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2021-02-08
Issue No. 281 / Feb. 08th, 2024
Dear Professionals,
We are glad to present to you the 281st edition of ‘Taxsutra Database Bulletin’, where we keep you updated with current trends in the tax arena!
“Taxsutra Database”, a true Income-tax research tool, is an archive of over 126250+ Income Tax Rulings reported across ITR, CTR, Taxman, ITD, TTJ, and ITR (Trib) and also includes recent ‘unreported handpicked rulings of SC, HC & ITAT’
Journals Current Status
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ITR Vol. 458 Part 5 |
Dated: 13th Nov 2023 |
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ITR-Trib Vol. 107 Issue 2 |
Dated: 09th Oct 2023 |
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CTR Vol. 334 Issue 41 |
Dated: 27th Oct 2023 |
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DTR Vol 224 Issue 78 |
Dated: 28th April 2023 |
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TAXMAN Vol. 295 Part 2 |
Dated: 11th Nov 2023 |
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ITD Vol.203 Issue 4 |
Dated: 22nd Nov 2023 |
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TTJ Vol. 225 Issue 41 |
Dated: 24th Oct 2023 |
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Key Takeaways from Handpicked Rulings
1) ITAT: Upholds revision over notional rent on builder’s unsold flats kept as stock-in-trade. ITAT upholds revisionary order under Section 263 wherein addition under Section 23 of deemed rental income in the hands of Assessee in respect of certain unsold flats for AY 2018-19 was made; Relies on SC judgment in Chennai Properties wherein it was held that the charging provision of Section 22 specifically gives exemption from determination of actual value of the property which is used for the purpose of any business or provision carried on by the Assessee; Observes that there is no dispute that the Assessee had retained the unsold stock of flats as stock-in-trade in the capacity of builder and the said unsold stock of flats were used only for the purpose of business; Relies on coordinate bench ruling in Pegasus properties and observes that Section 22 carves an exception wherein the stock-in-trade was indirectly taxed under relevant AY after providing moratorium period of 2 years, accordingly, up to AY 2017-18, no addition could be made in respect of deemed rental income on unsold stocks lying as stock in trade since they are used for business purpose; Observes that the availability of moratorium of 2 years commences from the date of completion of flats and the in the present case, benefit under Section 22/23 cannot be claimed as it is applicable with effect from AY 2018-19 only i.e., completion certificates received AY 2018-19 onwards only and in the case of Assessee stock of real estate lying completed much before and Assessee must not have shown income on the same ……………Click here to read and download ITAT Order
2) HC: Expenditure for road-development by State Agricultural Marketing Board exempt under Sec.11 - HC holds that the expenditure incurred on construction of rural road and development of Mandis for achievement of objects prescribed under the Punjab Agricultural Product Market Act (‘Market Act’) is allowable for application of income under Section 11 and cannot be considered as repayment of loan taken from Haryana State Agricultural Marketing Board (‘Board’); HC observes that perusal of relevant provisions of Market Act clearly shows that it is not disputed that Assessee is applying its funds as per the statutory provision; Opines that on perusal of the payment details to Marketing Board by the Assessee shows that the excess payment of Rs.2.81 Cr was made towards development work which was also reflected in the balance sheet duly attested by CA; Notes that marketing committee is vested with the responsibility of effecting improvements besides ensuring that there is repair and maintenance of the existing infrastructure and the whole purpose is to provide better facilities in the rural areas and for the safety, health and convenience of persons who visit the market area for the sale of agricultural produce and for the general interest of the persons associated with the activities connected therewith; Holds that CIT(A) order was correct to the extent that the payment was made by the Assessee to the marketing board towards the statutory functions of application of money for the objects provided in the statute and it was not for repayment of any loan and accordingly, holds that both AO as well as ITAT wrongly came to the said conclusion……………… Click here to read and download HC Judgment copy
3) HC: Allows Sec.10A deduction on deputation of technical manpower for onsite ‘software development’ - HC holds reassessment initiated over allowability of deduction under Section 10A on income from deputation at the client’s place for software development which was already subject matter of assessment, thus, was mere change of opinion and liable to be set aside; Also holds that initiation of reassessment proceedings on the basis of assessment order for subsequent AY would amount to borrowed satisfaction which is impermissible; Notes that profits derived from export of computer software is eligible for deduction under Section 10A which was claimed by the Assessee and at the same time profit derived from business of tendering technical services outside India are eligible for deduction under Section 80HHE; Observes that there has been declaration in Form 56F including the expenditure relating to providing technical services and once the said primary fact was disclosed, there was no further obligation on the assessee; Observes that initiation of reassessment proceedings on the basis of assessment order for AY 2008-09 would amount to borrowed satisfaction which is impermissible; Observes that Revenue’s reliance on Master Service Agreement, work contract and SCWs and Invoices cannot be sufficient itself to initiate proceedings for deduction under Section 10A in absence of reasonable nexus between technical services rendered and the STP which is necessary for an allowable deduction under Section 10A…………… Click here to read and download HC Judgment copy
4) HC: Absent third-party sales, Sec.80-IA deduction allowable on captive power unit. HC holds that the benefit of Section 80-IA cannot be denied to eligible Assessee merely because power generated by its power undertaking was consumed by its other business and not sold to outsiders; Also holds that an eligible undertaking entitled to claim benefit under Section 80-IA shall equally be eligible to claim benefit under Section 80-IC even in case of captive undertaking; Relies on coordinate bench judgement in Assessee’s own case for AY 2002-03 wherein it was held that the benefit under Section 80IA cannot be denied merely because the power generated was consumed at home or other business since it is well settled that a statute granting incentives for promoting growth and development should be construed liberally so as to advance the objective of the provision and not to frustrate it; Notes that Section 80IA is a special provision conferring certain benefits on undertakings in certain special category states; Relies on SC judgement in Bajaj Tempo wherein in context of Section 15C of the 1922 Act it was held that claim of deduction under Section 15C is allowable on profits and gains derived from an industrial undertaking established in a building taken on lease which was previously used for other business; During AY 2007-08, Assessee, an industrial undertaking claimed deduction of Rs.57.83 Lac under Section 80-IA in respect of its two captive power under takings which was denied by Revenue on the premise that the claim of deduction under Section 80-IA cannot be allowed since it had supplied power only to the paper undertakings ..…………… Click here to read and download HC Judgment copy
5) HC: Treats final order violative of Sec.144C procedure as draft assessment order. HC sets aside assessment order passed without following the procedure under Section 144C in case of ‘eligible Assessee’; However, HC considers it as ‘draft assessment order’ in terms of Section 144C(5) on the premise that assessment order was passed within the extended timeline prescribed by notification under TOLA; Observes that merely because there is a procedural infraction in formatting the assessment order under Section 143(3) and demand notice will not ipso facto mean that assessment will have to abate on account of wrong formatting; Observes that the assessment order treated as draft assessment order under Section 144C(1) will not abate assessment until it is passed beyond the limitation prescribed under Section 153; Observes that on treating the final assessment order as draft assessment order, the Assessee have an option to approach DRP and assessment will have to be completed within one month...………… Click here to read and download HC Judgment copy
