Tribunal Members On Probation Are Entitled To Practice: High Court

 

Dear Subscriber,

 

The following important judgement is available for download at itatonline.org.

UOI vs. Ramesh Nair (Delhi High Court)

Bar in s. 129(6) on ex-Members practising before CESTAT does not apply to Members demitting office on probation

The respondent, a practising Advocate at Indore, was offered appointment as Member (Judicial) of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). It was indicated that the respondent would be on probation for a period of one year and upon confirmation shall hold office for a term of 5 years extendable by another term of 5 years. It was indicated in the letter that if the respondent accepted the offer his first posting would be at CESTAT Chennai Bench. The respondent sent a letter accepting the offer of appointment but requested that he may be posted at a place nearby Indore, preferably at Mumbai. That request was not accepted and the respondent was requested to convey his unconditional willingness to accept the offer of appointment as Member (Judicial) within 10 days. The respondent wrote a reply in which he gave his unconditional willingness to be appointed Member (Judicial) but sought clarification whether a Member is entitled to practice and appear in CESTAT after he is discharged from services for any reason during the period of probation. The Government responded and stated that the bar in s. 129(6) of the Customs Act which applied to a member 'on ceasing to hold office' is applicable to all types of cessation; whether on retirement, resignation or discharge during probation or by any other way. The respondent challenged the said letter before the Central Administrative Tribunal and sought a direction that he should be allowed to join as Member in the CESTAT without being subjected to the embargo of s. 129 (6) in the event of his ceasing to hold office as Member before the expiry of period of probation. During the pendency of the application before the CAT, the Government withdrew the offer of appointment on the ground that his unconditional willingness to accept the offer of appointment had not been received. The respondent challenged the withdrawal of the offer of appointment before the CAT. The CAT held that a person under probation was not holding an office for the purpose of s. 129(6) of the Customs Act and that the case of discharge of a probationer from service on account of not being not found suitable for being confirmed was not comparable with cessation of office by person who has acquired a lien on it. The CAT followed the order in Concept Creations vs. ACIT 120 ITD 19 (Del) (SB) where it was held that Members of the ITAT are debarred from appearing before the ITAT only after retirement from service of the Tribunal and such conditions are not made applicable to a member discharged from service during the period of probation. It also held that the clarification sought by the respondent did not mean that he had not unconditionally accepted the offer of appointment and that the same could not be revoked. The Government challenged the said order in a Writ Petition. HELD by the High Court dismissing the Petition:

The bar under s. 129(6) that a Member "on ceasing to hold office" shall not be entitled to appear, act or plead before the Tribunal is applicable to a Member holding the post on substantive basis and not to a person demitting office as a probationer. The word 'probation' means the testing of the character, conduct or abilities of a person. A Member on probation cannot be said to be "holding office" because he has no vested right in the said office. The Service Rules also show that a distinction has been made between the appointment of a Member who is on probation and a Member who is confirmed. Also, the fact that the respondent sought a change in the place of posting and sought clarification does not mean that he had not unconditionally accepted the offer of appointment.

Note: Concept Creations 120 ITD 19 (SB) has been stayed in Dinesh Chandra Agarwal 206 TM 29 (All) and as an interim measure ex-ITAT Members have been permitted to practice before Benches where they were not posted

(Click Here To Read More)

 

Regards,

 

Editor,

 

itatonline.org

---------------------

Latest:

Mohan Parasaran Won The Vodafone T. P. Battle But Will Harish Salve Win The War?

Section 271(1)(c) Penalty: Law On Discharge Of Onus In View Of SC Verdict In MAK Data Explained

 

Dear Subscriber,

 

The following important judgement is available for download at itatonline.org.

CIT vs. M/s. Gem Granites (Karnataka) (Madras High Court)

S. 271(1)(c) penalty cannot be levied if the assessee discharges the primary burden by a cogent explanation and the AO is unable to rebut it. MAK Data (SC) explained

Pursuant to a search conducted u/s 132 it was revealed that the assessee had "on-money" transactions in real estate dealings. The assessee accepted the "on-money" but claimed that it was taxable only on completion of the projects under the 'completed contract method'. The assessee's claim was rejected by all the authorities including the High Court. In the s. 271(1)(c) penalty proceedings, the assessee claimed that there was a mistake in the entries regarding the sale of flats to J.B. Exports in as much as the rate at which the property was shown as sold to the said party was much higher than the rate at which the property was sold to other parties. The AO and CIT(A) rejected the claim but the Tribunal accepted it on the basis that the huge difference in the rate of sale of the flat recorded in other cases and in the case of J.B. Exports supported the assessee's contention that there may be a mistake in recording the rate. It held that as the department had failed to prove concealment without any doubt, penalty could not be imposed. On appeal by the department to the High Court, HELD dismissing the appeal:

Merely because the assessment proceedings have been confirmed does not automatically mean that penalty u/s 271(1)(c) is justified. Unless the case is strictly covered by s. 271(1)(c), penalty cannot be invoked. For sustaining penalty, the bona fide explanation of the assessee must be looked at so that the contumacious conduct of the assessee for the purpose of sustaining the penalty would be taken as condition that is the main requirement u/s 271(1)(c). In Mak Data P. Ltd vs. CIT the Supreme Court held that when a difference is noticed by the AO between the reported and assessed income, the Explanation to Section 271(1) raises a presumption of concealment and the burden is on the assessee to show otherwise, by cogent and reliable evidence. When the initial onus placed by the Explanation has been discharged by the assessee, the onus shifts on the Revenue to show that the amount in question constituted undisclosed income. On facts, the onus cast upon the assessee has been discharged by giving a cogent and reliable explanation. If the department did not agree with the explanation, the onus was on the department to prove that there was concealment of particulars of income or furnishing inaccurate particulars of income. Such onus has not been discharged by the department and so the Tribunal's finding cannot be interfered with (Dharmendra Textiles Processors 306 ITR 277 (SC) & Reliance Petroproducts 322 ITR 158 (SC) referred)

(Click Here To Read More)

 

Regards,

 

Editor,

 

itatonline.org

---------------------

Latest:

Can Harish Salve Bail Out Nokia In The Rs. 6000 Crore Tax Evasion Case?

Section 44BB Receipts Are Not Assessable As FTS. S. 234B Interest Verdict Cannot Be Followed: ITAT Mumbai

 

Dear Subscriber,

 

The following important judgement is available for download at itatonline.org.

ADIT vs. Valentine Maritime (Gulf) LLC (ITAT Mumbai)

If the contract falls u/s 44BB, incidental technical services are not assessable as "fees for technical services" u/s 9(1)(vii). Verdict in Alcatel Lucent (Del) on liability of foreign company to pay s. 234B interest cannot be followed in Mumbai

The Tribunal had to consider two questions of law (i) whether a part of the consideration paid for a project involving installation, assembly or the like in connection with the prospecting for, or extraction or production of, mineral oils can be assessed as "fees for technical services" u/s 9(1)(vii) or the entire consideration has to be assessed only u/s 44BB? and (ii) whether in view of the verdict of the Delhi High Court in Alcatel Lucent a foreign company can be held liable for advance-tax and consequent payment of interest u/s 234B? HELD by the Tribunal:

(i) The contract was a composite one and its main purpose was to install offshore pipelines, etc. To achieve this main purpose, the assessee had undertaken various activities which were listed down in the various articles of the contract. Those activities were incidental to the main job and were an integral part of the contract to ensure that all the pipe lines were successfully installed, commissioned, tested and complied with the standards set out in the contract. The argument of the department that the activity relating to providing technical services should be assessed as "fees for technical services" u/s 9(1)(vii) is not acceptable. When a contract consists of a number of terms and conditions, each condition does not form a separate contract. The contract has to be read as a whole. The entire consideration is assessable only u/s 44BB and no part of it is assessable as fees for technical services u/s 9(1)(vii) (Chaturbuj Vallabhdas AIR 1954 (SC) 236, Mitsui Engg. & Ship Building 259 ITR 248 (Del), Jindal Drilling and Industries 320 ITR 104 (Del) & G&T Resources (Europe) Ltd 139 TTJ 568 followed);

(ii) The argument of the department based on Alcatel Lucent USA (Del) that even a foreign company is liable to pay advance tax and consequential interest u/s 234B is not acceptable in view of the contrary decision of the jurisdictional High Court in NGC Network 313 ITR 187 (Bom). 

(Click Here To Read More)

 

Regards,

 

Editor,

 

itatonline.org

---------------------

Latest:

UOI vs. Ramesh Nair (Delhi High Court)

Bar in s. 129(6) on ex-Members practising before CESTAT does not apply to Members demitting office on probation

Can Harish Salve Bail Out Nokia In The Rs. 6000 Crore Tax Evasion Case?

 

Dear Subscriber,

Can Harish Salve Bail Out Nokia In The Rs. 6000 Crore Tax Evasion Case?

Nokia India has got itself into a terrible mess over alleged failure to deduct TDS on royalty payments to its parent company. What would have ended with a mere 10% tax rate has now morphed into a horrendous tax liability. Nokia is now desperate to sell its assets but the Income-tax department has a strangle-hold over it and is calling all the shots. It will take all of Harish Salve's wizardry to pull Nokia out from the deep hole it is in. Can he do it?

(Click Here To Read More)

 

Regards,

 

Editor,

 

itatonline.org

---------------------

Latest:

ADIT vs. Valentine Maritime (Gulf) LLC (ITAT Mumbai)

If the contract falls u/s 44BB, incidental technical services are not assessable as "fees for technical services" u/s 9(1)(vii). Verdict in Alcatel Lucent (Del) on liability of foreign company to pay s. 234B interest cannot be followed in Mumbai

ITR VOL 359 PART 1

 

INCOME TAX REPORTS (ITR)--PRINT AND ONLINE EDITION

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

HIGH COURTS

Appeal to Appellate Tribunal --Investment allowance--Remand for recomputation--Restricted--No jurisdiction in Assessing Officer to consider admissibility of investment allowance--Need for remand orders to be specific in directions--Income-tax Act, 1961, ss. 32A, 254-- CIT v. V. S. Dempo and Co. Ltd. (Bom) . . . 523

Reassessment --Income escaping assessment--Reason to believe--Material forming basis for--Communication received from Governmental agency under exchange of information in terms of Double Taxation Avoidance Agreement that assessee received money not shown in its books--Prima facie ground for reassessment--Notice valid--Income-tax Act, 1961, s. 147-- Mitsui and Company India Pvt. Ltd. v. ITO (Delhi) . . . 534

----Notice after four years--No failure by assessee to disclose material facts--Notice not valid--Income-tax Act, 1961, s. 147-- CIT v. Gujarat Mineral Development Corporation Ltd. (Guj) . . . 532

Revision --Jurisdiction--Erroneous and prejudicial to Revenue --Assessing Officer after detailed enquiry and considering assessee’s disclosures allowing deduction--Not a case of no enquiry--Order of Tribunal holding expenditure revenue--View taken by Assessing Officer plausible--Revision not permissible--Income-tax Act, 1961, s. 263-- CIT v. Vodafone Essar South Ltd. (Delhi) . . . 526

 

PRINT EDITION

ITR Volume 359 : Part 1 (Issue dated : 2-12-2013)

SUBJECT INDEX TO CASES REPORTED IN THIS PART

HIGH COURTS

Assessing Officer --Powers--International transactions--Transfer Pricing Officer determining arm’s length price after taking transactions suo motu for consideration--Assessing Officer cannot deviate from order of Transfer Pricing Officer--Income-tax Act, 1961-- Vodafone India Service Pvt. Ltd. v. Union of India (Bom) . . . 133

Assessment --Auditing of accounts--Special audit--Conditions precedent--Charitable trust--No plea that Assessing Officer had concluded complexity of accounts without having examined accounts--Audit as required under section 12A(1)(b) not found satisfactory--Nature and complexity of accounts of assessee satisfied--No prejudice to trust by special audit--Direction for special audit warranted--Income-tax Act, 1961, ss. 12A(1)(b), 142(2A)-- Hiranandani Foundation v. Joint Director of Income-tax (Exemption) (Bom) . . . 29

Business expenditure --Disallowance--Payments subject to deduction of tax at source--Non-resident--Commission or discount paid to non-resident--Circular clarifying that tax need not be deducted if non-resident did not have permanent establishment in India--Withdrawal of circular in October 2009--Non-deduction of tax in accounting year relevant to assessment year 2009-10--Payment not to be disallowed--Income-tax Act, 1961, s. 40(a)(i)-- CIT v. Angelique International Ltd. (Delhi) . . . 9

----Modvat credit on account of excess of excise duty and additional customs duty paid by assessee on purchase of raw material--Allowable--Income-tax Act, 1961, s. 37(1)-- CIT v. Samtel India Ltd. (Delhi) . . . 62

Business income or capital gains --Income from futures and options transactions and daily trading in shares with business motive--Business income--Income-tax Act, 1961-- CIT v. Om Prakash Suri (No. 1 ) (MP) . . . 39

Capital gains --Business--Business income or capital gains--Purchase and sale of shares--Purchase by investment company to obtain right to manage vendor company--Shares held for more than 30 months before sale--Shares not freely transferable--Profits from sale of shares assessable as capital gains--Income-tax Act, 1961, ss. 28, 45-- Accra Investments P. Ltd. v. ITO (Bom) . . . 116

----Firm--Partners--Retiring partner taking only money towards value of his share--No distribution of capital assets among partners--No transfer of capital asset--No profits or gains payable by firm under section 45(4)--Income-tax Act, 1961, ss. 2(47), 45(4)-- CIT v. Dynamic Enterprises [FB] (Karn) . . . 83

----Income from delivery based transactions with investment motive--Short-term capital gains--Income-tax Act, 1961-- CIT v. Om Prakash Suri (No. 1 ) (MP) . . . 39

Circular --Effect--Circulars binding on income-tax authorities--Circulars withdrawing benefit--Not to have retrospective effect--Income-tax Act, 1961, s. 119-- CIT v. Angelique International Ltd. (Delhi) . . . 9

Deduction of tax at source --Salary or professional fees--Consultant doctors employed in hospital in addition to full time resident doctors--Consultants rendering services under contract--Fees paid to them not salary--Tax deductible under section 194J and not under section 192--Consultants declaring professional fees in returns and paying tax thereon--No loss to Revenue--Levy of interest not justified--Income-tax Act, 1961, ss. 192, 194J, 201(1A)-- CIT (TDS) v. Apollo Hospitals International Ltd. (Guj) . . . 78

Deemed dividend --Loan to shareholder--Finding of fact of Tribunal that sum received by assessee upon sale of land not as loan or advance--Sum not taxable as deemed dividend--Income-tax Act, 1961, s. 2(22)(e)-- CIT v. Om Prakash Suri (No. 2 ) (MP) . . . 41

Depreciation --Imported motor cars--Amalgamation--Assessee acquiring cars after 1-4-2001 under scheme of amalgamation--Bar on depreciation allowance on imported vehicles in section 32(1) proviso (a) has no application--Assessee entitled to depreciation--Income-tax Act, 1961, ss. 32, 43(1)-- CIT v. Mira Exim Ltd. (Delhi) . . . 70

Exemption --New industrial undertaking in free trade zone--Transfer of entire business--Transferee entitled to exemption--Income-tax Act, 1961, s. 10A-- CIT v. Heartland KG Information Ltd. (Mad) . . . 1

International transaction --Transfer pricing--Arm’s length price--Determination--Writ--Determination of arm’s length price after notice to assessee and hearing it--Principles of natural justice followed--Assessee had alternative remedy--Writ would not issue to quash order of Transfer Pricing Officer--Income-tax Act, 1961, s. 92CA-- Hindalco Industries Ltd. v. Addl. CIT (Bom) . . . 46

----Arm’s length price--Amendment empowering Transfer Pricing Officer to consider transaction coming to his notice “during the course of proceedings before him†--Phrase “during the course of the proceedings†--Does not restrict the source to material already on record--Transfer Pricing Officer has jurisdiction to consider transactions not reported by assessee and transactions not referred to him by Assessing Officer where proceedings pending before him on 1-6-2011--Income-tax Act, 1961, s. 92CA(2A), (2B)-- Vodafone India Service Pvt. Ltd. v. Union of India (Bom) . . . 133

Penalty --Concealment of income--Claim made in course of scrutiny assessment to loss on account of loan to subsidiary company being written off--Bona fide claim--Not a case of concealment--Penalty not leviable--Income-tax Act, 1961, s. 271(1)(c)-- CIT v. DCM Ltd. (Delhi) . . . 101

----Loan or deposit in cash exceeding specified limit--Assessee doing business as “shroff†--Cheque discounting business--Farmers selling their produce to traders against post-dated cheques--Taking cheques to assessee for discounting for cash--Not a case of assessee taking loan or deposit from agriculturists or repaying loan to agriculturists--Provisions of section 269SS or section 269T not attracted--No question of levy of penalty under sections 271D and 271E--Income-tax Act, 1961, ss. 269SS, 269T, 271D, 271E-- CIT v. Dineshchandra Shantilal Shah (HUF) (Guj) . . . 57

Precedent --Effect of decision of Supreme Court in Catholic Syrian Bank Ltd. v. CIT [2012] 343 ITR 270 (SC)-- CIT v. Angelique International Ltd. (Delhi) . . . 9

Purchase of immovable property by Central Government --Conditions precedent--Valuation of cost for resettling tenant--Appropriate Authority ignoring court orders twice and giving same reasons which court found not good enough to sustain acquisition of property--Pre-emptive purchase not warranted--Income-tax Act, 1961, s. 269UD(1)-- Satish Balan v. Union of India (Bom) . . . 15

Reassessment --Notice--Reason to believe income escaping assessment--Grounds must be recorded before issue of notice--Assessing Officer not entitled to record additional reasons thereafter--Income-tax Act, 1961, ss. 147, 148-- CIT v. Living Media India Ltd. (Delhi) . . . 106

----Notice--Validity--Original assessment after scrutiny--No new material showing escapement of income from assessment--Notice not valid--Income-tax Act, 1961, ss. 147, 148-- CIT v. Fujistu Optel Ltd. (MP) . . . 67

----Notice--Validity--To be judged on basis of reasons recorded prior to issue of notice--Additions based on reasons recorded prior to notice deleted and that order becoming final--Reassessment on other grounds recorded after issue of notice not valid--Income-tax Act, 1961, ss. 147, 148-- CIT v. Living Media India Ltd. (Delhi) . . . 106

Unexplained investment --Search and seizure against third person--Reassessment of assessee on basis of statement of such person--Addition relying on statement without opportunity to assessee to cross-examine--Violation of principles of natural justice--Matter remitted to Assessing Officer for fresh consideration--Income-tax Act, 1961, s. 69A-- CIT v. P. C. Chemicals (Delhi) . . . 129

Writ --High Court--Alternative remedy--International transactions--Arm’s length price--More efficacious remedy by filing objections before Dispute Resolution Panel--Disputed questions of fact--Writ petition not maintainable--Constitution of India, art. 226-- Vodafone India Service Pvt. Ltd. v. Union of India (Bom) . . . 133

----High Court--Alternative remedy--International transactions--High Court permitting assessee to avail of alternative remedy without prejudice its rights and contentions--Not a ground to refuse to entertain petition--Constitution of India, art. 226-- Vodafone India Service Pvt. Ltd. v. Union of India (Bom) . . . 133

----High Court--International transactions--Doctrine of merger--Transfer Pricing Officer’s order and Assessing Officer’s draft order merged in order of Dispute Resolution Panel--Orders passed in proceedings pursued by assessee without prejudice to its rights and pursuant to orders of court--Writ petition maintainable--Constitution of India, art. 226-- Vodafone India Service Pvt. Ltd. v. Union of India (Bom) . . . 133

 

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Constitution of India :

Art. 226 --Writ--High Court--Alternative remedy--International transactions--Arm’s length price--More efficacious remedy by filing objections before Dispute Resolution Panel--Disputed questions of fact--Writ petition not maintainable-- Vodafone India Service Pvt. Ltd. v. Union of India (Bom) . . . 133

----Writ--High Court--Alternative remedy--International transactions--High Court permitting assessee to avail of alternative remedy without prejudice its rights and contentions--Not a ground to refuse to entertain petition-- Vodafone India Service Pvt. Ltd. v. Union of India (Bom) . . . 133

----Writ--High Court--International transactions--Doctrine of merger--Transfer Pricing Officer’s order and Assessing Officer’s draft order merged in order of Dispute Resolution Panel--Orders passed in proceedings pursued by assessee without prejudice to its rights and pursuant to orders of court--Writ petition maintainable-- Vodafone India Service Pvt. Ltd. v. Union of India (Bom) . . . 133

Income-tax Act, 1961 :

S. 2(22)(e) --Deemed dividend--Loan to shareholder--Finding of fact of Tribunal that sum received by assessee upon sale of land not as loan or advance--Sum not taxable as deemed dividend-- CIT v. Om Prakash Suri (No. 2 ) (MP) . . . 41

S. 2(47) --Capital gains--Firm--Partners--Retiring partner taking only money towards value of his share--No distribution of capital assets among partners--No transfer of capital asset--No profits or gains payable by firm under section 45(4)-- CIT v. Dynamic Enterprises [FB] (Karn) . . . 83

S. 10A --Exemption--New industrial undertaking in free trade zone--Transfer of entire business--Transferee entitled to exemption-- CIT v. Heartland KG Information Ltd. (Mad) . . . 1

S. 12A(1)(b) --Assessment--Auditing of accounts--Special audit--Conditions precedent--Charitable trust--No plea that Assessing Officer had concluded complexity of accounts without having examined accounts--Audit as required under section 12A(1)(b) not found satisfactory--Nature and complexity of accounts of assessee satisfied--No prejudice to trust by special audit--Direction for special audit warranted-- Hiranandani Foundation v. Joint Director of Income-tax (Exemption) (Bom) . . . 29

S. 28 --Capital gains--Business--Business income or capital gains--Purchase and sale of shares--Purchase by investment company to obtain right to manage vendor company--Shares held for more than 30 months before sale--Shares not freely transferable--Profits from sale of shares assessable as capital gains-- Accra Investments P. Ltd. v. ITO (Bom) . . . 116

S. 32 --Depreciation--Imported motor cars--Amalgamation--Assessee acquiring cars after 1-4-2001 under scheme of amalgamation--Bar on depreciation allowance on imported vehicles in section 32(1) proviso (a) has no application--Assessee entitled to depreciation-- CIT v. Mira Exim Ltd. (Delhi) . . . 70

S. 37(1) --Business expenditure--Modvat credit on account of excess of excise duty and additional customs duty paid by assessee on purchase of raw material--Allowable-- CIT v. Samtel India Ltd. (Delhi) . . . 62

S. 40(a)(i) --Business expenditure--Disallowance--Payments subject to deduction of tax at source--Non-resident--Commission or discount paid to non-resident--Circular clarifying that tax need not be deducted if non-resident did not have permanent establishment in India--Withdrawal of circular in October 2009--Non-deduction of tax in accounting year relevant to assessment year 2009-10--Payment not to be disallowed-- CIT v. Angelique International Ltd. (Delhi) . . . 9

S. 43(1) --Depreciation--Imported motor cars--Amalgamation--Assessee acquiring cars after 1-4-2001 under scheme of amalgamation--Bar on depreciation allowance on imported vehicles in section 32(1) proviso (a) has no application--Assessee entitled to depreciation-- CIT v. Mira Exim Ltd. (Delhi) . . . 70

S. 45 --Capital gains--Business--Business income or capital gains--Purchase and sale of shares--Purchase by investment company to obtain right to manage vendor company--Shares held for more than 30 months before sale--Shares not freely transferable--Profits from sale of shares assessable as capital gains-- Accra Investments P. Ltd. v. ITO (Bom) . . . 116

S. 45(4) --Capital gains--Firm--Partners--Retiring partner taking only money towards value of his share--No distribution of capital assets among partners--No transfer of capital asset--No profits or gains payable by firm under section 45(4)-- CIT v. Dynamic Enterprises [FB] (Karn) . . . 83

S. 69A --Unexplained investment--Search and seizure against third person--Reassessment of assessee on basis of statement of such person--Addition relying on statement without opportunity to assessee to cross-examine--Violation of principles of natural justice--Matter remitted to Assessing Officer for fresh consideration-- CIT v. P. C. Chemicals (Delhi) . . . 129

S. 92CA --International transaction--Transfer pricing--Arm’s length price--Determination--Writ--Determination of arm’s length price after notice to assessee and hearing it--Principles of natural justice followed--Assessee had alternative remedy--Writ would not issue to quash order of Transfer Pricing Officer-- Hindalco Industries Ltd. v. Addl. CIT (Bom) . . . 46

S. 92CA(2A), (2B) --International transactions--Arm’s length price--Amendment empowering Transfer Pricing Officer to consider transaction coming to his notice “during the course of proceedings before him†--Phrase “during the course of the proceedings†--Does not restrict the source to material already on record--Transfer Pricing Officer has jurisdiction to consider transactions not reported by assessee and transactions not referred to him by Assessing Officer where proceedings pending before him on 1-6-2011-- Vodafone India Service Pvt. Ltd. v. Union of India (Bom) . . . 133

S. 119 --Circular--Effect--Circulars binding on income-tax authorities--Circulars withdrawing benefit--Not to have retrospective effect-- CIT v. Angelique International Ltd. (Delhi) . . . 9

S. 142(2A) --Assessment--Auditing of accounts--Special audit--Conditions precedent--Charitable trust--No plea that Assessing Officer had concluded complexity of accounts without having examined accounts--Audit as required under section 12A(1)(b) not found satisfactory--Nature and complexity of accounts of assessee satisfied--No prejudice to trust by special audit--Direction for special audit warranted-- Hiranandani Foundation v. Joint Director of Income-tax (Exemption) (Bom) . . . 29

S. 147 --Reassessment--Notice--Reason to believe income escaping assessment--Grounds must be recorded before issue of notice--Assessing Officer not entitled to record additional reasons thereafter-- CIT v. Living Media India Ltd. (Delhi) . . . 106

----Reassessment--Notice--Validity--Original assessment after scrutiny--No new material showing escapement of income from assessment--Notice not valid-- CIT v. Fujistu Optel Ltd. (MP) . . . 67

----Reassessment--Notice--Validity--To be judged on basis of reasons recorded prior to issue of notice--Additions based on reasons recorded prior to notice deleted and that order becoming final--Reassessment on other grounds recorded after issue of notice not valid-- CIT v. Living Media India Ltd. (Delhi) . . . 106

S. 148 --Reassessment--Notice--Reason to believe income escaping assessment--Grounds must be recorded before issue of notice--Assessing Officer not entitled to record additional reasons thereafter-- CIT v. Living Media India Ltd. (Delhi) . . . 106

----Reassessment--Notice--Validity--Original assessment after scrutiny--No new material showing escapement of income from assessment--Notice not valid-- CIT v. Fujistu Optel Ltd. (MP) . . . 67

----Reassessment--Notice--Validity--To be judged on basis of reasons recorded prior to issue of notice--Additions based on reasons recorded prior to notice deleted and that order becoming final--Reassessment on other grounds recorded after issue of notice not valid-- CIT v. Living Media India Ltd. (Delhi) . . . 106

S. 192 --Deduction of tax at source--Salary or professional fees--Consultant doctors employed in hospital in addition to full time resident doctors--Consultants rendering services under contract--Fees paid to them not salary--Tax deductible under section 194J and not under section 192--Consultants declaring professional fees in returns and paying tax thereon--No loss to Revenue--Levy of interest not justified-- CIT (TDS) v. Apollo Hospitals International Ltd. (Guj) . . . 78

S. 194J --Deduction of tax at source--Salary or professional fees--Consultant doctors employed in hospital in addition to full time resident doctors--Consultants rendering services under contract--Fees paid to them not salary--Tax deductible under section 194J and not under section 192--Consultants declaring professional fees in returns and paying tax thereon--No loss to Revenue--Levy of interest not justified-- CIT (TDS) v. Apollo Hospitals International Ltd. (Guj) . . . 78

S. 201(1A) --Deduction of tax at source--Salary or professional fees--Consultant doctors employed in hospital in addition to full time resident doctors--Consultants rendering services under contract--Fees paid to them not salary--Tax deductible under section 194J and not under section 192--Consultants declaring professional fees in returns and paying tax thereon--No loss to Revenue--Levy of interest not justified-- CIT (TDS) v. Apollo Hospitals International Ltd. (Guj) . . . 78

S. 269SS --Penalty--Loan or deposit in cash exceeding specified limit--Assessee doing business as “shroff†--Cheque discounting business--Farmers selling their produce to traders against post-dated cheques--Taking cheques to assessee for discounting for cash--Not a case of assessee taking loan or deposit from agriculturists or repaying loan to agriculturists--Provisions of section 269SS or section 269T not attracted--No question of levy of penalty under sections 271D and 271E-- CIT v. Dineshchandra Shantilal Shah (HUF) (Guj) . . . 57

S. 269T --Penalty--Loan or deposit in cash exceeding specified limit--Assessee doing business as “shroff†--Cheque discounting business--Farmers selling their produce to traders against post-dated cheques--Taking cheques to assessee for discounting for cash--Not a case of assessee taking loan or deposit from agriculturists or repaying loan to agriculturists--Provisions of section 269SS or section 269T not attracted--No question of levy of penalty under sections 271D and 271E-- CIT v. Dineshchandra Shantilal Shah (HUF) (Guj) . . . 57

S. 269UD(1) --Purchase of immovable property by Central Government--Conditions precedent--Valuation of cost for resettling tenant--Appropriate Authority ignoring court orders twice and giving same reasons which court found not good enough to sustain acquisition of property--Pre-emptive purchase not warranted-- Satish Balan v. Union of India (Bom) . . . 15

S. 271(1)(c) --Penalty--Concealment of income--Claim made in course of scrutiny assessment to loss on account of loan to subsidiary company being written off--Bona fide claim--Not a case of concealment--Penalty not leviable-- CIT v. DCM Ltd. (Delhi) . . . 101

S. 271D --Penalty--Loan or deposit in cash exceeding specified limit--Assessee doing business as “shroff†--Cheque discounting business--Farmers selling their produce to traders against post-dated cheques--Taking cheques to assessee for discounting for cash--Not a case of assessee taking loan or deposit from agriculturists or repaying loan to agriculturists--Provisions of section 269SS or section 269T not attracted--No question of levy of penalty under sections 271D and 271E-- CIT v. Dineshchandra Shantilal Shah (HUF) (Guj) . . . 57

S. 271E --Penalty--Loan or deposit in cash exceeding specified limit--Assessee doing business as “shroff†--Cheque discounting business--Farmers selling their produce to traders against post-dated cheques--Taking cheques to assessee for discounting for cash--Not a case of assessee taking loan or deposit from agriculturists or repaying loan to agriculturists--Provisions of section 269SS or section 269T not attracted--No question of levy of penalty under sections 271D and 271E-- CIT v. Dineshchandra Shantilal Shah (HUF) (Guj) . . . 57

 

 

ITR (TRIB) Volume 28 : Part 2 (Issue dated : 2-12-2013)

 

ITR'S TRIBUNAL TAX REPORTS (ITR (TRIB)) -- PRINT AND ONLINE EDITION

 

ONLINE EDITION

SUBJECT INDEX TO CASES REPORTED

Business expenditure --Provision for doubtful debts and advances--Details of opening balance on account of doubtful debts and closing balance clearly indicating assessee had reduced provision for doubtful debts which was no longer written back--No material to show reconciliation not correct--Disallowance not justified--Income-tax Act, 1961, s. 36-- Assistant CIT v. Living Media India Ltd. (Delhi) . . . 666

Business income or capital gains --Trading or investment--Adventure in nature of trade--Purchase of minority stake in loss-making company at high price with view to sell shares at profit--Sale during lock-in-period at huge profit to other promoters--Not an investment--Profit on sale of shares assessable as business income--Income-tax Act, 1961, s. 28(ii)-- ITO v. Accra Investments P. Ltd. (Mumbai) . . . 683

Company --Book profits--Computation--Disallowance of expenditure in earning tax-free income--Principle of apportionment cannot be applied in computing book profit--Amount of expenditure to be adjusted--Matter remanded--Income-tax Act, 1961, s. 115JB-- Joint CIT (OSD) v. Reliance Capital Ltd. (Mumbai) . . . 695

Deduction of tax at source --Shortfall in deduction--Salary or professional fees--Hospital employing doctors under two types of agreements--Employee doctors receiving allowances--Consultant doctors receiving lump sum monthly payment--Employee doctors entitled to leave, medical benefit and personal accident benefit--No such benefit to consultant doctors--Consultant doctors required to take professional indemnity insurance on their own--Relationship of consultant doctors with hospital, not an employer-employee relationship--Deduction of tax at source to be made under section 194J--No short deduction of tax by assessee--No question of charging of interest--Income-tax Act, 1961, ss. 192, 194J, 201-- ITO v. Apollo Hospitals International Ltd. (Ahmedabad) . . . 656

Depreciation --Carry forward and set off--Brought forward depreciation cannot be set off against capital gains--Income-tax Act, 1961, ss. 71, 72-- Assistant CIT v. Living Media India Ltd. (Delhi) . . . 666

Income --Disallowance of expenditure in earning tax-free income--Assessee not able to produce evidence with regard to source of investments--Disallowance to be decided after considering available funds from sale of investments and own funds--Matter remanded--Income-tax Act, 1961, s. 14A-- Joint CIT (OSD) v. Reliance Capital Ltd. (Mumbai) . . . 695

Interest on borrowed capital --Interest on money borrowed and lent to subsidiary company without charging interest--Deduction of interest allowable if made as measure of commercial expediency--Income-tax Act, 1961, s. 36(1)(iii)-- Joint CIT (OSD) v. Reliance Capital Ltd. (Mumbai) . . . 695

Penalty --Concealment of income--Claim of loss made during course of assessment proceedings--Disallowance of loss--Not a case for levy of penalty--Income-tax Act, 1961, s. 271(1)(c)-- DCM Ltd. v. Assistant CIT (Delhi) . . . 680

Reassessment --Jurisdiction--Reason to believe--Detailed questionnaire issued by Assessing Officer and replies filed by assessee--Details of bad debt placed before Assessing Officer--Assessment thereafter completed under section 143(3)--Notice of reassessment to bring provision for bad debts to tax--Assessing Officer assuming jurisdiction without any material--Reopening of assessment without jurisdiction--Income-tax Act, 1961, s. 148-- Assistant CIT v. Living Media India Ltd. (Delhi) . . . 666

----Validity--Reasons recorded only on account of provision for bad debt--Additional reasons recorded during reassessment proceedings--Assumption of jurisdiction originally held not valid--Entire assessment quashed--Income-tax Act, 1961, ss. 147, 148-- Assistant CIT v. Living Media India Ltd. (Delhi) . . . 666

PRINT EDITION

Volume 28 : Part 2 (Issue dated : 2-12-2013)

SUBJECT INDEX TO CASES REPORTED

Advance tax --Interest--Interest under sections 234A and 234B--Mandatory and consequential in nature--Income-tax Act, 1961, ss. 234A, 234B-- J. B. Educational Society v. Assistant CIT (Hyderabad) . . . 284

Assessment --Income in whose hands to be taxed--Assessee-society running engineering and medical colleges--Amounts collected from students over and above prescribed fees--Manager stating amounts collected and retained by him without knowledge of management committee--Amounts taxed in his assessments--Manager agreeing to withdraw appeals against assessments and pay tax if amounts added as income of assessee-society deleted--Receipts not to be considered as exclusively relating to assessee-- J. B. Educational Society v. Assistant CIT (Hyderabad) . . . 284

Business expenditure --Clearing expenses--Restriction of disallowance to 50 per cent in earlier year--Deviation in decision not permissible in absence of change in facts--Income-tax Act, 1961-- AFL P. Ltd. v. Assistant CIT (Mumbai) . . . 263

----Payments to sub-contractors--Letters to parties returned--Disallowance of 5 per cent. of payments covered by letters returned--Reasonable--Income-tax Act, 1961, s. 37-- IJM (India) Infrastructure Ltd. v. Assistant CIT (Hyderabad) . . . 176

----Payments to sub-contractors--That letters addressed to party three or four years after contract executed returned undelivered not ground to disallow expenditure--Payment vouchers produced by assessee giving details including names of payees and bearing signatures of payees as recipients--Genuineness of payments established--However, 15 per cent. of payment to be disallowed to allow for inflation of expenditure by assessee--Income-tax Act, 1961, s. 37-- IJM (India) Infrastructure Ltd. v. Assistant CIT (Hyderabad) . . . 176

----Power and fuel expenses not supported by proper vouchers and bills--Disallowance of 15 per cent. proper--Income-tax Act, 1961, s. 37-- IJM (India) Infrastructure Ltd. v. Assistant CIT (Hyderabad) . . . 176

Business income --Engineering college--Receipt of fees over and above those prescribed--No evidence of collection of excess fees in academic years 2003-04 to 2007-08--No admission by assessee of such collection--Estimation of income on materials seized relating to academic years 2008-09 and 2009-10 assuming unaccounted receipts of fees for earlier assessment years--Not proper--Direction for quantification of receipt of fees for management quota seats, if any, on basis of seized material and other material, if any, relating to academic years 2003-04 to 2007-08-- J. B. Educational Society v. Assistant CIT (Hyderabad) . . . 284

Capital gains --Exemption--Rectification of mistake--Assessment--Intimation--Claim to exemption for capital gains on basis of investment of consideration in residential property in foreign country--Intimation under section 143(1)(a) denying exemption--Not permissible--Question of law to be considered in light of section 54F(4) and beyond jurisdiction under sections 143(1)(a) and 154--Direction to Assessing Officer to pass fresh orders on petition under section 154--Income-tax Act, 1961, ss. 54F(4), 143(1)(a), 154-- Ms. Sushiela Natarajan v. ITO (Chennai) . . . 237

----When transfer took place--Sale deed executed on 3-9-2005 and possession handed over in financial year relevant to assessment year 2006-07 itself--Capital gains assessable in 2006-07--Income-tax Act, 1961, s. 54-- Satishkumar Agarwal v. Deputy CIT (Hyderabad) . . . 167

Charitable purpose --Charitable trust--Donations given for specific purpose as tied-up grant--Not taxable as income if used for specific purpose for which given--Donations used for benefit of trustees to be brought to tax as business income after allowing usual deductions-- J. B. Educational Society v. Assistant CIT (Hyderabad) . . . 284

----Charitable trust--Exemption--Corpus donation is in nature of capital receipt and not taxable irrespective of registration--Income-tax Act, 1961, ss. 12A, 12AA-- ITO v. Gaudiya Granth Anuved Trust (Agra) . . . 161

----Registration of trusts--Assessment denying exemption under sections 11 and 10(23C)(vi)--Order of Tribunal upholding cancellation of registration under section 12A--Denial of exemption cannot be challenged--Income-tax Act, 1961, ss. 10(23C)(vi), 11, 12A-- J. B. Educational Society v. Assistant CIT (Hyderabad) . . . 284

----Registration of trust--Cancellation--Conditions precedent for cancellation--Objects of society to preserve, protect and maintain traditional customs, culture, heritage and language of kodavas--Law applicable-- Amendment of section 2(15) w. e. f. 1-4-2009 disqualifying entity carrying on commercial activities--Cannot be invoked to revoke registration if conditions for cancellation not satisfied--Income-tax Act, 1961, s. 12AA-- Kodava Samaja v. Director of Income-tax (Exemption) (Bangalore) . . . 224

Income --Accrual of income--Receipt of fees from students joining institution for entire course--To be appropriated proportionately for each year under consideration during course period-- J. B. Educational Society v. Assistant CIT (Hyderabad) . . . 284

----Computation--Disallowance of expenditure relating to exempt income--Bank loans dedicated towards financing working capital to be excluded--Matter remanded--Income-tax Act, 1961, s. 14A-- Kunal Corporation v. Assistant CIT (Mumbai) . . . 277

----Expenditure in relation to income not includible in taxable income--Dividend--Assessee suo motu disallowing sum at 10 per cent.--Assessing Officer working out disallowance applying rule 8D--Onus of proving assessee’s claim is with assessee--Expenditure allowable depends upon facts--Records and accounts to be examined--Matter remanded--Income-tax Act, 1961, ss. 10(34), 14A--Income-tax Rules, 1962, r. 8D-- AFL P. Ltd. v. Assistant CIT (Mumbai) . . . 263

International transactions --Condition precedent--Transaction between associated enterprises--“International transaction†and “associated enterprise†--Definitions--General principles--Transactions with permanent establishment of non-residents--Permanent establishments treated as resident and taxed in India--Transactions not international and not subject to transfer pricing regulations--Income-tax Act, 1961, ss. 92A, 92B, 92CA(3)-- IJM (India) Infrastructure Ltd. v. Assistant CIT (Hyderabad) . . . 176

----Transfer pricing--Arm’s length price--Expenditure on advertisement and business promotion expenses--Transactional net margin method--Comparable uncontrolled price method--Matter remanded for fresh adjudication in light of Special Bench decision--Income-tax Act, 1961-- Diageo India P. Ltd. v. Deputy CIT (Mumbai) . . . 242

----Transfer pricing--Arm’s length price--Payment towards market promotion expenses made to associated enterprises--Transfer Pricing Officer not entitled to consider whether it was necessary or prudent for assessee to incur expenditure or disallow it on ground assessee has not justified benefit--Direction to Assessing Officer to examine nature of expenditure and to allow expenditure in nature of reimbursement--Income-tax Act, 1961-- Social Media India Ltd. v. Assistant CIT (Hyderabad) . . . 212

----Transfer pricing--Arm’s length price--Transactional net margin method--Comparables--Functional similarity in transactions with associated enterprise and unrelated enterprise--Profitability from uncontrolled party in similar business and circumstances is measure of arm’s length result--Income-tax Act, 1961-- Diageo India P. Ltd. v. Deputy CIT (Mumbai) . . . 242

----Transfer pricing--Determination of arm’s length price--Purchase of web portal, an intangible asset--Valuation report furnished as external comparable uncontrolled price--Nothing on record against value shown by assessee--Intangible asset purchased to be considered at arm’s length price--Depreciation allowable since intangible asset used for business--Assessing Officer not entitled to consider whether purchase was necessary--Income-tax Act, 1961-- Social Media India Ltd. v. Assistant CIT (Hyderabad) . . . 212

Penalty --Concealment of income--Expenditure in relation to income not includible in taxable income accepted at ten per cent. in earlier years--Not a case of concealment--Penalty cannot be levied--Income-tax Act, 1961, s. 271(1)(c)-- AFL P. Ltd. v. Assistant CIT (Mumbai) . . . 263

Search and seizure --Assessment--Cash balance in books of assessee on date of search--Addition cannot be made--Assessee to prove availability of cash balance on date of search--Income-tax Act, 1961, s. 153A-- J. B. Educational Society v. Assistant CIT (Hyderabad) . . . 284

SECTIONWISE INDEX TO CASES REPORTED IN THIS PART

Income-tax Act, 1961

S. 10(23C)(vi) --Charitable purpose--Registration of trusts--Assessment denying exemption under sections 11 and 10(23C)(vi)--Order of Tribunal upholding cancellation of registration under section 12A--Denial of exemption cannot be challenged-- J. B. Educational Society v. Assistant CIT (Hyderabad) . . . 284

S. 10(34) --Income--Expenditure in relation to income not includible in taxable income--Dividend--Assessee suo motu disallowing sum at 10 per cent.--Assessing Officer working out disallowance applying rule 8D--Onus of proving assessee’s claim is with assessee--Expenditure allowable depends upon facts--Records and accounts to be examined--Matter remanded-- AFL P. Ltd. v. Assistant CIT (Mumbai) . . . 263

S. 11 --Charitable purpose--Registration of trusts--Assessment denying exemption under sections 11 and 10(23C)(vi)--Order of Tribunal upholding cancellation of registration under section 12A--Denial of exemption cannot be challenged-- J. B. Educational Society v. Assistant CIT (Hyderabad) . . . 284

S. 12A --Charitable purpose--Charitable trust--Exemption--Corpus donation is in nature of capital receipt and not taxable irrespective of registration-- ITO v. Gaudiya Granth Anuved Trust (Agra) . . . 161

----Charitable purpose--Registration of trusts--Assessment denying exemption under sections 11 and 10(23C)(vi)--Order of Tribunal upholding cancellation of registration under section 12A--Denial of exemption cannot be challenged-- J. B. Educational Society v. Assistant CIT (Hyderabad) . . . 284

S. 12AA --Charitable purpose--Charitable trust--Exemption--Corpus donation is in nature of capital receipt and not taxable irrespective of registration-- ITO v. Gaudiya Granth Anuved Trust (Agra) . . . 161

----Charitable purpose--Registration of trust--Cancellation--Conditions precedent for cancellation--Objects of society to preserve, protect and maintain traditional customs, culture, heritage and language of kodavas--Law applicable-- Amendment of section 2(15) w. e. f. 1-4-2009 disqualifying entity carrying on commercial activities--Cannot be invoked to revoke registration if conditions for cancellation not satisfied-- Kodava Samaja v. Director of Income-tax (Exemption) (Bangalore) . . . 224

S. 14A --Income--Computation--Disallowance of expenditure relating to exempt income--Bank loans dedicated towards financing working capital to be excluded--Matter remanded-- Kunal Corporation v. Assistant CIT (Mumbai) . . . 277

----Income--Expenditure in relation to income not includible in taxable income--Dividend--Assessee suo motu disallowing sum at 10 per cent.--Assessing Officer working out disallowance applying rule 8D--Onus of proving assessee’s claim is with assessee--Expenditure allowable depends upon facts--Records and accounts to be examined--Matter remanded-- AFL P. Ltd. v. Assistant CIT (Mumbai) . . . 263

S. 37 --Business expenditure--Payments to sub-contractors--Letters to parties returned--Disallowance of 5 per cent. of payments covered by letters returned--Reasonable-- IJM (India) Infrastructure Ltd. v. Assistant CIT (Hyderabad) . . . 176

----Business expenditure--Payments to sub-contractors--That letters addressed to party three or four years after contract executed returned undelivered not ground to disallow expenditure--Payment vouchers produced by assessee giving details including names of payees and bearing signatures of payees as recipients--Genuineness of payments established--However, 15 per cent. of payment to be disallowed to allow for inflation of expenditure by assessee-- IJM (India) Infrastructure Ltd. v. Assistant CIT (Hyderabad) . . . 176

----Business expenditure--Power and fuel expenses not supported by proper vouchers and bills--Disallowance of 15 per cent. proper-- IJM (India) Infrastructure Ltd. v. Assistant CIT (Hyderabad) . . . 176

S. 54 --Capital gains--When transfer took place--Sale deed executed on 3-9-2005 and possession handed over in financial year relevant to assessment year 2006-07 itself--Capital gains assessable in 2006-07-- Satishkumar Agarwal v. Deputy CIT (Hyderabad) . . . 167

S. 54F(4) --Capital gains--Exemption--Rectification of mistake--Assessment--Intimation--Claim to exemption for capital gains on basis of investment of consideration in residential property in foreign country--Intimation under section 143(1)(a) denying exemption--Not permissible--Question of law to be considered in light of section 54F(4) and beyond jurisdiction under sections 143(1)(a) and 154--Direction to Assessing Officer to pass fresh orders on petition under section 154-- Ms. Sushiela Natarajan v. ITO (Chennai) . . . 237

S. 92A --International transactions--Condition precedent--Transaction between associated enterprises--“International transaction†and “associated enterprise†--Definitions--General principles--Transactions with permanent establishment of non-residents--Permanent establishments treated as resident and taxed in India--Transactions not international and not subject to transfer pricing regulations-- IJM (India) Infrastructure Ltd. v. Assistant CIT (Hyderabad) . . . 176

S. 92B --International transactions--Condition precedent--Transaction between associated enterprises--“International transaction†and “associated enterprise†--Definitions--General principles--Transactions with permanent establishment of non-residents--Permanent establishments treated as resident and taxed in India--Transactions not international and not subject to transfer pricing regulations-- IJM (India) Infrastructure Ltd. v. Assistant CIT (Hyderabad) . . . 176

S. 92CA(3) --International transactions--Condition precedent--Transaction between associated enterprises--“International transaction†and “associated enterprise†--Definitions--General principles--Transactions with permanent establishment of non-residents--Permanent establishments treated as resident and taxed in India--Transactions not international and not subject to transfer pricing regulations-- IJM (India) Infrastructure Ltd. v. Assistant CIT (Hyderabad) . . . 176

S. 143(1)(a) --Capital gains--Exemption--Rectification of mistake--Assessment--Intimation--Claim to exemption for capital gains on basis of investment of consideration in residential property in foreign country--Intimation under section 143(1)(a) denying exemption--Not permissible--Question of law to be considered in light of section 54F(4) and beyond jurisdiction under sections 143(1)(a) and 154--Direction to Assessing Officer to pass fresh orders on petition under section 154-- Ms. Sushiela Natarajan v. ITO (Chennai) . . . 237

S. 153A --Search and seizure--Assessment--Cash balance in books of assessee on date of search--Addition cannot be made--Assessee to prove availability of cash balance on date of search-- J. B. Educational Society v. Assistant CIT (Hyderabad) . . . 284

S. 154 --Capital gains--Exemption--Rectification of mistake--Assessment--Intimation--Claim to exemption for capital gains on basis of investment of consideration in residential property in foreign country--Intimation under section 143(1)(a) denying exemption--Not permissible--Question of law to be considered in light of section 54F(4) and beyond jurisdiction under sections 143(1)(a) and 154--Direction to Assessing Officer to pass fresh orders on petition under section 154-- Ms. Sushiela Natarajan v. ITO (Chennai) . . . 237

S. 234A --Advance tax--Interest--Interest under sections 234A and 234B--Mandatory and consequential in nature-- J. B. Educational Society v. Assistant CIT (Hyderabad) . . . 284

S. 234B --Advance tax--Interest--Interest under sections 234A and 234B--Mandatory and consequential in nature-- J. B. Educational Society v. Assistant CIT (Hyderabad) . . . 284

S. 271(1)(c) --Penalty--Concealment of income--Expenditure in relation to income not includible in taxable income accepted at ten per cent. in earlier years--Not a case of concealment--Penalty cannot be levied-- AFL P. Ltd. v. Assistant CIT (Mumbai) . . . 263

Income-tax Rules, 1962

R. 8D --Income--Expenditure in relation to income not includible in taxable income--Dividend--Assessee suo motu disallowing sum at 10 per cent.--Assessing Officer working out disallowance applying rule 8D--Onus of proving assessee’s claim is with assessee--Expenditure allowable depends upon facts--Records and accounts to be examined--Matter remanded-- AFL P. Ltd. v. Assistant CIT (Mumbai) . . . 263

 

 

ITAT Upset At Roughneck Recovery Measures Of AO

Dear Subscriber,

 

The following important judgement is available for download at itatonline.org.

Maharashtra Housing & Area Development Authority vs. ADIT (ITAT Mumbai)

AO's action of recovering outstanding taxes without affording reasonable time to take remedial steps is a misuse of powers and a gross violation of the directions laid down by the Courts. AO has to refund the taxes recovered

The assessee received the order of the CIT(A) on 16.11.2013. It filed an appeal before the Tribunal on 18.11.2013 which was the next working day. The assessee also filed an application before the Tribunal requesting stay of demand. The said application was fixed for hearing on 22.11.2013. However, the AO, without awaiting the outcome of the stay application, attached the assessee's bank account u/s 226(3) on 18.11.2013 and withdrew Rs. 159.84 crore. The assessee argued before the Tribunal that the coercive action of the AO was wrong because (i) the AO had taken coercive action before the expiry of time of filing the appeal against the order of the CIT(A), (ii) the action was taken even prior to the disposal of the stay application by the Tribunal and (iii) no prior notice was given to the assessee before taking the recovery action u/s 226(3). HELD by the Tribunal:

The action of the AO in recovering the outstanding without affording the assessee minimum reasonable time to take remedial steps is a misuse of powers and a gross violation of the directions laid down by the Courts as well as the basic rule of law and principles of natural justice. Accordingly, we direct the Revenue to refund the entire amount of Rs. 159.84 crore to the assessee within 10 days from the receipt of this order (Mahindra & Mahindra Ltd UOI 59 ELT 505, Mahindra & Mahindra W.P. 2164/2007, UTI Mutual Fund 345 ITR 71 (Bom), RPG Enterprises 251 ITR 20 (Mum) & MSEB 81 ITD 299 (Mum) followed)

Click here for more on the law of recovery of outstanding taxes

(Click Here To Read More)

 

Regards,

 

Editor,

 

itatonline.org

---------------------

Latest:

Oracle India Pvt. Ltd vs. CIT (Delhi High Court)

S. 37(1): Expenditure on acquiring master copy of software subject to obsolescence is deductible as revenue expenditure