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STUDY GROUP MEETING
THE RECENT DIRECT TAXES JUDGMENTS
PLACE: BABUBHAI CHINAI COMMITTEE: DATE: 22/04/013
2ND FLOOR, CHURCHGATE
(1) SECTION 1 TO 27 : Section 14A applicable only where expenses were incurred
CIT V/s Glen Mark Pharmaceutical Ltd. (2013) 351 ITR 359 (Bom): section 14A
would not allow expenses relating to exempt income but, it can not be applied to
disallow proportionate expenses as between taxable and tax free investments,
where no expenses are found to have been incurred for investment in tax free
bonds.
(2) Income from House Property: - or Income from Business (?)
Azim ganj Estate (Pvt) Ltd V/s CIT
(2013) 352 ITR 82 (Calcutta) High Court
Construction Business - Rental Income from unsold flats Assessable as Income
from house property – SS.14 & 22.
(3) Principle of Mutuality.
Dy. Director of I.T (International Taxation) V/s.
Solictic International De Telecommunication.
(2013) 84 DTR (Mumbai) Tribunal 219 (56) 229
In case of a non- mutual organization a few transactions with the members do not
convert its non- mutual status to mutual; in the like manner, the otherwise status
of mutuality of an organization cannot be destroyed because of a few
transactions with the non-members, Profits from transactions with non-members
is always taxable.
(4) Capital Assets Agricultural land:-
Income tax Officer V/s. Amrutlal B. Shah
(2013) 22 ITR (Tribunal) 668 Mumbai (5)
Agricultural land situated beyond 8 kms from Municipal limits and beyond 19 kms
from Centre of City- not a Capital asset- Land shown in revenue records as
agricultural- No incriminating material found that land is Capital asset- No
interference. Se.2 (14) (Note There was no notification issued by the Central
Govt. regarding the same being a capital asset. Therefore the land held by the
assessee was agricultural land. It was borne out of from the records of the
revenue. Department that the land was described by the District collector.
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Jamnagar, as agricultural lands. There was no material in the possession of the
A.O to hold that the land was a Capital asset within the meaning of Section 2 (14)
of the Act
(5) SECTION 28 TO 44
Undisclosed purchases-How dealt with (?)
CIT V/s Sathyamarayan P. Rathi
(2013) 351 ITR 150 (Gujarat)
Where it was noticed that the assessee was not able to prove the purchases to
the extent of Rs. 61=40 lakhs. The AO disallowed the entire amount, but in first
appeal it was felt that the profit element there from alone could be assessed so
that only 30 percent of such purchases amounting to Rs. 18=42 lakhs were
taxed. The Tribunal reduced the percentage of possible overstatement of
purchases to 12=50 percent. The Revenue came in appeal to the High Court on
the plea that the entire amount should have been treated as BOGUS
PURCHASE. The High Court pointed out that the assessee could not have made
the sale, which were accounted in the books without acquiring a corresponding
(goods) stock, it was therefore not a case of Bogus Purchase, but the inference
can only be that it is an unproved purchase. In such a case, the approach of the
Tribunal that a reasonable disallowance for possible inflation could be warranted
has to be upheld.
(6) Remuneration to partners whether could be treated as excessive (?)
CIT V/s Great City Manufacturing Co.
(2013) 351 ITR 156 (All) High Court
Section 40 (b) provides for deduction of salary to working partners on the basis of
the stipulation in the partnership deed for the relevant year. It has been held by
the Tribunal in Chhajed Steel Corp. V/s Asst. CIT (2001) 77 ITD 419 (Ahmedabad
Tribunal) that there is no scope for disallowance of any part of the payment so
stipulated in the deed purportedly under section 40A (2) in the view that the
payment is unreasonable or excessive.
(7) Business Expenditure – Capital or Revenue Expenditure
CIT V/s Glenmark Pharmaceutical Ltd
(2013) 85 DTR (Bombay H.C) 169 (67)
Expenditure for acquisition of marketing know-how-examination of the marketing
know-how agreement shows that it would lead to improvement in assessee’s
existing business resulting in higher sales and consequently higher profitability
the knowledge acquired by the assessee would assist in improving the marketing
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strategy. Therefore, expenses incurred for acquiring know-how were revenue
expenditure.
(8) Income Capital or Revenue Receipt
Khana and Annadhanam V/s CIT
(2013) 85 DTR (Delhi HC) 164 (66)
Section 4, Income: Capital or Revenue Receipt compensation for release of
income earning source-Assessee firm of a chartered Accountants, under
agreement with a Calcutta firm, receiving work through Calcutta firm for over a
period of 13 years compensation received for release of such arrangement was
capital receipt not liable to tax. Release amounted to the impairment of the profit
making structure or apparatus of the assessee firm and the compensation was a
substitute for the source it is immaterial that the assessee continued as a firm of
Chartered Accountants.
(9) Business expenditure Fines and Penalties
CIT V/s Regalia Apparels (P) Ltd
(2013) 352 ITR 71 (Bombay H.C)
Assessee taking business decision not to honour its commitment of fulfilling
export entitlement in view of losses – encashment of Bank guarantee by export
promotion council – payment recorded as penalty in assessee’s books and
claimed as deduction- No contravention of any provision of law – compensatory in
nature – Allowable – IT Act 1961 Se. 37 (1)
(10) Liquidated damages paid for delay in delivery of goods supplied under contract
revenue, Expenditure. Huber to Suhnor Electronics (P) Ltd. V/s. Dy. CIT (2013)
22 ITR (Tribunal) 596 (Delhi H.C) (5)
The Assessee claimed an amount of Rs.29,97,209./- on account of liquidity
damage expenses. The goods were not according to the Indian Railway
Standard (1 Rs.) i.e. the contractor failed to delivery Railway stores (goods)
within the period fixed in the agreement.
The Tribunal held.
Therefore whenever any statutory impost paid by an assessee by way of
damages or penalty or Interest is claimed as an allowable Expenditure u/s 37 (1)
of I.T Act. The assessing authority is required to examine the scheme of the
provisions of the provisions of the relevant statute providing of such impost
notwithstanding the nomenclature of the impost as given by the statute to find
whether it is compensatory or penal in nature. The authority has to allow
deduction u/s 37 (1) of I.T Act 1961. Wherever such examination reveals the
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concerned impost to be purely compensatory in nature. Wherever such impost is
found to be of a composite nature that is partly of compensatory nature and partly
of penal nature that is, partly of compensatory nature the authorities are obliged
to bifurcate the two components of the impost and give deduction to that
component which is compensatory in nature and refused to give deduction to that
component which is penal in nature.
(11) Capital or Revenue Expenditure
SKOL Breweries Ltd. V/sw. Asst. CIT (2013) 84 DTR ( Mumbai) 271. Club
Membership fees. Details filed by the assessee show that the expenditure was
incurred towards entrance fee, subscription and other services of the clubs- A.O
has not doubted the payment of entrance fee and service charges for the club
membership similar disallowance made by the A.O for A.Y. 2004-05 to 2006-07
has been deleted by the CIT (A) and the Revenue has accepted the order of CIT
(A). Through the principle of resjudicata is not applicable in Income tax matters-
rule of consistency has to be followed as the facts are identical. Therefore claim
of deduction cannot be disallowed in the relevant year.
(12) SKL Breweries Ltd. V/s. Asst. CIT
(2013) 84 DTR Mumbai (Tribunal) 271/275 (57)
Depreciation is a mandatory deduction in respect of an asset owned by the
assessee. Which is used for the purpose of business and not for incurring any
expenditure, Which is subject to TDS and therefore, provisions of Section 40 (a)
(i) are not attracted to deduction of depreciation.
(13) Allowability of- Brand building Expenditure
Fine Jewellery (India) Ltd V/s. Asst. CIT
(2013) 56 SOT 226 (2)
A.Y. 2006-07. Assessee was engaged in business of manufacturing and Export
of Jewellery in course of assessment, A.O allowed assessee’s claim in respect of
Brand Creation Expenses being in nature of differed revenue Expenditure. CIT
passed a revisional order holding that brand creation expenditure was a Capital
in nature and thus assessee’s claim in respect of said Expenditure was wrongly
allowed. Whether Since Expenditure incurred on creation of brand did not create
any tangible or intangible asset of enduring nature, and moreover. A.O had
allowed assessee’s claim after taking into account all relevant facts impugned
revisional order passed by CIT was to be set aside Held YES.
(14) Section 14A read with rule 8D
Rainy Investments (P) Ltd. V/s. Ass. CIT
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(2013) 56 SOT 61 (Mumbai) (URO)
Section 14A of the I.T Act 1961 read with rule 8D of the Income tax Rules 1961.
Expenditure incurred in relation to Income not includible in total Income. Share
Application money A.Y. 2008 – 09. Whether share application money being
incapable of yielding any tax free . Income same would have to excluded in
working out disallowance under rule 8D Held ‘YES’.
(15) Non- Complete Fees- Scope of provision Se.28 (va)
Anurag Toshniwal V/s. Dy. CIT 1 (3)
(2013) 56 SOT 62 Mumbai.
Scope of Provision- A.Y. 2009 – 2010. Whether non- complete fees is liable to be
taxed under head “Profits and Gain of business or profession. Held Yes.
Assessee- director of Company sold one of its units to a company and entered
into an agreement with the said company for not carrying out any similar
business for a period of four years. It received sum as non- compete fee and
treated same as long term Capital gain- whether, post amendment in Section 28
(va) said receipt was under head “Profits from business” Held Yes.
(16) Income from undisclosed sources. Addition
CIT V/s. Digambar Kumar Jain (HUF) (M.P. High Court)
(2013) 84 DTR (MP) 365 (56)
Addition on the basis of statement recorded during survey. During Survey under
Section 133A, the Karta of the assessee- HUF surrendered an amount of Rs.40
lakhs to cover possible discrepancies in the impounded documents. A.O made
addition merely on the basis of the Statement recorded during Survey- Not
justified merely on the basis of statement under Section133A. Which was
recorded during the survey; such addition could not have been made. To make
such addition some corroborating evidence against undisclosed Income was
required which could not be found by the A.O. There was no error in the order
passed by the CIT (A) and the Tribunal deleting the addition.
(17) Royalty Payment V/s. Business Income.
P.T. Mc Kinsey Indonesia V/s Dy CIT (IT) 4 (1) Mumbai.
Section 9 of I.T Act 1961 read with ‘Article 7 & 12 of DTAA between India and
Indonesia. Income Deemed to accrue or arise in India (Business profits/
Royalty).
Assessee – Indonesian company was part of a group providing strategic
consultancy services for clients- It provided various information to its. Indian
group company. Information supplied was in nature of data and did not arise out
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of exploitation of know- how generated by skills and innovation of persons who
possessed such talent. Whether amount received by assessee from Indian
group company did not full in category of royalty rather it had to be assessed as
business Income Held ‘YES’.
(18) CIT Patialal V/s Groz Beckert Asia Ltd V/s LD/61/70 Reported in. The
Chartered Accountant t Journal. April 2013 (Page 1530) Date of Judgement
24/01/2013. Corporate Member ship fee paid to Golf Club is allowable as
revenue expenditure.
(19) Confederation of Indian Pharmaceutical Industry SSI V/s CBDT.
Section 37 (1) of the I.T Act 1961. Business Expenditure. Allowable as Circular
No. 5/2012 dated 01/8/2012 issued by the CBDT Providing that claim of any
expenses incurred in providing freebees in violation of the provisions of Indian
Medical (professional Conduct Etiquette and Ethic) Regulations 2002 shall be
in admissible under Se.37 (1) is valid reported in C.A Journal April 2013 Page
No.1534.
(20) Club Membership Capital or Revenue Expenditure.
CIT V/s. Groz Becken Asia Ltd. (P*& H) FB. (2013) 84 DTR (1) (46)
Corporate Membership fee of a club- Expenditure on Corporate Membership of a
club does not bring into existence an asset or an advantage for the enduring
benefit of the business and same is deductible as revenue Expenditure.
(21) (Allahbad H.C) Noida Bridge qualifies as building Depreciation allowable
through land not owned.
CIT V/s. Noida Toll bridge Co. Ltd. CTS-837-HC. 2012 All)
Depreciation allowable on Noida Toll bridge and adjoining road as building
construction of roads/ bridge on leased land not relevant. Assessee is owner of
roads/ bridge during lease period exercised exclusive right to collect toll regulated
used of Bridge.
HC held “The present case stands on a better footing, in which the land is held
on lease and the road as capital asset has been built on it with exclusive
ownership of the road, and the bridge in the assessee company for the
concession period, and which also includes the right to collect tolls and to
regulate use of the bridge Se.32 would therefore, apply for the purpose of
providing depreciation. For removal of doubts the legislature has provided that
the building includes roads in Note. (1) to Appendix 1 Providing for the table of
rates at which the depreciation is admissible.
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(22) Income from undisclosed Sources.
Shree Ganesh Trading Co. V/s CIT
(2013) 84 DTR (Jharkhand) 94
Addition- Addition on the basis of Statement under Section 132 (4). during
Search of premises of the firm, its partner surrendered Rs.20 lacs. However, in
the return filed after search, the Income of Rs.20 lacs was not declared by the
assessee- firm- No specific reason has been given for rejection of the assessee’s
contention by which the assessee has retracted from his admission- Addition
thereof was not sustainable on the facts of the case- This fact also has not been
taken care of and considered by any of the authorities that in a case where there
was search operation, no assets or cash was recovered from the assessee, in
that situation what had prompted the assessee to make declaration of
undisclosed income of Rs.20 lacs.
(23) Chargeability : Unclaimed liability.
Lintas India (P) ltd V/s Asst CIT Mumbai K Branch
(2013) 83 DTR Tribunal Page No 263 Mumbai Tribunal Assessee having
consistently followed a method of accounting whereby it is maintaining provision
for unclaimed liabilities and offering the unclaimed amounts to tax after the end of
three year limitation period, entire credit in the said account cannot be brought to
tax as Income of the relevant year.
(24) CAPITAL GAIN
Capital gains: Capital Assets – Personal Effects
Faiz Murtaza Ali V/s CIT A.Y. 2002-2003
(2013) 85 DTR (Delhi HC) 33 (62)
Articles such as carpets, paintings, collector items, house hold items, including
crystal items, antique furniture, etc. inherited and or received as gift by assessee
form his father aunt etc – Fact that these articles were held by him for personal
use has been indicated in the affidavit filed by assessee before the AO. No
material has been brought out by the AO or the Revenue to indicate that the
affidavit is false – Therefore, on the basis of evidence on record, the articles in
question ought to have been held to be personal effects of the assessee Capital
gains – were not chargeable on sale of these items.
(25) Capital Gains Exemption Under Section 54.
CIT V/s. Gita Duggal (2013) 84 DTR (Del) 346 (55)
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Capital Gains:- Exemption under Section 54: Construction of two or more units
or floors Section 54/54F. uses the “Expression ” a residential house” Expression
used is not ‘a residential unit’ So long as the assessee acquires a building, which
may be constructed, for the sake of convenience, in such a manner as to consist
several units which can if the need arises, be conveniently and independently
used as an independent residence, the requirement of the section should be
taken to have been satisfied- Fact that the residential house consists of several
Independent units can not be permitted to act as an impediment to the allowance
of the exemption under Section 54/54F. It is neither expressly nor by necessary
implication prohibited. .
(26) Capital Gains. Exemption U/S 54F. Residence acquired out of India.
Vinay Mishra V/s. Ass.CIT
(2013) 141 ITD 301 (Bangalore)
Se.54F of the I.T Act 1961. Capital Gains. Exemption of, in case of Investment
in residential house, Condition precedent A.Y. 2009-10. whether provisions of
section 54F does not suggest that new residential house acquired should be
situated in India. Held ‘YES’ . whether, therefore exemption under Section 54F
cannot be denied on ground that residential house acquired was situated outside
India. Held ‘YES’.
(27) Assistant Commissioner of Income Tax V/s. IFE India Ltd.
(2013) 22 ITR (Trib) 365 (Mumbai)
(a) Capital gains- Computation of capital gains- Assessee owning flat in co-
operative housing society- Co-operative society allotted additional floor space-
Transfer of development rights to builder by all flat owners- Transfer of capital
asset – Gains not taxable as there was no cost of acquisition- Income- Tax Act,
1961, ss 45,48.
(b) Company- dividend- Income- Mutual concern- assessee owning flat in co-
operative Housing Society- Co-operative Society allotted additional floor space
– Portion of floor space index allotted to assessee- Value not assessable as
dividend- Principle of mutuality applicable- Value not assessable in hands of
assessee- Income –tax Act, 1961.
(28) Exemption of, in case of Investment in residential House.
Raj Babbar V/s Income tax Officer 11 (1) (3) Mumbai.
(2013) 56 SOT 1 (Mumbai)
Section 54 F read with Se.48 and 50C of I.T Act 1961.
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Capital gains Exemption of, in case of Investment in residential house, Effect of
deeming fiction of Section 50C. A.Y. 2008-09. Whether where investment in new
asset was more than net consideration received as well as full value of
consideration computed as per Se.50C. Assessee would not be chargeable to
Capital gain Held yes. Whether Construction of additional floors would be part of
existing house, not a separate unit Held ‘YES.
(I) Sale Price of plot of Land Rs.8,00,000/-
(II) The Market value of Plot as per Stamp duty authorities Rs. 16,87,000/- [ i.e.
50C Value].
The Assessee spent and claimed exemption u/s 54F for construction of
two additional floors on existing house amounting to Rs.17,65,752/-
(29) DEDUCITION INCENTIVES
Deduction under Se. 80P (2) (a) (i) Allowability- Failure to File return.
Kadachira Service Co.op. Bank Ltd. V/s. ITO
(2013) 84 DTR (Cochin) (Tribunal) 177.
In view of the mandatory provisions of Se.139 (1) read with Se.80A (5) it is
mandatory for Co. operative Society for claiming deduction under Section 80P to
file return and to make the claim of deduction Under Se.80P to file return and to
make the claim of deduction in the return if return is not filed either under section
139 (1) or Se.139 (4) or in pursuance of notice issued under Section 142(1) or
under section 148: assessee is not entitled for deduction under Section 80P.
(30) Losses/ Deductions.
EDAC Engineering Ltd V/s Dy. CIT Chennai
(2013) 141 ITD 231 (Chennai)
Se.28 (1) of the I.T Act 1961 Business loss/deduction.
Allowable an expected Loss- A.Y. 2004-05. Whether booking of expected loss
when circumstances are adverse might be warranted in terms of Accounting
Standards as a matter of conservatism, but, for tax purposes it is a cardinal
principle that only expenses incurred or losses suffered could be allowed. Held
Yes. Assessee, a contractor, was recognizing revenue based expected loss on
grounds that contracts had no escalation clause and price of steel and cost of
wages and spares had increased manifold whether since there was no legal right
on any person for claiming a cost which was still to be incurred, said loss could
not have been allowed Held ‘YES’.
(31) Section 68/50 etc.
Income from undisclosed Sources Addition under Se.69B.
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Dy CIT 83 DTR (JP) Tribunal 346 (40)
In the absence of any positive material on record to prove that the bold figure
found noted on a seized paper actually represents the cost/ purchase price of
land addition under Section 63B can not be made simply by rejecting assessee’s
explanation, supporting evidence i.e. statements of original land owners admitting
additional considerable which was neither taken into consideration by the A.O nor
filed by the Department before the CIT (A) cannot be accepted by the Tribunal,
Same being totally new evidence, more so when these statements were neither
confronted to the assessee nor any cross examination was allowed.
(32) ASSESSMENT REASSESSMENT APPEAL
Re-assessment Notice is not valid
Pardesi Developers and infrastructure (P) Ltd V/s CIT
(2013) 351 ITR 8 Delhi H.C.
Merely because there was information received form investigation wing that the
assessee is one of the beneficiary of accommodation entries, the receipt of share
Application money received by the assessee could not be a basis for issue of re-
assessment notice without application of mind on the part of the AO the
information received and the facts of the case. In the original assessment the
assessee had been questioned on the receipt by the AO, when the assessee had
furnished a reply along with confirmations of the parites of survey had also been
conducted when the confirmations of the parties. A survey had also been
conducted, when the confirmations were reaffirmed. it was only after such
enquiry the assessment had been completed under section 143 (3) it was in this
context that writ petition against issue of re-assessment notice, was entertained
by the High Court the matter had been remitted for enabling the assessee to
lodge his objections to jurisdiction before coming to the High court when the
assessee’s objection were not accepted, the assessee came up on the second
round and its objection to jurisdiction was successful.
(33) Revision erroneous an prejudicial order:
Jeewan Ram Chodhary V/s CIT ITAT Jodhpur Bench
(2013) 84 DTR (Jd) (Tribunal) 317
AO having rejected assessee’s books of account after discovering certain defects
and determined the income by applying net profit rate of 9=5 percent having
regard to the past history of the case as against 8=5 percent declared by the
assessee, it can not be said that the AO did not apply his mind while framing the
assessment and therefore the order passed by the AO cannot be held to be
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erroneous or prejudicial to the interests of the Revenue, order under S. 263
passed by the CIT on the ground that AO ought to have applied profit rate of 10
percent instead of 9=5 percent and made separate additions for the said defect is
not sustainable.
(34) Appeal to High Court competency of Appeal
CIT V/s Ranka & Ranka (2013) 352 ITR 121 (Karnataka)
Effect of section 268A monetary limits – instruction No. 3 of 2011. Raising
monetary limits – scope of National Litigation policy 2011 – instruction No. 3 of
2011.
It is applicable to pending proceedings – CBDT instruction No. 3 of 2011.
Dated February 3 2011 IT Act 1961 Sec. 260A ,268A
Sr.
No
Appeal in Income tax Matters Instruction 5 of
2008
Instruction 3 of
2011
(i) Appeal before ITAT Rs. 2,00,000 Rs. 3,00,000
(ii) Appeal before High Court Rs. 4,00,000 Rs. 10,00,000
(iii) Appeal before the Supreme Court Rs. 10,00,000 Rs. 25,00,000
(35) (i) Re assessment: Income Escaping Assessment .
Qmac Test Equipments (P) Ltd V/s. Ass.CIT
(2013) 22 ITR (Tribunal) 690 (Chennai) (6)
Notice after four years- A.O must apply mind. No failure to disclose material
facts necessary for assessment Reassessment not valid. I.T Act 1961
SS147/148.
(ii)That the order had been passed by the CIT (A) in a non-judicious and arbitrary
manner. The order of the CIT (A) was not only against the law laid down by the
High Court (CIT V/s DSL Software Ltd. (2013) 351 ITR 385 (Karnataka) but
smacked of mala fide on the part of the CIT (A). the Department had to
compensate the assessee for causing the latter unnecessary mental and
financial harassment. Therefore the appeal of the assessee was allowed with
cost of Rs.25,000/-.
(36) Revision- Erroneous and prejudicial order:-
CIT V/s. Jain Construction Co.
(2013) 84 DTR. (Rajsthan H.C) 369 (57)
Once the A.O rejected the books of account of the assessee on those very
defects pointed out by CIT and passed the best Judgement assessment on the
basis of G.P rate of 12.5 percent and made additions in the declared total
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Income, there was no occasion of revising the assessment order on the ground
that the Assessing Authority did not verify the closing stock of assessee a fact
which the assessee himself admitted and the Assessing Authority noticing the
same and rejecting the books of accounts, passed the best judgement
assessment.
(37) CIT V/s. (A.P) Hyderabad V/s. Bake Food Products (P) Ltd.
August 21, 2012 (AP0 A.Y. 1986-87
Section 144 read with Se.139 of the I.T Act 1961.
Best Judgement Assessment.
Prior to 1/4/1989 where various discrepancies had been pointed out by the A.O in
the return filed, but assessee did not rectify same. A.O should proceed as if
assessee had failed to furnish returns and he should issue notice under Section
139 (2) he should not make ex-parte assessment under Section 144. (C.A
Journal April 2013 Page 1540)
(38) E- Return where ignorance of usage of latest technology, A.O to examine
positive. Interest to be added to taxable Income.
Suman Chandra G. Mehta V/s. ITO
(21013) 22 ITR (Tribunal) 270 (Mumbai)
Return of Income- E-Return- assessee showing Interest Income earned as well
as Interest paid under “Income from Other Sources” Errors in E- Return- Not
ignorance of law but ignorance of usage of latest Technology Direction to A.O to
examine interest paid and if satisfied, positive interest to be added to taxable
Income I.T Act 1961.
(39) (i) Appeal:- Tribunal has no power to declare retrospective effect of
amendment as un constitutional
(ii)Tribunal can Suo motu require additional Evidence even after conclusion of
hearing.
L.G. Electronics India (P) Ltd. V/s. ACIT.
(2013) 22 ITR (Tribunal) 1 Delhi S.B.
(40) Book Profits. Under Section 115JB.
Forever Diamonds (P) Ltd. V/s. Dy. CIT
(2013)83 DTR (Mumbai Tribunal) 411. (45)
Company- Book Profit under Se.115JB. Profit from sale of rights in immovable
property- Assessee earned profit from sale of its rights in the immovable
property- Which was not shown in the P & L A/c but was taken directly to the
balance sheet- A.O reworked the book profit and made addition on account of
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profit on sale of Investment- Not justified- Once accounts are prepared under
the companies Act and have been certified by the authorities the A,.O cannot
tinker with the accounts and make any changes while computing book profit
except making adjustments as provided in explanation to Section 115JB (2).
(41) Search and Seizure- Release of Seized Jewellery.
Smt. Bhawna Lodha V/s. Director of General of I.T & Others
(2013) 85 DTR (Rajsthan H.C) 10 (46)
Tendency of penalty appeal- There is no demand for tax interest and penalty
outstanding against the assessee for the period in question, for which the
assessment orders were passed on the contrary, the assessee is claiming refund
of excess tax paid in pursuance of appeal effect given by respondent authority-
Mere pendency of appeal before the Tribunal on the issue of penalty of
Rs.72,300/- which is already deposited by her, can only result in further relief to
assessee to the extent. Which may be allowed by the Tribunal if such appeal is
allowed by the Tribunal – Impugned order dt. 16th April 2012 is quashed-
Respondent are directed to release the gold ornament and Jewellery of the
assessee.
(42) Cash Credit under Se.68
ABT Ltd V/s ACIT (2013) 83 DTR (Chennai Tribunal) 178.
Repayment of deposits through banking channels, confirmation of bank showing
the cheques issued encashed by parties identity of person with complete address
was also furnished. Addition under Section 68 is invalid. A.Y. 2008-09.
(43) Deduction- Section 80HHC.
Surrender of Income during Survey on Excess valuation of Stock. Assessee
entitled to deduction under Section 80HHC CIT V/s. Haswani Arts (2013) 83
DTR (Rajsthan H.C) 81.
(44) Re-assessment- Notice after four years.
Ranbaxy Laboratories Ltd. V/s Dy CIT
(2013) 351 ITR 23 Delhi (1)
Incorrect allowance of deduction in respect of Royalty received from foreign
Enterprise- Incorrect allowance of deduction in respect of Export Profit Incorrect
allowance of deduction in respect of profits and gains from newly established
under takings. A.O raising specific queries and considering material before him
club membership specifically mentioned in Tax Audit Report. A.O duly bound to
go through before completing Assessment. Notice not valid Se.147/148.
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(45) TAX RECOVERY/TDS/SECTION 195
Recovery of tax: stay of demand
(a) Deloitte consulting India (P) Ltd V/s Asst. CIT
(2013) 351 ITR 160 Bombay H.C.
The court observed that stay is a matter of discretion which has to be
exercised after consideration of all the relevant facts, mere rejection of
stay petition on the ground that no case has been made out for stay does
not indicate application of mind. A stay order must indicate the reasons
on the basis of which stay has been refused in a speaking order after
considering the claim fairly. Fairness requires objectivity, guided no doubt,
by the deed to protect the revenue, while, at the same time, taking into
consideration the facts of eh case pending in the statutory appeal where it
has not been done, it was held that the order of refusal can not be
sustained.
(b) Society the Franciscan (Hospitallor) Sisters V/s Dy Director of IT
(Exemption) 2013 351 ITR 302 (Bombay)
(c) Sri Lakshmi Brick Industries V/s Tax Recovery Officer
(2013) 351 ITR 345 (madras)
(d) Mohan Wahi V/s CIT (2001) 248 ITR 799 (SC)
(e) Bombay HC lays down guide lines for demand recovery comes down
heavily on Revenue.
UTI Mutual Fund V/s ITO (TS-171-HC-2012(Bombay)
(f) KFC International (2001) 251 ITR 158 (SC)
and the ruling in Coca Cola (2006) 285 ITR 419 (HC)
Ruled that no recovery of tax should be made pending expiry of the time
limit for filing an appeal.
(46) Tax deducted at source: Scope of certificate under Section 197
CIT V/s Parle Biscuits (P) Ltd (2013) 351 ITR 138 (P & H)
The assessee had two units with separate Tax deduction Account Number (TAN)
because they were at two different places. it had obtained a certificate for one
unit for deduction at a lower rate. The AO found that same rate was adopted by
the assessee for deduction for both and he, therefore, took action for alleged
short-deduction in respect of the unit for which separate certificate u/s 197 was
not applied for since the nature of payment was the same, the order passed for
one unit, it was held, could be applicable for the other unit since another
application would have been merely a matter of redundancy. It is under these
15
circumstances, it was held that short deduction could not have inferred affirming
concurrent decisions in first appeal and the order of the Tribunal.
Where on identical facts, the AO himself had inferred a lower rate, there is no
justification whatsoever for the AO to infer short deduction in respect of similar
payments not covered by the certificates.
(47) Service Tax:
Search and Seizure: Release of seized money :-
Chitra Builders (P) Ltd V/s Addln CIT
(2013) 85 DTR (Madras HC) 122 (64)
Absence of tax liability collection of Rs. 2 Crores by the Department from the
assessee company during the search conducted at its premises can not be held
to be valid in the eye of law-it has not been shown by the respondent that the
assessee was liable to pay service tax to the Department in relation to the work
being carried on by it during the course of its business-it is well settled that no tax
can be collected from the assessee without an appropriate assessment order
being passed by the authority concerned by following the procedures established
by law-Therefore, respondent is directed to return the said amount collected from
the assessee during the search.
(48) Interest under se. 220(2) waiver or reduction u/s 220(2A)
K.C. Mohanan V/s Chief CIT & Others
(2013) 85 DTR (Kerala HC) 125 (64)
Genuine hard ship – Assessee could not establish that payment of interest would
cause genuine hard ship to him and that circumstances were beyond his control
and therefore application for waiver of interest was rightly rejected.
Applicability of Board’s instruction F No.400/29/2002 IT (B) dated 26th June 2006
None of the reasons mentioned in Boards instructions are applicable and
therefore the assessee can not seek waiver of interest levied under Sec. 234A,
234B.
(49) Recovery – Stay Se. 220(6) & 222
Saipem Tribune Engineering (P) Ltd V/s Ass CIT
(2013) 84 DTR Delhi HC 417 (59)
Prima Facie Case – out of the figure of Rs. 15=82 Crores an amount of 13 = 36
Crores is the result of tax of Rs. 10 = 24 Crs. and interest thereon of Rs. 3 = 12
Crs. in respect of enhancement of Rs. 30 = 44 Crs. made by the CIT(A) with
regard to the purported disallowance under se. 40A(2) relating to the intangible
assets purchased in the slump sale. A sum of Rs. 50 Lacs has already been paid
16
by 5th February 2013, which leaves a balance of Rs. 13 = 69 Crs. and as against
this an amount of Rs. 13=36 Crs. is only on account of enhancement made of Rs.
30 = 44 Crs. which, Prima Facie, does not appear to be backed by law Assessee
has an excellent prima facie case and Tribunal ought to have granted stay of the
demand raised by the Revenue – impugned order passed by the Tribunal is set
aside to the extent of balance payments other than the payment of Rs. 50 laces
already made by the assessee Rest of the demand is stayed till the Tribunal
disposes of the appeal.
(50) TDS Fees for Technical Services
Siemens Ltd V/s CIT (Appeals)
(2013) 23 ITR (Tribunal) 86 Mumbai Se. 9 (1) (vii) expln.
Technical Services rendered in foreign country Services not involving much
human interface – Services not technical Services under explanation 2 to Se. 9 (i)
(vii) not liable for tax deduction at source IT Act 1961 Se. 9 (i) (vii) explanation 2.
CIT V/s Bharti Cellular Ltd (2009) 319 ITR 139 Delhi Follow.
(51) Deduction of TDS under section 195 of IT Act 1961
Asst. CIT V/s YESH RAJ Films (P) Ltd
(2013) 23 ITR (Tribunal) 125 Mumbai
Non Resident – Payment for services in connection with shooting of films for
arranging for shooting locations, obtaining necessary permits arrangement for
shipping and custom clearance, arranging for “ Extras” shooting equipments,
meals, transport, obtaining visas arranging for make-up of casts, and
coordinating necessary licenses, services, commercial and logistic, not technical
services – payments therefore business profits not chargeable to tax in India in
absence of permanent establishment in India – Assessee not liable to deduct tax
at source IT Act 1961 Se. 9(i) (vi) explanation 2. 195 (2) 201 (1A)
(52) Deduction of tax at source. Payments to for Services of modeling.
Kodak India (P) Ltd. V/s. Dy. CIT
(2013) 22 ITR (Tribunal) 721 (Mumbai ) (6)
Words and phases Modeling and acting.
Professional Services- Payments for Modeling- Modeling not connected with
Cinematographic film- Section 194J not applicable.
Allowing the appeal, that the Payments were made for the services of modeling
which were unconnected with the production of cinematographic films- While
modeling was aimed at display of merchandise, the ‘acting’ wa defined as to act
in play of film. i.e. to portray a role authored by a story- writer with different
17
purposes and objects and certainly not to displace merchandise to boost the
sales of a manufacturers or a traders of the product or services. Therefore, the
payments made by the assessee to M on behalf of K did not attract the provision
of section194J of the Act.
(Note. P the professions notified for the purpose of Section 44AA of the Act hold
goods for Section 194J too]. (i.e. Se.44AA referred to an explanation the rules
are notified Rule 6F explains the means of film artist.
(53) Advance tax Interest- Notice of demand:-
CIT V/s. Dehradun Club Ltd.
(2013) 351 ITR 396 Uttarkhand (5)
No direction in Assessment order for charging interest . Notice of demand can
not be issued levying interest under Section 234B- I.T Act 1961 Se. 143 (3)
156/234B.
(54) Recovery of Tax:-
Society of the Franciscan (Hospitaller) Sisters
V/s. Dy. Director of IT (Exemptions) and Others.
(2013) 351 ITR 302 (Bombay)
Recovery of Tax- Notice of Demand- Stay- Appeals before CIT (A) Pending-
withdrawal of huge money in pursuance of notice under Section 220 (6)
enforcement of recovery of demand without disposing of application for stay Not
justified I.T Act 1961 Se.220 (6)
(55) Bombay H.C Lays down guideline for demand recovery comes down heavily on
Revenue.
UTI Mutual Fund V/s ITO [TS-171-HC 2012 (Bombay) Court or Tribunal coming
down heavily on the Revenue for over Zealousness is nothing new Despite that
this High court ruling is stinging rebuke to the aggressive recovery tactics of the
Income tax Department. Justice Chandrachud made it clear that there would be
zero tolerance shown by courts where the tax officers did not follow the due
process of law and instead acted in a manner so as to only achieve Revenue
targets. The judgement is in line with the ‘non adversial regime” promised by
Chidambaram.
The Court held Consistent with parameters laid down in KEC International (2001)
251 ITR 158 (S.C) and ruling in Coca Cola (2006) 285 ITR 419 He ruled that no
recovery of tax should be made pending expiry of the time limit for filing an
appeal, or disposal of a stay application moved by the assessee. A reasonable
period should also be allowed thereafter to enable the assessee to move a higher
18
forum, He further held that if the A.O takes a contrary view to what has been held
in previous years without material change in facts or law, that is a relevant
consideration in deciding the application. H.C laid down that when a bank
account is attached before withdrawing the amount, reasonable prior notice
should be furnished to the assessee to enable to make a representation or seek
recourse to a remedy in law lastly. He concluded, the ITO should not act as a
mere tax gatherer but as a quasi judicial authority vested with the Public duty of
protecting the revenue’s Interest as well as balancing the need to mitigate
hardship to the assessee. The A.O must objectively decide the considering that
an appeal lies against his order.
(56) Refund Entitlement TDS Deposited with Govt. by mistake.
FAG Bearing India Ltd. V/s, chief CIT (Gujarat H.C)
(2013) 83 DTR Page No 136 Gujarat High Court.
Tax deducted at source under mistake and deposited with Government was liable
to be refunded without reference to any circular- Further, the case of the
petitioner was covered under clause (i) ( c ) of Para (1) of Circular No 769 dt. 6th
August 1998 and not under Subsequent Circular No.790 dt. 290th April 2000.
Refund directed with Interest.
(57) CHARITIES
Where should form 10 be filed
Associated of corp. and Apex Societies of Handlooms V/s Asst. Director of
Income tax (2013) 351 ITR 287 (Delhi)
Where an assessee is unable to apply the prescribed percentage of 75 percent
/85 percent of its income during the year, it has to file an application to the AO for
carrying forward the amount required to be applied for being for specified
purposes in a later year. Though the time limit for such application is prescribed,
the delay in application filed before AO or in first appeal can be considered in
genuine cases vide Board circular No. 273 dt. 3/06/1980 (1981) 126 ITR 1st 27
since such delayed application before the Tribunal would not be eligible, the High
Court dismissed the appeal of the assessee. The law that it could have Form No.
10 if reassessment action had been initiated makes no difference.
(58) Section 80G Deduction
Shiv Mandir Devsattan Panch Committee Sanstan V/s CIT I Nagpur
(2013) 56 SOT 456 Nagpur (ITAT)
Se. 80G read with section 2 (15) of the Income tax Act 1961. Deduction –
Donation to certain funds, charitable institutions etc (Approval under section 80G
19
(5) (vi) whether lord Shiva, Hanumanji, Goddess Durga does not represent any
particular religion, they are merely regarded to be super power of universe. Held
‘YES’ whether, therefore, worshipping of Lord Shiva, Hanumanji, Goddess Durga
and maintaining of temple cannot be regarded for advancement, support or
propagation a particular religion. Held ‘YES’. whether, expenses incurred for
worshipping of Lord Shiva, Hanumanji, Goddess Durga and maintaince of temple
cannot be regarded to be for religious purpose, Held ‘YES’. Whether
Commissioner is not correct in law in not allowing approval to assessee trust
under section 80G Held ‘YES’.
(59) Charitable purpose Registration of Society cancellation Tamil Nadu Cricket
Association V/s. Director of IT (Exempt )
(2013) 22 ITR (Tribunal) 673 (Chennai)
Law Applicable Assessee formed for promotion of Cricket carrying activities of
commercial nature and generating huge Revenue. Cancellation justified
Se.12AA.
Held, dismissing the appeal, that the case of the assessee was covered by both
limbs stated in section 12AA(3) of the Act. The entire income of the assessee
was generated out of activities of commercial nature towards earning hyper
profits. The genuineness of the activities carried on by the assessee stopped
with the physical aspects of the game. The object of the assessee was to carry
on an activity for advancement of an object of general public utility by promoting
the cricket game. But, it had deviated from the stated objective by carrying out
the game as an entertainment industry, generating huge revenue. Therefore, the
Director of Income-tax (Exemptions) had rightly cancelled the registration under
section 12AA of the Act.
(60) Section 11 of I.T Act 1961. Charitable or religious Trust.
Ass. CIT V/s. Sri Sri Radha Damodar Charitable trust
Exemption of Income from house property- held under trust. A.Y. 2008-09.
Assessee was a charitable trust and its principal objects included promotion of
vegetarianism and distribution of Prasad. Assessee claimed exemption u/s 11.
A.O finding that assessee was in a business of running an eating house/
restaurant, took a view that entire. Charater of and focus of assessee had
become totally commercial he thus, rejected assesseee’s claim. Whether since
promotion of vegetarianism is undoubtly a charitable activity- because of
preparing vegetarian food items and selling same was very much incidental to
object of assessee trust and such business could be conducted by a charitable
20
trust as per provision of section 11 (4A). Held Yes. Whether, therefore,
assessee’s claim for exemption under Section 11 was to be allowed. Held ‘YES’.
(61) Charitable Trust. Charitable Purpose:-
CIT V/s. Bhhola Bhandari Charitable Trust.
(2013) 351 ITR 469 ( P & H) (5)
Donation for Charitable purposes Exemption- Renewal of exemption- Exemption
once granted shall continue in perpetually- Exemption can not be withdrawn
without issuing notice C.B.D.T Circular No 5 of 2010 Dated 3/6/2010 and 7 of
2010 dated 27/10/2010. IT Act 1961. Se. 80G. (29010) 324 ITR (St) 293.
(2010) 328 ITR (St) 43.
(62) Charitable Trust: Registration Under Section 12A Cancellation under Section
12AA (3)
Mumbai Cricket Association V/s Director of IT (Exemptions)
(2013) 84 DTR (Mumbai) Tribunal 162 (54)
Charitable trust: Registration under Section 12A- Cancellation under Section
12AA (3) Agreement entered between assessee engaged in the activity of
promoting and regulating the game of cricket in Mumbai and SI for development
of world class facilities on plot belonging to assessee- Facilities as developed
which include a club, bar, banquets etc. Cannot but be called as commercial and
profit sharing ventures at times commercial activities were undertaken on the
unutilized land- But in view of the prospective, insertion of sub S. (3) in S. 12AA,
cancellation of registration granted to MCA shall not date back to the date of
signing of the concessionaire agreement i.e. 12th December 2005, but shall be
effective from 1st June 2010 i.e. the date when the amendment was insertered in
the statute.
(63) Section 12AA of the Income tax Act 1961.
Charitable or religious trust Registration procedure Cancellation of registration:-
Agra Development Authority V/s CIT
(2013) 31 Taxman.com 40 [Agra. Tribunal]
Power to cancel registration under section 12AA (3) having been brought on
statute with effect from 1/6/2010 prospectively, cancellation made with effect from
assessment year 2009-190 would be invalid.
(64) Amendment of Section 2 (15) barring exemption where receipts exceeds Rs.10
lakhs not for cancellation u/s 12 (a) Madras Motors Sports Club V/s Director of
I.T (Exemption() (2013) 22 ITR (Tribunal) 175 (Chennai) A.Y. 2009-10. or 141
ITD (1).
21
Charitable Purpose- Registration of Trust- Cancellation.
Amendment of Section 2 (15) barring exemption where receipts exceeds Rs.10
lakhs- Not sufficient reason for cancellation of Registration under Section 12A (a)
I.T Act 1961. SS 2 (15) 12A (a)
A harmonious reading of the provisos to Section 2 (15) of I.T Act 1961. Shows
that in the years in which the receipts of nature mentioned in the first proviso
exceeds Rs. 10 lakhs, the assessee will not be eligible for exemption under
Se.11 & 12 of the Act. It does not mean that an otherwise charitable object of
general utility will become a non-charitable one only for a reason that the
aggregate receipts exceeds Rs.10 lakhs.
(65) Rejection of application for registration of Charitable Institution based on
assumption set aside.
Social Pedia Knowledge foundation V/s Director of I.T (Exemption)
(2013) 22 ITR (Tribunal) 238 (Chennai)
The object of the assessee- company were providing education and facilitating
social and economic empowerment, economic development programs, literacy
programs, training programs for villagers and down trodden people. It applied
for registration under Se.12AA of I.T Act 1961. The Director of I.T (Exemption)
rejected the application on the ground that the objects and activities of the
assessee were not inconformity with the definition of Charitable purpose u/s 2
(15) and hence did not qualify for registration u/s 12AA on appeal.
Held that rejection of registration by DIT (Exemption) was based on assumption.
The fact that the assessee had been incorporated u/s 25 of the companies Act
1956 showed that it had been formed for promoting charity or any other useful
object and intended to apply its profits if any or other Income in promoting its
objects. In other words it was a non-profit earning organization. Therefore, the
order of the DIT (Exemptions) was to be set aside with a direction to grant
registration to the assessee under Section 12AA.
(66) Accumulation of Income
(2013) 351 ITR 287 (Delhi)
Re-assessment- Charitable Trust- Exemption- Accumulation of Income-
Assessee can file Form 10 during reassessment proceedings- Assessee could
not file form 10 only before Tribunal I.T Act 1961. Se.11 and IT Rule 1962 rule 17
form 10.
(67) VISHAV NAMDHARI SANGAT V/S. COMMISSIONER OF INCOME TAX.
[2013] 22 ITR (TRIB) 468 (CHANDIGARH)
22
Donations to charitable institutions- Special deduction- Approval of institution-
Renewal- Circular clarifying that existing approvals deemed to have been
extended in perpetuity unless specifically withdrawn – Circular binding- Approval
to continue- Income Tax Act, 1961, s. 80G (5) – Circular No. 5 dated 3-6-2010.
(68) PENALITIES
Penalty under section 271 (1) (C) No exigible
CIT V/s Jaswinder Singh Ahuja (2013) 351 ITR 262 (Delhi HC)
Where the issue related to assessment of income from sale of shares received on
stock option with the assessee claiming it as a long term capital gains, but it was
actually found that it has to be treated as short term capital gains the question
was, whether penalty was exigible (liable) in such a case.
it was found that the law was not clear at the time the assessment was made for
the A.Y. 2002-2003 in view of lack of clarity, the issue has to be treated as
debatable so that penalty was not liable the High Court confirmed this view.
(69) Penalty under section 271 (1) (C)
(2013) CIT V/s Amit Jain (Delhi HC) 175 (67)
Income assessed under another head-income having been correctly returned by
assessee as capital gains assessment under the head of business income would
not attract penalty under se. 271 (1) (C)
(70) Penalty under section 271(1) (C) : Concealment
Asst CIT V/s Grand Organics (P) Ltd
(2013) 85 DTR (Panaji Tribunal Bench) 142 (65)
Withdrawal of claim for deduction – penalty u/s 271 (1) (C)
can be levied either in case of concealment of particulars of income or furnishing
of inaccurate particulars of Income-Assessee, being allowed deduction u/s 80IB-
in the past, claimed deduction furnishing full particulars but on legal advice
withdrew the claim and paid tax-AO without recording whether assessee
concealed particulars of income or furnished inaccurate particulars levied penalty
under se. 271(1) (C) observing that it was mandatory and automatic-Not
Justified- Assessee has disclosed all the necessary particulars in the return-
Bonafides of making the claim for deduction under section 80IB and withdrawals
thereof is duly proved- A mere making claim, which is not sustainable in law, by
itself, will not amount to furnishing inaccurate particulars regarding income of
assessee, more particularly in present case of assessee where in the claim of
deduction under se. 80IB was withdrawn and tax duly paid on the same.
23
(71) Penalty under section 271(1) (C)
CIT V/s Celetronix power Indian (P) Ltd (2013) 352 ITR 70 (Bom)
Penalty – Concealment of income – failure to furnish accurate particulars –
Disallowance of claim and imposition of penalty on basis of subsequent Supreme
Court decision – not furnishing of inaccurate particulars – penalty levied not
justified.
IT 1961 Se. 271 (1) (C)
(72) Penalty: Concealment of Income wrong claim
Dy CIT V/s Apollo Hospitals Enterprises Ltd
(2013) 23 ITR (Tribunal) 49 (Chennai)
Claim to depreciation on entire medical equipment as life saving device – NO
concealment of any fact – penalty not leviable for wrong claim.
(73) Penalty under SS 271D and 271E Contravention of SS.269SS and 269T.
Dy CIT V/s. Forging Ltd. (2013) 84 DTR (Del) Tribunal 153 (53)
Contravention of Section 269SS and 269T Current account transactions vis-à-vis
journal entries- Assessee entered into a development agreement with one DD
under which land was to be provided by assessee and development was to be
undertaken by DD. DD purchased land on behalf of assessee through it
representative K- payments made by DD on behalf of assessee were credited
assessee by journal entries to DD’s account. Assessee having not accepted any
deposit from DD in cash, there was no violation of Se.269SS, hence no penalty
under Section 271D was attracted Transactions are in nature of business
transaction recorded through the current account- There is no finding that the
transactions were under taken to avoid payment of tax. For the same reason
payment by assessee to DD through the said account also did not attract penalty
u/s 271E for violation of Se.,269T.
(74) Penalty under Section 271 (1) (c ) of I.T Act 1961.
(i) Claim of excess depreciation amounting Rs.32,51,161
(ii) Wrong claim of Loss on sale of garment unit amounting to Rs.21,68,597/-.
CIT V/s. Somany Evergree Knits Ltd.
(ITA No 1332 of 2011) Bombay High Court dt. 21/3/2013.
Relief upheld on the basis of the ITAT Tribunal holding that excess depreciation
originally claimed was on account of bona fide and inadvertent mistake on the
part of the respondent assessee. In any case during the course of the
assessment proceedings. The assessee realized its mistake and pointed out the
same. The Tribunal held that mistake should not be visited penalty the court held
24
that since the order of the Tribunal on the above issue is based on a finding of
fact, we see no reason to entertain question.
As per the I.T Department: (1) The assessee did not filed a revised return of
Income,. However the tribunal noted that the time to file revised return had
expired. In any event the revenue does not dispute that it was a bona fide
mistake on the part of the assessee in the above imposition of penalty upon the
assessee is not warranted.
(75) CIT V/s. Sania Mirza (A.Y. 2004 – 05)
Section 271 (1) ( c) of the I.T Act 1961. Penalty for Concealment of Income.
Where assessee player disclosed the details of awards received from the
government and other Institutions but did not offer them to tax and subsequent to
re-opening of assessment voluntarily offered same to tax. Penalty could not be
levied.
(76) Penalties.
Penalty under Section 271D. Limitation under Section 275. applicability of
clause (a) or Clause (c ) of Se.275 (1)
CIT V/s. Jitendra Singh Rathore.
(2012) 83 DTR Rajsthan 227 ( 40)
When the show-cause notice was served by the A.O on the assessee on 27th
March 2003. Penalty under Section 271D levied by Joint CIT on 28th May 2004
was clearly barred by limitation, notwithstanding issue of show-cause notice by
Joint CIT after matter was referred to him on 22nd March 2004.
(77) Penalty for Concealment of Income.
Dy CIT V/s. Hifanda Ltd.
(2013) 22 ITR (Tribunal) 488 (Kolkata)
Penalty- concealment of Income- Claim to depreciation on cost of development
of Portal and E-commerce site not a fixed asset under Section 2(ii) (b) Penalty
not leviable for wrong claim Deletion of Penalty Justified I.T Act 1961 Se.271(1)
(c).
(78) Penalty under Se. 271 (1) (c ) of I.T Act 1961.
Dy CIT V/s. VRB Investment (P) ltd.
(2013) 56 SOT 12 (Kolkata) URO
Section 271 (1) ( c), read with section 36 (1) (vii), of the Income-tax Act, 1961-
Penalty- For concealment of income-Bona fide claims- Assessment year 2005-
06- Assessee wrote off certain amount as provision for bad debts and claimed
deduction for same under section 36 (1) (vii)- Assessing Officer took a view that a
25
provision for bad debts would not amount to its write off and, thus, there was no
basis for claim raised under section 36 (1) (vii)- Assessing Officer also passed a
penalty order for raising a false claim of bad debts- It was apparent that
assessee made a provision against its dues under a bona fide belief that same
was allowable and, there was no attempt to conceal said fact- Whether in view of
above, impugned penalty order was to be set aside and, matter was to be
remanded back with a direction to allow assessee an opportunity to prove that
deduction claimed under section 36 (1) (vii) did not suffer from lack of any bona
fides or did not fall within either under Explanation 1 (A) or 1(B) of Section 271 (1)
( c ) – Held, yes [Para 4.7] [Matter remanded].
(79) Penalty u/s 269 SS read with Se.271D.
Dy CIT V/s. Firozabad V/s. Akhilesh Kumar Yadav.
(2013) 56 SOT 2 [Agra (unreported) ]
Section 269 SS, read with section271D, of the Income-tax Act, 1961- Deposits-
Mode of taking/accepting- Reasonable cause- Assessment year 2006-07-
Assessee accepted cash loan beyond exempted limit from Samajwadi Party, of
which he was member, for making payment to Nazul Department in order to meet
part cost of converting leasehold rights over Nazul land into free hold- according
to Assessing Officer, said cash loan transaction violated section 269SS because
assessee’s case neither fell in any exceptional clause of section 269SS nor he
could prove urgency of accepting cash directly avoiding banking channel; and
therefore, penalty under section 271D was attracted- However, it was found that
Assessing Officer did not dispute genuineness of said transaction and made no
addition in this regard- Further, cash loan deposited by Samajwadi Party in
assessee’s joint account was withdrawn on same day for making payment to
Nazul authority and assessee had also filed confirmation of Samajwadi Party- In
addition- Assessing Officer had not made out any case that assessee had used
unaccounted or black money- Whether when assessee had entered into
genuine transaction for bona fide reasons, and said loan was also repaid through
banking channel, assessee had been able to establish that he had ‘reasonable
cause’ for not complying with section 269SS- Held, yes- Whether, therefore, it
was not a fit case for levy of penalty- Held, yes [Para 8.12][ In favour of assessee]
(80) Penalty under Section 271D- Contravention of Se.269 SS Reasonable cause.
CIT V/s. Sahara India Financial Corp. Ltd.
(2013) 83 DTR Del, 171 (38)
26
Held Reasonable cause CIT (A) and the Tribunal having arrived at current
findings that there was reasonable cause within the meaning of Se.273B for
violation of Se,.269SS after taking note of the entire facts and circumstances in
which the assessee was place, it cannot be held that the view taken by the
Tribunal is either perverse or absolutely irrational, and the findings recorded by
the Tribunal being essentially findings of facts no substantial question of law
arises.
(81) Penalty under Section 271 (1) ( c) / Short term Capital gain V/s,. Business
Income.
CIT V/s. Amit Jain
(2013) 351 ITR 74 (Delhi H.C)
Penalty- Furnishing in accurate particulars- short-term Capital Gains- A.O
treating amount as Income from Business amount reported in return treating
Income under some other head not inaccurate particulars- Tribunal rightly deleted
penalty.
(82) Right to Information.
Girish Ramchandra Desphande V/s,. Central Information Commissioner and
others.
(2013) 351 ITR 472 (S.C)
Right to Information Exemption from disclosure. Invasion of Privacy of Individual-
return of Income. Information found in Income tax return- Personal and exempt-
No case of Public Interest in disclosure made out Information not to be disclosed.
(83) The following case law
Vinod V. Chhapia V/s ITO 21 (2) (3) Mumbai
(2013) 31 Taxman.com 415 (Mumbai-TribunaL)
Ref: Se. 2(47) Read with Se. 45 & 56 of IT Act 1961
Capital gains- Transfer (Surrender of tenancy Rights) A.Y. 2006-2007
Assessee land lord old tenant transferred tenancy rights in favour of new tenant-
Assessee (the Land lord gave consent to such transfer –New tenant made
payment to old tenant as well as assessee-Assessee claimed said amount to be
capital receipt and claimed exemption u/s 54EC by investing it in NABARD
BONDS-whether consent given by assessee (Land Lord) for transfer of tenancy
rights would result in transfer of any capital asset Held ‘NO’ whether amount
received was taxable as income from other source and not as capital gains Held
‘YES’
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