Vat on Builders

The Bombay High Court today dismissed a bunch of petitions filed by builders against two circulars of the Maharashtra Sales Tax department which levied VAT on all property transactions between 2006 and 2010.

No reasessment after four years from the expiry from relevant assessment year if income escaping assessment is less than 1 lakh

ITAT Asr 31-10-2012  in I.T.A. Nos.522 & 523 (Asr)/2011 Harniranjan Kaur
Cases relied upon:

1) CIT vs. Atlas Cycle 180 ITR 319 (P&H)
2) Sagar Enterprises vs. CIT 257 ITR 335 (P&H)
3) Prashant S. Joshi vs. ITO 324 ITR 154 (Bombay)
4) P.V. Doshi vs. CIT 113 ITR 22 ( Gujarat)
5) Smt. Meera Ananta Naik  Ors vs. DCIT 221 CTR 149 (Bom.)

Appeal is liable to be dismissed for non presence of counsel

Held by ITAT Asr in ITA 246 & 247/2010 on 30-10-2012:
The law assists those who are vigilant and not those who sleep over their rights. This principle is
embodied in the well known dictum “VIGILANTIBUS, NON DORMENTIBUS, JURA SUBVENIUNT’. Considering the facts and keeping in mind the provisions of Rule 19(2) of the Appellate Tribunal
Rules and by relying on the decision of the ITAT Delhi Bench, in the case of C.I.T. Vs. Multiplan India Ltd; 38-ITD-320 and the judgment of the Hon’ble Madhya Pradesh High Court in the case of Estate of Late Tukoji Rao Holkar Vs. CWT (1997) 223-ITR-480,  the appeals are dismissed for want of prosecution

SLP filed against decision of High Court

SLP filed against decision of High Court even if admitted by SC is of no avail unless order of High Court is stayed by SC
ITA (Asr)/65/2010 dated Vinod Jain c/o VK Metals and ITA 68/2010 Balaji Rosins (SB) 26-10-2012

ITAT Asr on 2(22)(e)

ITA 148/2011 15-10-2012 Satish Kumar Aggarwal
During the year under consideration the company M/s. Satish Agg Private Limited enagged in lending of money lent money to partnership firm M/s Satish Agg & Co in which partners held more that 20% share. Held by ITAT Asr no addition can be made in hands of firm for money advanced by company to firm.
Cases relied upon:
Bhaumic Colour (Spl Bench of ITAT)
Hiltop (Rajasthan HC) 313 ITR 116
ITA No.331(Asr)/2009 dated 26.08.2009

ITAT Asr on road contractor

ITAT Asr allowed the appeal of assessee who is road contractor holding that nature of business of road contractor is such that earth has to be used hence expenses should be allowed although assessee could not produce the proper evidence supporting the expenses in respect of payments made to truck owners. Moreover the assessee had shown better net profits as compared to last year.
ITA 148/2011 15-10-2012 Satish Kumar Aggarwal

No addition can be made for trade creditors u/s 68

Addition u/s 68 with regard to trade creditors i.e., the creditors from whom purchases have been made in regular course of business.
It has been held in the following cases that no addition can be made in the case of persons from whom purchases have been made in the regular course of business:-
• CIT vs. Pancham Dass Jain 205 CTR 444 (All)
• Annamaria Travels & Tours (P) Ltd. 95 TTJ 71 (Del)
• CIT vs. M.K. Brothers 163 ITR 249 (Guj.)

Addition u/s 68 for unexplained creditors not sustainable where trading results are accepted

M/S. Divine International Delhi ITAT ITA 1493/2011 dated 30-9-2011.

Underwriting commission and interest on bonds earned by a co-op bank is entitled for deduction under section 80P

[2012] 25 taxmann.com 237 (SC)

SUPREME COURT OF INDIA

Commissioner of Income-tax, Jalandhar

v.

Nawanshahar Central Co-op. Bank Ltd.*

S.H. KAPADIA, CJ.

MADAN B. LOKUR, J.

CIVIL APPEAL NOS. 5975 & 5976 OF 2004

AUGUST 30, 2012

Section 80P of the Income-tax Act, 1961 - Deduction - Income of co-operative society - Whether a Co-operative bank is entitled for deduction under Section 80P(2)(a)(i) in respect of income earned from underwriting commission and interest on PSEB Bonds and IDBI Bonds - Held, yes [In favour of assessee]

CASE REVIEW

---

CIT v. Nawanshahar Central Co-op Bank Ltd. [2007] 160 Taxman 48 (SC) (para 2) followed.

ORDER

---

Heard learned counsel on both sides.

The civil appeals are dismissed.

No order as to costs.

ORDER

---

Heard learned counsel on both sides. In these appeals, following questions of law arise for determination:

"[a]  Whether the High Court was justified in holding that the Respondent-Assessee was entitled for deduction under Section 80P(2)(a)(i) of the Income Tax Act, 1961 in respect of income from underwriting commission and interest on PSEB Bonds and IDBI Bonds?

[b]  Whether the High Court was justified in affirming the decision of the Tribunal that the income earned by the Assessee which was derived from underwriting the issue of bonds and investments in PSEB Bonds was in the nature of income from banking business and hence qualified for deduction under section 80P(2)(a)(i) of the Income Tax Act, 1961?"

In view of the decision of this Court in the case of Commissioner of Income Tax, Jalandhar v. Nawanshahar Central Cooperative Bank Limited [Civil Appeal No.2499 of 2005/[2007] 160 Taxman 48 (SC) @ S.L.P. (C) No.3826 of 2004], these civil appeals filed by the Department are dismissed.

No order as to costs.

Payments made by assessee manufacturer of milk products to milk producers through an agent in cash for purchase of milk are covered by exception clauses (f) and (l) of rule 6DD

[2012] 25 taxmann.com 209 (Hyderabad - Trib.) Heritage Foods (India) Ltd.*

CIT can not reject stay of demand without reasons

Order rejecting stay on demand should be reasoned one - Application for stay of demand of tax cannot be rejected without considering assessee's submissions and without giving reasons for rejection
Balaji Universal Tradelink (P.) Ltd. [2012] 25 taxmann.com 256 (Bombay)

No TDS on Reimbursement of Charges

Reimbursement of validation charges in respect of testing of medicine manufactured under contract 
[2012] 26 taxmann.com 7 (Bangalore - Trib.) Allergan India (P.) Ltd.

WDV of an asset which had been written off from books on ground of its being obsolete, has to be reduced from WDV of block of assets

Allergan India (P.) Ltd. [2012] 26 taxmann.com 7 (Bangalore - Trib.)

Ignorance of law by Non Resident is valid excuse for penalty

Where foreign company having deputed assessee-non-resident in India, paid salary to him after deducting taxes payable, failure of assessee to show said income in his return was to be regarded as bona fide mistake for which penalty under sec. 271(1)(c) could not be levied
Emilio Ruiz Berdejo [2012] 26 taxmann.com 24 (Pune - Trib.)

Where land sold by assessee to builder had been acquired by Government and assessee had received no compensation, no capital gains arose to assessee even though he received consideration from builder

Tej Singh [2012] 25 taxmann.com 573 (Agra - Trib.)
Anil Kumar Forma (HUF) v. CIT [2007] 289 ITR 245/163 Taxman 182 (Mad.) and CIT v. Karambir Singh [2008] 303 ITR 231/169 Taxman 85 (Punj. & Har.) (para 6.3) followed.

Institute providing academic services and applying income towards same is entitled to registration - Where assessee - Institute was registering students to write exams conducted by ICS, London, and providing necessary academic support to them and applying income towards purpose of Institute, registration u/s 12AA could not be denied

[2012] 25 taxmann.com 289 (Chennai - Trib.) Institute of Chartered Shipbrokers

No addition for investment in property can be made where rental income is disproportionately high

[2012] 25 taxmann.com 550 (Delhi) Dinesh Jain HUF
Valuation provisions of wealth tax also can not be used

Details disclosed in Income-tax returns are exempt from disclosure under RTI Act unless disclosure justified in larger public interest

Girish Ramchandra Deshpande [2012] 25 taxmann.com 525 (SC)

Where there was difference of opinion between judicial authorities on allowance of credit u/s 88E and view taken by Assessing Officer in course of assessment was in accordance with judicial precedents, revision was not justified

[2012] 26 taxmann.com 55 (Kolkata - Trib.) Todi Securities (P.) Ltd.

No denial of section 54F exemption on registration of residential property in name of minor daughter - Exemption under section 54F will be admissible even where assessee has registered residential house property in name of his minor daughter

N. Ram Kumar [2012] 25 taxmann.com 337 (Hyderabad - Trib.)
Mir Gulam Ali Khan v. CIT [1987] 165 ITR 228/[1986] 28 Taxman 572, CIT v. Ravindra Kumar Arora [2012] 342 ITR 38/[2011] 203 Taxman 289/15 taxmann.com 307 (Delhi) and Third ITO v. S. Vardarajan [1989] 33 TTJ 466 (Mad.) (para 7) followed.

Jainarayan v. ITO [2008] 306 ITR 335 (Punj. & Har.); Parkash v. ITO [2009] 312 ITR 40/[2008] 173 Taxman 311 (Mum.) and ITO v.Prakash Timeji Dhanjede [2002] 258 ITR (AT) 114 (Nag.) (para 7) distinguished.

Where Assessing Officer undertakes scrutiny assessment, raises queries and after that does not make any addition, Assessing Officer can be said to have formed an opinion and reopening of such an assessment would be held to be due to mere change of opinion

Gujarat Power Corpn. Ltd. [2012] 26 taxmann.com 51 (Gujarat)

No disallowance of interest for debit balance in partner capital account

If debit balance in partners' capital account is due to loss and not due to any amount withdrawn there can be no dis allowance of interest u/s 36(1)(iii)
Meerut Rubber Factory ITA 5114/2010 ITAT DELHI

Capital Asset must be created before making application for grant of registration u/s 12AA

Hardayal Charitable and Educational Trust [2012] 25 taxmann.com 288 (Agra - Trib.)    In the instant case, the building of educational  institution was still under construction and no educational activity was carried on till date of making application u/s 12AA. Hence ITAT asked to make fresh application when activity is started. 
Self Employers Service Society v. CIT [2001] 247 ITR 18/[2000] 113 Taxman 703 (Ker.) (para 13) followed.

Amount paid to wife of late partner was allowed as deduction.

The issue before the Tribunal was whether the amount paid by the assessee to Mrs Mehru Minoo

Shroff, wife of late Dr M.S.Shroff is first charge on receipts of firm in terms clause 13 of the partnership deed executed on 1-4-2003. Held that, as there was an absolute contractual obligation imposed on the continuing firm/partners by the partnership deed to pay an amount of 2% of the gross receipts subject to maximum of 3 lakhs p.a. to the legal heir of the deceased partner, it was a first charge on the receipts of the continuing firm/partners and constituted a diversion of income by overriding title. The claim of assessee was allowed

Shroff Eye Centre v. ACIT ( Delhi)(Trib.) www.itatonline.org

If developer has taken any steps in relation to construction of flats, on the basis of development agreement, then it has to be considered as transfer under section 2 (47)(v)

When an owner enters into an agreement for development of the property and certain rights are assigned to the developer who in turn has made the substantial payment and taken steps to construction of flats , then the transaction is held to be a transfer under section 2(47)(v). Legal ownership continued with the owner does not have bearing on taxability of capital gains. Though total profits received in later year for the purpose of capital gains tax the year of transfer is relevant. On the facts of the case the provisions of section 53A of Transfer of Property Act is held to be applicable
ACIT v. A. Rama Reddy ( 2012) 52 SOT 521 (Hyd.)(Trib.)

Service Tax Return for April to June 2012 to be submitted till 25-10-2012

As per notification 47/2012 dated 28-9-2012, service tax return for QE 30-6-2012 only to be submitted till 25-10-2012

Investment out of cash accumulated by assessee accepted

Santokh Ram ITA 24/2011 dated 25-7-2012 of ITAT ASR


The cases relied upon by the assessee are as under:
 i) Shivcharan Dass vs. CIT 126 ITR 263 (P&H)
ii) Bhawna Sareen vs DCIT, Jalandhar, ITA No.217(Asr)/2010 (Amritsar Bench).
iii) ITO vs. Chaman Lal Nagpal , ITAT, Amritsar Bench (2006) 102 TTJ(Asr) 890.
iv) Asstt. CIT vs. Jagdish Raj Chauhan, ITAT, Amritsar  Bench (2006) 100 TTJ (Asr) 64
v) CIT vs. K. Sreedharan 201 ITR 1010
vi) R.K.Dave vs. Ito , ITAT Jodhpur Bench (2005) 94 TT

S. 54F exemption can be claimed if amount invested although construction not completed

IN THE ITAT AMRITSAR BENCH

Smt. Usha Vaid

v.

Income-tax Officer, Dasuaya

IT Appeal No. 98 (Asr.) of 2011

[Assessment year 2006-07]

July 27, 2012

This view is supported by the decision of the Hon’ble Madras High Court in the case of  CIT vs. Sardar Mal Kuthari 302 ITR 286. The Ld. counsel for the assessee has also placed reliance on the following decisions : 

i)  Mrs. Seetha Subramanian vs. ACIT 56 TTJ 417 (Mad)  

ii)  Smt. Ranjit Sandhu vs. DCIT 133 TTJ (Chd)(UO) 46 (2010). 

S.54 and S.54EC can be claimed simultaneously

IN THE ITAT MUMBAI BENCH ‘D’

Assistant Commissioner of Income-tax, Cr-23(2)

v.

Deepak S. Bheda

IT APPEAL NO. 5011 (MUM.) 2010

[ASSESSMENT YEAR 2007-08]

JUNE 15, 2012

Transactions in commodity exchange to be treated non speculative w.e.f. 01-04-2006

Held by ITAT Mumbai in ITA 2742/2011 in case of Arnav Akshay Mehta on 12-09-2012
ITAT held that s.43(5)(d) to apply retrospectively w.e.f. even if MCX recognized  on 22-5-2009
The issue that 43(5)(d) applies to securities and not commodities not dealt in the case

Cash Receipt of Share Application Money is not contravention of 269SS

 INCOME TAX APPELLATE TRIBUNAL, DELHI

ITA No.2858/Del/2012 – Assessment year: 2008-09

Deputy CIT V/s.  M/s Alpex Exports (P) Ltd.

Date of pronouncement 28-08-2012

Addition can not be made only on the basis of low GP ratio

1. ITA 4126/Del/2010 (ITAT Delhi) Sh. Prem Chand vs ITO
2. ITA 1406/2012/Del (ITAT) ITO vs Sai Internaitonal
3. 296 ITR 45 (Gau) Madnani Cosntruction Corporation
4.  38 ITR 579 S.N. Namasivyam Chhettiar
5. 26 ITR 159   Pandit Bros.
6. S. Veeriah Reddiar 38 ITR 152 Ker
7. International Forest Co. v. CIT [1975] 101 ITR 721 (J&K)                                                                                                       
8. Aluminium Industries (P.) Ltd. v. CIT [1995] 80 Taxman 184 (Gauhati)
9. CIT v. Paradise Holidays [2010] 325 ITR 13 (Delhi).                                                                               The accounts which are regularly maintained in the course of business and are duly audited, free from any qualification by the auditors, should normally be taken as correct unless there are adequate reasons to indicate that they are incorrect or unreliable. The onus is upon the Revenue to show that either the books of account maintained by the assessee were incorrect or incomplete or that the method of accounting adopted by him was such that true profits of the assessee cannot be deduced therefrom

Service Tax on Retreading old tyres

CBEC in the month of Feburary,2012, in their circular CBEC F.No.137/125/2011-ST. have addressed the issue and relied on the judgment of Hon’ble Supreme Court in the case of M/s P.C. Cheriyan v. Mst. Barfi Devi. The context is as below:

“ In the said judgment, Hon’ble Supreme Court has observed that-

“The retreading of old tyres does not bring into being a commercially distinct or different entity. The old tyre retains its original character, or identity as a tyre. Retreading does not completely transform it into another commercial article, although it improves its performance and serviceability as a tyre. Retreading of old tyres is just like resoling of old shoes.”

Though this judgment is given in the context of Transfer of Property Act, however, the basic principle behind “manufacture” of coming into existence of a commercially different and distinct entity is equally applicable to Central Excise Act and has been relied upon by the Tribunal in certain cases while interpreting ‘manufacture’ under section 2(F) of the Central Excise Act. “

 This is a works contract and service tax shall be charged @ 70% of amount charged w.e.f. 1-7-2012

After filing appeal before CIT A,assesee has no right to withdraw it

High Court of Madras in case of M. Loganathan ITA 361/2006 dated 18-07-2012
Followed CIT v. Rai Bahadur Hardutroy Motilal Chamaria [1967] 66 ITR 443 wherein the Apex Court held that when an assessee takes the assessment on appeal, he cannot withdraw the same. Thus, when the machinery of the Act has been activated, the assessee cannot prevent the appellate authority from settling the real income to be assessee. 

Rajiv Gandhi Equity Saving Scheme 80CCG

Newly inserted Section 80CCG provides deduction wef assessment year 2013-14 in respect ofinvestment made under notified equity saving scheme. The deduction under this section is available if following conditions are satisfied:

NSC shall double in 10 years w.e.f. 01-04-2012

NOTIFICATION NO.GSR 319(E), DATED 25-4-2012

Rate of interest on nsc subscribed on or after 01-04-2012 changed 

Rate of Interest on Senior Citizen Scheme shall be 9.3% w.e.f. 01-04-2012

NOTIFICATION NO.GSR 321(E), DATED 25-4-2012

Post Office MIS Interest w.e.f. 01-04-2012 shall be 8.5%

NOTIFICATION NO.GSR 322(E), DATED 25-4-2012

8.8% Interest on PPF w.e.f. 01-04-2012

NOTIFICATION NO. S.O. 904(E), DATED 25-4-2012

No TDS on software purchase from Resident where tax deducted in previous transfer

NOTIFICATION NO. 21/2012 [F.No.142/10/2012-SO(TPL)] S.O. 1323(E), DATED 13-6-2012

CA Certificate F.26A/27BA notified for regularizing TDS/TCS defaults

NOTIFICATION NO. 37/2012 [F.NO. 142/18/2012-SO(TPL)], DATED 12-9-2012 by CBDT

Cost Inflation Index for Financial Year 2012-13 notified at 852

Depreciation on Let Out unused Machinery allowed by P&H HC

ITA 124 of 2004 dated 6-8-2012 CIT Vs. Ranbir Chemicals (P&H HC)

appellant-revenue submitted that the assessee had let out the machinery without there being any commercial expediency and the amount of lease was not increased in spite of providing additional machinery worth ` 45,64,613/-.Held by CIT A and ITAT that once purchase of machinery and letting out was not in doubt depreciation has to be allowed. Order confirmed by High Court

Tax Audit held not required for Entities having exempt Income by Punjab & Haryana High Court

ITA 494 of 2005 dated 17-07-2012
Chapter IV of the Act provides for 'computation of total income'. Section 44AB of the Act is one of the sections enacted under Chapter IV-D dealing with computation of profits and gains of business or profession. Section 44AB of the Act becomes operative where there is computation of profits and gains of business or profession as a part of total income. In other words, it has no applicability where the assessee
is not involved in or has no income from profits and gains from business or profession. In the present case, it was not disputed that the income of the assessee was exempted under Section 10 (20) of the Act which
falls in Chapter III of the Act. There was no income of the assessee which would fall under heading “profits and gains of business or profession”. Once that was so, it could not be said that the provisions of
Section 44AB were applicable and as a sequel thereto, penalty under Section 271B of the Act was not leviable. The Tribunal had rightly decided the issue in favour of the assessee.

Deductor absolved from duty to quote correct PAN by P&H HC

In Instant case assesee quoted 196 wrong PANs and penalty was Rs. 1960000 was imposed by department. Assessee later revised TDS return. CIT(A) and ITAT observed that liability to quote correct PAN is that of deductee. Penalty was absolved and order of ITAT was confirmed by High Court

Decision of ITAT, Ahmedabad “D” Bench in the case of Financial Cooperative Bank Limited v. ITO,

followed in instant case.
ITA 124/7-8-12 in case of CIT vs. SP Office, Yamunanagar decided by P&H HC

Refund Harrassment case-Anand Parkash DHC on 31-08-2012

HIGH COURT OF DELHI

Court on Its Own Motion

v.

Commissioner of Income-tax

W.P.(C) No. 2659 OF 2012

AUGUST 31, 2012

Service Tax not to be included for calculation of turnover for presumtive basis

M/s Mitchell Drilling International Pty. Ltd. ITA No.698/Del./2012
Sedco Forex International Drilling Inc. vs. Addl. DIT (International Taxation) in ITA
No.5284/Del./2011

Service Tax on Educational Service

Vide Not 25/2012, dated 20.06.2012 the Central Government exemptions to education services from the whole of the service tax leviable under section 66B of the FA 1994.   Item No. 9 of the said mega Notification provides that the services to or by an educational institution in respect of education exempted from service tax by way of-

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.