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DATE: May 9, 2019 (Date of pronouncement)
DATE: May 18, 2019 (Date of publication)
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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: May 17, 2019 (Date of pronouncement)
DATE: May 18, 2019 (Date of publication)
AY: -
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ITAT Members' Appointment: The action of the Selection Committee of short-listing only 24 candidates for interview out of 649 applications is not violative of Article 14. The criteria of short-listing Advocates in practice for at least 20 years and with income of not less than Rs. 1.40 lakh for post of Judicial Member is rational and reasonable and not arbitrary

Considering the above provisions, guidelines, status of applications and on perusal of list of candidates in decreasing order of their experience, the interim Search-cum-Selection Committee decided to call 24 most experienced applicants who were practicing Advocates for interview. The above-mentioned principle has been upheld by the Supreme Court in catena of judgments wherein it has been held that if the number of applications are enormous in number with reference to the number of posts available to be filled up then the Selection Board has no option but to short-list such applications on some rational and reasonable basis

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DATE: April 25, 2019 (Date of pronouncement)
DATE: May 11, 2019 (Date of publication)
AY: 2008-09, 2011-12, 2012-13
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CITATION:
S. 14A/ Rule 8D: Though, after Maxopp Investment 402 ITR 640 (SC), even "strategic investments" have to be considered for disallowance, the assessee is entitled to contend that the investments are "legacy" or "one-time" and that there is in fact no expenditure incurred to earn the tax-free income

It is apparent from a reading of the facts in the appeal that the CIT(A) formed an opinion based upon diverse reasoning, having regard to the facts of each case, regarding the nature of expenditure and especially whether it was a one-time investment opportunity availed of by the assessee. This is relevant in the context of assessee’s assertion that in fact no expenditure was incurred while investing in the mutual funds that yielded substantial income. As to whether in fact no expenditure was incurred or attributable at all, in these circumstances, it becomes a factual controversy requiring further hearing and scrutiny.

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DATE: April 25, 2019 (Date of pronouncement)
DATE: May 11, 2019 (Date of publication)
AY: 2014-15
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CITATION:
S. 10(38) Bogus Capital Gains From Penny Stocks: U/s 101 of Evidence Act, 1972, the onus is on the assessee to prove that the LTCG is genuine. The assessee cannot, on failure to establish a prima facie case, take advantage of the weakness in the AO's case. The jump in the share price of a company of unknown credentials cannot be an accident or windfall but is possible because of manipulations in a pre-planned manner by interested broker and entry operators. The LTCG transactions are a sham

Documents submitted as evidences to prove the genuineness of transaction are themselves found to serve as smoke screen to cover up the true nature of the transactions in the facts and circumstances of the case as it is revealed that purchase and sale of shares are arranged transactions to create bogus profit in the garb of tax exempt long terra capital gain by well organised network of entry providers with the sole motive to sell such entries to enable the beneficiary to account for the undisclosed income for a consideration or commission. I further find that the share transactions leading to long term capital gains by the assessee are sham transaction entered into for the purpose of evading tax.

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DATE: May 1, 2019 (Date of pronouncement)
DATE: May 11, 2019 (Date of publication)
AY: 2008-09 to 2013-14
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CITATION:
Natural Justice: The assessee cannot be kept in the dark. Adverse statements or materials cannot be kept away from his eyes. If the AO intends to use it to draw adverse inference/finding, the assessee should be provided the adverse material/statements in order to rebut/cross examine the provider/maker of the adverse material. Failure to do so is a serious flaw which renders the assessment a nullity (All imp judgements referred)

It has to be kept in mind that the AO is empowered to collect materials behind the back of the assessee, however if he intends to use it adversely against the assessee, then it is incumbent upon him to furnish a copy of the materials/statements to the assessee and the assessee should be provided an opportunity to rebut/cross examine the provider/maker of the adverse material. The assessee cannot be kept in the dark and the adverse statements or materials cannot be kept away from his eyes, and if the AO was intending to use it against the assessee to draw adverse inference/finding, then the assessee should be provided the adverse material/statements in order to rebut/cross examine the provider/maker of the adverse material, which is a natural right of the assessee and we find that it has not been done in this case, resulting in violation of natural justice. We are therefore of the considered view that the general statements recorded from the alleged entry operators by themselves with the legal infirmities pointed out, supra, did not constitute incriminating material for the purposes of Section 153A of the Act

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DATE: March 19, 2019 (Date of pronouncement)
DATE: May 10, 2019 (Date of publication)
AY: 2009-10
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S. 80P(4): The AO is not obliged to grant deduction by merely looking at the certificate of registration issued by the competent authority under the Co-op Societies Act. Instead, he has to conduct an enquiry into the factual situation as to the activities of the assessee and arrive at a conclusion whether benefits can be extended or not. Chirakkal 384 ITR 490 (Ker) overruled. Antony Pattukulangara 2012 (3) KHC 726 & Perinthalmanna 363 ITR 268 (Ker) approved. Citizen Co-operative Society 397 ITR 1 (SC) followed)

In Chirakkal, the Divjsion Bench did not notice the earlier judgment in Perinthalmanna. After referring to the provisions under the Kerala Co-operative Societies Act and the Banking Regulation Actl 1949 the Division Bench held that the certificate of registration issued by the Department categorizing the assessee as Primary Agricultural Credit Society could be reIied on solely to grant deduction under Section 80P of the Income Tax Act

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DATE: February 11, 2019 (Date of pronouncement)
DATE: May 10, 2019 (Date of publication)
AY: -
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CITATION:
The ICAI has jurisdiction to examine any conduct (including alleged sexual harassment) by a CA that would tend to bring disrepute to the profession or the Institute. The fact that the matter is pending trial before the Criminal Court is not relevant because the standards of proof are different. The ICAI may or may not await the outcome of the trial depending on the circumstances (Gurvinder Singh 259 TM 311 (SC) followed)

This Court is unable to accept the contention that the Board of Discipline does not have the jurisdiction to examine the alleged misconduct on the part of the petitioner. Clause (2) of Part-IV of the First Schedule to the Act is wide, and would include within its scope, any conduct that would tend to bring disrepute to the profession or the Institute. If a Chartered Accountant is found to have been guilty in outraging the modesty of a woman and/or other offences involving moral turpitude, it would not be inapposite for the Board of Discipline to also conclude that the conduct did, in fact, lower the dignity of the profession. In this view, this Court is not able to accept that the proceedings before the Board of Discipline are without jurisdiction

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DATE: November 19, 2018 (Date of pronouncement)
DATE: May 4, 2019 (Date of publication)
AY: 2008-09
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CITATION:
S. 14A Rule 8D disallowance of shares held as stock-in-trade: Though Maxopp Investment 402 ITR 640 (SC) rejects the theory of dominant purpose in making investment, it makes a clear distinction between dividend earned on shares acquired for controlling interest & shares purchased as stock-in-trade. In the case of the latter, it is only by a quirk of fate that the shares were held by the assessee when the dividend was declared. Accordingly, s. 14A & Rule 8D do not apply to shares held as stock-in-trade

Hon’ble Apex Court, therefore, while rejecting the theory of dominant purpose in making investment in shares-whether it was to acquire and retain controlling interest in the other company or to make profits out of the trading activity in such shares – clearly made a clear distinction between the dividend earned in respect of the shares which were acquired by the assessee in their exercise to acquire and retain the controlling interest in the investee company, and the shares that were purchased for the purpose of liquidating those shares whenever the share price goes up, in order to earn profits. It is, therefore, clear that though not the dominant purpose of acquiring the shares is a relevant for the purpose of invoking the provisions under section 14 A of the Act, the shares held as stock in trade stand on a different pedestal in relation to the shares that were acquired with an intention to acquire and retain the controlling interest in the investee company

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DATE: April 3, 2019 (Date of pronouncement)
DATE: May 4, 2019 (Date of publication)
AY: 2011-12
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CITATION:
Section 54F is a beneficial provision and should be liberally interpreted. An assessee who has purchased a house property is entitled to exemption u/s 54F despite the fact that construction activities of the new house has started before the date of sale of the original asset (Bharti Mishra 265 CTR 374 (Del) & Kuldeep Singh 270 CTR 561 (Del) followed)

In J. R. Suhramanya Bhat (supra). Karnataka High Court noticed language of Section 54 which stipulated that the assessee should within one year from the dale of transfer purchase, or within a period of two years thereafter, construct a residential house to avail of concession under the said Section. The contention of the Revenue that construction of the new building had commenced earlier to the sale of the original asset, it was observed, cannot bar or prevent the assessee from taking benefit of Section 54 II was immaterial when the construction commenced, the sole and important consideration as per the Section was that the construction should he completed within the specified period

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DATE: April 16, 2019 (Date of pronouncement)
DATE: April 30, 2019 (Date of publication)
AY: 2005-06
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CITATION:
S. 115JB (pre amendment by Finance Act, 2012) is not applicable to a banking company (also insurance & electricity cos) . The mechanism provided for computing book profit in terms of S. 115JB(2) is wholly unworkable for a banking company. When the machinery provision fails, the charging section also fails. The anomaly was removed by the Finance Act, 2012. However, the amendments are neither declaratory nor clarificatory but make substantive and significant legislative changes which are applicable prospectively (Kerala State Electricity Board 329 ITR 91 (Ker) followed)

These amendments in section 115JB are neither declaratory nor classificatory but make substantive and significant legislative changes which are admittedly applied prospectively. The memorandum explaining the provision of the Finance Bill, 2012 while explaining the amendments under Section 115JB of the Act notes that in case of certain companies such as insurance, banking and electricity companies, they are allowed to prepare the profit and loss account in accordance with the sections specified in their regulatory Acts. To align the Income Tax Act with the Companies Act, 1956 it was decided to amend Section 115JB to provide that the companies which are not required under Section 211 of the Companies Act, to prepare profit and loss account in accordance with Schedule VI of the Companies Act, profit and loss account prepared in accordance with the provisions of their regulatory Act shall be taken as basis for computing book profit under Section 115 JB of the Act.

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