Registration of educational Institution can not be cancelled as surplus was utilized for educational purposes; it is no where provided that trust can not be constituited by family; it is also not provided that trust can not have number of units Rajasthan Vikas Sanstha 78 DTR 411 (Jodhpur Trib)

If some deficiencies are found in books of accounts some guess work has to be applied by A.O National Plastic Incus (2009) ITR 309 191

Fall in sale without showing any material to prove sale outside books, does not warrant rejection of books. Ravi Agricultural Industries121 TTJ 903 (Agra) (TM)

For genuine difficulties for changing method of accounting from merchantile to cash for interest income-change is genuine Coromandal Investment (P) Ltd. (Guj) 225CTR 313

Promoter holding shares with sole motive of retaining control cannot be recognized as stock in trade. Pal enterprises ITA 1994/Mum/2005

Assessee has option to follow different method of accounting for different sources of income under business income Mehul J Somaiya ITA 7118/MUM/2007

Accrued interest receivable by assessee only after end of previous year cannot be assessed to tax in current year even though assessee following mercantile system. FAL Industries 17 DTR 308 (MAD) (2009)

Once an order of refund of sales tax is passed, the same has to be treated as income notwithstanding pendency of appeal against refund order. Beirsdorf (India) LTD 28 DTR 188(Bom)

Additions made for understatement of sale to co-ops which was merely 5% of total sale by comparing sale price to sale to other individuals without bringing any material on record was unjustified. Rabindranath (kol) 180 taxmann 104

Additional evidence which goes to the root of the matter has to be considered. ITAT confirming order of CIT A without considering Addl. Evidence is Hyper Technical approach. Daljeet kaur (2009) 212 taxation 46(MP) Smt Prabhavati Shah (1998) 231 itr 1(Bom) B.L Choudhary [1976] 105 ITR 371

A foreign company was in receipt of income from assessee on account of sale of shares. Section 163(1)(c) uses the words “from or through” and not through”. Hence assessee could be to treated as agent of non resident. Utkal Investment Ltd 120 TTJ 67(Mum)

For effective and co-ordinate investigation, income tax cases can be transferred Shree Ram Vessel Scrap PVT LTD (Guj HC)23.01.13 ITA 16883/2012

Assessee a shareholder along with other shareholders sold all the shares of company to “R” could not be treated indirect transfer of flats owned by company to “R” Hence provisione of Section 50C could not be applied to transaction of sale of shares. Irfan Abdul Kader Fazlani (Mum Trib) 29 TMC424

Scope and power of CIT u/s 12A/12AA favoring Assesse 1)Saint Kabir Education Trust (ITAT Asr)41 DTR 267 2)Dream Land Edu Trust (ITAT Asr)109 TTJ 850 3)DN Memorial Trust ITA 618/Asr/2011 4) Surya Educational Trust (P&H HC)15 TMC 123 5)Spring Dale Edu Society(P&H HC)16 TMC 285 6) Tishir Shiksha Prasar Samiti 217 TMC 525 7)Gagan Education society 145 TTJ 230 8)Divine Health Services ITA 417/2010

Providing Machinery without manpower cannot be termed as carrying out work by P & M owner. 194C held not applicable 30 TMC 235 (Hyd Trib ) Note however covered by 194 I I w;e;f 13-07-2006

Section 14 A is not applicable to share application money Rainy investment (p) LTD 30 TMC 169 16-01-2013

For registration of newly registration trust u/s 12 AA ,objects for which it was formed should be examined and not its activities which is yet to be commenced AVS Educational trust (Chennai Trib )18-06-2013

Guidelines of land value fixed by sub register is only a guideline value to ascertain market value of land for collection of stamp duty and can not be sole basis to fix market value on 1.1.81 R.Vidhyadharan (Cochin Trib.) 30 TMC 130 21.12.12

Deposit of money in FD cannot be constructed as deposit in capital gain bonds for claiming exemption u/s 54 EC R.Vidhyadharan 30 TMC 130 (Cochin) 21.12.12

Brand creation expenditure is deferred revenue exp. Fine Jewellery 30 TMC 323 (Mum Trib)

Assessee can not be asked to prove source of source or origin of origin Zafa Ahmed (All HC) 10.01.13 ITA 71/2002 Relying upon Anita Rice Mills 282 ITR 236

Foreign exchange Fluctuations gain on share capital raised in foreign country and repatriated to India on need basis for working capital not a revenue receipt. Due consideration be given to source of funds and not to the ultimate use of funds Jagjit industries (Del HC) 337 ITR 21

S.54 F exemption is available on house constructed on agriculture land -Om Parkash Goyal ITA 647 /JP /2011/2.02.12

For 2(42A) calculation of 12m /36m ,” more then 12m/36m immediately preceeding date of transfer , date of transfer to be excluded. Month = calendar Month as defined in Gen Clauses Act 1897. If asset acquired on 2nd Jan period of 12m to expire on 1st Jan . Hence if asset sold on 2nd jan it is LTCA Bharti Ramola Gupta(Del HC)72 DTR 387

Expenditure on back up support and maintenance of existing software is revenue in nature. Asahi India Safety Glass Ltd (2011) 245CTR 529(Del)

Interest free loan to directors and sister concerns commercial expediency of transactions to be examined Southern Bottler ITA 225/2004 ( P & H ) 7.5.13 S. A BUILDERS (SC) 288 ITR 1 applied

“………… The Supreme Court in Commr. of Agrl. IT vs. The Plantation Corporation of Kerala Ltd. (2000) 164 CTR (SC) 502 : AIR 2000 SC 3714 was concerned with whether the "Explanation" at the bottom of s. 5 of the Agrl. IT Act applied to the entire section or to only one of the clauses thereof. It was held that an Explanation below a particular clause/sub-section is intended to be an Explanation to that specific or particular clause/sub-section but when at the bottom of the section, is generally meant to explain the entire section……………”Quoted in Bagri Foundation 344 ITR 0193 (Delhi High Court)

Barren land is not agriculture land and liable for capital gain tax Suresh kumar D . Shah (2012) 49 SOT 341 (HYD TRIB)

Extraction of oil from fruit / kernel is industrial activity and assessable as under rule 7 Oil Palm India (2012) 206 Taxman (KER HC)

Company supplying seeds to formers under agreement Supervising cultivation and after harvesting purchasing at fixed rate . Income from supply of seeds held not agriculture income Namdhari seeds (Karnataka HC) 341 ITR 342

Conversion of new seed into pea seeds constitutes agriculture income Rana gurjit singh (2012) 340 ITR 108 (p&h)

Compensation received on demolition of borrowell is agricultural income Ghyansham Mudgal 143 TTJ (UO) 60 (JP)

No penalty can be levied where income is estimated Whitline chemicals (guj) ITA 496/2012 at 15-1-13 Vatika construction P ltd.ITA 1246/2010 at 11.10.12 P Rojes (Maid) 5.2.13 ITA 341/2010

Third proviso to Section 254 (2A) was inserted by Finance Act 2008 to Overcome ruling of Bombay High Court in Narang coverseas 295 ITR 22 which said that ITAT could grant stay beyond 365 days where delay was not attributable to assessee.Seeton 254 (2A) specifically prohibited extension beyond 365 days even if delay not attributable to assessee. Delhi HC in Maruti Suzuki & Bombay HC in jethmal Fauzi Mal Soni also confirmed this third proviso to S.254 (2A) was not challenged. Now Delhi HC in Pepsi Foods Pvt.ltd. has struck down S. 254 (2A) third proviso being voilative of Act 14 Pepsi Foods P ltd. (Del HC ) 19.5.2015

Co.rendering highend KPO service is not comparable with co. rendering low end BPO services TNS Index (P) Ltd. (Hyd Trib ) 17.4.15 57TMC 165

Due to financial constraints assessee selling its shares to others JV partner at a price even lower than the price at which rights were referred resulting in loss.Held not a colorable device. SIEL Ltd. (Del HC ) 24.07.14 57 TMC 29

Misapproprition of money by power of attorney holder who had authority to operate bank account of assessee in money lending business is incidental to carrying on of business.Hence deductible in computing profits of business Badridas Daga (SC) 25.04.1958

Loss on transfer of compensation bonds issued to assessee in consideration of assignment of debt receivable (in US dollars) from Iraq Govt.is not covered by head capital gain and hence no indexation can be made. However loss can be claimed as bad debt because payment received in form of bonds for services rendered under contract would not alter the character of income Ircon International Ltd. (Del HC ) 15.5.15 57TMC 336

SC in Goetze India had held that although AO can not accept the claim of the assessee except through return or revised return but in the same decision, the hon'ble apex court made it clear that this did not impinge on the power of the Tribunal. The above position of law revisited by ITAT Delhi in Micron Instruments[2015] 63 taxmann.com 180 (Del Trib) and claim of CLU charges paid along with interest in instalment by factory already working for last 30 years allowed as revenue expenditure although claim made only by simple letter during assessment

Held By ITAT Chandigarh in Smart Value Product & Services Ltd ITA 685/2014 dtd 28-10-2015 that addition made by AO for negative stock by preparing monthly trading account is not sustainable. Similar decision has been given by ITAT Chandigarh in M/s Saqi Brothers V ITO ITA No. 279/Chd/1990 which has been confirmed by Hon’ble Punjab & Haryana High Court vide judgment ITR No. 70 of 1998 dated 31.10.2006

The assessee is an AOP but department wrongly issued PAN as Firm. Held by Gujrat High Court in Tulsi Mall AOP Vs CIT 2015 (12) TMI 1077 that Merely because PAN was issued by the Department erroneously, there cannot be any insistence that return should be filed in the same capacity

Punjab and Haryana High Court on deduction to LIC Employees u/s 10(14)

I.T.A. NO. 645 OF 2005 [1]

IN THE HIGH COURT OF PUNJAB AND HARYANA AT CHANDIGARH

I.T.A. NO. 645 OF 2005

DATE OF DECISION: 21.04.2006

THE COMMISSIONER OF INCOME TAX, PATIALA

....APPELLANT

VERSUS

BRANCH MANAGER, LIC OF INDIA, SANGRUR (PUNJAB) ....RESPONDENT

CORAM: HON'BLE MR.JUSTICE ADARSH KUMAR GOEL
HON'BLE MR. JUSTICE RAJESH BINDAL

PRESENT: DR. N.L. SHARDA, ADVOCATE

FOR THE APPELLANT-REVENUE.

Decades long Controversy over defining “Month “ whether Calender Month or Lunar Month

The word “month” has been mentioned in the Income tax law in number of provisions. However the term has not been defined in the Income tax law. Interpretation of the term poses number of issues especially in the interest calculation. However to understand the controversy around it, we shall have to start the journey from genesis as under:

TOTAL RECALL VS PARTIAL RECALL OF ITAT ORDER – ITAT AMRITSAR COMPREHENSIVE DECISION

Often when department or the assessee is not satisfied with the order of the ITAT, then apart from resorting to appeal before High Court u/s 260A makes use of section 254(2). U/s 254(2), ITAT is vested with power to rectify mistake apparent from record with in four years from the date of order. As per section 254(2) read with Rule 34A of ITAT rules, application for rectification is required to be filed in triplicate and to be accompanied by fee of fifty rupees. The assessee might even file second application u/s 254(2) after earlier application fails. The ITAT

For Investment u/s 54 F funds other than from transfer of capital asset can also be used. Section 54F does not put any restriction in this regard-Held by Punjab and Haryana High Court in Kapil Kumar Aggarwal ITA 12/2015 dtd. 04-11-2015. P&H High Court relied upon K.C. Gopalan 107 taxman 591(Ker); Anandraj 56 taxmann.com 176 (karnatka); Rajesh Kumar jalan 286 ITR 274 (Gau) and V.R. Desai 197 taxman 52 (Ker). In Anand Raj the assessee used borrowed funds, still exemption was held allowable.[Page 13 Para 18]

Employer vs Employees Contribution: CBDT takes a step aback but does not leave the ground: 2nd Proviso of section 43B which provided for deduction of employer contribution to labor welfare funds only if payment is made with in time prescribed under relevant labor law was rescinded by Finance Act 2003 w.e.f. AY 2004-05 and was merged with first proviso which provided for deduction even of payment is made till due date of filing of return. Since first proviso operated was inserted w.e.f. AY 1988-89, SC in Alom Extrusions held that amendment is curative in nature. If it is applied prospectively, the person who did not pay employer contribution for so many years till AY 2004-05 and pays timely contribution for AY 2004-05 only shall stand at better footing as who paid employer contribution but after due date under relevant labor law. Hence the amendment should be applied retrospectively. Delhi High Court in AIMIL Limited, Uttrakhand High Court in Kichha Sugar Compnay, P&H High Court in Rai Agro Industries, Hemila Mills, Mark Auto Industries, held that for employees contribution also pay ment till due date of filing return shall qualify for deduction. This opinion was based on the view that relevant labor laws permit payment in grace period or after due date by charging some interest. However Gujrat High Court in Gujrat State Road Transport Corp and ITAT KOL(SB) in LKP Securities held that S.43B is not applicable to employee contribution and it is governed by express provisions of 36(1)(va). Now, CBDT in its circular has accepted the Alom Extrusion and has decided that issue of retrospective application of employer contribution shall no longer be contested and all grounds based there on shall be withdrawn/not pressed. However CBDT has in the same breath held that issue of employee contribution be armoured with whole hog.

Finance Act 2015 amended S. 195(6) w.e.f. 01-06-2015 to provide that person responsible for making payment to non resident shall funsih information as per prescribed rules whether or not tax is chargeable under the Act . However Rule 37BB was not amended at the same time and required that furnishing of information in 28 categories was not required because most of these comprised cases where income can not be said to be chargeable to tax in India like investment in equity abroad , personal; gifs, donations, travel for education including fee, hostel expenses etc. Also penal provisions providing that penalty for Rs. One lakh shall be levied for non furnishing or inaccurate information. Since then persons making remittance for import of goods were furnishing declarations even though no income is chargeable to tax in India. However now the CBDT has amended rule 37BB vide notification dated 16-12-2015 w.e.f. 01-04-2016. Important features of Rule 37BB are 1) No Information required to be filed where no income is chargeable to tax and remittance falls under Liberlased Remittance Scheme. 2) No information required to be filed where information apart from old 28 categories relates to advance/settlement payment against imports and three other categories. 3) Where however no tax is chargeable in India in respect of remittances and also it does not relate to Liberalised remittance system, Part D of 15CA without CA certificate in 15CB is sufficient 4) Limit of filing F. 15CA in summary manner (Part A) without obtaining CA certificate which was earlier Rs. 50000 for single payment and Rs. 250000 for aggregate of payments during financial year has been raised to Rs. 5 lacs albeit for remittances against sums chargeable to tax in India. 5) Now only where aggregate of remittances shall exceed Rs. 5 lacs and also remittance is chargeable to tax in India, the requirement of F. 15CB i..e CA certificate shall arise along with F. 15CA (PartC) shall arise. 6) In cases of lower/ no deduction AO certificate and Part B of F.15CA to be furnished. Again CA Certificate not required. 7) Further as per amended Rule 37BB(6) CA Certificate in F. 15CB shall also now be furnished and verified electronically. Earlier CA Certificate in 15CB was furnished manually. 8) Also in case of digitally signed 15CAs signed hard copies shall not be required to be provided by banks to income tax authorities. 9) Banks shall file digitally signed quarterly statement with in fifteen days from the end of the quarter to department in F. 15CC.

Issue of Interest on Refund of Self Assessment tax : Bombay High Court in Stock Holding Corporation [17-11-2014] and Punjab and Haryana High Court in Punjab Chemical & Crop Protection Ltd [25-08-2014] have pronounced that interest on refund of self assessment tax is entitled u/s 244A(1)(b).However Delhi High Court in Engineers India Ltd [2015] 55 taxmann.com 1 (Delhi) FEBRUARY 26, 2015 had held that no interest u/s 244A can be paid on refund of self assessment tax u/s 244A(1)(b)because Expl below 244A(1)(b) defines expression "date of payment of tax or penalty" means the date on and from which the amount of taxes or penalty specified in the notice of demand issued under section 156 is paid in excess of such demand.” while self assessment tax is not paid in pursuance of notice u/s 156. Now Madras High Court in Rajaratna Mills Ltd [2015] 64 taxmann.com 89 (Madras) AUGUST 18, 2015 resolving the issue of interpretation of Explanation to S. 244A(1) has held that Assessee is entitled to interest on refund of self assessment tax because of substantive part of sub-section (1) of section 244A. The explanation to section 244A does not really talk about the entitlement or disentitlement. It only defines expression "date of payment of tax or penalty" .The above explanation does not give room for an interpretation that if a person has paid money otherwise than by way of demand under section 156, he is not entitled to interest on refund under section 244A. The explanation cannot, really, curtail the method of computation prescribed in clause (b) or the substantive part of section 244A

Suggestion on S. 12(2) first proviso

1. As per proviso to section 12A(2) inserted by Finance Act 2014 w.e.f. 01-10-2014

where registration has been granted to the trust or institution under section 12AA, then, the provisions of sections 11 and 12 shall apply in respect of any income derived from property held under trust of any assessment year preceding the aforesaid assessment year, for which assessment proceedings are pending before the Assessing Officer as on the date of such registration and the objects and activities of such trust or institution remain the same for such preceding assessment year​

​2. ITAT Kolkatta in ITA 1680 to 1685/2012 Sree Sree Ramkrishna Samity , pronounced on 09-10-2015 ​held that the above proviso is retrospective in operation.

3.Further that the  Appeal proceedings are continuation of assessment proceedings and powers of appellate authority are coterminuous with assessing officer has been held by supreme court in CIT v Kanpur Coal Syndicate (1964) 53 ITR 225 (SC); CIT v Jute Corporation, 187 ITR 688; National Thermal Power Co. Ltd. v CIT (1998) 229 ITR 383 (SC); Ahmedabad Electrecity Co. Ltd. v CIT 199 ITR 351 (Bom) (FB)

4. However inspite of above position of law, if on the date of registration of trust the case of the assessee trust is pending before appellate authorities, the assessee may be denied the benefit of section 11 and 12 inspite of the fact that Para 8.2 of memorandum explaining the provisions of Finance Act says that

“8.2 Non-application of registration for the period prior to the year of registration caused genuine hardship to charitable organisations. Due to absence of registration, tax liability is fastened even though they may otherwise be eligible for exemption and fulfil other substantive conditions. However, the power of condonation of delay in seeking registration was not available”

5.Hence the position of law should be clarified to provide benefit to trusts even if proceedings are pending before appellate bodies.

Voice recorded CDs are documents under evidence Act Held by SC in Shamsher Singh Verma CRIMINAL APPEAL NO. 1525 OF 2015 (Arising out of S.L.P. (Crl.) No. 9151 of 2015)24-11-2015

“………..11. Word “document” is defined in Section 3 of the Indian Evidence Act, 1872, as under: - “ ‘Document’ means any matter expressed or described upon any substance by means of letters, figures or marks, or by more than one of those means, intended to be used, or which may be used, for the purpose of recording that matter