Search Results For: Saktijit Dey (JM)


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DATE: November 18, 2016 (Date of pronouncement)
DATE: November 26, 2016 (Date of publication)
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Taxability of software license fees as royalty: Non-consideration of the verdict of the Tribunal in Solid Works Corporation (51 SOT 34) and misreading of the Delhi High Court's verdict in Ericsson AB constitutes a mistake apparent from the record u/s 254(2) and the orders have to be recalled

In the instant appeals, the Tribunal admittedly did not consider the decision rendered by co-ordinate bench in the case of Solid Works Corporation (supra), even though it was relied upon by the assessees herein. The assessees have contended that the non-consideration of the decision of co-ordinate bench, when it was specifically relied upon by the assessee would result in a mistake apparent from record and would warrant recall of the order. In support of this contention, the assessees have placed their reliance on the decision rendered by Hon’ble Supreme Court in the case of Honda Siel Power Products Ltd (supra), wherein the Hon’ble Apex Court has held that the Tribunal was justified in exercising its power u/s 254(2) when it was pointed out to the Tribunal that the judgement of co-ordinate bench was placed before the Tribunal when the original order came to be passed but it had committed a mistake in not considering the material which was already on record

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DATE: August 24, 2016 (Date of pronouncement)
DATE: November 14, 2016 (Date of publication)
AY: 2007-08
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Bogus share capital: Interplay between s. 56(2)(viib) and s. 68 explained. Amendment to s. 68 casting onus on assessee and requiring it to explain source of source of share subscription is clarificatory and retrospective. Law in Lovely Exports 299 ITR 268, Sophia Finance 205 ITR 98 etc does not apply as they are prior to the Money Laundering Act 2002

A conjoint reading of proviso to section 68 and section 56(2)(viib) divulges that where a closely held company receives, inter alia, some amount as share premium whose genuineness is not proved by the assessee company or its source etc. is not proved by the shareholder to the satisfaction of the AO, then the entire amount including the fair market value of the shares, is chargeable to tax u/s 68 of the Act. If however, the genuineness of the amount is proved and the shareholder also proves his source, then the hurdle of section 68 stands crossed and the share premium, to the extent stipulated, is chargeable to tax u/s 56(2)(viib) of the Act. It shows that only when source of such share premium in the hands of a shareholder is properly explained to the satisfaction of the AO, that the provisions of section 56(2)(viib) gets triggered

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DATE: July 27, 2016 (Date of pronouncement)
DATE: August 10, 2016 (Date of publication)
AY: 2007-08
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S. 50C: Land purchased by a builder with the knowledge that there are encumbrances on it and development is not feasible is a “capital asset” and not “stock-in-trade”. The gains on transfer of such land is assessable as capital gains and not as business profits. S. 50C applies to development agreements if the effect of the development agreement read with the conveyance deed is that the entire land with ownership rights are transferred

Section 50C of the Act is clearly applicable even to the sale of development rights in the land as was held in the decisions relied upon by the learned DR as detailed above , more-so we have already held that in-fact the assessee has not only sold development rights in the land but the assessee sold the entire land with ownership rights in the land if the development agreement are read in conjunction with deed of confirmation / conveyance executed by the assessee which are placed in paper book filed with the Tribunal. Thus, the land which was sold during the previous year by the assessee, thus keeping in view our above discussions in the light of facts and circumstances of the case, was a capital asset within the provisions of Section 2(14) of the Act and the valuation of the land as per stamp duty valuation authorities as per section 50C of the Act was rightly adopted by the AO as full value of consideration

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DATE: February 24, 2016 (Date of pronouncement)
DATE: May 6, 2016 (Date of publication)
AY: 2010-11
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Bogus Purchases: Purchases cannot be treated as bogus is (i) assessee has furnished quantitative reconciliation, (ii) Gross Profit rate is comparable to earlier & subsequent years, (iii) suppliers are income-tax assessees and their sales have not been treated as bogus by their AOs, (iv) payments are by account payee cheques and other documentary evidences are available

Another crucial fact which commands consideration is, all the suppliers are income tax assessees and as per the evidence produced on record they have disclosed these sale transactions in the books of account as well as return filed by them. However, no adverse inference has been drawn in respect of sales made by them by concerned Assessing Officers to the effect that they are not genuine parties or they are providing accommodation bills only. At least, no such fact is forthcoming from assessment order nor the department has filed any paper book before us to demonstrate that there is any adverse material in the possession of the Department to establish that concerned suppliers are non-genuine and are providing accommodation bills. In contrast, enough documentary evidences by way of purchase bills, sales bills, ledger copies of suppliers, etc., along with the fact that payments were made through cheque has been brought on record by assessee to demonstrate that purchases made from the concerned suppliers are genuine

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DATE: March 16, 2016 (Date of pronouncement)
DATE: April 13, 2016 (Date of publication)
AY: 2001-02, 2002-03
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S. 147: If the AO objects to the audit objection, he cannot have reason to believe that income has escaped assessment and is not entitled to reopen the assessment

One of the key sources of dispute is the existing arrangement for follow up on audit objections by Internal Audit Party and the Revenue Audit Party. In terms of the existing arrangement, the AO is required to take corrective steps following audit objections. The corrective measures take the form of rectification or reassessment (by reopening the case under section 147 or revision by the Principal Commissioner or Commissioner under section 263). In the case of rectification, these are general in the nature of correction for arithmetical errors and other mistakes which are apparent from the record. The problem arises when the AO seeks to take corrective measures by invoking the provisions of section 147 or 263 of the Income tax Act. Since the audit object ions are based on mater ial on record and there is no occasion for new mater ial to be brought on record in the course of audit, any reopening of assessment or review by the Pr incipal Commissioner constitutes “change of opinion” in the eyes of the law. This being so, the corrective measure under section 147 or section 263 of the Income tax Act is held to be invalid by Courts.

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DATE: October 28, 2015 (Date of pronouncement)
DATE: February 23, 2016 (Date of publication)
AY: 2005-06
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S. 147: Reopening of assessment is not permissible in the absence of "fresh tangible material". Entire law on the subject reiterated

In the present case, it was noticed by us that the case of the assesse is that there was no fresh tangible material in the possession of AO at the time of recording of impugned reasons. A perusal of the ‘Reasons’ recorded by the AO in this case reveals that at the time of recording of these ‘Reasons’ the AO had examined original assessment records only and no fresh material had come in the possession of the AO. In response to our specific query also, Ld DR could not point out any fresh material available with the AO at the time of reopening of the case of the assessee. Thus, assertion of the assessee that there was no fresh material with AO for reopening of this case, remained uncontroverted

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DATE: October 28, 2015 (Date of pronouncement)
DATE: November 20, 2015 (Date of publication)
AY: 2001-02
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S. 147/ 148: Issue of furnishing the ‘Reasons’ for reopening the assessment goes to the root of the matter. In the event of failure of the AO to furnish the reasons, the reopening is bad in law

The undisputed facts are that, one – no ‘Reasons’ are available in the assessment record, and two there is nothing on record to show that certified copy of verbatim ‘Reasons’ was ever provided to the assessee, despite the request made by the assessee before AO, more than once. It clearly indicates that no ‘Reasons’ were recorded infact and therefore, these could not have been provided to the assessee. Had the ‘Reasons’ been recorded by AO, these would have definitely been provided to the assessee. The position of law is clear. It has been held by Hon’ble Supreme Court in the case of GKN Driveshaft 259 ITR 19, that it is mandatory on the part of the AO to provide the copy of the reasons to the assessee and to meet the objections filed by the assessee thereto, if any, before the AO can frame the reassessment order. It is further noted that Hon’ble Bombay High Court in the case of CIT v. Videsh Sanchar Nigam Ltd. (2012) 340 ITR 66 (Bom.), has held that in case reasons are not furnished by the AO to the assessee, before completion of reassessment proceedings, reassessment order cannot be upheld

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DATE: September 4, 2015 (Date of pronouncement)
DATE: September 12, 2015 (Date of publication)
AY: 2008-09
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S. 271(1)(c): Failure to apply s. 50C and offer capital gains as per the stamp value does not constitute concealment/ furnishing of inaccurate particulars of income for levy of penalty u/s 271(1)(c)

For application of section 50C of the Act, it is not necessary for the A.O. to examine whether actually assessee has received anything over and above the amount mentioned in the sale deed as he simply has to go by the valuation adopted by the SRO. However, as far as imposition of penalty is concerned, there must be positive evidence before the A.O. to conclude that assessee has received the amount as valued by SRO for stamp duty purpose. Unless there are positive evidence to indicate receipt of on money to the extent of valuation made by SRO by the assessee, penalty under section 271(1)(c) cannot be imposed

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DATE: July 15, 2015 (Date of pronouncement)
DATE: July 21, 2015 (Date of publication)
AY: 2007-08
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S. 68: If the assessee has furnished the details of the creditors with their PAN, the onus is on the AO to examine their credit-worthiness and source of payment to assessee

If at all the A.O. or CIT(A) had any doubt with regard to creditworthiness of the creditors, it should have triggered an enquiry by the A.O. to find out the real facts. When the identity of the creditors along with their income tax particulars including PAN and assessment details were available with the A.O. it would not have been difficult on the part of the A.O. to verify their bank accounts and other details to ascertain whether the advances were from explained sources. Even the A.O. could have taken up the issue with the concerned A.Os with whom the creditors are assessed

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DATE: June 30, 2015 (Date of pronouncement)
DATE: July 8, 2015 (Date of publication)
AY: 2011-12
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S. 2(15)/ 11: Important principles of what is a "charitable purpose" and the scope of the proviso to section 2(15) of the Act explained

As regards the proviso to Section 2(15) of the Act, it is clearly discernible from the CBDT’s Circular No.11 of 2008, dated 19.12.2008 and speech of the Hon’ble Finance Minister that the intention of Parliament in introducing the proviso to Section 2(15) of the Act is to deny exemption to those organizations or entities, which are purely commercial or business in nature or the commercial business entities, which wear the mask of a charity. The genuine charitable organizations are not affected in any way