Issue No. 269 / November 28^th, 2022 

Dear Professionals, 

We are glad to present to you the 269^th edition of ‘Taxsutra Database Bulletin’, where we keep you updated with current trends in the tax arena!  

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Judicial “forward & backward reference” 

1) [TS-5017-SC-1991-O], (1991) 98 CTR 0161 (SC) relied in [TS-5072-HC-2022(BOMBAY)-O] on adequacy or sufficiency as distinct from existence or relevance of material for AO belief that income on income has escaped.

2) [TS-5031-HC-2019(Bombay)-O] / [TS-5262-SC-2019-O] distinguish in, [TS-5072-HC-2022(BOMBAY)-O] on reopening of assessment

3) [TS-14-SC-1993-O] / (1993) 69 TAXMAN 627 (SC) relied in [TS-5072-HC-2022(BOMBAY)-O] on reassessment only when AO has reason to believe

4) [TS-5502-HC-2010(Gujarat)-O], (2010) 43 DTR 0329 (Gujarat) relied in, [TS-6617-HC-2021(MADRAS)-O] on Service of notice, the expression “shall be issued”

5) [TS-5897-ITAT-2008(Mumbai)-O] / [2009] 28 SOT 484 (MUMBAI) relied in [TS-7149-ITAT-2022(Hyderabad)-O] on Cumulatively shareholding to be considered u/s 79

6) [TS-6695-HC-2018(Culcutta)-O] /  (2018) 169 DTR 179 (CALCUTTA) relied in, [TS-6926-ITAT-2022(Kolkata)-O] on failure to issue Sec 143(2) notice nullifies reassessment

7) [TS-5945-HC-2015(BOMBAY)-O] / (2016) 242 TAXMAN 159 (BOMBAY) applied in [TS-6851-HC-2021(KARNATAKA)-O] & Revenue SLP admitted by SC in, [TS-5116-SC-2022-O] on shareholders’ amount has to be considered as arising out of Life Insurance Business

8) [TS-6810-HC-2021(GUJARAT)-O] / (2022) 214 DTR 283 (GUJARAT) followed in [TS-5375-HC-2022(GUJARAT)-O] on failure to issue notice, Order not valid

9) [TS-6-SC-2000-O] / (2000) 109 TAXMAN 66 (SC) relied in, [TS-5060-HC-2022(CALCUTTA)-O] on assessment order may result in loss of revenue cannot be treated to be prejudicial to the interest of revenue

10) [TS-5801-HC-2010(MADRAS)-O], (2011) 51 DTR 0067 (MADRAS) relied in , [TS-5060-HC-2022(CALCUTTA)-O] on deduction u/s 80IA(4)

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Expert Column 

The Updated Return was introduced by the Finance Act, 2022 to enable the taxpayers to make good their disclosures or failure in filing of ITR within the time frame already provided in the Income Tax Act. Opting for filing the Updated Return can save taxpayers from multi-pronged legal consequences

Mr. Prashant Upadhyay and Mr. Varun Fitter (Partners, Shah Mehta & Bakshi, Chartered Accountants) elaborate on various advantages entailed in filing an Updated Return from the perspective of income-tax and GST laws. The authors discuss the implications of filing an Updated Return on penalty and prosecution related provisions. They also explain how the income-tax and GST bill can drastically go down on filing of Updated Return. Given the legal framework on exchange of information, the authors are of the view that an Updated Return can save tax payers from legal battles under PF, ESI, labour welfare laws too.

Click here to read the article, "Shades of Updated Return"

     

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Key Takeaways from Handpicked Rulings

1) ITAT: Form 67 filing mandatory, not directory, for claiming FTC – Visakhapatnam ITAT denies foreign tax credit by invoking the Rule 128(9) of the IT Rules;  ITAT notes that the Assessee realised the filing of Form 67 only after the scrutiny was initiated and filed it with a delay of more than two years without any valid and reasonable cause; ITAT observes that use of the word “shall” in Rule 128(9) signifies that it is mandatory in nature and not directory; Thus, holds that as per the Rule, Form 67 shall be furnished on or before the due date specified for furnishing the return of income under Section 139(1)………..Click here to read and download ITAT Order

2) ITAT: Mere entries in firm's books cannot alter ownership; Upholds colourable device plea – ITAT holds that mere entries in the books of accounts of partnership firm, the Assessee cannot claim that the transferred property was owned by the partnership firm; The Assessee cannot change ownership and character of the transaction of purchase and sale entered into in individual capacity; ITAT upholds CIT(A) order that the attempt is a colorable device obviously to circumvent Sec.50C (43CA) not being in existence in impugned year); Holds Assessee liable to capital gains tax but only to the extent of his share of 50%.............Click here to read and download ITAT Order

3) ITAT: Trust doesn't lose complete exemption, only 'diverted' amount taxable – Mumbai ITAT holds that the Assessee-Trust loses the exemption only to the extent of violation of Section 13 and not on the whole of the income; Notes that as per an amendment to the provisions by the finance act 2022 w.e.f 1-4-2023 which provides that a part of income is applied directly indirectly for the benefit of specified persons then only such part of income shall be excluded from the operations of provisions of Section 11 and 12 of the Act and consequently it should be included in the total income of the trust; ITAT directs AO to make an independent enquiry in accordance with the law that whether the 10th floor has been utilized by the trustees for their direct or indirect benefit and if on enquiry the AO finds that the property was used for the director indirect benefit of the specified persons ……….Click here to read and download ITAT Order

4) SC: Dismisses Assessee's SLP against disallowance of bonus or commission paid to directors - SC dismisses assessee’s SLP against Delhi HC order, observes that there is a concurrent finding of fact by the AO, CIT (Appeal) and ITAT which has been duly affirmed by the High Court, disallowing the payment of bonus to two Directors of the company; SC holds that no case to interfere with the impugned order passed by the HC is made out; HC upheld the ITAT order by holding that there was no substantial question of law as AO and CIT(A) had given a concurrent finding that the assessee has paid the bonus to avoid payment of dividend distribution tax; HC, while dismissing the appeal, observed that if we take the analogy in case of …………..Click here to read and download SC Order

5) ITAT: Disallowance of TDS Credit by rectification order not sustainable – ITAT discards rectification order disallowing TDS credit claimed on the basis of Form 26AS & Form 16A; Holds rectification proceedings u/s 154 can be done only in the cases where there is a mistake apparent from record and no debatable issue is involved; Assessee filed her return of income on the basis of record generated by the Department itself i.e., Form No 26AS and Form No 16A; The Revenue disallowed the TDS credit by passing a rectification order; ITAT exclaims how the documents that formed the basis of claiming TDS credit processed and issued by the Revenue itself can have a mistake apparent from record; ITAT observes …………………Click here to read and download ITAT Order

     

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 About Taxsutra Database! 

“Taxsutra Database”, a true Income-tax research tool, is an archive of over 119590+ 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:    

a) Comprehensive coverage of all latest cases powered by an advanced search engine to provide a seamless user experience; 

b) Effective search results supported by active filters around Court Level, Location, Case Numbers and Citation; 

c) Enhanced search feature, using the Unique Bulls Eye Application, by including "Exact words", "Any of these", "none of these" options.   

d) Judicial “forward & backward reference”    

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