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DATE: June 21, 2018 (Date of pronouncement)
DATE: April 29, 2019 (Date of publication)
AY: 2011-12
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S. 260A: Dept directed to "bonafide apply mind" before filing appeals to the High Court. Concern & anguish expressed at the tendency of the Dept to file unnecessary appeals even though the issues are ex facie covered by decisions of the jurisdictional High Courts or even the Supreme Court. CBDT & Ministry of Finance directed to take needful action

We express our concern and anguish at the tendency of the Revenue Department to file unnecessary appeals u/s. 260-A of the Act even though the issues are ex facie covered by the decision of the jurisdictional High Courts or even the Hon’ble Supreme Court of India. The substantial question of law essentially means that a question of law which is not already settled by the Constitutional Courts can only fall within the ambit of Section 260-A of the Act and therefore repetitive filing of such appeals by the Tax Department who are expected to be serious and bonafide litigants in the Constitutional Courts is a matter of concern.

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DATE: (Date of pronouncement)
DATE: September 26, 2018 (Date of publication)
AY: 2010-11
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Entire law on "real income theory" and distinction between "application of income" vs. "diversion of income by overriding title" explained with reference to case laws. Law on whether if an amount is not treated as "diversion of income", it can be allowed as "business expenditure" u/s 37(1) or as a "trading loss" u/s 29 also explained. Issue of “Base Erosion and Profit Shifting” (BEPS) also raised in the context of "tax avoidance vs. tax evasion" and diversion of income by a MNC

Courts and the Tax Authorities can look into the real purpose of the commercial arrangements and transactions to reach the truth and the transactions having the sole purpose of tax avoidance may be held to be having no effect on the actual tax liability of the tax payer. Book entries and Method of Accounting is not determinative and conclusive for deciding the computation of ‘taxable income’ in the hands of the Assessee though they may be relevant to be considered. “Diversion of income by transfer of overriding title at source” should normally have the support of the statutory requirements or some decretal binding character of Courts of law and even though the private contractual obligations can also bring about such “diversion of income at source” but in this last sphere of private contractual obligations, the Courts and the Income Tax Authorities have to examine such aspects carefully in comparison to the above two other categories of statutory requirements and the Court decrees and then examine the real purport and object of such private arrangements and Contracts

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DATE: June 25, 2018 (Date of pronouncement)
DATE: June 27, 2018 (Date of publication)
AY: 2006-07
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S. 260A: Entire law on when transfer pricing disputes constitute "substantial questions of law" for challenge in the High Court explained. Transfer Pricing Adjustments on the basis of the comparables are a matter of estimate of broad and fair guess-work of the Authorities based on relevant material. The exercise of fact finding or ‘Arm’s Length Price’ determination or ‘Transfer Pricing Adjustments’ should become final with a quietus at the hands of the final fact finding body, i.e. the Tribunal. The ITAT's findings of fact cannot be challenged in the High Court unless it is shown that the findings are ex-facie perverse and unsustainable and exhibit total non-application of mind by the Tribunal to the relevant facts of the case and evidence before it

This Court cannot be expected to undertake the exercise of comparison of the comparables itself which is essentially a fact finding exercise. Neither the sufficient Data nor factual informations nor any technical expertise is available with this Court to undertake any such fact finding exercise in the said appeals under Section 260-A of the Act. This Court is only concerned with the question of law and that too a substantial one, which has a well defined connotations as explained above and findings of facts arrived at by the Tribunal in these type of assessments like any other type of assessments in other regular assessment provisions of the Act, viz. Sections 143, 147 etc. are final and are binding on this Court. While dealing with these appeals under Section 260-A of the Act, we cannot disturb those findings of fact under Section 260-A of the Act, unless such findings are ex-facie perverse and unsustainable and exhibit a total nonapplication of mind by the Tribunal to the relevant facts of the case and evidence before the Tribunal.

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DATE: February 26, 2016 (Date of pronouncement)
DATE: March 2, 2016 (Date of publication)
AY: -
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S. 44AB/ 271B: Belief that a mutual association like a club is not liable for tax audit is a bona fide one and constitutes reasonable cause u/s 273B

Under the general law relating to mutual concerns, the surplus accruing to a mutual concern cannot be regarded as income, profits or gains for the purpose of the Act (s.4), and where the contributors are to receive back a part of their own contributions, the complete identity between the contributors and recipients negatives the idea of any profit, for no man can make profit out of himself. Therefore, a mutual concern can carry on an activity with its members, though the surplus arising from such activity is not taxable income or profit. The principle of mutuality has also been accepted in the case of a voluntary organization, which receives contributions from its members. The assessee’s contention that Section 44AB of the Act is not applicable to a club being a mutual concern is supported by several judgements

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DATE: February 16, 2016 (Date of pronouncement)
DATE: March 1, 2016 (Date of publication)
AY: 2007-08
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No s. 40(a)(ia) disallowance for short-deduction TDS default (i.e. deduction u/s 194H instead of u/s 194H)

An identical question regarding Section 40(a)(ia) of the Act was considered by the Calcutta High Court in S. K. Tekriwal [2014] 361ITR 432 (Cal) and the findings given by the Calcutta High Court has been followed by the Tribunal. Similarly, as regards the binding nature of the CBDT, the Tribunal has followed the Judgment of the Apex Court in HAL (supra). In view of both the decisions cited supra, no substantial questions of law arises for our determination in this appeal

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DATE: February 23, 2016 (Date of pronouncement)
DATE: March 1, 2016 (Date of publication)
AY: -
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S. 2(15): In order to constitute a “charitable purpose”, the object need not be to benefit of the whole of mankind or of persons in a Country or State. Even benefit to only a section of the public is sufficient. To ascertain the true nature/purpose of the Trust, the objectives have to be considered as a whole and not in isolation

Section 2[15] of the Act contemplates ‘charitable purpose’. ‘Charitable purpose’ includes relief of the poor, education, medical relief and the advancement of any other object of general public utility. The phrase ‘any other object of general public utility’ if, examined in the light of the Judgment in the case of AHMEDABAD RANA CASTE ASSOCIATION [supra], it is not necessary that the object should be to benefit of the whole of mankind or of persons in a Country or State. If it is distinguished from a specified individual and if it is to the benefit of section of the public, it has to be construed as charitable purpose

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DATE: January 25, 2016 (Date of pronouncement)
DATE: February 12, 2016 (Date of publication)
AY: 2001-02
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S. 271(1)(c)/ 271(1-B): If the notice is issued without application of mind (by striking out the relevant part in the notice), the penalty proceedings are invalid

It is clear that the notice is issued proposing to levy penalty under Section 271(1)(b) of the Act whereas the order is passed by the Assessing Officer under Section 271(1)(c) of the Act which clearly indicates that there was no application of mind by the Assessing Officer while issuing the notice under Section 274 of the Act. As regards Section 271(1-B) of the Act, it clearly indicates that the assessment order should contain a direction for initiation of proceedings. Merely saying that the penalty proceedings have been initiated would not satisfy the requirement, a direction to initiate proceeding shall be clear and not be ambiguous

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