Category: Tribunal

Archive for the ‘Tribunal’ Category


Rashtriya Chemicals & Fertilizers Limited vs. CIT (ITAT Mumbai)

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DATE: February 14, 2018 (Date of pronouncement)
DATE: February 16, 2018 (Date of publication)
AY: 2012-13
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CITATION:
S. 263: Even if there is lack of inquiry by the AO and the assessment order is "erroneous" under Explanation 2 to s. 263, the order is not "prejudicial to the interests of the Revenue" because Fringe Benefit Tax is not "tax" as defined in s. 2(43) and cannot be disallowed u/s 40(a)(v) or added back to "Book Profits" u/s 115JB

The only question that survives for our consideration is that whether the omission to carry out the stated adjustment in the Book profits as envisaged by Ld. CIT has made the quantum order erroneous and prejudicial to the interest of the revenue and whether the stated adjustment as suggested by Ld. CIT was tenable in law or not? In other words, we are concerned with whether the twin prime conditions viz. erroneous and prejudicial to the interest of the revenue for invoking the provisions of Section 263 was fulfilled in the instant case or not

Seema Sabharwal vs. ITO (ITAT Chandigarh)

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DATE: February 5, 2018 (Date of pronouncement)
DATE: February 12, 2018 (Date of publication)
AY: 2013-14
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CITATION:
S. 54: If agreement for purchase of new residential house is made and entire purchase price is paid within three years from the date of transfer of the old asset, exemption u/s 54 is available. It is not required that the house must be completed within 3 years. The requirement in s. 54(2) that the capital gains should be deposited in the CGAS scheme is merely an enabling provision. If the assessee shows during assessment proceedings that the capital gains have been reinvested in the new residential house, exemption cannot be denied merely the amount was not deposited in the CGAS

If the assessee at the time of assessment proceedings, proves that he has already invested the capital gains on the purchase / construction of the new residential house within the stipulated period, the benefit under the substantive provisions of section 54(1) cannot be denied to the assessee. Any different or otherwise strict construction of sub section (2), in our view, will defeat the very purpose and object of the exemption provisions of section 54 of the Act

Rajat B Mehta vs. ITO (ITAT Ahmedabad)

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DATE: February 9, 2018 (Date of pronouncement)
DATE: February 10, 2018 (Date of publication)
AY: 2011-12
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CITATION:
S. 54: The expression “cost of the residential house so purchased” in s. 54 is not confined to the cost of civil construction but includes furniture and fixtures if they are an integral part of the purchase. The fact that the assessee did not make the claim is no reason to deny the claim if he is otherwise entitled to it (Scope of Srinivas R Desai 155 TTJ 743 (Ahd) expanded)

The expression used in the statute is “cost of the residential house so purchased” and it does not necessarily mean that the cost of the residential house must remain confined to the cost of civil construction alone. A residential house may have many other things, other than civil construction and including things like furniture and fixtures, as its integral part and may also be on sale as an integral deal. There are, for example, situations in which the residential units for sale come, as a package deal, with things like air-conditioners, geysers, fans, electric fittings, furniture, modular kitchens and dishwashers. If these things are integral part of the house being purchased, the cost of house has to essentially include the cost of these things as well

Vastukar Township Pvt. Ltd vs. DCIT (ITAT Jaipur)

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DATE: December 22, 2017 (Date of pronouncement)
DATE: January 29, 2018 (Date of publication)
AY: 2012-13
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CITATION:
S. 145(2): Law on how revenue should be recognized by a developer of property under the “percentage completion method” in the light of Accounting Standards AS-1, AS-7 & AS-9, the Guidance Note on Accounting for Real Estate Transactions issued by the ICAI and several judgements on the issue explained

As per AS 7, the recognition of revenue and expenses by reference to the stage of completion of a contract is often referred to as the percentage completion method. Under this method, contract revenue is matched with the contract costs incurred in reaching the stage of completion, resulting in the reporting of revenue, expenses and profit which can be attributed to the proportion of work completed

Priyanka Chopra vs. DCIT (ITAT Mumbai)

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DATE: January 16, 2018 (Date of pronouncement)
DATE: January 25, 2018 (Date of publication)
AY: 2008-09
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CITATION:
S. 68: If an admission of undisclosed income is made by the assessee after reference to the material found during search and seizure, it cannot be said that the admission is not based on incriminating material. The retraction of such admission of undisclosed income is not permissible especially when the retraction is by the mother and not by the assessee

As evident in the material obtained by the Revenue during search and seizure, it was only with reference to the search and seizure material that Smt. Madhu Chopra gave a specific amount to various heads wherein the undisclosed income had been utilized. The assessee had also separately accepted the same. Hence, it cannot be said that this addition is not based upon any incriminating material found or searched. Furthermore, the so called retraction is by the mother of the assessee and the Assessing Officer is correct in finding that there is no retraction whatsoever by the assessee

Vodafone India Services Pvt Ltd vs. DCIT (ITAT Ahmedabad)

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DATE: January 23, 2018 (Date of pronouncement)
DATE: January 24, 2018 (Date of publication)
AY: 2012-13
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CITATION:
Transfer Pricing: Important law explained on whether termination of Option rights under an agreement can be treated as a "deemed international transaction" under section 92B(2) of the Act read with Rule 10B (4) in the light of the judgements in Vodafone's own cases of the Supreme Court (341 ITR 1) and the Bombay High Court (385 ITR 169).

When we interpose the aforesaid statutory definition in Section 92C(1), we find that the expression ‘international transaction’ means “an arrangement, understanding or action in concert etc between two or more associated enterprises, either or both of whom are non-residents, in the nature of purchase, sale or lease of tangible or intangible property, or provision of services, or lending or borrowing money, or any other an arrangement, understanding or action in concert having a bearing on the profits, income, losses or assets of such enterprises ……..”. Therefore, in order to ascertain whether a particular transaction or not is an international transaction or not, the necessary preconditions which are to be satisfied are (a) that it is in the nature “an arrangement, understanding or action in concert etc”; (b) that it is between two or more associated enterprises, either or both of whom are non-residents; and (c) that it has a bearing on the profits, income, losses or assets of such enterprises

Pankaj Kumar Gupta vs. ITO (ITAT Lucknow)

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DATE: January 16, 2018 (Date of pronouncement)
DATE: January 24, 2018 (Date of publication)
AY: 2012-13
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CITATION:
S. 271(1)(c) penalty: Though capital gains was not disclosed in the return, if tax on the same is paid after the s. 147 assessment order is passed, there is no loss to the Revenue and it also shows the bona fides of the assessee and penalty cannot be levied. The fact that if the s. 148 notice was not issued, the assessee would have got away with tax evasion does not mean that his action was not bona fide

At the very outset, we observe that as appearing on record, in the return filed by the assessee the tax on sale of immoveable property was not paid or entered into. However, when notice under section 148 of the Act was issued, assessee himself attended the proceedings and thereafter paid the entire tax on the same date when the assessment order was finalized. This element of behaviour on the part of the assessee shows that when he had filed the return, there was some omission on the part of the assessee to include the tax on the sale of property. However, when he received notice under section 148 of the Act, he was very eager to know what mistake has been committed by him and, therefore, he himself attended the hearing before the Assessing Officer and on coming to know about the amount of tax payable, has immediately paid tax on the same date. He has not even challenged the assessment order and has accepted the assessment as passed by the Assessing Officer and paid due tax. Therefore, there is no loss to the Revenue.

Indrani Sunil Pillai vs. ACIT (ITAT Mumbai)

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DATE: January 19, 2018 (Date of pronouncement)
DATE: January 23, 2018 (Date of publication)
AY: 2010-11
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CITATION:
S. 271(1)(c) penalty: If the AO has not recorded any satisfaction in absolute terms whether the assessee has concealed particulars of income or has furnished inaccurate particulars of income, the levy of penalty is invalid. The judgement of the Bombay High Court in Maharaj Garage cannot be read out of context or in a manner to mean that there is no need for mentioning the specific limb of section 271(1)(c) of the Act for which the penalty was intended to be imposed, as such issue never came up for consideration before the High Court

As far as the judgment of the Hon’ble Jurisdictional High Court in Maharaj Garage dated 22nd August 2017 in ITA no. 21 of 2008 relied upon by the learned Departmental Representative, on a careful reading of the said judgment, we are of the view that it will have no application to the facts of the case. As could be seen, the basic issue arising out of the reference application which fell for consideration of the Hon’ble Jurisdictional High Court was, while granting previous approval by Inspecting Assistant Commissioner of Income–tax as per provisions of section 271(1)(c)(iii) of the Act whether the assessee was required to be given an opportunity of being heard. While considering this issue, the Hon’ble Jurisdictional High Court observed that provisions of section 271(1)(c)(iii) does not attract rule of presumption of mens rea as the penalty imposable under the said provision is for the breach of civil obligation. The observations of the Hon’ble Court against issuance of show cause notice appears to be in the context of quantum of penalty proposed to be imposed and not with reference to the doing away with the issuance of show cause notice as contemplated under section 274 of the Act. Therefore, the judgment of the Hon’ble Court cannot be read out of context or in a manner to mean that there is no need for mentioning the specific limb of section 271(1)(c) of the Act for which the penalty was intended to be imposed, as such issue never came up for consideration before the Hon’ble High Court. That being the case, the aforesaid decision cannot be applied for rebutting the proposition that in the absence of recording of satisfaction regarding the exact nature of offence, no penalty under section 271(1)(c) can be imposed

ACIT vs. Mohinder Singh (ITAT Chandigarh)

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DATE: January 18, 2018 (Date of pronouncement)
DATE: January 23, 2018 (Date of publication)
AY: 2013-14
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CITATION:
S. 2(1A)/ 68: An assessee who understates the consideration received for sale of agricultural land to avoid payment of stamp duty is defrauding the exchequer. He cannot take advantage of his own wrong and is estopped from contending that the amount received from the purchaser is a higher amount than was stated in the agreement. The incremental amount is assessable as ‘income from other sources’ and not as ‘agricultural income’. However, penalty u/s 271(1)(c) cannot be levied for the said wrong claim

Both seller and purchaser are estopped from their act and conduct to take such a self -contradictory plea. Not only the earlier but the later authorities also are the public officers appointed for the collection of taxes contributing to the public exchequer (may be of the State or of the Union) and a person having represented the factum of the transaction in a particular manner at one stage to a public officer and getting a wrongful benefit is estopped to deny the same to the subsequent public authority, both authorities being employee and representative of the government . The principle of estoppel in the light of the provisions of section 115 of the Evidence Act gets attracted in such a case. Even otherwise, recognizing such a transaction will amount to over riding the provisions of Transfer of Property Act and Indian Registration Act. In view of the above discussion, it can be safely held that not only legally but also ethically and morally, the parties to a registered document are not allowed to deny the terms of the document until and unless the very validity or execution of such a document is disputed

Jeetmal Choraria vs. ACIT (ITAT Kolkata)

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DATE: December 1, 2017 (Date of pronouncement)
DATE: January 20, 2018 (Date of publication)
AY: 2010-11
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CITATION:
S. 271(1)(c) Penalty: Conflict in law laid down by Bombay, Patna & Karnataka High Courts in Kaushalya 216 ITR 660 (Bom), Maharaj Garage (Bom), Samson Perinchery (Bom), Mithila Motors 149 ITR 751 (Pat) & Manjunatha Cotton & Ginning 359 ITR 565 (Kar) on whether the issuance of a s. 274 notice is merely an administrative device for informing the assessee about the proposal to levy penalty and mere mistake in the language used or mere non-striking of the inaccurate portion invalidates the notice or not explained. Impact of the conflicting law of the High Courts on Benches of the Tribunal in jurisdictional and non-jurisdictional States also explained

The line of reasoning of the Hon’ble Bombay High Court and the Hon’ble Patna High Court is that issuance of notice is an administrative device for informing the assessee about the proposal to levy penalty in order to enable him to explain as to why it should not be done. Mere mistake in the language used or mere non-striking of the inaccurate portion cannot by itself invalidate the notice. The Tribunal Benches at Mumbai and Patna being subordinate to the Hon’ble Bombay High Court and Patna High Court are bound to follow the aforesaid view. The Tribunal Benches at Bangalore have to follow the decision of the Hon’ble Karnataka High Court. As far as benches of Tribunal in other jurisdictions are concerned, there are two views on the issue, one in favour of the Assessee rendered by the Hon’ble Karnataka High Court in the case of Manjunatha Cotton & Ginning (supra) and other of the Hon’ble Bombay High Court in the case of Smt. Kaushalya. It is settled legal position that where two views are available on an issue, the view favourable to the Assessee has to be followed

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