Issue No. 249 / November 1^st, 2021

Dear Professionals, 

We are glad to present to you the 249^th edition of ‘Taxsutra Database Bulletin’, where we keep you updated with current trends in the tax arena!

Status of Journals Updated 

 Expert Column

The Taxation Laws in India are litigation prone, and even though Indian Judiciary is internationally recognised for its detailed and unbiased verdicts on controversial issues, it lags behind when it comes to the time involved in closing an assessment.

 

CA Sachin Kumar BP (Chief Strategic Partner, Manohar Chowdhry & Associates) and CA Urvi Asher in this article highlights the issue of lack of consistency in tax litigation and suggest ways to step in the direction of adopting a consistent approach. The authors refer to certain recent judicial precedents and state that for the principle of consistency to apply, it is the taxpayers’ responsibility to ensure there is no change in the fact pattern.

 

They further touch upon recent amendments in reassessment proceedings and opine that “need for consistency in assessment orders from year to year may also draw support from judicial precedents where reassessment proceedings have been quashed on a mere ‘change of opinion’ or without having ‘reasons to believe”. They aver that there are numerous benefits of adopting a consistent approach in tax litigation and suggest some ways in which the consistent approach can be maintained.

 

Click here to read an article titled, “Tax Litigation – Need for Consistency”

 

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Recently, the SC hearing a batch of appeals filed before it, held that for chargeability of interest u/s 234B prior to FY 2013-14, the amount of income-tax deductible or collectible at source can be reduced while computing the advance tax liability.

 

Ashwath Pai and Sudeep Das (Chartered Accountant) in their article discuss the implications of the SC ruling and highlight that in the light of amended provisions of Section 209, the ruling is a relief to many, and will settle a long battle fought between the taxpayers and the Revenue. They briefly capture the arguments advanced by the Revenue and the Taxpayers and the various judicial precedents relied thereon. Apart from granting relief to taxpayers presently litigating the issue at lower levels, another interesting takeaway from the ruling is the principle reiterated by the SC that while interpreting any provisions of the Income-tax Act, subsequent legislations/ amendments to the provisions can be considered, in case the earlier provisions were ambiguous or led to multiple interpretations.

 

Click here to read an article titled, “Interest u/s 234B - Mitsubishi Corporation Ruling – Way Forward”

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Key Takeaways from Handpicked Rulings

1) HC: Dismisses writ petition against faceless assessment order, regards statutory form over writ remedy - HC dismisses Assessee's writ petition against the faceless assessment order, on the grounds that the statutory remedy of appeal against the assessment order was available with the Assessee; Assessee before the HC submitted that proper opportunity of hearing has not been provided by the assessing authority prior to passing the assessment order; HC refers to coordinate bench rulings and holds that “when a statutory forum is created by law for redressal of grievances, a writ petition should not be entertained ignoring the statutory dispensation.” .................Click here to read and download HC Order 

2) HC: Citing alternative efficacious remedy, dismisses Assessee's writ petition against faceless assessment order - HC dismisses writ petition against the faceless assessment order passed without granting personal hearing; Notes that assessee had already approached the Appellate Authority against the assessment order and issuance of demand notice by way of filing an appeal u/s 246(A) of the Act; The Appellate Authority has powers to set aside the assessment order if found to be contrary to mandatory provisions under the Act and u/s 251 and that the Appellate Authority is having all the powers to consider the grounds raised by the petitioner in appeal; HC relies on SC ruling in case of Satya Pal Anand wherein exception to the rule of alternative remedy has been recognized..........Click here to read and download HC Order 

3) HC: Quashes Faceless Assessment order passed contrary to the procedure in Section 144B - HC: Quashes faceless assessment order passed along with notice of demand as well as show-cause notice issued u/s 274 r.w.s 271AAC(1). HC allows assessee’s writ petition and directs revenue to issue a draft Assessment Order to the Assessee and give an opportunity to file its objections along with documentary evidence and thereafter pass such order as it deems fit by also giving a personal hearing as per rules; Accepts Assessee’s statement to withdraw the Appeal filed before appellate authorities against the Assessment Order which had been filed to save the Appeal from getting time-barred, within 2 weeks from today; Notes that revenue does not say why the request of Petitioner to issue summons to the third-party lenders could not be issued or will not be issued and straight away goes ahead and passes the Assessment order making addition u/s 68 with regard to a party who was not even referred to in any of the show-cause notices..............Click here to read and download HC Order 

4) ITAT: Western Union has no Fixed Place PE or DAPE in India under India-USA DTAA - Delhi ITAT dismisses Revenue’s appeal by following ITAT’s conclusions for AY 2001-02 which have thereafter been followed in AYs 2002-03, 2003-04, 2004-05, 2005-06, 2007-08, 2008-09, 2009-10 and 2010- 11, holding that Assessee did not constitute any Permanent Establishment (PE) in India; Assessee, a non-resident company, registered in USA and engaged in the business of rendering money transfer services including transfer of money across international borders; Revenue contended that the Assessee company has a Fixed Place PE in India under Article 5 of India-US DTAA due to usage of software developed and owned by the Assessee in India; Further Revenue claimed existence of Agency PE on account of agents working in India; ITAT considers the orders passed in earlier years for AYs 2001-02 to 2010-11 wherein it was concluded that though the Assessee had a business connection in India, it neither had fixed placed PE nor agency PE in India and in absence of any PE in India the profits, if any, attributable to India operations could not be assessed as business profits under Article 7 of the India-US DTAA; It was also held that Assessee were independent agents under Article-5(4) of the India US-DTAA; Therefore, being the facts similar to that of earlier years, ITAT views that a consistent view taken by the ITAT should not be disturbed and hence, dismissed Revenue’s grounds............Click here to read and download ITAT Order 

5) HC: Quashes reassessment, directs Revenue to pass speaking order on Assessee’s objections within two weeks - HC quashes reassessment order and order rejecting objections, directs Revenue to pass a speaking order rejecting options within two weeks; Assessee-Company was issued a notice u/s 148 for AY 2013-14 and objections filed by the Assessee were rejected by the Revenue after a year of filing the same, and Assessee preferred a writ petition against the impugned notice and the order passed rejecting the objections; Assessee submitted that there being no independent application of mind by the Revenue, the reasons recorded suffered a serious statutory illegality; Assessee also contended that information received from ADIT, Kolkata that it is a beneficiary for an amount of Rs. 1 Cr. was baseless since the amount received was in the nature of loan, and the transaction being genuine there could not be any addition of any income; Assessee relied on the SC ruling in GKN Driveshafts and submitted that the order rejecting the objections was not a speaking order; HC finds that in the instant case there was no order u/s 143(3) and return of income was processed u/s 143 and..........Click here to read and download HC Judgment 

6) HC: Higher depreciation allowable for vehicle used for running on hire for own business - HC holds that the Assessee is entitled for higher rate of depreciation @ 30% for AY 2006-07 in respect of motor buses/lorries/taxi used in the Assessee's business of running them on hire; Follows SC ruling Radhasoami Satsang and identical issue decided by the ITAT in Assessee’s own case for AYs 1993-94 and 1995-96; Assessee, being a C & F agent involved in stevedoring, clearing and forwarding agency, custom house agency, steamer agency, rendering services in New Mangalore Port, was assessed at Rs. 87.66 lacs against Rs. 17.60 lacs pursuant to a search conducted on its premises u/s 132; Pr. CIT, exercising its power u/s 263, directed Revenue to pass a fresh assessment order regarding depreciation @30% on lorries, tippers, loaders, etc. which was negatived by the Revenue and appealed against before CIT(A) and allowed in Assessee’s favour; ITAT also decided in favour of the Assessee following coordinate bench’s ruling in Assessee’s own case for prior years; On Revenue’s appeal, HC refers to SC ruling Radhasoami Satsang wherein it was held “even though principles of res judicata do not apply to income tax proceedings, but where a fundamental aspect permeating through the different Assessment Years has been found as the fact one way or the other and the parties have allowed the position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in subsequent year”; Upholds the findings of CIT(A) and the ITAT by following earlier year’s judgment and rules in favour of Assessee............Click here to read and download HC Judgment 

7) HC: Holds Assessee eligible under VsV where of filing of appeal before HC not expired on Jan 31, 2020 - HC sets aside the rejection of declaration under Direct Tax Vivad se Vishwas Act; Holds that u/s 260A, time for filing any appeal was still alive on Jan 30, 2020; Revenue had made additions to Petitioner’s income by assessment order dt. Mar 25, 2010 and an appeal was preferred before the CIT(A) which partly allowed Petitioner’s appeal leading to an appeal with the ITAT, again partly allowed on Oct 22, 2019; However, Petitioner submitted that the ITAT’s order copy was not served upon it for eleven months as a result of which communication was made to the Assistant Registrar of the ITAT and eventually received the order copy in the month of Dec 2020; Assessee submitted that the time limit of 120 days was further extended as per SC order by 90 more days from March 15, 2021 owing to the situation of COVID-19 and thus filed an appeal on Oct 30, 2020 even before receiving the certified copy of ITAT order and the declaration under VsV on Mar 17, 2021; Revenue challenged that the declaration should have been filed before January 31, 2020; HC analyses section 2 of the VsV Act and on observing the chronology of various events, remarks that the period of limitation would start running from the date of receipt of certified copy as per Section 260(A)(2)(a) and a period of..........Click here to read and download HC Judgment 

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