Category: Tribunal

Archive for the ‘Tribunal’ Category


COURT:
CORAM: ,
SECTION(S):
GENRE:
CATCH WORDS: , ,
COUNSEL: ,
DATE: June 11, 2019 (Date of pronouncement)
DATE: February 15, 2020 (Date of publication)
AY: 2014-15
FILE: Click here to view full post with file download link
CITATION:
Transfer Pricing: (i) If the "arms length‟ principle is satisfied qua the relevant transaction between the assessee and its Indian subsidiary, no further profits can be attributed to the assessee in India even if it was to be held that the latter had a PE in India (ii) If the subsidiary has subsequently entered into an "APA‟ with the CBDT & the FAR analysis and overall functions remain unchanged, the "APA‟ would have a bearing on the ALP of the earlier years

The Indian subsidiary of the assessee had for A.Y. 2015-16 to A.Y 2019-20 entered into an “APA‟ with the CBDT. As is discernible from the “APA‟, the functions of the subsidiary company inter alia included “marketing and sale of various software solutions” of the assessee company. As per the “APA‟ the operating profit margin up to its revenue of Rs. 50 crore was to be taken at 7% of its “Operating revenue‟. Admittedly, the FAR analysis and overall functions of the subsidiary company had remained the same during the period covered by the “APA‟ and that for the year under consideration i.e A.Y 2014-15. Though, the APA in the case of the assessee had been entered into for the period spread over A.Y. 2015- 16 to A.Y 2019-20, however, as held by the ITAT, Mumbai in the case of 3i India Pvt. Ltd. Vs. DCIT (ITA No. 581/Mum/2015, dated 16.09.2016), a subsequent “APA‟ would also have a bearing on the earlier years

COURT:
CORAM: ,
SECTION(S): ,
GENRE:
CATCH WORDS:
COUNSEL:
DATE: October 31, 2019 (Date of pronouncement)
DATE: February 8, 2020 (Date of publication)
AY: 2009-10
FILE: Click here to view full post with file download link
CITATION:
S. 253(3) Condonation of delay: The tendency to perceive delay as a non-serious matter should be discouraged. The notion that the ITAT should always condone the delay should not be promoted. For mistake of lawyer to serve as valid consideration for the purpose of condonation of delay, the mistake must be such as may be made by a professional lawyer well-versed and experienced in law. "Useless advice" by a professional to not file appeal and to instead file a Cross Objection if Revenue filed the appeal cannot help the assessee because there was always going to be a chance that Revenue might not file appeal. Counsel must disclose the circumstances in which incorrect advice was given and, it is not sufficient to make a perfunctory and general statement that wrong advice was given bonafide (all judgements considered)

It is not as if mistake of a legal advisor, however, gross and inexcusable, will entitle an assessee to condonation of delay in filing of appeal. The facts of the case are to be examined to ascertain if there had been negligence or gross want of skill, competence or knowledge on the part of the legal advisor; or whether there was only a mistake that even a skilled legal advisor, well-versed and experienced in law might make that mistake. It is only in the latter case that an assessee may justifiably seek condonation of delay

COURT:
CORAM: ,
SECTION(S): ,
GENRE:
CATCH WORDS: , ,
COUNSEL:
DATE: January 20, 2020 (Date of pronouncement)
DATE: January 25, 2020 (Date of publication)
AY: 2013-14
FILE: Click here to view full post with file download link
CITATION:
S. 226(3): Undue haste in recovery of disputed demands by issue of s. 226(3) garnishee notices, in respect of which the hearing of appeal as also the stay petition is already concluded, is indeed inappropriate. The revenue authorities should have at least waited the disposal of the stay petition. Interim stay granted and garnishee proceedings placed under suspension till the disposal of the stay petition

We have noted that the hearing of stay petition was concluded, as per information available to us, on 17th January 2020, but the order thereon has not been passed as yet since one of the Members constituting coram of the bench has gone on tour to Delhi benches due to unavoidable official exigencies. In the meantime, however, the revenue authorities have already issued garnishee notices, under section 226(3) of the Income Tax Act, 1961, to the bankers of the assessee on 17th January 2020 itself. Such an undue haste in recovery of the disputed demands, in respect of which the hearing of appeal as also the stay petition is already concluded, is indeed inappropriate. The revenue authorities should have at least waited for the disposal of the stay petition.

COURT:
CORAM: ,
SECTION(S): , ,
GENRE:
CATCH WORDS: , ,
COUNSEL:
DATE: January 20, 2020 (Date of pronouncement)
DATE: January 25, 2020 (Date of publication)
AY: 2014-15
FILE: Click here to view full post with file download link
CITATION:
(i) 56(2)(vii)(b): The amendment w.e.f AY 2014-15 will not apply to a purchase transaction of immovable property for which full consideration is paid pre the amendment. Mere registration at a later date will not cover a transaction already executed in the earlier years and substantial obligations have already been discharged and a substantive right has accrued to the assessee therefrom. The Revenue is debarred to cover the transaction where inadequacy in purchase consideration is alleged (ii) Interest u/s 234A & 234B is chargeable with reference to the returned income and not the assessed income

It is not in dispute that purchase transactions of immovable property were carried out in FY 2011-12 for which full consideration was also parted with the seller. Mere registration at later date would not cover a transaction already executed in the earlier years and substantial obligations have already been discharged and a substantive right has accrued to the assessee therefrom. The pre-amended provisions will thus apply and therefore the Revenue is debarred to cover the transactions where inadequacy in purchase consideration is alleged

COURT:
CORAM: ,
SECTION(S):
GENRE:
CATCH WORDS: , ,
COUNSEL:
DATE: January 10, 2020 (Date of pronouncement)
DATE: January 18, 2020 (Date of publication)
AY: 2013-14
FILE: Click here to view full post with file download link
CITATION:
S. 54F: The words "in India" cannot be read into section 54F when Parliament in its legislative wisdom has deliberately not used the words. The assessee is entitled to exemption under section 54F of the Act though he has acquired house property in a foreign country. The amendment to s. 54F by the Finance Act, 2014 w.e.f. 2015 is applicable only prospectively (all imp verdicts considered)

Unless there is an ambiguity, it would not be open to the Court to depart from the normal rule of construction which is that the intention of the legislature should be primarily to gather from the words which are used. It is only when the words used are ambiguous that they would stand to be examined and considered on surrounding circumstances and constitutionally proposed practices

COURT:
CORAM:
SECTION(S): ,
GENRE:
CATCH WORDS:
COUNSEL:
DATE: January 3, 2020 (Date of pronouncement)
DATE: January 11, 2020 (Date of publication)
AY: 2014-15
FILE: Click here to view full post with file download link
CITATION:
S. 56(2)(viib)/ Rule 11UA: The legislative intent is to apply s. 56(2)(viib) where unaccounted money received in garb of share premium. The AO has not made out a case that stated money is not clean money. Also, the assessee has given approved valuer (CA) report justifying share premium raised based on valid and prescribed method being DCF and said report is in accordance with ICAI norms. AO has not countered the said report by substitute valuation. Also, if the shares are sold in next FY at much higher amount, the premium cannot be said to be excessive (Lalithaa Jewellery 178 ITD 503 (Chennai) followed)

Keeping in view of the facts and circumstances of the case and by applying the principles from the aforesaid decision and legislative intent behind insertion of section 56(2)(viib), I hold that addition made by AO on account of alleged excess share premium is unjustified when those very shares are sold in next financial year at much higher amount after proper due diligence, that to a non resident buyer and further there is no case of unaccounted money being brought in garb of stated share premium, hence, addition made u/s 56(2)(vii) of the Act is hereby deleted

COURT:
CORAM: ,
SECTION(S): , ,
GENRE:
CATCH WORDS: ,
COUNSEL: ,
DATE: December 23, 2019 (Date of pronouncement)
DATE: January 11, 2020 (Date of publication)
AY: 2013-14
FILE: Click here to view full post with file download link
CITATION:
S. 147 vs. S. 263: If the AO has incorrectly or erroneously applied law and income chargeable to tax has escaped assessment, the Revenue should resort to s. 263 and revise the assessment and not reopen u/s 147. When matter was referred to the CIT for seeking approval, instead of holding that the matter falls u/s 263 and not u/s 148, has given approval u/s 151 which shows non-application of mind and mechanical grant of approval. Therefore, the assumption of jurisdiction u/s 147 cannot be sustained and is held as invalid in eyes of law

In such a situation, where the Assessing officer has incorrectly or erroneously applied law and income chargeable to tax has escaped assessment, the Revenue is not without remedy and resort to provisions of section 263 could have been made by the ld CIT. In fact, the revisionary jurisdiction u/s 263 is meant to deal with such type of cases where the ld CIT can step-in and correct the Assessing officer. In the instant case, the original assessment proceedings were completed vide order u/s 143(3) dated 29.02.2016 and therefore, the provisions of section 263 could have been invoked by the ld CIT by 31.03.2018. However, instead of invoking the revisionary jurisdiction u/s 263 by ld. CIT, the Assessing officer has assumed the jurisdiction u/s 147 of the Act by issuance of notice dated 28.02.2017. Interestingly, for such assumption of jurisdiction, the ld CIT has accorded the approval u/s 151 of the Act. It is therefore a case where matter was referred to the ld CIT for seeking his approval and the ld CIT instead of holding that the matter falls under section 263 and not under section 148 has given the approval u/s 151 of the Act which shows non-application of mind and mechanical grant of approval

COURT:
CORAM:
SECTION(S): ,
GENRE:
CATCH WORDS: ,
COUNSEL:
DATE: December 6, 2019 (Date of pronouncement)
DATE: December 21, 2019 (Date of publication)
AY: 2008-09
FILE: Click here to view full post with file download link
CITATION:
S. 68/ 69C: In case of bogus purchases where sales are accepted, the addition can be made only to the extent of difference between the GP declared by the assessee on normal purchases vis a vis bogus purchases. The AO is directed to restrict the addition to the extent of lower GP declared by the assessee in respect of bogus purchases as compared to G.P. on normal purchases

It is clear from the above decisions that in case of bogus purchases where sales are accepted, the addition is required to be made only to the extent of difference between the GP declared by the assessee on normal purchases vis a vis bogus purchases

COURT:
CORAM:
SECTION(S): , ,
GENRE:
CATCH WORDS: , ,
COUNSEL:
DATE: December 2, 2019 (Date of pronouncement)
DATE: December 7, 2019 (Date of publication)
AY: 2009-10
FILE: Click here to view full post with file download link
CITATION:
S. 147 Reopening of Bogus share capital/ premium: If the PCIT, while granting approval for issue of notice u/s. 148, has only mentioned “YES”, it establishes that the approving authority has given approval to the reopening of assessment in a mechanical manner without due application of mind. On this count the reassessment is not sustainable in the eyes of law and needs to be quashed (All imp judgements referred)

The Ld. Pr. Commissioner of Income Tax, Delhi-2, New Delhi while granting approval for issue of notice u/s. 148 of the Act in Column no. 12 has only mentioned that “YES”, which establish that the approving authority has given approval to the reopening of assessment in a mechanical manner without due application of mind and therefore, on this account the reassessment is not sustainable in the eyes of law and needs to be 6 quashed.

COURT:
CORAM: ,
SECTION(S): , ,
GENRE: ,
CATCH WORDS: , , , ,
COUNSEL:
DATE: November 15, 2019 (Date of pronouncement)
DATE: November 30, 2019 (Date of publication)
AY: 2018-19
FILE: Click here to view full post with file download link
CITATION:
Static vs. Ambulatory interpretation of DTAAs: Entire law on whether the retrospective amendments to the definition of "royalty" in s. 9(1)(vi) of the Act can have bearing on the interpretation of the same term in the DTAAs explained with reference to the doctrine of "treaty override" and the Vienna Convention (Siemens AG 310 ITR 320 (Bom) explained)

That is a classic case of a subtle unilateral treaty override. While, in India, the expression ‘treaty override’ is often loosely used for the situations where the provisions of tax treaty prevails over any inconsistent provisions of domestic law, this approach seems to be at variance with the international practices wherein connotations of ‘treaty override’ refer to a situation in which domestic legislation of a treaty partner jurisdiction overrules the provisions of a single treaty or all treaties hitherto having had effect in that jurisdiction. That will be the end result of a domestic law amendment of an undefined treaty term, in departure from the current position, and import such amended meaning of that term, under article 3(2), in the treaty situations as well. Such an approach, on the first principles, is unsound inasmuch as it is well settled in law that the treaty partners ought to observe their treaties, including their tax treaties, in good faith. Article 26 of Vienna Convention on Law of Treaties provides that, “Pacta sunt servanda: Every treaty in force is binding on the parties to it and must be performed by them in good faith”. What it implies is that whatever be the provisions of the treaties, these provisions are to be given effect in good faith. Therefore, no matter how desirable or expedient it may be from the perspective of the tax administration, when a tax jurisdiction is allowed to amend the settled position with respect to a treaty provision, by an amendment in the domestic law and admittedly to nullify the judicial rulings, it cannot be treated as performance of treaties in good faith. That is, in effect, a unilateral treaty over-ride which is contrary to the scheme of Article 26 of Vienna Convention on Law of Treaties