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DATE: September 5, 2019 (Date of pronouncement)
DATE: October 5, 2019 (Date of publication)
AY: 2010-11
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CITATION:
S. 48 Capital Gains: The payment towards discharge of outstanding loan liability out of the sale proceeds of mortgaged property is a mere application of income and not a diversion of sale proceeds by overriding title. The assessee cannot claim such application as deduction for the purpose of computing Capital Gain in terms of s. 48 of the Act. The legal position prevailing prior to SARFAESI Act is also germane even after the enactment of SARFAESI Act

I thus agree with the view taken by the learned Judicial Member that the consideration from sale of property to the extent of principal component of loan adjusted by the bank cannot be treated as ‘diversion of income by overriding title’ and was thus not deductible from the total consideration accrued to the assessee from sale of property. In my considered opinion, so far as the instant dispute is concerned, the legal position prevailing prior to SARFAESI Act is also germane even after the enactment of SARFAESI Act

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DATE: March 1, 2019 (Date of pronouncement)
DATE: March 9, 2019 (Date of publication)
AY: 2015-16
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CITATION:
S. 10(38) Bogus Capital Gains from Penny Stocks: Though the AO did not find any mistake in the documentation furnished by the assessee, there is need for finding of fact on (i) the nature of the shares transactions; (ii) make-believe nature of paper work; (iii) Camouflage the bogus nature; and, (iv) the relevance of human probabilities etc (NDR Promoters 410 ITR 379 (Del) referred)

In the present case, it is beyond preponderance of probability that the fantastic sale price of a little known share i.e. Mishka Finance & Trading Ltd. without economic or financial basis, would increase from Rs.0.37/- to Rs.45/- per share. If one considers the fact that the assessee got 24,000/- shares against original 300 shares, the price increase is 120 times within 24 months which is evident from the fact that by investing Rs.9000/-, the assessee has got Rs.10,19,050/- (in respect of 22,500/- shares only) in a span of 24 months. There is no doubt that the capital gain was manipulated and bogus and was done only to claim exemption U/s 10(38). Once the entire transaction is viewed from the perspective of human probabilities, it definitely fails on all counts

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DATE: June 16, 2017 (Date of pronouncement)
DATE: September 12, 2017 (Date of publication)
AY: 2008-09
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CITATION:
Transfer Pricing: In the case of an assessee engaged in distribution activity there is no value addition to the product in question even if the selling and marketing expenses are borne by the assessee. Accordingly, the Resale Price Method is the most appropriate method for bench marking the transaction and determining whether it is at arms' length. The TPO is not entitled to thrust TNMM to evaluate the transaction

It is settled legal position at the various Benches of the Tribunal that, in case of distribution activity, even when there are selling and marketing expenses are borne by the assessee, there cannot be any value addition to the product in question. In such cases, Resale Price Method is the most appropriate one and accordingly we reverse the decision given by the AO/TPO/DRP in thrusting on the assessee the TNM method to the transaction under consideration

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DATE: February 29, 2016 (Date of pronouncement)
DATE: March 7, 2016 (Date of publication)
AY: 2007-08
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CITATION:
Entire law on whether consideration for user of software is assessable as "royalty" in the light of the different definitions in s. 9(1)(vi) and Article 12 of the DTAA and the conflicting judgements of various High Courts explained

A comparison of the definition of ‘royalty’ as provided under the DTAA (as reproduced above) with the definition of ‘royalty’ as provided under Income Tax Act shows that the same are not at para materia with each other.The definition provided under the DTAA is the very short and restrictive definition, whereas, the definition of the royalty as provided under the Income Tax Act is a very wide and inclusive but vague. A careful reading of the relevant provision under the DTAA and under the Income Tax Act reveals that the DTAA covers only a part of the items mentioned under sub clause (i) to (v)to Explanation 2 to section 9(1)(vi). We may mention here that the section9(1)(vi) having sub clauses (a), (b), & (c) is very vast to cover consideration paid for any right, property or information used or services utilized for the purpose of business or profession. Further, we find that in the said sub clauses(a), (b) & (c) of section 9(1) (vi), the wording is somewhat vague and negatively written.

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DATE: December 31, 2016 (Date of pronouncement)
DATE: February 6, 2016 (Date of publication)
AY: 2005-06 to 2009-10
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CITATION:
S. 153A: Law on whether an assessment made u/s 143(1) can be said to have abated & whether an assessment u/s 153A can be made in the absence of incriminating material explained

Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment “can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material

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DATE: September 11, 2015 (Date of pronouncement)
DATE: October 12, 2015 (Date of publication)
AY: 2009-10
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CITATION:
S. 271(1)(c): If the notice does not clearly specify whether the penalty is initiated for "concealment" or for "filing inaccurate particulars", it is invalid. Penalty should not be imposed merely because the income has been offered to tax in a later year and not in the present year

The penalty notice issued u/s 274 of the Act is ambiguous to the extent for which the penalties are initiated. The said notice does not specify where the present penalty is being levied for concealment of income or for furnishing of inaccurate particulars of income. CIT (A) did not strike of The irrelevant limb mentioned in the notice u/s 274 of the Act. CIT (A) is not clear as to the relevant limb of the provisions of section 271(1)(c) of the Act for which penalty should be levied. Further, in the quantum order u/s 250 of the Act, the CIT (A) initiated penalty for assessee’s failure in furnishing inaccurate particulars in respect of estimated cost of future expenditure resulted in suppression of income. In the penalty order of the CIT (A), penalty was levied for “concealment of particulars of income‟ in respect of the change in estimated cost. By all these variations, the CIT (A) is not clear as to whether the penalties are levied for “concealment of income” or “furnishing of inaccurate particulars of income”

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DATE: May 16, 2015 (Date of pronouncement)
DATE: May 29, 2015 (Date of publication)
AY: 2005-06, 2006-07
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CITATION:
Dept's practice of filing appeals in a routine manner and without application of mind deprecated as it causes inconvenience to taxpayers

At least the senior officer such as Commissioner of Income Tax should have carefully perused the record and CIT(A)’s order before granting authorisation. The very fact that the AO filed the appeals without even verifying the year, which was mentioned in the grounds of appeal, also indicates that the appeals were filed in a routine manner which causes lot of inconvenience to the tax payers and such a practice should be deprecated

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DATE: March 25, 2015 (Date of pronouncement)
DATE: March 27, 2015 (Date of publication)
AY: 2008-09
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CITATION:
(i) Growth mutual funds do not yield dividend and so s. 14A/ Rule 8D does not apply, (ii) S. 14A/Rule 8D disallowance for admin exp cannot exceed allocable exp debited to P&L A/c, (iii) ALP of funds lent to AE should be as per LIBOR, (iv) ALP of corporate guarantee to be at 0.5%

Growth mutual fund does not yield any dividend/exempt income, therefore, the provisions of section 14A would not apply on the investment in growth mutual funds

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DATE: March 25, 2015 (Date of pronouncement)
DATE: March 27, 2015 (Date of publication)
AY: 2007-08
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CITATION:
Transfer Pricing: Share application money cannot be treated as loan amount merely because there is a delay in issuance of shares

For transfer pricing purposes, share application money cannot be treated as loan amount merely because there is a delay in issuance of shares by the subsidiary in the name of the assesse, which was duly explained by the assesse

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DATE: December 5, 2014 (Date of pronouncement)
DATE: January 9, 2015 (Date of publication)
AY: 2008-09
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CITATION:
Additions made solely on the basis of AIR information are not sustainable in law. The AO has to prove that assessee has received income from a particular source. The assessee cannot be expected to prove the negative

It has been held time and again by this Tribunal that the additions made solely on the basis of AIR information are not sustainable in the eyes of the law. If the assessee denies that he is in receipt of income from a particular source, it is for the AO to prove that the assessee has received income as the assessee cannot prove the negative

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