Friday, 16 October 2015
Seized Assets being Kishan Vikas Patras, Indira Vikas Patras, Fixed Deposit Receipts, etc.retained for more than 19 years after adjustement of tax. High Court directed to pay interest on aforesaid Kishan Vikas Patras, Indira Vikas Patras, Fixed Deposit Receipts, etc., at par with interest, which money would have earned, had investments revalidated/renewed been encashed by department- Chander Prakash Jain [2015] 62 taxmann.com 37 (Allahabad)
Where assesse made specific expenditure for exempt income and disallowed the same under R8D(iii) but AO following the general formula. Matter remended to AO to determine the expenditure incurred following Bombay High Court in Godrej & Boyce Mfg. 328 ITR 81- Microlabs Ltd [2015] 62 taxmann.com 60 (Bangalore - Trib.) MARCH 5, 2015
Where the interest-free funds far exceed the value of investments, it should be considered that investments have been made out of interest-free funds and no disallowance under section 14A towards any interest expenditure can be made following Reliance Utilities 313 ITR 340(Bom HC) and HDFC bank 366 ITR 505(Bom HC)[Para 42] - Microlabs Ltd [2015] 62 taxmann.com 60 (Bangalore - Trib.) MARCH 5, 2015
Disallowance u/s 14A computed with Rule 8D to be added to computation of book profits under Explanation I(f) “ amount of expenditure relatable to any income to which section 10…..apply”. Held by ITAT that it is same as “expenditure incurred by the assessee in relation to Income which does not form part of total income”. Assessee plea that Explanation 1(f) is very specific and only direct expenditure should be disallowed rejected following paras 29 and 30 of Shobha developers 58 taxmann.com 107(Bang.) - Microlabs Ltd [2015] 62 taxmann.com 60 (Bangalore - Trib.) MARCH 5, 2015
Product development charges are entitled to deduction@ 150% u/s 35(2AB). Sale of dossier entitling the buyer to marketing authorization and drug registration in their respective areas shall not be deducted from product development charges for claiming weighted deduction. It is different from sale of asset which is to be deducted from development charges under Guideline 5(vii) of DSIR [Para 13 to 18]- Microlabs Ltd [2015] 62 taxmann.com 60 (Bangalore - Trib.) MARCH 5, 2015
Partial revival of appeal in M.A. by ITAT against order u/s 263 decided on merits, allowing to plead the case on merits and not on invocability of S.263 itself held to be perverse-State Bank of India DECEMBER 17, 2014 [2015] 62 taxmann.com 67 (Bombay)
Order of ITAT for AY 2005-06 was
passed allowing order u/s 263 to redo assessment. There after for AY 2007-08,
another order u/s 263 was passed but this order decided merits of the case on withdrawl of deduction for provision on standard assets of the assessee bank. ITAT again decided the case against the assessee following its earlier order. The
assessee bank went in appeal u/s 260A before High Court. Meanwhile assessee
also applied for MA u/s 254(2) before ITAT against which partial revival of
appeal against withdrawl of deduction for provision on standard assets only was allowed,
which meant that ITAT did not allow assessee to challenge the invocability of
order u/s 263 itself. High Court reprimanded ITAT for partial revival of the appeal in
M.A.
In the field of biotechnology, license fee paid for acquiring genetic material for cereals, seeds, etc. along with right to future development and improvement and such technology would benefit assessee even after expiry of agreement period and even assessee could sell germplasm, a part of expenditure paid by assessee would be apportioned as capital expenditure. SC in Alembic Glass Company 177 ITR 377 had said that having regard to fast changing technology, there is not enduring benefit. However , Andhra Pradesh High Court in Advanta India Ltd pronounced on OCTOBER 9, 2015 [2015] 62 taxmann.com 223 (Andhra Pradesh) has found the Alembic Glass Company distinguishable.
Monday, 12 October 2015
Assessing Officer made a certain addition in income of assessee under section 41(1) with regard to credit balances of three parties appearing in his account books - He held that these creditors were having opening balances and this liability was not existing in account books during year - Record showed that assessee was still showing these creditors as liability and he had not written back said liability in account books - Whether in terms of provisions of section 41(1), impugned addition was not sustainable - Held, yes -Sheikh Abdul Farid[2015] 61 taxmann.com 176 (Lucknow - Trib.)
Chief CIT v. Kesaria Tea Co. Ltd. [2002] 254 ITR 434/122 Taxman 91 (SC) (para 5.3) and CIT v. Sugauli Sugar Works (P.) Ltd. [1999] 236 ITR 518/102 Taxman 713 (SC) (para 5.3) followed.
Where notice under section 148 was issued after obtaining sanction from Commissioner instead of Joint Commissioner who is competent authority to approve issuance of notice, assessment framed consequent thereto was not valid and same was void ab initio -Sardar Balbir Singh[2015] 61 taxmann.com 320 (Lucknow - Trib.)MARCH 13, 2015
Jai Prakash Ahuja v. ITO [2014] 48 taxmann.com 86 [2015] 152 ITD 592 (Luck. - Trib.) (para 7) CIT v.SPL's Siddhartha Ltd. [2012] 345 ITR 223 (Delhi),followed.
The apex court in the case of Anirudhsinhji Karansinhji Jadeja v. State of Gujarat [1995] 5 SCC 302 has held that if a statutory authority has been vested with jurisdiction, he has to exercise it according to its own discretion. If discretion is exercised under the direction or in compliance with some higher authorities instruction, then it will be a case of failure to exercise discretion altogether. [Para 9]
Friday, 9 October 2015
ITAT, Hyderabad Bench in the case of ACIT vs S.Suvarna Rekha in ITA No.743/Hyd/2009 dated 29.10.2010 took the view that if difference between valuation for the purpose of stamp duty and the sale consideration actually received by the assessee is 10% or less then the value actually received by the assessee should be adopted for the purpose of computing the long term capital gain. Keeping in view of the decision of the Hon’ble ITAT, Hyderabad Bench referred to above and keeping in view of the fact that the difference between the valuation for the stamp duty and the actual consideration received by the assessee is less than 2% , addition u/s 50C is not sustainable [Para 30,31]-M/s. LGW Limited ITA No.267/Kol/2013 Date of Pronouncement : 07.10.2015.
Loss on Forward Contracts for hedging foreign exchange fluctuations is not speculative. Followed CIT Vs. Soorajmull Nagarmull (1981) 5 Taxman 289 (Cal), CIT Vs, Badridas Gauridu (P) Ltd., (2004) 134 Taxman 376 (Bom), CIT Vs. Friends and Friends Shipping Pvt.Ltd., Tax Appeal No.251 of 2010 dated 23.8.2011 and CIT Vs. Panchmahal Steel Ltd. Tax Appeal No.131 of 2013 dated 28.3.2013 by the Hon’ble Gujarat High Court-M/s. LGW Limited ITA No.267/Kol/2013 Date of Pronouncement : 07.10.2015.
Application for approval under Section 10(23C)(vi) of the Act could not be rejected only on the ground that it was not accompanied with an audit report. Report can be filed during approval process also.Support drawn from P&H High Court in Punjab Financial Corporation (2002) 254 ITR 6 and Circular No. 689 of 1994- All India Personality Enhancement & Cultural Centre for Scholars Aipeccs Society [2015] 62 taxmann.com 92 (Delhi)
Section 11(5) is not applicable to educational institutions u/s 10(23C)(iiiab)/(iiiad) i.e. institutions having gross receipts lesser than one crore or being substantially financed by government need not invest in specified modes u/s 11(5)[Para 63 2nd Line] )- All India Personality Enhancement & Cultural Centre for Scholars Aipeccs Society [2015] 62 taxmann.com 92 (Delhi)
Recall order of ITAT u/s 254(2) can not be challenged before High Court u/s 260A. It canot even be challenged along with main order u/s 254(1). The only remedy is writ petition under Article 226 (Para 32 to 36)- All India Personality Enhancement & Cultural Centre for Scholars Aipeccs Society [2015] 62 taxmann.com 92 (Delhi)
Where deposits are made in saving account of the assessee and assessee pleads that they represent sale proceeds of the business without producing sale and purchase bills of the business, the matter held to require investigation by AO -Bir Parkash Malhotra [2015] 61 taxmann.com 99 (Chandigarh - Trib.)
AO assumed that all the patients who had undergone lab test had been operated upon. Held that AO has not brought any material on record to show whether actually any patient had undergone surgery without recording the same in the records Of the assessee. The addition has been made by the AO merely on assumption of certain facts without any basis.Books of accounts can not be rejected. Dr. Maheshinder Singh [2015] 61 taxmann.com 353 (Chandigarh - Trib.) JANUARY 30, 2015
Fee for technical service in DTAA between India-China covers provision of service while Pak-China treatise talks about 'provision of rendering of services. Hence DTAA between India-China gives more comprehensive coverage to fee for technical service and service might get covered even if it is not rendered. Hence Chinese subsidiary of Indian company getting service cost plus 10% from Indian company for specialized services of market research and information on new developments in China with regard to technology/product/process upgrade etc., held taxable at gross amount including reimbursement of actual service cost following Timken India Limited (AAR No.617 of 2003). [2015] 62 taxmann.com 96 (AAR - New Delhi)
Thursday, 8 October 2015
No TDS on payment made in kind as per Para 9 of Judgment delivered by Karanatka High Court in Bruhat Banglore Mahanagar Palike ITA 94/2015 dated 29-09-2015.The Court held that no TDS was liable to be deducted under section 194LA of the Act on land acquired through voluntary surrender by land owners in lieu of development rights on the ground that the section contemplates payment of a sum of money which was not satisfied as development rights did not constitute monetary consideration
PAN/Voter Identity Card is a KYC norm, which does not apply to the sale of goods under the Sale of Goods Act. Hence where dealer of automobiles could not produce these evidences in respect of advance from customers which is converted to sale in two to three months, no addition can be made in respect of advances received from customers-DUTTA AUTOMOBILES (P) Ltd(kol Trib)Oct 5, 2015 (2015) 45 CCH 0100 KolTrib
Wednesday, 7 October 2015
Investments on which no dividend income is earned should be excluded for calculation of disallowance u/s 14A-Living Media India Ltd [2015] 61 taxmann.com 206 (Delhi - Trib.)
Battery of Cases u/s 14A relied upon by assessee:
Delhi High Court in the case of CIT v. Holcim India (P.) Ltd. [2015] 57 taxmann.com 28 and
Delhi High Court in the case of CIT v. Holcim India (P.) Ltd. [2015] 57 taxmann.com 28 and
Para 63 of Karanatka High Court in Manju Nath Cotton & Ginning factory 359 ITR 565 on Penalty followed by Banglore Tribunal in H.LakshmiNarayan [2015] 61 taxmann.com 373 (Bangalore - Trib.)
63. In the light of what is stated above, what emerges is as under :
| (a) | Penalty under section 271(1)(c) is a civil liability. | |
| (b) | Mens rea is not an essential element for imposing penalty for breach of civil obligations or liabilities. | |
| (c) | Willful concealment is not an essential ingredient for attracting civil liability. |
Tuesday, 6 October 2015
When statements of witnesses are made basis of demand, not allowing assessee to cross-examine witnesses is a serious flaw which makes order nullity, as it amounts to violation of principles of natural justice - It is not for adjudicating authority or Tribunal to have guesswork as to for what purposes assessee wanted to cross-examine witnesses and what extraction assessee wanted from them- Andaman Timber Industries [2015] 62 taxmann.com 3 (SC) SUPREME COURT OF INDIA SEPTEMBER 2, 2015
Ancilary services such as loading/ unloading, packing/unpacking, transshipment, temporary storage services provided by goods transport agency in course of transportation of goods by road to be treated as part of composite service and shall enjoy abatement of 70% like principal service- Circular No. 186/5/2015 by CBEC dated 05-10-2015-
Assessee filed returns in response to notices under section 148 issued by ITO, Erode - While said returns were pending for disposal, assessee's file was transferred to jurisdiction of ITO, Madras, who issued second notice under section 148 - Whether, while reassessment proceedings were pending, impugned second notice was valid - Held, no-A.S.S.P. & Co. [1986] 27 Taxman 623 (Madras)
Wednesday, 30 September 2015
Tuesday, 29 September 2015
Once the Council of Ministers takes a policy decision, the implementing Vat Department cannot issue a notification contrary to the policy decision taken by the Government.
Held by Supreme Court in Lloyd Electric And
Engineering Ltd. 2015] 61 taxmann.com 311 (SC) SEPTEMBER 3, 2015 where
central sales exemption was extended by decision of the State Cabinet, the
notification issued by vat department of the Himachal pradesh at a later point
of time extending exemption from the date of issue of notification shall have
effect from the date decided by State cabinet only. Excise and Taxation
department can not take a different stand
Failue of the assessee partner to deduct TDS on Interest on overdrawn balance with the firm is liable to penalty for failure to deduct tax.
S. 19A(3)(iv) exempts interest credited or paid by a firm to
a partner of the firm but vice versa is not true . So the alleged belief of the
partner that vice versa is true i.e partner is also not liable to deduct tax
form the overdrawn balance was brushed aside by Kerala High Court in Thomas
Muthoot [2015] 61 taxmann.com 76 (Kerala) JULY
3, 2015 . The plea of reasonable cause u/s 273B also held not
applicable
Sunday, 27 September 2015
Mere possession and recovery of currency notes from an accused is not sufficient to establish an offense under the Prevention of Corruption Act. Proof of demand of illegal gratification is essential. Its absence is fatal to the complaint.P. Satyanarayana Murthy vs. Dist. Inspector of Police (Supreme Court) September 14, 2015
Friday, 25 September 2015
CBEC has issued a circular on 21-09-2015, directing field officers not to follow the CBEC circulars contrary to the judgement of supreme court. The Board has quoted Supreme Court Judgement in Rattan Meltings which says that circular only represent department's understanding of the law, while power to declare the law is vested with Supreme Court only under Article 141. Board has also urged to start the process of referring such circulars to Board so that they may be declared non est. The board may suo moto also take such action.
Compensation of Rs. 1.95 crores received by prospective employee for not joining the employment held not taxable. Also held not covered by Section 17(3)(iii) "profits in lieu of salary" which includes any amount due to or received, whether in lump sum or otherwise, by any assessee from any person before his joining any employment with that person or after cessation of his employment with that person. Further not held taxable as income from other sources- Pritam Dass Narang [2015] 61 taxmann.com 322 (Delhi) SEPTEMBER 16, 2015
1. Depreciation of business and administrative expense to be allowed for business suspended due to govt orders but not discontinued. 2. Interest income from margin money and bank guarantee deposits to be set off against expenses and not to be treated under Income from other sources- .MS. ASSOCIATES vs.ASSISTANT COMMISSIONER OF INCOME TAXSep 21, 2015(2015) 45 CCH 0069 DelTrib
Notice u/148 issued to address in PAN data base which is no longer occupied by assessee. Assessee not precluded from pleading that notice served to wrong address. Also even if assessee participates in reassessment proceedings , the Jurisdictional defect does not get cured.IN THE HIGH COURT OF DELHI AT NEW DELHI 2. + ITA 665/2015 ATLANTA CAPITAL PVT. LTD.
Matters which are not covered by notified standards u/s 145(2) and are also not covered by provisions of income tax law can be interpreted as per non notified standards or guidance notes of ICAI although not mandatory in nature- Held by AP High Court in Pact Securities on 05-02-2015 ITA 252/2003. The Court allowed deduction of lease equalization charges as per Guidance Note issued by ICAI applicable before 01-04-2001
Refund of excess salary which was granted in earlier years is deductible because the assessee is under legal obligation to repay the amount. Ahmadabad Trib. lays down that salary “due” and not salary “accrued” or “arising” is sought to be taxed u/s 15. The legislature has intentionally used the words “due” and not “accrued”. -Vrajeshwari B. Parikh 15-09-2015 ITA 1512/2014
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