S.145:Method of accounting – Real estate construction contracts –Consistency method of accounting- Completed contract- Percentage completion- Accounting Standards AS-7 and AS-9- AO was not justified in applying the percentage completion method on the assessee merely on the basis that it was followed by the developer JSM DPL and arbitrarily making addition to the income ignored the fact that project completion method/ completed contract method of accounting has been consistently adopted by the assessee . [ S. 5,43C]

S. 9(1)(i):Income deemed to accrue or arise in India – Business connection -The duration of 12 months specified to constitute a PE is activity specific qua the site, construction, assembly or installation project. Preparatory work for tendering of contract cannot be included in the period. The activity qua the project comes to an end when the work gets completed and the responsibility of the contractor with respect to that activity comes to end. Onus is heavily upon the revenue to establish that that assessee’s activity had crossed the threshold period of 12 months- Accordingly no income of the assessee on the contract executed by assessee in India can be held to be taxable in terms of Article 7- DTAA-India –Cyprus [ Art .5,7 ]

S. 2(22)(e): Deemed dividend- Both the registered and beneficial shareholders are two individuals and not the assessee-company- Addition cannot be made as deemed dividend-.The argument of the Dept, based on Gopal and Sons (HUF) v CIT ( 2017) 399 ITR 1(SC) that even though the assessee-recipient of money is neither the registered nor the beneficial shareholder of the payer company, the money should be assessed as “deemed dividend” is not correct .

S. 194I : Deduction at source – Rent -Annual rent paid under lease deed is rent – liable to deduct tax at source on the payment of lease rent to NOIDA /Greater NOIDA .[ S.10(20), (10(20A)]

S. 10(20): Local authority – New Okhla Industrial Development Authority (NOIDA) is not local authority – Hence is not exempted from payment of income-tax under S. 10(20) and S.10(20A) . Followed , New Okhla Industrial Development Authority (NOIDA) v. CCIT ( 2018) 95 taxmann.com 58/ 303 CTR 448 / 168 DTR 48 (SC)

S. 194A : Deduction at source – Interest other than interest on securities- NOIDA and Greater NOIDA are covered by the notification No .S.O. 3489 dt 22nd oct, 1970 -Interest received by them is exempt [ S.194A(3) (iii) (f) ]

S. 194A : Deduction at source – Interest other than interest on securities- NOIDA and Greater NOIDA are covered by the notification No .S.O. 3489 dt 22nd oct, 1970 -Interest received by them is exempt-Bank is not liable to deduct tax at source . [ S.194A(3) (iii) (f) ]

S. 271(1)(c):Penalty –Concealment -The AO cannot initiate penalty on the charge of ‘concealment of particulars of income’, but ultimately find the assessee guilty in the penalty order of ‘furnishing inaccurate particulars of income’ (and vice versa). In the same manner, he cannot be uncertain in the penalty order as to concealment or furnishing of inaccurate particulars of income by using slash between the two expressions. Such error is not procedural but goes to the root of the matter and is not saved by S. 292B. The error renders the penalty order unsustainable in law [ S.292B ]

S. 260A:Appeal- High Court-Strictures passed against the revenue for not following the assurance given earlier – Court observed that “ We are pained at this attitude on the part of the State to obtain orders of admission on pure questions of law by not pointing out that an identical question was considered by this Court earlier and dismissed by speaking order. Revenue has not carried out the assurance which was made earlier. Revenue should give proper explanation why assurance given earlier is not being followed. It is time responsibility is fixed and the casual approach of the Revenue in prosecuting its appeals is stopped”

S. 220 : Collection and recovery – Assessee deemed in default -Stay – CBDT’s OMs dated 29.02.2016 & 31.07.2017 by which AO’s have been directed to grant stay of disputed demand on payment of 20%/ 15% does not fetter the power of the AO & CIT to grant stay on payment of amounts lesser than 15%/ 20%. The AO/ CIT have to deal with the prima facie merits and give reasons for rejection of the stay application.