Search Results For: Bombay High Court


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DATE: January 8, 2020 (Date of pronouncement)
DATE: January 18, 2020 (Date of publication)
AY: 2009-10
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S. 68/ 69C Bogus purchases: Even if the purchases made by the assessee are to be treated as bogus, it does not mean that entire amount can be disallowed. As the AO did not dispute the consumption of the raw materials and completion of work, only a percentage of net profit on total turnover can be estimated (Mohommad Haji Adam & Paramshakti Distributors followed)

Assuming that the purchasers from whom the purchases were made were bogus, in view of the finding of fact that the material was consumed, the question would be of extending the percentage of net profit on total turnover. This would be a matter of calculations by the concerned authority

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DATE: December 12, 2019 (Date of pronouncement)
DATE: December 21, 2019 (Date of publication)
AY: 2012-13
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S. 147 reopening for bogus purchases & accommodation entries: The omission of the AO to make an assertion in the reasons that there was a failure to disclose fully and truly all material facts necessary for the assessment is sufficient to set aside the reassessment notice. Also, a notice issued on change of opinion is bad

The reasons also refer to a decision of the Supreme Court in the case of M/s.N.K.Proteins Ltd. (2017-TIOL-23-SC-IT v. DCIT ). Even this decision was before the Assessing Officer in the proceeding pursuant to first reopening notice. The Petitioner, along with its objections, placed explanatory note as to how the said decision of the Supreme Court in M/s.N.K.Proteins did not apply to the facts of the case. Therefore, this aspect was also considered when the proceeding under the first reopening notice was conducted

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DATE: November 11, 2019 (Date of pronouncement)
DATE: December 7, 2019 (Date of publication)
AY: 2008-09
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S. 147/ 151: As the Act provides for sanction by the JCIT, the sanction by the CIT does not meet the requirement of the Act and the reopening notice is without jurisdiction. The fact that the sanction is granted by a superior officer is not relevant

The reopening proceedings under section 148 are bad as necessary sanction/approval had not been obtained in terms of section 151 of the Act. The impugned order of the Tribunal records that the sanction for issuing the impugned notice had been obtained from the Commissioner of Income Tax when, in terms of section 151, the sanction had to be obtained from the Joint Commissioner of Income Tax. Thus, in the absence of sanction/approval being obtained from the appropriate authority as mandated by the Act, the Tribunal held that the reopening notice itself is without jurisdiction

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DATE: October 3, 2019 (Date of pronouncement)
DATE: October 23, 2019 (Date of publication)
AY: 2005-06
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Writ Petition for non-grant of refund: Though an order refusing to issue refund is not an appeallable order u/s 246A, it is subject to revision u/s 264. As the alternate remedy of revision is available, the Writ is not maintainable (Larsen & Toubro 326 ITR 514 (Bom) referred)

If one contrasts section 264 of the Act with section 246A of the Act which provides for appeal, it would be noticed that unlike section 246A of the Act which specifies sections of the Act from which an appeal would lie, section 264 of the Act provides for revision from `any order’ under the Act. This is another indication that the Commissioner of Income Tax has very wide powers to correct any order passed by an officer subordinate to him

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DATE: September 25, 2019 (Date of pronouncement)
DATE: October 12, 2019 (Date of publication)
AY: 2009-10
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CITATION:
Taxability of loan waivers u/s 28(iv), 41(1): Argument of Revenue that loan taken from agents/ dealers is on revenue account or that on waiver of the loan, its character undergoes a change and it becomes on revenue account is not correct. S. 28(iv) & 41(1) cannot apply if the loan is on capital account and the assessee has never claimed any deduction therefor in the past (Solid Containers 308 ITR 417 (Bom) distinguished, Mahindra and Mahindra Ltd 404 ITR 1 (SC) followed)

Sine-qua-non for application of Section 41(1) of the Act, is that there should have been allowance or deduction claimed by the Assessee in any Assessment Year as a loss, expenditure or trading liability incurred by the Assessee. Subsequently, if any remission or waiver is granted in respect of which such an allowance/deduction has been claimed, then the Assessee is liable to pay t ax on the amount waived/ remitted under Section 41(1) of the Act. This, as the Court held is only to ensure that Assessee does not keep double benefit – one by way of deduction and another by waiver of the amount, which has already been deducted in computing the tax

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DATE: January 15, 2019 (Date of pronouncement)
DATE: October 12, 2019 (Date of publication)
AY: 2006-07
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Bogus loss from Client Code Modification (CCM): Even if the Revenue's theory of the assessee having enabled the clients to claim contrived losses is correct, the Revenue had to bring on record some evidence of the income earned by the assessee in the process, be it in the nature of commission or otherwise. Adding the entire amount of doubtful transactions by way of assessee's additional income is wholly impermissible. The fate of the individual investors in whose cases the Revenue could have questioned the artificial losses is not known

The Tribunal accepted the assessee’s explanation and discarded the Revenue’s theory that profit of the assessee’s company were passed on to the clients. It was also noticed that the Revenue has not contended that the client code modification facility is often misused by the assessee to pass on losses to the investors, who may have sizable profit arising out of commodity trading against which such losses can be set off. The Revenue normally points out number of such instances of client code modifications as well as nature of errors in filling of the client code

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DATE: February 28, 2019 (Date of pronouncement)
DATE: October 9, 2019 (Date of publication)
AY: 2013-14
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Stay of demand u/s 220(6)/254(2A): The Dept is not right in relying upon the decision of the Supreme Court in Asian Resurfing of Road Agency vs. CBI (AIR 2018 SC 2039) to contend that any stay against recovery granted would automatically lapse after six months. This is neither the purport of the judgment of the SC, nor the observations made in the said judgment in the context of civil and criminal litigation can be imported in present set of quasi judicial proceedings. The power of the AO to review the situation every six months, would not authorize him to lift the stay previously granted after full consideration and insist on full payment of tax without the assessee being responsible for delay in disposal of the appeal or any other such similar material change in circumstances

We are prima facie of the view that the Revenue Authorities committed serious error. Against the total demand arising out of the order of assessment of Rs. 205 crore, the Assessing Officer has already recovered a total of Rs. 140 crores by now through different means. There is no allegation that the petitioner is responsible for delay in disposal of the appeal before the Commissioner. Merely relying upon the decision of the Supreme Court in the case of Asian Resurfacing of Road Agency Pvt Ltd (supra), Revenue Authorities now held a belief that any stay against the recovery granted would automatically lapse after six months

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DATE: September 19, 2018 (Date of pronouncement)
DATE: October 9, 2019 (Date of publication)
AY: -
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Service Tax/ GST: The collection of non-refundable deposits by the assessee from prospective flat buyers, for maintaining the building, does not result in the assessee providing management, maintenance or repair service as defined in Section 65(105)(zzg) of Finance Act 1994

The service of maintenance, management or repair, rendered by any person to any other person is a taxable service but in the context and backdrop in which the issue arises before us, we do not think that a taxable service is rendered. The Revenue does not wish to take into consideration the background in which buildings are maintained and till they are conveyed with complete title to even the land beneath. Thus, the provisions of Sections 5 and 6 and eventually the further provisions right upto Section 13 of the MOFA would make it clear that builder and developer maintains and repairs the property till it is conveyed or the title in the same is conveyed to the Flat purchasers or the legal entity which would ultimately be formed by him

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DATE: January 4, 2019 (Date of pronouncement)
DATE: September 21, 2019 (Date of publication)
AY: 2010-11
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S. 41(1) (old & unpaid liability for sundry creditors): It is well settled through series of judgments that merely because a debt has not been repaid for over three years, would not automatically imply cessation of liability. Exhaustion of period of limitation may prevent filing of recovery proceedings in a Court of law, nevertheless it cannot be stated by itself that the liability to repay the amount had ceased. Such liability cannot be termed as bogus

It is well settled through series of judgments that merely because a debt has not been repaid for over three years, would not automatically imply cessation of liability. Exhaustion of period of limitation may prevent filing of recovery proceedings in a Court of law, nevertheless it cannot be stated by itself that the liability to repay the amount had ceased. Going by this logic itself, the Assessing Officer, in our opinion, committed an error invoking Section 41(1) of the Act

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DATE: February 20, 2019 (Date of pronouncement)
DATE: September 7, 2019 (Date of publication)
AY: -
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Liability of professionals acting as Non-executive directors: Practicing professionals are prohibited from acting as full time directors. They can only act as non-executive directors not performing administrative duties. Such persons cannot be prosecuted for offenses committed by the company. it will be a travesty of justice to prosecute all Directors if the offense is committed without their knowledge. The accounts are signed by such directors in a routine manner and they are not subject to vicarious liability (Homi Phiroz Ranina & Ors. vs. State of Maharashtra 2003 (3) Mh.L.J. 34 followed)

In Homi Phiroz Ranina & Ors. vs. State of Maharashtra & Ors., the complaint was filed for delay in remitting the tax deducted. The applicant has taken stand that he was non- executive Director of the company and they are also practising advocates and, therefore, they are prohibited under the law to act as full time directors. They could only act as non-executive directors not exercising administrative powers or peforming administrative duties. It is held that unless the complaint discloses a prima facie case against the applicant/accused of their liability and obligation as principal officers in the day to day affairs of the company as Directors of the company, the applicants cannot be prosecuted for the offences committed by the company and held that it will be a travesty of justice to prosecute all the Directors if the offence is committed without their knowledge