Addition made u/s 68 for non production of creditors

Amount equivlent to cheques issued deposited in accounts of creditors. Creditors were men of small means. The assessee didn't ask for summoning creditors. Hence burdern of proof not discharged

Agra ITAT in case of Sumant Gupta 16-03-2012 ITA 454/2009

Department can not take advantage of its own inaction

Orrisa High Court in case of Managing Committee CFH scheme 3-07-2012

a certificate ought to have been given to the petitioner during the financial year 2009-10 and the Department cannot take advantage of its own inaction and lapses by taking a stand that the financial year is over. Such action of the opposite parties as rightly apprehended by the petitioner would lead to unnecessary complication and unavoidable and inappropriate proceedings. Had the certificate been given in time as was done in the previous year there would not have been any necessity for making any deduction of tax by some of the principals from the payments made to the petitioner and the ultimate consequence, because of Departmentalinaction, the Assessee-petitioner has to again go through the process of seeking refund in its assessment.

The Hon’ble Supreme Court in M/s. Dabur India Ltd. and another v. State of Uttar Pradesh and others. AIR 1990 SC 1814, observed that Government, Central or State, cannot be permitted to play dirty games with the citizens of this country to coerce them in making payments which the citizens were not legally obliged to make. If any money is due to the Government, the Government should take appropriate steps, but it should not take extra legal steps or adopt the course of manoeuvring. Because of the above discontentment expressed at the Bar, it has become necessary to provide guidelines for just exercise of the power of Revenue authorities. To prevent the abuse of power and to see that it does not become a new despotism, courts are gradually evolving the principles to be observed by the authorities while exercising such power. New problems call for new solutions.

CIT A can admit additional evidence only after applying R46A

Held by ITAT Asr in case of Gurdaspur Central Coop Bank Ltd ITA 99/2011

Bullock cart Drivers are not covered by GTA service

CESTAT, NEW DELHI BENCH

Kisan Sahkari Chini Mills Ltd.

v.

Commissioner of Central Excise, Meerut-II

FINAL ORDER NOS. ST/A/240-243/2012-CUS.

STAY ORDER NOS. ST/S/294-296/2012-CUS.

APPLICATION NOS ST/S/2683-2685/2011

APPEAL NOS. ST/1525 OF 2010

ST/1275-1277/2011

FEBRUARY 8, 2012

Commission paid by exporters exempted from service tax

As per Clause G of Rule 2(1)(i) of Service tax Rules, in relation to taxable services provided or agreed to be provided by any person located in non taxable territory and received by person in taxable territory, the recipient of service shall be liable to pay service tax. 

Hence in respect of commission on exports payable to person located outside India, service tax liability shall fall upon exporter.

However vide notification 42/2012 dated 29-06-2012, specific exemption has been provided to exporters subject to certain conditons

Limited Period Service tax exemption for Railways

Vide Notification 43/2012 dated 2-07-2012, exemption has been provided from service tax up to 30-09-2012 in respect of AC coach or first class coach travelling by passenger, whether or not accompanied by baggage. Further transportation of goods by Railways has also been exempted up to 30-09-2012

Service of Slaughtering of all types of animals exempted

Vide Notification 44/2012 dated 7-8-2012, while earlier slaughtering of bovine animals only was exempted under entry 33 of mega exemption notification 25/2012 dated 20-6-12

Service Tax on Directors' Services brought under reverse charge

Vide Notification 46/2012 and 45/2012 dated 7-8-2012, on service provided by director to a company service tax has been imposed on reverse charge basis i.e. company shall be liable to pay 100 % service tax.

Service Tax on Security Services

Vide Notification 45/2012 and 46/2012 dated 07-08-2012 read with Notification 30/2012 dated 20-6-2012, security services has been brought under reverse charge mechanism u/s 68(2)i.e.if security services are provided by individual,HUF or partnership firm,AOP to a body corporate, 75% of service tax is required to be deposited by that body corporate and balance 25% is to be remitted by security service agency

Disallowance of Interest on borrowed capital advanced without interest

In the case of S.A.Builders Ltd. 288 ITR 1 (SC), the Hon’ble Apex Court have examined the issue of disallowance of interest on account of advance of interest free funds to sister concerns. The Hon’ble Apex Court have held in this decision that the issue of lending of funds to the sister concern should have been examined from the view point as to whether this was done as a measure of commercial expediency.

ITAT Asr on Disallowance of Expenses paid through Cheque

I.T.A. No.277(Asr)/2012 dated 7-08-2012 Chaman lal Jain dismissed the disallowance of expenses paid through cheque

ITAT Asr on GP Ratio

Assessee engaged in business of wholesale goods like, shampoo, soaps, Hair dye, Mehndi and other cosmetic items etc. Books rejected  GP ratio was better than last year. Addition made by AO held not sustainable

I.T.A. No.277(Asr)/2012 Chaman lal Jain

ITAT Asr on S.263

Royal Times Traders ITA 220/2012 09-08-2012
Assessee firm had offered explanation regarding capital introduced by partners before AO being amount introduced in cash from various sources. Order under s. 263 was held bad in law.
Decisions relied:

Judgements on Stock Valuation

CIT vs. Hindustan Zinc Ltd. (2007) 210 CTR (SC) 282 : (2007) 291 ITR 391 (SC)
British Paints India Ltd 188 ITR 44 SC
Hot Line Teletube & Components 175 Taxmann 286
M/s Dynavision (Supreme Court) ITA 197/2005

No TDS u/s 194H on discount to stamp vendors

Supreme Court in case of   AHMEDABAD STAMP VENDORS ASSOCN Date: 06/09/2012 “Heard learned counsel on both sides. The respondent in this civil appeal is Ahmedabad Stamp Vendors Association and the Members of the said Association are licensed Stamp Vendors.We are satisfied that 0.50% to 4% discount given to the Stamp Vendors is for purchasing the stamps in bulk quantity and the said discount is in the nature of cash discount.In the circumstances, we concur with th e impugned judgement that the impugned transaction is a sale. Consequently, Section 194H of the Income Tax Act, 1961, has no application. The civil appeal filed by the Department is dismissed with no order as to costs

Luxuries Tax on Hotel and marriage palaces increased from 4% to 8% w.e.f 5-09-2012

Public Notice issued on 5-09-2012

Processing Fee of Rs. 800 under Vat

  Rules 40-A has been added to the Punjab Vat Rules, 2005 as per which “Every taxable person shall 

pay annual processing fee of Rs. Eight Hundred only during the month of October along with the 

filing of quarterly return. This  processing fee is in lieu of operation, maintenance and up gradation of 

such facilities  and services as electronic issuance of statutory forms, e-filing of returns, e-payment 

of taxes and such other online and offline services being rendered or proposed to be rendered by the 

Excise and Taxation Department.”

So Only Vat dealers are required to required to pay processing fee. TOT dealers or casual traders 

are not required to pay processing fee.

(Public Notice dated 05-09-2012)

Querries

Banking
Partnership firm succeded bycompany. Whether cheques in name of  firm can be deposited into bank account of company.

Service Tax on vocational educational courses-Clarification

Circular dated 28-08-2012 issued by CBEC regarding VEC offered by Government institutions and Institutions established under law as under:

1. Clarification has been sought in respect of levy of service tax on certain vocational education/training/ skill development courses (VEC) offered by the Government (Central Government or State Government) or local authority themselves or by an entity independently established by the Government under the law, as a society or any other similar body.

Increase in Vat Rates by 0.5% w.e.f 03-09-2012

Following amendments made in notification dated 03-09-2012:

1. Vat Rate of Items in Schedule B which were taxable @ 4% originally and increased to 5% vide notification dated 29-01-2010 has been increased to 5.5% w.e.f 03-09-2010 (on goods other than declared goods i.e. wheat, paddy, rice (Entry 162,164)). With surcharged of 10%, the effective rate shall be 6.05%

Vat on Cell Phones in Punjab

-          Originally taxable @ 5% under entry 60 of Sch B

-          Vide Notification 7-01-2011, entry  no. 60 sub entry 6 was omitted which contained words “Cellular Telephone” 6(g)

Vat on Sugar in Punjab

-         Originally, Sr. No. 49 of Sch A declared “Sugar and Khandsari “tax free

-          Later by Notification dated 5-11-2007, following amendmends were made:

80IB is allowable for disallowance u/s 40(a)(ia) also

 M/s. Kashmir Udyog I.T.A. No.124(Asr)/2011 21-8-2012
M/s. Singla Cabales, Jammu, in ITA No.147(Asr)/2012 1-6-2012
M/s. Sun Pharmaceuticals, in ITA No.184(Asr)/2009, dated 11.06.2010
Sunandan Aggaral ITA 166/2012 dated 26-7-2012

Presumption however strong can not replace evidence

i. M/s. Monga Metals Pvt. Ltd, vs. ACTI(2000) 67 TTJ 247 (Allahabad).
ii. M/s. Elite Developers Vs. DCIT(2000) 73 ITD 379 ( Nagpur Tribunal)
iii. DCIT Vs. D.N. Kamani ( HUF) (1999) 70 ITD 77 ( Patna Tribunal)
iv. JCIT Vs. Gramophone Company of India Ltd, (2004) 265 ITR (A.T) 46  ( Kolkata Tribunal)
v. CIT vs. Ram Narain 224 ITR 180 (P & H)

Ancestral Property in revenue records can be assessed in Hands of HUF only

I.T.A. No.48(Asr)/2011 Amarbir Singh dtd 23-08-2012
In this assessee deposited cash in bank account out of sale proceeds of ancestral property. Held to assessable in hands of HUF by CIT(A) and ITAT

Wrong Claim by assessee does not tantamount to inaccurate particulars

Supreme Court in Reliance Petro Products 322 ITR 158

Order regarding stay of demand must discuss prima facie case

KLM Royal Dutch Airlines and Anr. v.Deputy Director of Income Tax, (2011) 332 ITR 224 (Delhi) in
support of the contention that the order should be a composite one and specifically deal with various elements such as existence of prima facie case etc.

Delhi High Court Reiterated it in case of Virgin Mobile India Private Limited dtd 17-8-2012 W.P. (C) 4983/2012

Stay of Demand under s.220(6)-CBDT Circulars

Board’s letter F.No.1/6/69-ITCC (Instruction No.96)
Minutes of the 8th Meeting of the Informal Consultative Committee held on 13th May, 1969 –
Implementation of assurance given regarding stay of recovery in certain cases – Sec. 220(6) of the IT Act,

Registration u/s 12AA to be granted even if no activity carried out

Delhi High Court ITA 1687/2010  16-08-2012

FOUNDATION OF OPHTHALMIC & OPTOMETRY RESEARCH EDUCATION CENTRE
Case Represented by CA Ved Jain
Cases Relied by Assessee Counsel

Sanjeevamma Hanumanthe Gowda Charitable Trust vs. Director of IT (Exemption) (2006) 203 CTR (Kar)
533 : (2006) 285 ITR 327 (Kar)

IT Training company educating storage networking held charitable

The main objects of the   assessee, a non-profit company under Section 25 of the Companies Act are   as follows :
     1. To promote, educate and train professionals as well as IT and end
  users in Public and Private sectors working in the field of Information
  Technology, Advancement in the adoption of storage networking as complete
  and trusted solutions, to lead the storage industry in developing and
  promoting standards, technologies and educational services to empower
  organization in the management of information, not with motive of profit.

Tribunal is bound by its earlier decision

The Tribunal is bound by its earlier decision where neither Tribunal has any reason nor the applicant in the ground of revision has brought any new point which requires reversal of eralier decision

Ram Murti Gupta and Sons 1992 P&H Taxes 366 (Pb Tri)

Supreme Court Judgement is precedent for question of lawlaw

Supreme Court judgement is precedent for quaestion of law only and for an order requiring reinstatement of employee without assigning reasons
Surinder Kumar and Ors 194 ITR 434 SC

Supreme Court Judgement even if doubted by another bench to be applied unless declared bad by another bench

Johnson Lifts Ltd 10 STM 864 HC-AP

Judges found to follow decision of co-ordinate bench

If Judges do not agree with decision of coordinate bench the matter must be referred to larger bench otherwise decision of coordinate bench must be followed

1.Sunder Das Kanahaya Lal Bhatija 77 STC 347(SC)
2. Devki Ammal 212 ITR 395 

Refund Harrassment-Anand Prakash Case Delhi High Court 04-05-2012

IN THE HIGH COURT OF DELHI AT NEW DELHI
W.P.(C) 2659/2012
COURT ON ITS OWN MOTION ..... Petitioner

Casual Transaction with relatives and bonafide belief -not penalty for 269SS,269T

•Casual transaction with relatives and bonafide belief and genuineness constitutes reasonable cause—no penalty. Sunil Kumar Goel  315 ITR 163 P&H

 

269SS,269T not applicable to book entry

Acceptance or repayment through journal entry do not attract section 269SS or 269T: Acceptance or repayment through Journal Entry would not come within the ambit of the words ‘loans or deposits’-section 269SS applies only where money passes from one person to another by way of ‘loan or deposit

•’[CIT v. Noida Toll Bridge Co. Ltd. 262 ITR 260 (Del.)]

Amount paid by firm to partners or vice versa- 269SS,269T not attracted

Amount paid by firm to partners or vice versa- is payment to self and does not partake the character of loan or deposits in general law. Provisions of section 269SS are not applicable to such facts( CIT v. Lokhpat Film Exchange (Cinema) [2008] 304 ITR 172 (Raj.)

S.54EC is applicable to depreciable assets also

•M/s. Jai Hind Rubber Products Vs ACIT, ITA No.2296/Mum/2011, Date of pronouncement: 03.08.2012, ITAT- Mumbai

Remuneration to Partners as per Income Tax Act

•The Asian Marketing 2nd May 2012 Rajasthan HC

•The Tribunal finding that “The quantification of the remuneration was apparent from clause 8 of the partnership deed which provided that the remuneration would be payable as per norms fixed by the Income-tax Act. The requirement in law is that remuneration should have been authorized and the amount of remuneration shall not exceed the amount specified in s. 40(b)(v) which uses the word ‘authorised‘ and not the word ‘quantify‘” is a finding of fact which cannot be interfered with by this Court.

•The same view has been taken in Durga Dass Devki Nandan 241 CTR 180 (HP) while a contrary view has been taken in Sood Brij & Associates & Madeena Constructions 134 ITD 1 (Che)(TM) 

206AA not applicable to persons non assesses

•

•

A. Kowsalaya Bai v UOI 5th June 2012

Writ Petitions 12780 – 12782 / 2010 (T) Karnatka High Court

 S. 206AA runs counter to s. 139A and is discriminatory. Though the Legislature’s intention is to bring maximum persons under the income-tax net, it may not insist that even persons whose income is below the taxable limit have to compulsorily obtain a PAN. If any tax avoidance is detected, that can be taken care of by penal provisions.

• Accordingly, s.206AA is read down as being inapplicable to persons whose income is less than the taxable limit. Banks & financial institutions should not insist upon PAN from such small investors. It continues to apply to persons whose income is above the taxable limit

The provisions of section 40(a)(ia) are applicable only to the expenses payable as on 31st March of every year and cannot be invoked to disallow the amounts which have already been paid during the previous year, without deducting tax at source

•Merlyn Shipping 140 TTJ 1 (SB) Vizag.
Followed by ITAT Asr in Jamkash Vehicleades Pvt. Ltd
 I.T.A. No. 414(Asr)/2010 dated 6-08-2012 
Bright Enterprises Private Limited
Pranik Shipping & Services Ltd. v. Asstt. CIT [2012] 135 ITD 233/19 taxmann.com 107 (Mum.)
Underwater Services Co. [2012] 25 taxmann.com 216 (Mumbai - Trib.)

Ransom to secure release of Director-allowable.

Khemchand Motilal 243 CTR 270 MP 

Payment for settlement of dispute for infringement of patent- motivated by pure commercial purpose – allowable

Desiccant Rotors 245 CTR 572 (Del)

Compounding Fee of Construction is not allowable as business Expense

•Mamta Enterprises 266 ITR 356 Kar

Additional Compensation and new house received for displacement from old house is not taxable

Kushal K. Bangia v. ITO(2012) 50 SOT 1 (Mum.)(Trib.)

The assessee was the member of a housing society. The housing society and it’s members entered into an agreement with a developer pursuant to which the developer demolished the building

owned by the housing society and reconstructed a new multistoried building by using the FSI

arising out of the property and the outside TDR available under Development Control

Regulations. The assessee, as a member of the housing society, received a larger flat in the new

building, displacement compensation of Rs. 6 lakhs (at Rs.34,000/- p.m. for the period of

construction of the new building) and additional compensation of Rs.11.75 lakhs. The Assessing

Officer &CIT(A) held that the said “additional compensation” was assessable as income in the

assessee’s hands. On appeal by the assessee, held allowing the appeal:

Prize Money on Coupons of Small Saving Schemes is not income

CIT v. Tilak Raj Kalra (2012) 206 Taxman 126 / 249 CTR 205/69 DTR 363(P&H.)(High Court)


The Assessee subscribed to PPF which formed part of Small Savings Scheme encouraged by
Government of Punjab. The Govt issued lucky coupon on every investment of Rs.5,000/-. The
Assessee also received lucky coupon which won the prize of 1kg gold. The Assessing officer held
that the price money won by assessee fell within the meaning of section 2(24)(ix) and made
addition as income. On Appeal, the CIT(A) as well as the Tribunal deleted the addition. On
appeal, the High Court, confirmed the view of the Tribunal and held that incentive price received
by assessee on account of coupon given on the strength of small saving certificate would not fall
within the definition of lottery and would not be included as income as per section 2(24)(ix).

Coaching Classes by university or other distance education held not charitable u/s 2(15)

Dy. DIT v. Kuttukaran Foundation (2012) 51 SOT 175 ( Cochin) (Trib.)

A mere coaching class for preparing the students to attend the examination conducted by open university or by the other university or distance education cannot be considered to be regular and systematic schooling within the meaning of Section 2(15). For the purpose of section 2(15), the assessee has to necessarily conduct a regular school/ college in which the students are imparted education, knowledge, training which result in of degree or diploma by government or government agency or university. Activity of coaching classes cannot be considered as Charitable activity within the meaning of section 2(15), therefore the assessee is not entitled to exemption under section 11.

Publication of books on audit etc by ICAI is charitable activity

DIT v. The Chartered Accountants Study Circle ( 2012) 70 DTR 219( Mad.) (High Court)

On appeal by revenue the Court up held the order of Tribunal and held that activities of the assessee trust in publishing and selling books of professional interest which are meant to be used as reference material by general public as well as the professional in respect of bank audit, tax audit etc. cannot be construed as commercial activities and therefore, assessee trust formed with the object inter alia to conduct periodical meetings on professional subjects is entitled to approval under section 80G (5).

INADMISSIBILITY OF EXPENSES INCURRED IN PROVIDING FREEBEES TO MEDICAL PRACTITIONER BY PHARMACEUTICAL AND ALLIED HEALTH SECTOR INDUSTRY

CIRCULAR NO. 5/2012 [F. NO. 225/142/2012-ITA.II], DATED 1-8-2012

It has been brought to the notice of the Board that some pharmaceutical and allied health sector Industries are providing freebees (freebies) to medical practitioners and their professional associations in violation of the regulations issued by Medical Council of India (the 'Council') which is a regulatory body constituted under the Medical Council Act, 1956.