This Digest of case laws is prepared by KSA Legal and AIFTP from judgements reported in BCAJ, CTR, DTR, ITD, ITR, ITR (Trib), Chamber's Journal, SOT, Taxman, TTJ, BCAJ, ACAJ, www.itatonline.org and other journals
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S. 69C : Unexplained expenditure – Bogus purchases- Business of Civil Contactor – Even if the purchases made by the assessee are to be treated as bogus, it does not mean that entire amount can be disallowed- As the AO did not dispute the consumption of the raw materials and completion of work, only a percentage of net profit on total turnover can be estimated. [ S. 37(1), 68 ]

PCIT v Pinaki D. Panani ( Bom) (HC) www.itatonline .org

S.56: Income from other sources – Share premium- Approved valuer report was furnished – Addition is held to be not valid . [ S. 56(2)(viib), R, 11UA ]

Clearview Healthcare P. Ltd. v. ITO ( 2020 ) 181 ITD 141 / 185 DTR 369 / 77 ITR 39 (SN.)/ 203 TTJ 349 (SMC) (Delhi) ( Trib)

S.54F : Capital gains- Investment in a residential house – The words “in India” cannot be read into section 54F when Parliament in its legislative wisdom has deliberately not used the words. The assessee is entitled to exemption of the Act though he has acquired house property in a foreign country- The amendment to s. 54F by the Finance Act, 2014 w.e.f. 2015 is applicable only prospectively [ S.45 ]

Rajasugumar Subramani, v. ITO ( Bang) (Trib) www.itatonline .org

S.45 : Capital gains- Family arrangements- If there is no preexisting right, the family arrangement constitutes a transfer- Merely because dispute involved some family members and such dispute is ultimately settled by filing consent terms, the same cannot be styled as a family arrangement or family settlement so as to hold that the consideration received as a result of such settlement, does not constitute capital gain- Reassessment is also held to be valid . [ S.45,147, 148 , 149 ,151, 163 ]

P.P. Mahatme, Power of Attorney ,Lorna Margaret Pinto v .ITO ( 2019 ) 112 taxmann.com 253 / (2020) 420 ITR 71 / 268 Taxman 186 / 186 DTR 260/ 313 CTR 147 ( Bom) (HC) www.itatonline .org.Editorial : SLP of assessee is dismissed P. P. Mahatme v. ACIT ( 2021 ) 279 Taxman 325 ( SC)

S. 28(i) : Business loss – Diminution in value of shares- loss claimed by assessee by devaluing book value of shares purchased by them, could not be allowed as business loss . [ S.37 (1) ]

Twenty First Century Management Services Ltd v ITO( 2019) 108 taxmann.585 (Mad) (HC) Editorial: SLP of the assessee is dismissed Twenty First Century Management Services Ltd v ITO ( 2019) 266 Taxman 1 (SC)

S.147: Reassessment – Change of opinion – Housing project – Produced full accounts and provided full details including built-up area of flats sold-Reopening of assessment on basis of same material would be mere change of opinion and hence not permissible. [ S.80IB(10) 148 , Art .226 ]

Runwal Realty (P.) Ltd v Dy.CIT ( 2019) 107 taxmann.com 284/ 266 Taxman 6 (Mag) ( Bom) (HC)

S. 254(2A): Appellate Tribunal –Stay- Deposited 71 per cent of tax demand raised in reassessment proceedings- Tribunal is not justrified in rejecting the stay – Balance amount of tax and interest was to be stayed till disposal of assessee appeal. [ S.226, 254(1) ]

Neetaa Suneel Shah (Smt.) v .ITO (2019) 266 Taxman 40/ 196 DTR 253/ 317 CTR 789 (Mad) (HC)

S. 147 : Reassessment – Legal represenntaive – Liability – Not inherited anything from his father- Huge deposits prior to death – Reassessment is held to be bad in law . [ S..144, 148 159, Art .226 ]

C. Naveen Kumar v .ITO ( 2019 ) 266 Taxman 74 ( Mad) (HC)

S.54F : Capital gains- Investment in a residential house – The assessee is entitled to the withdrawal of the amount deposited under Sub-Section (4) of Section 54F of the Act under the capital gain account subject to deduction of tax applicable to the case on hand. [ S.45, 54F(4) ]

P.N.Shetty v ITO ( 2019) 181 DTR 97/ 310 CTR 359/ 266 Taxman 15 ( Karn) (HC) Editorial: Affirmed in P.N. Shetty. v ITO (2020) 268 Taxman 226 (Karn) (HC)

S. 92C : Transfer pricing – Arm’s length price – Selection of comparables -Comparision with high brand value and higher scale of operations and profit margin to be excluded – Comparables have to be functionally similar but they should have similar business environment and risks as the tested party- Tribunal order is set aside .[ S.144C ]

;Avaya India P. Ltd v ACIT ( 2019) 416 ITR 638/ 310 CTR 633/ 182 DTR 89 / 267 Taxman 351 (Delhi) (HC).Editorial: SLP of revenue was dismissed due to low tax effect,ACIT v. Avaya India (P) Ltd. (2021) 277 Taxman 402 (SC)