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DATE: July 17, 2017 (Date of pronouncement)
DATE: July 19, 2017 (Date of publication)
AY: 2001-02
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S. 153B(2)(a): Merely visiting the premises on the pretext of concluding the search but not actually finding anything new for being seized cannot give rise to a second panchnama so as to extend the limitation period for passing the s. 153A assessment order. In such event, there would be no occasion to draw up a panchnama at all. The visit and the panchnama drawn up on that date cannot lead to postponement of the period for completion of assessment with reference to s. 153B (2) (a) of the Act

The Court is not prepared to accept the plea of the Revenue that merely because a panchnama was drawn up on 15th May, 2007 showing that the search was ‘finally concluded’ on that date, it postponed the period of limitation in terms of Section 153B (2) (a) of the Act. It had to be the “last panchnama drawn in relation to any person in whose case the warrant of authorization has been issued”. The last panchnama, no doubt, is dated 15th May, 2007 but what it records is the seizure of the jewellery items not of any of the persons searched but the wives of one of the directors i.e., of Ms. Neena Jain who was not even a director of any of these entities. Therefore, even assuming that the jewellery of Ms. Neena Jain was seized under panchnama of 15th May, 2007, as far as the searched entities are concerned, the Revenue cannot take advantage of Section 153B (2) (a) to contend that the period of limitation in respect of them stands extended for completing of assessment up to 31st December, 2009

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DATE: July 12, 2017 (Date of pronouncement)
DATE: July 13, 2017 (Date of publication)
AY: -
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GST on legal services: There is no clarity whether all legal services (not restricted to representational services) provided by legal practitioners would be governed by the reverse charge mechanism. Legal practitioners are under genuine doubt whether they require to get themselves registered. The Court directs that no coercive action be taken against any lawyer or law firms for non-compliance with any legal requirement under the CGST Act, the IGST Act or the DGST Act till a clarification is issued by the Central Government and the GNCTD and till further orders in that regard by the Court

It is plain that as of date there is no clarity on whether all legal services (not restricted to representational services) provided by legal practitioners and firms would be governed by the reverse charge mechanism. If in fact all legal services are to be governed by the reverse charge mechanism than there would be no purpose in requiring legal practitioners and law firms to compulsorily get registered under the CGST, IGST and/or DGST Acts. Those seeking voluntary registration would anyway avail of the facility under Section 25 (3) of the CGST Act (and the corresponding provision of the other two statutes). There is therefore prima facie merit in the contention of Mr Mittal that the legal practitioners are under a genuine doubt whether they require to get themselves registered under the three statutes. In the circumstances, the Court directs that no coercive action be taken against any lawyer or law firms for non-compliance with any legal requirement under the CGST Act, the IGST Act or the DGST Act till a clarification is issued by the Central Government and the GNCTD and till further orders in that regard by this Court

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DATE: May 19, 2017 (Date of pronouncement)
DATE: June 2, 2017 (Date of publication)
AY: -
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Condonation of delay: Government departments are under a special obligation to ensure that they perform their duties with diligence and commitment. Condonation of delay is an exception and should not be used as an anticipated benefit for Government departments. The mere fact that the AO was busy in other time-bearing assessments is not an excuse for delay particularly given the fact that s. 260A provides a long time period of 120 days. Every day’s delay has to be explained

In our view, it is the right time to inform all the government bodies, their agencies and instrumentalities that unless they have reasonable and acceptable explanation for the delay and there was bonafide effort, there is no need to accept the usual explanation that the file was kept pending for process. The government departments are under a special obligation to ensure that they perform their duties with diligence and commitment. Condonation of delay is an exception and should not be used as an anticipated benefit for the Government Departments. The law shelters everyone under the same light and should not be swirled for the benefit of a few

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DATE: May 18, 2017 (Date of pronouncement)
DATE: May 27, 2017 (Date of publication)
AY: 1998-99, 1999-00, 2001-02
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S. 147/148 reassessment has to be based on "fresh material". A reopening based on reappraisal of existing material is invalid. The assessee's duty is only to disclose facts and not to make inferences. Consolidated Photo 281 ITR 394 (Del) is not good law

The reopening was not based on any fresh material. By revisiting the same materials the successor AO now concluded that the payments received by the Assessee pursuant to the O&M Agreements should be treated as FTS. In the circumstances, the view taken by a successor AO on the same material was indeed nothing but a mere change of opinion. It is a well-settled legal proposition, as explained in Calcutta Discount Co. Ltd. v. ITO [1961] 41 ITR 191(SC) that once an Assessee has discharged the burden of not only producing the account books and other documents, but also the specific material relevant to the assessment, “it is for the Income-tax Officer to draw the proper inferences of fact and law therefrom and the Assessee cannot further be called upon to do so for him.” In Indian Oil Corporation v. ITO [1986] 159 ITR 956 the Court pertinently observed “it is for the taxing authority to draw inference. It is not necessary for the Assessee to draw inference.” These observations apply on all fours to the case on hand

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DATE: May 16, 2017 (Date of pronouncement)
DATE: May 27, 2017 (Date of publication)
AY: 2006-07 to 2011-12
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S. 132/153A: Important law explained on the preconditions necessary for the department to initiate valid search and seizure action u/s 132 and whether the assessee is entitled to challenge the same. Consequences of the search being declared void on the s. 153A assessment also explained

The law in relation to searches under Section 132 of the Act has been explained in a large number of decisions of the Supreme Court and the High Courts. The jurisdictional facts that have to be established before a search under Section 132 (1) of the Act can be authorised are that (i) the authority issuing the authorisation is in possession of some credible information, other than surmises and conjectures (ii) that the authority has reason to believe that the conditions stipulated in clauses (a), (b) and (c) of Section 132 (1) qua the person searched exist; and (iii) the said information has nexus to such belief. The Courts have laid emphasis on the mandatory nature of the above requirement to be fulfilled under Section 132 (1) of the Act

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DATE: May 25, 2017 (Date of pronouncement)
DATE: May 26, 2017 (Date of publication)
AY: 2000-01 to 2004-05
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S. 153A: Entire law explained on whether concluded assessments can be reopened u/s 153A even in the absence of incriminating material found during the search in the light of the apparently conflicting verdicts in CIT vs. Kabul Chawla 380 ITR 573 (Del) and Dayawanti Gupta v. CIT 390 ITR 496 (Del)

Section 153A of the Act is titled “Assessment in case of search or requisition”. It is connected to Section 132 which deals with ‘search and seizure’. Both these provisions, therefore, have to be read together. Section 153A is indeed an extremely potent power which enables the Revenue to re-open at least six years of assessments earlier to the year of search. It is not to be exercised lightly. It is only if during the course of search under Section 132 incriminating material justifying the re-opening of the assessments for six previous years is found that the invocation of Section 153A qua each of the AYs would be justified. The question whether unearthing of incriminating material relating to any one of the AYs could justify the re-opening of the assessment for all the earlier AYs was considered both in CIT v. Anil Kumar Bhatia and CIT v. Chetan Das Lachman Das. Incidentally, both these decisions were discussed threadbare in the decision of this Court in Kabul Chawla 380 ITR 573 (Del)

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DATE: April 17, 2017 (Date of pronouncement)
DATE: April 28, 2017 (Date of publication)
AY: -
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Strictures passed regarding the "standard excuses" of the department for delay in filing appeals, namely, budgetary constraints, lack of infrastructure to make soft copies, change of standing counsel etc

The Court finds that the standard excuse that the Department is putting forth in all such applications for condonation of delay in re-filing the appeal is two-fold. The first is regarding the budgetary constraints of the Department which delayed payment of the differential court fees as a result of the Court Fees Delhi Amendment Act, 2012 which came into force on 1st August 2012. The second is regarding the practice directions issued by the Court pertaining to filing of soft copies of the paperbooks in tax matters

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DATE: April 11, 2017 (Date of pronouncement)
DATE: April 22, 2017 (Date of publication)
AY: -
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S. 279: As there is no time limit prescribed for filing an application for compounding of an offense, the CBDT is not entitled to reject an application on the ground of 'inordinate delay'. The CBDT has no jurisdiction to demand that the assessee pay a 'pre-deposit' as a pre-condition to considering the compounding application. The larger question as whether in the garb of a Circular the CBDT can prescribe the compounding fee in the absence of such fee being provided for either in the statute or prescribed under the rules is left open

The Court finds nothing in Section 279 of the Act or the Explanation thereunder to permit the CBDT to prescribe such an onerous and irrational procedure which runs contrary to the very object of Section 279 of the Act. The CBDT cannot arrogate to itself, on the strength of Section 279 of the Act or the Explanation thereunder, the power to insist on a ‘pre-deposit’ of sorts of the compounding fee even without considering the application for compounding. Indeed Mr Kaushik was unable to deny the possibility, even if theoretical, of the application for compounding being rejected despite the compounding fee being deposited in advance. If that is the understanding of para 11(v) of the above Circular by the Department, then certainly it is undoubtedly ultra vires Section 279 of the Act. The Court, accordingly, clarifies that the Department cannot on the strength of para 11(v) of the Circular dated 23rd December 2014 of the CBDT reject an application for compounding either on the ground of limitation or on the ground that such application was not accompanied by the compounding fee or that the compounding fee was not paid prior to the application being considered on merits

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DATE: August 1, 2016 (Date of pronouncement)
DATE: August 5, 2016 (Date of publication)
AY: 2005-06
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S. 80IA(2A): As the words "derived from" are absent, there is no requirement to prove "first degree nexus" of the receipts with the eligible business. All receipts of the undertaking are eligible for 100% deduction

The legislature having ousted applicability of sub-section (1) and (2) in the opening sentence brought in for the purposes of time line sub-section (2) into play but made no efforts whatsoever to put the assessee under sub-section (2A) to meet the stringent requirements that the profits so contemplated were to be “derived from”. The requirements of the first degree nexus of the profits from the eligible business has not been brought into play

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DATE: July 11, 2016 (Date of pronouncement)
DATE: July 14, 2016 (Date of publication)
AY: 2009-10, 2010-11
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S. 9(1)(vi): Though in Infrasoft 220 Taxman 273 (Del) the impact of the amendment to s. 9(1)(vi) on the question whether consideration received for sale of pre-packaged software was “royalty” or “fee for technical services” or "business income" was not examined, it is not required to be examined because u/s 90 (3) provides that the Act prevails only if it is more beneficial compared to the DTAA

The short question considered by the Court in Director of Income Tax v. Infrasoft Limited (2014) 220 Taxman 273 (Del) was whether the term “royalty” covered by Article 12 (3) of the DTAA would apply in the context of sale of pre-packaged copyrighted software. The Court stated that it has not examined the effect of the subsequent amendment to Section 9 (1) (vi) of the Act and also whether the amount received for use of software would be royalty in terms thereof for the reason that the Assessee is covered by the DTAA, the provisions of which are more beneficial

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