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COURT:
CORAM:
SECTION(S):
GENRE:
CATCH WORDS:
COUNSEL:
DATE: (Date of pronouncement)
DATE: June 9, 2011 (Date of publication)
AY:
FILE: Click here to view full post with file download link
CITATION:

The “short-cut method” adopted by the Tribunal is totally unsustainable. While the AO is required to record reasons, Law does not mandate the AO to suo moto supply the reasons to the assessee. It is for the assessee to demand the reasons and raise objections to the reopening which the AO is required to dispose of by passing a speaking order. As the assessee did not ask for the reasons and instead participated in the reassessment proceedings, the Tribunal could not have restored the matter back to the file of the AO and give another opportunity to the assessee to raise objections to the “reasons to believe” recorded by the AO. It was the assessee‟s own creation that it did not ask for the reasons or raise objection thereto. Merely because the assessee was oblivious of such a right would not mean that the Tribunal should have granted this right to the assessee, that too, at the stage when the matter was before the Tribunal and travelled much beyond the AO‟s jurisdiction. It is trite that what cannot be done directly, it is not allowed indirectly as well. This novel and ingenuousness method adopted by the Tribunal in setting aside the reassessment orders on merits cannot be accepted

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COURT:
CORAM:
SECTION(S):
GENRE:
CATCH WORDS:
COUNSEL:
DATE: (Date of pronouncement)
DATE: June 9, 2011 (Date of publication)
AY:
FILE: Click here to view full post with file download link
CITATION:

The AO’s order of attaching the bank account of the assessee even before the service of the CIT(A)’s order was wrong in view of (a) the CBDT’s letter dated 25.3.2004 advising that penalties u/s 271-D & 271-E for violation of s. 269-SS & 269-T should not be indiscriminately imposed without considering s. 273-B, (b) the CCIT’s direction that demand arising out of penalties imposed u/s 271-D & 271-E should be stayed in cases of co-operative credit societies, (c) UOI v/s Raja Mohammed Amir Mohammed AIR 2005 SC 4383 where concern was expressed over dangerous attitude developing amongst Executive resulting in institutional damage & (d) KEC Interntional Ltd 251 ITR 158 (Bom) where it was held that generally coercive measures may not be adopted during the period provided by the Statute to go in appeal. Accordingly, the assessee was unnecessarily subjected to harassment by the actions of the lower authorities. It is thus a fit case for imposing costs u/s 254(2B) on the Revenue to compensate the harassment caused by the officers of the Revenue at fault

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COURT:
CORAM:
SECTION(S):
GENRE:
CATCH WORDS:
COUNSEL:
DATE: (Date of pronouncement)
DATE: June 8, 2011 (Date of publication)
AY:
FILE: Click here to view full post with file download link
CITATION:

As per Instruction No. 3 of 2011 dated 09.02.2011 appeal before Tribunal can be filed where the tax effect exceeds the monetary limit of Rs. 3 lakhs. However, considering the similar situation where tax limits were modified by the CBDT Instruction No. 5 of 2008 the jurisdictional High Court in Madhukar K. Inamdar (HUF) 318 ITR 149 held that the circular will be applicable to the cases pending before the court either for admission or for final disposal. In view of the order of the jurisdictional High Court we hold that Instruction No. 3 dated 09.02.2011 is applicable for the appeal preferred by the Revenue. Therefore, the appeal is dismissed on the issue of tax effect involved

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Posted on by editor
COURT:
CORAM:
SECTION(S):
GENRE:
CATCH WORDS:
COUNSEL:
DATE: (Date of pronouncement)
DATE: June 8, 2011 (Date of publication)
AY:
FILE: Click here to view full post with file download link
CITATION:

The Commission is of the view that the members of the raiding party may take their own time to conclude the search & seizure operations but such operations must be carried out keeping in view the basic human rights of the Individual. They have no right to cause physical and mental torture to him. If the officer-in-charge of the Interrogation/recording of statements wanted to continue with the process he should have stopped the same at the proper time and resumed it next morning. But continuing the process without any break or interval at odd hours up to 3:30 AM, forcing the applicant and/ or his family members to remain awake when it is time to sleep was torturous act which and can not be countenanced in a civilised society. It was violative of their rights relating to dignity of the individual and therefore violative of human rights. Even die-hard criminal offenders have certain human rights which can not be taken away. The applicant’s position was not worse than that. In the opinion of the Commission, the Income Tax Department should ensure that the search & seizure operations at large in future are carried out without violating one’s basic human rights

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COURT:
CORAM:
SECTION(S):
GENRE:
CATCH WORDS:
COUNSEL:
DATE: (Date of pronouncement)
DATE: June 5, 2011 (Date of publication)
AY:
FILE: Click here to view full post with file download link
CITATION:

Though Explanation 3 to s. 147 inserted by the FA 2009 w.e.f 1.4.1989 permits the AO to assess or reassess income which has escaped assessment even if the recorded reasons have not been recorded with regard to such items, it is essential that the items in respect of which the reasons had been recorded are assessed. If the AO accepts that the items for which reasons are recorded have not escaped assessment, it means he had no “reasons to believe that income has escaped assessment” and the issue of the notice becomes invalid. If so, he has no jurisdiction to assess any other income. (Jet Airways 331 ITR 236 (Bom) followed)

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COURT:
CORAM:
SECTION(S):
GENRE:
CATCH WORDS:
COUNSEL:
DATE: (Date of pronouncement)
DATE: June 2, 2011 (Date of publication)
AY:
FILE: Click here to view full post with file download link
CITATION:

While s. 54EC is an exemption provision which exempts capital gains and takes them outside the purview of chargeable “capital gains”, s. 74 deals with the carry forward and set off of loss under the head “capital gains”. The stage at which set off of carried forward long term capital loss is to be given is subsequent to the stage at which income under the head capital gains is computed and deduction u/s 54EC is to be given in the course of the latter. Accordingly, s. 54EC deduction has to be given before set-off of losses

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COURT:
CORAM:
SECTION(S):
GENRE:
CATCH WORDS:
COUNSEL:
DATE: (Date of pronouncement)
DATE: June 2, 2011 (Date of publication)
AY:
FILE: Click here to view full post with file download link
CITATION:

On facts, as the assessee had engaged a portfolio manager to look after its’ investments and all decisions to buy and sell were taken by the portfolio manager and not by the asessee, the assessee cannot be called a “dealer”

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COURT:
CORAM:
SECTION(S):
GENRE:
CATCH WORDS:
COUNSEL:
DATE: (Date of pronouncement)
DATE: June 1, 2011 (Date of publication)
AY:
FILE: Click here to view full post with file download link
CITATION:

Though, as held in CIT vs. Bharat Ruia, derivatives transactions, prior to the amendment to s. 43(5) w.e.f. AY 2006-07, are “speculative transactions” and the losses suffered therefrom are “speculative losses”, the question whether they are eligible for set-off has to be determined as per the law prevailing in the year of set-off. As in the year of set-off, derivatives transactions are not, pursuant to the amendment to s. 43(5), treated as “speculative transactions”, the losses incurred prior to the amendment have to be treated as normal business losses and are eligible for set-off against all business income in accordance with s. 72 (Shreegopal Purohit 33 SOT 1 distinguished)

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Posted on by editor
COURT:
CORAM:
SECTION(S):
GENRE:
CATCH WORDS:
COUNSEL:
DATE: (Date of pronouncement)
DATE: June 1, 2011 (Date of publication)
AY:
FILE: Click here to view full post with file download link
CITATION:

While in principle, comparables having an abnormal difference of turnover and distorted operating profits have to be excluded for determining the ALP, the claim that as the assessee revenue is about Rs. 20 crores, comparables having more than 50 crores and less than 5 crores of turnover should be excluded is not acceptable because no specific fact has been brought on record to show that due to the difference in turnover the comparables become non-comparables. It is accepted economic principle and commercial practice that in highly competitive market condition, one can survive and sustain only by keeping low margin but high turnover. Thus, high turnover and low margin are necessity of the highly competitive market to survive. Similarly, low turnover does not necessarily mean high margin in competitive market condition. Therefore, unless and until it is brought on record that the turnover of such comparables has undue influence on the margins, it is not the general rule to exclude the same that too when the comparables are selected by the assessee itself

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Posted on by editor
COURT:
CORAM:
SECTION(S):
GENRE:
CATCH WORDS:
COUNSEL:
DATE: (Date of pronouncement)
DATE: June 1, 2011 (Date of publication)
AY:
FILE: Click here to view full post with file download link
CITATION:

The claim for deduction u/s 31 is not acceptable because (a) if the heart were to be considered a “plant”, it would necessarily mean that it is an asset which should have found a mention in the assessee’s balance sheet. This was not done and cannot be done as the “cost of acquisition” of such an asset cannot be determined

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