Issue No. 247 / September 23^rd, 2021

Dear Professionals,   

We are glad to present to you the 247^th edition of ‘Taxsutra Database Bulletin’, where we keep you updated with current trends in the tax arena!

Status of Journals Updated

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Key Takeaways from Handpicked Rulings

1) HC: Co-op society offering credit facilities to members, not co-op banks, eligible for deduction u/s 80P - Assessees-Deendayal Nagar Sahakari Pathsaunstha Maryadit and The Shiroda Urban Cooperative Credit Society Ltd. are registered Co-operative Societies, governed by the Goa Co-operative Societies, formed with the object of accepting deposits and provide credit facilities; In the course of assessment proceedings Revenue held the Assessees would be co-operative banks within the meaning of Part V of the Banking Regulation Act and disallowed the deduction u/s 80P(2); Revenue further held the activity of the society to be akin to banking and their members were from public and transactions took place post membership, and that there was no express prohibition on induction of a co-operative society as a member; HC observes that Assessees have their paid up share capital and reserves in excess of Rs. 1 lakh, and thus satisfied one of the conditions under Part V of the Banking Regulation Act; Further remarks that Revenue was at loss to show as to how there is prohibition to induct a cooperative society; With regards to business of accepting deposits and lending money, HC remarked that no specific material was placed on record showing that Assessees were offering credit facilities to non-members ……………..Click here to read and download HC judgment

2) HC: Rental income from leasing plant & machinery deductible u/s 80HHC - Assessee-Company, engaged in manufacture and sale-export of Calcined Petroleum Coke (CPC), was disallowed deduction u/s 80HHC by the Revenue pursuant to the directions issued by the CIT u/s 263 holding that product exported by Assessee was mineral oil; AO in giving effect to the aforesaid order, partially allowed Assessee’s claim for deduction u/s 80HHC which was challenged before the CIT(A) who remanded the matter for re-computation of deduction u/s 80HHC; Assessee preferred an appeal before the ITAT which dismissed the appeals against which order Assessee preferred before the HC;Observes that Assessee engaged in manufacture of CPC purchased plant and machinery which was given on lease and Assessee derived rental income……………..Click here to read and download HC judgment

3) HC: Interest on interest-free loan not taxable, when advanced to subsidiary for commercial expediency - Bombay HC dismisses Revenue’s appeal, rules against taxability of interest income for interest-free loans advanced to subsidiary entities;Assessee-Company was a holding company with deep interest in its subsidiary, advanced interest-free loans of Rs. 132.31 Cr. to the subsidiary entity and was called upon to explain why such interest income should not be taxed in its hands; Revenue made an addition of Rs. 15.37 Cr, disregarding the explanation provided by the Assessee, which was deleted by the CIT(A) and ITAT on appeal; HC observes both the CIT(A) and ITAT have recorded findings of fact that loans advanced to subsidiaries were not sham transactions and were advanced for reasons of commercial expediency; HC finds from the material on record that the company has reserves of over Rs.1000 Cr. and even the subsidiaries did not derive any interest income from the interest free advances received from the Assessee……………..Click here to read and download HC judgment

4) ITAT: Quashes revision; Assessment based on adequate enquiries, original documents - ITAT allows Assessee’s appeal, holds proceedings u/s 263 to be not erroneous where the AO passed the order pursuant to sufficient enquires; A search operation was conducted at the premises of one M/s Godwin Group, during the course of which, certain documents related to Assessee-Individual were found; Based on the information and after recording the satisfaction note, Assessee’s case was subjected to assessment u/s 153C; The evidence obtained pertained to an agreement to sell a particular property for a consideration of Rs.11.25 Cr.; Assessee submitted that the agreement was executed by a Amarjit Randhwa acting for himself and a co-owner, and that the Assessee had not appointed this person as a GPA, and accordingly the agreement to sell cannot be used against Assessee; Revenue after making adequate enquiry accepted Assessee’s submission and held that entire amount was liable to be assessed in the case of Amarjit Randhwa in his individual capacity; Subsequently Pr.CIT initiated proceedings u/s 263 holding the assessment as erroneous and made without adequate enquiry; ITAT finds that “once the order passed by the CIT Appeal in the hands of the ……………..Click here to read and download ITAT Order

5) HC: Seizure of jewellery held as stock-in-trade, illegal; Awards Rs.1 Lac as interest - HC allows assessee-jeweller’s writ petition, directs Revenue to “forthwith return to the Petitioner, the jewellery seized” and directs revenue to pay interest of a sum of Rs.1 lakh as a gross amount towards retention of assessee's is stock-in-trade; Declares all the actions taken pursuant to search, as illegal and contrary to the provision of Section 132(1)(iii); Holds that ..”the seizure has to be conducted after due care and caution”; The the Investigation Wing was in possession of credible information that Petitioner was in possession of jewellery which represents his undisclosed income or property; Further notes that before seizure is conducted explanation ought to be taken from the concerned firms and if they are able to produce the related books of account and necessary proof of articles which may include sale details, purchase details, stock register, audit reports, income tax returns etc., the Income Tax Authorities ought to take a decision at this stage and ought not to be allowed to seize the goods for years together to await for the assessment order to be passed in relation to concerned employee; The claim of the goods in terms of Section 132(1)(iii) was made by the assessee as the jewellery seized was stock-in-trade and required material was already placed before the Income Tax Authorities; Thus, holds the seizure to be unjustified and illegal……………..Click here to read and download HC judgment

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Expert Column

The recent ruling by the Mumbai bench of ITAT in case of Pramod Lele , held that the expression ‘Management consultancy’ could not be brought within the ambit of ‘Technical consultancy’ and it is still a debatable issue whether it constitutes a business receipt or a professional receipt. The bench ruled out that classifying the management consultancy receipt as business or profession, constitutes a ‘reasonable cause’ u/s 273B and thus, penalty levied u/s 271B for not getting the accounts audited as required u/s 44AB, is deleted.

Author, CA A. Sekar, analyses the judgment and elucidates the observations made by the ITAT in this article. Distinguishes between the terms ‘business’ as per Sec. 2(13) and ‘profession’ as per Sec. 2(36) and remarks “All professions are businesses, but not all businesses are not  professions”. He agrees with ITAT on the fundamental feature that to constitute a profession, some advanced skills are needed to be acquired by advanced education and special training. However, points out that no attention was drawn to Explanation (2) u/s 9(vii) according to which the definition found in bilateral treaties, the fees for ‘technical services’ includes consideration received for rendering any managerial, technical or consultancy services, thus, the author raises a question that whether inclusion of the term consultancy under one umbrella of Sec. 9(vii) is sufficient to conclude that the word ‘technical consultancy’ used in Sec. 44AA would also cover all the stated services.

Click here to read an article titled, “Business vs Profession receipts - Is it debatable?”

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Lot's more at Taxsutra Database 

Access all “Taxsutra Database Newsletters”, in case you have missed any!

Access latest News....and more!

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About Taxsutra Database!

“Taxsutra Database”, a true Income-tax research tool, is an archive of over 113735+ 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.

Click Here to Sign up, make payment and join the Taxsutra Family. 

Copyright © TAXSUTRA. All Rights Reserved

Issue No. 246 / September 8th, 2021

Dear Professionals,   

We are glad to present to you the 246^th edition of ‘Taxsutra Database Bulletin’, where we keep you updated with current trends in the tax arena!

Status of Journals Updated

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Expert Column

The term computer is not defined under the Income tax Act, however, under Information Technology Act, the function of composing and sending an email and receiving a reply qualifies as a computer. The Amritsar bench of ITAT in a recent ruling held that iPads are communicating devices and thus, not a substitute for computers, which had sparked a debate among tax professionals warranting a discussion.

In this backdrop, the author CA K Prasanna (Associate Partner, M2K Advisors LLP), this article analyses the issue and rationale of the judgement wherein ITAT applied the dominant purpose test on iPads based on the SB ruling (supra) observation and concluded that the dominant purpose is only a communicating device. The author remarks “There is apprehension about whether the dominance test must be evaluated from the taxpayer's perspective or through common parlance”. Further, on ITAT’s conclusion being based on the fact that Apple store selling iPad as an entertainment device and the fact that iPad has an IMEI number, the author views “…purpose by which the supplier market the product cannot be the determinative factor of dominant use…even if the iPad has an IMEI number, it cannot automatically become a communicating device, and it cannot displace the requirement of mobiles in our day-to-day life”. The author concludes by saying “…the gadgets are developed with multi-functional features, are pocket-friendly, and can be adapted to the consumer's requirements. Hence there is a need to interpret the law in light of the circumstances surrounding it”.

Click here to read the article titled “Is iPad a Computer entitled to a higher depreciation rate?”

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The Black Money Act, enacted in 2015 has led to detection of several instances of undisclosed foreign income and  helped the government raise a tax demand of Rs. 8216 Cr by unearthing numerous violations. 

Mr. Ruchesh Sinha (Advocate) along with Mr. R.K. Aggarwal and Mr. Pawan Aggarwal (Chartered Accountants) in their article explain that the term black money refers to undisclosed funds and monies on which taxes have not been paid in the light of a writ petition filed by Late. Ram Jethmalani in July 2011 which, according to them, was the trigger for introducing the law.

Considering the history, language and characteristics of the Black Money Act, and the practical scenario, they highlight certain issues that require consideration including definition of the expression ‘in which it comes to the notice of the Assessing Officer’, non-prescription of time limit to find out information about existence of assets etc. They also state that absence of the provisions for compounding and the amendment made in the PMLA Act for certain offences under the Black Money Act appears to be stringent and draconian in nature.

They conclude stating that punishment under the Black Money Act should be proportionate with the crime and also that there should be appropriate filters placed at the selection stage, to pick a case for investigation purpose, let alone the assessment, penalty and prosecution.

Click here to read the article titled “The Black Money Act – A Genesis”

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Key Takeaways from Handpicked Rulings

1) HC: Upholds CBDT’s notification extending time to issue Sec. 148 notice after March 31st, 2021 - HC dismisses assessee's writ petition against reassessment notice issued under the old regime and holds that by extension notification issued by CBDT and reaffirms its view on conditional legislation; Assessees-Individuals submits that ROI was filed for the AYs 2013-14 and on the basis of some information available initially a scrutiny was done however no concealment was found and again a notice u/s 148 has been issued on 30.06.2021, the power to issue the notice was preceded with a new provision of law and thereby Section 148 is to read with Section 148-A of the IT Act, 1961. HC refers to................Click here to read and download HC Judgment

2) ITAT: Upholds CIT revision over taxability of interest income on deposits with co-operative banks – ITAT dismisses assessee's (a co-operative society) appeal, holds that CIT was justified in exercising his powers of revision u/s.263 and directing the AO to tax interest income received  on deposits with co-operative banks; Holds that such income is neither of the nature specified in Sec.80P(2)(a)(i) nor 80P(2)(d) of the Act; Notes that CIT in his SCN referred to the decision of the Totagars Co-operative Sale Society [TS-5548-HC-2017(Karnataka)-O] for the proposition that the assessee was not entitled to deduction u/s 80P(2)(d) of the Act on the interest earned from deposits with co-operative banks and also in the light of the principles enunciated by the SC in Totgars Co-operative Sale Society [TS-5012-SC-2010-O], that in case of a society engaged in providing credit facilities to its members, income from investments made in banks does not fall within any of the categories mentioned in section 80P(2)(a) of the Act.......................Click here to read and download ITAT Order

3) ITAT: Holds conversion of agricultural land into residential stock-in-trade, is business -  Splits the profit on sale of plots developed on agricultural land into business income & capital gains; States that conversion of agricultural land into residential stock in trade of business of selling the plots of land is for earning profit; Holds that the fair market value (FMV) of the asset on the date of conversion as reduced by the cost of acquisition is required to be assessed under the head “capital gain” in the year(s) the stock-in-trade is sold or transferred; Further, observes that sales realization of the stock-in-trade over such fair market value is required to be assessed as “business income”; Accordingly, holds that taxability arising on conversion agricultural land into .......................Click here to read and download ITAT Order

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Lot's more at Taxsutra Database 

CBDT notifies Rule 9D for calculation of taxable interest on PF contributions; Prescribes monetary thresholds

CBDT issues Circular on extension of various e-filing deadlines

CBDT notifies extended timelines under Direct Tax Vivad se Vishwas Act, 2020 (3 of 2020)

Access all “Taxsutra Database Newsletters”, in case you have missed any!

Access latest News....and more! 

----------------------------------------------------------------------------------------------

About Taxsutra Database!

“Taxsutra Database”, a true Income-tax research tool, is an archive of over 113545+ 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.

Click Here to Sign up, make payment and join the Taxsutra Family. 

Copyright © TAXSUTRA. All Rights Reserved

ssue No. 245 / September 2^nd, 2021

Dear Professionals, 

 We are glad to present to you the 245^th edition of ‘Taxsutra Database Bulletin’, where we keep you updated with current trends in the tax arena!

Status of Journals Updated

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Expert Column

The recent judgment by the Hon'ble Supreme Court in M.M. Aqua, which was also the last judgment by the legendary Justice R.F. Nariman, brings us to delve deeper into the legal position on declaratory statutes. The retrospective applicability of declaratory statutes, typically inserted as an Explanation with the words "for the removal of doubts", enjoys a rather notorious status in the tax framework. Such statutory amendments have often been used to alter the settled legal position and saddle the taxpayers with an unanticipated liability. 

Mr. A. Sekar (Chartered Accountant) traces India's experience with the declaratory statutes in the light of plethora of judgments delivered across the board. He discusses the time-tested case laws with divergent views to demonstrate the expanse and the impact of the quintet - for the removal of doubts. He lays emphasis on the legal position that declaratory statutes meant only to explain the pre-existing legal provision cannot be retrospective in its effect.

Mr. Sekar is of the view that the draftsmen need to go beyond the words "for the removal of doubts", to bring an end to the controversy inexorably arresting the judicial minds due to its repetitive usage in the legislations and mostly leading to the conclusion that favours the taxpayers.

Click here to the article titled "Removing Doubts on Amendments Meant - For The Removal of Doubts"

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Key Takeaways from Handpicked Rulings

1) ITAT: Upholds disallowance on export commission paid for TDS default - ITAT upholds CIT(A)’s order restricting disallowance on exports, further allows deduction of interest on advance paid from interest free funds; Assessee filed its return of income declaring nil income for AY 2015-16 and his case was picked up for scrutiny assessment; Revenue disallowed commission on exports of Rs. 23.84 lakhs on the ground that no tax deduction was made on the same; Revenue further held that Assessee had failed to substantiate the rendering of services by commission agents with supporting evidences; On appeal, CIT(A) restricted the disallowance to Rs.5.42 lakhs; ITAT observes CIT(A) sustained the disallowance on Assessee’s failure to submit supporting detail to substantiate the payment; Follows co-ordinate bench ruling in Assessee’s own case for earlier year and dismisses appeal; Assessee made certain advances for intangible assets but did not receive the same during the year; Revenue held that Assessee did not provide .............. Click here to read and download ITAT order

2) ITAT: Expenditure on development of designs and tools, capital in nature - ITAT holds expenditure of Rs. 3.75 Cr incurred on development of tools and designs to be capital in nature; Assessee-Company engaged in the manufacture of automotive switch gears claimed Rs. 3.75 Cr incurred on development of tools and designs used for Assessee’s business as revenue expenditure which was claimed as a deduction; Assessee had written off such expenditure over a tenure of 10 years in accounts; Revenue disallowed the expenditure holding it to be capital in nature, which order was reversed by the CIT(A); ITAT reverses the CIT(A)’s order and remarks that the CIT(A)without examining the true nature of expenditure and the judicial precedents has allowed Assessee’s claim; Allows Revenue’s appeal and restores the addition.............. Click here to read and download ITAT order

3) ITAT: Non-issuance of notice u/s 143(2) on change of jurisdiction renders assessment null and void - ITAT allows Assessee’s appeal on jurisdictional ground whereby notice of assessment was issued by one ITO, whereas assessment orders were passed by non-jurisdictional Assessing Officer; Assessee-Individual filing returns with ITO Ward-3(1) submitted application for change of address with the PAN services unit which was confirmed and  the new address was within Ward-3(1); Notice u/s 143(2) was issued by ITO-1(1), whereas the order was passed by ITO, Ward 3(5) who was non jurisdictional Assessing Officer; Assessee relied on the Allahabad HC ruling in Mohd. Rizwan and submitted that since assessment order has been passed by AO who has not given notice u/s 143(2); the order  is null and void; Revenue submitted during issuance of notice u/s 143(2), Assessee’s PAN was with ITO-1(1) and not ITO 3(5), which was subsequently transferred; Further the assessment order passed by ITO Ward 3(5) is in continuation of notice issued by AO, Ward 1(1); ITAT finds Form 26AS issued by the Revenue u/s 143(2) should have been issued by the AO having jurisdiction over the Assessee which has not been done, and orders should be passed by the same AO who issued notice u/s 143(2).............. Click here to read and download ITAT order

4) ITAT: Restricts disallowance u/s 14A on availability of non-interest-bearing funds – Ahmedabad  ITAT restricts Revenue’s disallowance u/s 14A on availability of non-interest-bearing funds with the Assessee;Assessee-Company filed its return of income declaring total income at Rs. 12.28 Cr and claimed exemption of Rs. 1.26 Cr as dividend in computation of income, disallowing Rs. 4.75 lakhs being the only disallowance u/s 14A since non-interest-bearing funds were available with Assessee; Revenue held that no reason was furnished for non-allocation of common management expenses, and thus determined the disallowance u/s 14A at Rs.46.54 lakhs, which was confirmed by CIT(A); ITAT follows its co-ordinate bench ruling and restricts the disallowance to Rs. 14 lakhs as against Rs. 46.54 lakhs disallowed by Revenue; In computation of deduction u/s 80-IC, Revenue found financial expenses pertaining to domestic sales were not allocated to eligible unit u/s 80-IC, and on the basis of allocation rate of 58.69% reduced Rs. 27.89 lakhs from deduction claimed by Assessee u/s 80-IC, which was confirmed by the CIT(A); ITAT observes Assessee did not .............. Click here to read and download ITAT order

5) ITAT: Amendment to Sec. 40(a)(ia) clarificatory, restricts to 30% disallowance - Ahmedabad ITAT upholds CIT(A)’s order restricting disallowance u/s 40(a)(ia) to 30% of total expenditure towards interest payment for AY 2012-13; Holds the amendment to section 40(a)(ia) brought in by Finance Act, 2014 is clarificatory in nature and thus, applicable retrospectively; Assessee had filed a loss return and was issued notice u/s 263 by Pr. CIT for disallowing payment of interest to various parties without complying with TDS provisions; Revenue, on noting that the interest of Rs. 74.54 lacs have been debited to P&L A/C on which Assessee was liable to deduct tax u/s 194A, rejected Assessee’s submission of being under bonafide belief that the recipients of interest were not subject to TDS provisions; Further, Revenue rejected Assessee‘s explanation that the recipients were all operating as banking companies whose accounts are audited and returns are filed and respective taxes have been duly deposited; Thus, disallowed entire interest payment of Rs. 74.54 lacs holding the amendment to section 40(a)(ia) to be prospectively applicable from April 01, 2015 onwards; ITAT refers to Allahabad ITAT bench ruling in M.K. Agrawal & Co. wherein it was held “…once the recipient of the interest amount has included the same as part of their income and filed the return of income in that case the provision of section 40(a)(ia) is not required to invoked”; Observes that the Assessee failed to substantiate its submission of taxes .............. Click here to read and download ITAT order

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Lot's more at Taxsutra Database 

CBDT notifies Rule 9D for calculation of taxable interest on PF contributions; Prescribes monetary thresholds

CBDT issues Circular on extension of various e-filing deadlines

CBDT notifies extended timelines under Direct Tax Vivad se Vishwas Act, 2020 (3 of 2020)

Access all “Taxsutra Database Newsletters”, in case you have missed any!

Access latest News....and more! 

----------------------------------------------------------------------------------------------

About Taxsutra Database!

“Taxsutra Database”, a true Income-tax research tool, is an archive of over 113435+ 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.

Click Here to Sign up, make payment and join the Taxsutra Family. 

Copyright © TAXSUTRA. All Rights Reserved

Issue No. 244 / August 25^th, 2021

Dear Professionals,   

We are glad to present to you the 244^th edition of ‘Taxsutra Database Bulletin’, where we keep you updated with current trends in the tax arena!

Status of Journals Updated

***********************

Key Takeaways from Handpicked Rulings

1) HC : Salary paid to pedagogues liable to TDS - Division Bench of HC dismisses batch of appeals seeking amnesty from paying tax on salaries; Upholds Single-Judge's order that the CBDT 1944 or 1977 Circular does not excludes income of pedagogues from charge of tax and is liable for TDS; Notes that Section 192 does not contemplate any exemption from the liability to deduct tax at source on the basis of the nature of calling, profession, or vocation of the person who receives the salary. If the income payable falls under the head 'Salaries', the statute attaches an obligation to the person paying the salary to deduct TDS. HC rejects Assessees’ submission that as per the canon law, once a perpetual vow of poverty is taken, the nun or priest, as the case may be, undergoes a civil death, and thereafter, they are not 'persons' under the Act and HC held that nuns and priests act like any other living human and the exigibility to tax is governed and controlled by the respective taxing statutes and not by the.............Click here to read and download HC Judgment copy

2) HC: Reassessments based on information from Investigation wing legally tenable - HC dismisses writ petition challenging the reopening proceedings u/s 148 for AY 2012-13 based on reasons to believe on the information received from the Investigation Wing; Assessee-Petitioner was served with a notice u/s 133(6) calling upon for certain information which he failed to respond to; Subsequently he was served a notice u/s 148 to file his return of income for the said AY, in response to which Assessee filed the return of income declaring income of Rs. 1.50 Cr; Revenue, on the basis of information received from DDIT (Investigation), Ahmedabad contended that Assessee was a beneficiary of accommodation entries received of Rs. 20 Lakhs, and an entity ‘Kamdhenu Marketing’ had provided bogus sales entries to the Assessee; Assessee submitted all material facts necessary for assessment were disclosed, and assessment was framed u/s 143(3); It was further submitted that assessment could not be reopened on basis of borrowed belief received from the investigating wing, without verifying the material; Revenue submitted that on account of Assessee’s failure to respond to notice u/s 133(6), notice u/s 148 was issued and assessment was to be re-opened on tangible and credible information from two investigation wings; HC observes in view of the jurisprudence that the expression ‘reasons to believe’ cannot be read to mean that AO should finally have ascertained the fact by legal evidence or conclusion, and the term ‘reason to believe’ would mean cause or justification...................Click here to read and download HC Judgment copy

3) HC: Assessee entitled to reapply on rejection under Industrial Park Scheme - HC dismisses writ against rejection of Assessee’s application under the ‘Industrial Park Scheme, 2002 made after expiry of the said scheme and opines that Assessee is entitled to submit an application under the second scheme notified subsequently; Assessee-Petitioner submitted its application under the said scheme dated Apr 01, 2002 on Dec 15, 2006 which was rejected by the impugned order stating that period mentioned in the scheme has expired and therefore, Assessee was required to submit a fresh application under the new scheme of the year 2008 and its application was rejected; Revenue submitted that since the period of operation of the scheme was upto Mar 31, 2006 Assessee’s application dated Dec 15, 2006 could not be entertained under the scheme; HC, on perusal of the scheme observes that in terms of applicability of the scheme it was clear that any undertaking which develops / develops and operates or maintains and operates an industrial park for the period from Apr’97 to Mar’06 was entitled to avail benefit under the Scheme; It further observes that in respect of the second scheme notified on Jan’08 the benefit was extended in respect of industrial parks commenced between Apr’06 upto Mar’09, and remarks cases where commercial parks commenced in the said period are to be considered under the second scheme; HC holds that in view of the fact that application itself was submitted beyond the period of applicability, it has to be necessarily considered...................Click here to read and download HC Judgment copy

4) HC: Directs Revenue to grant TDS credit for AY 2009-10 following coordinate bench’s ruling - HC directs Revenue to decide the rectification applications filed by Assessee-petitioner in accordance with law, within 12 weeks; Assessee-petitioner filed the writ seeking directions for allowing TDS credit on basis of TDS certificates issued, further for cancellation of consequential demand and penalty notices arising from order u/s 143(1)(a); Assessee, non-resident individuals derived income from house property and bank interest, filed their return of income claiming tax refund of Rs. 2.50 lacs each, which was not granted to them under assessment orders u/s 143(3); Subsequently Assessee filed a rectification us/s 154 stating details of TDS amounts which were not considered as prepaid taxes; It was further submitted that no order was passed u/s 154, and demand was raised without any action being taken on the letters filed by the Assessee; Revenue submitted it had no objection if the writs are disposed with a direction to AO to decide the rectification applications within a strict time frame and considering the...................Click here to read and download HC Judgment copy

5) HC: Approval granted by STPI as 100% EOU insufficient for claim of exemption u/s 10B - HC dismisses Assessee’s writ petition challenging CBDT instruction dated No.2/2009 dated Mar 9, 2009 r/w corrigendum to the instruction issued by the CBDT in the context of 100% EOUs under Software Technology Parks / Electronic Hardware Technology Parks scheme; Assessee company is a Government of India approved 100% EOU, which has been approved by Software Technology Parks of India (STPI) through powers delegated to it by Department of Electronics, Govt of India;Assessee’s case for AY 2006-07 was re-opened stating that it was not entitled to exemption u/s 10B as a 100% EOU since approval granted by Development Commissioners would be valid only if such approval was ratified by Board of Approval (BoA) under EOU scheme; Assessee submitted that a post approval ratification from the BoA was not mandated anywhere under the law in case of 100% EOU under the STP/EHTP scheme; Assessee further contended that approval granted in its favour is deemed to have been granted by the BoA for all purposes; Assessee challenged the validity of the impugned clarification issued stating the same to be violative of the Act; HC on perusal of the approval order issued in favour of Assessee observes that approval has been granted for setting up of 100% EOU under the EHTP scheme of the government and approved by STPI, and remarks that such approval cannot be validated for purpose of claiming exemption u/s 10B;...................Click here to read and download HC Judgment copy

6) HC: Reassessment notice u/s. 148 issued in the name of non-existent entity bad in law, incurable u/s. 292B - HC allows assessee’s writ, quashes notice u/s. 148 issued in the name of a  non-existent entity and the subsequent order rejecting objections raised by assessee; Notes that the reasons issued by the AO itself mentioned the very fact of merger of Neeraj Realtors (noticee) with Alok Knit Exports P Ltd.; Observes that “ the indisputable fact is respondent no.1 has invoked jurisdiction by issuing notice under Section 148 of the Act to an entity that had ceased to exist” , rejects Revenue’s stand that it was an error which could be corrected under Section 292B; Relies on SC decision in the case of Maruti Suzuki, factually, distinguishes SC ruling in Skylight Hospitality.............. Click here to read and download HC Judgment copy

7) HC: Sets aside Faceless Assessment order for violation of natural justice - HC sets aside faceless assessment orders and consequent orders for demand holding the same to be violative of principles of natural justice; Assessee submitted that mandatory valid SCN and draft assessment order was issued before drawing an adverse inference against it qua addition of short-term capital loss of Rs.8.70 Cr leading to a tax demand, thus preferred this writ challenging the same; Revenue submitted that Assessee’s writ was not maintainable considering recourse to alternate remedy available to Assessee; HC observes that the Faceless Assessment Scheme mandatorily provides for issuance of prior SCN and draft assessment order before issuing the final assessment order; HC holds that the Government is bound to follow the rules and standards they themselves had set on their pain of their action being invalidated; HC observes that in absence of SCN and draft assessment order resulted in violation of principles of natural justice, as well as the mandatory procedure under the ‘Faceless Assessment Scheme’; Further remarks that in case where there is violation of principles of natural justice, appeal is not an alternative effective remedy and a writ petition is maintainable; HC, accordingly sets aside the impugned Faceless Assessment order and consequential demand orders and remands matter back to the AO, with a direction to issue SCN and draft assessment order, and passed a reasoned order in accordance with law...................Click here to read and download HC Judgment copy

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Lot's more at Taxsutra Database 

Govt. notifies Taxation Laws (Amendment) Act, 2021

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About Taxsutra Database!

“Taxsutra Database”, a true Income-tax research tool, is an archive of over 113275+ 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.

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Copyright © TAXSUTRA. All Rights Reserved

Issue No. 243 / August 17th, 2021

Dear Professionals,   

We are glad to present to you the 243^rd edition of ‘Taxsutra Database Bulletin’, where we keep you updated with current trends in the tax arena!

Status of Journals Updated

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Expert Column

The ‘The Taxation Laws (Amendment) Act, 2021’ was notified in Aug 13, 2021. It withdraws the retrospective amendments on taxability of indirect transfers. The bill is an outcome of India’s long-time tax disputes with UK firms Cairn Energy PLC and Vodafone Group. Indian economy is regarded as one with a huge potential on the global platform holding a promising future for any business enterprise and thus, India’s tax policy needs to be clear, unambiguous and consistent

CA Sachin Kumar B P (Chief Strategic Partner, Manohar Chowdhry & Associates), in this article, analyses the amendments and some of the potential issues required to be addressed. He states that the retrospective amendment was brought in to nullify the SC’s judgement and raise demand on Vodafone which met widespread disapproval from stakeholders,  and it was contended that such amendment was against the principle of tax certainty. He  states that India had initiated proceedings under the 2012 amendment in the case of 17 taxpayers including Cairn, New Singular Wireless, WNS Capital, Sanofi and SABMiller out of which lost to Cairn and Vodafone who took it to International Arbitration against the Indian Government.

Mr. Kumar elucidates on the implications of the amendment and highlights that though the amendment seeks to bury the past disputes, it is not futuristic. However, concludes by saying “…India withdraws the retrospective amendment. This is a welcome step from the Government. Retrospective amendment after the Hon’ble SC’s judgement in favour of Vodafone was unfair and did not augur well for India’s image in the international arena”

Click here to the article titled: “Indirect Transfers – Impact of withdrawal of the retrospective amendment"

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Key Takeaways from Handpicked Rulings

1) ITAT: Voluntary donation to Trade Federation not deductible expenditure, eligible u/s 80G - ITAT holds donation made to All India Gems & Jewellery Trade Federationnot a revenue expenditure, confirms CIT(A)’s order of treating it as donation eligible for deduction u/s 80G, Allows Assessee’s claim for repair & renovation expenses on leased premises as revenue expenditure; Assessee, engaged in manufacture and sale of gold, silver, platinum etc. availed membership of All India Gems Jewellery & Trade Federation, and paid Rs. 15.25 lacs to the federation as corpus donation; Assessee claimed the body was working for the interest of business Assessee was engaged in, and claimed the amount u/s 37(1) citing commercial expediency; Assessee further submitted that it had participated in a programme conducted by the federation and such payment of the such amount as donation was mandatory to participate therein; Revenue held that such donation was eligible for deduction u/s 80G and disallowed 50% of the claim which was confirmed by the CIT(A); On perusal of material on record, ITAT finds donation to be...............Click here to read and download ITAT Order

2) HC: Grants partial relief of interest u/s 234B to Trust - Madras HC allows writ petition, modifies the impugned order and grants partial waiver on interest u/s 234B; Assessee-Trust established in 1954 and claimed exemption from payment of tax; Post introduction of section 11(4) w.e.f AY 1984-85, Assessee was still under the bonafide belief that it was eligible to claim exemption from payment of income tax as 75% of surplus was deployed for educational purpose; The Division Bench of HC had allowed such exemption to the Assessee, against which Revenue filed an appeal before SC, and orders of the HC allowing exemption were reversed; Assessee claims that since the issue about claim of exemption was clarified by the SC in 2001; It remitted the amount of tax belatedly and approached the Revenue for grant of waiver of interest u/s 234B which was rejected; HC refers to...............Click here to read and download HC Judgment

3) ITAT: Exemption u/s 54F allowable on investment in spouse’s name, amount not invested in special account - Bangalore ITAT hold exemption u/s 54F cannot be denied in case where capital gain was not invested in CG account scheme within due date of filing return, and further where investment in new residential house is made in spouse’s name; Assessee was in receipt of certain immovable property as gift, which were sold during AY 2015-16 for Rs. 4.42 Cr, and invested Rs. 3.37 Cr upto October 31, 2017, and the balance was utilised in construction of residential property in spouse’s name on land owned by him; AO denied the exemption as amount of capital gain was not deposited in the CG account scheme within the due date of return, further on the grounds that investment was made in Assessee’s spouse’s name; On appeal CIT(A) confirmed AO’s action...............Click here to read and download ITAT Order

4) ITAT: Default TDS compliance prior to June1, 2015, late fee u/s 234E inapplicable - ITAT directs deletion of late fee u/s 234E for defaults in filing TDS statements being prior to June 01, 2015; Assessee-local body required to deduct and deposit TDS for Q1 of FY 2014-15 duly deducted and deposited the same, however filed the TDS statement for the first quarter on November 14, 2015; AO raised a demand for delay in furnishing the TDS statement; On appeal, CIT(A) confirmed the same; Assessee preferred an appeal with ITAT, but failed to appear despite issuance of notices, ITAT decides the matter basis available documents; ITAT observes Assessee challenged of the provisions u/s 200A empowering the AO to levy late fee u/s 234E , contending lack of machinery provisions, and finds the same tenable...............Click here to read and download ITAT Order

5) ITAT: No addition u/s 43CA, variation between stamp value, sale consideration less than 10% - Delhi ITAT holds addition made u/s 43CA not sustainable where difference between stamp duty value and actual sale consideration is less than 10% of the stamp duty value; Assessee-company entered into a collaboration agreement with another entity for construction of flats, under which Assessee was to get 35% of total revenue from sale of flats; During assessment proceedings, AO observed sale consideration in respect of a flat to be less than the stamp duty value, and accordingly made an addition to the extent of 35% of the difference between stamp duty valuation and sale consideration, which was confirmed by the CIT(A)...............Click here to read and download ITAT Order

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Lot's more at Taxsutra Database 

Govt. notifies Taxation Laws (Amendment) Act, 2021

Access all “Taxsutra Database Newsletters”, in case you have missed any!

Access latest News....and more!

----------------------------------------------------------------------------------------------

About Taxsutra Database!

“Taxsutra Database”, a true Income-tax research tool, is an archive of over 113160+ 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.

Click Here to Sign up, make payment and join the Taxsutra Family. 

Copyright © TAXSUTRA. All Rights Reserved