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COURT:
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DATE: July 12, 2018 (Date of pronouncement)
DATE: August 3, 2018 (Date of publication)
AY: -
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CITATION:
S. 56(2)(viib) vs. s. 68: Any premium received by a Company, in which the public does not have substantial interest, on sale of shares, in excess of its face value, can be treated as income from other sources u/s 56(2)(viib). This is not controlled by s. 68 which provides that if the assessee does not provide a satisfactory explanation for the credit, the amount can be assessed as income. If S. 68 is applicable, and the proviso is not satisfied, then the entire amounts credited to the books would be treated as income. If satisfactory explanation is offered as to the source, then the premium paid as revealed from the books will be brought to tax as income from other sources

Any premium received by a Company on sale of shares, in excess of its face value; if the Company is not one in which the public has substantial interest, would be treated as income from other sources, as seen from Section 56(2) (viib) of the Act, which we do not think can be controlled by the provisions of Section 68 of the Act. Section 68 on the other hand, as substituted with the provisos, treats any credit in the books of accounts, even by way of allotment of shares; for which no satisfactory explanation is offered, to be liable to income-tax. Clause (viib) of Section 56(2) is triggered at the stage of computation of income itself when the share application money received, from a resident, by a Company, in which the public are not substantially interested; is above the face value. Then the aggregate consideration received for the shares as exceeds the fair market value will be included as income from other sources. However, when the resident investor is not able to explain the nature and source for the credit seen in the books of accounts of the Company or the explanation offered is not satisfactory then the entire credit would be charged to income tax for that previous year.

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DATE: July 18, 2018 (Date of pronouncement)
DATE: August 3, 2018 (Date of publication)
AY: -
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CITATION:
S. 80-IA: There is a difference between "derived from the undertaking" and "derived from the business of the undertaking". The latter expression is wider than the former. Interest on fixed deposits from Bank and other interest are "derived from the business of the undertaking" and are eligible for deduction u/s 80-IA

Mr. Subramaniam, learned Counsel appearing in support of the appeal points out that Pandian Chemicals Ltd. (supra) was rendered in the context of Section 80HH of the Act and we are concerned with Section 80IA of the Act. It is particularly pointed out that there is a difference in the wording of the two sections as existing during the previous year relevant to the subject assessment year. Section 80HH of the Act grants deduction in respect of the profits and gains derived from industrial undertaking while Section 80IA of the Act as in force at the relevant time grants deduction of profits and gains derived from any business of an industrial undertaking. It is submitted that the above issue is no longer res integra as the issue stand concluded in its favour by the decision of this Court in Commissioner of Income Tax Vs. Jagdishprasad M. Joshi, 318 ITR 420

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DATE: July 25, 2018 (Date of pronouncement)
DATE: July 31, 2018 (Date of publication)
AY: 2004-05
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CITATION:
S. 148/ 151: If the AO reopens the assessment by obtaining the sanction of the Commissioner of Income Tax instead of the Additional Commissioner of Income Tax, there is a breach of section 151 which renders the reopening void

It is undisputed position before us that in terms of Section 151(2) of the Act, the sanctioning/ permission to issue notice under Section 148 of the Act has to be issued by the Additional Commissioner of Income Tax. We find that the Assessing Officer had not sought the approval of the Designated Officer but of the Commissioner of Income Tax. This is clear from the Form used to obtain the sanction. In any case, the approval/ satisfaction recorded in the form submitted for sanction of the Commissioner of Income Tax by the Assessing Officer reproduced herein above, it is clear that the Additional Commissioner of Income Tax had not granted permission to initiate reopening proceedings against the Respondent Assessee

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DATE: June 27, 2018 (Date of pronouncement)
DATE: July 28, 2018 (Date of publication)
AY: 2009-10, 2010-11
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S. 260A: We are pained at this attitude on the part of the State to obtain orders of admission on pure questions of law by not pointing out that an identical question was considered by this Court earlier and dismissed by speaking order. Revenue has not carried out the assurance which was made earlier. Revenue should give proper explanation why assurance given earlier is not being followed. It is time responsibility is fixed and the casual approach of the Revenue in prosecuting its appeals is stopped

We are pained at this attitude on the part of the State to obtain orders of admission on pure questions of law by not pointing out that an identical question was considered by this Court earlier and dismissed by speaking order. We would expect a proper response from the Revenue and explanation as to why assurance given to us earlier that consistent view would be taken by the Revenue is not being followed. It is time, responsibility is fixed and the casual approach of the Revenue in prosecuting its appeals is stopped. We would also request the Additional Solicitor General to assist us on the next date

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DATE: July 6, 2018 (Date of pronouncement)
DATE: July 19, 2018 (Date of publication)
AY: 2010-11
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CITATION:
S. 147/148: If the recorded reasons do not specify, prima-facie, the quantum of tax which has escaped assessment but merely state that it would be at least Rs.1,00,000, and if the reopening is to "verify" suspicious transactions, prima-facie, the reasons do not indicate reasonable belief of the AO and the notice is without jurisdiction

Further, the reasons also do not specify, prima-facie, the quantum of tax which has escaped assessment but merely states that it would be atleast be Rs.1,00,000/-. Prima-facie, we are of the view that the reasons recorded do not indicate reasonable belief of the Assessing Officer himself to issue the impugned notice

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DATE: July 10, 2018 (Date of pronouncement)
DATE: July 19, 2018 (Date of publication)
AY: 1985-86 to 1995-96
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S. 158BC: The fact that the second proviso to s. 158BC(a) prohibits an assessee who is subjected to search from filing a revised return of income does not mean that the assessee is prohibited from raising an additional claim before the appellate authorities

We note that the prohibition in Second Proviso to Section 158BC(a) of the Act of filing a revised return of income before the Assessing Officer would not prohibit a Assessee from raising the additional claim before Appellate Authorities as held by this Court in Pruthvi Brokers and Shareholders P. Ltd. (Supra). This on consideration of the decision of the Supreme Court in National Thermal Power Co. Ltd. v. CIT 229 ITR 384 and Goetze (India) Ltd. v. CIT 284 ITR 323. In fact, in Goetze (India) Ltd., the Apex Court after holding that Assessing Officer has no power to entertain claim for deduction otherwise than by filing revised return of income by Assessee, clarified that the same would not fetter the appellate authority from entertaining a claim not made before the Assessing Officer

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DATE: June 28, 2018 (Date of pronouncement)
DATE: July 5, 2018 (Date of publication)
AY: 2008-09
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CITATION:
Difference between "Res Judicata" and "Consistency Principle" explained. While "res judicate" does not apply to income-tax matters, the principles of consistency does. If the Revenue has accepted a practice and consistently applied and followed it, the Revenue is bound by it. The Revenue can change the practice only if there is a change in law or change in facts and not otherwise

The reason why courts have held parties to the opinion expressed in a decision in one assessment year to the same opinion in a subsequent year is not because of any principle of res judicata but because of the theory of precedent or the precedential value of the earlier pronouncement. Where facts and law in a subsequent assessment year are the same, no authority whether quasijudicial or judicial can generally be permitted to take a different view

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DATE: June 27, 2018 (Date of pronouncement)
DATE: July 5, 2018 (Date of publication)
AY: -
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CITATION:
S. 68 Bogus share capital: If the alleged share applicants do not appear before the AO pursuant to the s. 131 summons and the documentation is inadequate, it is a "completely bogus claim". The assessee cannot argue that the AO should have made inquiries from the AO of the share applicants as to their credit-worthiness

The appellant-assessee has referred to a judgment of this Court reported at 114 ITR 689 for the proposition that upon the identity of the person who has put in the money being established by the assessee, the onus is on the Revenue to discredit the explanation offered in terms of Section 68 of the Act. In the present case, there was no plausible explanation that was furnished by the assessee. At any rate, the identities of the alleged share applicants could not be established and the documents of the alleged share applicants carried by the assessee before the Assessing Officer did not reveal the investments that the assessee claimed such alleged applicants had made in the assessee

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DATE: June 25, 2018 (Date of pronouncement)
DATE: June 27, 2018 (Date of publication)
AY: 2006-07
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CITATION:
S. 260A: Entire law on when transfer pricing disputes constitute "substantial questions of law" for challenge in the High Court explained. Transfer Pricing Adjustments on the basis of the comparables are a matter of estimate of broad and fair guess-work of the Authorities based on relevant material. The exercise of fact finding or ‘Arm’s Length Price’ determination or ‘Transfer Pricing Adjustments’ should become final with a quietus at the hands of the final fact finding body, i.e. the Tribunal. The ITAT's findings of fact cannot be challenged in the High Court unless it is shown that the findings are ex-facie perverse and unsustainable and exhibit total non-application of mind by the Tribunal to the relevant facts of the case and evidence before it

This Court cannot be expected to undertake the exercise of comparison of the comparables itself which is essentially a fact finding exercise. Neither the sufficient Data nor factual informations nor any technical expertise is available with this Court to undertake any such fact finding exercise in the said appeals under Section 260-A of the Act. This Court is only concerned with the question of law and that too a substantial one, which has a well defined connotations as explained above and findings of facts arrived at by the Tribunal in these type of assessments like any other type of assessments in other regular assessment provisions of the Act, viz. Sections 143, 147 etc. are final and are binding on this Court. While dealing with these appeals under Section 260-A of the Act, we cannot disturb those findings of fact under Section 260-A of the Act, unless such findings are ex-facie perverse and unsustainable and exhibit a total nonapplication of mind by the Tribunal to the relevant facts of the case and evidence before the Tribunal.

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DATE: May 17, 2018 (Date of pronouncement)
DATE: June 23, 2018 (Date of publication)
AY: 1997-98
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CITATION:
S. 260A: The time limit for filing an appeal to the High Court begins from the date of receipt of the order by the officer entitled to file the appeal. The fact that the ITAT may have dispatched the order earlier is not relevant. The fact that the officer may be aware of the ITAT's order owing to collateral proceedings is also not relevant

Section 260A creates a right of appeal and provides that appeal is to be preferred within a period of 120 days. The appeal is to be lodged within 120 days of the receipt of the order. Reading these provisions together, it is clear that what is contemplated by the law giver is that an appeal must be lodged within a period of 120 days from the date of receipt of the order and receipt is to be understood as meaning that there is a duty also on the Tribunal to communicate the order to the person, who is entitled to lodge the appeal

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