Deduction u/s 80JJAA – A must take incentive; Provisions of section 56(2)(vii) inapplicable to land held as stock-in-trade & more!
Issue No. 221 / January 4th, 2021
Dear Professionals,
We are glad to present to you the 221st edition of ‘Taxsutra Database Bulletin’, with a new feature “Judicial forward & backward reference”. This new feature aims to update readers about the judicial impact of a ruling in terms of the other rulings where it has been relied on, followed, distinguished etc. Every issue of the Database Bulletin will contain 10 rulings with judicial forward & backward references along with updates of current trends in the tax arena!
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Judicial forward & backward reference
1) Vembu Vaidyanathan (2019) 176 DTR 446 (Bombay) affirmed in, [TS-5198-SC-2019-O] on date of allotment for determining holding period of the property.
2) GULSHAN MALIK (2014) 102 DTR 354 (DELHI) affirmed in, [TS-5072-SC-2015-O] on “Booking rights” in flat shall be treated as acquired upon execution of buyer’s agreement with builder.
3) Reliance Petroproducts Pvt. Ltd. [2010] 322 ITR 158 (SC) relied in[TS-5185-HC-2020(BOMBAY)-O] on wrong claim is not at par with concealment.
4) Sudha Prasad [2005] 275 ITR 135 (Jharkhand) distinguished in, [TS-5232-HC-2020(DELHI)-O] on statutory obligation on legal heirs
5) Magadh Stock Exchange Association Patna HC followed Exide Industries [TS-5031-SC-2020-O], Clause (f) of Sec 43B, stands affirmed by SC
6) Foundation of Ophthalmic and Optometry Research Education Centre [2013] 355 ITR 361 (Delhi) affirmed in[TS-5037-SC-2020-O] on registration u/s.12AA subject to CIT's satisfaction of charitable 'objects'
7) P. M. S. Diesels v. CIT [2015] 374 ITR 562 (P&H) approved in[TS-5097-SC-2020-O] on Sec 40(a)(ia) disallowance for TDS default
8) Gujarat Narmada Valley Fertilizer and Chemicals Ltd. [2019] 416 ITR 144 (Guj) followed in[TS-6191-HC-2019(GUJARAT)-O] on Capital or revenue expenditure - Replacement of components of machinery
9) United Electrical Co. P. Ltd. v. CIT [2002] 258 ITR 317 (Delhi) relied on[TS-5539-HC-2020(Madras)-O] on Notice u/s 148, reopening the assessment
10) Jagran Prakashan Ltd. v. Deputy CIT (TDS) [2012] 345 ITR 288 (All) distinguished in[TS-5501-HC-2020(KERALA)-O] on proviso to Section 201, defaulted in deducting tax at the time of payment of interest
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Key Takeaways from Handpicked Rulings
1) HC: Time period of six months for filing rectification applications is from the date of passing the order u/s 245D and not from its date of receipt - HC dismisses assessee writ, holds that Section 245D(6B) creates an embargo on making an application for rectification after expiry of six months from the end of the month in which an order was passed; Notes that the order u/s 245D(4) was passed by the Settlement Commission on 28.11.2016; Thus, six months from the end of the month in which the order ..........Click here to read and download HC Judgment
2) ITAT: Accepts taxpayer's computation of cost inflation of asset from the date of allotment, not date of issue of possession certificate - ITAT rules in favour of assessee, reverses CIT(A) order, directs AO to consider the date of allotment of property i.e. 20.5.1986 for the purpose of determining the cost of inflation of the assets, while computing the cost of acquisition of property in terms of section 49; Notes that SC judgement relied by CIT(A) in the case Balbir Singh Maini have no application and it was delivered on different context with reference to Section 2(47)(v), taxability of capital gain on entering into a Joint Development Agreement (JDA); ITAT observes that it is not necessary that to constitute a capital asset the assessee must be the owner .............Click here to read and download ITAT Order
3) ITAT: Provisions of section 56(2)(vii) not applicable to plots of lands held as stock-in-trade - ITAT holds that stock-in-trade falls in the exclusion clause of the definition of ‘capital asset’ provided under section 2(14); Notes that the term ‘capital asset’ has been defined in section 2(14) of the IT Act and as per clause (a) of section 2(14) any stock-in-trade, consumable stores or raw material held for the purpose of business or profession is excluded from the definition of ‘capital asset’; Clarifies that once the properties in question did not fall in the definition ........ Click here to read and download ITAT Order
4) ITAT: Provisions of section 194-I not applicable when rent paid separately to each co-owner who have entered into a joint partnership agreement - ITAT holds that assessee should not be treated as assessee in default for short deduction of tax on rent payment to M/s. Sadhana Enterprises since the assessee has rightly deducted, collected and paid the tax on share of the rent paid to each of the co-owners; Notes that under a "Joint partnership agreement scheme" between the assessee and Sadhana Enterprises (Co-owners), rent of Rs.32,61,989/- was paid during the year and the payment was not made to .............Click here to read and download ITAT order
5) ITAT: Time limit for passing an order u/s 201(1) is two years from end of financial year in which statement of tax deducted at source filed - ITAT rules in favour of assessee, follows [TS-5170-HC-2016(Gujarat)-O] wherein it has been held that prior to section 201 was amended by Finance Act No. 2 of 2009, no time limit was provided for passing a order u/s 201(1). W.e.f. 01.04.2010 the time limit was provided that such order shall be passed within the two years from the end of the ...............Click here to read and download ITAT order
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Expert Column
Deduction u/s 80JJAA is a Game changer since Budget 2016 as the amended law is with a view to encourage employment generation.
Author CA Sunil Maloo (Managing Partner, Sunil Maloo & Co.) highlights that the benefit u/s. 80JJAA is an additional deduction of 30% of additional employee cost incurred in the previous year, for three AYs and a total Benefit of 90% including the relevant AY to the previous year in which such employment is provided. The author brings out certain differences pre and post benefit available in 2016 such as the fact that before 2016, benefit was available only if there is an increase of at least 10% in total number of workmen, which now stands removed. The author then discusses the applicability criteria and thereafter discusses definitions of key words such as Additional Employee Cost, Additional Employee Emoluments etc. The author signs off by stating that since Section 80JJAA has many technical conditions to be complied with, an attempt is made to decode the same in simple manner.
Click here to readarticle titled - “Tax Benefits on Employment Generation” - Deduction u/s 80JJAA – A must take incentive
“Taxsutra Database”, a true Income-tax research tool, is an archive of over110070+ 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.
ROI processed prior to June, 2015, fees u/s 234E cannot be levied; “Judicial forward & backward reference" and ....lots more!
Issue No. 220 / December 7th, 2020
Dear Professionals,
We are glad to present to you the 220th edition of ‘Taxsutra Database Bulletin’, with a new feature “Judicial forward & backward reference”. This new feature aims to update readers about the judicial impact of a ruling in terms of the other rulings where it has been relied on, followed, distinguished etc. Every issue of the Database Bulletin will contain 10 rulings with judicial forward & backward references along with updates of current trends in the tax arena!
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Expert Column
The word retrospective signifies looking back at, thus retrospective effect of law means giving effect to the amendment in the existing law before the date in which the changes/amendment was brought in.
Authors Rajesh Kumar & Anjali Jain, Advocates in their article discuss the nuances of the principle of retrospectivity under different laws. The authors elucidate that Statutes dealing with Procedure, in contrast to statutes dealing with substantive rights, are presumed to be retrospective unless such a construction is textually inadmissible. Speaking of the principle of retrospectivity in taxation laws, the authors state that general provisions regarding retrospectivity of amending acts, as applicable to other laws are also applicable to tax laws. They highlight that “A Validating Act validating any fiscal provision with retrospective operation is usually held not to be unreasonable or arbitrary. In the case of any Validating Act, the intention of the legislature is generally made sufficiently clear in the section or in the Act which is declared invalid on account of some flaw or defect which is within the competence of Parliament to rectify.”
Click here to read article titled – Retrospective Operations of Amendments in Taxation Laws
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Key Takeaways from Handpicked Rulings
1) ITAT: Return of Income processed prior to June, 2015, fees u/s 234E cannot be levied – ITAT holds that amendment brought in by Finance Act 2015 u/s 200A(c) w.e.f. 1.6.2015 is prospective in nature; Notes that though section 234E of the Act was in the statute prior to 01.06.2015, however, in absence of any enabling provision, no fee u/s 234E of the Act can be levied for late filing of TDS statement for any period prior to 01.06.2015; However, states that where the delay continues beyond 1.06.2015, the AO is well within his jurisdiction to levy fees u/s 234E for the period starting 1.06.2015 to the date of actual filing of the TDS return; Upholds the levy of fees u/s 234E for the period 1.06.2015 to the date of actual filing of the TDS return which is 22.07.2015 and deletes the balance fee so levied……… Click here to read and download ITAT order
2) HC: CBDT notification issued under a different provision of the Act cannot be applied for allowing deduction u/s. 54G against LTCG – HC dismisses assessee’s appeal, upholds ITAT’s order that notification issued by CBDT is applicable for tax credit certificates for shifting of industrial undertaking from urban areas u/s 280Y(d) r.w.s. 280ZA ………..Clickhere to read and download HC judgment
3) Provisions of Sec. 43B Constitutionally Valid; STT deducted, but not deposited with authorities attracts Sec. 43B - HC dismisses Assessee Writ, holds that the Section 43B is an exception to the mercantile system of accounting and is explicitly added to correct the mischief of claiming deductions without payment of taxes due even at a later stage; Holds that provisions of Section 43B squarely attractable if Security Transaction Tax (STT) deducted against the transaction of trading and not deposited with the authorities; HC notes that, the expression used is "same is actually paid by him"…………… Click here to read and download HC Judgment
4) SC: Dismisses Revenue’s SLP; HC ruled that Sec. 143(2) notice limitation period commences from original return date, not defective return correction date - SC dismisses SLP against HC order holding that date of filing of original return u/s 139(1) has to be considered for purpose of computing period of limitation under sub-section (2) of section 143 and not date on which defects actually came to be removed u/s 139(9)…….....Click here to read and download SC order
5) ITAT: Compensation received upon surrender of flat-booking right, attract capital gain tax; Grants Sec. 54 benefit – ITAT holds that excess compensation received on a refund from the builder in case of surrender of flats would attract capital gains tax, not income from other sources; Rejects Revenue’s submission that the incomplete, non-registered "letter of allotment" cannot be treated as an "allotment letter" for deciding ownership of capital asset, held that by virtue of the said allotment letter…… Click here to read and download ITAT Order
Note: SC in [TS-5072-SC-2015-O] dismissed Assessee’s SLP, booking confirmation letter irrelevant for determining Apartment “Booking Rights” acquisition; In another case of SC reported in [TS-5198-SC-2019-O] SC dismissed Revenue's SLP against HC-order considering the date of letter of allotment of flat over the date of sale agreement for determining holding period of the property;
4) PRIME SECURITIES LTD (2009) 28 DTR 119 (Bombay) followed in,[TS-6186-HC-2019(Gujarat)-O] on limitation period commences from original return date
5) A Daga Royal Arts (2018) 64 ITR 55 (Jaipur) followed in,[TS-8907-ITAT-2019(Kolkata)-O] on cash meets business expediency test.
6) TATA TELESERVICES (2016) 132 DTR 1 (GUJARAT) approved in, [TS-5050-SC-2017-O] on limitation u/s 201(3)
7) KUNAL STRUCTURE (INDIA) [TS-5141-SC-2020-O] Affirmed[TS-6186-HC-2019(GUJARAT)-O] on Sec. 143(2) notice limitation period
8) Sivagangai District Central Co-operative Bank [TS-5591-HC-2020(Madras)-O] applied[TS-5592-HC-2020(Madras)-O] on Cash withdrawals by member societies of District Co-operative Bank not income in their hands, thus not subject to TDS u/s. 194N
“Taxsutra Database”, a true Income-tax research tool, is an archive of over109760+ 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.
TDS u/s 194N on Cash withdrawals by societies member; GSTR-3B and FORM 26AS – Comparing Apples with Oranges & “Judicial forward & backward reference" and ....lots more!
Issue No. 219 / November 19th, 2020
Dear Professionals,
We are glad to present to you the 219th edition of ‘Taxsutra Database Bulletin’, with a new feature “Judicial forward & backward reference”. This new feature aims to update readers about the judicial impact of a ruling in terms of the other rulings where it has been relied on, followed, distinguished etc. Every issue of the Database Bulletin will contain 10 rulings with judicial forward & backward references along with updates of current trends in the tax arena!
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Judicial forward & backward reference
1) Shambhu investment private limited vs CIT (2003) 263 ITR 143 (SC) distinguished in [TS-6344-ITAT-2020(DELHI)-O] on Income from letting of property.
2) Hewlett Packard Global Soft Ltd (2017) 159 DTR 89 (Karnataka) followed in [TS-5340-HC-2020(MADRAS)-O] on Sec 10A / 10B tax-holiday eligibility on interest income.
4) Ghanshyam (HUF) [2009] 315 ITR 1 (SC) distinguished in [TS-5298-HC-2020(PUNJAB & HARYANA)-O] on interest on enhanced compensation treated as "income from other sources".
5) Piyoosh Kumar Goyal [2020] 426 ITR 546 (Delhi) distinguished in [TS-5018-HC-2020(Delhi)-O] on Abetment in tax evasion, directs authorities to recall look out circular in name of petitioner.
6) R T Industries (2018) 170 DTR 281 (DELHI) followed in [TS-5174-HC-2020(Madras)-O] on distinction between cause of action jurisdiction and doctrine of forum conveniens.
7) Swabhimani Souharda Credit Co-operative Ltd [2020] 421 ITR 670 (Karn) applied in [TS-5166-HC-2020(KARNATAKA)-O] on Souharda Co-operative entitled to claim Sec.80P benefit.
8) CIT v. Calcutta Export Co. [2018] 404 ITR 654 (SC) distinguished & explained in [TS-5097-SC-2020-O] on Sec. 40(a)(ia) disallowance.
9) CIT v. R. S. Bajaj Society [2014] 222 Taxman 111 (All) approved in [TS-5037-SC-2020-O] on provisions of Sec.12AA and scope of powers of PCIT/CIT to grant registration.
10) Shreyas S. Morakhia [2012] 342 ITR 285 (Bom) applied in [TS-5205-HC-2020(BOMBAY)-O] on bad debts on account of inter corporate debt and advances in contravention of Section 36(1)(vii) r.w.s 36(2)
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Key Takeaways from Handpicked Rulings
1) SC: Limitation Act stricto sensu does not apply to the writ jurisdiction; Sets aside HC order dismissing petitioner’s writ petition on grounds of delay - SC holds that it is “not a mandatory requirement that every delayed petition must be dismissed on the ground of delay”; States that there is no doubt that the High Court in its discretionary jurisdiction may decline to exercise the discretionary writ jurisdiction on ground of delay in approaching the court; Explain that however, “it is only a rule of discretion by exercise of self restraint evolved by the court in exercise of the discretionary equitable jurisdiction and not a mandatory requirement that every delayed petition must be dismissed on the ground of delay”; Opines accordingly, that “The discretion vested in the court ..........Click here to read and download SC Judgment
2) HC : Cash withdrawals by member societies of District Co-operative Bank not income in their hands, thus not subject to TDS u/s. 194N - HC holds assessee (a District Co-operative Bank) not liable to deduct tax u/s. 194N (TDS on cash payments), follows Co-ordinate Bench ruling rendered under similar circumstances and remands the matter back to AO for fresh consideration; Notes that the Co-ordinate Bench held that the sums withdrawn by the member society would not constitute ''income'' at the hands of the society and quashed proceedings u/s 201 against District Co-op. Banks' for alleged TDS default u/s 194N.............Click here to read and download HC judgment
3) HC: CBDT Circular has to be read and construed in consonance with the provisions of the IT Act – HC sets aside ITAT order, holds that no liability to deduct tax at source u/s 194C where C & F agents raises separate bills towards reimbursement of freight charges / transportation components alongwith supporting bill invoices, receipts etc; Notes that the Tribunal in its impugned order appears to have misread the bills issued by Jet Air Freighters and proceeded to incorrectly style “Jet Air Freighters” as “carriers” and not as the C & F agents; Infers that these bills as well as other material on record very clearly establishes that Jet Air Freighters were indeed the C & F agents and it is “Jet Airways” which was the carrier in these cases; Opines thus that the reasoning of the...........Click here to read and download HC Judgment
4) HC: Omission to provide details of number of workmen working in Units in Form No.10CCB doesn’t disentitle assessee from deduction u/s 80IB - HC holds that although it is true that there was an omission on the part of the assessee whilst filling in the Form 10CCB to the extent of details of workmen, it is not as if the omission was not rectifiable as to merit the penalty of disallowance of deduction u/s 80IB / 80IC; HC with respect to disallowance of deduction u/s 80IC, confirms ITAT order that mismatch between the production and the profits at the various Units as determined by rate of consumption of electricity at such units, cannot be the sole ground for concluding that there has been some unreasonable inflation of profits..........Click here to read and download HC Judgment
5) HC admits Revenue's appeal challenging ITAT’s order allowing entire expenditure claimed by the assessee for betterment of title of the land sold, while computing the capital gain tax in the hands of the assessee; Revenue also claims that ITAT ignored Revenue's contention that the genuineness of such payments had not been established.....Click here to read and download HC order
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Expert Column
Pursuant to a M.O.U. between the CBIC and the Income Tax Department, information contained in GST Return has, recently, been made part of Annual Information Report in Form 26AS.
In this backdrop, Chartered Accountants Dindayal Dhandaria and Naveen Kumar Dhandaria discuss the purpose which is intended to be served by incorporating such information and state that if the Income Tax Department wishes to match the Turnover as per an Assessee’s accounts and records with that furnished in GSTR 3B, it would be comparing apples with oranges. The authors believe that it is a futile exercise, inter alia, for the basic reason that whereas in GST, inter-state branch transfers of goods/services are treated as supply and forms part of turnover, it is not so considered in financial statements prepared under Generally Accepted Accounting Principles (GAAP) which stipulate that a person cannot sell goods or render services to himself. The authors opine that “If an Assessee is required to reconcile the amount of turnover reported in Form GSTR 3B with that in his Income Tax Return and is subjected to scrutiny for such mismatch, there would be serious miscarriage of justice and unnecessary harassment to him.”
Click here to read their insightful article titled – GSTR-3B AND FORM 26AS – Comparing Apples with Oranges
“Taxsutra Database”, a true Income-tax research tool, is an archive of over109530+ 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.
Face trial for not filing IT returns; Settlement under VSVS; TDS on purchase of software license; “Judicial forward & backward reference" and ....lots more!
Issue No. 218 / November 6th, 2020
Dear Professionals,
We are glad to present to you the 218th edition of ‘Taxsutra Database Bulletin’, with a new feature “Judicial forward & backward reference”. This new feature aims to update readers about the judicial impact of a ruling in terms of the other rulings where it has been relied on, followed, distinguished etc. Every issue of the Database Bulletin will contain 10 rulings with judicial forward & backward references along with updates of current trends in the tax arena!
2) CIT v. Ghanshyam (HUF) [2009] 315 ITR 1 (SC) distinguished in[TS-5298-HC-2020(Punjab & Haryana)-O] on interest received on compensation or enhanced compensation
3) RICHA GLOBAL EXPORTS PVT. LTD [2012] 54 SOT 185 (Delhi) Assessee`s appeal admitted by Delhi HC in as reported in [TS-5987-HC-2013(Delhi)-O] on Whether surcharge and education cess eligible for MAT credit u/s 115JAA?
4) GARG DYEING & PROCESSING INDUSTRIES vs ACIT (2013) 212 TAXMAN 0160 (DELHI) followed in[TS-6344-ITAT-2020(DELHI)-O] on income from composite letting of property, furniture etc.. should be assessed as income from other sources or income from house property
5) Kishanchand Chellaram vs CIT (1980) 125 ITR 0713 (SC) & Andaman Timber Industries vs CCE (2015) 127 DTR 241 (SC) relied in[TS-6370-ITAT-2020(DELHI)-O] on right of cross-examine.
6) (2002) 174 CTR 0090 (Guj) followed in, [TS-6628-ITAT-2015(Mumbai)-O] Relied in[TS-6628-ITAT-2015(Mumbai)-O] on invokes 5th proviso to Sec.32(1) and also refer recent Karnataka HC ruling [TS-523-HC-2020(KAR)] HC allows depreciation on 'revalued' intangibles to successor-company, rejects invocation of Sec.32(1) proviso
7) Umicore Finance Luxmeborg (2010) 36 DTR 0249 (AAR) approved in [TS-6127-HC-2016(Bombay)-O] on conversion of a partnership firm to a private limited company
9) TRF Ltd (2010) 35 DTR 0156 (SC) distinguish in[TS-6411-ITAT-2017(MUMBAI)-O] on written off the bad debt as irrecoverable in accounts
10) Virmani Industries Pvt. Ltd (1995) 83 TAXMAN 0343 (SC) followed in[TS-5551-HC-2020(BOMBAY)-O] on carry forward of depreciation of the following previous year.
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Key Takeaways from Handpicked Rulings
1) HC: Settlement under VSVS is to be considered on the basis of the rectified assessment order – HC allows petitioner writ, directs the competent authority officiating on behalf of Principal Commissioner Income Tax to rectify and pass appropriate order with reference to the petitioner’s claim for One Time Settlement under Vivad Se Vishwas Scheme [VSVS] strictly in accordance with the terms of Circular No.9/2020 dated 22.04.2020; Assessee submitted before the HC that as per Circular, several guidelines are issued with reference to the manner in which the assessment is required to be completed under VSVS; HC observes that as per the records there was an error while passing the assessment order for the relevant period, which is subsequently rectified vide order dated 18.03.2020 by the Assessing Officer.........Click here to read and download HC order
2) HC: Face trial for not filing IT returns, it was obligatory on the part of the petitioner to file ROI and then claim exemption u/s. 54F - HC rejects assessee’s writ to quash prosecution proceedings u/s 276CC, grants liberty to raise all the grounds before the trial Court; Notes that Revenue has filed a complaint against the petitioner for the offence u/s 276CC under the IT ACT, alleging that the petitioner has not filed return of income [ROI] against income from sale of property and even after the Revenue issued two notices, calling upon the petitioner to file her ROI, the petitioner failed to file the ROI and hence, a show cause notice was issued on 29.04.2016 and upon receipt of the same the petitioner submitted her return stating that she had reinvested the entire sale consideration in a residential property and therefore, the income was exempted from tax u/s 54F and there was no taxable income..........Click here to read and download HC Judgment
Note: SC in [TS-43-SC-2014-O] lays down law on criminal proceedings for non-filing of tax return and interprets scope of Sec 276CC and its proviso, says benefit of proviso available only on 'voluntary filing' and not after detection of failure to file return; Recently Madras HC in [TS-5064-HC-2020(Madras)-O] quashes prosecution initiation, held that failure to pay self-assessment tax along with returns, no 'offence' for purpose of prosecution u/s 276C.
3) SC: Issue of notice on same issue as examined in original assessment proceedings is change of opinion and hence, without jurisdiction - SC rules in assessee`s favour, notes that as per the record certain queries were raised by the AO during the assessment proceedings which were responded by the Assessee and after considering said responses, the assessment order was passed by the AO.........Click here to read and download SC judgment
4) ITAT: MCI Regulations applicable only for medical practitioners and not for pharmaceutical companies, holds that pharma company’s 'freebies' to doctors allowable deduction u/s 37 - Notes that MCI Regulations are applicable only to the doctors/medical practitioners and not to pharmaceutical companies; Therefore, the MCI Regulations cannot be brought into play to invoke Explanation to section 37(1) of the Act for disallowing expenditure claimed by the assessee.........Click here to read and download ITAT order
Note: In [TS-5878-HC-2010(PUNJAB & HARYANA)-O] HC held that commission paid by Diagnostic Centre to private Doctors for referring patients for diagnosis not allowed as business expenses.
5) Liability to deduct tax at source cannot be fastened on the basis of retrospective amendment to the Act or a subsequent ruling of a Court - ITAT quashes order u/s.201(1) holding as assessee-in-default for failure to deduct TDS on purchase of software license from non-resident for AY 2010-11; Follows co-ordinate ITAT bench ruling wherein it was held that 'assessee’ was not in default for TDS non-deduction on software purchase........Clickhere to read and download ITAT order
“Taxsutra Database”, a true Income-tax research tool, is an archive of over109400+ 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.
New Feature of “Judicial forward & backward reference"; Important rulings of SC, HC and ITAT; Faceless Assessment Scheme...and lots more!
Issue No. 217 / October 17th, 2020
Dear Professionals,
We are glad to present to you the 217th edition of ‘Taxsutra Database Bulletin’, with a new feature “Judicial forward & backward reference”. This new feature aims to update readers about the judicial impact of a ruling in terms of the other rulings where it has been relied on, followed, distinguished etc. Hence forth, every issue of the Database Bulletin will contain 10 rulings with judicial forward & backward references along with updates of current trends in the tax arena!
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Judicial forward & backward reference
1) CIT vs Chetak Enterprises P. Ltd. [2010] 325 ITR 405 (Raj) approved in[TS-5018-SC-2020-O]on condition laid down u/s 80-IA(4)(i)
2) Alembic Chemical Works Co. Ltd. v. CIT [1989] 177 ITR 377 (SC) applied in[TS-6202-HC-2019(KERALA)-O]on test of 'enduring benefit'
8) Pr CIT vs Gujarat Narmada Valley Fertilizer and Chemicals Ltd (2019) 416 ITR 144 (GUJARAT) followed in[TS-6191-HC-2019(Gujarat)-O]on replacement of components of machinery, a capital or revenue expenditure
9) CIT vs Narsee Nagsee and Co. [1960] 40 ITR 307 (SC) relied in[TS-6170-HC-2019(Gujarat)-O]on assessment proceedings.
On Aug 13, the Government launched a transparent platform for faceless assessment, faceless appeals and Citizens Charter. In this backdrop, author CA Sachin Kumar BP (Partner, Manohar Chowdhry & Associates, Chartered Accountants) discusses the niceties and nuances of the new scheme and states that faceless assessment scheme attempts to overcome the lacunae existing in the current structure of the Income tax department - functional specialisation and impersonality. The author opines that the scheme “intends to achieve it by eliminating the interface between the Assessing Officer and the taxpayer to the extent technologically feasible and by optimising utilisation of the resources through economies of scale and functional specialization.”. Encouraging the tax professionals to embrace this change, the author signs off suggesting that “Let us face the ever-changing and ever-growing challenges in the profession by constantly and continuously updating and improving the professional knowledge”
Click here to read the article titled, “Faceless assessments and appeals - A shift from People-dependent to Process-dependent Governance”
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Key Takeaways from Handpicked Rulings
1) SC: Amount mentioned in a letter from a bank suggesting assessee to get a draft re-validated cannot be treated as assessee’s unexplained income - SC dismisses Revenue’s appeal against HC order; HC holds that mere letter from a bank suggesting assessee to get a draft re-validated would not establish a relation between the payable amount and the assessee, particularly when the draft was in favour of a limited Company; Notes that a search was conducted at the premises of a third party from where, bank drafts were recovered one of which was drawn in favour of assessee and one in favour of....... Click here to read and download SC order
2) HC cannot assume the role of an appellate authority defined under the Black Money Act under its writ jurisdiction – HC dismisses assessee’s writ petition challenging notice of penalty under the Black Money Act for failure to furnish the return of income and information, observes that the procedure for assessment has been prescribed under the Act and the remedy of appeal before the Commissioner of Appeal and the Tribunal was also provided; On behalf of Assessee, it was submitted that he was a non-resident and after his retirement returned to India and filed his income tax return for the AY 2016-17; In the meanwhile, Parliament introduced the Black Money (Undisclosed Foreign Income and Assets) and Imposition of Tax Act, 2015; The assessee was under the bona fide belief that disclosure under Schedule FA was to be made only from the assessment year 2017-18........Click here to read and download HC Judgment
3) Assessing Officer should rectify Taxpayers’ mistake when it is brought to their notice and when they are satisfied with the genuineness of the claim – ITAT dismisses Revenue’s appeal, upholds CIT(A) direction to AO to compute the tax in accordance with provisions of section 115JB by reducing the amount of income to which section 10 applies, if such amount is credited to the profit and loss account; Notes that assessee computed the book profits while crediting the sale consideration of agricultural land to the profit and loss account and offered the same to tax which was a mistake..........click here to read and download ITAT Order
Note: Delhi HC in [TS-6377-HC-2016(DELHI)-O] held that CIT u/s 264-revisionary powers can rectify taxpayer's mistakes resulting in over-assessment. HC held that there is nothing in s. 264, which places any restriction on the Commissioner's revisional power to give relief to the assessee in a case where the assessee detracts mistakes because of which he was over-assessed after the assessment was completed. Once it is found that there was a mistake in making an assessment, the Commissioner had power to correct it under s. 264(1).
4) One deeming provision cannot be extended by importing another deeming provision, rejects invoking Sec 50C on land contributed by partner to firm as capital contribution - ITAT upholds the order passed by CIT(A) who referred to the order of the ITAT in assessee's own case for the AY 2012-13 wherein ITAT rejected AO’s invocation of deeming fiction u/s. 50C in computing capital gains on land introduced into an LLP as a capital contribution during AY 2012-13; Assessee (a private limited company and a partner in LLP) computed capital gains on land transferred by taking the amount recorded in the books of the LLP as full value of consideration u/s 45(3), however, Revenue invoked Sec. 50C and recomputed capital gains by adopting higher fair market value as determined by the stamp duty authority at the time of registration ........ Click here to read and download ITAT Order
5) Provisions of sec 2(47) r.w.s 53A of the Transfer of properties Act, 1882 are not applicable to transfer of development rights held by the Assessee as business asset – ITAT upholds the order passed by CIT(A), holds that the term transfer as defined in Sec.2(47)(v) applicable only in case of capital assets held by the assessee; Notes that assessee was engaged as civil contractor and the income earned from the stated project was assessed as Business Income and the development rights were held as business assets; Further, on year of taxability of consideration received, notes that from the terms of the Joint Venture Agreement that only part income accrued .........Click here to read and download ITAT Order
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“Taxsutra Database”, a true Income-tax research tool, is an archive of over109100+ 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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Author CA Sunil Maloo (Managing Partner, Sunil Maloo & Co.) highlights that the benefit u/s. 80JJAA is an additional deduction of 30% of additional employee cost incurred in the previous year, for three AYs and a total Benefit of 90% including the relevant AY to the previous year in which such employment is provided. The author brings out certain differences pre and post benefit available in 2016 such as the fact that before 2016, benefit was available only if there is an increase of at least 10% in total number of workmen, which now stands removed. The author then discusses the applicability criteria and thereafter discusses definitions of key words such as Additional Employee Cost, Additional Employee Emoluments etc. The author signs off by stating that since Section 80JJAA has many technical conditions to be complied with, an attempt is made to decode the same in simple manner.
Authors Rajesh Kumar & Anjali Jain, Advocates in their article discuss the nuances of the principle of retrospectivity under different laws. The authors elucidate that Statutes dealing with Procedure, in contrast to statutes dealing with substantive rights, are presumed to be retrospective unless such a construction is textually inadmissible. Speaking of the principle of retrospectivity in taxation laws, the authors state that general provisions regarding retrospectivity of amending acts, as applicable to other laws are also applicable to tax laws. They highlight that “A Validating Act validating any fiscal provision with retrospective operation is usually held not to be unreasonable or arbitrary. In the case of any Validating Act, the intention of the legislature is generally made sufficiently clear in the section or in the Act which is declared invalid on account of some flaw or defect which is within the competence of Parliament to rectify.”
In this backdrop, Chartered Accountants Dindayal Dhandaria and Naveen Kumar Dhandaria discuss the purpose which is intended to be served by incorporating such information and state that if the Income Tax Department wishes to match the Turnover as per an Assessee’s accounts and records with that furnished in GSTR 3B, it would be comparing apples with oranges. The authors believe that it is a futile exercise, inter alia, for the basic reason that whereas in GST, inter-state branch transfers of goods/services are treated as supply and forms part of turnover, it is not so considered in financial statements prepared under Generally Accepted Accounting Principles (GAAP) which stipulate that a person cannot sell goods or render services to himself. The authors opine that “If an Assessee is required to reconcile the amount of turnover reported in Form GSTR 3B with that in his Income Tax Return and is subjected to scrutiny for such mismatch, there would be serious miscarriage of justice and unnecessary harassment to him.”
On Aug 13, the Government launched a transparent platform for faceless assessment, faceless appeals and Citizens Charter. In this backdrop, author CA Sachin Kumar BP (Partner, Manohar Chowdhry & Associates, Chartered Accountants) discusses the niceties and nuances of the new scheme and states that faceless assessment scheme attempts to overcome the lacunae existing in the current structure of the Income tax department - functional specialisation and impersonality. The author opines that the scheme “intends to achieve it by eliminating the interface between the Assessing Officer and the taxpayer to the extent technologically feasible and by optimising utilisation of the resources through economies of scale and functional specialization.”. Encouraging the tax professionals to embrace this change, the author signs off suggesting that “Let us face the ever-changing and ever-growing challenges in the profession by constantly and continuously updating and improving the professional knowledge”