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DATE: February 25, 2019 (Date of pronouncement)
DATE: March 9, 2019 (Date of publication)
AY: 2011-12
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CITATION:
S. 147/148: If the AO is of the opinion that the issue requires verification, it tantamounts to fishing or roving inquiry. He is not permitted to reopen merely because in the later year, he took a different view on the basis of similar material. Even if the question of taxing interest income under the DTAA was not in the mind of the AO when he passed the assessment, he cannot reopen if there is no failure to disclose truly and fully all material facts

If during the assessment of the later assessment year, the Assessing officer collects or chances upon new material which may have bearing on the assessment of the assessee, and in case where the assessment is sought to be reopened beyond four years, he can also establish lack of true and full disclosures on the part of the assessee, it may be open for him to reopen assessment of the earlier year. However, merely because in the later year, the Assessing Officer takes a different view on the basis of similar material, which may have been collected during such process, would not permit him to reopen the assessment

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DATE: December 20, 2018 (Date of pronouncement)
DATE: December 22, 2018 (Date of publication)
AY: 2014-15
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CITATION:
S. 92BA(i)/ 40A(2)(b) Domestic Transfer Pricing: Entire law on what constitutes "Specified Domestic Transactions” explained. The Dept's contention that a shareholder has beneficial interest in the assets of the company is contrary to all canons of Company law

We cannot, and the law does not permit us, to hold that HDFC Ltd. is the beneficial owner of 22.64% of the shares in the Petitioner by clubbing the share holding of HDFC Investments Ltd. with the shareholding of HDFC Ltd. If we were to do this, we would be effectively holding that HDFC Ltd., being a shareholder of HDFC Investments Ltd., is the beneficial owner of the shares which HDFC Investments Ltd. holds in the Petitioner. This, in law, is clearly impermissible because a shareholder of a company can never have any beneficial interest in the assets (movable or immovable) of that company. In the present case, if we were to accept the contention of the Revenue, it would mean that HDFC Ltd. is the beneficial owner of the shares which HDFC Investments Ltd. holds in the Petitioner. This would be contrary to all canons of Company Law. It is well settled that a shareholder of a company can never be construed either the legal or beneficial owner of the properties and assets of the company in which it holds the shares. This being the position in law, we find that the Revenue is incorrect in trying to club the shareholding of HDFC Investments Ltd. in the Petitioner along with the shareholding of HDFC Ltd. in the Petitioner, to cross the threshold of 20% as required in explanation (a) to section 40A(2)(b). We are supported in the view that we take by a decision of the Supreme Court in the case of Bacha F. Guzdar Vs. Commissioner of Income Tax [(1955) 27 ITR 1].

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DATE: October 15, 2018 (Date of pronouncement)
DATE: October 23, 2018 (Date of publication)
AY: -
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CITATION:
S. 254(2): We are at a loss to understand why the ITAT has not communicated a date of hearing of the Miscellaneous Application (MA). The ITAT should give priority to the hearing of MAs. It should assign specific dates of hearing and inform parties well in advance. The ITAT should set right the lapses and put its house in order. None should be compelled to move the High Court and seek an out of turn hearing

We have already indicated in our earlier orders and directions that the Tribunal should inform parties well in advance by assigning specific dates of hearing on these Miscellaneous Applications. They should be taken in the order in which they have been instituted/filed. None should be compelled to move this Court and seek an out of turn hearing

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DATE: October 8, 2018 (Date of pronouncement)
DATE: October 15, 2018 (Date of publication)
AY: -
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CITATION:
S. 197 TDS: No functionary other than the officer referred to in the relevant statutory provision, namely section 197 and Rule 28AA of the Income Tax Rules, 1962, is permitted to take over the jurisdiction or interfere in the exercise of the discretionary power envisaged by this statutory provision. The concerned official has to record his satisfaction while issuing the TDS certificate

While we allow withdrawal of these certificates and impugned in this Writ Petition with liberty to issue fresh certificates in accordance with law, we clarify that no functionary other than the officer referred to in the relevant statutory provision, namely Section 197 and the Rule 28AA of the Income Tax Rules, 1962 would be permitted to take over the jurisdiction or interfere in the exercise of the discretionary power envisaged by this statutory provision

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DATE: September 28, 2018 (Date of pronouncement)
DATE: October 13, 2018 (Date of publication)
AY: 2016-17, 2017-18
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CITATION:
S. 271C & 206AA Penalty: The assessee has made out a prima facie case that the outcome of the appeal before the ITAT will directly impact the penalty proceedings which are hurriedly being finalized by the authorities which may entail huge liability by way of penalty on the assessee. The Revenue authorities are accordingly restrained from passing any order imposing penalty on the assessee so long as the appeal is pending before the Tribunal (Wander 44 Taxman.com 103 (Bom) & GE India Technology 46 Taxmann.com 374 (Guj) followed)

So far as the penalty proceedings are concerned, the assessee has made out a prima facie case in favour of the assessee proving that the outcome of the appeal before ITAT will directly impact the proceedings which are hurriedly being finalized by the authorities below, which may entail huge liability by way of penalty on the assessee. In our opinion, so long as the appeal is pending before the Tribunal, the Revenue authorities should be restrained from passing any order imposing penalty on the assessee u/s 271C and 206AA of the Act however the proceedings may continue

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DATE: October 1, 2018 (Date of pronouncement)
DATE: October 6, 2018 (Date of publication)
AY: -
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CITATION:
S. 244: The Dept should bring some order and discipline to the aspect of granting refunds. All pending refund applications should be processed in the order in which they are received. It is the bounden duty of the Revenue to grant refunds generated on account of orders of higher forums and disburse the amount expeditiously. In the absence of a clear policy, the Courts may impose interest on the quantum of refund at such rates determined by the Court

We hope and trust that all pending refund applications are processed in the order in which they are received by the Respondents. If refunds are generated on account of orders of Higher Forums, Authorities and Courts, then, it is the bounden duty of the Revenue to grant such refund and disburse the amount expeditiously

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DATE: August 28, 2018 (Date of pronouncement)
DATE: September 1, 2018 (Date of publication)
AY: -
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CITATION:
Securities Transaction Tax: CBDT's clarification that where a derivative contract is being settled by physical delivery of shares, the transaction would not be any different from transaction in equity share where the contract is settled by actual delivery or transfer of shares and the rates of STT as applicable to such delivery based equity transactions shall also be applicable to such derivative transaction takes care of the grievance of the stake holders

In a nutshell, CBDT is of the view that where a derivative contract is being settled by physical delivery of shares, the transaction would not be any different from transaction in equity share where the contract is settled by actual delivery or transfer of shares and the rates of STT as applicable to such deliverybased equity transactions shall also be applicable to such derivative transaction

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DATE: August 3, 2018 (Date of pronouncement)
DATE: August 7, 2018 (Date of publication)
AY: 2007-08
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CITATION:
S. 254(2): If there is no discussion whatsoever by the Tribunal of the various case laws detailed in the submissions filed by the assessee, the order is non-speaking and has to be recalled. The Tribunal should take into account the material and case laws relied upon by the assessee during the hearing

We find that, though the order dated 13th February, 2015 does render a finding that no positive material was brought on record, there is no discussion whatsoever of the various case laws detailed in the submissions which according to the petitioner clinches the issues in support of its case that the shareholding investment by the five Companies was genuine. In the above view, the Tribunal ought to have allowed the petitioner’s Rectification Application and considered the petitioner’s Appeal before it on merits, inter-alia, taking into account the material and case laws which has been already filed by the petitioner’s during the hearing leading to the order dated 13th February, 2015

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DATE: April 18, 2018 (Date of pronouncement)
DATE: April 27, 2018 (Date of publication)
AY: 2001-02
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CITATION:
The CBDT should reconsider the practice of appointing retired revenue officers as panel counsel. While the retired officials have domain expertise and do render assistance, they lack the skill and conduct required to appear as an Advocate. They also lack the objectivity expected from officers of the court. The CBDT could consider holding of a training programme, where leading Advocates could address the domain expert on the ethics, obligation and standard expected of Advocates before they start representing the State. The CBDT should lay down a standard procedure in respect of manner in which the Departmental Officer/ Assessing Officer assist the Counsel for the Revenue while promoting/ protecting Revenue’s cause so that the Revenue’s Counsel are not left to fend for themselves

We have for a long time, taken into account that many of these are fresh entrants to the bar and in due course, would learn the standard expected of an Advocate. However, to our disappointment, many of them are refusing to learn. Therefore, the CBDT could consider holding of a training programme, where leading Advocates could address the domainexpert on the ethics, obligation and standard expected of Advocates before they start representing the State. This is only a suggestion and it is entirely for the CBDT to take appropriate steps to ensure that the Revenue is properly represented to serve the greater cause of justice and fair play. In any case, we would expect the CBDT to lay down a standard procedure in respect of manner in which the Departmental Officer/ Assessing Officer assist the Counsel for the Revenue while promoting/ protecting Revenue’s cause. We find in most cases, atleast during the final hearing, Revenue’s Counsel are left to fend for themselves and that even papers at times are borrowed from the other side or taken from the Court Records. If the mind set of the Revenue Officer changes and they attend to the case diligently till it is disposed of, only then would it be ensured that the State is properly represented

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DATE: January 3, 2018 (Date of pronouncement)
DATE: January 4, 2018 (Date of publication)
AY: -
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CITATION:
Taxability of software payments as royalty: The fact that there is a conflict of judicial opinion on whether payments for software are assessable as royalty or not does not entitle the Dept to seek a reference to the Special Bench. The Tribunal has to follow judicial discipline. Also, if a reference is made to the Special Bench it will violate the principle in Vegetable Products 188 ITR 192 (SC) that if there are two possible views, the view favourable to the assessee must be adopted

So far as Constitution of special Bench is concerned, a reference to constitute a Special Bench flows from the members and not from the parties to the case. Furthermore, such a reference can be made by the members when they do not agree with the view taken by the earlier order of the Tribunal. However, in the instant cases before us, it is not a situation, only after hearing, the matter afresh by the division bench in terms of direction of Hon’ble High Court dated 08.08.2017, the bench may decide the issue to agree or disagree with the view already taken by the earlier bench. Furthermore merely on the conflict view .of the decision of the High Court, a reference cannot be made to constitute Special Bench. If the present application of the Revenue is accepted, the process of reference to a Special Bench / larger Bench would never reach an end. Reference to Special Bench would continue to be moved by the parties upon every subsequent non-jurisdictional High Court decision, thus, leading to a number of cases being referred to constitute Special Bench. However, correct decision is to follow the judicial hierarchy and maintain judicial discipline. Furthermore, if the applications of the Revenue were to be allowed, it would lead to the violation of the principle laid down by the Hon’ble Supreme Court in the case of CIT Vs. Vegetable Products (1973) (188 ITR 192) (SC)

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