Home › Archive for All Judgements › Page 112
Category: All Judgements

Archive for the ‘All Judgements’ Category

This section is now closed. Click here for new judgements


Posted on by editor
COURT:
CORAM: ,
SECTION(S):
GENRE:
CATCH WORDS: , , ,
COUNSEL:
DATE: March 18, 2016 (Date of pronouncement)
DATE: March 30, 2016 (Date of publication)
AY: 1997-98
FILE: Click here to view full post with file download link
CITATION:
S. 37(1): Distinction between "application software" and "system software" explained. Expenditure on "application software" is revenue as it allows efficient carrying on of business and requires to be constantly updated due to rapid advancements in technology and increasing complexity of the features

The concept of enduring benefit must respond to the changing economic realities of the business. The expenses incurred by installation of software packages in the present computer world, which revolves on the modern communication technology, enables the assessee to carry on its business operations effectively, efficiently, smoothly and profitably. However, such software itself does not work on a standalone basis. It has to be fitted to a computer system to work. Such software enhances the efficiency of the operation. It is an aid in the manufacturing process rather than the tool itself. Therefore, the payment for such application software, though there is an enduring benefit, does not result in acquisition of any capital asset and it merely enhances the productivity or efficiency and hence, has to be treated as revenue expenditure

Read more ›

Posted on by editor
COURT:
CORAM: ,
SECTION(S): ,
GENRE:
CATCH WORDS: , ,
COUNSEL:
DATE: February 9, 2016 (Date of pronouncement)
DATE: March 30, 2016 (Date of publication)
AY: 2011-12
FILE: Click here to view full post with file download link
CITATION:
S. 115JA/115JB: Capital receipts (such as subsidy & carbon credits), which have no income element, have to be excluded from book profits even if credited to the P&L A/c

The genesis of Sec 115J, thereafter section 115JA and now section 115JB was to ensure that the assessee, while making profit from operations, should not enjoy tax free status due to various deductions available under the Income Tax Act. There was never any intention of the legislature to tax what is not income at all. In a recent decision, the Hon’ble Apex Court in the case of Indo Rama Synthetics (I) Ltd -vs- CIT (2011) 330 ITR 363 (SC) has held that the object of MAT provisions is to bring out the real profit of the companies. The thrust is to find out the real working results of the company. Inclusion of receipt in the computation of MAT would defeat two fundamental principles, it would levy tax on receipt which is not in the nature of income at all and secondly it would not result in arriving at real working results of the company. The real working result can be arrived at only after excluding this receipt which has been credited to P&L a/c and not otherwise

Read more ›

Posted on by editor
COURT:
CORAM: ,
SECTION(S): ,
GENRE:
CATCH WORDS: ,
COUNSEL:
DATE: March 9, 2016 (Date of pronouncement)
DATE: March 30, 2016 (Date of publication)
AY: 2009-10
FILE: Click here to view full post with file download link
CITATION:
Bogus Purchases: Theory that transaction "defies human probabilities" cannot be applied to purchases in isolation but has to be applied to the entire transaction in the light of documentary evidence produced by the assessee

The tax authorities have not accepted the claim of purchases of diamonds from TTPL on the reasoning that the said transaction defies the human probabilities. The tax authorities have, accordingly, rejected the various evidences furnished by the assessee in support of claim of purchases. We also notice that the tax authorities have arrived at such a conclusion only by considering the purchase transaction and did not prefer to examine the claim of export of same goods in the succeeding year and re-import of the same goods thereafter. In our view, the surrounding circumstances and human probabilities attached to a transaction should be examined by considering the transactions as a whole. Examination of part of transactions alone in the context of human probabilities/surrounding circumstances, some times, would give misleading results

Read more ›

Posted on by ksalegal
COURT:
CORAM: ,
SECTION(S):
GENRE:
CATCH WORDS: ,
COUNSEL:
DATE: March 9, 2016 (Date of pronouncement)
DATE: March 29, 2016 (Date of publication)
AY: 2008-09
FILE: Click here to view full post with file download link
CITATION:
Mutuality - TDR Premium

The learned CIT(A) relied on ITAT order for A.Y. 2006-07 (ITA No. 499/M/2011) & A.Y. 2007-08 (ITA No. 500/M/2011) and held that TDR Premium received by Society from its members was not covered by principle of Mutuality. The Tribunal for A.Y. 2008-09 reversed the order of Learned CIT(A) and held that TDR premium will be covered by the principle of mutuality. Hence, ITAT order for A.Y. 2006-07 (ITA No. 499/M/2011) and A.Y. 2007-08 (ITA No. 500/M/2011) in case of Hatkesh Co-op. Hsg. Society is no longer good law.

Read more ›

Posted on by ananyakapoor
COURT:
CORAM: ,
SECTION(S): ,
GENRE:
CATCH WORDS:
COUNSEL: , ,
DATE: March 3, 2016 (Date of pronouncement)
DATE: March 28, 2016 (Date of publication)
AY: -
FILE: Click here to view full post with file download link
CITATION:
Section 147, reopening, reopening on factually erroneous premise, not permissible, change of opinion

Since the action of the Revenue was based on a factually erroneous premise, the Court is of the view that the reopening of the assessments for the said AYs is not sustainable in law. The Court is also satisfied that the requirement of the law, as explained by the Court in Commissioner of Income Tax. v. Kelvinator of India Limited (2010) 320 ITR 561 (SC), and reiterated in the later decisions, has not been fulfilled in the present case

Read more ›

Posted on by cahiren.trivedi@gmail.com
COURT:
CORAM: ,
SECTION(S):
GENRE:
CATCH WORDS: ,
COUNSEL:
DATE: March 28, 2016 (Date of pronouncement)
DATE: March 28, 2016 (Date of publication)
AY: A.Y 2006-07
FILE: Click here to view full post with file download link
CITATION:
An order of revision passed on a non-existing entity, even though the power of attorney and the adjournment and the reply to show cause notice was signed by the erstwhile company, is invalid. The Tribunal held that the case of estoppel relied on by the department cannot be applied to instant case as assessee did not behave in a notorious way to mislead the department. Taking cognizance of the intimation filed by the assessee to the jurisdictional AO that the company is not is existence, during the assessment proceedings, of the intervening assessment years, and there being no provision in law to intimate the CIT regarding the facts of merger, the ITAT held the order to be invalid.

In the Income Tax Act, there is no provision to communicate this fact to the Commissioner. The assessee has already informed the AO. We have extracted the copy of the letter written by the assessee. We have also made reference of the assessment order vide which the AO has taken cognizance of this fact while he issued notice under section 143(2) of the Income Tax Act. In the order of the ITAT, Kolkata Bench itself has observed that legally when a company amalgamates with another, it loses its identity and no proceedings can be taken in its earlier name. The Bench had taken a different view on account of notorious facts available in that case. No such circumstances are before us. Apart from above, we are of the view that even if the assessee gave consent for taking up the proceedings under section 263 against it, that would not infuse jurisdiction in the ld.Commissioner. In other words, this adjournment application, reply to show cause notice would not infuse jurisdiction to ld.Commissioner. Jurisdiction should be by virtue of operation of the Act and not by the consent of an assessee. A perusal of section 263 would indicate that before taking any action under section 263, the ld.Commissioner has to pursue record and record would include the communication made by the assessee to the AO on 23.7.2013 intimating about the fact of amalgamation

Read more ›

Posted on by CA.BHUPENDRASHAH
COURT: ,
CORAM: ,
SECTION(S):
GENRE:
CATCH WORDS:
COUNSEL:
DATE: March 18, 2016 (Date of pronouncement)
DATE: March 28, 2016 (Date of publication)
AY: 2009-10
FILE: Click here to view full post with file download link
CITATION:
An addition on account of bogus purchases cannot be made only on the basis of information received from the MVAT department.

Ostensibly, the Assessing Officer ought to have brought on record material which is relevant to the transactions of the assessee with the aforesaid four parties instead of making a general observation about the information received from the Sales Tax Department of the Government of Maharashtra. Quite clearly, the Assessing Officer as well as CIT(Appeals) have taken note of the fact that no sales could have been effected by the assessee without purchases. In the present case, assessee has explained that all its sales are by way of exports. The books of account maintained by the assessee show payment for effecting such purchases by account payee cheques and also the vouchers for sale and purchase of goods, etc. Notably, no independent enquiries have been conducted by the Assessing Officer

Read more ›

Posted on by Brettlee
COURT:
CORAM: ,
SECTION(S):
GENRE:
CATCH WORDS:
COUNSEL:
DATE: February 19, 2016 (Date of pronouncement)
DATE: March 28, 2016 (Date of publication)
AY: 2004-05
FILE: Click here to view full post with file download link
CITATION:
Reopening u/s 147 without application of mind is not valid

In this situation it was on the AO to peruse the relevant assessment record of AY 2005-06 which forming reason to believe and thus it is safely presumed that the AO initiated reassessment proceedings u/s 147 of the Act and issued notice u/s 148 of the Act without application of mind working in a mechanical manner and thus the same are not sustainable in the facts and on law. Respectfully following the dicta laid down by jurisdictional High Court in the case of CIT vs. G & G Pharma (Supra) we are inclined to hold that the AO issued notice u/s 148 of Act on the wrong and invalid assumption of Jurisdictional and all subsequent proceedings is pursuance thereto can’t be held as sustainable and valid hence, the same deserve to be quashed and we quash the same

Read more ›

Posted on by Brettlee
COURT:
CORAM: ,
SECTION(S):
GENRE: ,
CATCH WORDS:
COUNSEL:
DATE: March 18, 2016 (Date of pronouncement)
DATE: March 28, 2016 (Date of publication)
AY: 2007-08 and 2006-07
FILE: Click here to view full post with file download link
CITATION:
Deduction of section-10B, transferring pricing adjustment on account of ECB from parent company

Revenue has not disputed the submission made by the assessee before the CIT (A) that effective rate of interest paid by it in India was 6.62% on
loans. Interest paid by assessee on loans taken from AE abroad was 5%. This was below the rate of interest assessee was paying on loans taken
within India. When internal CUP with unrelated parties is available, in our opinion, it should be given precedence over external CUP Once such raw
gherkins are put into some process which increases its shelf life to six months or more, there indeed happen some irreversible change. Raw
gherkins are changed from its original state to a state where it remains good for human consumption even after six months. Thus the steps as
undertaken by the assessee which included fermentation and which extended the shelf life of raw gherkins, even if we construe as not ‘manufacture’, as commonly understood, it cannot be denied that it resulted in a product which cannot be equated with raw gherkins. The processes undertaken by the assessee had significant effect on the raw nature, converting it to a material capable of withstanding decay for a considerable period of time. In our opinion, in such a situation, it is difficult to say that what was packed by the assessee after the various process was very same as the raw gherkins which it got from its contract farmers

Read more ›

Posted on by editor
COURT:
CORAM: ,
SECTION(S):
GENRE:
CATCH WORDS: ,
COUNSEL: , ,
DATE: March 17, 2016 (Date of pronouncement)
DATE: March 28, 2016 (Date of publication)
AY: 2012-13
FILE: Click here to view full post with file download link
CITATION:
Strictures passed against high-handed and unfair approach of AO (IRS Officer) in refusing to give an acknowledgement of stay application. Chief CIT directed to ensure such behaviour is not repeated. Dept directed to nominate another AO to hear stay application

We find this conduct on the part of the Assessing Officer to accept a stay application and not immediately give acknowledgement of its receipt is unacceptable. The least that is expected of a civil servant is to be fair and civil. In the absence of the above, his conduct is not one becoming of an Officer belonging to the prestigious Indian Revenue Service. The least that is expected of an Officer is that when a person files an application / letter, which is accepted by him, an acknowledgement should be forthwith given to the party filing the application or letter. In case he refuses to accept the letter he should endorse on the letter / application the reason why it is not being accepted with a line or two for the refusal to accept. In case he does accept it and give an acknowledgment he can deal with the applications/ letters as is appropriate in accordance with law. We believe that what has happened in this case is an aberration. However, the Chief Commissioner of Income Tax would ensure that his Officers do not behave in such an high handed and unfair manner, not expected of civil servants

Read more ›