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| DATE: | (Date of pronouncement) |
| DATE: | September 7, 2012 (Date of publication) |
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| DCIT vs. Harishkumar J. Gupta (Gujarat High Court) Click here to download the judgement (harishkumar_gupta_undisclosed_income.pdf) |
| S. 158BC: Salary Income on which there is TDS is not "undisclosed income" even if ROI not filed |
| When an assessee is a salaried employee and on such salary income, suffers deduction of tax at source and such tax is also shown to have been deposited by the employer with the Revenue, it can hardly be stated that such income is undisclosed income even if the Return of Income is not filed. |
| Ramanbhai B. Patel (HUF) vs. DCIT (Gujarat High Court) Click here to download the judgement (ramanbhai_patel_penalty.pdf) |
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S. 18(1)(c) of W. T. Act requires "clear cut" finding of concealment. If AO has not invoked Explanation 4 to s. 18(1)(c), CIT(A) cannot do so |
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Penalty proceedings are quasi criminal in nature and the Revenue must be put to strict compliance of the legal requirements. The AO erred in imposing penalty without clear findings as to whether there was concealment of particulars of any assets or providing of inaccurate particulars of any assets. The CIT(A) was wrong in invoking Explanation(4) to s. 18(1)(c) which provides that if the net wealth returned is was less than 70% of the assessed wealth, there is a presumption of concealment. As the AO had not invoked the Explanation, the CIT(A) could not have relied on it to confirm the penalty. |
| CIT vs. Modi Revlon Ltd (Delhi High Court)Click here to download the judgement (modi_revlon_business_expenditure.pdf) |
| Principles for deduction of business expenditure (brand promotion & consultancy charges) set out |
| In order to determine whether the expenditure is not sustainable, the AO has to first return a finding that the payment made is excessive u/s 40-A (2). If it is found to be so, then the AO has to determine what constitutes the fair market value of the services rendered and disallow the difference between what is claimed and what is such value determined (as fair market value). In the absence of such exercise, an ad hoc method of disallowance is not permissible. Also, the revenue cannot place itself in the arm chair of businessman or in the position of the Board of Directors and assume the role of deciding what is the reasonable expenditure having regard to the circumstances of the case. As regards brand promotion expenses, one is not unmindful of the concerns of a business which engages in sale of consumer items, and faces continuous competition. Brand promotion enhances the visibility of given products or services, and are often perceived as conferring a competitive advantage on those who adopt those strategies or schemes. Expenditure towards that end is based on pure commercial expediency, which the revenue in this case, ought to have recognised, and allowed. The revenue’s arguments on this point too are insubstantial. |
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