S. 254(2): Appellate Tribunal-Rectification of mistake apparent from the record –While dealing with the application for rectification , the Tribunal where it finds is an error apparent on record then it should recall the original order and place the appeal for consideration of the issue on merits before the Regular bench -It is not appropriate to dispose of the controversy on merits of the submission while disposing of the Rectification application .[ S.11(1) ]

S. 4 : Charge of income-tax – Income derived by a trade , professional or similar association from specific services performed for its members -Non-Resident- Mutuality – Liaison office of non-resident non profit organisation for the benefit of members in the absence of profit motive and surplus if any was ploughed back in to the organisation again to be utilised for same objects-Income cannot be asssseed as business income -Receipts from non members only 2.05% and also isolated incident which has not affected the dominant object of the applicant – Membership fee and contribution from members is also not liable to tax in India – Once principle of mutuality is applied , the question of a permanent establishment did not arise – Receipt or income cannot be taxed applying the principle of mutuality .[ S.28(iii)]

Interpretation of taxing statues- Rule against double taxation

Interpretation of taxing statues- “Explanation” and “Proviso” .

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 ]