Issue No. 262 / June 10^th, 2022

Dear Professionals, 

We are glad to present to you the 262^nd 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-29-SC-2006-O] applied in [TS-6202-HC-2021(GUJARAT)-O], (2021) 206 DTR 65 (GUJARAT) which is affirmed by SC in, [TS-5107-SC-2021-O] on the assessment proceedings are part of a judicial process and are not administrative in nature.

2) [TS-5586-ITAT-2022(Kolkata)-O] followed in, [TS-5646-ITAT-2022(Kolkata)-O] on Interest on term deposit placed with the commercial banks

3) [TS-5362-ITAT-2022(BANGALORE)-O] followed in, [TS-5868-ITAT-2022(Bangalore)-O] on Co-op Society discharging onus u/s 68 not liable for addition on contravention of RBI's Demonetisation Notifications

4) (1996) 84 TAXMAN 0146 (Calcutta), [TS-5001-HC-1994(CALCUTTA)-O] relied in, [TS-7800-ITAT-2021(Bangalore)-O] on cash sales are admitted as revenue receipt, no reason to treat the cash deposits as income from undisclosed sources.

5) (2021) 202 DTR 337 (VISAKHAPTANAM), [TS-5821-ITAT-2021(Visakhapatnam)-O] relied in, [TS-7800-ITAT-2021(Bangalore)-O] on cash receipts represent the sales which offered for tax no addition u/s 68 or 115BBE again

6) (2016) 242 TAXMAN 159 (BOMBAY), [TS-5945-HC-2015(BOMBAY)-O] applied in, [TS-6851-HC-2021(Karnataka)-O], (2022) 209 DTR 383 (Karnataka) on income earned on shareholders' account is not an income which represents income on account of Life Insurance Business

7) (2022) 443 ITR 186 (Delhi) / [TS-5148-HC-2022(Delhi)-O] followed in, [TS-5247-HC-2022(Delhi)-O] on penalty u/s 270A without 'specific limb', unreasonable

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Key Takeaways from Handpicked Rulings  

1) ITAT: Upholds CIT(E) order rejecting Sec.12A; Onus to prove fulfilment of statutory requirements on Assessee - ITAT upholds CIT(E) order, rejecting application for grant of registration u/s 12A on four grounds, firstly that the assessee’s trust deed does not have irrevocability clause, secondly that the trust deed of the Assessee also does not provide that in case of winding up/dissolution of the Assessee, its funds /property will be transferred to another charitable entity, thirdly that the trust deed of the assessee does not have a clause that the beneficiaries are a section of public and not specific individuals, and fourthly that the assessee will use its funds/property for its objects; Notes that the primary condition for grant of registration u/s 12A is that the assessee is a ……………..Click here to read and download ITAT Order

2) HC: Remands Tata Teleservices' stay application over deposit of less than 20% of demand - HC holds that the requirement of payment of twenty percent (20%) of disputed tax demand is not a pre-requisite for putting in abeyance recovery of demand pending first appeal in all cases; The said pre-condition of deposit of twenty percent of the demand can be relaxed in appropriate cases; Takes note of Office Memorandum dt. 29th February, 2016 and observes that where addition on the same issue has been deleted by the appellate authorities in earlier years or where the decision of the SC or jurisdictional HC is in favour of the assessee, stay at lower deposit can be granted………….Click here to read and download HC Judgment

3) HC: Dismisses cooperative society's challenge against Sec.148 notice; Holds no change of opinion since assessment records not examined - HC dismisses writ petition by a co-operative society challenging reassessment proceeding as mere change of opinion, permits the Revenue to continue the proceeding by holding that “even in the case of existing material, if no conscious attempt has been made by the AO, it would at the most tantamount to mistake in not considering the relevant point or proposition and it would not certainly not fall in category of “change of opinion.”; Assessee filed its return of income for AY 2015-16 declaring NIL income after claiming deduction under Section 80P; Revenue issued notice under Section 148 on the ground that Assessee claimed deduction on interest received on FDR’s from the cooperative banks and nationalized banks, which was inadmissible under Section 80P; HC observes that the Revenue recorded two reasons: (i) interest on FDRs from Cooperative Banks and Nationalised Bank, for which deduction under Section 80P is inadmissible and (ii) interest other than Cooperative Societies and the same is not admissible for deduction under Section 80P; Opines that Revenue has rightly formed opinion that the interest derived from the surplus funds invested by the Assessee in the nature of FDRs other than the Cooperative Societies i.e. other Cooperative Banks and Nationalized Bank, will certainly not fall in the category to be entitled to claim the deductions under Section 80P(2)(i) and Section 80P(2)(d) and thus have escaped assessment, remarks that..………..Click here to read and download HC Judgment

4) HC: Interest on compensation awarded by MACT not taxable, de hors amendment to Section 145A(b) - HC holds interest awarded by the Motor Accidents Claim Tribunal (MACT) as not taxable under the Income-tax Act, observes that the compensation is on the principle of restitution to place the claimant in the same position in which he would be, if the loss of life or injury was not suffered; Also observes that “the amendment in Section 145A(b) only creates a deeming fiction as to the year of taxability of the interest on compensation. It does not create a deeming fiction as to the taxability of the interest on compensation. Even after the insertion of Section 145A(b), the interest on compensation under the Motor Vehicles Act which is exempt does not become taxable by operation of Section 145A(b)”; Explains that the compensation received on compulsory acquisition of land is chargeable under capital gains, thus the issue over taxability of interest thereunder is limited to the extent of whether it is taxable as interest income or as a part of compensation, whereas under the Motor Vehicles Act, the compensation itself is exempt; Thus, remarks that “nature of interest, therefore, would assume significance and cannot be given the same treatment as interest on compensation under the Land Acquisition Act and be taxed by operation of Section 145A(b)”………..Click here to read and download HC Judgment

5) ITAT: Co-operative banks are first co-operative soceity, entitled to Sec. 80P deduction - ITAT holds that interest earned from investment by an assessee a Co-operative Society from the co-operative bank, it does not come under the consideration of the income from other sources, hence interest is eligible for the deduction u/s 80P(2) …………….Click here to read and download ITAT Order

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