Category: High Court

Archive for the ‘High Court’ Category


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DATE: April 25, 2019 (Date of pronouncement)
DATE: May 11, 2019 (Date of publication)
AY: 2008-09, 2011-12, 2012-13
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S. 14A/ Rule 8D: Though, after Maxopp Investment 402 ITR 640 (SC), even "strategic investments" have to be considered for disallowance, the assessee is entitled to contend that the investments are "legacy" or "one-time" and that there is in fact no expenditure incurred to earn the tax-free income

It is apparent from a reading of the facts in the appeal that the CIT(A) formed an opinion based upon diverse reasoning, having regard to the facts of each case, regarding the nature of expenditure and especially whether it was a one-time investment opportunity availed of by the assessee. This is relevant in the context of assessee’s assertion that in fact no expenditure was incurred while investing in the mutual funds that yielded substantial income. As to whether in fact no expenditure was incurred or attributable at all, in these circumstances, it becomes a factual controversy requiring further hearing and scrutiny.

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DATE: March 19, 2019 (Date of pronouncement)
DATE: May 10, 2019 (Date of publication)
AY: 2009-10
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S. 80P(4): The AO is not obliged to grant deduction by merely looking at the certificate of registration issued by the competent authority under the Co-op Societies Act. Instead, he has to conduct an enquiry into the factual situation as to the activities of the assessee and arrive at a conclusion whether benefits can be extended or not. Chirakkal 384 ITR 490 (Ker) overruled. Antony Pattukulangara 2012 (3) KHC 726 & Perinthalmanna 363 ITR 268 (Ker) approved. Citizen Co-operative Society 397 ITR 1 (SC) followed)

In Chirakkal, the Divjsion Bench did not notice the earlier judgment in Perinthalmanna. After referring to the provisions under the Kerala Co-operative Societies Act and the Banking Regulation Actl 1949 the Division Bench held that the certificate of registration issued by the Department categorizing the assessee as Primary Agricultural Credit Society could be reIied on solely to grant deduction under Section 80P of the Income Tax Act

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DATE: February 11, 2019 (Date of pronouncement)
DATE: May 10, 2019 (Date of publication)
AY: -
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The ICAI has jurisdiction to examine any conduct (including alleged sexual harassment) by a CA that would tend to bring disrepute to the profession or the Institute. The fact that the matter is pending trial before the Criminal Court is not relevant because the standards of proof are different. The ICAI may or may not await the outcome of the trial depending on the circumstances (Gurvinder Singh 259 TM 311 (SC) followed)

This Court is unable to accept the contention that the Board of Discipline does not have the jurisdiction to examine the alleged misconduct on the part of the petitioner. Clause (2) of Part-IV of the First Schedule to the Act is wide, and would include within its scope, any conduct that would tend to bring disrepute to the profession or the Institute. If a Chartered Accountant is found to have been guilty in outraging the modesty of a woman and/or other offences involving moral turpitude, it would not be inapposite for the Board of Discipline to also conclude that the conduct did, in fact, lower the dignity of the profession. In this view, this Court is not able to accept that the proceedings before the Board of Discipline are without jurisdiction

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DATE: April 16, 2019 (Date of pronouncement)
DATE: April 30, 2019 (Date of publication)
AY: 2005-06
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S. 115JB (pre amendment by Finance Act, 2012) is not applicable to a banking company (also insurance & electricity cos) . The mechanism provided for computing book profit in terms of S. 115JB(2) is wholly unworkable for a banking company. When the machinery provision fails, the charging section also fails. The anomaly was removed by the Finance Act, 2012. However, the amendments are neither declaratory nor clarificatory but make substantive and significant legislative changes which are applicable prospectively (Kerala State Electricity Board 329 ITR 91 (Ker) followed)

These amendments in section 115JB are neither declaratory nor classificatory but make substantive and significant legislative changes which are admittedly applied prospectively. The memorandum explaining the provision of the Finance Bill, 2012 while explaining the amendments under Section 115JB of the Act notes that in case of certain companies such as insurance, banking and electricity companies, they are allowed to prepare the profit and loss account in accordance with the sections specified in their regulatory Acts. To align the Income Tax Act with the Companies Act, 1956 it was decided to amend Section 115JB to provide that the companies which are not required under Section 211 of the Companies Act, to prepare profit and loss account in accordance with Schedule VI of the Companies Act, profit and loss account prepared in accordance with the provisions of their regulatory Act shall be taken as basis for computing book profit under Section 115 JB of the Act.

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DATE: June 21, 2018 (Date of pronouncement)
DATE: April 29, 2019 (Date of publication)
AY: 2011-12
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S. 260A: Dept directed to "bonafide apply mind" before filing appeals to the High Court. Concern & anguish expressed at the tendency of the Dept to file unnecessary appeals even though the issues are ex facie covered by decisions of the jurisdictional High Courts or even the Supreme Court. CBDT & Ministry of Finance directed to take needful action

We express our concern and anguish at the tendency of the Revenue Department to file unnecessary appeals u/s. 260-A of the Act even though the issues are ex facie covered by the decision of the jurisdictional High Courts or even the Hon’ble Supreme Court of India. The substantial question of law essentially means that a question of law which is not already settled by the Constitutional Courts can only fall within the ambit of Section 260-A of the Act and therefore repetitive filing of such appeals by the Tax Department who are expected to be serious and bonafide litigants in the Constitutional Courts is a matter of concern.

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DATE: April 11, 2019 (Date of pronouncement)
DATE: April 23, 2019 (Date of publication)
AY: -
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S. 250: The CBDT is empowered to lay down broad guidelines for disposal of appeals by CsIT(A). However, it cannot offer 'incentives' to CsIT(A) for making enhancement and levying penalty. Such policy transgresses the exercise of quasi-judicial powers & is wholly impermissible and invalid u/s 119. The 'Incentives' have the propensity to influence the CsIT(A) and they will be tempted to pass an order in a particular manner so as to achieve a greater target of disposal

All these contingencies necessarily point to circumstances where the order passed by the Commissioner (Appeals) is in favour of the revenue. For example this policy refers to the enhancement made by the Commissioner or a case where the Commissioner has levied penalty under section 271(1) of the Act. This necessarily refers to enlargement of the assessee’s liability before the Commissioner as compared to what may have been determined by the Assessing Officer. In our opinion, such policy is wholly impermissible and invalid. Any directives by the CBDT which gives additional incentive for an order that the Commissioner (Appeals) may pass having regard to its implication, necessarily transgresses in the Commissioner’s exercise of discretionary quasi judicial powers.

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DATE: February 11, 2019 (Date of pronouncement)
DATE: April 23, 2019 (Date of publication)
AY: -
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S. 68/69 Bogus Purchases: Even if the purchases are bogus, the entire purchase amount cannot be added. As the department had not disputed the assessee's sales & there was no discrepancy between the purchases and the sales, the purchases cannot be rejected without disturbing the sales in case of a trader. The addition has to be restricted to the extent of the G.P. rate on purchases at the same rate of other genuine purchases (N.K .Industries 292 CTR 354 (Guj), N. K. Proteins 250 TM 22 (SC) distinguished)

In the present case, as noted above, the assessee was a trader of fabrics. The A.O. found three entities who were indulging in bogus billing activities. A.O. found that the purchases made by the assessee from these entities were bogus. This being a finding of fact, we have proceeded on such basis. Despite this, the question arises whether the Revenue is correct in contending that the entire purchase amount should be added by way of assessee’s additional income or the assessee is correct in contending that such logic cannot be applied. The finding of the CIT(A) and the Tribunal would suggest that the department had not disputed the assessee’s sales. There was no discrepancy between the purchases shown by the assessee and the sales declared. That being the position, the Tribunal was correct in coming to the conclusion that the purchases cannot be rejected without disturbing the sales in case of a trader. The Tribunal, therefore, correctly restricted the additions limited to the extent of bringing the G.P. rate on purchases at the same rate of other genuine purchases

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DATE: April 12, 2019 (Date of pronouncement)
DATE: April 23, 2019 (Date of publication)
AY: 2004-05
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S. 44BB: Amount reimbursed to the assessee (service provider) by ONGC (service recipient), representing service tax paid earlier by the assessee to the Government of India, would not form part of the aggregate amount referred to in clauses (a) and (b) of sub-section(2) of Section 44BB of the Act (Mitchell Drilling International 380 ITR 130 (Del), CBDT Circular No. 4/2008 dt 28.04.2008 & Circular No. 1/2014 dt 13.01.2014 followed)

Except to state that the said judgment needs re-consideration, no justifiable cause has been shown as to why this Court should take a view different from that of the Delhi High Court, in Mitchell Drilling International Pvt. Ltd.48, more so when the Division Bench of the Delhi High Court has taken a view similar to that of a Division Bench of this Court in M/s Schlumberger Asia Services Ltd.2. As the revenue has not been able to show just cause for this Court to take a different view, we see no reason to differ with the Division Bench judgment of the Delhi High Court that reimbursement of service tax is not an amount paid to the assessee on account of providing services and facilities in connection with the prospecting for, or extraction or production of, mineral oils in India.

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DATE: April 5, 2019 (Date of pronouncement)
DATE: April 20, 2019 (Date of publication)
AY: 2011-12
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S. 147/ 148: The fact that the assessee did not disclose the material is not relevant if the AO was otherwise aware of it. If the AO had the information during the assessment proceeding, irrespective of the source, but chooses not to utilize it, he cannot allege that the assessee failed to disclose truly and fully all material facts & reopen the assessment (Scope of Explanation 1 to S. 147 explained)

As per this Explanation thus, production before the Assessing Officer of account books or other evidence from which material evidence could with due diligence have been discovered by the Assessing Officer will not necessarily amount to disclosure within the meaning of the first proviso to Section 147. Here is not a case where the Assessee is seeking to rely on a disclosure which the Revenue can seek to bring within the fold of the said Explanation. Here is a case where the Department already had collected certain documents and materials which were before the Assessing Officer at the time of framing assessment. If the Assessing Officer did not, for some reason, advert to such material or did not utilize the same, he surely cannot allege that the Assessee failed to disclose truly and fully all material facts.

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DATE: April 5, 2019 (Date of pronouncement)
DATE: April 20, 2019 (Date of publication)
AY: 2007-08
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S. 148 Reopening: As per settled law, notice for reopening of assessment against a dead person is invalid. The fact that the AO was not informed of the death before issue of notice is irrelevant. Consequently, the s. 148 notice is set aside and order of assessment stands annulled (Alamelu Veerappan 257 TM 72 (Mad) followed)

There are several judgments of different High Courts holding that the notice or reopening of assessment is invalid in law. It is not necessary to refer to all the judgments on the point. Suffice it to say, as per the settled law, notice for reopening of assessment against a dead person is invalid