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Month: August 2015

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DATE: August 7, 2015 (Date of pronouncement)
DATE: August 13, 2015 (Date of publication)
AY: 2004-05, 2006-07, 2009-10
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CITATION:
Strictures passed against the Dept for ‘mischievous adamancy to attempt to mislead the Tribunal’, ‘obduracy and adamancy in filing meritless appeal’, ‘travesty of justice’, ‘Mocking at the system by filing the appeals’, ‘grave assault on the trust and reputation of fair play enjoyed by the tax administration’ etc

We are pained to address the serious damage done by this deliberate, mischievous and selective reference to facts by such responsible persons which grievously damages the public faith and belief in the honest fair play of the tax administration. The conscious and selective reference to facts demonstrates that at the very stage of filing of the appeal its fate and conclusion was known for which specific purpose the facts were attempted to be obfuscated. The filing of present appeal with complete knowledge of its fate by the Revenue only reflects the mischievous adamancy to attempt to mislead the Tribunal and waste the time of the Court and the officers concerned

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DATE: August 7, 2015 (Date of pronouncement)
DATE: August 13, 2015 (Date of publication)
AY: 1997-98, 1998-99, 1999-00
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CITATION:
S. 271(1)(c): Claim that interest income is eligible for s. 10B exemption, though upheld by the ITAT for an earlier year, is so implausible that it attracts penalty for concealment/ furnishing inaccurate particulars of income

We, in view of the foregoing, find no merit in the assessee’s case. It, to our mind, has not adduced any explanation, much less substantiated it, except for a bald assertion (i.e., of the said interest income as being a part of the assessee’s business income). The reliance on the decisions by the hon’ble jurisdictional high court, which we have found to be in fact supportive of the Revenue’s case, with the law in the matter being, in fact, well settled, is only a false plea or a ruse. Reliance on the decision by the tribunal for a subsequent year (AY 2000-01) is, under the circumstances, again, completely misplaced. A plausible explanation towards its’ claim/s saves penalty u/s. 271(1)(c), in view of, again, the settled law in the matter which though is completely missing in the present case

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DATE: August 12, 2015 (Date of pronouncement)
DATE: August 13, 2015 (Date of publication)
AY: 2010-11
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CITATION:
S. 144: If books are rejected and Gross Profit rate is estimated, separate disallowance of expenses cannot be made

When such an estimate is made it is in substitution of the income that is to be computed under s. 29. In other words, all the deductions which are referred to under s. 29 are deemed to have been taken into account while making such an estimate. This will also that the embargo placed in s. 40 also taken into account

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DATE: August 11, 2015 (Date of pronouncement)
DATE: August 12, 2015 (Date of publication)
AY: 1991-92
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CITATION:
S. 54G does not require that the machinery etc has to be acquired in the same AY in which the transfer takes place. It is sufficient if the capital gain is “utilized” towards purchase of P&M by giving advances to suppliers. Section 24 of the General Clauses Act applies also to ‘omissions’ along with `repeals’ and saves rights given by subordinate legislation

The aforesaid construction by the High Court of Section 54G would render nugatory a vital part of the said Section so far as the assessee is concerned. Under sub-section (1), the assessee is given a period of three years after the date on which the transfer takes place to purchase new machinery or plant and acquire building or land or construct building for the purpose of his business in the said area. If the High Court is right, the assessee has to purchase and/or acquire machinery, plant, land and building within the same assessment year in which the transfer takes place. Further, the High Court has missed the key words “not utilized” in sub-section (2) which would show that it is enough that the capital gain made by the assessee should only be “utilized” by him in the assessment year in question for all or any of the purposes aforesaid, that is towards purchase and acquisition of plant and machinery, and land and building. Advances paid for the purpose of purchase and/or acquisition of the aforesaid assets would certainly amount to utilization by the assessee of the capital gains made by him for the purpose of purchasing and/or acquiring the aforesaid assets

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DATE: August 13, 2015 (Date of pronouncement)
DATE: August 12, 2015 (Date of publication)
AY: -
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CITATION:
S. 253: Severe strictures passed regarding the conduct of the Vice President and President of the ITAT and the CBDT for seeking to constitute Special Bench for non-judicial reasons and on grounds of "political sensitivity"

This is the most distressing part. The president forwarded the letter of the Board to the Vice president for his comments. This was purely an internal movement of the file. It was not that the matter was judicially assigned to the Vice president and notified on his board. There was no indication for any litigant to know that the file was now before the Vice president. In spite of this position, the Special counsel who was to be engaged by the Revenue met the Vice president and explained him the need for a special bench. How the Special counsel knew that the file of the matter was before the Vice president, is a mystery. This was a private meeting and the Petitioner was not informed. The matter was seized before the regular bench and the revenue was a contesting party. The Petitioner was completely unaware that any such private meeting had taken place between the counsel and the Vice president. Permitting a party to the litigation to meet privately in absence of other side in respect of an ongoing litigation and then base an opinion on such meeting ,was most improper on the part of the Vice president. The Vice president did not even find it improper and he has proceeded to place the said private meeting on record as if nothing was wrong about the same. Not only holding such private meetings is opposed to judicial conduct, but not knowing that it is an improper judicial conduct, makes the matters worse

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DATE: August 5, 2015 (Date of pronouncement)
DATE: August 12, 2015 (Date of publication)
AY: 2004-05
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CITATION:
S. 36(1)(vii)/ 36(2): The principal part of the Inter-corporate Debt (ICD) can be claimed as a bad debt if the interest thereon has been offered to tax in some year

The debt comprises not only the brokerage which was offered to tax but also principal value of shares which was not received. Therefore, even if a part of debt is offered to tax, Section 36(2)(i) of the Act, stands satisfied. The test under the first part of Section 36(2)(i) of the Act is that where the debt or a part thereof has been taken into account for computing the profits for earlier Assessment Year, it would satisfy a claim to deduction under Section 36(1)(vii) read with Section 36(2)(i) of the Act

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DATE: August 7, 2015 (Date of pronouncement)
DATE: August 12, 2015 (Date of publication)
AY: 2009-10
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CITATION:
S. 41(1)/ 68: Old unclaimed liabilites which are not written back by the assessee can neither be assessed as "cash credits" u/s 68 nor assessed u/s 41(1) as "remission or cessation of liability"

On the applicability of section 68, we are of the view that those provisions will not apply as the balances shown in the creditors account do not arise out of any transaction during the previous year relevant to AY 2009-10. The provisions of sec. 68 are clear inasmuch as they refer to “sum found credited in the books of account of an assessee maintained for any previous year”. Since the credit entries in question do not relate to previous year relevant to AY 2009-10, the same cannot be brought to tax u/s. 68 of the Act. The proper course in such cases for the Revenue would be to find out the year in which the credits in question were credited in the books of account and thereafter make an enquiry in that year and make an addition in that year, if other conditions for applicability of section 68 are satisfied

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DATE: April 17, 2015 (Date of pronouncement)
DATE: August 10, 2015 (Date of publication)
AY: 2007-08
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CITATION:
S. 43B: Service-tax billed to customer but not collected from him cannot be disallowed u/s 43B on ground of non-payment to treasury

Section 43B does not contemplate liability to pay the service tax before actual receipt of the funds in the account of the assesee. Liability to pay service tax into the treasury will arise only upon the assessee receiving the funds and not otherwise

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DATE: August 6, 2015 (Date of pronouncement)
DATE: August 10, 2015 (Date of publication)
AY: 2012-13
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CITATION:
S. 92B(1): If assessee contends that it has not entered into an "international transaction" with an AE, the TPO has to counter that by furnishing relevant information. Failure to do so can be challenged by a Writ Petition

When the petitioner no.1 replied to the said notice by its letter dated 29th April, 2015, the concerned respondent authority ought to have given a reply by supplying such relevant materials with which it come to a conclusion that the petitioner no.1 was an “associated enterprise” of PricewaterhouseCoopers Services BV. The reason why furnishing of such relevant materials were singularly important is that if the petitioner no.1 was not an “associated enterprise” of PricewaterhouseCoopers Services BV, there cannot be any computation of income from “international transaction” having regard to arm’s length price as envisaged under section 92 of the Income Tax Act, 1961

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DATE: August 7, 2015 (Date of pronouncement)
DATE: August 10, 2015 (Date of publication)
AY: 2009-10
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CITATION:
S. 40(a)(ia)/ 194A/ 197A(1A): If payer obtains declarations in Form 15G/ 15H, tax is not deductible at source. Failure to furnish such declarations to CIT may attract penalty u/s 272A(2)(f). However, disallowance u/s 40(a)(ia) cannot be made

The assessee has received such Forms as prescribed from those persons to whom interest was paid/being paid and accordingly no deduction of tax was to be made in such cases. The default for non-furnishing of the declarations to the Commissioner of Income-tax as prescribed may result in invoking penalty provisions under section 272A(2)(f), for which separate provision/procedure was prescribed under the Act. However, once Form 15G/ Form 15H was received by the person responsible for deducting tax, there is no liability to deduct tax. Once there is no liability to deduct tax, it cannot be considered that tax is deductible at source under Chapter XVII-B as prescribed under section 40(a)(ia)

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