Category: High Court

Archive for the ‘High Court’ Category


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DATE: June 26, 2019 (Date of pronouncement)
DATE: July 13, 2019 (Date of publication)
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Prosecution u/s 276C for tax evasion: If the assessee's appeal against levy of s. 271(1)(c) penalty for concealment of income is allowed & has become final, the quashing of prosecution is automatic. The High Court can exercise its inherent jurisdiction to quash the prosecution and not indulge in the empty formality of directing the assessee to approach the trial Magistrate (K. C. Builders 265 ITR 562 (SC) followed)

The subject matter of the complaint being concealment of income arrived at on the basis of the finding of the assessing officer, if the Tribunal has set aside the order of concealment and penalties, there is no concealment in the eye of law and, therefore, the prosecution cannot be proceeded with by the complainant and further proceedings will be illegal and without jurisdiction

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DATE: June 25, 2019 (Date of pronouncement)
DATE: July 3, 2019 (Date of publication)
AY: 2011-12
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CITATION:
S. 147/ 148: Even in a case where the return is accepted u/s 143(1) without scrutiny, the fundamental requirement of income chargeable to tax having escaped assessment must be satisfied. Mere non-disclosure of receipt would not automatically imply escapement of income chargeable to tax from assessment. There has to be something beyond an unintentional oversight or error on the part of the assessee in not disclosing such receipt in the return of income. In other words, even after non-disclosure, if the documents on record conclusively establish that the receipt did not give rise to any taxable income, it would not be open for the AO to reopen the assessment referring only to the non disclosure of the receipt in the return of income. The attempt of further verification would amount to rowing inquiry

Despite such difference in the scheme between a return which is accepted under section 143(1) of the Act as compared to a return of which scrutiny assessment under section 143(3) of the Act is framed, the basic requirement of section 147 of the Act that the Assessing Officer has reason to believe that income chargeable to 3 (2013) 356 ITR 481 (Guj) OS WP 1230-19.doc tax has escaped assessment is not done away with. Section 147 of the Act permits the Assessing Officer to assess, reassess the income or recompute the loss or depreciation if he has reason to believe that any income chargeable to tax has escaped assessment for any assessment year. This power to reopen assessment is available in either case, namely, while a return has been either accepted under section 143(1) of the Act or a scrutiny assessment has been framed under section 143(3) of the Act. A common requirement in both of cases is that the Assessing Officer should have reason to believe that any income chargeable to tax has escaped assessment

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DATE: April 10, 2019 (Date of pronouncement)
DATE: June 28, 2019 (Date of publication)
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S. 254: President/ Sr. VP of the ITAT should take appropriate steps and expedite hearing in old appeals. A tabular statement indicating the age of the old appeals as well as an action plan of the ITAT with respect to the likely time for their disposal, having regard to the priorities that ITAT may set in this regard, shall also be filed in court

The petitioner’s grievance in this case is that the income tax appeals, pertaining to assessment years of about 20 years ago, filed by the petitioner, have been pending for 10 to 16 years (2003-2009). In the light of these averments, this court is of the opinion that the President or the Senior Vice President concerned of the Tribunal should take appropriate steps and expedite the hearing in these appeals

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DATE: April 26, 2019 (Date of pronouncement)
DATE: June 27, 2019 (Date of publication)
AY: -
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CITATION:
S. 276B TDS Prosecution: Mere delay in depositing TDS within the time limit prescribed in S. 200 & Rule 30 is an offense sufficient to attract s. 276B. The fact that the TDS has been deposited subsequently does not absolve the offense. The fact that penalty u/s 221 has not been levied is not relevant because there is an admitted delay in depositing TDS.

Once a statute requires to pay tax and stipulates period within which such payment is to be made, the payment must be made within that period. If the payment is not made within that period, there is default and an appropriate action can be taken under the Act. Interpretation canvassed by the learned counsel would make the provision relating to prosecution nugatory

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DATE: February 19, 2019 (Date of pronouncement)
DATE: June 26, 2019 (Date of publication)
AY: -
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S. 254: Surprised that how, after so much of case laws on the issue and amendment of Rule 24 itself, the ld Members of the Tribunal, even now commit the folly of dismissing appeals for want of prosecution and for default of appearance on the part of the assessees. Dismissal of appeal for want of prosecution is not only illegal but also entails further litigation by compelling the assessee to move for setting aside the ex parte order. Tribunals should not shirk their responsibility to decide the cases on merits. Copy of this judgment may be sent to the President of the ITAT & Law Secretary in Ministry of Law and Justice so that the same may be brought to the notice of all Members of the ITAT and new appointees in at the time of their recruitment itself. The President may also get it circulated to all existing Members of the ITAT so that such orders resulting in serious miscarriage of justice should not be repeated by any Member of the Tribunal

We reiterate that the fact finding Tribunals should not shirk their responsibility to decide the cases on merits because the view and reasons given by such Tribunals are important for the Constitutional Higher Courts to look into while deciding the substantial questions of law under Section 260-A of the Act arising from Tribunal’s orders. Obviously, such cryptic orders, not touching the merits of the case, would not give any rise to any substantial question of law for consideration by the High Courts under Section 260-A of the Act. The Assessee’s valuable rights of getting the issues decided on merits by the final fact finding body viz., the Tribunal cannot be given a short shrift in the aforesaid manner. A legal and binding responsibility, therefore, lies upon the Tribunal to decide the appeal on merits irrespective of the appearance of the Assessee or his counsel before it or not

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DATE: April 22, 2019 (Date of pronouncement)
DATE: June 26, 2019 (Date of publication)
AY: 2006-07
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S. 6, 68, 69: Law explained on (i) when an Indian citizen or person of Indian origin can be said to have come on "visit to India" so as to qualify as a "Non Resident" u/s 6(6) r.w. CBDT Circular No. 7 of 2003 & (ii) whether amount found deposited in a foreign bank is taxable in India u/s 68 & 69 if the assessee is a "Not Ordinary Resident"

In that view of the matter, clause (a) of Section 6(1) would not apply. It is true that in absence of clause (b) of Explanation 1 below Section 6(1) of the Act, the assessee would have fulfilled the requirements of clause (c) of Section 6(1). However, as per the explanation, if the assessee comes to a visit in India, the requirement of stay in India in the previous year would be 182 days and not 60 days as contained in clause (c). These facts would demonstrate that the assessee had migrated to a foreign country where he had set up his business interest. He pursued his higher education abroad, engaged himself in various business activities and continued to live there with his family. His whatever travels to India, would be in the nature of visits, unless contrary brought on record

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DATE: June 18, 2019 (Date of pronouncement)
DATE: June 24, 2019 (Date of publication)
AY: -
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S. 40A(9): The provision is not meant to hit genuine expenditure by an employer for the welfare and the benefit of the employees. Even contributions to unapproved and unrecognized funds have to be allowed as a deduction if they are genuine in nature

The very purpose of insertion of sub-section (9) of section 40A thus was to restrict the claim of expenditure by the employers towards contribution to funds, trust, association of persons etc. which was wholly discretionary and did not impose any restriction or condition for expanding such funds which had possibility of misdirecting or misuse of such funds after the employer claimed benefit of deduction thereof. In plain terms, this provision was not meant to hit genuine expenditure by an employer for the welfare and the benefit of the employees

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DATE: June 11, 2019 (Date of pronouncement)
DATE: June 20, 2019 (Date of publication)
AY: -
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S. 32(1)(ii) Depreciation on Intangible asset: Rights acquired under a non-compete agreement gives enduring benefit & protects the assessee's business against competition. The expression "or any other business or commercial rights of similar nature" used in Explanation 3 to sub-section 32(1)(ii) is wide enough to include non-compete rights (Ferromatice Milacron India 99 TM.com 154 (Guj) followed)

The legislature thus did not intend to provide for depreciation only in respect of the specified intangible assets but also to other categories of intangible assets which may not be possible to exhaustively enumerate. It was concluded that the assessee who had acquired commercial rights to sell products under the trade name and through the network created by the seller for sale in India were entitled to deprecation

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DATE: February 5, 2019 (Date of pronouncement)
DATE: June 8, 2019 (Date of publication)
AY: -
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S. 9(1)(vi) 'Royalty': The insertions of Explanations 5 & 6 to s. 9(1)(vi) by the Finance Act 2015 w.r.e.f. 01.04.1976, even if declaratory and clarificatory of the law, will not apply to the DTAAs. The DTAAs are a bilateral agreement between two Countries and cannot be overridden by a unilateral legislative amendment by one Country (New Skies Satellite BV 382 ITR 114 (Del) & Siemens AG 310 ITR 320 (Bom) followed)

India’s change in position to the OECD Commentary cannot be a fact that influences the interpretation of the words defining royalty as they stand today. The only manner in which such change in position can be relevant is if such change is incorporated into the agreement itself and not otherwise. A change in executive position cannot bring about a unilateral legislative amendment into treaty concluded between two sovereign states. It is fallacious to assume that any change made to domestic law to rectify a situation of mistaken interpretation can spontaneously further their case in an international treaty.

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DATE: May 16, 2019 (Date of pronouncement)
DATE: June 1, 2019 (Date of publication)
AY: 2012-13
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CITATION:
S. 145(2) "Project Completion Method" vs. "Percentage Completion Method": Dept's argument that assessee should have declared profit on percentage completion method because according to AS-7, revised in 2002 with effect from 01.04.2003, the 'Completed Contract method' has been scrapped & ICAI guidelines prefer the percentage completion method is not acceptable (Realest Builders 307 ITR 202 (SC) distinguished, All judgements referred)

As regards to the adoption of project completion method of accounting by the assessee, it is seen that the assessee’s business came into existence from 11.03.2003 and since then it has been consistently following project completion method of accounting. The Ld. AR has contended that the assessee has never deviated from such method of accounting since the inception of the business and that the revenue had also accepted project completion method and profit shown by the assessee during the assessment proceedings for AY 2014-15 in assessee’s own case which also finds mention in para 6.2.1 of the order passed by Ld. CIT(A). It is well settled that the project completion method is one of the recognized method of accounting and as the assessee has consistently been followed such recognized method of accounting thus in the absence of any prohibition or restriction under the act for doing so, it can’t be held that the decision of the CIT(A) was erroneous or illegal in any manner. The judgement in the case of “CIT vs. Realest Builders & Services Ltd.”, (Supra) relied Id. DR on method of accounting is rather in favor of the assessee and against the revenue