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DATE: August 10, 2018 (Date of pronouncement)
DATE: January 17, 2019 (Date of publication)
AY: 2009-10, 2010-11
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CITATION:
S. 28(iv) /68: Bogus share premium: The fact that the premium is abnormally high as per test of human probabilities is not sufficient. The AO has to lift the corporate veil & determine whether any benefit is passed on to the shareholders/directors. Directions issued to AO to establish whether assessee company was used as a vehicle to pass on the benefit to shareholders/directors

We also cannot presume or apply test of human probabilities, we are dealing with the business transaction, it has to be based on cogent material. Considering the whole situation, in our considered view, the AO/CIT(A) have restricted themselves by stopping the investigation based on circumstantial evidence and applying test of human probabilities. In order to lift the corporate veil for the purpose of determining whether any benefit is passed on to the shareholders/directors, they have to bring on record proper evidence/cogent material

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DATE: October 15, 2018 (Date of pronouncement)
DATE: January 5, 2019 (Date of publication)
AY: -
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CITATION:
TDS on salaries: Default by employers in not issuing Form 16 TDS certificates to employees prima facie makes employers liable to prosecution u/s 405 of the Indian Penal Code (IPC). Dept should provide information of such defaulters so that those seeking employment etc would know in advance as to how the employers are complying with law

During the course of arguments, we have invited Mr.Suresh Kumar’s attention to Section 405 of the Indian Penal Code, 1860 and we find that prima facie, the reading of this Section together with its explanation furnishes enough ground to bring the persons like respondent Nos.2 to 5 to book by applying provisions of Section 405 of the Indian Penal Code to them. We do not see any record till date of the Department of Revenue having applied such a provision in the prosecution launched against such defaulters

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DATE: November 26, 2018 (Date of pronouncement)
DATE: January 5, 2019 (Date of publication)
AY: 2008-09
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CITATION:
Capital Gains vs. Business Profits: Merely holding shares for a short period will not convert capital gain into business income. This would be contrary to be legislative mandate which itself provides that investment held for less than 12 months is to be termed as short term capital gain. If the assessee has two portfolios, one for "Investment" and other for "Trading" and if the investments are out of own funds and not borrowed funds, the gains have to be assessed as STCG

Thus two port-folios one for “Investment” and other for “Trading”. Besides for the earlier years the Revenue accepted the claim of short term capital gain. Thus the income has to be taxed as short term capital gain. We are of the view that respondent holding the shares for a short period, will not convert the capital gain into business income. This would be contrary to be legislative mandate which itself provides that when the investment is held for less than 12 months, it is to be termed as short term capital gain

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DATE: July 31, 2018 (Date of pronouncement)
DATE: December 29, 2018 (Date of publication)
AY: 2008-09
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CITATION:
S. 22 ALV: If the assessee is a builder but is not engaged in the business of letting of property, the lease rent from unsold flats is assessable to tax under the head 'income from house property' (Sambhu Investment 263 ITR 143 (SC), Chennai Properties 373 ITR 673(SC), Rayala Corp 386 ITR 500 (SC) referred/ distinguished)

In the present facts it is undisputed that the respondent assessee is in the business of development of real estate projects and letting of property is not the business of the respondent assessee. In both the decisions relied upon by Mr. Pinto i.e. Chennai Properties (supra) and Rayala Corporation (supra), the Supreme Court on facts found that the appellant was in the business of letting out its property on lease and earning rent therefrom. Clearly it is not so in this case.

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DATE: December 6, 2018 (Date of pronouncement)
DATE: December 29, 2018 (Date of publication)
AY: -
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CITATION:
Entire law on whether the situs of sale of intangible property like trademarks & patents is the place where the contract is entered into or where the intangible is registered or where the owner is resident explained in the context of s. 9(1)(i) of Income-tax Act & the law on sales-tax

Though intangible and incorporeal, it has an existence and its situs also has to be pinned down to a particular place with reference to the owner. The situs of the principal place of business, from where the owner of such trademark exercises his right to sell specified goods, under the trademark or enforces his patent rights, which has been obtained by them as a statutory right, is the place where the goods exist.

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DATE: December 26, 2018 (Date of pronouncement)
DATE: December 29, 2018 (Date of publication)
AY: 2007-08, 2008-09
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CITATION:
Guidelines specified to ensure expeditious hearing of cases referred to Special Benches and Third Members: Inordinate delay in fixation of hearing of Special Bench & Third Member cases is inappropriate and contrary to the scheme of the Act. It also reduces the efficacy and utility of the mechanism to deal with important matters

We share the anguish of the learned counsel. The sequence of events, as set out above, does clearly shows inordinate delay in the special bench case being taken up. It appears that despite specific requisition by the learned Judicial Member and for the reasons best known to the persons concerned, the Registry has not taken care to do the necessary follow up and ensure that the matter is listed for hearing expeditiously, so as to ensure timely disposal of appeals referred to the special benches. The importance of timely disposal of special bench cases and Third Member cases can hardly be over-emphasised. These cases deserve to be taken up on top priority basis. We are of the view that such an inordinate delay in fixation of hearing of special benches cases, particularly when stay is granted, is not only inappropriate and contrary to the scheme of the Act, but it does reduce the efficacy and utility of the mechanism of special benches to deal with important matters on which there is divergence of views by the division benches or which are otherwise of wider ramifications and national importance. Similarly, inordinate delays in disposal of Third Member cases, by itself, makes the expression of dissenting opinion less effective and useful. We, therefore, deem it fit and proper to formulate the following guidelines with a view to ensure the expeditious hearing of cases referred to Special Benches and Third Members

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DATE: September 24, 2018 (Date of pronouncement)
DATE: December 26, 2018 (Date of publication)
AY: 2009-10
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CITATION:
Severe strictures issued against DCIT for illegal tax recovery. DCIT directed to pay costs of Rs. 1.50 lakh from salary to the assessee. Dept directed to make entry of lapse & error in the Annual Confidential Report of the AO. Strictures also passed against DCIT for overreaching authority & power by not allowing Dept's Counsel to argue. Such conduct of DCIT does not enhance the image and reputation of Dept

If we allow such oral routine explanation to be tendered and accepted, we do not think that the state of affairs will ever improve. The superiors in the hierarchy have never bothered as to whether the discipline demanded from these officers is indeed in place. Though there is lack of discipline and there is gross insubordination, still, the acts of omission and commission are overlooked

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DATE: December 19, 2018 (Date of pronouncement)
DATE: December 26, 2018 (Date of publication)
AY: 2011-12
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CITATION:
S. 147 Reopening to assess Bogus share capital: Law explained whether allegation that assessee is a dummy concern used to route unaccounted money by way of bogus share application money is sufficient to reopen assessment (all imp judgements referred)

The respondents have stated that there are large number of dummy/bogus/shell/briefcase/paper entities including the petitioner/company in the group, which is being managed and controlled by Shri Anand Bangur for the purposes of routing unaccounted money and the department with great difficulties and after examining huge evidence, has arrived at a conclusion to initiate the proceedings against the petitioner and it is not a case where some unilateral action has been taken against the petitioner, it is a case where petitioner will receive every opportunity to defend himself and the entire mechanism has been provided under the Income Tax Act, 1961 and the respondents have prayed for dismissal of the writ petition.

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DATE: December 11, 2018 (Date of pronouncement)
DATE: December 24, 2018 (Date of publication)
AY: 2005-06
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CITATION:
S. 50C Capital Gains: The valuation of the stamp authority cannot be adopted for the purpose of collecting capital gain tax in the hands of the assessee if there is a long gap between the date of execution of the MOU and the execution of a formal development agreement

The assessee can be taxed only on the gain which is oozing out from the sale consideration, thus, no adverse inference can be drawn while invoking the provision of section 50C of the Act. No evidence has been produced by the Revenue at any stage that the assessee actually received the value which was adopted by the stamp valuation authority.

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DATE: December 12, 2018 (Date of pronouncement)
DATE: December 24, 2018 (Date of publication)
AY: -
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CITATION:
S. 220(6) Stay of demand: If the assessee has exercised on time its statutory remedy of filing an appeal and also filed a stay petition, procedural fairness demands that the authorities may wait, before taking further steps, until the appellate authority decides on the stay petition

I reckon the petitioner has exercised on time its statutory remedy of filing an appeal. It appears that it has also filed a stay petition. Procedural fairness demands that the authorities may wait, before taking further steps, until the appellate authority decides on the stay petition

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