Issue No. 220 / December 7^th, 2020 

Dear Professionals,    

We are glad to present to you the 220^th edition of ‘Taxsutra Database Bulletin’, with a new feature “Judicial forward & backward reference”. This new feature aims to update readers about the judicial impact of a ruling in terms of the other rulings where it has been relied on, followed, distinguished etc. Every issue of the Database Bulletin will contain 10 rulings with judicial forward & backward references along with updates of current trends in the tax arena! 

Expert Column

The word retrospective signifies looking back at, thus retrospective effect of law means giving effect to the amendment in the existing law before the date in which the changes/amendment was brought in. Authors Rajesh Kumar & Anjali Jain, Advocate in their article discuss the nuances of the principle of retrospectivity under different laws. The authors elucidate that Statutes dealing with Procedure, in contrast to statutes dealing with substantive rights, are presumed to be retrospective unless such a construction is textually inadmissible. Speaking of the principle of retrospectivity in taxation laws, the authors state that general provisions regarding retrospectivity of amending acts, as applicable to other laws are also applicable to tax laws. They highlight that “A Validating Act validating any fiscal provision with retrospective operation is usually held not to be unreasonable or arbitrary. In the case of any Validating Act, the intention of the legislature is generally made sufficiently clear in the section or in the Act which is declared invalid on account of some flaw or defect which is within the competence of Parliament to rectify.” 

Click here to read article titled – Retrospective Operations of Amendments in Taxation Laws

*********************** 

Key Takeaways from Handpicked Rulings   

1. ITAT:Return of Income processed prior to June, 2015, fees u/s 234E cannot be levied – ITAT holds that amendment brought in by Finance Act 2015 u/s 200A(c) w.e.f. 1.6.2015 is prospective in nature; Notes that though section 234E of the Act was in the statute prior to 01.06.2015, however, in absence of any enabling provision, no fee u/s 234E of the Act can be levied for late filing of TDS statement for any period prior to 01.06.2015;However, states that where the delay continues beyond 1.06.2015, the AO is well within his jurisdiction to levy fees u/s 234E for the period starting 1.06.2015 to the date of actual filing of the TDS return; Upholds the levy of fees u/s 234E for the period 1.06.2015 to the date of actual filing of the TDS return which is 22.07.2015 and deletes the balance fee so levied……… Click here to read and download ITAT order

2) HC: CBDT notification issued under a different provision of the Act cannot be applied for allowing deduction u/s. 54G against LTCG  – HC dismisses assessee’s appeal, upholds ITAT’s order that notification issued by CBDT is applicable for tax credit certificates for shifting of industrial undertaking from urban areas u/s 280Y(d) r.w.s. 280ZA ………..Click here to read and download HC judgment

3) Provisions of Sec. 43B Constitutionally Valid; STT deducted, but not deposited with authorities attracts Sec. 43B - HC dismisses Assessee Writ, holds that the Section 43B is an exception to the mercantile system of accounting and is explicitly added to correct the mischief of claiming deductions without payment of taxes due even at a later stage;  Holds that provisions of Section 43B squarely attractable if Security Transaction Tax (STT) deducted against the transaction of trading and not deposited with the authorities;  HC notes that, the expression used is "same is actually paid by him"…………… Click here to read and download HC Judgment

4) SC: Dismisses Revenue’s SLP; HC ruled that Sec. 143(2) notice limitation period commences from original return date, not defective return correction date - SC dismisses SLP against HC order holding that date of filing of original return u/s 139(1) has to be considered for purpose of computing period of limitation under sub-section (2) of section 143 and not date on which defects actually came to be removed u/s 139(9)…….....Click here to read and download SC order

5) ITAT: Compensation received upon surrender of flat-booking right, attract capital gain tax; Grants Sec. 54 benefit – ITAT holds that excess compensation received on a refund from the builder in case of surrender of flats would attract capital gains tax, not income from other sources; Rejects Revenue’s submission that the incomplete, non-registered "letter of allotment" cannot be treated as an "allotment letter" for deciding ownership of capital asset, held that by virtue of the said allotment letter…… Click here to read and download ITAT Order

Note: SC in [TS-5072-SC-2015-O] dismissed Assessee’s SLP, booking confirmation letter irrelevant for determining Apartment “Booking Rights” acquisition; In another case of SC reported in [TS-5198-SC-2019-O] SC dismissed Revenue's SLP against HC-order considering the date of letter of allotment of flat over the date of sale agreement for determining holding period of the property;

 *********************** 

Judicial forward & backward reference 

1) Palam Gas Service [TS-5107-SC-2017-O] followed in [TS-5097-SC-2020-O] on Sec. 40(a)(ia) disallowance

2) Hindustan Steel Ltd (1972) 83 ITR 26 (SC) followed in [TS-5552-HC-2020(BOMBAY)-O] on non furnishing of Form 10CCB

3) A Suresh Rao (2014) 223 TAXMAN 228 (KARNATAKA) followed in, [TS-5369-ITAT-2019(Bangalore)-O] , [TS-7231-ITAT-2020(Bangalore)-O] on determining capital gain from holding period and not date of registered title deed

4) PRIME SECURITIES LTD (2009) 28 DTR 119 (Bombay) followed in, [TS-6186-HC-2019(Gujarat)-O] on limitation period commences from original return date

5) A Daga Royal Arts (2018) 64 ITR 55 (Jaipur) followed in, [TS-8907-ITAT-2019(Kolkata)-O] on cash meets business expediency test.

6) TATA TELESERVICES (2016) 132 DTR 1 (GUJARAT) approved in, [TS-5050-SC-2017-O] on limitation u/s 201(3)

7) KUNAL STRUCTURE (INDIA) [TS-5141-SC-2020-O] Affirmed [TS-6186-HC-2019(GUJARAT)-O] on Sec. 143(2) notice limitation period

8) Sivagangai District Central Co-operative Bank [TS-5591-HC-2020(Madras)-O] applied [TS-5592-HC-2020(Madras)-O] on Cash withdrawals by member societies of District Co-operative Bank not income in their hands, thus not subject to TDS u/s. 194N 

9) Principal CIT vs Consumer Marketing (India) (P) Ltd [TS-6006-HC-2015(Gujarat)-O], CIT vs Kalyani Steels Ltd [TS-5218-HC-2018(Karnataka)-O]  followed in [TS-5544-HC-2020(Bombay)-O] on impact of Circular No.715

10) Piu Ghosh v. Deputy CIT [2016] 386 ITR 322 (Cal) disapproved in [TS-5097-SC-2020-O] on Sec 40(a)(ia) disallowance. 

*****