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DATE: March 12, 2019 (Date of pronouncement)
DATE: April 13, 2019 (Date of publication)
AY: 2008-09
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CITATION:
S. 50C Capital Gains: The assessee cannot avoid the impact of s. 50C by claiming that his s. 54EC investment is large enough to cover the deemed consideration based on stamp duty valuation. Such interpretation renders s. 50C redundant

The deeming fiction under section 50C of the Act, must be given its full effect and the Court should not allow to boggle the mind while giving full effect to such fiction. We are not opposing the proposition canvassed by the Counsel of the Assessee that deeming fiction must be applied in relation to the situation for which it is created. However, while giving full effect to the deeming fiction contained under section 50C of the Act for the purpose of computation of the capital gain under section 48, for which section 50C is specifically enacted, the automatic fallout thereof would be that the computation of the assessee’s capital gain and consequently the computation of exemption under section 54EC, shall have to be worked out on the basis of substituted deemed sale consideration of transfer of capital asset in terms of section 50C of the Act

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DATE: April 2, 2019 (Date of pronouncement)
DATE: April 9, 2019 (Date of publication)
AY: 2009-10
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CITATION:
S. 43D Interest on NPAs: Even though the special provision in s. 43D for taxing interest income on NPAs on receipt basis does not apply to NBFCs, it does not mean that NBFCs have to offer interest on bad or doubtful debts to tax on accrual basis. Such interest is not taxable on the real income theory

Learned counsel for the Revenue submitted that the assessee had to offer the interest income to tax on accrual basis. The special provision for taxing interest income on NPAs on the basis of receipt has been made under Section 43D of the Income Tax Act, 1961 (“the Act” for short) which does not apply to NBFC. By necessary implication, therefore, the legislature desired that such benefit would be restricted only to such of the entities as are referred to in Section 43D of the Act

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DATE: March 26, 2019 (Date of pronouncement)
DATE: April 6, 2019 (Date of publication)
AY: 2016-17
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CITATION:
S. 220(6)/ 281B Tax Recovery: Dismay at the conduct of the Officers of the Revenue. They should apply the law equally to all and not be over zealous in seeking to collect revenue ignoring the statutory provisions as well as binding decisions. The petitioner is being singled out for unfair treatment. The desire to collect more revenue cannot be at the expense of Rule of law. Revenue to pay cost of Rs.50,000 to the Petitioner for the unnecessary harassment

We have to express our dismay at the conduct of the Officers of the Revenue in this matter. We pride ourselves as a State which believes in rule of law. Therefore, the least that is expected of the Officers of the State is to apply the law equally to all and not be over zealous in seeking to collect the revenue ignoring the statutory provisions as well as the binding decisions of this Court. The action of respondent nos.1 and 2 as adverted to in para 14 herein above clearly indicates that a separate set of rules was being applied by them in the case of the petitioner. Equal protection of law which means equal application of law has been scarified in this case by the Revenue. It appears that the S.R.JOSHI 21 of 22 WP-543-2018 petitioner is being singled out for this unfair treatment. The desire to collect more revenue cannot be at the expense of Rule of law. In the above view, we direct the Respondent-Revenue to pay cost of Rs.50,000/- (Rupees Fifty thousand only) to the Petitioner for the unnecessary harassment, it had to undergo at the hands of the Revenue

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DATE: March 26, 2019 (Date of pronouncement)
DATE: April 3, 2019 (Date of publication)
AY: 2010-11
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CITATION:
S. 45(4): If new partners come into the partnership and bring cash by way of capital contribution and the retiring partners take cash and retire, the retiring partners are not relinquishing their interest in the immovable property. What they relinquish is their share in the partnership. As there is no transfer of a capital asset, no capital gains or profit can arise & s. 45(4) has no application (A. N. Naik 265 ITR 346 (Bom) distinguished, Dynamic Enterprises 359 ITR 83 (Karn) [FB] followed)

The property belongs to the partnership firm. It did not belong to the partners. The partners only had a share in the partnership asset. When the five partners came into the partnership and brought cash by way of capital contribution to the extent of their contribution, they were entitled to the proportionate share in the interest in the partnership firm. When the retiring partners took cash and retired, they were not relinquishing their interest in the immovable property. What they relinquished is their share in the partnership. Therefore, there is no transfer of a capital asset, as such, no capital gains or profit arises in the facts of this case. In that view of the matter, Section 45(4) has no application to the facts of this case

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DATE: March 26, 2019 (Date of pronouncement)
DATE: March 29, 2019 (Date of publication)
AY: -
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CITATION:
S. 68 Bogus Share Capital: Merely because the investment was considerably large and several corporate structures were either created or came into play in routing the investment in the assessee through a Mauritius entity would not be sufficient to brand the transaction as colourable device. The assessee cannot be asked to prove the source of source (PCIT Vs. NRA Iron & Steel 103 TM.com 48 (SC) referred)

As is well known in the context of Section 68 of the Act, the basic duty would be on the assessee to establish the genuineness of the transaction, credit worthiness of the investor and the source of funds. Equally well settled principle through series of judgments is that the Department cannot insist on the assessee establishing source of the source.

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DATE: March 19, 2019 (Date of pronouncement)
DATE: March 29, 2019 (Date of publication)
AY: 2006-07
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CITATION:
S. 271(1)(c) Penalty: Merely because the High Court has admitted the Appeal and framed substantial questions of law, it cannot be said that the entire issue is debatable one and under no circumstances, penalty could be imposed (CIT vs. Dharamshi B. Shah 366 ITR 140 (Guj) followed)

Admission of a tax appeal by the High Court, in majority cases, is ex parte and without recording even prima facie reasons. Whether ex parte or after by-parte hearing, unless some other intention clearly emerges from the order itself, admission of a tax appeal by the High Court only indicates the court’s opinion that the issue presented before it required further consideration. It is an indication of the opinion of the High Court that there is a prima facie case made out and the questions are required to be decided after admission. Mere admission of an appeal by the High Court cannot without there being anything further, be an indication that the issue is debatable one so as to delete the penalty under section 271(1)(c) of the Act

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DATE: March 15, 2019 (Date of pronouncement)
DATE: March 29, 2019 (Date of publication)
AY: 2015-16
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CITATION:
S. 92C(1) Transfer Pricing: Even if the assessee does not report the specified transaction & the AO has no occasion to notice it, the TPO has no jurisdiction to suo moto determine the ALP. He has to call for a reference from the AO. Alternate remedy is not a bar if the action is without jurisdiction & can be severed from the rest

Learned counsel for the Revenue is correct in pointing out that in the present case, the assessee did not report such transaction at all and therefore, the Assessing Officer had no occasion to notice such transaction as specified domestic transaction. His reference, therefore, was necessarily confined to the reported transactions. The TPO noticed this anomaly, he proceeded to determine the arm’s length price after full opportunity of hearing to the petitioner. Even in such a situation, the statute does not permit the TPO to assume the jurisdiction to determine the arm’s length price of a specified domestic transaction not reported to him

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DATE: March 22, 2019 (Date of pronouncement)
DATE: March 25, 2019 (Date of publication)
AY: -
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CITATION:
S. 250: The CBDT should reconsider the direction in the Central Action Plan of offering incentives to CsIT(A) to enhance assessments and levy penalty. From the action plan, it is not clear as to the utility of the norms set which the CIT(A) has to achieve. If the purpose of setting of norms is to evaluate the performance of the CIT(A) there would be all the more reason why the above quoted portion of the action plan be reconsidered by the CBDT.

With respect to the Petitioners’ second part of the challenge, we are of the opinion that the CBDT should reconsider the same. From the action plan, it is not clear as to the utility of the norms set which the Commissioner has to achieve. If the purpose of setting of norms is to evaluate the performance of the Commissioner, there would be all the more reason why the above quoted portion of the action plan be reconsidered by the CBDT

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DATE: March 7, 2019 (Date of pronouncement)
DATE: March 16, 2019 (Date of publication)
AY: 2011-12
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CITATION:
S. 147 Reopening of Bogus share capital: Though the reopening is based on information supplied by the investigation wing, the reasons do not specify that the investment was non-genuine. The AO cannot reopen to investigate into the source of genuineness and creditworthiness of the investors as it falls within the realm of fishing enquiries which is wholly impermissible in law

The reasons do not specify that the information supplied to the Assessing Officer by the Investigation Wing, suggested that such investment was non­ genuine. In this context, Assessing Officer refers to the requirement of verifying the genuineness of investor and requirement of further investigation. These observations would not further the case of the Revenue, these being no information with the Assessing Officer, prima facie, indicating that the investments were not genuine. The investigation into the source of genuineness and creditworthiness of the investor company would fall within the relam of fishing enquiries, which is wholly impermissible in law in the context of the re­opening of the assessment

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DATE: February 25, 2019 (Date of pronouncement)
DATE: March 9, 2019 (Date of publication)
AY: 2011-12
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CITATION:
S. 147/148: If the AO is of the opinion that the issue requires verification, it tantamounts to fishing or roving inquiry. He is not permitted to reopen merely because in the later year, he took a different view on the basis of similar material. Even if the question of taxing interest income under the DTAA was not in the mind of the AO when he passed the assessment, he cannot reopen if there is no failure to disclose truly and fully all material facts

If during the assessment of the later assessment year, the Assessing officer collects or chances upon new material which may have bearing on the assessment of the assessee, and in case where the assessment is sought to be reopened beyond four years, he can also establish lack of true and full disclosures on the part of the assessee, it may be open for him to reopen assessment of the earlier year. However, merely because in the later year, the Assessing Officer takes a different view on the basis of similar material, which may have been collected during such process, would not permit him to reopen the assessment

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