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. 147: Reassessment -Bogus share capital- Search in the premises of shreeji Polymers (India) Ltd – Specific information was available with the authorities -Allegation that assessee is a dummy concern used to route unaccounted money by way of bogus share application money is sufficient to reopen assessment .[ S. 68,148 ]

Etiama Emedia Ltd. v. ITO ( 2019) 261 Taxman 88 / 176 DTR 155/ 308 CTR 225( MP)(HC),www.itatonline.org

S.92BA:Domestic transfer pricing- Arms Length price- Specified Domestic Transactions ( SDT)- Purchase of loan from HDFC Ltd -Loan could never be termed as an expenditure – Payment made by the petitioner to the global Pvt Ltd for rendering services would not fall with in the meaning of a SDT – Payment of interest to HDFB Trust which is a welfare trust for providing general welfare to the employees of the petitioner and not the petitioner – The Trust has been set up exclusively for the welfare of its employees and there is no question of petitioner being entitle to 20% of the profits of such Trust – transaction would not fall with in the meaning of S. 40A(2) (b) of the Act hence is not covered as SDT- Loan cannot be treated as expenditure -Indirect share holding is not covered under S.40A(2)(b) of the Act- – From Revenues contention that a share holder has beneficial interest in the assets of the company is contrary to all cannons of company law -Law does not permit to hold that HDFC Ltd is the beneficial owner of 22.64% of the shares of the petitioner by clubbing the share holding of HDFC investments Ltd with the share holding of HDFC Ltd- None of the three transactions that form the subject matter of the petition with in the meaning of S.92BA(1) of the Act , required to be disclosed by the petitioner by filing form 3CEC – Accordingly the petition was allowed. [ S.40A(2)(b),92CA(1), 271G ]

HDFC Bank Ltd. v. ACIT ( 2019) 410 ITR 247/ 306 CTR 189/173 DTR 217/ 261 Taxman 297(Bom)(HC),www.itatonline.org

S. 69C : Unexplained expenditure – Bogus purchases – Business of manufacturing cycle/cycle rims- The item-wise break-up of each and every purchase item along with comparative figures of the previous years was furnished – All the payments have been made by account payee cheque/bank draft- All the payments have been made by account payee cheque- Sample copies of the bills raised by those parties were submitted and it was stated that the bills contained the complete address of the parties, their TIN Nos., etc. Further, the purchases have been made against C Forms which have been duly issued by the assessee company-The fact that the vendors are not available at the given address is not sufficient to treat the purchases as bogus if the assessee has discharged primary onus and substantiated the purchases through documentary evidence and payment is made through banking channels. None of these documents have been proved to be false or untrue and thus the initial burden cast on the assessee was duly discharged- Decision of the CIT(A) is deleting the addition is affirmed .[ S.143(3) ]

ACIT v. Karam Chand Rubber Industries (P) Ltd ( 2019) 174 DTR 142/ 197 TTJ 555(Delhi)(Trib),www.itatonline.org

S. 50C: Capital gains-Full value of consideration – Stamp valuation-The valuation of the stamp authority cannot be adopted for the purpose of collecting capital gain tax in the hands of the assessee, if there is a long gap between the date of execution of the MOU and the execution of a formal development agreement.[ S.45, 269UL(3) ]

PCIT v. The Executor of Estate of Late Smt. Manula A. Shah ( Bom)(HC),www.itatonline.org

S. 41(1) : Profits chargeable to tax – Remission or cessation of trading liability – Provision for doubtful debt- Burden is revenue to prove that excess provision for bad and doubtful debt written back in profit and loss account was allowed as deduction in previous years -Deletion of addition is held to be justified [ S. 36(1)(viia) ]

CIT v. Pragathi Gramina Bank ( 2018) 91 taxmann.com 343 ( Karn) (HC) Editorial: SLP of revenue is dismissed , CIT v. Pragathi Gramina Bank ( 2018) 259 Taxman 219 ( SC)

S. 14A : Disallowance of expenditure – Exempt income – Disallowance cannot exceed exempt income [ S. 263 ,R.8D ]

PCIT v. State Bank of Patiala ( 2018) 99 taxmann.com 285 / 259 Taxman 315 ( P& H) (HC) Editorial: SLP of revenue is dismissed , PCIT v. State Bank of Patiala ( 2018) 259 Taxman 314( SC)

S.37(1): Business expenditure – Ad hoc disallowance of 10% claim – Bricks, machinery repairs, cartage , labour expenses- No ad hoc disallowances can be made without rejecting the books of account and also allowed in the past consistently such expenses in scrutiny assessments . [ S.143(3), 144 ]

PCIT v. R. G. Buildwell Engineers Ltd ( 2018) 99 taxmann.com 283 / 259 Taxman 371 ( Delhi) (HC) Editorial: SLP of revenue is dismissed , PCIT v. R. G. Buildwell Engineers Ltd ( 2018) 259 Taxman 370 (SC)

S. 147 : Reassessment –Order passed consequent to reassessment had not confirmed the addition attributable to the reasonable belief of the Assessing Officer, while passing the reassessment order – Reassessment is held to be bad in law.[ S.148 ]

PCIT v. Lark Chemicals ( P) Ltd ( 2018) 99 taxmann.com 311/259 Taxman 366 (Bom) (HC) Editorial: SLP of revenue is dismissed , PCIT v. Lark Chemicals ( P) Ltd ( 2018)259 Taxman 265 ( SC)

S. 147 : Reassessment – Change of opinion- Income from other sources -AO has consciously considered the claim for deduction u/s 80IC in the regular assessment proceedings – Accordingly reassessment is held to be not valid .[ S.80IC, 148 ]

PCIT v. Century Textiles & Industries Ltd ( 2018)167 DTR 105 / 99 Taxmann.com 205/ 259 Taxman 361 ( 2019) 412 ITR 228 (Bom) (HC) Editorial: SLP of revenue is dismissed, PCIT v. Century Textiles & Industries Ltd ( 2018) 408 ITR 59 (St)/ 259 Taxman 360 ( SC)

S. 147 : Reassessment – Export oriented undertakings – Where in the course of original assessment proceedings the Assessing Officer has raised several queries and allowed the claim-Reassessment cannot be made to examine another facet of said claim.[ S.10B, 148 ]

QX KPO Services ( P) Ltd v. Dy. CIT ( 2018) 94 taxmann.com 467/ 2019) 414 ITR 429 ( Guj) (HC) Editorial: SLP of revenue is dismissed ,Dy.CIT v. QX KPO Services ( P) Ltd ( 2018) 259 Taxman 31/ 408 ITR 73 (St) (SC)