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DATE: April 30, 2019 (Date of pronouncement)
DATE: June 24, 2019 (Date of publication)
AY: 2008-09
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CITATION:
Speculation Loss: Law on when an amendment can be said to be clarificatory/ retrospective explained. The amendment to the Explanation to s. 73 by the Finance (No 2) Act 2014 with effect from 1 April 2015 is not clarificatory or retrospective. Consequently, loss occurred to the assessee as a result of its activity of trading in shares (a loss arising from the business of speculation) is not capable of being set off against the profits which it had earned against the business of futures and options since the latter did not constitute profits and gains of a speculative business

The amendment which was brought by Parliament to the Explanation to Section 73 by the Finance (No 2) Act 2014 was with effect from 1 April 2015. In its legislative wisdom, the Parliament amended Section 43(5) with effect from 1 April 2006 in relation to the business of trading in derivatives, Parliament brought about a specific amendment in the Explanation to Section 73, insofar as trading in shares is concerned, with effect from 1 April 2015. The latter amendment was intended to take effect from the date stipulated by Parliament and we see no reason to hold either that it was clarificatory or that the intent of Parliament was to give it retrospective effect. 31 The consequence is that in A.Y. 2008-2009, the loss which occurred to the assessee as a result of its activity of trading in shares (a loss arising from the business of speculation) was not capable of being set off against the profits which it had earned against the business of futures and options since the latter did not constitute profits and gains of a speculative business

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DATE: February 20, 2019 (Date of pronouncement)
DATE: June 22, 2019 (Date of publication)
AY: -
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Entire law explained on (i) whether a litigant is bound by concessions of fact and law made by his Counsel/ Authorized representative during the hearing, (ii) tests to find out whether contract labourers are direct employees or not, (iii) meaning of "control and supervision", (iv) meaning of "master-servant" relationship & (v) when the findings in a judgement can be said to be "perverse" and such that no reasonable person could possibly arrive at

There can be no doubt that admission of a party is a relevant material. But can the statement made by the learned counsel of a party across the Bar be treated as admission of the party? Having regard to the requirements of Section 18 of the Evidence Act, on the facts of this case, in our view, the aforementioned statement of the counsel for the respondent cannot be accepted as an admission so as to bind the respondent. Equally, where a question is a mixed question of fact and law, a concession made by a lawyer or his authorised representative at the stage of arguments cannot preclude the party for whom such person appears from re-agitating the point in appeal

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DATE: May 9, 2019 (Date of pronouncement)
DATE: May 18, 2019 (Date of publication)
AY: -
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CITATION:
Benami Transactions: While considering whether a particular transaction is benami, the intention of the person who contributed the purchase money is determinative. The intention has to be decided on the basis of surrounding circumstances; relationship of parties; motives governing their action in bringing about the transaction and subsequent conduct. The payment of part sale consideration & stamp duty cannot be the sole criteria to hold the sale/transaction as benami

It is required to be noted that the benami transaction came to be amended in the year 2016. As per Section 3 of the Benami Transaction (Prohibition) Act 1988, there was a presumption that the transaction made in the name of the wife and children is for their benefit. By Benami Amendment Act,2016, Section 3 (2) of the Benami Transaction Act, 1988 the statutory presumption, which was rebuttable, has been omitted.It is the case on behalf of the respondents that therefore in view of omission of Section 3(2) of the Benami Transaction Act, the plea of statutory transaction that the purchase made in the name of wife or children is for their benefit would not be available in the present case. Aforesaid cannot be accepted. As held by this Court in the case of Binapani Paul (Supra) the Benami Transaction (Prohibition) Act would not be applicable retrospectively

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DATE: February 21, 2019 (Date of pronouncement)
DATE: April 29, 2019 (Date of publication)
AY: 2001-02
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S. 43B: The conversion of outstanding interest into loan does not amount to "actual payment" of the interest in order to qualify for deduction in view of the retrospective insertion of Explanation 3C to s. 43B (Eicher Motors 315 ITR 312 (MP) & Pennar Profiles (T&AP) approved)

Expln. 3C has now in clear terms provided that such conversion of interest amount into loan shall not be deemed to be regarded as “actually paid” amount within the meaning of Section 43B. In view of clear legislative mandate removing this doubt and making the intention of legislature clear in relation to such transaction, it is not now necessary for this Court to interpret the unamended Section 43B in detail, nor it is necessary for this Court to take note of facts in detail as also the submissions urged in support of various contentions except to place reliance on Expln. 3C to Section 43B and answer the questions against the assessee and in favour of Revenue

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DATE: March 15, 2019 (Date of pronouncement)
DATE: April 29, 2019 (Date of publication)
AY: 2006-07
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S. 260A: The High Court cannot hear the appeal bipartite without framing any substantial question of law. It should either dismiss the appeal in limine on the ground that the appeal does not involve any substantial question or hear the parties after framing a question (see also PCIT vs. A. A. Estate Pvt. Ltd (SC)

The High Court did not frame any substantial question of law as is required to be framed under Section 260A of the Act though heard the appeal bipartite. In other words, the High Court did not dismiss the appeal in limine on the ground that the appeal does not involve any substantial question of law; Second, the High Court dismissed the appeal without deciding any issue arising in the case saying that it is not necessary

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DATE: April 16, 2019 (Date of pronouncement)
DATE: April 20, 2019 (Date of publication)
AY: 2008-09
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S. 260A: There is a distinction between questions proposed by the appellant for admission of the appeal (u/s 260­A(2)(c)) and the questions framed by the Court (u/s 260­A(3)). The High Court has to formulate substantial question of law and only thereafter hear the appeal on merits. If the High Court is of the view that the appeal does not involve any substantial question of law, it should record a categorical finding to that effect & dismiss the appeal in limine. However, it cannot, without admitting the appeal and framing any question of law, issue notice to the respondent, hear both parties on the questions urged by the appellant and dismiss it. This is not in conformity with the mandatory procedure prescribed in s. 260­A

It was, however, not done and instead the High Court without admitting the appeal and framing any question of law issued notice of appeal to the respondent­ assessee, heard both the parties on the questions urged by the appellant and dismissed it. In our view, the respondent had a right to argue “at the time of hearing” of the appeal that the questions framed were not involved in the appeal and this the respondent could urge by taking recourse to sub­ section (5) of Section 260­A of the Act. But this stage in this case did not arise because as mentioned above, the High Court neither admitted the appeal nor framed any question as required under sub­section (3) of Section 260­A of the Act. The expression “such question” referred to in sub­ section (5) of Section 260­A of the Act means the questions which are framed by the High Court under sub­section (3) of Section 260­A at the time of admission of the appeal and not the one proposed in Section 260­A (2) (c) of the Act by the appellant

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DATE: April 9, 2019 (Date of pronouncement)
DATE: April 13, 2019 (Date of publication)
AY: -
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CITATION:
Benami Transactions: In considering whether a particular transaction is benami, six circumstances can be taken as a guide: (1) source from which purchase money came; (2) nature and possession of property, after purchase; (3) motive, if any, for giving transaction a benami colour; (4) position of parties and relationship, if any, between claimant and alleged benamidar; (5) custody of title deeds after sale & (6) conduct of parties in dealing with the property after sale. Mere fact that financial assistance was given is not a determinative factor (All imp judgements referred)

It is well­ settled that the burden of proving that a particular sale is benami and the apparent purchaser is not the real owner, always rests on the person asserting it to be so. This burden has to be strictly discharged by adducing legal evidence of a definite character which would either directly prove the fact of benami or establish circumstances unerringly and reasonably raising an inference of that fact. The essence of a benami is the intention of the party or parties concerned; and not unoften, such intention is shrouded in a thick veil which cannot be easily pierced through. But such difficulties do not relieve the person asserting the transaction to be benami of any part of the serious onus that rests on him; nor justify the acceptance of mere conjectures or surmises, as a substitute for proof

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DATE: April 9, 2019 (Date of pronouncement)
DATE: April 10, 2019 (Date of publication)
AY: -
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CITATION:
If an amount (Dharmada, Charity) is paid at the time of the sale transaction for a purpose other than the price of the goods, it cannot form part of the transaction value. Such payment is not for the transaction of sale and cannot be treated as consideration for the goods. The fact that the payment is compulsory upon purchase does not mean that it is involuntary because the purchaser purchases the goods out of his own volition (All imp judgements referred)

When an amount is paid as Dharmada along with the sale price of goods, such payment is not made in consideration of the transfer of goods. Such payment is meant for charity and is received and held in trust by the seller. If such amounts are meant to be credited to charity and do not form part of the income of the assessee they cannot be included in the transaction value or assessable value of the goods

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DATE: February 18, 2019 (Date of pronouncement)
DATE: April 9, 2019 (Date of publication)
AY: 2012-13
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CITATION:
S. 68 Bogus Share Premium: No reason to interfere. SLP dismissed. High Court held there is no limitation on the amount of premium that can be charged. The AO cannot question the transaction merely because he thinks the investor could have managed by paying a lesser amount as share premium. It is the prerogative of the Board of Directors to decide the premium and it is the wisdom of the shareholder whether they want to subscribe to shares at such a premium or not. S. 68 does not apply as the funds were received through banking channels and the identity, creditworthiness and genuineness of the investors was established

Issuing the share at a premium was a commercial decision. It is the prerogative of the Board of Directors of a company to decide the premium amount and it is the wisdom of shareholder whether they want to subscribe the shares at such a premium or not. This was a mutual decision between both the companies. In day to day market, unless and until, the rates is fixed by any Govt. Authority or unless there is any restriction on the amount of share premium under any law, the price of the shares is decided on the mutual understanding of the parties concerned. Once the genuineness, creditworthiness and identity are established, the revenue should not justifiably claim to put itself in the armchair of a businessman or in the position of the Board of Directors and assume the role of ascertaining how much is a reasonable premium having regard to the circumstances of the case

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DATE: April 8, 2019 (Date of pronouncement)
DATE: April 9, 2019 (Date of publication)
AY: 1999-00
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CITATION:
S. 147 Reopening: High Court should decide (i) validity of s. 148 notice where assessment is made u/s 143(1) & not u/s 143(3), (ii) whether notice can be said to be based on change of opinion if there is no foundation to form any such opinion, (iii) Whether requirements of s. 148 are satisfied, namely, that it contains the facts constituting the "reasons to believe" and furnishes the necessary details for assessing the escaped income and (iv) whether finding recorded by ITAT on merits is legally sustainable

The objections raised by the respondent (assessee) to the notice contending inter alia that since the impugned notice was based on “change of the opinion” and hence bad in law was upheld by the ITAT resulting in allowing the respondent’s appeal and further by dismissing the Revenue’s appeal by the High Court. The Revenue has felt aggrieved by the order of the High Court dismissing their appeal in limine and has filed the present appeal by way of special leave in this Court

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