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DATE: September 2, 2015 (Date of pronouncement)
DATE: September 9, 2015 (Date of publication)
AY: 2004-05
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CITATION:
No disallowance u/s 14A can be made in a year in which no exempt income has been earned or received by the assessee. S. 14A also does not apply to shares bought for strategic purposes

The expression “does not form part of the total income” in Section 14A of the envisages that there should be an actual receipt of income, which is not includible in the total income, during the relevant previous year for the purpose of disallowing any expenditure incurred in relation to the said income. In other words, Section 14A will not apply if no exempt income is received or receivable during the relevant previous year

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DATE: July 31, 2015 (Date of pronouncement)
DATE: September 9, 2015 (Date of publication)
AY: 2009-10, 2010-11
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CITATION:
S. 29/37(1): Loss on account of forward contract entered into by the assessee to hedge against the loss arising on account of fluctuations in foreign exchange is an allowable deduction. Contrary view in Vinod Kumar Diamonds is not good law

The assessee was exposed to the risk arising in fluctuation out of exchange rate and as a prudent business man it would like to hedge its risk. Accordingly, the assessee had booked the forward contracts and utilised the same during the year or in the succeeding years. The pattern of the assessee reflected that it entered into forward contracts during the normal course of business and utilised the same for business allowing them to run upto the date of contract. The assessee was engaged in the export of diamonds and the forwards contract was entered into in respect of foreign exchange to be received as a result of export and the same was done to avoid the risk of loss due to foreign exchange fluctuations. The claim has to allowed after taking note of the claim of forward contracts and the accounting policies, i.e. AS-11 (revised) and applying the ratio laid down by the Apex Court in the case of CIT vs. Woodward Governor India Pvt. Ltd. 294 ITR 451 (SC)

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DATE: September 4, 2015 (Date of pronouncement)
DATE: September 9, 2015 (Date of publication)
AY: 1994-95, 1996-97
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CITATION:
Strictures passed against ICAI By ITAT for alleged “deteriorating standards” and “losing its grip over the Income tax matters” toned down on the basis that they were made in the context of a "hypothetical situation" and were not "intended to criticize the functioning of the ICAI"

The Income tax Appellate Tribunal, being a part of Government of India, should not shut its eyes when it is noticed that certain developments occurring in the Country may affect the Country as a whole, more particularly when the reputation of particular profession, from whom the Tribunal is getting assistance in the dispensation of justice, is at stake. Accordingly, we sincerely believe that it is the bounden duty of not only the Tribunal, but also the duty of one and all to point out and discuss about such kind of developments, when it is noticed that the same may affect the public at large. There cannot be any controversy that the interest of our Country is Supreme and no citizen can or should compromise on the same

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DATE: April 29, 2015 (Date of pronouncement)
DATE: September 4, 2015 (Date of publication)
AY: -
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CITATION:
The client is not bound by a statement or admission which he or his lawyer was not authorised to make. The Lawyer generally has no implied or apparent authority to make an admission or statement which would directly surrender or conclude the substantial legal rights of the client unless such an admission or statement is clearly a proper step in accomplishing the purpose for which the lawyer was employed

Generally, admissions of fact made by a counsel is binding upon their principals as long as they are unequivocal; where, however, doubt exists as to a purported admission, the Court should be wary to accept such admissions until and unless the counsel or the advocate is authorised by his principal to make such admissions. Furthermore, a client is not bound by a statement or admission which he or his lawyer was not authorised to make. Lawyer generally has no implied or apparent authority to make an admission or statement which would directly surrender or conclude the substantial legal rights of the client unless such an admission or statement is clearly a proper step in accomplishing the purpose for which the lawyer was employed. We hasten to add neither the client nor the Court is bound by the lawyer’s statements or admissions as to matters of law or legal conclusions. Thus, according to generally accepted notions of professional responsibility, lawyers should follow the client’s instructions rather than substitute their judgment for that of the client.

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DATE: August 28, 2015 (Date of pronouncement)
DATE: September 3, 2015 (Date of publication)
AY: 2008-09, 2009-10
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CITATION:
No s. 40(a)(ia) disallowance for failure to deduct TDS on payment if payee has offered amount to tax. Second Proviso to s. 40(a)(ia) inserted by Finance Act 2013 w.e.f. 1.4.2013 should be treated as curative and to have retrospective effect from 1.4.2005. ITAT praised for "thorough analysis" of the provision

Turning to the decision of the Agra Bench of ITAT in Rajiv Kumar Agarwal v. ACIT (supra ) , the Court finds that it has undertaken a thorough analysis of the second proviso to Section 40 (a)(ia) of the Act and also sought to explain the rationale behind its insertion … The Court is of the view that the above reasoning of the Agra Bench of ITAT as regards the rationale behind the insertion of the second proviso to Section 40(a) (ia) of the Act and its conclusion that the said proviso is declaratory and curative and has retrospective effect from 1st April 2005, merits acceptance. In that view of the matter, the Court is unable to find any legal infirmity in the impugned order of the ITAT in adopting the ratio of the decision of the Agra Bench, ITAT in (Rajiv Kumar Agarwal v. ACIT).

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DATE: August 28, 2015 (Date of pronouncement)
DATE: September 1, 2015 (Date of publication)
AY: 2002-03, 2005-06, 2006-07
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CITATION:
S. 153A/ 153C: Entire law on the scope of additions that can be made in a pending assessment and in a completed assessment pursuant to a search u/s 132 explained

Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment

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DATE: August 24, 2015 (Date of pronouncement)
DATE: September 1, 2015 (Date of publication)
AY: 2004-05
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CITATION:
S. 271(1)(c): Claim that compensation received from foreign party is a capital receipt, though wrong on merits, does not attract penalty if assessee disclosed facts in ROI and was supported by a legal opinion

These facts are sufficient to distinguish the present case from the facts in CIT Delhi v. Zoom Communication 327 ITR 510 (Del) where the Court observed that apart from a making wrong claim, the Assessee did so not on the basis of any advice given to it by an auditor or tax expert. Even in MAK Data P. Ltd. v. CIT 358 ITR 593 (SC), the Supreme Court held on facts that the Assessee there had no intention to declare its true income and no explanation was offered by it for the concealment of income. In the facts of the present case, the Court is satisfied that no error of law was committed either by the CIT (A) or the ITAT in holding that Explanation 1 to Section 271(1)(c) of the Act was not attracted. This was not a case of an Assessee furnishing inaccurate particulars

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DATE: July 21, 2015 (Date of pronouncement)
DATE: September 1, 2015 (Date of publication)
AY: 2008-09
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CITATION:
S. 271(1)(c): Offering interest on maturity on Bonds as “long-term capital gains” instead of as “income from other sources” is a mere change in the head of income and a case of bona fide mistake which does not attract penalty

The interest of all the three years was offered to tax in the year of maturity and not year-wise. This is just change in the head of income under which the income is offered to tax. The taxation of the receipt is changed to the head of income ‘other sources’ from the head of income ‘capital gain’. The explanation filed by the assessee is bona fide. This is a case of a bona fide mistake on part of the assessee

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DATE: August 13, 2015 (Date of pronouncement)
DATE: September 1, 2015 (Date of publication)
AY: 2008-09
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CITATION:
S. 253/ Rule 27: While the Tribunal can examine all questions which relate to the subject matter of an appeal but, once an issue has attained finality and is not a subject matter of the dispute before the Tribunal, it would not be open for the Tribunal to reopen the issue on the pretext of examining a question of law

Indisputably, the Revenue could also not take recourse to Rule 27 of the Income Tax (Appellate Tribunal) Rules, 1963. By virtue of the said Rule, a respondent before the Tribunal can support the decision appealed against not only on the grounds decided in favour of the respondent but also on grounds decided against it. However, Rule 27 of the said Rules would not extend to permitting the respondent to expand the scope of an appeal and assail the decision on issues, which are not subject matter of the appeal

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DATE: August 19, 2015 (Date of pronouncement)
DATE: August 27, 2015 (Date of publication)
AY: 2010-11
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CITATION:
S. 54: Giving advance to builder constitutes "purchase" of new house even if construction is not completed and title to the property has not passed to the assessee within the prescribed period

The word ‘purchase’ used in Section 54 of the Act should be interpreted pragmatically. The intention behind Section 54 was to give relief to a person who had transferred his residential house and had purchased another residential house within two years of transfer or had purchased a residential house one year before transfer. It was only the excess amount not used for making purchase or construction of the property within the stipulated period, which was taxable as long term capital gain while on the amount spent, relief should be granted. Principle of purposive interpretation should be applied to subserve the object and more particularly when one was concerned with exemption from payment of tax

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