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]

The assessee received 45% of total sale consideration for sale of immovable property and offered the same for capital gains. However, he took cost at 50%, which he accepted as done mistakenly. The other co-owner had offered balance 55% towards tax. The sale consideration in the hands of assessee can not be taken at 50%

ANIRUDHA V. PATEL AHMEDABAD TRIBUNAL Jul 17, 2015 (2015) 44 CCH 0359 AhdTrib

Amount deposited in bank account can not presumed to have been taken from buyer of the property as excess consideration over sale deed. It is for vendor to prove the deposit

LATE SHRI JASRAJ MULTANMAL JAIN AHMEDABAD TRIBUNAL Jul 17, 2015 (2015) 44 CCH 0387 AhdTrib
Assessee had purchased a piece of land for consideration which was mortgaged with the bank before the sale— Vendors paid Rs. 65 lacs to the bank and get the property released—AO held a belief that assessee must have paid unaccounted money over and above the consideration stated in the sale deed to the vendors which was ultimately deposited in bank and got released the land—AO had assumed that assessee has made unexplained investment in purchasing the property on the ground that vendors have got the property released from the bank and it was sold to the assessee and for same assessee had paid undisclosed sum—It was for the vendors to explain the source of what amount which they have discharged towards their loan liability and it cannot be presumed that it must be taken from the assessee in cash over and above the amounts stated in the sale deed—But AO had failed to make reference of any evidence which demonstrate that assessee has made unexplained investment—There was no direct co-relation between the discharge of loan liability vis-à-vis sale of plot—No evidence was with the AO to suggest that assessee had made unexplained investment in the purchase of the property—Revenue’s appeal dismissed

For Computing Rental Income of Trust registered u/s 12A, actual expenditure incurred shall be allowed as deduction and not the deductions u/s 23 and S. 24

Anjuman-E-Himayath-E-Islam [2015] 59 taxmann.com 379 (Chennai - Trib.) JUNE  2, 2015 

Treatment of Excess of Expenditure over Income in Trust

Where expenditure of trust exceeds its income, the excess can not be carried forward for application in subsequent years. While Computing excess, 15% of Income also not to be set aside. However, since excess expenditure is met out of corpus, loans, sundry creditors, the application in subsequent years shall be considered in the year of repayment of loan etc. Anjuman-E-Himayath-E-Islam [2015] 59 taxmann.com 379 (Chennai - Trib.) JUNE  2, 2015

 However in Maharashtra Industrial Development Corporation, ITA 6129/MUM/2013, dtd 05-03-2015, ITAT Mumbai relying upon assessee’s on case in (ITA No. 6752/Mum/2011 dated 15.03.2013) decided that excess of expenditure over income can be carried forward relying upon decision of Bombay High Court in Institute of Banking Personnel Selection 264 ITR 110

Issues relating to Job worker of dyeing of fabric resolved in : A.P. PROCESSORS vs.ASSISTANT COMMISSIONER OF INCOME TAX Jul 17, 2015 (2015) 44 CCH 0384 DelTrib

1. Job Worker not maintaining the record of receipt and dispatch of the goods because of the fact that the ownership of the fabric received for processing is not of the assessee, nor the shortage due to shrinkage, etc. of the fabrics belong to the assessee. Rejection of books of accounts quashed

2. Following shrinkage in dyeing  accepted

Cambric – shrinkage – 5% and further – 2% to – 5%. If it is further required residual shrinkage as zero.

Crapes – 10% and further – 2% if it required line dry (dry in air).

Other than the above shrinkage, there is another loss of fabric by 2% on account of grey and dyed fabs.

3. Fire Insurance claim received by Job Worker can not be treated as income of the Job worker not mainstaining stock records, where he produced all the relevant documents relating to insurance claim before the AO during the assessment proceedings along with FIR lodged before the Police; and report of Verifier (Valuation and Loss Assessor).

4. Hon’ble Supreme Court decision in Empire Industries Ltd. Vs. Union of India (3 Judges Bench) reported as 162 ITR 846 held that textile dyeing and printing amounts to manufacturing. Hence Additional depreciation of 20% u/s 32(1)(iia) is available to Job Worker engaged in dyeing of fabric

No addition u/s 68 can be made in the hands of person engaged in business of accommodation entries. Addition should be made in the hands of beneficiaries. Person providing accomodation entries can only be assessed to commission income.

ZENITH ESTATE LTD Jul 20, 2015 ITA No. 3419/Del/2014 (2015) 44 CCH 0396 DelTrib

No addition can be made in current year for opening balance of liability not deposited/paid

KISAN SAHKARI CHINI MILL LTD. LUCKNOW TRIBUNAL ITA No. 130/LKW/2014 (2015) 44 CCH 0393 LucknowTrib

Payment of Subscription to federation not covered by 194J and hence not hit by 40(a)(ia).

KISAN SAHKARI CHINI MILL LTD. LUCKNOW TRIBUNAL ITA No. 130/LKW/2014 (2015) 44 CCH 0393 LucknowTrib

Followed  Tribunal decision in the case of ACIT, Sitapur vs. Kisan Sahkari Chini Mill Ltd. Sampurnanagar, Lakhimpur Kheri in I.T.A. No.406 to 409/Lkw/2013 dated 29/11/2013

Sale of Property- unsigned agreement seized- Decided in favour of assessee

SARAL TALWAR (2015) 44 CCH 0391 HydTrib Jul 22, 2015

 It needs to be mentioned, assessee from the very initial stage of the proceeding has denied of receiving any cash amount from Mr. Suresh Chand Agarwal towards the sale of property. It is also evident that apart from the receipts and the unsigned document, there is no other evidence in the possession of the department to conclusively prove that the assessee has actually received the amount of Rs.2.66 crores from Mr. Suresh Chand Agarwal.

Adhoc disallowance of 50% of expenditure incurred in earning commission income, for the reason that assessee has not been able to explain fully that the expenditure claimed was wholly and exclusively laid out for the purpose of business. Assesee furnished names, cheque numbers and amounts of commission paid. Adhoc disallowance held not sustainable.

SARAL TALWAR (2015) 44 CCH 0391 HydTrib Jul 22, 2015

Software License Fee claimed as revenue expenditure , however, treated as capital by the department and allowed depreciation @ 60% under computer during 143(3). Later department reopened to allow depreciation @ 25% under intangibles. Held that since there is no failure to disclose material facts , no reassessment can be made.

[HCL TECHNOLOGIES LIMITED 16.07.2015 W.P.(C) 7948/2013 & CM 16840/2013 HIGH COURT OF DELHI]

Followed Haryana Acrylic Manufacturing Co. v. CIT: 308 ITR 38 (Delhi)

Wel Intertrade Private Ltd.[2009] 308 ITR 22 (Delhi) 

 Punjab and Haryana High Court in the case of Duli Chand Singhania [2004] 269 ITR 192

Good will is eligible for Depreciation as Intangible

Supreme Court in the case of SMIFS Securities Ltd., 348 ITR 0302 followed in

St. Angelo’s Computers Ltd. ITA No.6874/Mum/2011 Date of Pronouncement 22/07/2015

Tyssenkrupp elevator (India) (P) Ltd., 167 TTJ 131(Del);  

Worldwide Media Pvt. Ltd., 30 ITR (Trib) 181;

M/s PPG Asian Paints Pvt. Ltd., ITA No.2919/Mum/2013, dated 15-4-15 

M/s Toyo Engineering India Limited, ITA No.3279/Mum/2008, dated 13-10-2014; Birla Global Asset Finance Co. Ltd., 221 Taxman 176(Bombay); 

 KEC International Ltd., Order dated 7-2-2013(Bombay High Court)

In case a transporter hires trucks from any other transporter or truck owner on day-to-day requirement basis, such an arrangement cannot be said to be a result of written or oral contract.This is so because the liability fastened on the transporter (contractor) under a contract with a party for transporting its goods is never fastened either on the transporter or the truck owner from whom the trucks are hired

CHANDRAKANT THACKAR (2009) 28 CCH 0702 CuttackTrib

Credit sales not reflected in books of account—Total unrecorded sales cannot be regarded as the profit of the assessee—Net profit rate has to be adopted—Once a net profit rate is adopted, it cannot be said that there is perversity of approach—Whether the rate is low or high would depend upon the facts of each case Held

 BALCHAND AJIT KUMAR (2003) 71 CCH 0380 MPHC. 

President Industries Gujrat High Court Concurred with

Tribunal held that entire sales could not be added as income of assessee but addition could be made only to the extent of estimated profits embedded in sales for which net profit rate was adopted—There is no finding or material about suppression of investment in acquiring the goods which are subject of undisclosed sales—No referable question of law arises

PRESIDENT INDUSTRIES (2002) 124 TAXMAN 0654 (1999) 67 CCH 0259 GujHC

Difference between income as per TDS certificate and that shown in books—As per TDS certificate, gross amount of assessee’s receipts is Rs. 4.51 crores whereas as per the accounts, it is Rs. 4.29 crores—Assessee was not able to reconcile the difference to the extent of Rs. 14,94,285 and hence AO made addition thereof under the head ‘Undisclosed transportation receipts’— Not justified—In case of difference between the gross receipts as shown in the assessee’s books and as per TDS certificate addition is to be made only in respect of profits embedded therein—Impugned order is set aside and the AO is directed to adopt the GP rate declared by the assessee for the assessment year under consideration and compute addition accordingly

R.R. CARYYING CORPORATION CUTTACK BENCH (2009) 126 TTJ 0240

Balasore Synthetic (P) Ltd. vs. Dy. CIT (ITA No. 141/Ctk/2008) followed

Assessee is a transporter engaged in executing various contracts by engaging its own vehicles as well as vehicles of other transporters—There is nothing on record to suggest that any contract existed between the assessee and the other transporters—There is neither any written nor real agreement in this regard—AO has not made out a case that there existed contractor and sub-contractor relationship between the assessee and the alleged sub-contractor and that the latter has been engaged on some definite terms and conditions for executing the work—Therefore, assessee was not liable to deduct tax under s. 194C from the payments made to other transporters and same could not be disallowed under the provisions of s. 40(a)(ia)

R.R. CARYYING CORPORATION ITAT, CUTTACK BENCH (2009) 126 TTJ 0240

Payments were received by the representatives of the labourers who in most cases were employee of the assessee—AO holding that such payments made to Mukadam was nothing but payment made to contractors and since tax was not deducted under s. 194C, orders under s. 201(1) and 201(1A) were passed—AO not justified—As assessee has made payment for labourers but to the representative of the labourers through their Mukadam who are the employees of the assessee, provisions of s. 194C requiring deduction of tax are not applicable

LAXMI PROTEIN PRODUCTS (P) LTD.

ITAT, AHMEDABAD 29 CCH 0122 AhdTrib

No TDS u/s 194C for payment of daily wages

DEWAN CHAND (Delhi High Court) 76 CCH 1260

Assessee company engaged in production and marketing of potato seeds—Multiplication of potatoes is carried out in tissue culture laboratory which are transplanted in green houses to produce "O" generation seed and sold to farmers—Expenditure of Rs. 23,86,522 claimed as buy-back production cost—AO came to the conclusion that the assessee had given work contract to the farmers for growing potatoes of desired specifications from seeds supplied by it—Since the tax was not deducted at source, the amount was to be disallowed under s. 40(a)(ia)—Operations carried out by the farmers are purely agricultural operations and cannot be said that they were in the nature of works contract—Similarly payments made to labourers were also not under works contract—Disallowances rightly deleted Held:

KALINDI AGRO BIOTECH LTD 29 CCH 0422 DelTrib

No TDS u/s 194C for loading and unloading charges to daily unskilled workers

M/s. Man Foods Pvt. Ltd. Date of Pronouncement : 22-07-2015 ITA No.7150/Mum/2012,

Supervision Charges for Mixing shall be covered by 194C and not as technical service under 194J

M/s. Man Foods Pvt. Ltd. Date of Pronouncement : 22-07-2015 ITA No.7150/Mum/2012,(ITAT Mumbai)

Separate bills for windmill converters and other equipments being issued . Hence no TDS required to be deducted on such value while deducting TDS on value of civil work required for installation of equipment .

M/s Abhilash Garments & Estates Pvt.Ltd, Date of pronouncement : 17-07-2015 ITA Nos.1255 to 1257(B)/2014 

Principles of Reopening assesment where asessment u/s 143(3) has been made

M/s. Marks Shipping Pvt. Ltd Date of Pronouncement : 22-07-2015 ITA No.6363, 6364, 6365 and 6366/Mum/2013

The AO has the power to reopen the assessment,but such reassessment cannot be initiated on a mere change of opinion to merely re-examine an issue on the basis of information or material which was already available to the AO at the time of the completion of the original assessment.“Reason to believe” could never be an outcome of a change of opinion. Consequently, before taking any action,he is required to substantiate his satisfaction in the reasons recorded by him. If such reasons recorded disclose a mere change of opinion the assessment proceedings cannot be initiated. Once the AO has made an assessment on the primary facts and documents placed before him, he cannot at another point of time form another opinion on the same primary facts and arrive at a conclusion that he had committed an error or come to a conclusion that he has now reason to believe that income had escaped assessment and reopen the assessment proceedings. ix.Further, on the basis of an audit report, notice under section 148 cannot be issued as such audit report cannot be regarded as “information” within the meaning of 147 

The Commissioner of Income Tax (‘CIT’) has not recorded any satisfaction and has merely affixed his signature on the file without even putting a date or any other word in addition to such signature. Order of Tribunal that this is not proper sanction for S. 151rws S. 147 upheld by High Court

AMAR KHOSLA Order dated 20-07-2015 Delhi High Court. United Electrical Co. (P) Ltd. v. CIT (2002) 258 ITR 3174 followed

Appeal Effect order pased by AO can not be over ruled by another order terming the first order a only administrative order . Section 292B for technical breach can not confer jurisdiction for passing another order

CITI FINANCIAL CONSUMER FINANCE INDIA PVT. LTD dtd 17-07-2015 ITA 275/2015

Dissolution of Private Trust: Section 45(4) is not applicable because trust is not AOP

L.R. Patel Family Trust vs Income Tax Officer And Ors. on 19 March, 2003  262 ITR 520 Bom

Joint Commissioner who was promoted as a Commissioner and has granted the sanction, was directed by the Boardu/s 120(2) to so discharge duties of Joint Commissioner. Issue of Notice in such circumstances by CIT instead of JCIT not invalid

Sant Trust (since dissolved) WRIT  PETITION NO. 1349 OF 2015 IN THE HIGH COURT OF JUDICATURE AT BOMBAY. Held that in Ghanshyam K. Khabrani vs. Assistant Commissioner of Income Tax & ors.  ­ (2012) 346 ITR 443 (Bom) these facts were not present, hence sanction by higher authority was held invalid

Held by Bombay High Court that where sanction of particular officer is required for reassessment ,sanction by higher officer shall not meet the requirements of section 151

Ghanshyam K. Khabrani vs. Assistant Commissioner  (2012) 346 ITR 443 (Bom)

ITAT noticed the decision of its co-ordinate Bench in Justice Sam P. Bharucha v. Addl, Commissioner of Income Tax, Mumbai 25 Taxmann.com 381 (Mum) and observed that in the present case, the AO had not recorded any finding that any expenditure incurred by the Assessee was attributable for earning the exempt income. In order to disallow the expenditure there must be a nexus between the expenditure incurred and the income not forming part of the total income.

[Om Parkesh Khaitan ITAT Delhi 21-07-2015 ITA 416/2015]

Given the manner and functioning of the lawyers and law firms, it is correct that the categorization of a receipt can take place only at the time of appropriation i.e. in case of fees only when the matter is over or as when the Assessee decides on the quantum of fees. This will not be the entire advance received as at the time it is received it does not bear any particular characterization for the purposes of treating it as income. Hence mere receipt of advance can not be treated as income in the year of receipt of amount although cash system of accounting is being followed by the advocate.

[Om Parkesh Khaitan ITAT Delhi 21-07-2015 ITA 416/2015]

Registration u/s 12A cannot be denied merely upon activities of trust are extended outside India, where trust property is held wholly and exclusively under trust for charitable and religious purposes

Critical Art and Media Practices v. Director of Income-tax (Exemption), Mumbai [2015] 153 ITD 664 (Mumbai - Trib.)

Order of Tribunal pronounced beyond 60/90 days as prescribed in rule 34(5)(c) can not be challenged in a petition under section 254(2)

Times Guaranty Ltd. v. Assistant Commissioner of Income-tax, Circle 1 (3), Mumbai [2015] 153 ITD 655 (Mumbai - Trib.)

BLACK MONEY (UNDISCLOSED FOREIGN INCOME AND ASSETS) AND IMPOSITION OF TAX RULES, 2015

NOTIFICATION NO.58/2015 [F.NO.133/33/2015-TPL]/GSR 529(E), DATED 2-7-2015