S. 36(1)(iii) : Interest on borrowed capital-Mixed funds-Presumption is that the advance to sister concern is made from own funds -Dept’s argument that Maxopp Investment Ltd v.CIT ( 2018) 402 ITR 640 (SC) / Avon Cycles Ltd. v. CIT ( P&H (HC) (ITA No 277 of 13) overrules the presumption that advances to sister concerns are made from own funds and not borrowed funds is not correct- No disallowances can be made.

S. 12A : Registration –Trust or institution- Strictures- Society are to set up and carry on the administration and management of an academic institution at Anandpur sahib to be known as ‘Sri Dashmesh Academy’ for imparting education of high standard in general and training for administrative service and armed forces in particular to the children of persons domiciled in Punjab- -The properties of the trust, have been created and constituted out of 100% grants given by the State and Central Government and have now been attempted to be shifted in the hands of the private management, may be distributed amongst the private individual members of the trust- The above facts and circumstances also cast doubt about the functioning and genuineness of the objects of the trust- Rejection of application for registration is held to be justified – Exemplary cost of Rs. 1 lakh levied upon trust for fraud in wrongly seeking exemption on basis that it is controlled & managed by the Govt. The ITAT is deemed to be a Civil Court and its proceedings are deemed to be judicial proceedings within the meaning of s. 193 & 228 & of the Indian Penal Code. Any attempt to play fraud on the ITAT by way of conveying wrong and false facts and pleadings is required to be strictly dealt with. [S. 11, 254(1), IPC, S. 191, 228]

S. 4 : Charge of income-tax–Capital or revenue-compensation received on closure / termination of business activity resulting in loss of source of income, impairing its profit making structure or sterilization of profit making apparatus is capital receipts. [S.28(i)]

S. 272A : Penalty – Failure to answer questions – Sign statements – Furnish information -Business of production of potable country liquor/Alcohol -Belated TDS returns-TDS was deposited on time- Belated return was due to reasonable cause and revenue has not suffered any loss- Levy of penalty is held to be not justified. [S. 206, 273B, 276BB]

S. 271C : Penalty-Failure to deduct at source-Bonafide belief-There cannot be a case of automatic levy of penalty-The circular has come much after the expiry of the financial year ending on 31-3-2009, the assessee was clearly under a bona fide belief that no TDS is liable to be deducted- Penalty was deleted. [S. 194J]

S. 271AAA : Penalty – Search initiated on or after 1st June, 2007 – As there was search proceedings against the assesee initiation and levy of penalty is held to be in valid. [S. 132, 153C]

S. 250 : Appeal-Commissioner (Appeals)–Has to pass a speaking order after giving a reasonable opportunity of being heard. [S. 144]

S. 194J : Deduction at source-Fees for professional or technical services-Third Party Administrator (TPA), who was responsible for making payment to hospitals for rendering medical services to policy holders under various medical insurance policies issued by several insurers, was liable to deduct tax at source from payments made to hospitals only professional services relating to medical services alone should be liable for deduction of tax at source and not payment towards bed charges, medicines used on patients, transportation charges, implants, consumables etc-Consequence of failure to deduct or pay-Interest – If certificate from an auditor has been obtained from deductee that it had paid taxes in income tax return filed by him, had been brought into effect by Finance Act, 2012 w.e.f. 1-7-2012, therefore, it could not be applied for impugned assessment year ie 2009-10 -Accordingly liable to pay interest only in respect of professional fees and not on reimbursement – Partly allowed. [S. 201(1), 201(IA)]

S. 194I : Deduction at source – Rent – Lease line charges- Liable to deduct the tax as rent and cannot be treated as royalty- Cannot be treated as assessee in default. [S. 9(1)(vi), 194J, 201(1)]

S. 153B : Assessment-Search-Time limit-Seized material relating to assessee was received by Assessing Officer of assessee under section 153C in financial year 2011-12, assessment order passed on 22-3-2013 was well within period of limitation. [S. 132, 153C]