, the same cannot be brought to tax as capital gain by transfer of capital asset. (AY. 2004-05)

     National Company v. ACIT (2019) 415 ITR 5 / 263 Taxman 511 (Mad.)(HC)

117. S. 54 : Capital gains – Profit on sale of property used for residence – Ownership of land – Housing complex wassituated on a piece of land which was occupied by Co-operative Housing Society under a long term lease – Exemption cannot be denied in respect of sale of flat in a society. [S.45]

     Assessee was an owner of flat in a society. Residential building in which assessee’s flat was situated, had been constructed by housing society on leased land. AO denied the exemption on ground that the asseee had not transferred land along with flat. Tribunal allowed the claim. On appeal the Court held that in case of a constructed building of a Co-operative Housing Society, member owns constructed property and along with other members enjoys possessory rights over land on which such building is situated therefore merely because housing complex was situated on a piece of land which was occupied by Co- operative Housing Society under a long term lease, would make no difference.

     PCIT v. Rahul Uday Tuljapurkar (2019) 264 Taxman 36 (Bom) (HC)

118. S. 54EC : Capital gains – Investment in bonds – Part consideration in escrow account – Invested in the year of receipt – Entitle to exemption.[S.45]

     Dismissing the appeal of the revenue the Court held that the part consideration which is kept in the escrow account to avoid litigation is taxable in the year of receipt. The assessee has made investment with in specified time the entitle to exemption. (AY. 2008-09)

     CIT v. Mahipinder Singh Sandhu (2019) 416 ITR 175 (P&H) (HC)

119. S. 68 : Cash credits – Bogus share capital – Shell company – Huge premium – Failure to produce the subscribers and based on the statement of the Director that entire invest was bogus – Addition is held to be justified. [S.132(4)]

     Dismissing the appeal of the assessee the Court held that, no rational person with sound mind will invest huge amount in the share subscription of a paper/shell company having no worthwhile business/project in hand at such a huge premium. The onus is on the assessee to prove the genuineness of the transaction as well credit worthiness of the share subscribers. The failure to produce the subscribers and statement of the director that the entire investment is bogus justifies the addition. (ITA No. 438 of 2017, dt. 22.07.2019) (AY.2007-08)

     Royal Rich Development Pvt. Ltd. v. PCIT (Bom) (HC)

120. S. 68 : Cash credits – Share capital – Two foreign nationals – Directors of the company – Identity of share applicants and genuineness of money infused is established – Deletion of addition is held to be justified.

     Court held that the AO did not dispute veracity of documents produced and two individuals who had applied for shares, were made directors of assessee company. Accordingly the assessee had discharged onus that was placed upon it to disclose identity of share applicants and genuineness of money infused. Order of Tribunal is affirmed.

     PCIT v. E-Smart Systems (P.) Ltd. (2019) 105taxmann.com 158 / 263 Taxman 374 ( Delhi) (HC)

     Editorial: SLP of revenue is dismissed, PCIT v. E-Smart Systems (P.) Ltd. (2019) 263 Taxman 373 (SC)

121. S. 68 : Cash credits – Non- Resident – If the assessee is non- resident amount found deposited in a foreign bank is not taxable in India either u/s 68 or u/s 69 of the Act. [S. 6(6) 69]

     Dismissing the appeal of the revenue the Court held that, if the assessee is non-resident amount found deposited in a foreign bank is not taxable in India either u/s 68 or u/s 69 of the Act. (ITA No. 107 of 2017, dt. 22.04.2019)

     PCIT v. Binod Kumar Singh (Bom)(HC), www.itatonline.org

122. S. 69 : Unexplained investments – Statement on oath – Assets were not found – Merely on the basis of statement in the course of search no addition can be made. [S.132(4)]

     Dismissing the appeal of the revenue the Court    held that, when no incriminating materials or documents had been brought on record merely on the basis of statement on oath addition cannot be made. (AY. 2006-07)

     CIT v. Dilbagh Rai Arora (2019) 263 Taxman 30 / 308 CTR 502 (All)(HC)

123. S. 80G : Donation – Charitable activities – Application of u/s 80G(5) cannot be rejected when registration continued. [S.11AA, 12A, 80G(5)]

     Assessee trust was registered under S. 12A of the Act. It claimed deduction under S.80G of the Act. AO rejected assessee’s claim holding that there was no proof of charitable activities being carried on by assessee. Tribunal, however, found that for last three years details had been provided to show that charitable activities were being carried on. Registration under S. 12A continued in favour of assessee. Tribunal allowed assessee’s claim. High Court upheld Tribunal’s order.

     CIT v. Babbar Charitable Trust (2019) 106 taxmann.com 159 / 264 Taxman 30 (All)(HC)

     Editorial: SLP of revenue is rejected, CIT v. Babbar Charitable Trust (2019) 264 Taxman 29 (SC)

124. S.80G : Donation – When registration is granted application u/s 80G(5) cannot be rejected. [S.12AA, 80G(5)]

     CIT (E) rejected assessee’s application u/s 12AA of the Act . High Court held that as there was no adverse material against assessee to come to conclusion that it was not a charitable institution or organization it is entitle to registration (CIT v. Lok Sewa Sansthan Samiti Sonebhadra ITA No 139 of 2011 dt 2-07 2013). Following the order of granting of registration the Court held that once registration is granted application u/s 80G(5) cannot be rejected.

     CIT v. Lok Sewa Sansthan Samiti Sonebhadra (2019)105 taxmann.com 202 / 263 taxman 496 (All) (HC)

     Editorial: SLP of revenue is dismissed, CIT v. Lok Sewa Sansthan Samiti Sonebhadra (2019) 263 Taxman 495 (SC)

125. S. 80IA : Industrial undertakings – Manufacture – Converting herbs into a certain herbal product by manual process – Purchase of plant and machinery and consumption of electricity are not mandatory requirements – Entitle to deduction.

     Assessee which is in business of converting herbs into a certain herbal product by manual process. It used some chemicals and small machinery and most processes of its manufacturing did not require electricity. AO denied the exemption. Tribunal held that purchase of plant and machinery and consumption of electricity are not mandatory requirements to claim deduction and manufacturing of herbal product by assessee would amount to manufacture of a different commercial article. Order of Tribunal is affirmed by High Court. (AY. 1996-97 to 1998-99)

     CIT v. Cavinkare (P.) Ltd. (2019) 263 Taxman 740 (Mad.)(HC)

126. S. 80IA : Industrial undertakings – Gross or net – Net of interest excluding expenditure incurred in earning such interest income which should be excluded for purpose of deduction.

     Dismissing the appeal of the revenue the Court held that only be net of interest excluding expenditure incurred in earning such interest income which should be excluded for purpose of deduction. Followed ACG Associated Capsules PvtLtdv.CIT(2012)343ITR89(SC)

     PCIT v. Gujarat Paghuthan Energy Corporation (P.) Ltd. (2019) 263 Taxman 255 (Guj)(HC)

     Editorial: SLP of revenue is dismissed, PCIT v. Gujarat Paghuthan Energy Corporation (P.) Ltd. (2019) 263 Taxman 254 (SC)

127. S. 80IA : Industrial undertakings – Infrastructure development – Agreement with a nodal agency established by State Government Deduction cannot be denied. [S.80IA(4)]

     Dismissing the appeal of the revenue the Court held that, deduction could not be denied merely on ground that State Government had created a nodal agency for working out finer details and nitty-gritty of infrastructure development and assessee had entered into agreement with said nodal agency. (AY. 2012-13)

     CIT v. Ranjit Projects (P.) Ltd. (2019) 104 taxmann.com 391 / 263 Taxman 4 (Guj) (HC)

     Editorial: SLP of revenue is rejected, CIT v. Ranjit Projects (P.) Ltd. (2019) 263 Taxman 3 (SC)

128. S. 80P : Co-operative societies – Co-Operative Bank – Assessee must substantiate that its main object of incorporation continues to be fulfilled in relevant assessment year – Benefit is not allowable solely on basis of certificate of registration – Assessee is not entitled to deduction if it ceases to be of specified class of society in any year even if it was eligible for initial years. [80P(4)]

     Allowing the appeal of the revenue the Court held that, the assessee which claims the status and the benefits of a primary agricultural credit society would have to substantiate that its main object of incorporation continues to be fulfilled. It has to obtain a certificate from the competent authority by producing the relevant facts and figures including the balance-sheet and profit and loss account to show that it satisfies the requirements of the second proviso to section 2(oa) of the 1969 Act, to claim the status of a primary co-operative agricultural society. The certificate of registration of a society as primary agricultural credit society is not conclusive evidence that the primary object of the principal business undertaken by that society is to provide financial accommodation to its members for agricultural purposes or for purposes connected with agricultural activities, and the society is not entitled to deduction under section 80P merely on the strength of the certificate of registration issued under section 8(1) of the 1969 Act. On a claim for deduction under section 80P of the 1961 Act, by reason of sub-section (4) thereof, the Assessing Officer has to conduct an enquiry into the factual situation as to the activities of the assessee- society and arrive at a conclusion whether or not the benefits can be extended in the light of the provisions thereunder. (AY. 2007 -08 to 2010-11 2012-2013)

     CIT v. Poonjar Service Co-Operative Bank Ltd. (2019) 414 ITR 67 (FB)(Ker) (HC)

     Editorial: ITO v. Ettumanoor Service Co-Operative Bank Ltd. (2016) 52 ITR 132 (SN) (Cochin) (Trib) ITO v. Sahyadri Cohin, Co-Operative Credit Society Ltd (2017) 60 ITR 135 (Cochin) (Trib) is reversed.

129. S. 92C : Transfer pricing – Arm’s length price – Mutually agreed procedure (MAP) adopted by Governments of India and USA in relation to US based transactions for determination of ALP could also be adopted for determining ALP of on – US based transactions.

     Dismissing the appeal of the revenue the Court held that, the Asseessee had 96% international transactions with US based AEs and rest were with non-US based AEs. There was no distinction between US and non-US based transactions. US Govt entered in to Mutually Agreed Procedure for determining tax in two countries. CBDT, in later years agreed that such transfer pricing in relation to US based transactions could safely be adopted for purpose of assessee’s non-US based transactions to which the aseessee agreed under Advance Pricing Agreement. Tribunal held that for determining ALP of non-US transactions said MAP between India and US could be applied. High Court up held the order of the Tribunal. (AY. 2007 -08)

     PCIT v. J. P. Morgan Services India (P) Ltd (2019) 263 Taxman 141 (Bom) (HC)

130. S. 119 : Central Board of Direct Taxes – Refund claims and carry forward the losses – Delay in filing of return – Refusal to condone the delay would cause genuine hardship to assessee – Rendering substantial justice is the paramount consideration of the Courts as well as the authorities rather than deciding on hyper technicalities. [S.139(9)]

     Court held that upon being properly advised, the assessee filed the correct return of income in the correct form for the assessment year 2009-10 on March 24, 2015 declaring a loss of Rs. 7,91,66,338. Thus, it was because of circumstances beyond its control that the assessee could not file the return of income under section 139(9) of the Act within the specified time. The assessee had made out a case of genuine hardship for admitting the claim after the expiry of the period specified under the Act. The Board ought to have exercised its powers under clause (b) of sub-section (1) of section 119 of the Act and condoned the delay in filing the return of income. The order dated May 30, 2018 passed by the Board under section 119(2) (b) was liable to be quashed. Circular No 9 of 2015 dt 9-06 -2015) Court also observed that rendering substantial justice is the paramount consideration of the Courts as well as the authorities rather than deciding on hyper technicalities. (2015) 374 ITR 25 (St). (AY. 2009-10)

     Surendranagar District Co-Operative Bank Ltd. v. DCIT (2019) 416 ITR 294 (Guj) (HC)

     Editorial: SLP of revenue is dismissed DCIT v. Surendranagar District Co-Operative Bank Ltd (2019) 416 ITR 296 (SC).

131. S. 132 : Search and seizure – Validity – Initiation of search proceedings was not based upon any information or other material – Authorisation is held to be invalid and quashed. [Art.226]

     A search was conducted in case of assessee. Assessee challenged the search action. Allowing the petition the court held that, there was nothing on record to indicate that any belief had been formed by competent authority to effect that assessee had in his possession any money, bullion, jewellery or other valuable article or thing which would not have been disclosed by him for purposes of Act. Accordingly the warrant of authorization is quashed held to be in valid.

     Laljibhai Kanjibhai Mandalia v. PDIT(I) (2019) 263 Taxman 604 (Guj.)(HC)

132. S. 132(4) : Search and seizure –Statement on oath – Addition made on the basis of statement on oath – Subsequent retraction- Statement recorded during the course of action which was in presence of independent witness has overriding effect over the subsequent retraction – Addition is held to be valid. [S. 131, 132, 292C]

     A search was carried out at business premises of assessee-company on 11-0-2014. In course of search proceedings, statement of director Shri Bannala of assessee-company was recorded under S. 132(4) admitting certain undisclosed income. Subsequently on 4-12-2014 statement of the Director was again recorded. In the return of income the amount disclosed was not offered. Non disclosure of income in the return of income will amount to retraction of the statement. AO made addition to assessee’s income on basis of statement given by its director. Confirming the addition the Tribunal held that that statement had been recorded in presence of independent witness hence the retraction was not valid. On appeal High Court held that mere fact that director of assessee-company retracted statement at later point of time, could not make said statement unacceptable and burden lay on assessee to show that admission made by director in his statement was wrong and such retraction had to be supported by a strong evidence showing that earlier statement was recorded under duress and coercion. On facts as the asessee has failed to discharge the burden order of Tribunal is affirmed.

     Bannalal Jat Constructions (P.) Ltd. v. ACIT (2019) 106 taxmann.com 127 / 264 taxman 6 (Raj) (HC)

     Editorial: SLP of assessee is dismissed, Bannalal Jat Constructions (P.) Ltd. v. ACIT (2019) 264 Taxman 5 (SC)

133. S. 133A : Power of survey – Income from undisclosed sources –Disclosure in the course of survey – Project completion method –Addition can be made only in the year of completion of project – Deletion of addition is held to be justified.[S.69A,145]

     Dismissing the appeal of the revenue the Court held that the Tribunal was justified in confirming the order of the Commissioner (Appeals) deleting the addition made by the Assessing Officer on account of the undisclosed income of ` 26,05,00,000 disclosed during the course of survey under section 133A, on the ground that since the assessee followed the project completion method for offering the income to tax, the amount would be subjected to tax upon completion of sale, though the amount had been received earlier from the buyer and in view of the finding of the Commissioner (Appeals) that the assessee in fact, had offered such income to tax in the later years as and when the sale deeds were executed. In his statement the partner of the assessee had agreed that the sum was the undisclosed income of the assessee for the assessment year in question, and had added a clarification that it would be subject to execution of the sale deeds.

     CIT v. Happy Home Corporation (2019) 414 ITR 524 (Guj)(HC)

     Editorial: SLP of revenue is dismissed CIT v. Happy Home Corporation (2019) 411 ITR 38 (ST) (SC).

134. S.143(3) : Assessment – Alternative remedy – Writ against the assessment order is not valid since the assessee had an alternative remedy before Appellate Authority [S. 246A, Art. 226]

     Assessee filed a writ petition challenging assessment order as well as demand notice issued by the AO. High Court dismissed the petition on the ground that the assessee had an alternative remedy of appeal before appellate authority.

     MaheshKumarAgarwalv.PCIT(2019) 105 taxmann.com 272 / 263 Taxman 469 (Orissa) (HC)

     Editorial: SLP of the assessee is dismissed and passed the order stating that no coercive steps will be taken for a period of four weeks from the date of the order in order to avail of the alternative remedy provided. Mahesh Kumar Agarwal v. Pr. CIT (2019) 263 Taxman 468(SC)

135. S.143(3): Assessment – Income from undisclosed sources – real estate business – Purchase of land – Alleged cash receipts – Price of the land was paid with other entries in the bank and there was nothing to show that a cash was received in excess of the agreement – Deletion of addition is held to be justified.[S.69]

     Dismissing the appeal of the revenue the Court held that the price of the land was paid with other entries in the bank and there was nothing to show that a cash receipt was received by the assessee. The Tribunal was justified in deleting the additions.

     CIT v. Prestige City Developers P. Ltd. (2019) 415 ITR 149 (Raj)(HC)

     Editorial: SLP of the revenue is dismissed CIT v. Prestige City Developers P. Ltd (2018) 406 ITR 36 (St)

136. S.147 : Reassessment – After the expiry of four years – Penny stock – Shares – No failure to disclose all material facts – Merely on basis of information received from Investigation Wing without conducting any independent enquiries. [S.69A,148]

     Allowing the petition the Court held that, there was no failure on the part of the assessee to disclose material facts. It was fond that at relevant time period, there was no company by name of Nivyarh Infrastructure & Telecom Services Ltd was in existence and merely on basis of information received from Investigation wing without conducting any independent enquiries issue of notice for initiating reassessment proceedings is held to be bad in law (AY. 2011-12)

     South Yarra Holdings v. ITO (2019) 263 Taxman 594 (Bom.)(HC)

137. S. 147 : Reassessment – With in four years – Change of opinion – Details were submitted in the original assessmentproceedings – Reassessment for purpose of verification and investigation is held to be not valid.[S.148]

     Allowing the petition the Court held that the AO has passed the original assessment order by calling the information and getting the confirmation from the parties. The AO cannot reopen the assessment on the ground that further verification and investigation was required. On the basis of the very same material, the assessment could not be reopened on some change of opinion. In the facts and circumstances of the case, the notice of reassessment was not valid. (AY. 2013-14)

     Jarun Pharmaceuticals Pvt. Ltd. v. ITO (2019) 416 ITR 249 (Guj)(HC)

138. S. 147 : Reassessment – Non disclosure of receipt – The attempt of further verification would amount to rowing inquiry – Reassessment is bad in law. [S. 143(1),148]

     Allowing the petition the Court held that, even in a case where the return is accepted u/s 143(1) without scrutiny, the fundamental requirement of income chargeable to tax having escaped assessment must be satisfied. Mere non-disclosure of receipt would not automatically imply escapement of income chargeable to tax from assessment. There has to be something beyond an unintentional oversight or error on the part of the assessee in not disclosing such receipt in the return of income. In other words, even after non-disclosure, if the documents on record conclusively establish that the receipt did not give rise to any taxable income, it would not be open for the AO to reopen the assessment referring only to the non disclosure of the receipt in the return of income. The attempt of further verification would amount to rowing inquiry. (AY. 2011-12) (WP No. 1230 OF 2019, dt. 25.06.2019)

     The Swastic Safe Deposit and Investment Ltd. v. ACIT (Bom)(HC),
     www.itatonline.org

139. S.148 : Reassessment – The officer recording the reasons and the officer issuing notice has to be the same person- Any inherent defect therein cannot be cured – The fact that the assessee participated in the proceedings is irrelevant. [S.147, 148(2),292B]

     Allowing the petition the Court held that the officer recording the reasons u/s 148(2) for reopening the assessment & the officer issuing notice u/s 148(1) has to be the same person. If the reasons are recorded by the DCIT but the notice is issued by the ITO, the reassessment proceedings are invalid. The s. 148 notice is a jurisdictional notice. Any inherent defect therein cannot be cured u/s 292B. The fact that the assessee participated in the proceedings is irrelevant. Accordingly the notice issued u/s 148 and all proceedings pursuant thereto including the assessment order are quashed. (CA. No. 230 of 2019, dt. 09.04.2019)

     (AY. 2011-12)

     Pankajbhai Jaysukhlal Shah v. ACIT (Guj)(HC), www.itatonline.org

140. S. 148 : Reassessment – Notice  Mere issue of a notice is not sufficient – service of notice is essential – If thepostal authorities return the notice unserved, the Dept has to serve under Rule 127(2) using one of the four sources of address (such as PAN address, Bank address etc). The failure to do so renders the reassessment proceedings invalid. [S. 127, 147, 149, 282 Rule, 127]

     Petitioner never filed the return of income since she did not have any taxable income. The AO issued the notice u/s 148 which was returned with a remark “Left”. Assessment was passed ex-parte. The AO started recovery proceedings. On getting the information telephonically about certain despatches by the Department she rushed from Jabalpur to Mumbai and gathered basic information. The assessee challenged the reopening of the assessment and consequential actions taken by the department. Allowing the petition the, Court held that mere issue of a s. 148 notice is not sufficient. Service is essential. If the postal authorities return the notice unserved, the Dept has to serve under Rule 127(2) using one of the four sources of address (such as PAN address, Bank address etc). The failure to do so renders the reassessment proceedings invalid. Followed
     Y. Narayan Chetty v. ITO (1959)35ITR388(SC)(WPNo.513of2019,dt. 16.07.2019) (AY. 2011-12)

     Harjeet Suraprakash Girotra v. UOI (Bom)(HC), www.itatonline.org

141. S. 148 : Reassessment – Notice issued in name of deceased assessee – Department attempting to correct error by changing name of entity in reasons to believe” – Not curable defects notice is invalid –Failure to issue notice u/s 143(2) with in
     prescribed time – Reassessment is in valid [S.143(2) 147,159, 29BB]

     The notice was issued in the name of deceased assessee and an attempt was made by the revenue to correct error by changing name of entity in reason to believe. On writ allowing the petition the Court held that in the absence of any provision in the Act, to fasten the liability upon a deceased individual assessee and in the absence of any pending or previously instituted proceedings, the Department could not impose the tax burden upon the legal representative. Court also held that the omission to issue the mandatory notice under section 143(2) rendered the reassessment void. The reassessment notice, the consequential proceedings and the reassessment order passed were to be quashed. (AY. 2010-11)

     Rajender Kumar Sehgal v. ITO (2019) 414 ITR 286 (Delhi)(HC)

142. S. 151 : Reassessment – Sanction for issue of notice – Sanction order indicated non-application of mind to reasons recorded for reopening, therefore, reopening notice was bad in law and quashed. [S.147, 148]

     An information was received from ADIT (In) that during search conducted in case of Himanshu Verma Group it was found that Himanshu Verma Group was engaged in activity of providing bogus accommodation entries and that assessee was also a beneficiary of Himanshu Verma Group. On basis of such information, reopening notice was issued against assessee. CIT also granted sanction under S. 151 of the Act. It was found that reasons recorded in support of reopening notice recorded activity Himanshu Verma Group group in providing accommodation entries while order granting sanction proceeded on basis that it was assessee who was engaged in providing accommodation entries. Court held that it is a settled position in law that grant of sanction by CIT under S. 151 is not a mechanical act on his part but it requires due application of mind to reasons recorded before granting sanction. Accordingly the Court held that the sanction order indicated non-application of mind to reasons recorded for reopening hence reopening notice was bad in law and quashed. (AY. 2011-12)

     My Car (Pune) (P.) Ltd. v. ITO (2019)263 Taxman 626 (Bom.)(HC)

143. S. 153B : Assessment – Search and seizure – Limitation – Order of assessment was despatched on last day prescribed – Not barred by limitation. [S.132]

     Court held that in a block assessment where the officer passes the order on the last day of limitation and dispatches it after office hours, it cannot be said to be a factor vitiating the order or enabling the limitation period to be applied.

     Rajan Jewellery v. CIT (2019) 414 ITR 621 (Ker) (HC)

144. S. 194C : Deduction at source – Contractors – Placement fees/ carriage fees – work contract and not fees for technical service [S.194J]

     The question before the High Court was “Whether on the facts and in the circumstances of the case and in law, the Tribunal was right in holding that the placement fees/carriage fees paid to cable operators/MSO/DTH Operators are payments for work contract covered u/s 194C and not fees for technical service u/s 194J, without appreciating that the service received by the assessee are technical in nature? Following the order in
     CIT v.UTV Entertainment Television Ltd (2017) 399 ITR 443 (Bom) (HC), decided in favour of the assessee. (AY. 2009-10)

     CIT v. Times Global Broadcasting Co. Ltd. (2019) 105 taxman.com 313 / 263 Taxman 466 (Bom)(HC)

     Editorial: SLP of revenue is dismissed, CIT v. Times Global Broadcasting Co. Ltd. (2019) 263 Taxman 465 (SC)

145. S. 197 : Deduction at source – Certificate for lower rate – Quasi judicial – Must be supported by valid and cogent reasons- Orders passed by a statutory authority under “dictation” of a superior officer or anyone else is bad in law. [R.28AA]

     Court held that an order u/s 197 is quasi- judicial & must be supported by valid & cogent reasoning. It has to be based on objective criteria and relevant material. On facts, there is arbitrariness and non-application of mind at various levels which vitiates the certificate. The reasons do not conform to the requirement of s. 197 r. w. Rule 28 AA. The settled legal position is that orders passed by a statutory authority under “dictation” of a superior officer or anyone else is bad in law. The Court directed the AO for issuance of a lower withholding certificate under Section 197(1) of the Act afresh in accordance with law. (W.P.(C) 7744/2019 and CM APPL. 32145/2019 (stay), dt. 29.07.2019)

     Bently Nevada LLC v. ITO (2019) 107 taxmnn.com 440 (Delhi)(HC),
     www.itatonline.org

146. S. 220 : Collection and recovery Assessee deemed
     indefault–Stay – Issue decided in favour of assessee by CIT (A) in other proceedings- Pendency of appeal before CIT (A) – AO cannot pass the order to deposit 20 % of tax in dispute – Stay was granted against recovery of demand.

     During the pendency of appeal the AO demanded the 20% of tax in dispute, though the issue was decided in favour of assessee by CIT(A) in other proceedings . On writ the Court held that AO cannot pass the order to deposit 20% of tax in dispute and stay was granted against recovery of demand.

     ARCIL Retail Loan Portfolio 001-D- Trust v. Pr. CIT(2019) 264 Taxman 61(Bom)(HC)

147. S. 220 : Collection and recovery – Stay – Pendency of appeal before CIT(A) – 20% of the disputed demand – Consideration is not received cannot be a ground for lifting the rigor of the requirement of deposit of 20% of the disputed tax pending in appeal. [S. 220(6)]

     Court held that the decision of the authorities to demand payment of 20% of the disputed demand is in consonance with the department’s circulars. There are no extra ordinary reasons for imposing condition lighter than one imposed by the authorities. The contention that the assessee that he received no consideration and no tax could have been demanded from him is subject matter of the Appeal proceedings and cannot be a ground for lifting the rigor of the requirement of deposit of 20% of the disputed tax pending appeal.( WP No.1887 of 2019, dt. 15.07.2019)

     Kalpana Ashwin Shah v. ACIT (Bom)(HC), www.itatonline.org

148. S. 220 : Collection and recovery – Stay – Pendency of appeal before CIT( A) – AO cannot proceed mechanically in calling upon
     assessee to remit 20 per cent of demand without examining appropriateness of facts and circumstances of case – Order wassetaside. [S.132, 153A, 220(6)]

     Assessee filed an appeal against assessment order and also filed an application seeking a stay of recovery of disputed demand. AO passed an order under S. 220(6) to pay 20 per cent of disputed demand of tax as a pre- condition for grant of stay of recovery. On writ the Court held that grant of stay is conditional upon satisfaction of three primary aspects, i.e., existence of a prima facie case, financial stringency demonstrated and established by assessee and balance of convenience in matter. Since the AO proceeded mechanically in calling upon assessee to remit 20 per cent of demand without examining appropriateness of facts and circumstances of case order passed by the AO was set aside. (AY. 2011-12 to 2017-18)

     Uthangarai Sri Vidya Mandir Educational and Social Welfare Trust v. ACIT (2019) 263 Taxman 422 (Mad.)(HC)

149. S. 226 : Collection and recovery – Stay – Pendency of appeal before CIT (A) – Similar addition was decided in favour of other assessee by the CIT(A) – AO cannot direct the Assessee to deposit 20 percent of tax demanded.[S.246A]

     AO passed the order making certain disallowances. Pending such appeal, assessee requested to keep tax demand in abeyance. AO rejected the application and directed to deposit 20 per cent of tax demand. On writ the court held that since same disallowances and additions made under similar circumstances in case of other similar trusts were deleted by CIT(A) revenue should not recover the tax in dispute when the appeal is pending before CIT(A). (AY. 2016-17)

     ARCIL Retail Loan Portfolio 001-D-Trust v. PCIT (2019) 263 Taxman 508 (Bom.)(HC)

150. S. 226 : Collection and recovery – Stay – Pendency of appeal before CIT(A) – Non speaking order – Garnishe notices to Banks was quashed and attachment of Bank account was lifted. [S.226(3)]

     Allowing the petition the Court held that the order of the Assessing Officer rejecting the stay petition filed by the assessee was non- speaking and merely made reference to the non-payment of 20 per cent of the tax demand by the assessee. The order in question was unacceptable on all counts and was to be quashed in limine. The notices issued under section 226(3) to the assessee’s banks by the Assessing Officer were also quashed and the attachment of the bank accounts was lifted forthwith.

     Oren Hydrocarbons Pvt. Ltd. v. ACIT (2019) 414 ITR 52 (Mad)(HC)

151. S. 234B : Interest – Advance tax – Non-resident – Entire tax was to be deducted at source – Not liable to pay interest for failure to pay advance tax.

     High Court decided issue regarding interest payable under S. 234B in assessee’s favour. Followed
     CIT (IT) v. Shanghai Electric Group Co. Ltd.In[ITA No. 409-410 of 2018, dt. 9-4-2018 and also DIT v. Jacabs Civil Incorporated (2001) 330 ITR 578
     (Delhi) (HC), DIT v. GE Packaged PowerINC(2015)373ITR65(Delhi)(HC)CITv. ZTE Corporation(2017)392 ITR 80(Delhi)(HC).

     CIT (IT) v. Shanghai Electric Group Co. Ltd. (2019)105 taxmann.com 311/ 263 Taxman 476 (Delhi) (HC)

     Editorial: SLP is granted to the revenue, CIT (IT) v. Shanghai Electric Group Co. Ltd. (2019) 263 Taxman 475 (SC)

152. S. 237 : Refunds – Mismatch – Department cannot withhold refund payable to assessee on the ground that the computer system could not rectify the error
     – Directed to release the refund.

     Assessee had deducted and deposited TDSon payment under old TAN as well as new TAN due to human error. It resulted in TDS mismatch. Computer system could not rectify said error as well as duplication of entry. On writ the Court held that the department could not withhold refund payable to assessee and directed the department to release refund amount payable to assessee. (AY. 2007-08 to 2010-11)

     Vodafone Idea Ltd. v. Dy. CIT (2019) 263 Taxman 680 (Bom.)(HC)

153. S. 244A : Refund – Interest on refunds – Filing of Form 29B not essential for processing of return and granting of refund. [S.154]

     Filing of Form 29B for computation of tax under MAT is not essential for processing of the return and issuing of refund. Where income was determined and refund calculated in accordance with Form 29B filed belatedly, interest on such refund could not be denied on the ground that the delay in grant of refund was attributable to the assessee since it had filed Form 29B belatedly. Interest on refund was payable to the assessee from the date of filing of the revised return of income. (AY. 2002-03)

     HHA Tank Terminal (P) Ltd. v. ACIT (2019) 177 DTR 300 (Ker.)(HC)

154. S. 252 : Appellate Tribunal – Departmental promotion (DPC) – Assistant registrar – The Dept is expected to follow up the proposals to fill up the posts of Assistant Registrars in such quota as well as for issuing promotions for the posts of Deputy Registrars so that all these pots to the extent possible can be filled up at the earliest.

     In a PIL filed before the Bombay High Court the Court held that ,the work of important Tribunal like Income Tax Appellate Tribunal (ITAT) should not be allowed to suffer on account of shortage of administrative staff. There is no lethargy on the part of the Dept in filing up said posts. The Dept is expected to follow up the proposals to fill up the posts of Assistant Registrars in such quota as well as for issuing promotions for the posts of Deputy Registrars so that all these pots to the extent possible can be filled up at the earliest. (WP. No. 2873 of 2018, dt. 27.08.2019)

     All India Federation of Tax Practitioner (AIFTP) v. UOI (Bom)(HC),
     www.itatonline.org

155. S. 254(1) : Appellate Tribunal – Duties – The Tribunal should not make general observations that there are “contrary decisions”- Tribunal to be specific about the decisions and make a mention of the citation in the order and not make general observations.

     Court held that the Tribunal should not make general observations. This statement led us to direct counsel to examine the law and bring to our attention any decision contrary to the view taken by the Supreme Court in Mahalaxmi Sugar Mills 123 ITR 429 etc. We are now informed by Counsel that there are no contrary decisions.

     All this effort and time would have been saved if the Tribunal had made specific reference to contrary decisions or not stated so in the absence of referring to the citations. We request the Tribunal to be specific about the decisions and make a mention of the citation in the order and not make general observations. (ITA No. 809 of 2017, dt. 27.08.2019) (AY. 2007-08)

     PCIT v. M. J. Export Pvt. Ltd. (Bom)(HC), www.itatonline.org

156. S. 254(1) : Appellate Tribunal – Duties – When any concession is made by the Authorised representatives on behalf of the assessee the Tribunal should take an affidavit from asssessee and on counsel on behalf of assessee or at least a written endorsement made on record of case duly signed by them – Court also stated that the order to be circulated to all the members of the ITAT and also new members to be appointed.

     Court held that when any concession is made by the Authorised representatives on behalf of the assessee the Tribunal should take an affidavit from asssessee and on counsel on behalf of assessee or at least a written endorsement made on record of case duly signed by them. Copy of the order is sent to the President ITAT for circulation to all the Benches and also directed Secretary the Ministry of law and Justice to bring to the notice of the all the new members to be appointed. (AY. 2006-07)

     Ramesh V. v. ACIT (2019) 177 DTR 105 / 104 taxmann.com 292 (Mad.)(HC)

157. S. 254(1) : Appellate Tribunal  – Duties – Directions – ITAT should take appropriate steps – and expedite hearing in old appeals.

     Petitioner approached the High Court for getting the direction to dispose the appeal which are pending for more than five years. Court held that, President/ Sr. VP of the ITAT should take appropriate steps and expedite hearing in old appeals. A tabular statement indicating the age of the old appeals as well as an action plan of the ITAT with respect to the likely time for their disposal, having regard to the priorities that ITAT may set in this regard, shall also be filed in court. (W.P.(C) 2477/2019, dt. 10.04.2019)

     Nokia Solutions and Networks Italia Spa v. DDIT (Delhi)(HC),
     www.itonline.org

158. S.254(1) : Appellate Tribunal – Duties – Ex parte order – Even if the assessee could not appear , the Tribunal could have decided the appeal on merits – The Tribunal ought to have restored the appeal on miscellaneous application filed by the assessee – Court also directed to send the copy of the Judgement to the President of the Tribunal as well as Law Secretary in the Ministry of law and Justice so that the same may be brought to the notice of all the Members of the Tribunal. [ITATR. 1963, R.24]

     Allowing the appeal of the assessee, The Court held that, even if the assessee could not appear, the Tribunal could have decided the appeal on merits. When the miscellaneous application is filed by the assessee, the Tribunal ought to have restored the appeal. Tribunal is directed to decide the issue on merits. The Court also observed that the fact finding Tribunals should not shirk their responsibility to decide the case on merits because the view and reasons given by such Tribunals are important for the Constitutional Higher Courts to look into while deciding the substantial question of law under S.260A of the Act arising from the Tribunal’s orders. A legal and binding responsibility lies upon the Tribunal to decide the appeal on merits irrespective of the appearance of the assessee or his counsel before it or not. Court also directed to send the copy of the Judgement to the President of the Tribunal as well as Law Secretary in the Ministry of law and Justice so that the same may be brought to the notice of all the Members of the Tribunal and the new appointees in the Tribunal at the time of their recruitment its self. The Tribunal may also get it circulated to all the existing members of the Tribunal so that, such orders resulting in serious miscarriage of justice should not be repeated by any member of the Tribunal. (AY. 2010-11)

     Ritha Sabapathy (Smt) v. Dy.CIT (2019) 308 CTR 417 / 263 Taxman 84 (Mad) (HC)

159. S. 254(2) : Appellate Tribunal – Rectification of mistake apparent from the record – Grounds raised and not given up remains un decided – Tribunal to either adjudicate on or to direct the AO to consider the additional evidence – Judgement of the Tribunal gives rise to an error on the face of the record , which is rectifiable.[S.254(1)]

     Where the assessee’s application for additional evidence was admitted by the Tribunal, it was duty bound to either adjudicate on the basis of such additional evidence itself or direct the AO to consider the additions on the basis of such additional evidence. Not following either of these two routes amounts to a mistake apparent from record. Order of the Tribunal set aside. (AY. 2012-13)

     Rolls Royce Marine India (P) Ltd. v. ITAT (2019) 178 DTR 358 / 107 taxmann.com 26 (Bom.)(HC)

160. S. 254(2A) : Appellate Tribunal – Stay – Stay of demand would not stand vacated after expiry of a period of 365 days, if delay in disposal of appeal was not attributable to assessee.[S.254(1)]

     Revenue raised the question as to whether Tribunal’s order was to be treated as void- ab-initio in light of third proviso to section 254(2A) which provided that stay of demand would stand vacated after expiry of a period of 365 days, even if delay in disposal of appeal was not attributable to assessee. Following the order in
     PCIT v. Carrier Air Conditioning and Refrigeration Ltd. [2016] 387 ITR 441 (P & H) (HC)
     appeal of the revenue was dismissed.

     PCIT v. BMW India (P.) Ltd. (2019)105 taxmann. com 135 / 263 Taxman 340 (P& H) (HC)

     Editorial : SLP of the revenue is dismissed as infructuous as the main appeal is disposed by the Appellate Tribunal, PCIT v. BMW India (P.) Ltd. (2019) 263 Taxman 339 (SC)

161. S. 260A : Appeal – High Court – Jurisdiction – Bombay High Court does not have jurisdiction to entertain appeals in respect of order passed by the Bangalore Bench of the Tribunal, notwithstanding the fact that an order was passed under S.127 transferring the assessee’s case from AO at Bangalore to AO at Pune. [S. 116, 124,127]

     Held by High Court that:

     1. Since Tribunals and High Courts are not listed under S.116 of the Act Sections 124 and 127 will have no bearing in deciding the jurisdiction of the High Courts which will have jurisdiction over the orders of Tribunal;

     2. jurisdiction of the Court to which the appeal would lie under the Act would be decided by the seat of the Tribunal (ie in which State it is), hence Bombay High Court does not have jurisdiction to entertain appeals under S. 260A in respect of order passed by the Bangalore Bench of the Tribunal, notwithstanding the fact that an order was passed under S.127 transferring the assessee’s case from AO at Bangalore to AO at Pune (ITA No.1142 of 2016 dt. 26-02-2019) (AY.2008-09)

     PCIT v. Sungard Solutions (I) (P) Ltd. (2019) 308 CTR 22 / 176 DTR 57 (Bom)(HC)

162. S. 260A : Appeal – High Court – Pendency of petition for rectification before Tribunal is not relevant to decide the maintainable of appeal before High Court.[S.254(2)]

     Court held that while deciding the appeal under S. 260A of the Act wherein, the court on being prima facie satisfied that there were substantial questions of law to be decided, had admitted the appeal, by order dated December 21, 2018. In such circumstances, the pendency of a petition for rectification under section 254(2) could have no impact on the appeal. The appeal was maintainable. (AY. 2010-11)

     Daimler India Commercial Vehicles P. Ltd. v. DCIT (2019) 416 ITR 343 (Mad)(HC)

163. S. 260A : Appeal – High Court – Jurisdiction – Original Assessment in Delhi–Centralised at Ghaziabad after Search action – Punjab and Haryana High Court has no territorial jurisdiction to hear appeal. [S.143(3), 153A]

     The Deputy Commissioner, Ghaziabad passed an assessment order under section 153A read with section 143(3) and made similar additions as in the original assessment. The Commissioner (Appeals) allowed the appeal filed by the assessee against this order. The Tribunal dismissed the appeal filed by the Department against the order of the Commissioner (Appeals). On appeal by the revenue the Court held that the initial process of assessment was started in New Delhi and the final assessment was made by the Assessing Officer at Ghaziabad. Therefore, the Punjab and Haryana High Court lacked territorial jurisdiction to adjudicate the matter. The Department was directed to file appeal before the competent court. (AY.2008-09)

     CIT v. ABC Papers Ltd. (2019) 414 ITR 668 (P&H) (HC)

164. S. 263 : Commissioner – Revision of orders prejudicial to revenue – AO examined the claim in original assessment proceedings Rule of consistency is applied – Revision is held to be not valid. [S.143(3),80HHC]

     Court held that AO examined the claim in original assessment proceedings. Similar claim was allowed in earlier assessment years. Rule of consistency is applied and revision is held to be not valid. (AY. 1999-2000 to 2001-02)

     CIT v. Kohinoor Foods Ltd. (2019) 414 ITR 249 (Delhi)(HC)

165. S. 263 : Commissioner – Revision of orders prejudicial to revenue – On money – Order passed by the AO after detailed enquiries Revision is held to be bad in law.[S.69]

     AO passed the order by making certain addition. CIT passed a revisional order under on ground that AO had failed to carry out proper inquiries with respect to assessee’s on money receipt. Tribunal set aside the order of the CIT. High Court upheld Tribunal’s order. (AY.2010-11)

     PCIT v. Shree Gayatri Associates (2019) 263 Taxman 673 (Guj) (HC)

     Editorial : SLP of revenue is dismissed, PCIT v. Shree Gayatri Associates (2019) 263 Taxman 672 (SC)

166. S. 264 : Commissioner – Revision of other orders – Application for condonation of delay cannot be dismissed for technical reasons – Principle of substantial justice- Matter remanded. [S.80P]

     Allowing the petition the Court held that the Commissioner while passing the order ought not to have rejected the application for condonation of delay as well as the revision petition. It was not in dispute that the Commissioner himself had granted exemption in subsequent years to the assessee and the Central Board of Direct Taxes’ Instruction No. 13 of 2006, dated December 22, 2006, clearly laid down that up to six years’ application for refund can be entertained, but in the present case it was only two years. The order was not justified. Court also observed that, it is well-settled that when substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred for the other side cannot claim to have a vested right in injustice being done because of a non-deliberate delay. Matter remanded to the Commissioner. (AY. 2008-09, 2012-13,2013-14)

     Kammavari Credit Co-Operative Society Ltd. v. ACIT (2019) 416 ITR 180(Karn)(HC)

167. S. 264 : Commissioner – Revision of other orders – Amount mistakenly paid as tax – Revision is not maintainable – Duty of the revenue to refund the amount- Substantial justice should prevail over technical considerations. [S.119]

     The assessee, a bank, paid fringe benefits tax in respect of contribution to an approved pension fund. The Tribunal had held for assessment year 2006-07 that fringe benefits tax was not payable on such contribution. The assessee thereupon filed an application for revision under section 264. The application was rejected on the ground of delay. On a writ the Court held that S. 264 was not applicable. But section 119 could have been invoked. The authority ought to have posed only one question to himself, i. e., whether the assessee was liable to pay the tax in question or not. If he was not liable to pay the tax in question, the Department had no business to retain it even if it was wrongly paid. It is well-settled that when substantial justice and technical considerations are pitted against each other, the cause of substantial justice deserves to be preferred for the other side cannot claim to have a vested right in injustice being done because of a non-deliberate delay. The Income- tax Department represents the sovereign power of the State in matters of taxation. Whether the Department had illegally collected the tax from the citizen or whether the assessee mistakenly paid the tax to the Department, the consequence is one and the same. If the assessee had mistakenly paid, it is a case of illegal retention by the Department It is a well- settled principle of administrative law that if the authority otherwise had the jurisdiction, mere non-quoting or misquoting of the provision will not vitiate the proceedings. The respondent, the Principal Commissioner was directed to pass orders afresh under section 119 of the Act. (AY. 2007-08)

     Karur Vysya Bank Ltd. v. CIT (2019) 416 ITR 166 (Mad)(HC)

168. S. 271AAA : Penalty – Search initiated on or after 1st June, 2007 – Immunity from penalty – Explaining manner in which undisclosed income derived – Paying tax and interest – Deletion of penalty is held to be valid.[S.132(4)]

     Dismissing the appeal of the revenue the Court held that the assessee explained the manner in which undisclosed income derived and paid the tax and interest. Deletion of penalty is held to be valid. (AY.2011-12)

     PCIT v. Ravani Developers (2019) 415 ITR 91 (Guj) (HC)

169. S. 271AAA : Penalty – Search initiated on or after 1st June, 2007 – Manner of earning of earning of undisclosed income was substantiated – Deletion of penalty is held to be justified. [S.132(4)]

     Dismissing the appeal of the revenue the Court held that; during course of assessment proceedings the assessee had submitted several documents/communications to substantiate manner in which undisclosed income was derived, hence the Tribunal is justified in deleting the penalty levied by the AO. (AY. 2012-13)

     PCIT v. Bhavi Chand Jindal (2019) 105 taxann.com 77 / 263 Taxman 242 (Delhi)(HC)

     Editorial: SLP of revenue is dismissed, PCIT v. Bhavi Chand Jindal (2019) 263 Taxman 241 (SC)

170. 170. S. 271(1)(c) : Penalty – Concealment – Explanation 5 -Disclosed undisclosed income in the course of the statements under section 132(4), specifying the manner of earning it from real estate business and paid tax with interest for which no time frame is fixed in Explanation 5(2) – Levy of penalty is held to be not justified. [S.132(4),158BC]

     Court held that, clause (2) of Explanation 5 appended to section 271(1)(c) of the Act has not changed with the amendment of law with effect from June 1, 2003 changing the procedure of assessment in the case of search under section 132 . The filing of the returns after the notice is issued to the assessee after search under section 158BC of the Act does not, for the purpose of clause (2) of Explanation 5 to section 271(1)(c) of the Act, mandate the assessee to pay such tax admitted by him to be payable with interest on the undisclosed income admitted by him in the course of search in the statements under section 132(4) of the Act. The only change brought about with effect from June 1, 2003 is in the procedure in the filing of returns and in the assessment for each year independently rather than in the assessment for a block of period as was the position prior to June 1, 2003. Accordingly the assessee satisfied all the three conditions, namely (a) disclosure of undisclosed income in the course of the statements under section 132(4) of the Act ; (b) specifying the manner of earning it from real estate business ; and (c) payment of tax with interest for which no time frame is fixed in Explanation 5(2). The assessee was entitled to the immunity from penalty under section 271(1)(c). As regards the agricultural income the question of fact hence deletion of penalty by Tribunal is held to be justified. (AY. 2002-03 to 2008-09)

     Duraipandi and S. Thalavaipandian (AOP) v. ACIT (2019) 415 ITR 437 (Mad) (HC)

171. S. 276B : Offences and prosecutions – Failure to pay to the credit tax deducted at source – Mere delay in depositing TDS within the time limit prescribed in S. 200 & Rule 30 is an offense sufficient to attract S. 276B. The fact that the TDS has been deposited subsequently does not absolve the offense. The fact that penalty u/s 221 has not been levied is not relevant because there is an admitted delay in depositing TDS. [S. 200, 221, R.30]

     Company had deducted tax at source for the Financial Years 2010-2011 and 2011-2012, but had failed to remit the same to the Central Government account as per the provisions of Chapter XVII-B of the Act. Considerable delay of more than one year, that too, in consequence of survey conducted by the Department and repeated reminders. Since, the explanation given by the accused for delay in remittance of TDS was not acceptable, the Commissioner of Income Tax (TDS) after giving sufficient opportunity to the accused, passed an order under Section 279 of the Act authorizing the complainant. Assessee moved the petition to quash the proceedings. Dismissing the petition the Court held that, Mere delay in depositing TDS within the time limit prescribed in S. 200 & Rule 30 is an offense sufficient to attract S. 276B. The fact that the TDS has been deposited subsequently does not absolve the offense. The fact that penalty u/s 221 has not been levied is not relevant because there is an admitted delay in depositing TDS. (CR P.868/2014, dt. 26.04.2019)

     Golden Gate Properties Ltd. v. DCIT (Karn)(HC),
     www.itatonline.org

172. S. 276C : Offences and prosecutions – Wilful attempt to evade tax – Concealment penalty is deleted – Quashing of prosecution is automatic – The High Court can exercise its inherent jurisdiction to quash the prosecution and not indulge in the empty formality of directing the assessee to approach the Trial Magistrate. [S.271(1)(c), 278]

     Allowing the petition the to quash the Criminal proceedings for wilful attempt to evade tax the Court held that, if the assessee’s appeal against levy of penalty u/s 271(1)

     for concealment of income is allowed by the Appellate Tribunal and has become final, the quashing of prosecution is automatic. The High Court can exercise its inherent jurisdiction to quash the prosecution and not indulge in the empty formality of directing the assessee to approach the Trial Magistrate. Accordingly the prosecution proceedings against the firm and partners are quashed.Followed K. C. Builder v. ACIT (2004) 265 ITR 562 (SC) (CRMP No. 2075 of 2018, dt. 26.06.2019)

     System India Casting v. PCIT (Chhattisgarh)(HC),
     www.itatonline.org

173. S. 281B : Provisional attachment – Recovery of tax – Over 21 Per Cent of demand already collected – Assessments concluded–No justification to continue with provisional attachment.[S.226(3)]

     Allowing the petition the Court held that once the assessment was complete there would be no justification for continuing with the order under section 281B. Over 21 percent of demand already collected. Assessment is concluded hence no justification to continue with provisional attachment. Referred Instruction F. No. 404/22/2004-ITCC, and CircularNo.179, datedSeptember30,1975(1976)102ITR9(St) (AY. 2005-06 to 2016-17)

     Dabur Invest Corp. v. ACIT (2019) 416 ITR 282 (Delhi)(HC)