S.28(i): Business loss- Speculation –Tax planning- The fact that the assessee bought and sold shares of groups concerns with a view to book loss and off-set the capital gains from another transaction does not mean that the loss can be treated as bogus if the documentation is in order. The loss cannot be treated as “speculation loss” under the Explanation to S.73 because the shares were held as investments.

S. 2(22)(e): Deemed dividend- Addition is up held – Contention that only a proportionate addition of deemed dividend can be made taking into consideration the percentage of the shareholding in the borrowing company in cases where (a) there is only one shareholder that has a shareholding in the lending company as well as in the borrowing company & (b) two or more shareholders are shareholders of the same lending company and the same borrowing company is rejected .

S. 279 : Offences and prosecutions – Sanction – Chief Commissioner – Commissioner -The expression “amount sought to be evaded” in CBDT’s compounding guidelines dated 23.12.2014 means the amount of “tax sought to be evaded” and not the amount of “income sought to be evaded”- Directed the department to refund the excess amount paid by the assessee latest by 31.10.2018.. [ S. 271(1) ( c), 276C ]

S. 260A : Appeal – High Court –Strictures- Subsequent event was not brought to the notice of High Court by revenue – Court held that there is no discipline in the manner the Dept conducts matters. The Dept should not take legal matters casually and lightly. There should be a dedicated legal team in the department. Lack of preparation is affecting the performance of the advocates. They do not have full records & do not have the assistance of officials who can give instructions. The Commissioner of income tax should devote more time to their work rather than attending some administrative meetings and thereafter boasting about revenue collection in Mumbai.

S. 192 : Deduction at source – Salary – Bar against direct demand – If the deductor has deducted TDS and issued Form 16A, the deductee has to be given credit even if the deductor has defaulted in his obligation to deposit the TDS with the Government revenue [ S.205, 221 ]

S. 4 :Charge of income-tax –Development agreement – The “right to sue” which arises on breach of a development agreement is a “personal right” and not a “capital asset” which can be transferred. Consequently, the damages received for relinquishment of the “right to sue” is a non-taxable capital receipt [ S. 2(14) 28(va) ]

S. 263 : Commissioner – Revision of orders prejudicial to revenue – U/s 114(e) of the Evidence Act, there is a presumption that a s. 143(3) assessment order is regularly passed after application of mind. If the assessee is consistently following the same method of valuation of closing stock, the CIT is not entitled to disturb the consistent method [ S.143(3),145A, , Evidence Act , S.114( e) ]

S. 260A: Appeal – High Court –Restoration of appeal- Low Tax Effect Circular-Very strange request by the Dept is an attempt to get over the binding Circulars. We shall not allow the Revenue to get over them in this manner. The Circulars continue to bind the Revenue and if they contain any conditions, whether such conditions are attracted or not would have to be proved and established by the Revenue-Appeal of revenue was dismissed .[ S.119 ]

S. 68: Cash credits- Accommodation entries- Peak credit-In order to avail of the theory of “peak credit”, the assessee has to make a clean breast of all facts. He has to explain each of the sources of the deposits and the corresponding destination of the payment without squaring them off. The ITAT cannot proceed merely on the basis of accountancy and overlook the settled legal position-Addition of peak credit under S.68 is held to be justified. .[ S.145 ]

S.37(1):Business expenditure-real income theory-application of income-diversion of income by overriding title- Distributable Surplus paid is application of income and not allowable as business expenditure- Payment made did not amount to “diversion of income at source by overriding title” – Income from business of manufacture and sale of Liquor will be taxable in the hands of the Assessee by applying the principle of real income theory-Appeal of revenue was allowed . [ S.4, 28(i), 29,145 ]