S. 14A : Disallowance of expenditure-Exempt income–Failure to consider contention and factual error–Investment from own funds -Matter remanded to the AO. [S. 254(1), R. 8D]

S. 14A : Disallowance of expenditure – Exempt income – When there is no exempt income shown during the year – No disallowance can be made. [R. 8D]

S. 12AA : Procedure for registration –Trust or institution-Cancella1Amendment in 2004 is enabling cancellation of registration is not retrospective- Cancellation cannot be made with retrospective effect – No allegation of fraud notice for reassessment is held to be bad in law. [S. 12A.]

S. 12AA : Procedure for registration–Trust or institution-Bogus donation–Appellate Tribunal remanded the matter for grant of opportunity to assessee to cross examine representative of donor -High Court quashing cancellation of registration on the ground that single instance of bogus donation cannot be the sole ground for cancellation of registration- Order of High Court is set-aside and directed the Commissioner to decide on merits. [S. 12AA(3), 80G(5) (vi)]

S. 11 : Property held for charitable purposes-Statutory authority to manage Ports—Main object is to enable commerce and economy of country—Entitle to exemption–Withdrawal of exemption as local authority–Exemption can be claimed as charitable Trust-Delay in filing the application was condoned as the assessee was enjoying exemption as local authority which was withdrawn. [S. 2(15) 10(20), 12, 12AA]

S. 2(22)(e) : Deemed dividend- Loans from companies–Not beneficial shareholder in lender companies–Cannot be added as deemed dividend – Provision is not applicable.

S. 260A : Appeal – High Court -Defunct companies-The fact that the assessee company stands dissolved as a defunct company u/s 560(5) of the Companies Act, 1956 does not mean that income-tax proceedings & appeals become infructuous. The liability against such companies has to be dealt with in accordance with s. 506(5) proviso (a) of the Companies Act and Chapter XV of the Income Tax Act which deal with “liability in special cases” and “discontinuance of business or dissolution”[ S.176, Companies Act , 1956 S, 560(5) ]

S. 254(2) : Appellate Tribunal-Rectification of mistake apparent from the record–Strictures-The insinuation of the Dept that ITAT passes order in a state of oblivion displays a totally irresponsible and cavalier approach on the cusp of contempt and deserving exemplary cost to purge the same. Referring in a deriding manner that the ITAT started with the grounds of appeal, displays the naiveté of revenue authority purporting to be critical examiner of ITAT verdict, which is uncalled for- I express deep anguish at this approach of the department and hope that revenue will disband this cavalier and naïve approach while insinuating about the functioning of the ITAT without verifying their record. [S. 147]

S. 147 : Reassessment-Bogus share capital-Though the reopening is based on information supplied by the investigation wing, the reasons do not specify that the investment was non-genuine-The AO cannot reopen to investigate into the source of genuineness and creditworthiness of the investors as it falls within the realm of fishing enquiries which is wholly impermissible in law. [S.68, 148]

S. 92C : Transfer pricing-It is mandatory for the AO to determine the arm’s length price (ALP) of the international transactions by following one of the prescribed methods-He is not entitled to follow any other method or to resort to estimation-The failure to follow one of the prescribed methods makes the entire transfer pricing adjustment unsustainable in law-The legal infirmity cannot be cured by restoring the issue to the TPO-The TPO cannot be allowed another innings to rectify the mistake. [S. 254(1)]