We are glad to present to you the 251st edition of ‘Taxsutra Database Bulletin’, where we keep you updated with current trends in the tax arena!
Status of Journals Updated
ITR Vol - 438 PART 6
Dated 22nd Nov 2021
ITR Trib - 92 Issue 2
Dated 29th Nov 2021
CTR Vol. 322 Issue 43
Dated 12th Nov 2021
DTR Vol 207 Issue 212
Dated 23rd Nov 2021
TAXMAN Vol. 283 Part 2
Dated 20th Nov 2021
ITD VOL.191 Issue 5
Dated 1st Dec 2021
TTJ VOL. 213 Issue 45
Dated 23rd Nov 2021
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Key Takeaways from Handpicked Rulings
1) HC: Period of limitation u/s 263 to be reckoned from original assessment order - HC dismisses Revenue’s appeal, upholds ITAT’s holding that the period of imitation has to be considered from the date of the order passed u/s 143(3)r.w. Section 263 when MAT Credit was originally allowed and not from the date of the order passed u/s 143(3) r.w.Sections 263 &251 when it was only increased; Revenue allowed MAT Credit as per Section 115JAA originally in assessment u/s 143(3) r/w Section 263; CIT(A) had decided the issue of whether the MAT Credit allowed should include surcharge amount and education cess in Assessee’s favour and accordingly the MAT Credit originally allowed was only increased by the amount of surcharge and education cess; ITAT held the error in allowing the MAT Credit was there in the AO’s order u/s 143(3) r.w.Section 263 whereby the MAT Credit was originally allowed and was only increased by the amount of surcharge and education cess while giving effect to the appellate order.………………..Click here to read and download HC Judgment
2) ITAT: No addition u/s 68 for completed assessments sans any incriminating material - ITAT follows SC order in Meeta Gutgutia, holds no addition u/s 68 can be made in case of search, in absence of incriminating material for completed assessments; Assessee was subjected to a search and his case was reopened u/s 153A wherein certain additions were made, which were deleted by CIT(A) who held that since the assessments in these cases stood completed, any additions could be made only on the basis of incriminating material; ITAT finds that addition has not been made on the basis of any incriminating material but has been made on the basis of entries in the books of account; Observes that entries were not unsupported as argued by the Revenue but are duly and properly supported by documentary evidences and holds that; ITAT observes that the case of Raj Kumar Arora which was based on Anil Kumarruling which was also followed in Kabul Chawla ruling wherein issue was decided in favour of Assessee by holding that in case of completed assessments, the additions can only be made on the basis of incriminating material; ITAT notes that the CIT(A) held that there was a difference between a statement recorded u/s 133A and that recorded u/s 132(4) whereas statements which have been relied by Revenue were recorded u/s 133A and not u/s 132(4); ITAT observes that ……………..Click here to read and download ITAT Order
3) HC: Revision u/s 263 of assessment based on one of the two possible views, invalid - HC refuses to admit the appeals preferred by PCIT invoking revisional powers under Section 263 of the Act; Remarks that the revisional powers u/s 263 were illegally invoked by the Principal Commissioner and upheld the decision of ITAT setting aside PCIT’s order; Assessee, engaged in gold and jewellery business was subjected to search whereby excess stock of Rs. 6.12 Cr was found, and Assessee filed the revised return admitting the income; Assessees admitted to the undisclosed income discovered during the search and seizure procedure and in reply to the show cause notice as to why the said income should not be charged u/s 69 as ‘Undisclosed Investment’ and u/s 115BBE of the Act, explanations had been given with regard to the additional income, which were considered and duly accepted by the Assessing Officer………………..Click here to read and download HC Judgment
4) HC : Society eligible for benefit u/s 10(23C)(iiiad) for fees, interest from FDRs - HC holds Assessee eligible for benefit u/s 10(23C)(iiiad) for interest from FDR and fees received by it; Assessee-Society, registered under the Societies Registration Act had established an educational institute and received receipts in fees and interest on FDRs for which it claimed the benefit u/s 10(23C)(iiiad), which was disallowed by the Revenue since the aggregate of fee receipts of the institution and the receipts of the Society breached the prescribed upper limit of Rs.1 Cr, which was upheld by the CIT(A); ITAT also denied Assessee the benefit u/s 10(23C)(iiiad) on the further reasoning that there was no evidence that the donations had been received by the Society with any specific direction that they will form part of the corpus of the Institution; HC holds that there would be no clubbing of the receipts of the Institution with the other income of the Society; Observes that the impugned additions made on the ground that the aggregate of the fee receipts of the Institute run by the Assessee-Society breached the prescribed upper limit of Rs.1 Cr under Rule 2BC of the IT Rules is incorrect, on the ground that ………………..Click here to read and download HC Judgment
5) HC: Transfer of depreciable assets, without liabilities, covered by Sec.50; Not taxable as slump sale - Calcutta HC dismisses Revenue’s appeal, upholds the ITAT’s order affirming sale of certain assets could not be regarded as a slump sale u/s 2(42C); Assessee-Company, engaged in the business of manufacturing and sale of chemicals, castings, steels, wagons sold its chemical unit whereas Revenue held it to be a transaction of slump sale; On appeal, both the CIT(A) and ITAT held the transaction was not in the nature of slump sale; HC observes that the unit itself was never sold and/or transferred as a going concern in totality but only assets of the unit was sold and transferred to the purchaser on a pre-determined and agreed price for each type of assets being sold and transferred and the consideration fixed for all the assets were not in lump sum; HC notes that none of the liabilities were transferred to the purchaser and the same continued to be a liability of the assessee and to be discharged by the Assessee; Relies on the coordinate bench ruling in Kwality Ice Cream (India) Ltd and holds that Section 50 will override all other provisions and for depreciable assets, the value has to be determined in accordance with the principles of block of assets;HC confirms ITAT’s approach and states that it was not the case thatITAT did not determine the issue of fact nor can it be said that the issue has been determined wrongly by reason of any illegality or omission or error………………..Click here to read and download HC Judgment
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Expert Column
The Courts are usually flooded with writ petitions against statutory authorities over non-adherence to the principles of natural justice which has led to evolution of the principles in various dimensions. Recently, the Madras High Court thought it fit to dispose of an income-tax appeal preferred by the Revenue without extending an opportunity of being heard to the Assesee since the issue was fully covered.
Mr. Mahesh Chhajed (Senior Partner, M.S. Chhajed & Co.) and Mr. Hem Chhajed (Partner) in their article analyse the aforesaid ruling and discuss its implications which in all probability could set a disturbing trend. They discuss the well-established principle of law enshrined in legal maxim audi alteram partem and its essential ingredients. They highlight that the principles of natural justice are not embodied rules but are evolved under common law and they check the arbitrary exercise of power by the state or its functionaries.
The authors emphasise on the importance of natural justice by referring to the provisions of the Code of Civil Procedure as well as the observations of the Apex Court in several rulings and opine that Madras High Court's order appear contrary to Article 14 of the Constitution which could lead to situation where assessees would be required to file caveats after every favourable order of ITAT. They conclude with the remark, “In the changing times of E-assessments, E-Appeals and perhaps even E-tribunals, if there is anything that needs a champion, it is the Principles of Natural Justice.”
Click here to read"Departure from Principles of Natural Justice - Questions Galore!"
“Taxsutra Database”, a true Income-tax research tool, is an archive of over114985+ 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:
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Mr. Mahesh Chhajed (Senior Partner, M.S. Chhajed & Co.) and Mr. Hem Chhajed (Partner) in their article analyse the aforesaid ruling and discuss its implications which in all probability could set a disturbing trend. They discuss the well-established principle of law enshrined in legal maxim audi alteram partem and its essential ingredients. They highlight that the principles of natural justice are not embodied rules but are evolved under common law and they check the arbitrary exercise of power by the state or its functionaries.
