Month: May 2013

Archive for May, 2013


CIT vs. Kichha Sugar Company Ltd (Uttarakhand High Court)

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DATE: (Date of pronouncement)
DATE: May 31, 2013 (Date of publication)
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S. 2(24)(x) provides that the amounts of employees’ contribution to PF etc collected by the employer shall be assessed as his income. S. 36(1)(va) provides that the said employees’ contribution shall be allowed as a deduction if paid within the “due date” specified in the relevant legislation. S. 43(B)(b) provides that any sum payable by the assessee as an employer by way of contribution to any provident fund etc shall be allowed if paid before the due date of filing the ROI. The “due date” referred to in s. 36(1)(va) must be read in conjunction with s. 43B(b) to mean the “due date” of filing the ROI. The AO wrongly proceeded on the basis that the “due date” in s. 36(1)(va) is the due date fixed by the Provident Fund authority, whereas read in the context of s. 43B(b) it is the “due date” fixed for filing the ROI

Crystal Phosphates Ltd vs. ACIT (ITAT Delhi)

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DATE: (Date of pronouncement)
DATE: May 30, 2013 (Date of publication)
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The CBDT’s instructions for assumption of jurisdiction for selection of cases of corporate assesses for scrutiny and assessment are issued u/s 119 and are binding on the AO and have to be followed by him in letter and spirit. The burden lies on the authority assuming jurisdiction to show and establish that such instructions have duly been complied and satisfied in letter and spirit. On facts, as there was no disallowance of Rs. 5 lacs or more in the earlier years and as no identical issue had arisen in the present year, the notice issued u/s 143(2) was not in terms of the CBDT’s Scrutiny Guidelines and consequently the assumption of jurisdiction was illegal and the entire assessment proceedings were invalid (Nayana P. Dedhia 270 ITR 572 (AP) followed)

Platinum Investment Management Ltd vs. DDIT (ITAT Mumbai)

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DATE: (Date of pronouncement)
DATE: May 29, 2013 (Date of publication)
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Under the policy of the Central Government and the SEBI (FII) Regulations, 1995 a FII can only “invest” in securities and cannot do “business” in securities. S. 115AD also provides that all income arising to a FII from securities, whether from their retention or from their transfer, is taxable as a capital gain. This is also the view expressed in Press Note F. No. 5(13)SE/91-FIV dated 24.03.1994 issued by the Ministry of Finance. If the Revenue is permitted to make a distinction between the securities held by a FII by classifying them as a capital asset or as stock in trade, s. 115AD will become otiose. The result is that all income arising to a FII, including from dealings in derivatives has to be assessed as capital gains. The contrary view of the AAR in Royal Bank of Canada cannot be followed (LG Asian Plus Ltd 46 SOT 159 followed)

Kunal Surana vs. ITO (ITAT Mumbai)

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DATE: (Date of pronouncement)
DATE: May 28, 2013 (Date of publication)
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The affidavit produced by the AR is not a valid affidavit because there is no verification appended on it and there is no mention as to which of the paras are true to the knowledge of the deponent and which of the paras of the affidavit are true to his belief. The affidavit is also not a duly sworn affidavit as required under Rule 10 of the ITAT Rules 1963 because it has not been properly endorsed by the notary regarding the oath of affirmation before him by the executant of the affidavit. The notary has put his signatures under his name seal but there is no mention whether the oath was administered to the signatory or if done so, when and where it was administered. Even words “Sworn before me” are missing. If the affidavit does not certify or endorse the fact that oath has been administered, it remains a waste paper. On merits, the case is one of gross negligence and inaction on the part of the assessee and the AR. The explanation that the AR’s assistant kept the papers in his drawer and failed to take necessary action is vague and evasive and not sufficient cause for condonation. There is also no general principle saving the party from all mistakes of its counsel. There is also total inaction and gross negligence on the part of the assessee for not inquiring the status of the appeal from the AR. Though courts adopt liberal view while condoning delay on the principle that technicalities should not prevail over the cause of justice, litigants should not take the courts for granted

CIT vs. Madan Theatres (Calcutta High Court)

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DATE: (Date of pronouncement)
DATE: May 27, 2013 (Date of publication)
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FILE: Click here to view full post with file download link
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Though the assessee could have disputed the valuation on the basis of the deemed value and chose not to do so, the fact remains that the actual amount received was offered for taxation. It is only on the basis of the deemed consideration that the proceedings u/s 271(1)(c) started. The revenue has failed to produce any iota of evidence that the assessee actually received one paise more than the amount shown to have been received by him. As such, there is no scope to admit the appeal

ITO vs. LKP Securities Ltd (ITAT Mumbai)

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DATE: (Date of pronouncement)
DATE: May 23, 2013 (Date of publication)
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FILE: Click here to view full post with file download link
CITATION:

S. 43B covers only the sums payable by way of contribution by the assessee as an employer, i.e., the employer’s contribution to the PF and ESI funds. It does not cover the employees contribution. While the employer’s contribution is allowable u/s 37(1), the employees’ contribution collected by the employer is deemed to be his income u/s 2(24)(x) and is allowable as a deduction u/s 36(1)(va) only if it is paid to the relevant fund by the due date as prescribed in the relevant legislation. Even if one assumes that s. 43B(b) applies to s. 36(1)(va) payments, a deduction would not be admissible because the s. 36(1)(va) payments are not ‘otherwise allowable’ if they are paid beyond the “due date”. The decisions in Vinay Cement 213 CTR (SC) 268 & Alom Extrusions 319 ITR 306 (SC) are not an authority on the point that employees’ contributions are also covered by s. 43B. Though in AIMIL 321 ITR 508 (Del) it was held that employees’ contribution to EPF and ESI funds are covered by s. 43B, it cannot be followed because (i) the Court moved on the premise that employees’ contribution is subject to clause (b) of s. 43B and did not notice the condition in s. 36(1)(va), (ii) the decision by the tribunal, which was approved by the High Court in AIMIL was rendered without considering the decision of the Special Bench in ITC Ltd & (iii) it is inconsistent with Godaveri (Mannar) Sahakari 298 ITR 149 (Bom). Accordingly, AIMIL cannot be followed and the deductibility of employees’ contribution has to be seen only with reference to s. 36(1)(va) (together with grace period) (Bengal Chemicals & Pharmaceuticals (included in file) & ITC Ltd 112 ITD 57 (Kol)(SB) followed)

DCIT vs. Ashish Jhunjhunwala (ITAT Kolkata)

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DATE: (Date of pronouncement)
DATE: May 22, 2013 (Date of publication)
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The AO has not brought on record anything which proves that there is any expenditure incurred towards earning of dividend income. The AO has not examined the accounts of the assessee and there is no satisfaction recorded by the AO about the correctness of the claim of the assessee and without the same he invoked Rule 8D. While rejecting the claim of the assessee with regard to expenditure or no expenditure, as the case may be, in relation to exempted income, the AO has to indicate cogent reasons for the same. The AO has not considered the claim of the assessee and straight away embarked upon computing disallowance under Rule 8D of the Rules on presuming the average value of investment at ½% of the total value. This is not permissible (J. K. Investors (Bombay) followed)

Gurinder Singh Bawa vs. DCIT (ITAT Mumbai)

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DATE: (Date of pronouncement)
DATE: May 17, 2013 (Date of publication)
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FILE: Click here to view full post with file download link
CITATION:

In All Cargo Global Logistics 137 ITD 287 (Mum)(SB), the Special Bench held that in a case where the assessment has abated the AO can make additions in the assessment, even if no incriminating material has been found. However, in a case where the assessment has not abated, an assessment u/s 153A can be made only on the basis of incriminating material (i.e. books of account & other documents found in the course of search but not produced in the course of original assessment and undisclosed income or property disclosed during the course of search). On facts, as the assessment was completed u/s 143(1) and the time limit for issue of s. 143(2) notice had expired on the date of search, there was no assessment pending and there was no question of abatement. Therefore, the addition could be made only on the basis of incriminating material found during search. As the addition u/s 153A was made on the information/material available in the return of income (i.e. the information regarding the gift was available in the return of income as capital account had been credited by the assessee by the amount of gift) and not on the basis of any incriminating material found during the search, the AO had no jurisdiction to make the addition u/s 153A

CIT vs. Crescent Export Syndicate (Calcutta High Court)

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DATE: (Date of pronouncement)
DATE: May 16, 2013 (Date of publication)
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FILE: Click here to view full post with file download link
CITATION:

The key words in s. 40(a)(ia) are “on which tax is deductible at source under Chapter XVII –B” and this makes it clear that it applies to all expenses. Nothing turns on the fact that the legislature used the word ‘payable’ and not ‘paid or credited’. Unless any amount is payable, it can neither be paid nor credited. If an amount has neither been paid nor credited, there can be no occasion for claiming any deduction. The Special Bench was wrong in making a comparison between the draft Bill and the enacted law to determine the intention of the Legislature. A comparison is permissible only between the pre-amendment and post amendment law to ascertain the mischief sought to be remedied or the object sought to be achieved by the amendment. The fact that the impact of s. 40(a)(ia) is harsh is no ground to read the same in a manner which was not intended by the legislature. The law was deliberately made harsh to secure compliance of the provisions requiring deductions of tax at source. It is not the case of an inadvertent error. For the same reason, the second proviso sought to become effective from 1st April, 2013 cannot be held to have already become operative prior to the appointed date. Consequently, the majority view in Merilyn Shipping & Transports is not acceptable

G. E. Veerabhadrappa vs. UOI (Central Administrative Tribunal)

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DATE: (Date of pronouncement)
DATE: May 14, 2013 (Date of publication)
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FILE: Click here to view full post with file download link
CITATION:

As regards the allegation that the removal was motivated by “malice and personal vendetta“, the exchange of correspondence between the President and the Law Ministry regarding the transfers of the Members took place after the passing of the order dated 5.5.2012 curtailing the tenure of the Applicant till 31.8.2012. There is some merit in the contention of the Respondents that the Applicant is trying to create a “smoke screen” by unnecessarily dragging the names of the Law Secretaries and making personal allegations

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