S.195: Deduction at source- Non –resident- commission paid to non-resident agents for services rendered outside is not liable to deduct tax at source.
S.195: Deduction at source- Non –resident- commission paid to non-resident agents for services rendered outside is not liable to deduct tax at source.
S. 69C : Unexplained expenditure -Bogus Purchases- Purchases cannot be treated as Bogus if (a) they are duly supported by bills, (b) all payments are made by account payee cheques, (c) the supplier has confirmed the transactions, (d) there is no evidence to show that the purchase consideration has come back to the assessee in cash, (e) the sales out of purchases have been accepted & (f) the supplier has accounted for the purchases made by the assessee and paid taxes thereon [ S.143(3) ]
S. 68:Cash credits- Bogus share capital-If the alleged share applicants do not appear before the AO pursuant to the S. 131 summons and the documentation is inadequate, it is a “completely bogus claim”. The assessee cannot argue that the AO should have made inquiries from the AO of the share applicants as to their credit-worthiness [ S.131 ]
S. 56: Income from other sources- by back of shares – S.56(2)(viia) is a counter evasion mechanism to prevent laundering of unaccounted income under the garb of gifts. The primary condition for invoking S. 56(2)(viia) is that the asset gifted should become a “capital asset” and property in the hands of recipient. If the assessee-company has purchased shares under a buyback scheme and the said shares are extinguished by writing down the share capital, the shares do not become capital asset of the assessee-company and hence S. 56(2)(viia) cannot be invoked in the hands of the assessee company [ S.56(2)(viia)]
A
S.45: Capital gains- Exchange -Slump sale -A transaction by which an undertaking is transferred in consideration of the allottment of shares is an “exchange” and not a “sale”. The fact that the agreement refers to the parties as “seller” and “purchaser” is irrelevant. S. 2(42C) and S. 50B apply only to “sale” and not to “exchange”. As there is no estoppel against a statute, an assessee is entitled to raise the claim regarding non-taxability at any stage of the proceedings [ S.2(42C), 50B ]
S. 45: Capital gains- Penny Stocks- 31000% increase in value of shares over 2 years is highly suspicious but cannot take the place of evidence. The addition cannot be made based on generalizations. Evidence collected from third parties cannot be used against the assessee without giving him a copy and an opportunity to rebut the same [ S.68 ]
S.37(1):Business expenditure – Allocation of expenses-Difference between “Res Judicata” and “Consistency Principle” explained. While “res judicate” does not apply to income-tax matters, the principles of consistency does. If the Revenue has accepted a practice and consistently applied and followed it, the Revenue is bound by it. The Revenue can change the practice only if there is a change in law or change in facts and not otherwise [ S.143(3) ]
New Okhla Industrial Development Authority (NOIDA) v. CCIT ( 2018) 95 taxmann.com 58(SC)/ www.itatonlin.org
S. 35 :Scientific research – Rejection of weighted deduction in respect of donation cannot be denied when the institution was enjoying approval within the meaning of S. 35(1)(ii) as on date of receipt of donation, no matter that the approval was cancelled subsequently with retrospective effect.
S. 10(20): Local authority –Industrial township referred to in proviso to Article 243Q is not equivalent to a “municipality” and a “local authority” – Income is not entitle to exemption .[S.10(20A), Art. 243P,243Q ]
S. 271(1)(c) : Penalty – Concealment – Accepting addition does not mean assessee furnishing inaccurate particulars — Levy of penalty is held m to be not valid .