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DATE: September 4, 2017 (Date of pronouncement)
DATE: September 22, 2017 (Date of publication)
AY: 2008-09
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CITATION:
40(a)(ia)/40(ba) Disallowance of reimbursement of salary for non-deduction of TDS: Displeasure and unhappiness expressed at the manner in which the Tribunal approached the matter insofar as the applicability of s. 40(ba) is concerned. Tribunal cautioned that it should not use abbreviations in the order without indicating what the terms stand for as it causes confusion

Apart from that, the Tribunal’s order is confusing. In the impugned order, the Tribunal does not indicate what it means by AOP. It does not indicate as to what it means by TAS for both sides tell us that it is identical to TDS, namely, Tax Deducted at Source. We are unhappy with the abbreviations and short forms in the Tribunal’s order. We do not see who is reluctant, either one who dictates or one who takes down the same, but such abbreviations and shortcuts increase burden on the higher Courts. We would caution the Tribunal that hereafter it should indicate somewhere in the order as to what the abbreviations used by it stand for

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DATE: September 11, 2017 (Date of pronouncement)
DATE: September 15, 2017 (Date of publication)
AY: 2002-03
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CITATION:
S. 153A: Argument of the Dept that the law laid down in Continental
Warehousing/ All Cargo Global Logistics 374 ITR 645 (Bom) that assessment u/s 153A can be made only on the basis of incriminating material found in the search and no other issue can be taken is per incuriam in view of Rajesh Jhaveri Stock Brokers 291 ITR 500 (SC) is not correct. Bhola Shankar Cold Storage 270 ITR 487 (Cal) distinguished

The argument of Mr. Ahuja is that the view taken by the Tribunal based on its Special Bench decision in the case of All Cargo Global Logistics Ltd. v. Deputy Commissioner of Incometax, Central Circle44, [2012] 23 Taxman.Com 103 (Mum.) (SB) cannot be said to be correct. Mr. Ahuja’s argument is that though the assessee is heavily relying upon a Division Bench judgment of this Court in the case of Commissioner of IncomeTax v. (1) Continental Warehousing Corporation (Nhava Sheva) Ltd. and (2) All Cargo Global Logistics Ltd. Reported in [2015] 374 ITR 645 (Bom), still, the questions proposed by the Revenue in these Appeals ought to be entertained. These are substantial questions of law and the Division Bench judgment in Continental Warehousing Corporation and All Cargo Global Logistics (supra) is rendered in ignorance of a judgment of the Hon’ble Supreme Court reported in [2007] 291 ITR 500 (SC) (Assistant Commissioner of IncomeTax vs. Rajesh Jhaveri Stock Brokers Private Limited).

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DATE: September 5, 2017 (Date of pronouncement)
DATE: September 15, 2017 (Date of publication)
AY: 2011-12
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CITATION:
S. 263 Revision: For the purposes of exercising jurisdiction u/s 263, the conclusion of the CIT that the order of the AO is erroneous and prejudicial to the interests of the Revenue has to be preceded by some minimal inquiry. If the PCIT is of the view that the AO did not undertake any inquiry, it becomes incumbent on the PCIT to conduct such inquiry. The second option available u/s 263 (1) of sending the entire matter back to the AO for a fresh assessment can be exercised by the PCIT only after he undertakes an inquiry himself and not otherwise

For the purposes of exercising jurisdiction under Section 263 of the Act, the conclusion that the order of the AO is erroneous and prejudicial to the interests of the Revenue has to be preceded by some minimal inquiry. In fact, if the PCIT is of the view that the AO did not undertake any inquiry, it becomes incumbent on the PCIT to conduct such inquiry. All that PCIT has done in the impugned order is to refer to the Circular of the CBDT and conclude that “in the case of the Assessee company, the AO was duty bound to calculate and allow depreciation on the BOT in conformity of the CBDT Circular 9/2014 but the AO failed to do so. Therefore, the order of the AO is erroneous insofar as prejudicial to the interest of revenue”

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DATE: September 7, 2017 (Date of pronouncement)
DATE: September 15, 2017 (Date of publication)
AY: -
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CITATION:
S. 12AA: At the time of registration of a charitable institution u/s 12AA, the CIT is not required to look into the activities, where such activities have not or are in the process of its initiation. The registration cannot be refused on the ground that the trust has not yet commenced the charitable or religious activity. At this stage, only the genuineness of the objects has to be tested and not the activities, unless such activities have commenced

The preponderance of the judicial opinion of all the High Courts including this court is that at the time of registration under section 12AA of the Income-tax Act, which is necessary for claiming exemption under sections 11 and 12 of the Act, the Commissioner of Income-tax is not required to look into the activities, where such activities have not or are in the process of its initiation. Where a trust, set up to achieve its objects of establishing educational institution, is in the process of establishing such institutions, and receives donations, the registration under section 12AA cannot be refused, on the ground that the trust has not yet commenced the charitable or religious activity. Any enquiry of the nature would amount to putting the cart before the horse. At this stage, only the genuineness of the objects has to be tested and not the activities, which have not commenced. The enquiry of the Commissioner of Income-tax at such preliminary stage should be restricted to the genuineness of the objects and not the activities unless such activities have commenced. The trust or society cannot claim exemption, unless it is registered under section 12AA of the Act and thus at that such initial stage the test of the genuineness of the activity cannot be a ground on which the registration may be refused

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DATE: August 28, 2017 (Date of pronouncement)
DATE: September 12, 2017 (Date of publication)
AY: -
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CITATION:
Severe strictures passed against the department for filing a 'patently false' affidavit with regard to the failure to remove office objections. The cause shown is not sufficient and lacks in bona fides. It is a case of gross negligence and utter callousness on the part of the Revenue/Department. Tendency of the Revenue to either blame its' Advocate or the procedural rules for the dismissal of their Appeals deprecated

We find that the explanation or reason given in paragraph 3 of this affidavit to be patently false. If paragraph 3 and paragraph 4 of this affidavit-in-support cannot be reconciled, then, it is obvious that though aware of the conditional orders after lodging of the subject Appeal, the Revenue’s Advocate and the Revenue officials did not take the requisite steps. They cannot now come out with such a version for seeking restoration of a dismissed Appeal. The cause shown is, therefore, not sufficient and lacks in bona fides. It is a case of gross negligence and utter callousness on the part of the Revenue/Department. In two similar Motions, we had deprecated the tendency of the Revenue to either blame it’s Advocate or the procedural rules for the dismissal of their Appeals

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DATE: September 8, 2017 (Date of pronouncement)
DATE: September 12, 2017 (Date of publication)
AY: 2010-11
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CITATION:
CBDT guidelines for scrutiny of cases: Law explained as to how the CBDT Guidelines for manual selection of cases for scrutiny have to be interpreted and whether CIT in granting approval is required to show application of mind and give reasons for his decision

The Criteria / Guidelines for Income tax Scrutiny dated 10th September 2011 authorize the Assessing Officer to select any return for scrutiny after recording the reasons and obtaining approval of the CCIT/CIT. The case under the category should be selected if, they are compelling the reasons and the case selected through CASS. These cases should be watched by CCIT / CIT in respect of the quality of assessment. In our view, the requirements of the guidelines have been met by the AO in this case. The term compelling reasons is a relative term and has to be viewed from the point of view of the AO

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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: September 6, 2017 (Date of pronouncement)
DATE: September 9, 2017 (Date of publication)
AY: -
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CITATION:
HUF Law: It is a settled principle of Hindu law that there lies a legal presumption that every Hindu family is joint in food, worship and estate and in the absence of any proof of division, such legal presumption continues to operate in the family. The burden lies upon the member who after admitting the existence of jointness in the family properties asserts his claim that some properties out of entire lot of ancestral properties are his self-acquired property

It is a settled principle of Hindu law that there lies a legal presumption that every Hindu family is joint in food, worship and estate and in the absence of any proof of division, such legal presumption continues to operate in the family. The burden, therefore, lies upon the member who after admitting the existence of jointness in the family properties asserts his claim that some properties out of entire lot of ancestral properties are his self-acquired property. (See-Mulla – Hindu Law, 22nd Edition Article 23 “Presumption as to co-parcenary and self acquired property”- pages 346 and 347)

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DATE: August 17, 2017 (Date of pronouncement)
DATE: September 9, 2017 (Date of publication)
AY: 1992-93
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CITATION:
S. 37(1): in order to decide whether disputed lease rent is deductible in the year of fixation or in the year the dispute attains finality, the nature of fixation of rent, its payment, recovery etc. and whether it is statutory or contractual, have bearing. The Tribunal is required to bring the facts on record

The question as to whether the fixation of rent and its payment is statutory or contractual and, if so, its effect while claiming deduction under the Income Tax Act and, if so, in which year of assessment is a mixed question of law and fact. In our considered opinion, in order to decide the issue of deduction, the nature of fixation of rent, its payment, recovery etc. and whether it is statutory or contractual, has some bearing over the question

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DATE: September 5, 2017 (Date of pronouncement)
DATE: September 9, 2017 (Date of publication)
AY: 1981-82, 1982-83, 1983-84
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CITATION:
S. 260A/27A: Meaning of "substantial question of law" explained. The High Court cannot proceed to hear a second appeal without formulating the substantial question of law involved in the appeal and if it does so it acts illegally and in abnegation or abdication of the duty case on Court

The High Court cannot proceed to hear a second appeal without formulating the substantial question of law involved in the appeal and if it does so it acts illegally and in abnegation or abdication of the duty case on Court. The existence of substantial question of law is the sine qua non for the exercise of the jurisdiction under the amended Section 100 of the Code

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