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.

Though the assessee was following the mercantile system and was entitled to royalty under an agreement, the royalty was not assessable in accordance with the principles of real income, in view of the dispute pending in arbitration.

Where the assessee bought units of a mutual fund, received tax-free dividend thereon and immediately thereafter redeemed the units and claimed the difference between the cost price and redemption value as a loss and the same had been upheld by …

CIT vs. Wallfort Shares & Stocks (Bombay High Court) Read More »

While computing normal profits which do not involve Ch VI-A relief, an assessee is entitled not to claim depreciation. However, where deduction under Ch VI-A is claimed depreciation is mandatory.

Where the assessee is carrying on an illegal activity which is treated as a business, any loss arising in such business as a result of confiscation by the authorities is an allowable loss. However, where the assessee is carrying on a lawful business, any loss arising as a result of infraction of the law is not allowable.