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DATE: October 3, 2018 (Date of pronouncement)
DATE: October 5, 2018 (Date of publication)
AY: 2007-08
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S. 2(22)(e) Deemed Dividend: Law explained on whether only a proportionate addition of deemed dividend can be made taking into consideration the percentage of the shareholding in the borrowing company in cases where (a) there is only one shareholder that has a shareholding in the lending company as well as in the borrowing company & (b) two or more shareholders are shareholders of the same lending company and the same borrowing company

There cannot be any proportionate addition of deemed dividend taking into consideration the percentage of the shareholding in the borrowing company. Section 2(22)(e) of the I. T. Act, 1961 does not postulate any such situation. This is especially as there is only one shareholder that has a shareholding in the lending company as well as in the borrowing company. Different considerations may arise if two or more shareholders are shareholders of the same lending company and the same borrowing company. In such a factual position it could possibly be argued that the addition ought to be made on a proportionate basis.

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DATE: September 24, 2018 (Date of pronouncement)
DATE: October 5, 2018 (Date of publication)
AY: 2009-10
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S. 260A: Transfer Pricing disputes with regard to exclusion and inclusion of comparables to determine Arm's Length Price (ALP) would not necessarily give rise to substantial questions of law except if there is perversity of finding or failure to adhere to the settled principles of law while determining comparables

This Court was rather surprised as to why the Revenue brings such Appeals to this court and regularly. The Courts in India seem to be taking a view that the Revenue has routinely brought such matters before this Court knowing fully well that the Transfer Pricing particularly with regard to exclusion and inclusion of certain comparables to determine Arm’s Length Price (ALP) would not necessarily give rise to purely legal questions or substantial questions of law

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DATE: September 26, 2018 (Date of pronouncement)
DATE: September 29, 2018 (Date of publication)
AY: 1996-97
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There is no discipline in the manner the Dept conducts matters. The Dept should not take legal matters casually and lightly. There should be a dedicated legal team in the department. Lack of preparation is affecting the performance of the advocates. They do not have full records & do not have the assistance of officials who can give instructions. The CsIT should devote more time to their work rather than attending some administrative meetings and thereafter boasting about revenue collection in Mumbai

If Appeals are filed routinely merely because the Revenue thinks that there are huge stakes involved, then, it is expected that the Revenue officials come fully prepared to Court, give instructions and before the matters are actually argued before us, they hold meeting and conference with the Revenue advocates. Very often, lack of preparation is affecting the performance of the advocates. One of the reasons why the advocates are not in a position to render complete assistance to the Court is because they themselves do not have full records. They do not have the assistance of the official, who can give them instructions. Arguing matter before a Court requires presence of mind. At times, one has to think on toes. More so, when the scales are not evenly balanced. The assessees and their counsel are fully equipped, but the Revenue does not have such degree of competence nor are they efficient enough

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DATE: September 10, 2018 (Date of pronouncement)
DATE: September 22, 2018 (Date of publication)
AY: -
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S. 260A Low Tax Effect Circular: Very strange request by the Dept is an attempt to get over the binding Circulars. We shall not allow the Revenue to get over them in this manner. The Circulars continue to bind the Revenue and if they contain any conditions, whether such conditions are attracted or not would have to be proved and established by the Revenue

We find that this is an attempt to get over the binding Circulars and in any case we shall not allow the Revenue to get over them in this manner. The Circulars continue to bind the Revenue and if they contain any conditions, whether such conditions are attracted or not would have to be proved and established by the Revenue. Once there is no such record before us, we do not countenance the oral request of Mr. Pinto. Consequently, we do not see any reason to entertain this appeal. It is dismissed

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DATE: September 17, 2018 (Date of pronouncement)
DATE: September 19, 2018 (Date of publication)
AY: 2002-03, 2003-04
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Gain arising to the assessee on account of securitization of lease receivables and credited to the Profit & Loss Account is a taxable receipt in the year of securitisation as per T. V. Sunderam Iyengar 222 ITR 344 (SC). Argument that the entry represents hypothetical income and not real income and that the amount is assessable in subsequent years on receivable basis is not correct. Question of whether income can also be deferred to subsequent years under the "Matching concept" as per Taparia Tools 260 ITR 102 (Bom)/ 372 ITR 605 (SC) left open

Thus, if the assessee claims the expenditure in that year, the Department cannot deny it. However, in a case where the assessee himself wants to spread the expenditure over a period of ensuing years, it can be allowed only if the principle of the “matching concept” is satisfied, which up to now has been restricted only to cases of debentures. Whether the ‘matching concept’ would also apply to “income” is wholly a different matter and which would be considered in an appropriate case, as and when it so arises, provided the factual foundation is laid for the same.

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DATE: September 4, 2018 (Date of pronouncement)
DATE: September 15, 2018 (Date of publication)
AY: 2014-15
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S. 276(C)(1) Prosecution for bogus transaction: If a stay application is filed before the CIT(A) to seek a stay of the assessment order, during the pendency of such application, the criminal prosecution should not be launched and, if it has been already launched, the same shall not proceed

In the event, the petitioner seeks a stay of the order passed by the Assessment Officer by making a stay application, then, during the pendency of such application, the criminal prosecution should not be launched and, if it has been already launched, the same shall not proceed. Thus, the ad interim stay granted by this Court would continue till the disposal of the application for stay by the First Appellate Authority

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DATE: September 4, 2018 (Date of pronouncement)
DATE: September 7, 2018 (Date of publication)
AY: 2003-04, 2004-05, 2005- 06
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S. 271(1)(c) Penalty: If appeals with reference to the quantum proceedings have been admitted by the Court on substantial questions of law, it means that there were debatable and arguable questions raised and so penalty u/s 271(1)(c) cannot be levied (PCIT v. Shree Gopal Housing 167 DTR 236 distinguished). Penalty also cannot be levied if the claim was as per judicial precedents prevalent at the time of filing the ROI. Also, there must be a finding that the details supplied by the assessee in its return were incorrect or erroneous or false

In all these appeals, we find that the appeals with reference to the quantum proceedings have been admitted by this Honourable Court on a substantial question of law. That has also been recorded by the Tribunal in the impugned order and the same is also not disputed before us. We find that the appeals were admitted as this Court found that there were debatable and arguable questions raised in the quantum proceedings. This being the case, we find that the Tribunal, in the facts and circumstances of the present case, was fully justified in confirming the order of the CIT (A) in all the three assessment years for deleting the penalty

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DATE: August 31, 2018 (Date of pronouncement)
DATE: September 7, 2018 (Date of publication)
AY: -
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A co-operative housing Society is not expected to indulge into profiteering business from its members. Transfer fees cannot be charged under the pretext of "voluntary donation". Amount which is accepted above permissible limits towards transfer fee is illegal and taxable as income in the hands of the society

The Society is not expected to indulge into profiteering business from the members and if such amount is earned, then it is taxable under the law. There is no bar for any member to pay donation to the Society, however, it should be voluntary without any compulsion and coercion. No manner the transfer fees can be charged under the pretext of donation

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DATE: August 23, 2018 (Date of pronouncement)
DATE: September 3, 2018 (Date of publication)
AY: 2009-10
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The Revenue has been selective in its approach. It picks either the assessee or the AYs pertaining to that assessee for challenging the orders in relation to them, before the higher forums. This results in revenue leakage or perpetuation of wrongs affecting adversely the collection of revenue. The public at large is at a loss to understand as to why the Department/Revenue consistently loses the battle in the higher Courts. This could be then termed as a deliberate or intentional act. If the Department of Revenue, Ministry of Finance, Government of India is going to conveniently overlook this and not bring the guilty persons to book by initiating disciplinary measures against them, then, no purpose will be served at all. This is not a short term exercise, but a major surgery which will have to be performed. If the Revenue Officials are prepared to take some bold decisions, then, only these state of affairs will improve and not otherwise

On numerous occasions, this Court has brought to the notice of the Department of Revenue, Ministry of Finance, Government of India through the Commissionerates that the Revenue has been selective in its approach.It picks either the assessee or the assessment years pertaining to that assessee for challenging the orders in relation to them, before the higher forums.This results in revenue leakage or perpetuation of wrongs affecting adversely the collection of revenue. The public at large is at a loss to understand as to why the Department/Revenue consistently loses the battle in the higher Courts. This could be then termed as a deliberate or intentional act.6 If the Department of Revenue, Ministry of Finance, Government of India is going to conveniently overlook this and not bring the guilty persons to book by initiating disciplinary measures against them, then, no purpose will be served at all.We know that the Appeal for the prior Assessment Year may not be properly drafted or does not contain the relevant details, much less the precise question of law and if that is dismissed, there will be definitely an impact on the Appeal relating to the Assessment Year under consideration.Hence, this is not a short term exercise, but a major surgery which will have to be performed. If the Revenue Officials are prepared to take some bold decisions, then, only these state of affairs will improve and not otherwise

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DATE: August 28, 2018 (Date of pronouncement)
DATE: September 1, 2018 (Date of publication)
AY: -
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Securities Transaction Tax: CBDT's clarification that where a derivative contract is being settled by physical delivery of shares, the transaction would not be any different from transaction in equity share where the contract is settled by actual delivery or transfer of shares and the rates of STT as applicable to such delivery based equity transactions shall also be applicable to such derivative transaction takes care of the grievance of the stake holders

In a nutshell, CBDT is of the view that where a derivative contract is being settled by physical delivery of shares, the transaction would not be any different from transaction in equity share where the contract is settled by actual delivery or transfer of shares and the rates of STT as applicable to such deliverybased equity transactions shall also be applicable to such derivative transaction

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