Deduction made from contractor's bill on account of amount being receivable upon there being no defect during stipulated period shall not be included in his income although he is following mercantile system . Held by Andhra Pradesh High Court in Shankar Constructions . ITA 135/2004. High Court discussed the principles propounded by Supreme Court inCIT v. Shoorji Vallabhdas & Co. [1962] 46 ITR 144 (SC) , CIT v. A. Gajapathy Naidu [1964] 53 ITR 114 (SC) .

CBDT Instruction No. 5 of 2014 revising monetary limit to Rs. 4 lakhs for filing appeal before Tribunal shall apply to pending appeals also. Since monetary limit of appeal filed by revenue was less than Rs. 4 lakhs, same was to be dismissed-Gurudayal Sontosh Kumar[2015] 60 taxmann.com 24 (Kolkata - Trib.)FEBRUARY 4, 2015

Even if advance forfeited by supplier wasn't allowable as bad-debt u/S 36, yet it could be considered as business loss u/S 37-Amines & Plasticizers Ltd.2015] 60 taxmann.com 82 (Guwahati - Trib.)JANUARY 30, 2015

Cuttuck Tribunal in N.K. Media Ventures 59 taxmann.com 365 following Mumbai Tribunal in Porwal Creative 50 SOT 148 has held that since no TDS return can be filed till payment of tax, no penalty u/S 272A(K) can be levied from due date of filing TDS return till date of tax payment. Although Section 234E had reigned over S. 272A(K) wef 01-07-2012, it contains similar provisions, hence Judgement might become applicable to 234E also-

For educational Institutions being granted approval u/s 10(23C)(vi) (CIRCULAR NO.14/2015 dated 17-08-2015) following postulates put accross:

1. Guidelines of Supreme Court in American Hotel and lodging 301 ITR 86 to be followed.

2. No denial to be made where compliance depends upon events that have not taken place till date of application.

3. Institution granted registration both under S. 12AA and 10(23C)(vi), no automatic withdrawal of approval where 12AA registration cancelled unless conditions under 10(23C) are violated.

4. No withdrawal of approval for accumulation of profit be cause the third Proviso to the said clause clearly provides that accumulation of income is permissible subject to the manner prescribed therein provided such accumulation is to be applied "wholly and exclusively to the objects for which it is established.  

 5.Collection of small and reasonable amounts under different heads of fee, which are essentially in the nature of fee connected with imparting education and do not violate any Central or State regulation does not, in general, represent a profit making activity E.g. application fee, examination fee, fee for issuing transfer certificate, subscription fee for library.    

6. Extra ordinary powers of managing  trustees to appoint other trustee and their heirs also shall not result in denial of approval

Penalty of Rs. 10,000/- u/s 271(1)(b) for not complying with sec. 143(2)couldn't be imposed more than once for same default . The provision of Section 271(1)(b) is of deterrent nature and not for earning revenue. Hence penalty of Rs. 50000 confirmed by CIT (A) reduced to Rs. 10000 by Delhi Tribunal in Smt. Rekha Rani IT APPEAL NO. 6131 (DELHI) OF 2013 DATED 06-05-2015

Where assessee, engaged in business of land developers, borrowed certain amount from financial institutions for its business activity, interest paid on said loan had to be allowed as deduction under section 36(1)(iii)

Modi Builders[2015] 60 taxmann.com 54 (Pune - Trib.) JUNE  26, 2015 

Assessee-firm advanced money to two ladies without interest out of interest bearing funds allegedly to acquire properties for firm in course of business - However, no evidence was produced by assessee to justify its stand - Assessee claimed interest paid on borrowings - Whether since amount advanced out of interest bearing funds was not for business purpose, interest attributable to money advanced to said two ladies could not be allowed as deduction - Held, yes

Akarshan Builders [2015] 60 taxmann.com 138 (Karnataka) DECEMBER  2, 2014 

No concealment penalty if sum treated as capital receipt was disclosed in notes to accounts and return

The respondent-assessee had originally paid an amount of Rs.54 Lakhs as a consideration for the development agreement in 1995. In the previous year relevant to assessment year, the respondent-assessee received from the vendor an amount of Rs. 1.65 Crores which included an amount of Rs. 54 Lakhs which was originally paid in 1995 by the assessee to the vendor. 

The department imposed tax on the assessee and the assessee accepted the position. However held by Bombay High Court in S.M. Construction [2015] 60 taxmann.com 135 (Bombay) following Supreme Court inCIT v. Reliance Petroproducts (P.) Ltd. [2010] 322 ITR 158/189 Taxman 322 and distinguishing CIT v. Zoom Communication (P.) Ltd. [2010] 327 ITR 510/191 Taxman 179 (Delhi) (para 9)disclosure of Rs. 1.11 Crores which was made by the petitioners as a part of its notes to accounts as well as letter dated 29 October 2005 alongwith its claim of not being taxable was filed along with the Return of Income. Thus there has been a complete disclosure of all facts as held by CIT(A) and the Tribunal

In the absence of any assessment , taking of cheques by ETO of mobile wing is not justified. Rs. 10,000 penalty imposed

Sumit Agencies (8-07-2015) 25 STM 148 [P&H HC]

Provisional Assessment can not be made by member of raiding team

Sumit Agencies (8-07-2015) 25 STM 148 [P&H HC]

Non Speaking order passed by authority can not be sustained. Order set aside and designated order asked to pass reasoned order with in three months.

Arora Steel [27-04-2015] PVAT TRI 25 STM 141

Input Tax Credit can not be denied to the purchasing dealer on the ground that the registration of the selling dealer was cancelled after the sales were made or that they did not deposit the full tax in the treasury unless there is malafide intention, connivance or wrongful association of the purchaser with the seller or any dealer earlier there to

Gheru Mal Bal Chand [2011] 17 STM 465; Delhi High Court  Shanti Kiran India Ovt Ltd. [2013] 20 STM 168 (Del HC)

. Rule 86 of Punjab Vat Rules prescribing modes of serving notices to the dealer does not contemplate notice by publishing on website. Such a publishing for assessment as well as reassessment is bad in law. Section 149 of Municipal Corporation Act which contemplates service of notice by beating of drum and play cards posted at conspicuous place can not be applied

Olam Agro India Ltd. 25 STM 114 [20-08-2013]

Sony India Pvt Ltd. 25 STM 144 [27-04-2015] following Olam Agro India Ltd. [2015]

Power of Reassessment u/s 29(4) Proviso can not be invoked without affording opportunity of being hearing to the dealer

A.B. Sugars Ltd. [2010] 15 STM 90(P&H HC)

ITC Carried forward for earlier assessment year can not be rejected on the ground that it has not been verified.

H.M. Steels Ltd. 25 STM 186 (PVAT Tri) 30-03-2015 

Where assessee, a civil contractor, made payments to transporters and sub-contractors in course of its business, in view of fact that assessee gave complete addresses and PANs of payees and, moreover, said payments had been made after deducting tax at source, impugned order rejecting assessee's books of account was to be set aside

V.V. Constructions[2015] 59 taxmann.com 368 (Pune - Trib.) JUNE  12, 2015 

For relevant assessment year, assessee-firm declared gross profit rate (GPR) of 25.38 per cent as against 29.5 per cent declared in immediate preceding year - Assessing Officer was not satisfied with assessee’s explanation regarding decline in GPR and, therefore, he rejected its books of account and applied GPR at 27 per cent which resulted in certain addition - On appeal, Commissioner (Appeals) deleted addition holding that Assessing Officer made addition without pointing out any specific defect in books of account - Tribunal upheld finding of Commissioner (Appeals) - Whether there was any perversity in order of Tribunal - Held, no

Om Overseas [2008] 173 TAXMAN 185 (PUNJ. & HAR.) HIGH COURT OF PUNJAB AND HARYANA MARCH 4, 2008

On assessee’s inability to supply addresses of purchasers who purchased goods on cash, ITO rejected assessee’s books of account showing result in respect of cash sale transactions, and made addition – AAC deleted additions but Tribunal restored ITO’s orders – Whether there was no necessity whatsoever for assessee to maintain addresses of cash customers – Held, yes – Whether, therefore, rejection of book results of assessee was unjustified – Held, yes – Whether, consequently, additions made to assessee’s income were liable to be deleted – Held, yes

R.B. Jessaram Fatehchand (Sugar Dept.)[1970] 75 ITR 33 (BOM. HIGH COURT OF BOMBAY JULY 30, 1969

FDR Interest is not Business Income

The Hon'ble Rajasthan High Court had held in the of Murli Investment Co v. CIT 167 ITR 368 (Raj.) that merely investing surplus funds instead of keeping them idle and obtaining interest thereon would not constitute business and therefore, the interest by the assessee would not be assessable as business income but assessable as income under other sources. The Hon'ble Kerala High Court in the case of CIT v. Venad Conductors (P) Ltd. 326 ITR 513 (Ker.) had held that income from short term deposit cannot be treated as income from business but it is income from other sources. Likewise, in the case of T.O. Abraham & Company v. Dy. CIT 325 ITR 201 (Ker.) It was held that interest income from bank deposits is assessable under the head "income from other sources" where the assessee is not engaged in money lending business. The Himachal Pradesh High Court in the case of Shanta Lal Chopra v. CIT 2008 214 CTR 420 (HP) had held that the interest on FOR pledged with bank for obtaining loan was assessable as income from other sources and not business income. Similar view was taken by the Hon'ble M.P High Court and Hon'ble Madras High Court respectively in the cases of Ferro Concrete Construction (lndia)(P) Ltd. v. CIT 290 ITR 713 (MP) and CIT v. Monark Tools (P) Ltd. 260 ITR 258 (Mad.). The Hon'ble Delhi High Court in their later on decisions had also taken the view that, interest income is assessable as income from other sources. In the case of CIT v. Shri Ram Honda Power Equip. (Delhi) 289 ITR 475 (Delhi), the Hon'ble Delhi High Court had held that where surplus funds are parked with the bank and interest is earned there on it can only be categorized as income from other sources. The other category is where the exporter is required to mandatorily keep monies in fixed deposits in order to avail of credit facility for the export business. Interest earned on fixed deposits for the purpose of availing of credit facility from the bank, does not have an immediate nexus with the export business and therefore has to necessarily be treated as income from other sources and not business income.
(Para 2.3 and Para 2.4 in Almac Corporation [60 taxmann.com 34][Ahd Trib]

Where Assessing Officer disallowed a part of remuneration payable by assessee-firm to its partners under section 40(b)(v) on ground that interest on FDRs was to be excluded for purpose of calculation of remuneration payable to partners, since no such adjustment had been made by him while computing income from business, impugned disallowance was to be deleted

Almac Corporation [2015] 60 taxmann.com 34 (Ahmedabad - Trib.) APRIL  10, 2015 

Where Assessing Officer rejected books of account and estimated net profit on gross receipts, Commissioner could not invoke revisional power

Gopal Narayan Singh (Patna Trib) 4-07*-2014 53 taxmann.com 51

Section 145, read with section 263, of the Income-tax Act, 1961 - Method of accounting - Rejection of accounts (Revision) - Assessment year 2007-08 - Assessing officer estimated net profit of assessee at 5.58 per cent of gross turnover from civil contract work - Commissioner invoked section 263 alleging that there was inability to produce evidences in support of assessee's claim of expenses and profit - It was found that in opinion of Assessing Officer, books of account were not reliable and, accordingly, he rejected books of account and estimated said profit of his own - Whether Commissioner could not invoke section 263 by mentioning that no proper enquiry had been made by Assessing Officer when nothing had been brought on record by Commissioner - Held, yes - Whether, therefore, Commissioner was not justified in cancelling assessment order - Held, yes [Para 5] [In favour of assessee]

AO couldn't make estimated additions without showing comparable case to justify higher rate of net profit

Section 145 of the Income-tax Act, 1961 - Method of accounting - Estimation of income (GP Rate) - Assessment year 2009-10 - Assessee - a partnership firm, was engaged in business of civil contractor and had furnished his income-tax return along with audit report and other information - Assessee declared a net profit of 5.38 per cent, subjected to interest and remuneration to partners - A perusal of order revealed that net profit rate in immediate preceding year was 5.02 per cent - Assessing Officer invoked provisions of section 145 and disallowed expenses amounted to Rs. 1.17 crores and determined net profit at 13.7 per cent - Commissioner (Appeals) sustained an ad hoc addition of Rs 10 lakhs - Tribunal reduced addition to Rs 5 lakhs - It was observed by Tribunal that though contract receipts had sharply increased from Rs 10.60 crores to Rs. 12.32 crores, net profit had increased from 5.02 to 5.38 per cent with addition of Rs 5 lakhs - Whether as Assessing Officer had failed to bring on record any comparable case so as to justify any estimation/addition, order of Tribunal was to be upheld - Held, yes [Paras 10 and 11] [In favour of assessee]
[2015] 59 taxmann.com 293 (Rajasthan)/[2015] 371 ITR 325 (Rajasthan)

Whether where amount of transport subsidy, interest subsidy, insurance subsidy and power subsidy would reduce cost of production of an industry and there is direct nexus between said subsidies and profits and gains derived by industrial undertaking, deduction under section 80-IC has to be granted in respect of subsidies so received

[2015] 59 taxmann.com 197 (Guwahati - Trib.)/[2015] 38 ITR(T) 186 (Guwahati - Trib.)/[2015] 168 TTJ 9 (Guwahati - Trib.)(UO) NOVEMBER  11, 2013 

Law to be applied for penalty

Law to be applied for penalty is the law, when default is committed and not the law for assessment year when return is filed. Like if income is concealed the offence is committed when return is filed. Hence law applicable on day of filing return to apply. Brij Mohan 120 ITR 1, Rameshwar 130 ITR 51.
If income concealed in original return and then in response to section 148, again same return filed, there is no fresh concealment. Hence penal Provision on original return to apply. (Ram Achal Ram Sewak 106 ITR 144(All))

As per Article 20 of the Constitution, no person shall be subjected to penalty greater than that which might have been inflicted under the law in force at the commission of offence.

having regard to sub clause (i) of Clause 8 of Circular issued by Government of India, if petitioner’s submission to effect that he was aged 70 years was correct then proceedings against him could be dropped

Kishan Lal (All) 179 ITR 206

Pre operative expenses of extension of business are revenue in nature in case of existing business

SRF Ltd HIGH COURT OF DELHI [2015] 59 taxmann.com 180 (Delhi) JANUARY  15, 2015 (FY  2005-06) relying on Jay Engg. Works Ltd. v. CIT [2009] 311 ITR 405/[2008] 166 Taxman 115 (Delhi). further relying on  Veecumsees v. CIT [1996] 220 ITR 185 (SC) where the assessee ran a jewellery business and then commenced business in the exhibition of cinematographic films. The assessee obtained loans for building a cinema theatre and the question was whether the interest payable on the loans borrowed for the new business was a revenue expenditure or not. While answering the question in favour of the assessee, the Supreme Court found that the two businesses were composite in the sense that there was interconnection, interlacing or interdependence between the jewellery business and the cinema business. 
However w.e.f AY 2004-05 proviso to section 36(1)(iii) inserted a proviso:
"Provided that any amount of the interest paid, in respect of capital borrowed for acquisition of an asset for extension of existing business or profession (whether capitalised in the books of account or not); for any period beginning from the date on which the capital was borrowed for acquisition of the asset till the date on which such asset was first put to use, shall not be allowed as deduction" 

Since SC Judgement  itself is not applicable hence whether Delhi high court judgement relying upon that judgement can be relied ? Interestingly Delhi High Court in Jay Engg distinguished SC Judgement in Challapali Sugar which is itself a judgement holding that pre-operative interest to be capitalized

Section 115BBC is not applicable to institutions like that of assessee trust being a temple or shrine; provisions of this section are meant to check inflow of unaccounted/black money into system with a modus operandi to make out as a part of accounts of institutions like university, medical institutions where problem relating to receipt of capitation fees, etc. is generally highlighted.

Such type of offerings are made/put into the donation box by numerous visitors and its generally not possible for any such type of institutions to make and keep record of each of the donor with his name address etc. Even sometimes the donors out of their esteem, respect and regard and selflessness they do not want that their name be registered as a donor before the deity for whom them make the prayer in the belief that the deity is the ultimate giver of all the worth and virtues of their life.

Gurudev Siddha Peeth JULY  22, 2015  ITAT MUMBAI IT APPEAL NOS. 3466 AND 3467 (MUM.) OF 2012

Unreasoned Order of ITAT reducing addition for bogus purchases to 10% relying upon Coordinate Bench decision upheld by Gujrat High Court

Premkumar B. Rathi [2015] 59 taxmann.com 203 (Gujarat)

Case Laws on Requirement to pass reasoned order by ITAT: Gujrat High Court in Premkumar B. Rathi [2015] 59 taxmann.com 203 (Gujarat)

(1)		Omar Salay Mohamed Sait v. CIT [1959] 37 TR 151 (SC).
(2)		Board of Trustees of Martyrs Memorial Trust v. Union of India [2012] 10 SCC 734.
(3)		Real Estate Agencies v. State of Goa [2012] 12 SCC 170.

Hindustan Steel (1970) 25 STC 211 (SC) on Penalty

" ..................An order imposing penalty for failure to carry out a statutory obligation is the result of a quasi criminal proceedings and penalty will not ordinarily be imposed unless the party obliged either acted deliberately in defiance of law or was guilty of conduct contumacious or dishonest or acted in concious disregard of its obligation. Penalty will also not be imposed because it is lawful to do so. Whether penalty should be imposed for failure to perform a statutory obligation is a matter of discretion of the authority to be exercised judicially and on a consideration of all the relevant circumstances. Even if minimum penalty is prescribed , the authority competent to impose penalty will be justified in refusing to impose penalty, when there is technical or venial breach of the provisions of the Act or where the breach flows from a bonafide belief that the offender is not liable to act in the manner prescribed by the statute......."

Supreme Court in J.K. Synthetics (1994) (SC)FB has held that if a dealer has deposited full amount of tax without willfully omitting any information but later an amount is found to be payable dealer would not be liable to pay interest on additional amount of tax deposited by him

Quoted in Suder Nagar Integrated Rural Development Associaiton 51 PHT 411 (HP TT)

Duplicate C forms request can not be rejected on account of delay .

In case of Amba Shakti Ispat Ltd. 51 PHT 408(HP TT) while dealing with issue of duplicate C forms, Tribunal held that request for duplicate C forms can not be rejected merely on the ground that application is made with delay of 3 to 5 years from date of transactions. C forms are required usually only at the time of assessment of selling dealer. The Court also made following observations:

a) Genuiness of transactions can be verified from entry at the barrier.

b) There is no PAN Indian Computer Network of verification of Statutory forms and verification is done through inquiry or correspondence.

c) Factor to be considered is genuiness of transaction and not the factor of delay in applying for C forms as the need arises at the time of assessment

Held by Supreme Court in Delhi Automobiles (P) Ltd. (1997) 104 STC 75 that where sufficient compliance with the provisions of Rule 12(3) has taken place, C forms should be Issued

Quoted in Amba Shakti Ispat Ltd. 51 PHT 408, 410(HP TT)

Outotec India Pvt. Ltd vs. ACIT (ITAT Delhi) Articles 13 & 15 of DTAA: Law on whether if a sum cannot be assessed as "fees for technical services" under the "make available" clause of Article 13, it can still be assessed as "Independent personal services" under Article 15 explained The assessee’s contention that since the services contracted for the by the assessee with non-residents fall within the meaning of Article 13 but get excluded because of not `making available’ any technical knowledge etc., then such services cannot be once again considered under Article 15 is not acceptable. The precise question is that which of the two Articles, namely, 13 or 15, should have primacy in the facts and circumstances as are instantly prevailing?

 para 1 of Article 15 of the DTAA, we find that the income derived by a resident of Finland in respect of professional services or other independent activities of a similar character performed in India can be taxed in India if he is present in India for a period or periods aggregating to 90 days or more in the relevant fiscal year or has a fixed base regularly available to him in India for the purpose of performing his activities. It is noticed that the CIT(A) has computed the period of 90 days by considering the presence of these persons in India from 24.11.2008 to 24.4.2009. The AR contended that the CIT(A) has considered total period of stay of all the five persons taken together without considering it on individual basis. We find force in the submission of the ld. AR in this regard. Once it is held that five individuals from Finland were not representing IPS and, in fact, there was no valid agreement between the assessee and IPS, then, what remains to be examined is such five residents of Finland on individual basis. The amounts payable to each of such five persons satisfying the duration test on individual basis would enable the ultimate triggering of Article 15 of the DTAA. In other words, only those Finland residents out of such five persons who independently and individually satisfy the condition about their presence in India for a period of 90 days or more in the relevant fiscal year or having a fixed place regularly available to them in India for the purpose of performing the supervisory functions, can be brought within the purview of Article 15. If, however, this condition is found wanting qua some individuals, then the amount payable to such individual residents of Finland, would cease to be chargeable to tax in terms of Article 15 of the DTAA notwithstanding its taxability under section 9(1)(vii) read with section 5 of the Act.

A licensee who is in full control of the building and can exercise the rights of the owner in his own right is entitled to depreciation

CIT vs. Bharat Hotels (Delhi High Court)

(i) Explanation (1) to Section 32 of the Act also acknowledges that depreciation would be claimed by assessee who carries on business “in a building not owned by him but in respect of which the assessee holds a lease or other right of occupancy and any capital expenditure is incurred by the assessee for the purposes of the business or profession on the construction of any structure or doing of any work or in relation to……. the building.” In such event, Section 32 (1) would apply “as if the said structure or work is a building owned by the assessee.

Having held that the sundry creditors are not payable and fictitious, the next question that comes up for our consideration is the year in which the amount is taxable under what provisions of law either under Section 41(1) or 68 of the Act. We are required to examine whether this amount should be brought to tax in the year in which credit was made first time in the books of account or in the year in which these are found not payable. An identical issue had come up for consideration before the Hon’ble Gujarat High Court in the case of CIT Vs Bhogilal Ramjibhai Atara in Tax Appeal No. 588 of 2013, dated 04.02.2013, in which it was held that that even if the debt itself is found to be non-genuine from the very inception there was no cessation or remission of liability and that therefore, the amount in question cannot be added back as a deemed income under section 41(1) of the Act. The Jurisdictional High Court in the case of CIT Vs. Shri Vardhman Overseas Ltd., (2012) 343 ITR 408 (Del), has dealt with the issues of taxability under section 41(1) of the Act in a case where long outstanding sundry creditors were treated as taxable. The High Court after referring to the decisions of Hon’ble Supreme Court in the cases of CIT(Chief) Vs. Kesaria Tea Co. Ltd., (2002) 254 ITR 434(SC) and CIT Vs. Sugauli Sugar Works P. Ltd (1999) 236 ITR 518 (SC, has held that such amounts cannot be brought to tax under Section 41(1) of the Act. The Hon’ble Suprme Court in the case of CIT Vs. Sugauli Sugar Works P. Ltd. (supra) held that a unilateral action cannot bring about a cessation or remission of the liability because a remission can be granted only by the creditor and a cessation of the liability can only occur either by reason of operation of law or the debtor unequivocally declaring his intention not to honour his liability when payment is demanded by the creditor, or by a contract between the parties, or by discharge of the debt. (ii) Applying the ratio in the cases mentioned supra, the amount in question cannot be brought to tax in the year under appeal under the provisions of Section 41(1) of the Act. It is trite law that an addition under Section 68 can be made only in the year in which credit was made to the account of the creditors in the books of account maintained. Kindly refer to the Supreme Court in the case of Damodar Hansraj Vs. CIT, (1969) 71 ITR 427 (SC). Admittedly, in this case the credit to the account of creditors was made in the earlier years and therefore, the amount even cannot be brought to tax under Section 68 in the year under appeal. However, it is open to the Department to levy tax on such amount by resorting to the remedies available under the provisions of Act by duly following the procedure known to the law.

Cheil India Pvt. Ltd vs. ITO (ITAT Delhi)

The ITAT directed that the assessee be granted sufficient opportunity to rebut the evidence used by the Assessing Officer regarding the addition of Rs.89,39,92,188 made by the Assessing Officer on account of alleged short receipts declared in the profit and loss account violating the principles of natural justice. In compliance, the Assessing Officer made the assessment on the issue afresh under sec. 254 read with 143(3) of the Act making the addition of Rs.4,55,41,557 out of Rs.89,39,92,188 which was questioned before the CIT(Appeals). The CIT(Appeals) not only upheld the addition of Rs.04,55,41,557 made on account of short receipts declared in profit and loss account but enhanced the income by directing the Assessing Officer to disallow payments made by the assessee under sec. 40(a)(ia) of the Act. The assessee claimed that by directing the Assessing Officer to make the disallowance of payments made by the assessee under sec. 40(a)(ia) of the Act, the CIT(Appeals) has introduced in the assessment a new source of income, which is not allowed in an assessment which was made by the Assessing Officer strictly in compliance of the order of the ITAT for reconsideration of addition of Rs.89,39,92,188 after examining the evidence and upholding opportunity of being heard to the assessee. HELD by the Tribunal:

(i) The direction to the Assessing Officer by the CIT(Appeals) to disallow payments made by the assessee under sec. 40(a)(ia) of the Act was a question of taxability of income from a new source of income which has not been considered by the Assessing Officer, hence it was exceeding of jurisdiction by the CIT(Appeals) in a set aside matter by the ITAT in the present case. Though the CIT(Appeals) has co-terminus powers as of the Assessing Officer and is empowered to do what an Assessing Officer can do for the assessment, the directed disallowance was new source of income, which was not the subject matter of setting aside order by the ITAT, in compliance of which assessment under sec. 254 read with section 143(3) was framed.

(ii) The power of the CIT(Appeals) to set aside assessment, which does not involve a proposal for enhancement cannot be used for the purpose of expending the whenever the question of taxability of income from a new source of income is concerned, which had not been considered by the Assessing Officer, the jurisdiction to deal with the same in appropriate cases may be dealt with under sec. 147/148 of the Act and section 263 of the Act, if requisite conditions are fulfilled. It is inconceivable that in the presence of such specific provisions, a similar power is available to the appellate authority (CIT vs. Sardari Lal & Co. – 251 ITR 864 (Del) followed).

Unclaimed liabilities to creditors, even if fictitious and bogus, cannot be assessed u/s 41(1) in the absence of a write-back. The bogus credits can be assessed u/s 68 only in the year the credits were made and not in the year they are found to be not payable

Perfect Paradise Emporium Pvt. Ltd vs. ITO (ITAT Delhi)

 Having held that the sundry creditors are not payable and fictitious, the next question that comes up for our consideration is the year in which the amount is taxable under what provisions of law either under Section 41(1) or 68 of the Act. We are required to examine whether this amount should be brought to tax in the year in which credit was made first time in the books of account or in the year in which these are found not payable. An identical issue had come up for consideration before the Hon’ble Gujarat High Court in the case of CIT Vs Bhogilal Ramjibhai Atara in Tax Appeal No. 588 of 2013, dated 04.02.2013, in which it was held that that even if the debt itself is found to be

Loss suffered on account of forex derivative contracts (Exotic Cross Currency Option Contracts cannot be treated as speculative loss to the extent that the derivative transactions are not more than the total export turnover of the assessee. If the derivative transaction is in excess of export turnover, the loss in respect of that portion of excess transactions has to be considered as speculative loss because the excess derivative transaction has no proximity with export turnover

M/s. Majestic Exports vs. JCIT (ITAT Chennai)July 24, 2015 (Date of pronouncement)

The Mumbai High Court in CIT vs. M/s SMSL-UANRCL (JV) has held that even if contract is awarded to the Joint Venture, the income is assessable only in the hands of the person which has executed the work - [2015-ITRV-HC-MUM-120]

The Mumbai High Court in CIT vs. Hariram Bhambhani has held that the entire unaccounted sales cannot be assessed as undisclosed income particularly if the purchases have been accounted for. Only the net profit on such unaccounted sales can be taken as income - [2015-ITRV-HC-MUM-115]

The Mumbai ITAT in Vardhman Developers Ltd vs. ITO has held that expenditure towards repair and renovation of leased premises is capital in nature. It has also explained the method for allocation of common expenses to different WIP projects of a builder - [2015-ITRV-ITAT-MUM-111]

The Mumbai ITAT in Fardeen Khan vs. ACIT has held that land ceases to be a capital asset on date of application for conversion into N. A. land. Pursuant to amendment to s. 53A of TOP Act , non-registered development agreement does not result in transfer u/s 2(47)(v). Law in Chaturbhuj Dwarkadas Kapadia 260 ITR 461 (Bom) does not apply after amendment to s. 53A - [2015-ITRV-ITAT-MUM-121]

The Pune ITAT in M/s. Chakrabarty Medical Centre vs. TRO has held that property introduced by a partner into firm becomes the asset of the firm even if there is no registered deed. Though the asset is held by the firm as a depreciable asset and though the investment in s. 54EC bonds is made in the names of the partners, the firm is eligible for s. 54EC exemption - [2015-ITRV-ITAT-PUNE-110]

The Delhi High Court in CIT vs. Taikisha Engineering India Ltd has held that no disallowance can be made u/s 14A if AO does not record satisfaction with reference to accounts that assessee's claim is improper. However, if Rule 8D applies, assessee's claim that interest is not disallowable on ground of "own funds" is not acceptable - [2015-ITRV-HC-DEL-118]

The Pune ITAT in Kul Foundation vs. CIT has held that CIT, while granting registration or renewal u/s 12AA / 80G(5), can only look at the nature of activities and is not concerned with potential violation of s. 11(5) or s. 13. Registration cannot be denied on ground that activities have not commenced - [2015-ITRV-ITAT-PUNE-112]

The Mumbai High Court in Rashmikant Kundalia vs. UOI holding the constitutionally valid the levy of fee u/s 234E has held that the late filing of TDS returns by the deductor causes inconvenience to everyone and s. 234E levies a fee to regularize the said late filing. The fee is not in the guise of a tax nor is it onerous - [2015-ITRV-HC-MUM-114]

The Delhi High Court in CIT vs. M/s Muthoot Financiers has held that transaction of loan between a firm and its partner does not attract s. 269SS. If other High Courts have taken a consistent view, that should be followed even if opposite view is possible - [2015-ITRV-HC-DEL-109]

The Mumbai High Court in CIT vs. Fine Jewellery (India) Ltd has held that fact that assessment order is silent on a point does not mean that there is no application of mind by AO u/s 263 if he has raised a query during the assessment proceedings and assessee has replied - [2015-ITRV-HC-MUM-116]

The Mumbai High Court in CIT vs. State Bank Of India has held that uniformity in treatment is the basis premise of rule of law. The Dept cannot arbitrarily pick and choose which orders of the ITAT should be challenged in the High Court. If ITAT has followed an order which is not challenged by the Dept then an affidavit must be filed explaining the distinguishing features which warrants the different view - [2015-ITRV-HC-MUM-117]