Allowing the appeal of the assessee, the Tribunal held that the section uses the expression “by way of advances or loans” which shows that all payments received from the sister company cannot be treated as deemed dividend but only payments which bear the characteristics of loans and advances. Under the law, all loans and advances are debts, but all debts are not loans and advances. The term ‘loans and advances’ is not defined & has to be understood in the commercial sense. Advances given for purely temporary financial accommodation for business purposes does not attract the deeming fiction. (ITA.No.5188/Del./2019 dt.24-06-2020) (AY. 2013-14)

Exotica Housing & Infrastructure Company Pvt. Ltd. v. ITO (Delhi) (Trib) www.itatonline.org

68. S. 10(38) : Long term capital gains from equities – Penny stocks – Produced contract notes, demat statements etc. & discharged the onus of proving that the shares were bought and sold – Merely relying upon the statement of investigation wing, the transaction cannot be treated as bogus – Denial of exemption is held to be not valid – Reassessment is held to be valid. [S. 45, 68, 147, 148]

    Allowing the appeal of the assessee the Tribunal held that, the assessee has produced contract notes, demat statements etc. & discharged the onus of proving that he bought & sold the shares. The AO has only relied upon the report of the investigation wing alleging the transaction to be bogus. He ought to have examined a number of issues such as online trading, statement of the parties were not provided, shares of the company are still traded in the stock exchange etc. The AO has simply relied upon the report of the investigation wing. The capital gains are genuine and exempt from tax, however the reassessment is held to be valid. (ITA No. 8703/Del/2019 dt. 29-06-2020) (AY. 2011-12)

    Suresh Kumar Agarwal v. ACIT (2020) 117 taxmann.com 678 (Delhi)(Trib) www.itatonline.org

69. S. 15 : Salaries – Director Of Company – Assessable on accrual basis and not on receipt basis – Even if higher salary proposed by employer Not approved By Central Government – AO to examine factually if what is claimed by employer as deduction has been offered to tax by Director.

    On appeal, the Tribunal held that, any salary due from an employer or a former employer to an assessee is taxable on accrual basis whether the salary is paid or not. Though a higher amount of salary was approved by the Company, the salary was not paid to the director as the necessary approval from the Central Government was not received. Hence, no such excess salary can be subject to tax merely because a higher amount was paid in the earlier years as that did not lead to the presumption that the same amount should have been paid in the succeeding year also. If the company had claimed salary of ₹ 2,10,00,004 only as deduction, there was no reason to tax any amount in excess of such amount. However, this factual aspect required verification by the Assessing Officer. Accordingly, for the limited purposes of verification of the aspect, the issue was restored to the Assessing Officer. (AY.2011-12)

    DCIT v. Villoo Zareer Morawala Patel (Smt.) (2020) 78 ITR 17 (SN.) (Bang.)(Trib)

70. S. 28(i) Business Income – Benefit or amenity arising from business – Remission or cessation of trading liability – Assessee introducing gold left behind by his father into his business and showing trade liability in his name and in name of other family as a whole or individual legal heir – AO accepting purchase of gold and approving trading results – Not a case of Assessee introducing unaccounted or unexplained money into capital or of a trade liability ceasing to exist. [S.41(1)]

    On appeal, the Tribunal held that the assessee introduced the gold left behind by his father into his business and showed the trade liability in his own name and / or in the name of other family members as a whole or individual legal heir. Such an act could not be termed either as introduction of unaccounted or unexplained money into the capital nor could the trade liability be said to have ceased to exist. Further, unless the benefit accrued to the assessee is in nature of cash or money, S. 28(i) of the Act had no application and in the absence of cessation of liability, S. 41(1) had no application. Thus the addition under S. 28(i) of the Act read with Section 41 of the Act could not be sustained. (AY. 2012-13)

    Deepak Garg v. ITO (2020) 78 ITR 40 (SN) (Delhi)(Trib)

71. S. 37(1) : Business expenditure – Expenses prohibited by law – Grants – Assessee receiving grants on annual basis and grants used in accordance with directions of Government – AO allowing salary expenses in preceding year – AO should not have taken a different stand in current year – Salary paid to all old employees who worked for Assessee and expenses genuine – Expenses wholly and exclusively for purpose of business, hence expenses are deductible.

    On appeal, the Tribunal held that, the assessee received grants from the Ministry of Science and Technology. The grants were to be used in accordance with the directions issued by the Ministry. In the preceding AY, the Assessing Officer had accepted Assessee’s claim without any objection. Hence, when the same policy had been followed by the assessee and accepted by the Assessing Officer, he should not have taken a different stand in the year under review. Further, the assessee had made it very clear that salary was paid to all old employees who had worked for the assessee and the expenses were genuine. Tax had been deducted on the salary and paid to the Government. All the employees had worked for the assessee. No case was made out by the Assessing Officer that making salary payment was an offence or something prohibited by law. Therefore, Explanation 1 to S. 37 of the Act, would not be attracted in the present case. (AY. 2011-12, 2012-13)

    Addl CIT v. National Research Development Corporation (2020) 78 ITR 56 (SN)(Delhi)(Trib)

72. S. 40(a)(ia) : Amounts not deductible – Deduction at source – The amendment to S. 40(a)(ia) by the Finance (No.2) Act, 2015 w.e.f. 01.04.2015, which restricts the disallowance for failure to deduct TDS to 30% of the expenditure instead of 100%, is curative in nature and should be applied retrospectively [S. 194H]

    The assessee is an individual who is engaged in the business of trading in fabric and job work. The AO disallowed the commission, incentives paid to employees and other for failure to deduct tax at source. Order of the AO is affirmed by the CIT(A). On appeal the Tribunal held that The amendment to s. 40(a)(ia) by the Finance (No.2) Act, 2015 w.e.f. 01.04.2015, which restricts the disallowance for failure to deduct TDS to 30% of the expenditure instead of 100%, is curative in nature and should be applied retrospectively. (ITA No. 114 /Del/2019 dt. 18-06-2020) (AY. 2014-15)

    Muradul Haque v. ITO www.itatonline.org (Delhi)(Trib.)

73. S. 45(3) : Capital gains – Transfer of capital asset to firm – Transfer of capital asset by Partner to Firm as capital contribution – Amount recorded in books of account of Firm deemed to be full value of consideration – One deeming provision cannot be extended by importing another deeming provision [S. 48, 50C]

    On appeal, the Tribunal held that S. 45(3) of the Act comes into operation only in special cases of transfer between a partnership and its partners and in such circumstances, the amount recorded in the books of account of the firm shall be taken as full value of consideration, since the Act provides for deeming consideration to be adopted for the purpose of S. 48 i.e. S. 45(3). Accordingly in case of transfer from partner to partnership firm), another deeming fiction provided by way of S. 50C of the Act cannot be extended to compute the deemed full value of consideration. (AY. 2010-11, 2014-15)

    ACIT v. Amartara P. Ltd. (2020) 78 ITR 46 (SN)(Mum.)(Trib)

74. S. 56 : Income from other sources – Consideration for issue of shares – Excess of the face value of shares – Market value – Method of valuation – The Assessee has the choice to choose a prescribed method for ascertaining the market value of the shares transferred – If the assessee has chosen one method of valuation provided under Rule 11UA (i.e. DCF method), the AO has no power or jurisdiction to change that method to another method – Addition is deleted. [S. 56(2)(viib), R. 11UA]

    The CIT(A) has upheld that order of the AO wherein the AO held that the share premium received from the shareholders on issue of equity shares and preference shares as income for the year under consideration is taxable u/s. 56(2)(viib) of the Income-tax Act. The issue before the Appellate Tribunal was whether the the premium of ₹ 3,96,54,531/- received from shareholders via-a-vis issue of equity shares and preference shares as income u/s. 56(2)(viib) of the Income-tax Act, 1961. Allowing the appeal of the assessee the Tribunal held that, the assessee has the choice to choose a prescribed method for ascertaining the market value of the shares transferred. If the assessee has chosen one method of valuation provided under Rule 11UA (i.e. DCF method), the AO has no power or jurisdiction to change that method to another method. Addition is deleted. (ITA No.3955/Mum/2018 dt.28-07-2020) (AY. 2014-15)

    Karmic Labs Pvt. Ltd v. ITO www.itatonline.org (Mum.)(Trib)

75. S. 68 : Cash credits – Unsecured loans – Lenders either directors or relatives of directors of Assessee – Assessee furnishing PAN, bank statements, confirmations and copies of income-tax returns of lenders – None of lenders were entry providers – No cash deposited in lenders’ account prior to issuing cheques – Assessee not purchasing cheque by paying cash – Addition unsustainable.

    On appeal, the Tribunal held that, all the lenders were either directors or relatives of the directors. The assessee had furnished PANs, bank statements, confirmations and copies of income-tax returns of the lenders. None of the lenders was alleged to be an entry provider. They have given loans to the assessee out of their available balances and it was not the case of the Department that prior to issuing cheques, there was a deposit of cash in the lender’s bank account. Therefore, the assessee had not purchased cheques by paying cash and hence no addition can be made under S. 68 of the Act. (AY. 2011-12)

    R. G. Consultants P. Ltd. v. DCIT (2020) 78 ITR 37 (SN)(Delhi) (Trib)

76. S. 68: Cash credits – Survey –Demonetization – Purchase of gold from sale proceeds – Sales cannot be assessed as undisclosed income – Only profit thereon could be taxed as income – Entire sales cannot be assessed as undisclosed income – Provision of section 115BBE is cannot be made retrospectively – For the assessment year 2017-18 only net profit was directed to be taxed. [S. 115BBE, 132, 133A]

    The assessee is an individual carrying on business of trading. In the course of search and survey the amount was surrendered and the taxes were paid. The Assessee suffered the loss in the undisclosed business and set off the same against the undisclosed income. The AO disallowed the loss. On appeal the CIT(A) confirmed the order of the AO and assessed the income u/s. 115E of the Act. On appeal the Tribunal held that the present appeal is against the order of Ld. CIT(A) filed by department as well as by the assessee. Amended provisions are applicable from 01-04-2017 only and cannot be applied retrospectively. As regards the addition the deletion of addition made by the CIT(A) was affirmed. Tribunal also held that It is evident from entries found in cash book and from statement recorded from assessee in course of survey that assessee purchased gold in period of demonetization which was obviously for sale to persons on receiving cash from them as the same is normal practice of gold trade. The gold purchased in period of demonetization was towards agreed sale to persons on receiving amount therefor from those persons. Thus the source of payment for purchase of gold is out of amount received from its sales and so it is to be treated as properly explained. It is only profit on sale of said purchased gold which is income of assessee which was undisclosed income of assessee and the same could only be subjected to tax. It is settled law that in case of unaccounted sales only profit therefrom could only be taxed as income of assessee As regards undisclosed income only profit can be taxed the Tribunal relied on following case laws Dr. T. A. Quereshi v. CIT (2006) 287 ITR 547 (SC), CIT v. Piara Singh (1980) 124 ITR 40 (SC), CIT v. S. C. Kothari (1971) 82 ITR 794 (SC) (AY. 2015 to 2017-18) (ITA No. 1256, 1257 & 1258/JP/2019 dt. 15-9-2020)

    Shri Nawal Kishore Soni v. ACIT (Jaipur)(Trib) www.itatonline.org

77. S. 68 : Cash credits – Capital gains – Penny stocks – Transactions were genuine and duly supported by various documentary evidences – Opportunity of cross examination was not provided – The AO has not discharged the onus of controverting the documentary evidences furnished by the assessee and by bringing on record any cogent material to sustain the addition – Addition as cash credit and addition of 2% as commission was deleted – Assessed as long term capital gains and exemption is allowed [S. 10(38), 45, 69]

    The assessee had made investment in 62500 Equity Shares of an entity namely Santoshima Trade Link Ltd (STL) during the month of September 2011. The face value of the share was ₹ 10 per share with premium of ₹ 10 per share, accordingly the assessee has paid ₹ 12.50 lacs to acquire the said shares. The shares were allotted and were received in physical form. The shares were dematerialised during March 2012. Meanwhile STL got merged with another entity namely Sunrise Asian Ltd. (SAL) pursuant of scheme of Amalgamation u/s. 391 to 394 of the Companies Act, 1956 which was duly approved by the Honourable Bombay High Court. In the month of June 2013 SAL was a public limited Company and its shares were traded at Bombay Stock Exchange. The Assessee sold the shares in the month of March 2014. Since the Shares were held more than one year the shares were sold through broker by paying Securities Transactions Tax (STT). The assessee earned the long term capital gains of ₹ 293-38 lacs. The Assessee has shown long term capital gains on sale of shares and claimed exemption under section 10(38) of the Act. The AO has doubted the transactions and held that SAL was merely a paper company engaged in providing accommodation entries to various beneficiaries. The search was conducted on the assessee on 5-11-2014. Applying the ratio of judgement in Sumati Dayal v. CIT (1995) 214 ITR 801 (SC), the AO assessed the long term as cash credits and also made addition of 2% commission thereon as explained u/s 69C of the Act. Order of AO is affirmed by the CIT(A). On appeal allowing the appeal the Tribunal held that the AO has not discharged the onus of controverting the documentary evidences furnished by the assessee and by bringing on record any cogent material to sustain the addition. The allegation of price rigging / manipulation has been levied without establishing the vital link between the assessee and other entities. The whole basis of making additions is third party statement and no opportunity of cross-examination has been provided to the assessee to confront the said party. As against this, the assessee’s position that that the transactions were genuine and duly supported by various documentary evidences, could not be disturbed by the revenue. (Referred Andaman Industries Ltd. v. CCE (2015) 127 DTR 241 / 281 CTR 241 (SC), Kishanchand Chellaram v. CIT v. CIT (1980) 125 ITR 713 (SC) ITA. No. 7648/Mum/2019 dt. 11-8-2020 and Ors. (AY. 2014-15)

    Dipesh Ramesh Vardhan v. DCIT (Mum.)(Trib) www.itatonline.org

78. S. 69 : Unexplained investments – Undisclosed cash – Money changer – Business requirements – Cash bundles carrying tag of another bank – Common practice – Cash books written day-to-day basis but in practice always a time gap between book entries – No defect pointed out by Assessing Officer in books of account of assessee – addition on basis of suspicion and surmises not justified.

    On appeal, the Tribunal held that, the assessee was an authorized money changer. This line of business required availability of cash in huge amounts as persons give dollars to be exchanged in Indian currency. The fact that the cash bundles carried the tag of PNB should not be given weightage as it was a common practice amongst all banks to issue currency bundles as received by them. Though the cash books were written on day-to-day basis, in practice there was always a time gap between the book entries. Further, not a single defect had been pointed out by the Assessing Officer in the books of account of the assessee when produced during assessment proceedings. The entire addition had been made on the basis of suspicions and surmises and such addition could not be sustained. (AY. 2011-12)

    R. G. Consultants P. Ltd. v. DCIT (2020) 78 ITR 37 (SN)(Delhi) (Trib)

79. S. 69 : Unexplained investments – Cash credits – Sole beneficiary of trust – The sum of ₹ 196 crore held by HSBC Pvt Bank, Switzerland, in the name of Tharani Family Trust, of which the assessee was a beneficiary, is assessable as the undisclosed income of the assessee. [S. 68]

    The assessee is an individual. The assessee had filed her income tax return, on 29th July 2006, disclosing an income of ₹ 1,70,800 for the relevant previous year, but subsequently the investigation wing of the income tax department, received information that the assessee is having a bank account with HSBC Private Bank (Suisse) SA Geneva. Based on this information, was reopened for fresh assessment was made. The assessee denied having any bank account. The AO made the addition of ₹ 196 crore held by HSBC Pvt. Bank, Switzerland, in the name of Tharani Family Trust, of which the assessee was a beneficiary, is assessable as the undisclosed income of the assessee. Order of the AO is affirmed by the CIT(A). On appeal affirming the view of the lower authorities the Tribunal observed that the assessee is not a public personality like Mother Terresa that some unknown person, with complete anonymity, will settle a trust to give her US $ 4 million, and in any case, Cayman Islands is not known for philanthropists operating from there; if Cayman Islands is known for anything relevant, it is known for an atmosphere conducive to hiding unaccounted wealth and money laundering. HSBC Pvt Bank has also been indicted by several Governments worldwide and how it has even confessed to be being involved in money laundering. (ITA No. 2333/Mum/2018 dt. 16-07-2020 (B.I.)(AY. 2006-07)

    Renu T. Tharani (Ms) v. Dy. CIT (IT) (Mum.)(Trib) www.itatonline.org

80. S. 80P: Co-operative Society – Interest earned from scheduled bank – Not deductible – Net interest from deposits with scheduled bank to be excluded from deduction – Interest earned from Co-operative bank or society – Deduction allowable on net interest – Receipt by society from its members towards form fee –Attributable to and arising from Assessee’s day-to-day activities – Deductible – Standard deduction allowable. [S. 80P(2)(a), 80P(2)(c), 80P(2)(d)]

    On appeal, the Tribunal held that, the assessee was not entitled to deduction of interest from scheduled bank under Section 80P(2)(a)(i) of the Act and the Assessing Officer has to work out the net interest earned from the deposits with the scheduled bank to exclude that amount from the computation of deduction claimed under Section 80P(2)(a)(i) of the Act. The interest earned from co-operative bank or society would qualify for grant of deduction under Section 80P(2)(d) of the Act and the net amount of such interest income should be considered for grant of deduction under Section 80P(2)(d) of the Act. State Bank of India v. CIT (2016) 389 ITR 578 (Guj) (HC) relied on. The assessee received amount from its members towards form fee, was attributable to and arose from the assessee’s day-to-day activities. Therefore, the claim of the assessee was allowable under Section 80P of the Act. The standard deduction of ₹ 50,000 claimed by the assessee under Section 80P(2)(c) of the Act being a statutory deduction, the assessee would be entitled to such deduction. The Assessing Officer was directed to allow such claim in accordance with the law. (AY.2014-15)

    Balasinor Vikas Co-Operative Credit Society Ltd. and Shri Jalaram Mahila Co-Operative Credit Society Ltd. and Anand Catholic Co-Operative Credit Society Ltd. v DCIT (2020) 78 ITR 15 (SN)(Ahd) (Trib)

81. S. 80JJAA : Employment of new workmen – Provisions as existing before 1-4-2016 applicable to earlier years – AO to apply provisions as applicable to each of the earlier years

    On appeal, the Tribunal held that, S. 80JJAA(3) of the Act as amended by the Finance Act, 2016 makes it clear that the provisions that existed before April 1, 2016 shall apply to the earlier years, meaning thereby the provisions, which are applicable to a particular year, should be applied for determining the eligibility of the assessee to claim this deduction. The Assessing Officer was directed to apply the provisions of Section 80JJAA of the Act as applicable to the respective year(s). (AY. 2012-13, 2013-14)

    Century Link Technologies India Pvt. Ltd. v. DCIT (2020) 78 ITR 71 (SN)(Bang.)(Trib)

82. S. 115JB : Book profit – Waiver of loan – Loss or depreciation – Reduction of lower of loss or depreciation of the past years is allowable even where the same did not appear in the books of the current years on being absorbed against the credits not otherwise liable to tax in the past years – Matter remanded to CIT(A) for on a short point that the aspect of the adjustments had not been delved upon. [S. 32, 72]

    The Tribunal permitted the assessee for set-off of amount of the lower of loss or depreciation, pertaining to A.Y. 2010-11 as per books of accounts and allowed the deduction of the amount credited to Profit & Loss Account of AY. 2011-12 on account of waiver of loans and other payables and also disregarded the reduction made in the accumulated debit balance of Profit & Loss Account through the Restructuring Account. The Tribunal held that the debit balance of Profit & Loss A/c., through absorbed and wiped off in books, now positive was deemed to have survived for set-off in a later year in computing book profit. The matter is remanded to the CIT(A) on a short point that the aspect of the adjustments had not been delved upon. (ITA No. 2709 & 4696/M/2019 and ITA No. 2710 & 4697/M/2019 dt. 28-05-2020) (AY. 2013-14, 2014-15)

    Windsor Machine Ltd. v. DCIT (Mum.)(Trib.)(UR)

83. S. 145A : Accounting – Valuation of stock – Change in method – Assessee changing method of valuation – Cost or market value whichever is lower method – Changed method consistent with mandatory AS 2 – No need to apply changed method to opening stock of finished goods – Changed method valuation to be applied to all components of inventory

    On appeal, the Tribunal held that, valuing finished goods at cost or market value whichever is lower, was in accordance with the mandatory Accounting Standard (AS) – 2 and thus it could be said that change in method of valuing finished stock was bona fide. This would satisfy the mandate of S. 145A of the Act. Once, change of method is proven to be bonafide and genuine, then, if the changed method was applied to opening stock also, there would be taxing of the same income twice, hence, there was no need to apply the changed method to value the opening stock and it could be continued to be valued as per the old method. If the assessee had to change the method of valuing inventory in compliance with AS 2, the changed method of valuation had to be applied to all the components of inventory as prescribed under AS 2. The assessee was directed to prove that these differential methods were consistent with AS 2 and there was no intent to reduce tax by applying the new method of valuing finished goods.

    ACIT v. Thiagarajar Mills Ltd. (2020) 78 ITR 8 (SN)(Chennai)(Trib)

84. S. 143(3) : Assessment – Limited scrutiny cannot be taken for complete scrutiny unless the AO forms a reasonable view that there is a possibility of under assessment of income – Approval by the PCIT in a mechanical manner is not valid – S. 292BB does not save the infirmity – Order is quashed as a nullity. [S. 292BB]

    Allowing the appeal of the assessee the Tribunal held that, under CBDT Instruction No. 5/2016, a case earmarked for ‘Limited Scrutiny’ cannot be taken for ‘Complete Scrutiny’ unless the AO forms a “reasonable view” that there is a possibility of under assessment of income. The objective of the instruction is to (i) prevent fishing and roving enquiries; (ii) ensure maximum objectivity; and (iii) enforce checks and balances upon the powers of the AO. On facts, there is not an iota of cogent material shown by the AO for the conversion from limited scrutiny to complete scrutiny. The PCIT has also accorded approval in a mechanical manner. S. 292BB does not save the infirmity. The assessment order has to be quashed as a nullity (ITA No. 6767/Del/2019 dt. 12-06-2020 (AY. 2015-16)

    Dev Milk Foods Pvt. Ltd. v. Dy. CIT (Delhi)(Trib) www.itatonline.org

85. S. 147: Reassessment – Non-Resident – information from investigation wing of the income tax department – Return the asseeee has shown as resident – Reassessment is held to be valid [S. 6(1), 9(1), 148]

    The assessee is an individual. The assessee had filed her income tax return, on 29th July 2006, disclosing an income of ₹ 1,70,800 for the relevant previous year, but subsequently the investigation wing of the income tax department, received information that the assessee is having a bank account with HSBC Private Bank (Suisse) SA Geneva. Based on this information, was reopened for fresh assessment was made. Assessee challenged the reassessment on the ground that the assessee was non-resident for the relevant assessment year hence the department has no jurisdiction to question the alleged deposit in other countries. The Tribunal up held that reassessment on the ground that in the return of income filed by her she has shown as resident. As the prima facie belief of the AO that the asseseee was resident is held to be valid. Accordingly the ground of reopening of assessment is up held by the Tribunal. (ITA No. 2333/Mum/2018 dt. 16-07-2020 (B.I.) (AY. 2006-07)

    Renu T. Tharani (Ms) v. Dy. CIT (IT) (Mum.)(Trib) www.itatonline.org

86. S. 148 : Reassessment – Notice – Validity – Amalgamation of companies – Effect – Amalgamating company ceases to exist – Factum of amalgamation brought to notice of AO – Reassessment proceedings against amalgamating company – Not valid [S. 147]

    On appeal, the Tribunal held that the CIT(A) had given a categorical observation that the reassessment was initiated based on the audit objection. Even, on the date of such audit objection, the erstwhile assessee was not in existence pursuant to the amalgamation. Further, despite various intimations given, during penalty proceedings, the Assessing Officer proceeded to frame the re-assessment in the name of the amalgamating company, which was declared void ab initio by the CIT(A). Given this, the reassessment was liable to be set aside. (AY. 2008-09)

    DCIT v. Palm Tech India Ltd. (2020) 78 ITR 4 (SN)(Mum.)(Trib)

87. S. 206AA : Requirement to furnish Permanent Account Number (PAN) – Provision for deduction at higher rate where recipient fails to provide PAN – Provision cannot override beneficial provisions of DTAAs – Assessee not liable to deduct tax at higher rates in spite of failure by non-resident to furnish PAN

    On appeal, the Tribunal held that the non obstante clause contained in the machinery provision of Section 206AA of the Act has to be assigned restrictive meaning and cannot be read so as to override beneficial provisions of DTAAs, which override even the charging provisions of the Act by virtue of Section 90(2) of the Act. Therefore, an assessee cannot be held liable to deduct tax at higher rates prescribed in S. 206AA of the Act for payments made to non-residents having taxable income in India in spite of their failure to furnish PAN. (AY.2010-11)

    ACIT v. Wipro Ltd. (2020) 78 ITR 70 (SN)(Bang.)(Trib)

88. S. 254(2A): Appellate Tribunal – Stay – Special Bench –Amendment in first proviso to s. 254(2A) by the Finance Act 2020 – Whether directory or mandatory – Reference to special Bench. [S. 253]

    Honourable President of the Appellate Tribunal to consider whether a Special Bench should be constituted to decide two very significant aspects relating to the powers of the Appellate tribunal to grant unconditional stay of demand after the amendment in first proviso to S. 254(2A) by the Finance Act 2020, namely, (i) The legal impact, if any, of the amendment on the powers of the Tribunal u/s. 254(1) to grant stay; and, (ii) if the amendment is held to have any impact on the powers of the Tribunal u/s 254(1),- (a) whether the amendment is directory in nature or is mandatory in nature; (b) whether the said amendment affects the cases in which appeals were filed prior to the date on which the amendment came into force; (c) whether, with respect to the manner in which, and nature of which, security is to be offered by the assessee, under first proviso to S. 254(2A), what are broad considerations and in what reasonable manner, such a discretion must essentially be exercised, while granting the stay, by the Tribunal. (SA Nos. 147 and 148/Mum/2020, arising out of ITA Nos. 1423 and 1424/Mum/2018 dt. 17-06-2020) (AY. 2011-12, 2012-13)

    Tata Education and Development Trust v. ACIT (2020) 117 taxmann.com 500 (Mum.)(Trib) www.itatonline.org

89. S. 271(1)(c) : Penalty – Concealment – Furnishing inaccurate particulars of income – Sufficient interest-free funds available with Assessee – Interest expenses not disallowable – Mere wrong claim does not tantamount to furnishing of inaccurate particulars of income or concealment of income – Penalty not leviable in such cases.

    On appeal, the Tribunal held that sufficient interest-free funds were available with the assessee against which it had advanced a meagre amount on which it had not charged interest. Hence, interest was not disallowable. Moreover, it was only a case of opinion on the part of the Assessing Officer that assessee had diverted interest bearing funds to interest-free advances ignoring the fact that the assessee had huge interest-free reserves. The penalty was imposed by calculating notional interest on interest-free advances. The assessee had not concealed any particulars of income. Mere wrong claim could not amount to furnishing of inaccurate particulars of income or concealment of income, hence, levy of penalty was not sustainable. (AY. 2011-12)

    Deem Roll-Tech Ltd. v. DCIT (2020) 78 ITR 45 (SN)(Ahd.)(Trib)