Where the assessees challenged by writ petitions the orders passed by the Transfer Pricing Officer (“TPO”) determining the Arm’s Length Price (“ALP”) in relation to “International transactions” on the grounds that the said orders were passed without granting an oral hearing and without considering the documents and information filed by the assessees and without disclosing the information and documents obtained by the TPO which were used by him in the determination of the ALP, HELD, allowing the challenge: S. 92CA (3) imposes an obligation on the TPO to accord an oral hearing to the assessee. Even otherwise, an order entailing civil and penal consequences cannot be passed without a hearing.
On the question as to whether for the purpose of availing deduction under Ch VI-A of the Act, the gross total income is required to be computed by deducting allowable depreciation even though the assessee had disclaimed the same for the purpose of regular assessment, there is a conflict of views between two Division Benches of the Court in Grasim Industries Ltd 245 ITR 677 and Scoop Industries 289 ITR 195. Accordingly, the issue has to be referred to the Full Bench.
The judgement of the Division Bench in CIT v. Ram Commercial Enterprises Ltd. (2000) 246 ITR 568 (Delhi) holding that penalty under Section 271(1)(c) of the Act cannot be levied where the authority initiating the penalty proceedings had not recorded its satisfaction regarding concealment of income or furnishing of inaccurate particulars thereof by the assessee is approved.
Where the assessee, Vodafone, a Dutch company, purchased shares of a Cayman Company (which in turn held shares of an Indian company ‘Hutch Essar’) from another foreign company (HTIL) and the AO issued a notice asking the assessee why it should not be treated as an assessee in default for failure to deduct tax at source on the capital gains and the assessee filed a writ petition to challenge the same on the ground that a transaction between two foreign companies did not attract the provisions of the Act, HELD dismissing the writ petition that:
Though Instruction No. 1914 dated 2nd Dec 1993 supercedes Instruction No. 96 dated 21st August 1969, it clearly provides that demand should be stayed in “exceptional circumstances e.g., where the assessment order appears to be unreasonably high-pitched or where genuine hardship is likely to be caused to the assessee”. A case where the assessed income is several times the returned income falls within the expression “unreasonably high pitched” and stay on recovery of demand must therefore be granted to the assessee.
It is incumbent upon the Tribunal, being the final authority of facts, to appreciate the evidence, consider the reasons of the authorities below and assign its own reasons as to why it disagrees with the reasons and findings of the lower authorities. The Tribunal cannot brush aside the reasons or findings recorded by the lower authorities. It must give reasons and its failure to do so renders its’ order unsustainable.
Amounts received towards reimbursement of expenses can, under no circumstances, be regarded as a revenue Receipt and is not chargeable to income-tax;
In view of the Proviso to s. 147, merely having a reason to believe that income had escaped assessment is not sufficient to reopen assessments but it must be specifically alleged by the AO in the recorded reasons that the escapement was on account of the failure of the assessee to make a full and true disclosure of material facts. In the absence of such allegation, the reopening is without jurisdiction;
Where the assessee was a company incorporated in the Netherlands and its main activity was operation of aircrafts in international traffic both for transport of passengers and cargo and its income was exempt under the Double Taxation Avoidance Agreement between India and the Netherlands and it recovered charges from an Indian company which on facts was found to be arising from the activity of cargo handling and was directly and inextricably linked to such activity, held the same was exempt. Also held in the alternative that even if the recovery of rent was to be treated as an income from other sources at the hands of the assessee, since an identical amount was paid to the Airport Authority of India, the same would be entirely offset u/s 57 (iii) against each other because there was a direct nexus between the receipt and the payment.
Where the Tribunal did not pass an order on the appeal despite considerable delay and instead fixed the matter repeatedly for ‘clarifications’ and thereafter closed the matter for orders on the basis of written submissions and without hearing the assessee, HELD the procedure followed by the Tribunal was not in compliance with the principles of natural justice. The Tribunal should decide the matter within a reasonable time of the hearing and in case they are not in a position to pass the order within a reasonable period, they should fix the matter for rehearing and not only for calling for clarification on certain points.