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DATE: March 13, 2020 (Date of pronouncement)
DATE: March 25, 2020 (Date of publication)
AY: 2012-13
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CITATION:
S. 44DA prevails over s. 44BB after the amendment w.e.f. 01.04.2011. Income from provision of services through high end customized software does not constitute "Fees For Technical Services" u/s 9(1)(vii) as the definition excludes income from "mining or like project". The Q whether income from composite software and maintenance services constitutes "royalty" for purposes of s. 44DA would have to be decided from the nature of services. The assessee is eligible to take benefit of the definition of 'royalty' as per the DTAA for the purpose of applicability of s. 44DA

If the nature of services rendered have a proximate nexus with the extraction of production of mineral oils, it would be outside the ambit of the definition of FTS. In the instant case, since the nature of services rendered by the Petitioner gets excluded from the definition of “FTS”, in light of what is discussed above, the next logical question that arises for consideration is whether the Petitioner can claim the benefit of Section 44BB. The answer to this question is contingent on factual determination, as the legal position has changed from April 01, 2011. It is now required to be considered whether the receipts in the hands of the assessee qualify to be “royalty” or not? If the answer to this question is in the affirmative, then in that event, the relevant provision would now be 44DA(1).

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DATE: March 4, 2020 (Date of pronouncement)
DATE: March 14, 2020 (Date of publication)
AY: 2011-12
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CITATION:
S. 220(6) Recovery of demand: A Petitioner invoking the discretionary extraordinary writ jurisdiction of the Court is expected to approach with clean hands. Instead, there is gross suppression and misstatement, which led to a false projection of the outstanding liability due from the petitioner. Also, the Petitioner ought not to have sought adjournment before the CIT(A) on the ground that the earlier year is pending without seeking modification of the Court's order. Writ Petition dismissed with costs of Rs. 5 lakh. (Note: The Supreme Court has stayed recovery of the demand)

Considering the fact that the petitioner has invoked the discretionary extraordinary writ jurisdiction of this Court, the petitioner was expected to approach this Court with clean hands, which, unfortunately, we find is completely lacking in the present case. We are, therefore, not inclined to exercise our discretionary writ jurisdiction in favour of such a petitioner. Accordingly, we dismiss this petition with costs quantified at Rs. 5 lakhs to be paid to the Delhi High Court Advocates’ Welfare Trust

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DATE: February 13, 2020 (Date of pronouncement)
DATE: February 22, 2020 (Date of publication)
AY: 2012-13
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CITATION:
S. 147 Reopening for Bogus Share Capital u/s 68: The parent co does not have sufficient funds to invest such huge amounts in Indian subsidiaries. The funds are routed through a web of entities spread across various jurisdictions, mostly in tax havens. The investments so made, are required to be investigated and the credit worthiness of the investing company is in jeopardy, in view of the information received from the investigation wing. This exercise can be undertaken during the re-reassessment proceedings to finally determine if the amounts represent undisclosed income of the assessee which is required to be taxed in its hands. At the stage of re-opening, only a reason to believe should exist with regard to escapement of income. Definite conclusion would be drawn after raising queries upon the assessee in the light of s. 68 of the Act (All imp verdicts referred)

Whilst it is the settled position in law that the sanctioning authority is required to apply his mind and the grant of approval must not be made in a mechanical manner, however, as noted by the Division Bench of the Calcutta High Court in Prem Chand Shaw (Jaiswal) v Assistant Commissioner, Circle-38, Kolkata [2016] 67 taxmann.com 339 (Calcutta), the mere fact that the sanctioning authority did not record his satisfaction in so many words would not render invalid the sanction granted under section 151(2) when the reasons on the basis on the basis of which sanction was sought could not be assailed and even an appellate authority is not required to give reasons when it agrees with the finding unless statute or rules so requires

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DATE: November 28, 2019 (Date of pronouncement)
DATE: January 11, 2020 (Date of publication)
AY: 2012-13, 2013-14
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CITATION:
S. 147/148: If the AO has failed to perform his statutory duty, he cannot review his decision and reopen on a change of opinion. Reopening is not an empty formality. There has to be relevant tangible material for the AO to come to the conclusion that there is escapement of income and there must be a live link with such material for the formation of the belief. Merely using the expression “failure on the part of the assessee to disclose fully and truly all material facts” is not enough. The reasons must specify as to what is the nature of default or failure on the part of the assessee

Though, the recorded reasons allude to an ostensible failure on the part of the Assessee to disclose fully and truly all material facts, however, the recorded reasons except for using the expression “failure on the part of the Assessee to disclose fully and truly all material facts”, do not specify as to what is the nature of default or failure on the part of the Assessee. The reasons also do not explain or specify as to what is the rationale connection between the reasons to believe and the material on record

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DATE: October 23, 2019 (Date of pronouncement)
DATE: December 28, 2019 (Date of publication)
AY: 2012-13
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CITATION:
S. 147 Reopening for taxing bogus share application money: One is known by the company one keeps. As the investors have dubious character & are known to have engaged in the business of providing accommodation entries., the genuineness of their transactions with the assessee has come under serious cloud, giving rise to reasonable belief in the mind of the AO that the assessee may have indulged in a dubious transaction to launder its undisclosed income. The fact that the assessee produced evidence during assessment is neither here nor there (NRA Iron & Steel 412 ITR 161 (SC) followed). Costs of Rs. 2L imposed on assessee for wasting Court's time

It is true that during the course of the assessment proceedings, the Assessing Officer had required the assessee to disclose information pertaining to the share applicants, the amounts and their source, the mode in which payment was made and confirmatory letters together with PAN details. But it is also trite law that for such cases three important aspects have to be considered by the Assessing Officer, namely (i) the identity of the investors; (ii) the credit worthiness of the applicants; and (iii) the genuineness of the transaction. Ex-facie, the order of assessment which was passed by the Assessing Officer under Section 143(3) does not indicate that the Assessing Officer had brought his mind to bear on either of these aspects

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DATE: October 21, 2019 (Date of pronouncement)
DATE: November 2, 2019 (Date of publication)
AY: 2011-12
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CITATION:
S. 254(2A): In cases where there is stay of recovery of demand of tax, the Tribunal should deal with the appeals pending before it on a higher priority. The Tribunal should consider forming a separate list of such cases which should be heard on priority after arranging the cases on the basis of their seniority as well as the quantum involved in the stay

We are of the considered view that in cases where there is stay of recovery of demand of tax, the Tribunal should deal with the appeals pending before it on a higher priority. The Tribunal should consider forming a separate list of such cases which should be heard on priority after arranging the cases on the basis of their seniority as well as the quantum involved in the stay

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DATE: September 17, 2019 (Date of pronouncement)
DATE: October 2, 2019 (Date of publication)
AY: 2014-15
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CITATION:
S. 10(38) Bogus LTCG from Penny Stock: The analysis of balance sheet & P&L account of the Co shows that astronomical increase in share price which led to returns of 491% for assesee was completely unjustified. The EPS & other financials parameters cannot justify price at which assessee claims to have sold shares to obtain Long Terms Capital Gains. It is not explained as to why anyone would purchase said shares at such high price

The AO has worked out the glaring facts, which cannot be ignored and which are clear indicative of the non-genuine nature of the transactions. The assessee could not satisfactorily explain how the investments in the absence of any evidence as to the financials, growth and operations of the company could earn profit of 4910% over a short period of 5 months from the date of allotment of shares

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DATE: July 29, 2019 (Date of pronouncement)
DATE: August 3, 2019 (Date of publication)
AY: -
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CITATION:
S. 197/ Rule 28AA TDS: An order u/s 197 is quasi-judicial & must be supported by valid & cogent reasoning. It has to be based on objective criteria and relevant material. On facts, there is arbitrariness and non-application of mind at various levels which vitiates the certificate. The reasons do not conform to the requirement of s. 197 r. w. Rule 28 AA. The settled legal position is that orders passed by a statutory authority under "dictation" of a superior officer or anyone else is bad in law

The Court accordingly finds that in the present case the impugned withholding certificate which directs TDS to be deducted at 5% on the payments made by the Indian entities to the Petitioner is unsustainable in law, inasmuch as it is not based on valid reasons and is contrary to the legal requirement spelt out in Section 197(1) of the Act read with Rule 28AA of the Rules. The impugned certificate is hereby quashed

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DATE: April 10, 2019 (Date of pronouncement)
DATE: June 28, 2019 (Date of publication)
AY: -
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CITATION:
S. 254: President/ Sr. VP of the ITAT should take appropriate steps and expedite hearing in old appeals. A tabular statement indicating the age of the old appeals as well as an action plan of the ITAT with respect to the likely time for their disposal, having regard to the priorities that ITAT may set in this regard, shall also be filed in court

The petitioner’s grievance in this case is that the income tax appeals, pertaining to assessment years of about 20 years ago, filed by the petitioner, have been pending for 10 to 16 years (2003-2009). In the light of these averments, this court is of the opinion that the President or the Senior Vice President concerned of the Tribunal should take appropriate steps and expedite the hearing in these appeals

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DATE: May 17, 2019 (Date of pronouncement)
DATE: May 18, 2019 (Date of publication)
AY: -
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CITATION:
ITAT Members' Appointment: The action of the Selection Committee of short-listing only 24 candidates for interview out of 649 applications is not violative of Article 14. The criteria of short-listing Advocates in practice for at least 20 years and with income of not less than Rs. 1.40 lakh for post of Judicial Member is rational and reasonable and not arbitrary

Considering the above provisions, guidelines, status of applications and on perusal of list of candidates in decreasing order of their experience, the interim Search-cum-Selection Committee decided to call 24 most experienced applicants who were practicing Advocates for interview. The above-mentioned principle has been upheld by the Supreme Court in catena of judgments wherein it has been held that if the number of applications are enormous in number with reference to the number of posts available to be filled up then the Selection Board has no option but to short-list such applications on some rational and reasonable basis