Year: 2012

Archive for 2012


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DATE: (Date of pronouncement)
DATE: July 6, 2012 (Date of publication)
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In assessments that are abated, the AO retains the original jurisdiction as well as the jurisdiction conferred on him by s. 153A for which assessments shall be made for each of the 6 assessment years separately

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DATE: (Date of pronouncement)
DATE: July 5, 2012 (Date of publication)
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However, the amendment is violative of Article 14 of the Constitution of India because two assessees of the same class are placed on different footing. While some assessees whose export turnover is more than Rs.10 Crore and who have claimed deduction u/s. 80 HHC on DEPB / DFRC in their ROI and the assessments have become final are given the benefit of deduction without compliance of the conditions imposed by the Taxation Laws (Second Amendment) Act, 2005, assessees whose turnover is more than Rs.10 Crore, and who have claimed deduction u/s. 80 HHC on DEPB/DFRC and whose assessments are pending either before the AO or the appellate authority would be required to comply with those two conditions retrospectively. Two assessees of similar description having export turnover of more than Rs.10 Crore are discriminated inasmuch as the assessees whose assessments have become final is not required to comply with the two conditions and would avail deduction u/s. 80 HHC as against the assessees whose assessments are pending and who would be required to comply with the two conditions. A benefit based on pendency of proceedings of assessment and discrimination based thereon definitely violates Article 14 of the Constitution. In the matter of completion of assessment, the assessees have little role to pay. After the assessees have submitted their returns within the time fixed by law, if for any reason the AO delays in making the assessment, taking advantage of their own delay, the Revenue cannot deprive a class of the assessees of the benefit whereas other assessees of the same class whose assessment have already been completed would get the benefit

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DATE: (Date of pronouncement)
DATE: July 5, 2012 (Date of publication)
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The appellate authorities have come to a finding of fact after examining the relevant material that the assessee is an investor in shares and not a trader. This finding of fact is not perverse. As held in Gopal Purohit 228 CTR (Bom) 582, there is no bar for an assessee to maintain two separate portfolios, one relating to investment in shares and another relating to business activities involving dealing in shares

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DATE: (Date of pronouncement)
DATE: July 5, 2012 (Date of publication)
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S. 43B was inserted by the FA 1983 to prevent assessees from claiming a deduction for a provision for statutory liabilities without actually paying the same. Leave encashment is not a statutory liability as held in Bharat Earth Movers 245 ITR 428 (SC) and a deduction is allowable in respect of the accrued liability. To overcome the said decision, clause (f) was inserted in the year 2001 to allow deduction for leave encashment only on payment basis. In Exide Industries 292 ITR 470 (Cal), clause (f) of s. 43 B was held to be inconsistent with the object with which s. 43B was inserted and thereby was held to be unconstitutional. As the department has accepted the judgement of the Calcutta High Court and not filed an appeal to the Supreme Court, it is not open to the Revenue to challenge its correctness in the case of another assessee as held in Berger Paints 266 ITR 99 (SC)

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DATE: (Date of pronouncement)
DATE: July 3, 2012 (Date of publication)
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It is well settled that an assessee is entitled to raise not merely additional legal submissions before the appellate authorities, but is also entitled to raise additional claims before them. The appellate authorities have the discretion whether or not to permit such additional claims to be raised. It cannot, however, be said that they have no jurisdiction to consider the same. That they may choose not to exercise their jurisdiction in a given case is another matter. The exercise of discretion is entirely different from the existence of jurisdiction. Goetze was confined to a case where the claim was made only before the AO and not before the appellate authorities. The Court did not lay down that a claim not made before the AO cannot be made before the appellate authorities. The jurisdiction of the appellate authorities to entertain such a claim has not been negated by the Supreme Court in this judgment. On facts, there was nothing to show that the claim entertained by the CIT (A)/ ITAT was improper

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DATE: (Date of pronouncement)
DATE: June 29, 2012 (Date of publication)
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As per GKN Driveshafts 259 ITR 19 (SC) and the rules of natural justice, the AO was bound to furnish reasons within a reasonable time so that the assessee could file objections against the same. The adherence to this procedure is a necessity because at the preliminary stage itself, the AO may be satisfied with the explanation of the assessee. A reassessment completed without furnishing the reasons actually recorded by the AO for reopening of assessment is not sustainable in law. The subsequent supply of the reasons would not make good of the illegality suffered at the stage of reopening of the assessment. On facts, though the assessee asked for the recorded reasons, the same was supplied to him only after the passing of the reassessment order. This failure on the part of the AO renders the reassessment order invalid (Fomento Resorts & Videsh Sanchar Nigam 340 ITR 66 (Bom) (SLP dismissed) followed (included in file))

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DATE: (Date of pronouncement)
DATE: June 28, 2012 (Date of publication)
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The AO had not disputed the consideration received by the assessee & the addition had been made solely on the basis of the deeming provisions of s. 50C. The assessee had furnished all the facts of the sale which had not been doubted by the AO. The fact that the assessee agreed to the additions because of the deeming provisions of s. 50C does not mean that he filed inaccurate particulars of his income. The assessee’s acceptance of the addition on the basis of the valuation made by the stamp valuation authority is not conclusive proof that the sale consideration as per the sale agreement was incorrect and wrong and so s. 271(1)(c) penalty cannot be levied (Renu Hingorani (ITAT Mumbai) followed)

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DATE: (Date of pronouncement)
DATE: June 26, 2012 (Date of publication)
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CITATION:

Articles 11 & 12 of the DTAA provide that the “tax” chargeable in India on interest and royalties cannot exceed 15% and 10% respectively. The expression ‘tax’ is defined in Article 2(1) to include ‘income tax’ and includes ‘surcharge’ thereon. Article 2(2) extends the scope of the ‘tax’ by laying down that it shall also cover “any identical or substantially similar taxes which are imposed by either Contracting State after the date of signature of the present Agreement in addition to, or in place of, the taxes referred to in paragraph 1”. “Cess” was introduced by the Finance Act, 2004 and it is described in s. 2(11) of the Finance Act 2004 as “additional surcharge for purposes of the Union, to be called the “Education Cess on income-tax”. Accordingly, the “education cess” is in the nature of an “additional surcharge” and is covered by Article 2. Accordingly, education cess cannot be levied in respect of the assessee’s tax liability

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DATE: (Date of pronouncement)
DATE: June 26, 2012 (Date of publication)
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CITATION:

hough the proceeds of the premium notes on which the redemption premium was paid had been invested in the shares/debentures of RUPL and although the dividend income and LTCG from the said investment was exempt u/s 10(23G), the premium cannot be regarded as expenditure incurred exclusively in relation to earning of exempt income so as to invoke s. 14A because the said investment had the potential of generating taxable income in the form of STCG etc

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DATE: (Date of pronouncement)
DATE: June 26, 2012 (Date of publication)
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CITATION:

The department’s argument that if the sum is not assessable as “fees for technical services”, it is assessable as “other income” Article 23 of the DTAA is not acceptable because that Article applies only to “items of income which are not expressly mentioned in the foregoing Articles of this Agreement”. Article 23 does not apply to items of income which can be classified under Articles 6-22 whether or not taxable under these articles. Therefore, income from consultancy services, which cannot be taxed under articles 7, 12 or 14 because the conditions laid down therein are not satisfied, cannot be taxed under article 23 either