Search Results For: ITAT Mumbai


ACIT vs. Subhodh Menon (ITAT Mumbai)

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DATE: December 7, 2018 (Date of pronouncement)
DATE: December 15, 2018 (Date of publication)
AY: 2010-11
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CITATION:
S. 56(2)(vii) is a counter evasion mechanism to prevent money laundering of unaccounted income & does not apply to bona fide business transaction done out of business exigency. The difference between alleged fair market value of share and the subscribed value of shares cannot be assessed as income u/s 56(2)(vii)(c) (CBDT Circulars & case laws referred)

Section 56(2)(vii) does not apply to bonafide business transaction. As explained hereinabove, shares were issued by the company to comply with a covenant in the loan agreement with State Bank of India which required the promoters to increase the total net worth of the company to Rs. 150 crores by 31 March, 2010. Therefore, the shares were issued by the company for a bonafide reason and as a matter of business exigency. Circular No.1/2011 dated 6 April, 2011 issued by the CBDT explaining the provision of section 56(2)(vii) specifically states that the section was inserted as a counter evasion mechanism to prevent money laundering of unaccounted income. In paragraph 13.4 thereof where it is stated that “the intention was not to tax transactions carried out in the normal course of business or trade, the profit of which are taxable under the specific head of income”

Ramprasad Agarwal vs. ITO (ITAT Mumbai)

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DATE: November 30, 2018 (Date of pronouncement)
DATE: December 7, 2018 (Date of publication)
AY: 2013-14, 2014-15
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CITATION:
S. 10(38) Bogus capital gains from penny stocks: If the holding of shares is D-mat account cannot be disputed then the transaction cannot be held as bogus. The AO has also not disputed the sale of shares from the D-mat account of the assessee and the sale consideration was directly credited to the bank account of the assessee. Once the assessee produced all relevant evidence to substantiate the transaction of purchase, dematerialization and sale of shares then, in the absence of any contrary material brought on record the same cannot be held as bogus transaction merely on the basis of statement of one Anil Agrawal recorded by the Investigation Wing, Kolkata wherein there is a general statement of providing bogus long term capital gain transaction to the clients without stating anything about the transaction of allotment of shares by the company to the assessee

The assessee has produced the D-mat account and therefore, as on 18.06.2012 the assessee was holding 3,50,000 equity shares of M/s Rutron International Ltd. in D-mat account. This fact of holding the shares in the D-mat account as on 18.06.2012 cannot be disputed. Further, the Assessing Officer has not even disputed the existence of the D-mat account and shares credited in the D-mat account of the assessee. Therefore, once, the holding of shares is D-mat account cannot be disputed then the transaction cannot be held as bogus. The AO has not disputed the sale of shares from the D-mat account of the assessee and the sale consideration was directly credited to the bank account of the assessee

ACIT vs. Celerity Power LLP (ITAT Mumbai)

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DATE: November 16, 2018 (Date of pronouncement)
DATE: December 3, 2018 (Date of publication)
AY: 2011-12
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CITATION:
S. 47(xiiib) r.w.s 47A(4): The conversion of a company into a LLP constitutes a "transfer". If the conditions of s. 47(xiiib) are not satisfied, the transaction is chargeable to 'capital gains‘ u/s 45 (Texspin Engg 263 ITR 345 (Bom) distinguished). If the assets and liabilities of the company are vested in the LLP at 'book values‘ (cost), there is in fact no capital gain. The argument that u/s 58(4) of the LLP Act, the LLP is entitled to carry forward the accumulated losses & unabsorbed depreciation of the company, notwithstanding non-compliance with s. 47(xiiib) is not acceptable

We find from a perusal of the ‘memorandum‘ explaining the purpose and intent behind the enactment of sub-section (xiiiib) to Sec. 47, that prior to its insertion, the ‘transfer‘ of assets on conversion of a company into a LLP attracted levy of “capital gains” tax. The legislature in all its wisdom had vide the Finance Act, 2010 made Sec. 47(xiiib) available on the statute, with the purpose that the transfer of assets on conversion of a company into a LLP in accordance with the Limited Liability Partnership Act, 2008, subject to fulfilment of the conditions contemplated therein, shall not be regarded as a ‘transfer‘ for the purposes of Sec. 45 of the Act. In so far, the reliance placed by the ld. A.R on the judgment of the Hon‘ble High Court of Bombay in the case of CIT Vs. Texspin Engg. & Mfg. Works (2003) 263 ITR 345 (Bom) is concerned, the same in our considered view is distinguishable on facts.

Kaushik N. Tanna vs. ACIT (ITAT Mumbai)

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DATE: November 1, 2018 (Date of pronouncement)
DATE: November 30, 2018 (Date of publication)
AY: 2010-11
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CITATION:
S. 254(1)/ Rule 34(5)(c): An order passed by the Tribunal even one day after the prescribed period of 90 days from the date of hearing causes prejudice to the assessee and is liable to be recalled and the appeal posted for fresh hearing

Since, in the present case, the order has been pronounced one day beyond 90 days prescribed under the Rules, we respectfully following the order of the Hon’ble High Court discussed above, recall the order dated 09.11.2017 without going into the merits of the other grounds raised in the application, for fresh hearing

Concept Communication Ltd vs. DCIT (ITAT Mumbai)

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DATE: November 14, 2018 (Date of pronouncement)
DATE: November 28, 2018 (Date of publication)
AY: 2011-12
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CITATION:
Bogus expenditure: A statement recorded u/s 133A under fear/ coercion cannot be relied upon by the AO if it is not corroborated by documentary evidence. The assessee is entitled to retract such statement. The AO is bound to give the assessee an opportunity to controvert evidence and cross examine the evidence on which the department places its reliance. A failure in providing the same can result in the order being a nullity (All judgements considered)

Retraction being on affidavit was legal and valid and was not belated. Further retraction was supported by explanation of impounded documents to the Survey team. The impounded document did not contain any information which was not recorded in the books of accounts. Hence, in view of retraction and such retraction based on concrete evidence, no addition can be made on the basis of statement taken during survey without bringing on record some corroborative materials

DCIT vs. Piramal Realty Pvt. Ltd (ITAT Mumbai)

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DATE: November 16, 2018 (Date of pronouncement)
DATE: November 24, 2018 (Date of publication)
AY: 2012-13
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CITATION:
S. 68 Bogus share premium: If the overwhelming evidence in the form of audited accounts, ROC Form 2 & ROC Form 20B shows the 'nature' of receipt to be share premium, it has to be taken to be so. If the Department wants to contend that what is apparent is not real, the onus is on it to prove that it was the assessee's own money which was routed through a third party. S. 68 does not (before & after the 2012 amendment) envisage the valuation of share premium. Consequently, the AO has no jurisdiction to determine whether the share premium is reasonable or not (Pratik Syntex (P.) Ltd. vs. ITO 94 taxmann.com 12 (Mum) distinguished)

Even amendment to section 68 brought by Finance Act, 2012 does not refer to valuation. The insertion of the proviso to section 68 of the Act by Finance Act, 2012 casts an additional onus on the closely held companies to prove source in the shareholders subscribing to the shares of companies. During the course of the hearing, the Ld Counsel explained that the explanatory memorandum to the Finance Bill 2012 makes it clear that the additional onus is only with respect to source of funds in the hands of the shareholders before the transaction can be accepted as a genuine one. Even the amended section does not envisage the valuation of share premium. This is further evident from a parallel amendment in section 56(2) of the Act which brings in its ambit so much of the share premium as charged by a company, not being a company in which the public are substantially interested, as it exceeds the fair market value of the shares. If one accepts the Ld CIT-DR’s contentions that section 68 of the Act can he applied where the transaction is proved to be that of a share allotment that here the valuation for charging premium is not justified, it will make the provisions of section 56(2)(viib) of the Act redundant and nugatory. This cannot be the intention of the Legislature especially when the amendments in the two sections are brought in at the same time

DCIT vs. Hemant Mansukhlal Pandya (ITAT Mumbai)

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DATE: November 16, 2018 (Date of pronouncement)
DATE: November 21, 2018 (Date of publication)
AY: 2006-07, 2007-08
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CITATION:
S. 68 Black Money in HSBC Bank Account (i) Non-residents are not required to disclose their foreign bank accounts and assets to Indian income-tax authorities (ii) The assessee cannot be asked to prove the negative that the credits found in HSBC Bank is not sourced out of income derived from India (iii) the Govt / legislature never intended to tax foreign accounts of non residents (iv) mere holding of an account outside India does not have led to the conclusion that the amount is tax evaded

It is very clear from the clarifications issued by the Government itself that the legislature does not wish to take any action in respect of non residents holding foreign bank accounts. Further, even in the excel utility of return of income in the income-tax department website, the moment a person fills his residential status as non resident, the excel utility prevents filling of columns pertaining to foreign assets. Even, the Hon’ble Finance Minister has clarified that all accounts in foreign bank may not be illegal as they may belong to NRI. Thus, even the government has acknowledged the fact that an NRI foreign bank account is not illegal

Periar Trading Company Private Limited vs. ITO (ITAT Mumbai)

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DATE: November 9, 2018 (Date of pronouncement)
DATE: November 21, 2018 (Date of publication)
AY: 2012-13
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CITATION:
S. 2(47) Transfer: Law on whether conversion of preference shares into equity shares constitutes a "transfer" and whether capital gains can be assessed on the basis of the market value of the equity shares explained (Santosh L. Chowgule 234 ITR 787 (Bom) & Trustees of H.E.H. The Nizam 102 ITR 248 (AP) distinguished. CBDT Circular dated 12.05.1984 referred

Where one type of shares is converted into another type of share (including conversion of debentures into equity shares), there is, in fact, no “transfer” of a capital asset within the meaning of section 2(47) of the Income Tax Act, 1961. Hence, any profits derived from such conversion are not liable to capital gains tax under section 45(1) of the Act. However, when such newly converted share is actually transferred at a later date, the cost of acquisition of such share for the purpose of computing the capital gains shall be calculated with reference to the cost of the acquisition of the original share of stock from which it is derived

ITO vs. Mohanraj Trading & Exchange (ITAT Mumbai)

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DATE: July 2, 2018 (Date of pronouncement)
DATE: November 3, 2018 (Date of publication)
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CITATION:
S. 250/ 254: If a decision is challenged by the assessee both on the issue of jurisdiction as well as on merits, the appellate authority has to decide both issues. He cannot decline to decide one of the issues on the basis that the decision on the other issue renders it academic. This approach leads to multiplication of proceedings and leads to delay

Examining the present case on the touchstone of above said case law, we find that the order of the ld. CIT(A) here directly falls under the ambit of Hon’ble High Court’s order as above. The ld. CIT(A) has decided one issue and has left undecided another issues duly raised before him. Hence, we are of the considered opinion that these issues relating to validity of reopening were duly raised, which have been left undecided by the ld. CIT(A) and need to be remitted to the file of the ld. CIT(A). The ld. CIT(A) is directed to complete his appellate order by deciding on these issues regarding the validity of reopening which were duly raised before him by the assessee

Deepak B Shah vs. ACIT (ITAT Mumbai)

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DATE: October 31, 2018 (Date of pronouncement)
DATE: November 2, 2018 (Date of publication)
AY: 2006-07, 2007-08
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CITATION:
S. 69A Black Money: If the assessee is a discretionary beneficiary of the HSBC Bank Account and is not the owner, addition u/s 69A cannot be sustained. In the case of a discretionary trust, the income of the trust cannot be added in the hands of the beneficiary. The trustees are the representative assessees who are liable to be taxed for the income of the trust (All judgements considered)

We find that addition has been made by the AO U/s 69A of the Act to justify the addition on account of peak balance. We agree with the contentions of the Ld. AR that it is sine qua non for invoking section 69A of the IT Act., the assessee must be found to be the owner of money, bullion, jewellery or other valuable articles and whereas in the present case the money is owned and held by Mr. Dipendu Bapalal Shah a foreign resident in an account HSBC, Geneva and also admitted that he is the owner of the money in the HSBC Account Geneva

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