Search Results For: ITAT Mumbai


Vora Financial Services P. Ltd vs. ACIT (ITAT Mumbai)

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DATE: June 29, 2018 (Date of pronouncement)
DATE: July 5, 2018 (Date of publication)
AY: 2014-15
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CITATION:
S. 56(2)(viia) is a counter evasion mechanism to prevent laundering of unaccounted income under the garb of gifts. The primary condition for invoking S. 56(2)(viia) is that the asset gifted should become a “capital asset” and property in the hands of recipient. If the assessee-company has purchased shares under a buyback scheme and the said shares are extinguished by writing down the share capital, the shares do not become capital asset of the assessee-company and hence s. 56(2)(viia) cannot be invoked in the hands of the assessee company

The provisions of sec. 56(2)(viia) should be applicable only in cases where the receipt of shares become property in the hands of recipient and the shares shall become property of the recipient only if it is “shares of any other company”. In the instant case, the assessee herein has purchased its own shares under buyback scheme and the same has been extinguished by reducing the capital and hence the tests of “becoming property” and also “shares of any other company” fail in this case. Accordingly we are of the view that the tax authorities are not justified in invoking the provisions of sec. 56(2)(viia) for buyback of own shares

Oricon Enterprises Limited vs. ACIT (ITAT Mumbai)

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DATE: May 16, 2018 (Date of pronouncement)
DATE: July 3, 2018 (Date of publication)
AY: 2007-08
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CITATION:
S. 2(42C)/ 50B: A transaction by which an undertaking is transferred in consideration of the allottment of shares is an "exchange" and not a "sale". The fact that the agreement refers to the parties as "seller" and "purchaser" is irrelevant. S. 2(42C)/ 50B apply only to "sale" and not to "exchange". Entire law on "estoppel" explained. As there is no estoppel against a statute, an assessee is entitled to raise the claim regarding non-taxability at any stage of the proceedings

In the present case the consideration was not money but equity shares and debentures and hence the transaction was not a “Sale” but an “Exchange” and consequently, the provisions of Section 50B of the I.T. Act, are not attracted. In the case of CIT vs. Bharat Bijlee Ltd. (365 ITR 258) where an undertaking was transferred under a Scheme of Arrangement to a company which allotted preference shares and bonds as consideration to the Transferor company. Following the decision of the Hon’ble Supreme Court in Motor & General Stores (P) Ltd. (66 ITR 692), the jurisdictional High Court held that the provisions of section 50B were inapplicable to the transaction

Mahesh H. Hinduja vs. ITO (ITAT Mumbai)

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DATE: June 20, 2018 (Date of pronouncement)
DATE: June 23, 2018 (Date of publication)
AY: 2011-12
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CITATION:
S. 139(5): There is no bar / restriction that an assessee cannot file a revised return of income after issuance of notice u/s 143(2). A revised return of income can be filed even in course of the assessment proceedings provided the time limit prescribed u/s 139(5) is available. The Departmental Authorities are not expected to deny assessee’s legitimate claim by raising technical objection

There is no bar / restriction in the provisions of section 139(5) of the Act that the assessee cannot file a revised return of income after issuance of notice under section 143(2) of the Act. It is trite law, the assessee can file a revised return of income even in course of the assessment proceedings, provided, the time limit prescribed under section 139(5) of the Act is available. That being the case, the revised return of income filed by the assessee under section 139(5) of the Act cannot be held as invalid

M/s Shah Realtors vs. ACIT (ITAT Mumbai)

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DATE: May 25, 2018 (Date of pronouncement)
DATE: June 21, 2018 (Date of publication)
AY: 2012-13
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CITATION:
'On Money': The fact that the assessee has sold flats at an undervaluation does not mean that he has understated the consideration and earned undisclosed 'on money'. The mere presumption that excess price could have been charged is not a ground for coming to the conclusion that the assessee did charge a higher price. The burden of proving such understatement or concealment is on the Revenue (All important judgements considered)

The case law relied by Assessing Officer in ITO Vs Diamond Investment and Properties ITA No. 5537/M/2009 is not applicable on the facts of the present case. In case of Diamond Investment and Properties (supra), the flats were sold to the related parties was much lower than the price charged from the other parties. However, there is no allegation of related parties’ transaction in the present case. The coordinate bench of Tribunal Neelkamal Realtor & Erectors India (P0 Ltd (2013) 38 taxmann.com 195 held that when the assessee offered an explanation for charging lower price in respect of some of flats sold by it and Assessing Officer without controverting such explanation made addition to income of assessee by applying rate of another flat sold by it, Assessing Officer was not justified in his action. Similar view was taken by another bench of Tribunal in ACIT Vs Rustom Soil Sethna

Indus Best Hospitality & Realtors Pvt. Ltd vs. PCIT (ITAT Mumbai)

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DATE: January 19, 2018 (Date of pronouncement)
DATE: June 13, 2018 (Date of publication)
AY: 2012-13
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CITATION:
S. 263 Revision: Explanation 2 to s. 263 inserted by the FA 2015 (which confers power upon the CIT to revise assessments where inadequate inquiries have been conducted by the AO) is prospective in nature and does not apply even to a case where the CIT passed the order after Explanation 2 came on the statute. The CIT should show that the view taken by the AO is unsustainable in law. The action of the CIT in directing the AO to conduct enquiry in a particular manner is contrary to the law interpreted by the Delhi High Court in CIT v. Goetze (India) Ltd 361 ITR 505. If such course of action is permitted, the CIT can find fault with each and every assessment order without making any enquiry or verification in order to establish that the assessment order is not sustainable in law

Ld. DR also submitted that in light of the introduction of the Explanation 2 to s.263 by the Finance Act, 2015, the Ld. CIT had power to conduct further enquiry even in a case where inadequate enquiries have been conducted by the Assessing Officer. (a) Crompton Greaves Ltd v. CIT [ITA No. 1994/Mum/2013] dated 01.02.2016, (b) Madhurima International Pvt Ltd v. Pr. CIT [ITA No. 421/Mum/2017] dated 28.04.2017. 23. In this regard, we observe that the aforesaid judgments have been later considered by Hon’ble Mumbai Tribunal in several other cases. Further, in the recent judgments, the Hon’ble Tribunal has taken a view that the provisions to Explanation 2 to s. 263 of the Act introduced by the Finance Act, 2015 is prospective in nature and would not apply to the year under consideration

Supermax Personal Care Private Limited vs. ACIT (ITAT Mumbai)

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DATE: June 1, 2018 (Date of pronouncement)
DATE: June 2, 2018 (Date of publication)
AY: 2011-12
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CITATION:
S. 2(47)/ 45: Argument that the allotment of shares by the assessee's holding co to foreign investors at huge valuation results in a "transfer"/ "indirect transfer" of the assessee's assets to the foreign investors is not correct. Argument that a multi layered holding structure was deliberately created to avoid taxes in India and to conceal the information about the ultimate beneficiaries is also not correct

The AO had held that a multi layered holding structure was deliberately created to avoid taxes in India and to conceal the information about the ultimate beneficiaries. Having AE.s outside India in itself cannot be held against an assessee. Because of advancement of technology, the globe has become a villge. So, the nature of business has changed a lot. In our humble opinion, assessees are free to decide the manner in which they want to run their businesses.It is said that a citizen is perfectly entitled to exercise his ingenuity so to arrange his affairs as may make it possible for him legally and lawfully not to pay tax, and if his ingenuity succeeds, however reluctant the Court may be to acknowledge the cleverness of the assessee,the Court must give effect to the letter of the taxation law rather than strain that letter against the assessee.

All India Federation of Tax Practitioners vs. ITO (ITAT Mumbai)

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DATE: May 4, 2018 (Date of pronouncement)
DATE: May 18, 2018 (Date of publication)
AY: 2013-14
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CITATION:
Rule 45 of the Income Tax Rules which mandates compulsory e-filing of appeals before the CIT(A) w.e.f. 01.04.2016 is a procedural and technical requirement. It cannot defeat the statutory right of an assessee to file an appeal. An assessee who has filed the appeal in paper format should be permitted to make good the default and to file an appeal electronically

From the facts of the present case, we gathered that the assessee had already filed the appeal in paper form, however only the e-filing of appeal has not been done by the assessee and according to us, the same is only a technical consideration. The Supreme Court has reiterated that if in a given circumstances, the technical consideration and substantial Justice are pitted against each other, then in that eventuality the cause of substantial Justice deserves to be preferred and cannot be overshadowed or negatived by such technical considerations

Cromption Greaves Limited vs. CIT (ITAT Mumbai)

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DATE: May 11, 2018 (Date of pronouncement)
DATE: May 15, 2018 (Date of publication)
AY: 2007-08
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CITATION:
S. 254(2) r.w Rule 34(5): Excessive delay by the Tribunal in passing judgement shakes the confidence of the litigants. Under Rule 34(5) of the Tribunal Rules read with Shivsagar Veg. Restaurant 317 ITR 433 (Bom) & Otters Club (Bom), orders have to be passed invariably within three months of the completion of hearing of the case. The delay is incurable. Even administrative clearance cannot cure the delay. Such decisions rendered after 3 months reflect a mistake apparant from the record and have to be recalled and the appeals heard afresh

Nevertheless, we think that an unreasonable delay between hearing of arguments and delivery of a judgment, unless explained by exceptional or extraordinary circumstances, is highly undesirable even when written arguments are submitted. It is not unlikely that some points which the litigant considers important may have escaped notice. But, what is more important is that litigants must have complete confidence in the results of litigation. This confidence tends to be shaken if there is excessive delay between hearing of arguments and delivery of judgments. Justice, as we have often observed, must not only be done but must manifestly appear to be done.

Pratik Syntex Private Ltd vs. ITO (ITAT Mumbai)

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DATE: May 11, 2018 (Date of pronouncement)
DATE: May 15, 2018 (Date of publication)
AY: 2012-13
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CITATION:
S. 68 Bogus share capital: The assessee has to justify the allottment of shares to outsiders at exorbitant premium with cogent material and not bald statements. The fact that s. 56(2)(viib) r.w.s. 2(24)(xvi) comes into effect from AY 2013-14 does not mean that for earlier years the assessee is not required to justify the identity, genuineness and creditworthiness of the transaction. The burden is very high for closely held companies. Mere submission of name & address, Balance Sheet & bank statement of the subscribers is not sufficient to discharge the onus (all judgements on the point considered)

The assessee did not rely on its own financial statements, business model and financial indicators as are existing in its audited financial statements to justify charging of huge share premium of Rs. 490 per share as against face value of Rs. 10 per share from these new shareholders. The problem got further aggravated when the assessee does not bring on record project report or any other cogent material justifying issue of shares at huge premium which could reflects viability, higher profitability and bright future prospects of the assessee company by implementing project for which funds were raised at huge share premium to justify chargeability of such a huge share premium. The assessee’s claim in statement of fact/written submissions as to justification of share premium / valuation etc are not substantiated through any cogent evidences on record and are merely bald statements which cannot be relied upon in the absence of cogent material/evidences brought on record by the assessee. The assessee raised funds to the tune of Rs. 300 lacs from these new shareholders and it was for the assessee to have brought on record cogent material to substantiate its contentions and if the evidences are withheld by the assessee then it is at assessee’s own peril as presumption will be drawn against the assessee.

Soman Sun Citi vs. JCIT (ITAT Mumbai)

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DATE: October 23, 2018 (Date of pronouncement)
DATE: May 15, 2018 (Date of publication)
AY: 2011-12
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CITATION:
S. 69C Bogus Purchases (100% disallowance confirmed): The right of cross-examination is not absolute. No prejudice is caused to the assessee by non granting of cross examination if the assessee has not discharged the primary onus. The fact that purchase bills are produced and payment is made through banking channels is not sufficient if the other evidence is lacking

No prejudice is caused to the assessee by non granting of opportunity of cross examination by the authorities below as right of cross examination is not absolute as in the instant case even primary onus that fell on the assessee did not stood discharged. Had assessee discharged its primary onus, but still the authorities proceed to prejudice assessee based solely on the incriminating statements/affidavits of third parties recorded at the back of the assessee, the right of the assessee to cross examine these third parties will become absolute. It is not a case that the authorities below have merely/solely relied on the statement/affidavit of third parties namely hawala dealers recorded at the back of the assessee to cause prejudice to the assessee rather primary onus that lay on the assessee was not discharged by the assessee

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