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Month: February 2015

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DATE: February 11, 2015 (Date of pronouncement)
DATE: February 24, 2015 (Date of publication)
AY: 2007-08
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CITATION:
(i) Even if gains have accrued on execution of the development agreement as per Chaturbhuj Dwarkadas, the subsequent modification/ supercession of the agreement means that gains are not taxable as per real income theory, (ii) expenditure on buy-back of shares of warring shareholders is business expenditure

In Chaturbhuj Dwarkadas Kapadia, the issue was to determine the year in which the property was transferred for the purpose of capital gains. In this case the issue is what is the consideration received for the transfer of an asset. No income is accrued or received of the value of 18000 sq.feet of constructed area under the development agreement because the said agreement was not acted upon as it came to be uperseded/modified by the Tripartite agreement. This was the position when the return of income was filed. On the application of the real income theory, there would be neither accrual nor receipt of income to warrant bringing to tax to the constructed area of 18,000 sq.ft which has not been received by the assessee (CIT vs. Shoorji Vallabhdas 46 ITR 144 (SC) followed)

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DATE: January 28, 2015 (Date of pronouncement)
DATE: February 24, 2015 (Date of publication)
AY: 2005-06
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CITATION:
S. 147: S. 143(3) assessment order is not a scrap of paper & AO is expected to have applied his mind. Reopening on ground of "oversight, inadvertence or mistake" is not permissible

The argument that the AO has been careless in bringing to tax a particular amount which is chargeable to tax and that the Revenue should not be precluded from issuing notice u/s 148 overlooks the fact that power to reopen is not a power to review an assessment order. At the time of passing assessment order, it expected of the AO that he will apply mind and pass an order. An assessment order is not a mere scrap of paper. To accept the submission of the department would mean to negate the well settled position in law as stated by the Supreme Court in CIT Vs. Kelvinator of India Ltd 256 ITR 1 (Delhi)(FB) that the concept of ‘change of opinion’ brought in so as to have in built test to check abuse of power

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DATE: February 13, 2015 (Date of pronouncement)
DATE: February 20, 2015 (Date of publication)
AY: 2005-06
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CITATION:
The affidavit and cavalier conduct of CA in support of application for condonation of delay raises serious questions on his professional competence and work ethics in giving such an affidavit which hides more than it explains

The affidavit and cavalier conduct of Shri Kaushal Agarwal, C.A. raises serious questions on his professional competence and work ethics in giving such an affidavit which hides more than it explains. The burden is on the assessee to reasonably explain day to day delay and establish that there existed reasonable and sufficient cause in delaying the filing of appeals for about 1 year. If the proper dates or occasions are not mentioned with proper facts then the delay cannot be condoned. The law helps diligent and not the indolent as well as the axiomatic delay defeats equity. In our considered view that the condonation petitions filed by the assessee and material available on the record, fail to invoke any confidence, fail to explain reasonable and sufficient cause for condonation of long delay of 347 days in filing these appeals

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DATE: February 18, 2015 (Date of pronouncement)
DATE: February 19, 2015 (Date of publication)
AY: -
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CITATION:
S. 9(1)(i) & (vii): Concept of “source rule” vs. "residence rule" explained. Definition of expression "fees for technical services" in s. 9(1)(vii) explained with reference to "consultancy" services

The nature of service referred by the NRC, can be said with certainty would come within the ambit and sweep of the term ‘consultancy service’ and, therefore, it has been rightly held that the tax at source should have been deducted as the amount paid as fee could be taxable under the head ‘fee for technical service’. Once the tax is payable paid the grant of ‘No Objection Certificate’ was not legally permissible

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DATE: July 20, 2012 (Date of pronouncement)
DATE: February 19, 2015 (Date of publication)
AY: 2004-05
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CITATION:
S. 147: Verdict of Bombay High Court in The Indian Hume Pipe Co Ltd vs. ACIT 348 ITR 439 that “full & true disclosure of material facts” means “specific” disclosure of “each” fact nullified

We make it clear, that on the validity of Notice under Section 148 of the Income Tax Act, 1961, it would be open to the assessee as well as the Department to put forth their respective contentions before the Appellate Authority and the Appellate Authority will decide this issue also along with other issues without being influenced by the observations made by the High Court in the impugned order

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DATE: February 13, 2015 (Date of pronouncement)
DATE: February 16, 2015 (Date of publication)
AY: 2003-04
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CITATION:
S. 260A: Entire law on condonation of delay explained

Section 5 of the Limitation Act cannot be stretched to bring about a situation of unsettling judicial decisions which stood accepted by the parties. If the contention of the applicant is accepted, it would create a situation of chaos and unsettling various orders passed from time to time by the Tribunal as accepted by the parties. The legislative mandate in stipulating a limitation to file an appeal within the prescribed limitation cannot be permitted to be defeated when a litigant has taken a decision not to pursue further proceedings. A new ruling is no ground for reviewing a previous judgment. If this is permitted, the inevitable consequence is confusion, chaos, uncertainty and inconvenience as then no orders can ever attain finality though accepted by parties

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DATE: February 11, 2015 (Date of pronouncement)
DATE: February 16, 2015 (Date of publication)
AY: 2006-07, 2007-08
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CITATION:
S. 115JB: Distinction between "reserve" & "provision" explained. Statutory reserve created u/s 45-IC of RBI Act is not a "diversion of income at source" and cannot be excluded from book profits

Diversion of income at source by way of overriding title as a principle is applicable when under a statutory or contractual obligation or under the provisions of Memorandum and Articles of Association, the earning is divested and the assessed has no title over a particular receipt. When such charge exists, the amount or income so charged must be excluded from income of the assessed as income never reaches his hands and in fact belongs to a third person. Thus, the income stands diverted at source. Diversion of income at source implies that income or the amount mentioned therein belongs to a third party and was not income of the assesse

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DATE: February 13, 2015 (Date of pronouncement)
DATE: February 16, 2015 (Date of publication)
AY: 2009-10
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CITATION:
S. 43(5): Transaction of call/put options in foreign currency are "derivatives" and loss suffered therein is not a "speculation" loss

“Derivatives” include foreign currency call option/ put option. These transactions are of derivative markets and cannot be termed as speculative in nature

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DATE: January 28, 2015 (Date of pronouncement)
DATE: February 16, 2015 (Date of publication)
AY: 2009-10
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CITATION:
Law on applicability of s. 271AAA penalty in the context of a voluntary disclosure u/s 132(4) explained. Difference between s. 271(1)(c) and 271AAA also explained

For s. 271AAA, a finding as to the impugned incomes being undisclosed incomes is a pre-requisite for the application of the provision. Further, each of the three ingredients as specified u/s. 271AAA(2) would need to be separately examined for their satisfaction by the assessee if the penalty there-under is not to be levied and, thus, sustained. The admission u/s.132(4) is to specify the undisclosed income, or at least the manner in which it is to be arrived at; the whole premise for extending immunity from the penalty, statutorily mandated, being that the assessee commits himself, providing the necessary details under a condition of oath.

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DATE: February 13, 2015 (Date of pronouncement)
DATE: February 16, 2015 (Date of publication)
AY: 2002-03 & 2004-05
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CITATION:
S. 153A: Assessments which have attained finality cannot be disturbed or varied if no incriminating material is found qua the addition made

Since the assessment had attained finality before the date of search and does not get abated in view of second proviso to section 153A, therefore, without there being any incriminating material found at the time of search, no addition over and above the income which already stood assessed can be made

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