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. 10(14) : Special allowance or benefit -Allowance received by employee to cover expenses incurred wholly in performance of duties —Extra payment to meet costs in Foreign location is not entitled to exemption. [ S.15, 17 , 192 ]

Sun Outsourcing Solutions P. Ltd. v. CIT (2018) 407 ITR 480/ 171 DTR 358/ 305 CTR 537 (T&AP) (HC)

S. 9(1)(i): Income deemed to accrue or arise in India – Permanent Establishment -Global payment solutions facilitating use of electronic forms of Payment, ie by credit card, instead of cash and cheques -Banks and financial Institutions – There was a fixed place permanent establishment, service permanent establishment and dependent agent permanent establishment-On such attribution of income to the permanent establishment, the tax was required to be withheld at full applicable rate at which the non-resident is subjected to tax in India. Even automatic equipment like server can also create a permanent establishment and there was no requirement of human intervention- DTAA-India -Singapore [ Art. 5, 7, 12 ]

Mastercard Asia Pacific Pte. Ltd. Singapore, In Re (2018) 406 ITR 43/ 303 CTR 305/ 167 DTR 321 (AAR)

S. 4 : Charge of income-tax – Income or capital- Non-compete Amounts received by assessee under Non-Compete agreement constitute capital receipt- Revenue cannot ignore the specific terms of the agreements and render findings contrary thereto as regards the nature of the income received by the assessee- Form and substance of transaction-Substance of transaction to be considered. [ S.28(i) ]

V. C. Nannapaneni. v. CIT (2018) 407 ITR 505 / 305 CTR 625 /171 DTR 337(T&AP) (HC)

S. 4 : Charge of income-tax -Income or capital — Incentive for sale of Sugar is a capital receipt and hence not chargeable to tax .

CIT v. Kanoria Sugar And General Manufacturing Co. Ltd. (2018) 407 ITR 737 (Raj) (HC) Editorial: SLP of revenue is dismissed; CIT v. Kanoria Sugar And General Manufacturing Co. Ltd. (2018) 405 ITR 1 ( St)

S. 35:Punishment of advocates for misconduct- Status of Legislator is member of House. Legislator cannot be styled as full time salaried employees – Merely drawing salary or allowances does not result in creation of relationship of employer and employee between government and legislators- Merely because Advocate is elected people’s representative , it does not amount to professional misconduct – In the absence of express provision in Act or Rules , Legislators cannot be debarred from practicing as Advocate [ S.49, Bar Council of India Rules , 1975 R.49, Art. 14, 32 ]

Ashwin Kumar Upadhyay v. UOI AIR 2018 SC 4633

S. 21:Professional misconduct – Audit fee was not paid – Allegation that Chartered accountant carried out audit of three companies without intimating and obtaining no objection certificate from previous auditor – Chartered accountant is held of professional misconduct and reprimanded . [ S. 22 ]

Council of Institute of Chartered Accountants of India v Manoj Harivadan Lekinwala AIR 2018 Guj 166

S. 260A : Appeal – High Court – Cross objection- Limitation-Limitation to file cross objections starts from date of service of notice of appeal – Plea by cross-objector that as no date of final hearing was mentioned in notice , there is no necessary to explain the delay of 94 days in filing the cross objection is held to be unsustainable – Application filed for condonation of delay was not pressed by the Counsel . [ Civil P.C. O. 41 , R. 22 , Limitation Act, 1963 , S. 5 ]

Santosh Devi (Smt ) v. Hari Singh AIR 2018 HP 170

S. 254(1) : Appellate Tribunal – Duties- Bad debts-If the AO has failed to discharge his obligation to conduct a proper inquiry, it is the obligation of the ITAT to ensure that effective inquiry is carried out-The AO has not examined the crucial aspect whether the bad debts claimed by the assessee due to the NSEL scam constitutes a “speculative transaction” u/s 43(5) and whether Explanation to S. 73(1) applies. Matter remanded . [ S.36(1(iii), 43(5) , 73(1)]

Omni Lens Pvt. Ltd. V. DCIT ( 2019) 174 ITD 262 ( Ahd)(Trib),www.itatonline.org

S. 226 : Collection and recovery – Modes of recovery –Appeal- The AO is not justified in insisting on payment of 20% of the demand based on CBDT’s instruction dated 29.02.2016 during pendency of appeal before the CIT(A)- This approach may defeat & frustrate the right of the assessee to seek protection against collection and recovery pending appeal-Such can never be the mandate of law- CIT(A) is directed to hear the appeal expeditiously-Pendency of appeal the stay is granted . [ S. 220(6),246 ]

Bhupendra Murji Shah v. DCIT( 2018) 170 DTR 423/ 305 CTR 88 / 259 Taxman 45( Bom)(HC)www.itatonline.org

S. 90: Double taxation relief – If a non-resident assessee derives income from multiple sources in India, it is entitled to adopt the provisions of the Act for one source and the DTAA for the other source, whichever is more beneficial to it, even though the payer is common for both sources- Fees received by the assessee would be taxable under the Act as FTS (fees for technical services) under section 9(1)(vii) r.w.s. 115A(1)(b) @ 10% and not as business income and thus held that the maximum possible taxability in the hands of the assessee could not exceed 10%.- DTAA- India -Singapore. [S.90(2),115A(1)(b), Art.5(6) ]

Dimension Data Asia Pacific Pte. Ltd. v. DCIT (2018) 99 taxmann.com 270 ( Mum)(Trib),www.itatonline.org