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DATE: November 1, 2017 (Date of pronouncement)
DATE: December 29, 2017 (Date of publication)
AY: 2010-11
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CITATION:
S. 23 House Property Income: Common Area Maintenance Charges and non-occupancy charges paid by the assessee to the Society are deductible from the rent while computing the 'Annual Letting Value' u/s 22

What s. 22 attempts to assess is the annual value of the property consisting of any building or land appurtenant thereto, of which the appellant is the owner,, and which has not been put to use for the purposes of its business or profession by it. The rent being charged by the appellant, if so, is only a surrogate measure of the said annual value. The expenditure on the aforesaid items, i.e., the salary (including bonus) to the maintenance staff of the facilities as electric motors, lift, caning, etc., as well as that on the electricity consumed in respect of any common area and the electric motors, is not attributable directly to the house property as such, but to its enjoyment by the tenants/users thereof

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DATE: December 18, 2017 (Date of pronouncement)
DATE: December 22, 2017 (Date of publication)
AY: 2013-14
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CITATION:
S. 54: Acquisition of new flat in an apartment under construction should be considered as a case of “Construction” and not “Purchase”. The date of commencement of construction is not relevant for purpose of s. 54. The fact that the construction may have commenced prior to the date of transfer of the old asset is irrelevant. If the construction is completed within 3 years from the date of transfer, the exemption is available

For the purpose of sec. 54 of the Act, we have to see whether the assessee has completed the construction within three years from the date of transfer of old asset. In the instant case, there is no dispute that the assessee took possession of the new flat within three years from the date of sale of old residential flat. Accordingly, we are of the view that the assessee has complied with the time limit prescribed u/s 54 of the Act. Since the amount invested in the new flat prior to the due date for furnishing return of income was more than the amount of capital gain, the requirements of depositing any money under capital gains account scheme does not arise in the instant case. Further, the Hon’ble High Court has held in the case of ITO Vs. K.C.Gopalan (2000)(162 CTR 0566) that there is no requirement that the sale proceeds realised on sale of old residential house alone should be utilised

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DATE: November 17, 2017 (Date of pronouncement)
DATE: December 2, 2017 (Date of publication)
AY: 2008-09
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CITATION:
Taxability of Gifts u/s 56(2)(vi): A receipt cannot be taxed u/s 56(2)(vi) merely on conjecture or surmises. The AO has to prove beyond doubt that a particular receipt is taxable as income. Merely because the person who paid the amount does not initiate any action for recovery of money is not sufficient for making addition

The AO has observed in his assessment order that SPCL has not taken any action for recovery of the amount, even after lapse of three years from the date of payment. The AO further observed that though the assessee has procured various immovable properties in his personal name, the company has failed to initiate necessary proceedings to get the land procured in their name or return the money given to the assessee. No interest has been charged on money paid to the assessee. All these facts goes to prove undisputed fact that the transactions are not genuine, therefore, the AO opined that impugned amount is taxable under the provisions of section 56(2)(vi) of the Act. We do not find any merit in the findings of the A.O. for the reason that merely because the person, who paid the amount does not initiate any action for recovery of money should not be not a reason for making addition towards amount received as assessee’s income. The AO has to prove beyond doubt a particular receipt is taxable in the given circumstances within the meaning of the said provision

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DATE: November 1, 2017 (Date of pronouncement)
DATE: November 28, 2017 (Date of publication)
AY: 2010-11
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CITATION:
S. 45/ 48: The scheme of the Act is to assess real income and not hypothetical income. The word "accrue" in "full value of consideration received or accruing" in s. 45 means that the assessee has a legally enforceable right to receive the sum. An amount which is payable only on fulfillment of conditions does not create an enforceable right and has to be excluded while computing capital gains

The expression “full value of consideration received or accruing” would mean the amount actually received by the assessee or consideration which has accrued to the assessee. The expression “accrue” means a right acquired by the assessee to receive income. Unless, a debt due by somebody has been created in favour of assessee, it cannot be said that he has acquired a right to receive the income or that income has accrued to him. An amount can accrue to assessee if he acquires a legally enforceable right to receive it from the debtor. The entire purpose of the Income Tax Act, 1961 is to assess the real income of the assessee. Therefore, the Departmental Authorities cannot assess any hypothetical or notional income to tax

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DATE: October 11, 2017 (Date of pronouncement)
DATE: November 4, 2017 (Date of publication)
AY: 2010-11
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S. 68: In the absence of any direct evidence demonstrating that the assessee received cash payment, no addition can be made merely on presumption and surmises and on estimate basis. For making the addition on account of cash component, it is the duty of the AO to bring on record corroborative evidence to establish the fact that the entries made in the seized document were correct

The Assessing Officer has not brought on record any clinching evidence on the basis of any enquiry made by him to demonstrate that the assessee has actually received any cash as per the evaluation sheet from Matrix. Therefore, in the absence of any direct evidence demonstrating that the assessee had received cash payment from Matrix, as shown in the evaluation sheet, no addition can be made merely on presumption and surmises and on estimate basis. For making the addition on account of cash component, it was the duty of the Assessing Officer to bring on record corroborative evidence to establish the fact that the entries made in the evaluation sheet were correct

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DATE: May 22, 2017 (Date of pronouncement)
DATE: September 23, 2017 (Date of publication)
AY: 2008-09
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CITATION:
S. 271(1)(c) penalty: Voluntary disclosure of Rs. 557.50 crores. Entire law on levy of penalty discussed in the context of declaration made during survey, bogus purchases, bogus share capital, accommodation entries, non-application of mind by the AO etc. All important judgements incl Kaushalya 216 ITR 660 (Bom), MAK Data 358 ITR 593 (SC) explained/ ditinguished

A survey action u/s 133A was taken by the Investigation Wing against the assessee on 19/12/2012. The survey took place at the office premises as well as at the factory premises where the manufacturing activity is carried on. Not a single piece of paper is found either from the office premises or from the factory premises which could prove or indicate or suggest that the assessee has earned unaccounted income. However, during course of survey, statement of Director of Company Shri Babu Lal was recorded on 21/12/2012, wherein he offered income earned during the course of business. No iota of proof is also found regarding the manufacturing results disclosed by the assessee. The Investigation Wing has not issued a -single letter or a show cause or a questionnaire after conduct of the survey to the assessee pointing out any discrepancy or defect in the books of account or regarding detection of unaccounted income. The assessee on its own voluntarily filed a letter dated 27/12/2012 on 07/01/2013 with the Investigation Wing offering the income of Rs.557.50 crores for A.V. 2007-08 to 2010-11. As no incriminating material/document was found, the assessee was left with no choice but to state that the said income was generated on account of difference in yield, when in fact and in substance there was no defect or error in the yield which is disclosed by the assessee in the regular books of accounts. The assessee thereafter filed the return of income disclosing the income offered in the letter dated 27/12/2012 on 15/01/2013 and filed a copy of the same with the Investigation Wing. Notice u/s 148 was issued on 25/11/2013 received by the assessee on 27/11/2013. The assessee filed a letter stating that the return filed voluntarily on 15/01/2013 may be treated as return in response to notice u/s 148. The assessments for the impugned assessment years were framed u/s 147 r.w.S. 143(3) of the Income Tax Act(“the Act”). The impugned penalty in respect of impugned assessment years were imposed by the ACIT, Central Circle-41, Mumbai(“AO”) u/s.271(1)(c) of the IT Act.

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DATE: July 5, 2017 (Date of pronouncement)
DATE: July 13, 2017 (Date of publication)
AY: -
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CITATION:
S. 68 Bogus share capital: Mere fact that parties to whom the share certificates were issued and who had paid the share capital money were not traceable and did not appear before the AO in response to summons does not mean that the transaction can be treated as bogus if the documentation shows the genuineness of the transaction

The Assessing Officer added Rs.95 lakhs as income under Section 68 of the Income Tax Act only on the ground that the parties to whom the share certificates were issued and who had paid the share money had not appeared before the Assessing Officer and the summons could not be served on the addresses given as they were not traced and in respect of some of the parties who had appeared, it was observed that just before issuance of cheques, the amount was deposited in their account

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DATE: June 7, 2017 (Date of pronouncement)
DATE: June 21, 2017 (Date of publication)
AY: -
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CITATION:
S. 92C +/- 5%: The contention that there is an error because mere mathematical calculation shows that the arm's length purchase price as worked out by the TPO falls beyond (+)/(-) 5% range and consequently falls outside the scope of the second proviso to s. 92C(2) cannot be considered if it was not raised before the CIT(A) & ITAT

Whether on the facts and circumstances of the case and in law, the ITAT is correct in directing the Assessing Officer to allow benefit of +/5% to the assessee without considering Explanation (2A) to Section 92C(2) inserted by Finance Act 2012 w.e.f. 1.4.2002, whereby deduction of 5% earlier being allowed by appellate authorities has been explicitly prohibited w.e.f. 1.4.2002 and therefore, the ITAT ought not to have issued such directions to the A.O. as are in contravention of the provisions of the statute

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DATE: May 2, 2017 (Date of pronouncement)
DATE: May 9, 2017 (Date of publication)
AY: 2010-11
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CITATION:
S. 271(1)(c): Bogus purchases cannot be assessed as 'unexplained expenditure' u/s 69C if the transactions are duly disclosed and payments are through banks. The fact that the sellers are not traceable and the assessee surrendered the bogus purchases does not justify levy of penalty. Mere non-striking of the options in the s. 274 notice does not render the penalty proceedings void if the assessment order shows due application of mind.

Section 69C could not be applied to the facts of the case as the payments were through banking channels which were duly reflected in the books of accounts and therefore, there was no unexplained expenditure within the meaning of Section 69C incurred by the assessee. Further, we find that the assessee was in possession of purchase invoices and various other documentary evidences qua these purchases. A bare perusal of the purchase invoices reveals that the assessee has purchased consumables etc. from the alleged bogus suppliers, which are connected, at least to some extent, with the business of the assessee. The assessee, during quantum proceedings itself filed revised computation of income after disallowing the alleged bogus purchases by citing the reason that the suppliers were not traceable during assessment proceedings. Nevertheless, the assessee was in possession of vital evidences in his possession to prima facie substantiate his purchases to some extent particularly when the payments were though banking channels. Merely because the suppliers could not be traced at the given address would not automatically lead to a conclusion that there was concealment of income or furnishing of inaccurate particulars by the assessee

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DATE: March 6, 2017 (Date of pronouncement)
DATE: March 10, 2017 (Date of publication)
AY: 2009-10
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CITATION:
S. 145: The average cost method of valuing inventories is an accepted method of valuation approved by the accounting standards issued by the ICAI. The AO is not entitled to disregard the method if the assessee has consistently followed the method

The Assessing Officer sought to question the method of accounting only because the assessee has not been regularly following the same or the income is not computed in accordance with the standards notified under subsection (2). We do not find that there was any material with regard to the standards and notified. It is only whether the assessee was consistent in following the method of accounting provided in subsection (1) of Section 145 of the Income Tax Act, 1961. If that is the other eventuality in which the Assessing Officer derives his power in terms of Section 145, then, in para 12 the Tribunal has found that the assessee has maintained proper books of account. No defect has been pointed out by the Assessing Officer either in the purchases or in the sales

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