Category: All Judgements

Archive for the ‘All Judgements’ Category


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DATE: September 24, 2018 (Date of pronouncement)
DATE: September 29, 2018 (Date of publication)
AY: 2012-13
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CITATION:
S. 192/ 205: If the deductor has deducted TDS and issued Form 16A, the deductee has to be given credit even if the deductor has defaulted in his obligation to deposit the TDS with the Government revenue

In case of the petitioner the employer for the assessment year 201213 while paying salary had deducted tax at source to the tune of Rs.2,68,498/ but had not deposited such tax with the Government revenue. The short question is under such circumstances can the Department seek to recover such amount from the petitioner or whether the petitioner is correct in contending that he had already suffered the deduction of tax, the mere fact that the deductee did not deposit such tax with the Government revenue could not permit the Incometax Department to recover such amount from the petitioner

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DATE: September 17, 2018 (Date of pronouncement)
DATE: September 29, 2018 (Date of publication)
AY: 2008-09
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CITATION:
S. 2(14)/ 28(va): The "right to sue" which arises on breach of a development agreement is a "personal right" and not a "capital asset" which can be transferred. Consequently, the damages received for relinquishment of the "right to sue" is a non-taxable capital receipt (all judgements considered)

A development agreement was executed which enabled the assessee to utilize the land for construction and for sharing of profits. This right/advantage accrued to the assessee was sought to be taken away from the assessee by way of sale of land. The prospective purchaser as well as the defaulting party (owner) perceived threat of filing suit by developer and consequently paid damages/ compensation to shun the possible legal battle. The intrinsic point with respect to accrual of ‘right to sue’ has to be seen in the light of overriding circumstances as to how the parties have perceived the presence of looming legal battle from their point of view. I t is an admitted position that the defaulting party has made the assessee a confirming party in the sale by virtue of such development agreement and a compensation was paid to avoid litigation. This amply shows the existence of ‘right to sue’ in the perception of the defaulting party.

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DATE: (Date of pronouncement)
DATE: September 26, 2018 (Date of publication)
AY: 2010-11
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CITATION:
Entire law on "real income theory" and distinction between "application of income" vs. "diversion of income by overriding title" explained with reference to case laws. Law on whether if an amount is not treated as "diversion of income", it can be allowed as "business expenditure" u/s 37(1) or as a "trading loss" u/s 29 also explained. Issue of “Base Erosion and Profit Shifting” (BEPS) also raised in the context of "tax avoidance vs. tax evasion" and diversion of income by a MNC

Courts and the Tax Authorities can look into the real purpose of the commercial arrangements and transactions to reach the truth and the transactions having the sole purpose of tax avoidance may be held to be having no effect on the actual tax liability of the tax payer. Book entries and Method of Accounting is not determinative and conclusive for deciding the computation of ‘taxable income’ in the hands of the Assessee though they may be relevant to be considered. “Diversion of income by transfer of overriding title at source” should normally have the support of the statutory requirements or some decretal binding character of Courts of law and even though the private contractual obligations can also bring about such “diversion of income at source” but in this last sphere of private contractual obligations, the Courts and the Income Tax Authorities have to examine such aspects carefully in comparison to the above two other categories of statutory requirements and the Court decrees and then examine the real purport and object of such private arrangements and Contracts

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DATE: March 21, 2018 (Date of pronouncement)
DATE: September 26, 2018 (Date of publication)
AY: 2010-11
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CITATION:
S. 147/148: If the AO reopens the assessment on the incorrect premise that the assessee has not filed a return, the reopening is invalid. The fact that the AO may be justified in the view that income has escaped assessment owing to the capital gains not being computed u/s 50C cannot save the reopening is the reasons do not refer to s. 50C

The Assessing Officer may be correct in pointing out that when the sale consideration as per the sale deed is Rs.50 lakhs but the registering authority has valued the property on the date of sale at Rs.1,18,95,000/for stamp duty calculation, section 50C of the Act would apply, of course, subject to the riders contained therein. However, this is not the cited reason for reopening the assessment

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DATE: September 12, 2018 (Date of pronouncement)
DATE: September 26, 2018 (Date of publication)
AY: 2012-13
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CITATION:
S. 263 Revision: U/s 114(e) of the Evidence Act, there is a presumption that a s. 143(3) assessment order is regularly passed after application of mind. If the assessee is consistently following the same method of valuation of closing stock, the CIT is not entitled to disturb the consistent method (all judgements referred)

The conclusions being drawn up as a result of enquiry is a highly subjective exercise and as to what is appropriate conclusion is something on which perceptions vary from person to persons. These variations in the perceptions of the Assessing Officer vis-a- vis that of the Commissioner, cannot render an order erroneous and prejudicial to the interest of the revenue

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DATE: September 10, 2018 (Date of pronouncement)
DATE: September 22, 2018 (Date of publication)
AY: -
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CITATION:
S. 260A Low Tax Effect Circular: Very strange request by the Dept is an attempt to get over the binding Circulars. We shall not allow the Revenue to get over them in this manner. The Circulars continue to bind the Revenue and if they contain any conditions, whether such conditions are attracted or not would have to be proved and established by the Revenue

We find that this is an attempt to get over the binding Circulars and in any case we shall not allow the Revenue to get over them in this manner. The Circulars continue to bind the Revenue and if they contain any conditions, whether such conditions are attracted or not would have to be proved and established by the Revenue. Once there is no such record before us, we do not countenance the oral request of Mr. Pinto. Consequently, we do not see any reason to entertain this appeal. It is dismissed

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DATE: September 12, 2018 (Date of pronouncement)
DATE: September 22, 2018 (Date of publication)
AY: -
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CITATION:
S. 68 Cash Credits: In order to avail of the theory of "peak credit", the assessee has to make a clean breast of all facts. He has to explain each of the sources of the deposits and the corresponding destination of the payment without squaring them off. The ITAT cannot proceed merely on the basis of accountancy and overlook the settled legal position

The legal position in respect of an accommodation entry provider seeking the benefit of ‘peak credit’ appears to have been totally overlooked by the ITAT in the present case. Indeed, if the Assessee as a self-confessed accommodation entry provider wanted to avail the benefit of the ‘peak credit’, he had to make a clean breast of all the facts within his knowledge concerning the credit entries in the accounts. He has to explain with sufficient detail the source of all the deposits in his accounts as well as the corresponding destination of all payments from the accounts. The Assessee should be able to show that money has been transferred through banking channels from the bank account of creditors to the bank account of the Assessee, the identity of the creditors and that the money paid from the accounts of the Assessee has returned to the bank accounts of the creditors. The Assessee has to discharge the primary onus of disclosure in this regard

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DATE: September 17, 2018 (Date of pronouncement)
DATE: September 19, 2018 (Date of publication)
AY: 2002-03, 2003-04
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CITATION:
Gain arising to the assessee on account of securitization of lease receivables and credited to the Profit & Loss Account is a taxable receipt in the year of securitisation as per T. V. Sunderam Iyengar 222 ITR 344 (SC). Argument that the entry represents hypothetical income and not real income and that the amount is assessable in subsequent years on receivable basis is not correct. Question of whether income can also be deferred to subsequent years under the "Matching concept" as per Taparia Tools 260 ITR 102 (Bom)/ 372 ITR 605 (SC) left open

Thus, if the assessee claims the expenditure in that year, the Department cannot deny it. However, in a case where the assessee himself wants to spread the expenditure over a period of ensuing years, it can be allowed only if the principle of the “matching concept” is satisfied, which up to now has been restricted only to cases of debentures. Whether the ‘matching concept’ would also apply to “income” is wholly a different matter and which would be considered in an appropriate case, as and when it so arises, provided the factual foundation is laid for the same.

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DATE: November 10, 2017 (Date of pronouncement)
DATE: September 19, 2018 (Date of publication)
AY: 2010-11
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CITATION:
S. 263(1) obligates the CIT to give the assessee an opportunity of being heard before passing of his order. While the CIT is entitled to consider a point which is not stated in the show-cause notice, he cannot pass the revision order unless the assessee is given the opportunity of being heard. Such an order is untenable in the eyes of law (Amitabh Bachchan 384 ITR 200 (SC) followed)

Notably, section 263(1) of the Act obligates the Commissioner to give the assessee an opportunity of being heard before passing of his order. No doubt the Commissioner is not disentitled to consider a point which is not stated in the notice so issued. However, the obligation to given an opportunity to the assessee of being heard on the point on the basis of which he finds it expedient to treat the assessment order erroneous in so far as it is prejudicial to the interests of the Revenue, is definitely cast on the Commissioner, as opined by the Hon’ble Supreme Court in the case of Amitabh Bachchan 384 ITR 200

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DATE: June 21, 2018 (Date of pronouncement)
DATE: September 19, 2018 (Date of publication)
AY: -
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CITATION:
Strictures against CA for certifying bogus accounts with a view to mislead bankers. The matter is typical of how business is conducted in this country and why loans obtained from banks remain unpaid. The ITAT may only be faulted for not reporting the CA to the ICAI for having apparently abetted in the commission of a colossal act of misrepresentation. ICAI directed to look into the matter and take necessary action

A rosy picture as to the financial position of the applicant seeking credit facilities from a bank would be presented before the bank for the bank to assess the creditworthiness of the applicant and the desirability of extending credit facilities to such applicant; but later another balance-sheet and profit and loss accounts would be slipped into the file, possibly indicating a less robust financial position of the constituent. If such was the object on the exercise, to which Roy Ghosh and Associates appear to have been a willing accomplice, the assessee has been appropriately dealt with by the fora below. The balance-sheet and profit and loss accounts of an assessee accompanied by a certificate as to its fairness, notwithstanding the caveat as noticed in paragraph 2(A) thereof, cannot be tailor-made to suit a particular purpose or window-dressed to make it attractive for bankers to rely thereupon and all the gloss and sheen removed thereafter when it was the time to pay tax