In Circular 204 dated 24.7.1976, the CBDT has accepted that u/s 23(1)(a) the “sum for which the property might reasonably be expected to let from year to year” is the municipal valuation of the property. The same view that the Municipal valuation is the annual value u/s 23(1)(a) has been taken in CIT vs. Prabhabati Bansali 141 ITR 419 (Cal) & M.V. Sonavala vs. CIT 177 ITR 246 (Bom)

There is no presumption in law that the AO is supposed to discharge an impossible burden to assess the tax liability by direct evidence only and to establish the evasion beyond doubt as in criminal proceedings. He can assessee on consideration of material available on record, surrounding circumstances, human conduct, preponderance of probabilities and nature of incriminating information/ evidence available on record

On merits, the CUP method is the ‘most appropriate method’ to determine the arm’s length price in the cases of generic drug manufacturers so long as comparables are available. As the API imported by the assessee was a generic drug and not patent protected, the CUP method could be used. The argument that the APIs are “unique” on the ground that they are better, of proven effectiveness and manufactured using WHO – GMP practices is not acceptable because while the high quality standards does confer a certain degree of comfort, it does not affect the comparability of the API with the same API manufactured by competitors. (Principles laid down in Glaxo Smith Kline Inc Vs Her Majesty (2008 TCC 324) approved on this point by the Canadian Court of Appeal in 2010 FCA 201, followed – Noted that it was not the argument that the higher prices of API were warranted on account of commercial compulsions arising out of licensing agreement)

S. 144C empowers the DRP to issue directions for the guidance of the AO to enable him to complete the assessment. It can confirm, reduce or enhance the variations proposed in the draft order. However, as against the provisions of s. 144C, the DRP has passed a very laconic order. Though voluminous submissions were made before the DRP against the draft assessment order, the DRP brushed aside everything without even a whisper of the assessee’s objections and submissions. The directions of the DRP are too laconic to be left uncommented. The directions given by the DRP almost tantamounts to supervising the AO’s draft order and in that sense it can be equated that appellate jurisdiction being exercised. It was held in Sahara India (Farms) vs. CIT 300 ITR 403 (SC) that even “an administrative order has to be consistent with the rules of natural justice”

The Supreme Court’s observations in Dunlop cannot be interpreted to mean that the Tribunal is denuded of the powers to grant stay until case for financial stringency is successfully made out by the applicant. There is no conflict in holding this view as also adhering to the settled principles governing grant of stay which lay down that financial constraints of the applicant are important, even if not sole of qualifying, consideration in entertaining a stay application, besides considerations like existence of strong prima facie case, balance of convenience and possibilities of Revenue’s rights of recovery being prejudiced by waiting till the outcome of appeals