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DATE: October 24, 2018 (Date of pronouncement)
DATE: November 21, 2018 (Date of publication)
AY: 2011-12
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CITATION:
S. 17(2)(vi) Perquisite: Gains arising to an employee from sale of shares allotted under ESOP (Employees Stock Option Plan) by foreign parent company cannot be assessed as "salaries". It is assessable as "capital gains". Fact that employer has shown the gains as "perquisite" in Form 16 is irrelevant

The assessee had already acquired the asset viz., “stock” from the employee’s stock options scheme when he was serving abroad in the parent company and during that assessment year, the assessee was non-resident. Therefore during the beginning of the relevant assessment year, the stock viz., the asset was already vested on the assessee. Any gain on sale arising out of such asset during the relevant assessment year when he is a resident but NOR has to be necessarily treated as capital gain in the hands of the assessee as per the provisions of the act

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DATE: June 25, 2018 (Date of pronouncement)
DATE: November 13, 2018 (Date of publication)
AY: 2006-07
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CITATION:
S. 253: Delay of 2819 days in filing the appeal caused by the fault of CA/ Counsel has to be condoned. the expression “sufficient cause” should be interpreted to advance substantial justice. If there is "sufficient cause", the period of delay cannot be regarded as excessive or inordinate (All judgements considered)

Under the scheme of Constitution, the Government cannot retain even a single pie of the individual citizen as tax, when it is not authorised by an authority of law. Therefore, if we refuse to condone the delay, that would amount to legalise an illegal and unconstitutional order passed by the lower authority. Therefore, in our opinion, by preferring the substantial justice, the delay of 2819 days has to be condoned

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DATE: October 8, 2018 (Date of pronouncement)
DATE: November 13, 2018 (Date of publication)
AY: 2013-14, 2014-15
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CITATION:
S. 253 Condonation of delay: An assessee supported by large number of CAs & Advocates cannot seek condonation of delay on the ground that the officer handling the issue was transferred. A party cannot sleep over its rights and expect its appeal to be entertained. The fact that the issue on merits is covered in favour of the assessee makes no difference to the aspect of condonation of delay

The assessee is a scheduled bank supported by a large number of personnel and also assisted by qualified Chartered Accountants and Advocates. The reason as come out from the condonation petitions filed by the assessee, as stated earlier, is that there was transfer of the officer who was handling the issue. We cannot accept such proposition as it cannot be considered as good and sufficient reason to condone the delay. It was submitted that the delay is to be condoned since the issue on merit covered in favour of the assessee. This submission ignores the fact that the object of the law of limitation is to bring certainty and finality to litigation

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DATE: October 23, 2018 (Date of pronouncement)
DATE: November 13, 2018 (Date of publication)
AY: 2011-12
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CITATION:
S. 4: Law on whether compensation received on closure/ termination of business activity resulting in loss of source of income, impairing its profit making structure or sterilization of profit making apparatus can be assessed as a revenue receipt or it is a capital receipt which is not chargeable to tax explained after referring to important judgements on the subject

Where, on a consideration of the circumstances, payment is made to compensate a person for cancellation of a contract which does not affect the trading structure of his business, nor deprive him of what in substance is his source of income, termination of the contract being a normal incident of the business, and such cancellation leaves him free to carry on his trade (freed from the contract terminated), the receipt is revenue : where by the cancellation of an agency the trading structure of the assessee is impaired, or such cancellation results in loss of what may be regarded as the source of the assessee’s income, the payment made to compensate for cancellation of the agency agreement is normally a capital receipt.

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DATE: November 5, 2018 (Date of pronouncement)
DATE: November 9, 2018 (Date of publication)
AY: 2014-15
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CITATION:
S. 10(38)/68 Bogus long-term capital gains from penny stocks: It cannot be inferred that the assessee has manipulated the share price merely because it moved up sharply. The AO has to produce material/evidence to show that the assessee/ brokers did price rigging/manipulation of shares. The AO must also show that the relevant evidence produced by the assessee in the form of bills, contract notes, demat statement, bank account etc to prove the genuineness of the transactions are false or fictitious or bogus (All judgements considered)

We note that in the absence of material/evidence the allegations that the assessee/brokers got involved in price rigging/manipulation of shares must therefore also fail. At the cost of repetition, we note that the assessee had furnished all relevant evidence in the form of bills, contract notes, demat statement and bank account to prove the genuineness of the transactions relevant to the purchase and sale of shares resulting in long term capital gain. These evidences were neither found by the AO nor by the ld. CIT(A) to be false or fictitious or bogus. The facts of the case and the evidence in support of the evidence clearly support the claim of the assessee that the transactions of the assessee were genuine and the authorities below was not justified in rejecting the claim of the assessee that income from LTCG is exempted u/s 10(38)

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DATE: October 24, 2018 (Date of pronouncement)
DATE: November 6, 2018 (Date of publication)
AY: 2011-12
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CITATION:
S. 9(1)(vi) Royalty/ 40(a)(i): Law explained on whether payment of web hosting charges to Amazon Web Services LLC (USA) (AWS) constitutes "royalty" under Explanation 2 to s. 9(1)(vi) read with the India USA DTAA and whether there is any obligation to deduct TDS thereon u/s 195

The aspect which needs to be seen is whether the assessee is paying consideration for getting any right in respect of any property. The assessee claims that it does not pay for such right but it only pays for the services. The claim of assessee before us was that it was only using services provided by Amazon and was not concerned with the rights in technology. The fees paid by assessee was for use of technology and cannot be said to be for use of royalty, which stands proved by the factum of charges being not fixed but variable i.e. it varies with the use of technology driven services and also use of such services does not give rise to any right in property of Amazon and consequently, Explanation under section 9(1)(vi) of the Act is not attracted

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DATE: July 2, 2018 (Date of pronouncement)
DATE: November 3, 2018 (Date of publication)
AY:
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CITATION:
S. 250/ 254: If a decision is challenged by the assessee both on the issue of jurisdiction as well as on merits, the appellate authority has to decide both issues. He cannot decline to decide one of the issues on the basis that the decision on the other issue renders it academic. This approach leads to multiplication of proceedings and leads to delay

Examining the present case on the touchstone of above said case law, we find that the order of the ld. CIT(A) here directly falls under the ambit of Hon’ble High Court’s order as above. The ld. CIT(A) has decided one issue and has left undecided another issues duly raised before him. Hence, we are of the considered opinion that these issues relating to validity of reopening were duly raised, which have been left undecided by the ld. CIT(A) and need to be remitted to the file of the ld. CIT(A). The ld. CIT(A) is directed to complete his appellate order by deciding on these issues regarding the validity of reopening which were duly raised before him by the assessee

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DATE: October 31, 2018 (Date of pronouncement)
DATE: November 3, 2018 (Date of publication)
AY: -
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CITATION:
S. 12A Charity Registration: Exemplary cost of Rs. 1 lakh levied upon trust for fraud in wrongly seeking exemption on basis that it is controlled & managed by the Govt. The ITAT is deemed to be a Civil Court and its proceedings are deemed to be judicial proceedings within the meaning of s. 193 & 228 & of the Indian Penal Code. Any attempt to play fraud on the ITAT by way of conveying wrong and false facts and pleadings is required to be strictly dealt with

We are further pained to note here that identical contentions as were raised by the representatives of the Trust before the lower authorities that the Trust is controlled and managed by the Government or that its funds and properties otherwise belong to the Government, have been raised by the counsel for the assessee Trust before us also and further that even otherwise, dissolution clause has been added vide the amended resolution. This, in our view, is a clear and visible attempt on behalf of the trust to mislead this Bench of the Tribunal by way of concealing the real and true facts that the Members of the Trust have, by not extending the term of Board of Governors, conveniently entrusted unto themselves the control and management of the Trust. Had the case of the Trust been not carefully examined, these important and relevant facts would have remained wrapped under the carpet, and the Trust could have managed to get the relief of exemption from taxation by presenting wrong and false facts

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DATE: October 30, 2018 (Date of pronouncement)
DATE: November 3, 2018 (Date of publication)
AY: 2012-13
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CITATION:
S. 194C TDS: Law on whether the by-product allowed to be retained by the miller can be regarded as consideration 'paid' in kind by the procurement agency so as to create an obligation to deduct TDS thereon explained in the light of Kanchanganga Sea Foods Ltd. vs CIT 325 ITR 549 (SC) & other judgements

Though, before the milling of the paddy, the Government / procurement agencies remain the owner of the paddy, however, the moment the paddy is milled, the Government / procurement agencies lose their ownership and control over the paddy and the by-product but have right only on the ‘milled rice’ for which they pay a stipulated amount of Rs. 15/- as milling charges. The relevant words in the clause (8) of the Agreement that “the Government / Procuring Agency shall have no right or responsibility in this regard” speaks that to retain the by-product cannot always said to be ‘right’ over a thing but sometimes it becomes a ‘responsibility’ also and the Government / Procurement Agencies are not willing to own this responsibility.

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COURT:
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DATE: October 31, 2018 (Date of pronouncement)
DATE: November 2, 2018 (Date of publication)
AY: 2006-07, 2007-08
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CITATION:
S. 69A Black Money: If the assessee is a discretionary beneficiary of the HSBC Bank Account and is not the owner, addition u/s 69A cannot be sustained. In the case of a discretionary trust, the income of the trust cannot be added in the hands of the beneficiary. The trustees are the representative assessees who are liable to be taxed for the income of the trust (All judgements considered)

We find that addition has been made by the AO U/s 69A of the Act to justify the addition on account of peak balance. We agree with the contentions of the Ld. AR that it is sine qua non for invoking section 69A of the IT Act., the assessee must be found to be the owner of money, bullion, jewellery or other valuable articles and whereas in the present case the money is owned and held by Mr. Dipendu Bapalal Shah a foreign resident in an account HSBC, Geneva and also admitted that he is the owner of the money in the HSBC Account Geneva

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