“Taxsutra Database”, a true Income-tax research tool, is an archive of over 110800+ Income Tax Rulings reported across ITR, CTR, Taxman, DTR, ITD, TTJ, and ITR (Trib) and also includes recent ‘unreported handpicked rulings of SC, HC & ITAT’. It is a completely integrated service with the following features:
· Comprehensive coverage of all latest cases powered by an advanced search engine to provide a seamless user experience;
· Effective search results supported by active filters around Court Level, Location, Case Numbers and Citation;
· Enhanced search feature, using the Unique Bulls Eye Application, by including "Exact words", "Any of these", "none of these" options.
· Judicial “forward & backward reference”
We are glad to present to you the 224th edition of ‘Taxsutra Database Bulletin’, where we keep you updated with current trends in the tax arena!
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Expert Column
Exploring and evaluating the proposal to introduce faceless ITAT, R.E.Balasubramanyam, (Partner, Balu & Anand, Chartered Accountants) states that the COVID pandemic ensured that all of us had a taste of virtual proceedings before it becomes the norm and has only hastened the process. The author discusses the SC decision in Gullapalli Nageswara Rao v. A.P.S.R.T. Corporation, AIR 1959 SC 308 which elaborated on the rule of “the one who decides must hear” and explained the usefulness of a personal hearing. The author opines that with the advancement of technology, if a person is enabled to put forth his arguments from any place without being physically present before the judges, then there is no reason why such a facility should not be treated as equivalent to a personal hearing. On this note the author expresses his hopes that “when the Finance Minister talked about faceless proceedings of the tribunal, she was in fact actually meaning a virtual hearing.”
Click here to read article titled – “Budget 2021: Courting A Faceless Future”
Section 45(4) of the Income Tax Act, 1961 is proposed to be substituted and section 45(4A) inserted vide the Finance Bill, 2021, with consequential amendment of section 48. CA Dindayal Dhandaria & CA Naveen Kumar Dhandaria explore the proposals and point out the anomalies therein. Noting that the receipt of capital asset is in the hands of the ‘specified person’ but the incidence of tax is on the specified entity which does not receive the capital asset but transfers it, the authors point out that “The provisions of section 2(47) have not been amended to take care of such an exceptional situation”. Further, they highlight that section 45(4A) is proposed to apply to “money” also and state that “By no stretch of imagination, money can be a “capital asset”. The definition of “capital asset” given in section 2(14) of the Act does not cover it.”
Click here to read article titled – “Budget 2021: Capital gains on firms/AOPs”
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Key Takeaways from Handpicked Rulings
1) ITAT: Amount deemed to be undisclosed for the AYs 2016-17 cannot be brought to tax for the AYs 2017-18 - ITAT deletes addition u/s. 69A for AY 2017-18 towards cash found in a locker during search, observes that assessee last operated the locker on 29.10.2015 and that there were no no locker operations between 01.04.2016 to 25.04.2017 (the date on which the locker was operated by the Revenue), i.e., the period relevant for the impugned year, i.e., AY 2017-18; Accordingly, holds that the issue of unexplained cash found during search can be considered in AY 2017-18..........Click here to read and download ITAT Order
2) ITAT: Buy back of foreign currency convertible bonds (FCCBs) at discount falls in the nature of capital receipt not exigible to tax - ITAT dismisses Revenue’s ground, upholds deldetion of addition towards buy-back of FCCBs on discount; Notes that it is undisputed that assessee is in manufacturing business and utilised the FCCBs for purchase of capital assets for the company and most of them being depreciable asset; Further assessee has satisfied the conditions of ...........Click here to read and download ITAT order
3) ITAT : Section 139 is to be read here as section 139(4) and not to be confined to section 139(1) alone for the purpose of deposit of capital gains in the designated bank account – ITAT sets aside lower authorises order, allows exemption u/s.54B towards purchase of another agricultural land; AO denied the said claim on the ground that the assessee did not furnish details of payment as well as Capital gain account maintained with a designated bank which was confirmed by the CIT(A) by relying on the decision of Bombay HC in case of “Humayun Suleman Merchant”; ITAT notes that the HC has infact observed that the requirement of depositing before the date of furnishing of return of Income u/s 139 has not to be restricted only to the date specified in Section 139(1) but would include all sub sections of S. 139 including sub-sec (4) and that the requirement of depositing ........Click here to read and download ITAT Order
Note: In [TS-5578-HC-2014(Karnataka )-O] HC upheld Sec 54F benefit despite non deposit of amount in capital gains account scheme (CGAS)
4) ITAT: Change in the method of accounting is permissible provided it’s genuine and not bogus - ITAT deletes addition made on the premise of fall in gross profit earned by the assessee despite increase in turnover, holds the allegation of reducing profit by obtaining non-genuine bogus purchase bills as wrong and not sustainable; Observes that during the year, assessee has changed its business vastly from export of colour stones to export of diamonds and it is a common fact that the profit margin in diamond is much lesser than in colour stones which ranged between 6% to 7%; Accordingly, opines that “in view of difference in the circumstances, the results of this year i.e. A.Y. 2010-11 cannot be compared to the results of earlier year as the complete nature of business is changed from this year.”; Further, noting that assessee has backed his purchases with evidences, holds that “the allegation of reducing profit by obtaining non-genuine bogus purchase bills .......Click here to read and download ITAT Order
Note: In [TS-5074-ITAT-2020(Mumbai)-O] ITAT held that assessee has the right to change method of accounting over the present method
5) Prohibition from filing a second application before Settlement Commission only when earlier application was ‘allowed’ to be proceeded with, no bar when application is ‘rejected’ - HC dismisses Revenue's writ against ITSC order, holds that there is no bar on filing of a second application before the Settlement Commission (ITSC), when the earlier application was ‘not allowed’ to be proceeded with u/s 245D(1) of the Act; Explains that Section 245K(2) of the Act prohibits a subsequent application, only when the assessee had earlier made an application under Section 245C and such an application has been ‘allowed’ to be proceeded with u/s 245D(1); Holds that there is no provision under the IT Act, disbarring the assessee from subsequently making an application after his original application was ‘rejected’ u/s 245D(1) and ‘not allowed’ to be proceeded with..........Click here to read and download HC Judgment
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About Taxsutra Database!
“Taxsutra Database”, a true Income-tax research tool, is an archive of over110800+ Income Tax Rulings reported across ITR, CTR, Taxman, DTR, ITD, TTJ, and ITR (Trib) and also includes recent ‘unreported handpicked rulings of SC, HC & ITAT’. It is a completely integrated service with the following features:
· Comprehensive coverage of all latest cases powered by an advanced search engine to provide a seamless user experience;
· Effective search results supported by active filters around Court Level, Location, Case Numbers and Citation;
· Enhanced search feature, using the Unique Bulls Eye Application, by including "Exact words", "Any of these", "none of these" options.
· Judicial “forward & backward reference”
The Taxsutra Database comes at a very special Annual Subscription price of 4200+ GST AND includes an annual license to the Taxsutra Library.
Exploring and evaluating the proposal to introduce faceless ITAT, R.E.Balasubramanyam, (Partner, Balu & Anand, Chartered Accountants) states that the COVID pandemic ensured that all of us had a taste of virtual proceedings before it becomes the norm and has only hastened the process. The author discusses the SC decision in Gullapalli Nageswara Rao v. A.P.S.R.T. Corporation, AIR 1959 SC 308 which elaborated on the rule of “the one who decides must hear” and explained the usefulness of a personal hearing. The author opines that with the advancement of technology, if a person is enabled to put forth his arguments from any place without being physically present before the judges, then there is no reason why such a facility should not be treated as equivalent to a personal hearing. On this note the author expresses his hopes that “when the Finance Minister talked about faceless proceedings of the tribunal, she was in fact actually meaning a virtual hearing.”
Section 45(4) of the Income Tax Act, 1961 is proposed to be substituted and section 45(4A) inserted vide the Finance Bill, 2021, with consequential amendment of section 48. CA Dindayal Dhandaria & CA Naveen Kumar Dhandaria explore the proposals and point out the anomalies therein. Noting that the receipt of capital asset is in the hands of the ‘specified person’ but the incidence of tax is on the specified entity which does not receive the capital asset but transfers it, the authors point out that “The provisions of section 2(47) have not been amended to take care of such an exceptional situation”. Further, they highlight that section 45(4A) is proposed to apply to “money” also and state that “By no stretch of imagination, money can be a “capital asset”. The definition of “capital asset” given in section 2(14) of the Act does not cover it.”
