Category: Supreme Court

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CIT vs. Sunita Dhadda (Supreme Court)

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DATE: March 28, 2018 (Date of pronouncement)
DATE: June 6, 2018 (Date of publication)
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CITATION:
S. 143(3)/ 292C: If the AO wants to rely upon documents found with third parties, the presumption u/s 292C against the assessee is not available. As per the principles of natural justice, the AO has to provide the evidence to the assessee & grant opportunity of cross-examination. Secondary evidences cannot be relied on as if neither the person who prepared the documents nor the witnesses are produced. The violation of natural justice renders the assessment void. The Dept cannot be given a second chance (All judgements considered)

Cross-examination is one part of the principles of natural justice: A Constitution Bench of this Court in State of M.P. v. Chintaman Sadashiva Vaishampayan AIR 1961 SC 1623, held that the rules of natural justice, require that a party must be given the opportunity to adduce all relevant evidence upon which he relies, and further that, the evidence of the opposite party should be taken in his presence, and that he should be given the opportunity of cross-examining the witnesses examined by that party. Not providing the said opportunity to cross-examine witnesses, would violate the principles of natural justice

Mahabir Industries vs. PCIT (Supreme Court)

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DATE: May 18, 2018 (Date of pronouncement)
DATE: May 19, 2018 (Date of publication)
AY: 2008-09, 2009-10
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CITATION:
S. 80-IC: The fact that the assessee has earlier availed deduction u/s 80-IA & 80-IB is of no concern because deduction u/s 80-IC is available from the "initial year" i.e. the year of completion of substantial expansion. The inclusion of period for the deduction availed u/s 80-IA & 80-IB, for the purpose of counting ten years, is provided in sub-section (6) of s. 80-IC and it is limited to those industrial undertakings or enterprises which are set-up in the North-Eastern Region

If the assessee had earlier availed deduction under Section 80-IA and Section 80-IB, that would be of no concern inasmuch as on carrying out substantial expansion, which was carried out and completed in the Assessment Year 2006-07, the assessee became entitled to deduction under Section 80-IC from the initial year. The term ‘initial year’ is referable to the year in which substantial expansion has been completed, which legal position is stated by the High Court itself and even accepted by the Department as it has not challenged that part of the judgment. The inclusion of period for the deduction is availed under Section 80-IA and Section 80-IB, for the purpose of counting ten years, is provided in sub-section (6) of Section 80-IC and it is limited to those industrial undertakings or enterprises which are set-up in the North-Eastern Region. By making specific provision of this kind, the Legislature has shown its intent, namely, where the industry is not located in North- Eastern State, the period for which deduction is availed earlier by an assessee under Section 80-IA and Section 80-IB will not be reckoned for the purpose of availing benefit of deduction under Section 80-IC of the Act.

Mangammal @ Thulasi vs. T.B. Raju (Supreme Court)

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DATE: April 19, 2018 (Date of pronouncement)
DATE: May 18, 2018 (Date of publication)
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Hindu Succession Act, 1956 (HUF Law): U/s 29-A of the TN Amendment, only daughters of a coparcener who were not married at the time of commencement of the amendment of 1989 are is entitled to claim partition in the Hindu Joint Family Property. Married daughters are not coparceners and are not entitled to institute suit for partition and separate possession (Danamma @ Suman Surpur Vs. Amar 2018 (1) Scale 657 distinguished)

Any property inherited upto four generations of male lineage from the father, father’s father or father’s father’s father i.e. father, grand father etc., is termed as ancestral property. In other words, property inherited from mother, grandmother, uncle and even brother is not ancestral property. In ancestral property, the right of property accrues to the coparcener on birth. The concept of ancestral property is in existence since time immemorial. In the State of Tamil Nadu, in order to give equal position to the females in ancestral property, in the year 1989, the State Government enacted the Hindu Succession (Tamil Nadu Amendment) Act, 1989 effective from March 25, 1989 which brought an amendment in the Hindu Succession Act, 1956 (for brevity “the Act”) by adding Section 29-A vide Chapter II-A under the heading of Succession by Survivorship

Union of India vs. Pirthwi Singh (Supreme Court)

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DATE: April 24, 2018 (Date of pronouncement)
DATE: May 10, 2018 (Date of publication)
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When will the Rip Van Winkleism stop and Union of India wake up to its duties and responsibilities to the justice delivery system? To make matters worse, in this appeal, the Union of India has engaged 10 lawyers, including an Additional Solicitor General and a Senior Advocate! In other words, the Union of India has created a huge financial liability by engaging so many lawyers for an appeal whose fate can be easily imagined on the basis of existing orders of dismissal in similar cases. Yet the Union of India is increasing its liability and asking the taxpayers to bear an avoidable financial burden for the misadventure

To say the least, this is an extremely unfortunate situation of unnecessary and avoidable burdening of this Court through frivolous litigation which calls for yet another reminder through the imposition of costs on the Union of India while dismissing this appeal. We hope that someday some sense, if not better sense, will prevail on the Union of India with regard to the formulation of a realistic and meaningful National Litigation Policy and what it calls ‘ease of doing business’, which can, if faithfully implemented benefit litigants across the country

CIT vs. Calcutta Export Company (Supreme Court)

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DATE: April 24, 2018 (Date of pronouncement)
DATE: May 3, 2018 (Date of publication)
AY: 2005-06
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CITATION:
S. 40(a)(ia): The amendment to s. 40(a)(ia) by the Finance Act, 2010 w.e.f 01.04.2010 to provide that all TDS made during the previous year can be deposited with the Government by the due date of filing the return of income should be interpreted liberally and equitably and applied retrospectively from the date when s. 40(a)(ia) was inserted i.e., with effect from the AY 2005-2006 so that an assessee should not suffer unintended and deleterious consequences beyond what the object and purpose of the provision mandates. The amendment is curative in nature and should be given retrospective operation as if the amended provision existed even at the time of its insertion

Hence, in light of the forgoing discussion and the binding effect of the judgment given in Allied Moters 224 ITR 677(SC), we are of the view that the amended provision of Sec 40(a)(ia) of the IT Act should be interpreted liberally and equitable and applies retrospectively from the date when Section 40(a)(ia) was inserted i.e., with effect from the Assessment Year 2005-2006 so that an assessee should not suffer unintended and deleterious consequences beyond what the object and purpose of the provision mandates. As the developments with regard to the Section recorded above shows that the amendment was curative in nature, it should be given retrospective operation as if the amended provision existed even at the time of its insertion. Since the assessee has filed its returns on 01.08.2005 i.e., in accordance with the due date under the provisions of Section 139 IT Act, hence, is allowed to claim the benefit of the amendment made by Finance Act, 2010 to the provisions of Section 40(a)(ia) of the IT Act.

CIT vs. S. Ajit Kumar (Supreme Court)

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DATE: May 2, 2018 (Date of pronouncement)
DATE: May 3, 2018 (Date of publication)
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S. 158BB Block Assessment: While it is a cardinal principle of law that in order to add any income in the block assessment, evidence of such income must be found in the course of the search u/s 132, any material or evidence found/collected in a survey u/s 133A which has been simultaneously made at the premises of a connected person can also be utilized while making the Block Assessment. The same would fall under the words “and such other materials or information as are available with the Assessing Officer and relatable to such evidence” occurring in s. 158 BB

It is a cardinal principle of law that in order to add any income in the block assessment, evidence of such must be found in the course of the search under Section 132 of the IT Act or in any proceedings simultaneously conducted in the premises of the assessee, relatives and/or persons who are connected with the assessee and are having transaction/dealings with such assessee. In the present case, the moot question is whether the fact of cash payment of Rs 95.16 lakhs can be added under the head of the undisclosed income of the assessee in block assessment. The power of survey has been provided under Section 133A of the IT Act. Therefore, any material or evidence found/collected in a Survey which has been simultaneously made at the premises of a connected person can be utilized while making the Block Assessment in respect of an assessee under Section 158BB read with Section 158 BH of the IT Act. The same would fall under the words “and such other materials or information as are available with the Assessing Officer and relatable to such evidence” occurring in Section158 BB of the Act. In the present case, the Assessing Officer was justified in taking the adverse material collected or found during the survey or any other method while making the Block Assessment.

CIT vs. HCL Technologies Ltd (Supreme Court)

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DATE: April 24, 2018 (Date of pronouncement)
DATE: May 2, 2018 (Date of publication)
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CITATION:
S. 10A: If deductions on freight, telecommunication and insurance attributable to the delivery of computer software u/s 10A of the IT Act are allowed only in Export Turnover but not from the Total Turnover then, it would give rise to inadvertent, unlawful, meaningless and illogical result which would cause grave injustice to the assessee which could have never been the intention of the legislature As the object of the formula is to arrive at the profit from export business, expenses excluded from export turnover have to be excluded from total turnover also. Otherwise, any other interpretation makes the formula unworkable and absurd

In the instant case, if the deductions on freight, telecommunication and insurance attributable to the delivery of computer software under Section10A of the IT Act are allowed only in Export Turnover but not from the Total Turnover then, it would give rise to inadvertent, unlawful, meaningless and illogical result which would cause grave injustice to the Respondent which could have never been the intention of the legislature. The definition of total turnover given under Sections 80HHC and 80HHE cannot be adopted for the purpose of Section 10A as the technical meaning of total turnover, which does not envisage the reduction of any expenses from the total amount, is to be taken into consideration for computing the deduction under Section 10A. When the meaning is clear, there is no necessity of importing the meaning of total turnover from the other provisions. If a term is defined under Section 2 of the IT Act, then the definition would be applicable to all the provisions wherein the same term appears. As the term ‘total turnover’ has been defined in the Explanation to Section 80HHC and 80HHE, wherein it has been clearly stated that “for the purposes of this Section only”, it would be applicable only for the purposes of that Sections and not for the purpose of Section 10A. If denominator includes certain amount of certain type which numerator does not include, the formula would render undesirable results.

CIT vs. Mahindra and Mahindra Ltd (Supreme Court)

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DATE: April 24, 2018 (Date of pronouncement)
DATE: May 2, 2018 (Date of publication)
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CITATION:
Loan Waiver - Applicability of S. 28(iv) & 41(1): (a) S. 28(iv) does not apply if the receipts are in the nature of cash or money (b) S. 41(1) does not apply if the waiver of loan does not amount to cessation of trading liability i.e if the assessee has not claimed any deduction u/s 36 (1) (iii) of the IT Act qua the payment of interest in any previous year

On a perusal of section 41(1), it is evident that it is a sine qua non that there should be an allowance or deduction claimed by the assessee in any assessment for any year in respect of loss, expenditure or trading liability incurred by the assessee. Then, subsequently, during any previous year, if the creditor remits or waives any such liability, then the assessee is liable to pay tax under Section 41 of the IT Act. The objective behind this Section is simple. It is made to ensure that the assessee does not get away with a double benefit once by way of deduction and another by not being taxed on the benefit received by him in the later year with reference to deduction allowed earlier in case of remission of such liability

CIT vs. Container Corporation of India Ltd (Supreme Court)

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DATE: April 24, 2018 (Date of pronouncement)
DATE: May 2, 2018 (Date of publication)
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CITATION:
S. 80-IA(4): Inland Container Depots (ICDs) are Inland Ports and income earned out of these Depots are eligible for deduction. However, the actual computation is to be made in accordance with the different Notifications issued by the Customs department with regard to different ICDs located at different places

Though both the Notification and communication are not binding on CBDT to decide whether ICDs can be termed as Inland Ports within the meaning of Section 80-IA of the IT Act, the appellant herein is unable to put forward any reasonable explanation as to why these notifications and communication should not be relied to hold ICDs as Inland Ports. Unless shown otherwise, it cannot be held that the term ‘Inland Ports’ is used differently under Section 80-IA of the IT Act. All these facts taken together clear the position beyond any doubt that the ICDs are Inland Ports and subject to the provisions of the Section and deduction can be claimed for the income earned out of these Depots. However, the actual computation is to be made in accordance with the different Notifications issued by the Customs department with regard to different ICDs located at different places.

CIT vs. Carpet India (Supreme Court)

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DATE: April 27, 2018 (Date of pronouncement)
DATE: April 30, 2018 (Date of publication)
AY: 2001-02
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CITATION:
S. 80HHC: Law laid down in Baby Marine Exports 290 ITR 323 & Sushil Kumar Gupta 210 TM 251 (SC) is not correct. Question whether supporting manufacturer who receives export incentives in the form of duty draw back (DDB), Duty Entitlement Pass Book (DEPB) etc. is entitled for deduction u/s 80HHC is referred to the larger Bench

we are not in the agreement with the decisions in Baby Marine Exports 290 ITR 323 & Sushil Kumar Gupta 210 TM 251 (SC) and as Explanation (baa) of Section 80HHC specifically reduces deduction of 90% of the amount referable to Section 28 (iiia) to (iiie) of the IT Act, hence, we are of the view that these decisions require re-consideration by a larger Bench since this issue has larger implication in terms of monetary benefits for both the parties

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