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DATE: August 20, 2019 (Date of pronouncement)
DATE: August 24, 2019 (Date of publication)
AY: 2009-10
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CITATION:
S. 153A, 153C Search Assessments: The Act has separate provisions for making assessment in case of material found in the course of search from premises of assessee (s. 153A) as well as material found in course of search at premises of third party (S. 153C). Even if search happens in case of assessee, the AO cannot initiate proceedings u/s 153A if incriminating material is found during search of other person. Proceedings should be initiated u/s 153C and failure to do so renders the addition in the s. 153A assessment void-ab-initio (Vinod Kumar Gupta 165 DTR 409 (Del) distinguished)

In the case of Vinod Kumar Gupta the Hon’ble High Court held that as search and seizure was conducted through one authorization, there was no requirement of issuing separate notice under section 153C of the Act and following separate procedure under section 153C of the Act. But in the instant case, separate search warrant has been issued in the case of the assessee as well in the case of Sh. Ashok Chowdhary and the Assessing Officer has used the material found in the course of search at the premise of Sh. Ashok Chowdhary, which is not permitted in view of the express provision of the law.

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DATE: March 8, 2019 (Date of pronouncement)
DATE: March 15, 2019 (Date of publication)
AY: 2006-07
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CITATION:
S. 68 Bogus Share Capital: Merely presenting of documents & making payment through bank or appearance by director before the AO & admitting fact of share application made is in itself not sufficient to justify the genuineness of the transaction. It is against human probability that anyone will invest and pay share premium in a company without net worth or future prospectus. All applicants with common address are being controlled remotely by one person. These applicants are all paper companies not having sufficient worth and created for providing entries of share application money or share capital or loans by way of accommodation entries (NDR Promoter 410 ITR 379 (Del) & NRA Iron & Steel 103 TM.com 48 (SC) followed)

It is against the human probability that anyone will invest and pay share premium of Rs. 50/- per share without having any net worth of the company or any future prospectus of earning by the company. The current directors have not been able to justify, why the shares were purchased at high premium, without corresponding valuation of the company, which was having meagre income. It is impossible that directors of these nine companies are having either of the two addresses of the Paharganj area of New Delhi. In normal circumstances it is not possible until unless all these companies are being controlled remotely by one person. All the circumstances manifests that these are all paper companies not having sufficient worth and created for providing entries of share application money or share capital or loans by way of accommodation entries

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DATE: December 10, 2018 (Date of pronouncement)
DATE: December 15, 2018 (Date of publication)
AY: 2014-15
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CITATION:
S. 194-IA TDS: The exemption of Rs. 50 lakh in s. 194-IA(2) is applicable w.r.t. the amount related to each transferee and not with reference to the amount as per sale deed. Each transferee is a separate income tax entity and the law has to be applied with reference to each transferee as an individual transferee / person

Each transferee is a separate income tax entity therefore, the law has to be applied with reference to each transferee as an individual transferee / person. It is also noted that Section 194-IA was introduced by Finance Act, 2013 effective from 1.6.2013. It is also noted from the Memorandum explaining the provisions brought out alongwith the Finance Bill wherein it was stated that “in order to reduce the compliance burden on the small tax payers, it is further proposed that no deduction of tax under this provision shall be made where the total amount of consideration for the transfer of an immovable property is less than fifty lakhs rupees.”

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DATE: October 12, 2018 (Date of pronouncement)
DATE: October 15, 2018 (Date of publication)
AY: 2006-07
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CITATION:
S. 23(1)(b), 50C: Law explained on (i) whether notional interest on interest-free security deposit can be added while computing annual value u/s 23(1)(b) & (ii) whether the interest-free security deposit can be treated as 'full value of consideration' u/s 50C as it was included in 'assessable value' by the Stamp Duty Valuation Authority

The object of Section 2(47)(vi) appears to be to bring within the tax net a de facto transfer of any immovable property. The expression “enabling the enjoyment of” takes colour from the earlier expression “transferring”, so that it is clear that any transaction which enables the enjoyment of immovable property must be enjoyment as a purported owner thereof the idea is to bring within the tax net, transactions, where, through title may not be transferred in law, there is, in substance, a transfer of title in fact

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DATE: August 13, 2018 (Date of pronouncement)
DATE: September 15, 2018 (Date of publication)
AY: 2009-10
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CITATION:
S. 194-H TDS: The law in Idea Cellular 325 ITR 148 (Del) that there is a principal-agent relationship between the telecom company and the dealers does not mean that a similar relationship can be inferred between the dealers and the sub-dealers. The incentive paid by the dealers to sub-dealers cannot be equated with commission as stipulated u/s194H and so there is no requirement for deducting TDS

There is no agency agreement between the assessee and his dealers/sub-dealers. The agency relationship between the assessee and the cellular operators cannot be inferred or presumed in the transaction between the assessee and his sub-dealers. The reason being the SIM cards, vouchers belonged to the cellular operators/cellular entities and these cellular operators/telecom entities ensure that payment is received in respect of those prepaid vouchers and SIM cards which are sold to the subscribers and unsold SIM cards are returned back to them and even if such SIM cards are returned, then these cellular/telecom entities are required to be made payment against them and the SIM card stocked with the distributors are the property of service provider, i.e., the telecom/cellular entities

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DATE: July 6, 2018 (Date of pronouncement)
DATE: August 4, 2018 (Date of publication)
AY: 2008-09
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CITATION:
Article 5 Permanent Establishment (PE): The duration of 12 months specified to constitute a PE is activity specific qua the site, construction, assembly or installation project. Preparatory work for tendering of contract cannot be included in the period. The activity qua the project comes to an end when the work gets completed and the responsibility of the contractor with respect to that activity comes to end. Onus is heavily upon the revenue to establish that that assessee’s activity had crossed the threshold period of 12 months

Auxiliary and preparatory activity, purely for tendering purpose before entering of the contract and without carrying out any activity of economic substance or active work qua that project cannot be construed as carrying out any activity of installation or construction. Clause (g) of Article 5(2) ostensibly refers to activity based PE, because the main emphasis is on “where such site project or activity continues for a period of more than 12 months.” The duration of 12 months per se is activity specific qua the site, construction, assembly or installation project. If the contract would not have been awarded, then any kind of preparatory work for tendering of contract cannot be reckoned for carrying out any activity as stipulated in this clause. Hence, in this case all such preparatory work for tendering purpose before entering into contract cannot be counted while calculating the threshold period.

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DATE: April 20, 2018 (Date of pronouncement)
DATE: June 27, 2018 (Date of publication)
AY: 2007-08
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CITATION:
Condonation of delay (92 days): The AO was negligent in filing the remand report before the CIT(A). The same attitude has continued at the stage of filing appeal to the ITAT. The excuse that the appeal was not filed due to the AO being busy with time barring assessment is not acceptable. The AO deliberately overlooked the impugned order and did not file appeal before the Tribunal within the period of limitation. Even the authorization by Pr. CIT to file the appeal has been granted after the period of limitation. Hence sufficient cause is not shown

The same conduct of the AO continued even after passing of the impugned appellate order because the appellate order was kept pending without any action and no appeal has been filed by the Department within the period of limitation. It is simply stated in the application for condonation of delay that due to time barring assessment, the impugned order was overlooked and got barred by limitation. However, it is a fact that AO was aware that departmental appeal would be meritless. It is, therefore, clear that the AO deliberately overlooked the impugned order and did not file appeal before the Tribunal within the period of limitation. Even the authorization by Ld. Pr. CIT to file the appeal have been granted after the period of limitation to file the appeal on 07.06.2016. Therefore, no sufficient cause has been shown to explain the delay in filing the appeal before the Tribunal beyond the period of limitation

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DATE: June 19, 2018 (Date of pronouncement)
DATE: June 20, 2018 (Date of publication)
AY: 2012-13
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CITATION:
S. 159/ 163/ 176: While a notice/ order on a dead person/ wound-up company is a nullity, this is subject to the condition that the department is made aware of the death/ winding-up. If the legal representative, either voluntarily or in response to a notice issued against the deceased but served upon his agent, allows the assessment proceedings to continue against the deceased/ wound-up company without any objection and lets the AO make an assessment order, it would not be open for him to take a plea at the appellate stage, as a last resort or as an afterthought, that the proceedings taken and the assessment order made against the deceased/ wound-up company are nullity. In such cases, the assessment is liable to be set-aside for a fresh assessment in accordance with law instead of its annulment

In the instant case before us, we have observed that compliance of the assessment proceeding before the Assessing Officer has been made from time to time by the persons authorized in this behalf and proceedings have not been challenged due to lack of jurisdiction. According to the available records, the validity of the jurisdiction has been challenged for first time before the Ld. DRP. In view of the above circumstances, following the finding of the Hon’ble Gujarat High Court in the case of CIT Vs. Sumantbhai C Munshaw (1981) 128 ITR 142 the assessment order should not be nullified

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DATE: June 6, 2018 (Date of pronouncement)
DATE: June 7, 2018 (Date of publication)
AY: 2010-11
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CITATION:
Applicability of s. 80 to s. 153A returns: A return filed u/s 153A is deemed to be a return filed u/s 139(1). Accordingly, the restrictive provisions of s. 80 do not apply. The return u/s 153A, once accepted and assessed, replaces the original return filed u/s 139. Therefore, the assessee is eligible for carry forward business loss

Therefore, if the assessee has filed a loss return u/s. 139(3) within the period provided under the Act and if the assessee has filed a revised loss return under Sub- section (5) thereof again within the prescribed time limit, the A.O is bound to take cognizance of the revised return because the original return is replaced by the revised return, held the Tribunal. In the present case before us, undisputedly, the assessment u/s. 153A r.w.s. 143(3) of the Act has been framed on the basis of return filed in response to notice issue u/s. 153A of the Act. Hence, now it is not open to raise contention by the revenue that return was filed beyond the prescribed time period mentioned in the notice issued u/s. 153A of the Act. The return of income filed in response to the notice u/s. 153A on the basis of which assessment in question has been framed thus has replaced the original return for determining the net income in the assessment u/s. 153A of the Act. Thus, in a sense, return filed in response to the notice issued u/s. 153A was a revised return and the assessment was re- assessment

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DATE: January 17, 2017 (Date of pronouncement)
DATE: January 30, 2017 (Date of publication)
AY: 2002-03, 2003-04
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CITATION:
S. 9(1)(i)/ 9(1)(vi)/ 9(1)(vii)/ 40(a)(i): Law on whether payment by the assessee to non-resident parties for “call transmission services through dedicated bandwidth” is assessable as income accruing in India, royalty or fees for technical services and whether a disallowance can be made for failure to deduct TDS explained

In the instant case also, the undersea cable for providing dedicated bandwidth to the assessee was installed beyond the territory of India and no operations were carried out by the non-resident party M/s Kick Communication in India. It was responsible for restoring connectivity and Managing faults in connectivity etc in respect of data transmitted through undersea cable only. Similarly, the operations carried out by M/s. IGTL Solutions are also in USA and not in India. Since operations by both the non-resident parties are carried out beyond the territory of India, we thus hold that section 9(1)(i) is of the Act is not attracted in case of above two non-resident parties

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