S.68: Cash credits – Share capital and share premium – Identity, genuineness and creditworthiness of subscriber established – Assessee issued 22,50,000 equity shares of face value ₹10 at ₹50 per share, including premium of ₹40 –Merely because shares were issued at a high premium, addition under section 68 could not be made – Second proviso to section 68 inserted w.e.f. 1-4-2013 – A.Y. 2012-13 – Even assuming applicability, factual requirement stood satisfied as subscriber had explained source of investment received from group companies – No substantial question of law arose – Revenue’s appeal dismissed. [ S. 260A ]

S.45: Capital gains – Co-operative housing society – Redevelopment of property – Development Agreement entered into by society on behalf of its members – Society continued to be owner of land – No consideration received by society – Developer entered into Permanent Alternate Accommodation Agreements with individual members – Society merely acted as representative of members – Capital gains arising from redevelopment transaction, if any, taxable in hands of individual members and not in hands of society – Addition made in hands of society deleted. [ S.2(47), 143(3), Maharashtra Co-operative Societies Act, 1960, S.79A .]

S.264: Commissioner – Revision of orders – Assessment – Addition under section 69 – Cost imposed Rs .1 lakh – Redevelopment of property – Permanent Alternate Accommodation Agreements entered into with existing tenants – Assessee contending that PAAA’s were entered into to allot area to existing tenants in lieu of their existing area, free of cost – Assessment completed under section 143(3) read with section 144B by adding ₹4.24 crore as unexplained investment under section 69 – In revision proceedings, assessee produced only Index-II and failed to produce PAAA’s, MHADA permission and other supporting evidence – Revision application dismissed – High Court restored revision proceedings to Revisional Authority to enable assessee to produce complete evidence and fresh order – Subject to payment of costs of ₹1 lakh – Order passed in peculiar facts and not to be treated as precedent. [ S.69, 143(2), 143(3), 144B, 264, 43CB .]

S.195: Deduction of tax at source – Non-resident – Purchase of trademark – Assessee acquired absolute ownership of trademark “Jamawar” from a non-resident for lump-sum consideration – Payment made for outright purchase of a capital asset and not for use of trademark – Consideration for transfer of ownership of trademark taxable, if at all, under the head “Capital gains” and not as “royalty” – Assessee not liable to deduct tax at source under section 195 – Demand under sections 201(1) and 201(1A) deleted. [S.5(2), 9(1)(vi), 201(1), 201(1A).]

S.263: Commissioner – Revision of orders prejudicial to revenue – Non-performing assets – Loss on sale of NPAs – Co-operative bank – Assessment completed under section 143(3) after examination of relevant details – AO having adopted a possible view – Loss on sale of NPAs held allowable as business loss by the Tribunal in the assessee’s own case – PCIT could not invoke revision merely for directing fresh enquiry or substitute his view for the view taken by AO – Revision order quashed. [ S. 2(14), 143(3), 144B .]

S.147A: Reassessment – Face less Assessment – Assessing Officer for the purposes of sections 148, 148A – Constitutional validity – Retrospective amendment – Section 147A introduced with retrospective effect from 1-4-2021 to provide that Assessing Officer for purposes of sections 148 and 148A would mean an Assessing Officer other than National Faceless Assessment Centre/assessment unit – Amendment seeking to neutralise judgments of constitutional Courts holding that notices under section 148 were required to be issued by faceless Assessing Officer – Legislature cannot directly overrule or set aside judgments of constitutional Courts without removing the basis of such judgments – Section 147A held unconstitutional and struck down – Notices under section 148 issued by jurisdictional Assessing Officers without random automated allocation and in faceless manner also quashed – Writ petitions allowed. [ Art. 14, 19(1)(g), 265 of the Constitution of India, S. 130, 144B(3 ) 147 , 148, 151A .]

S. 263: Commissioner – Revision of orders prejudicial to revenue – Accommodation entries -Revision under section 263 could not be exercised on the basis of a void reassessment order – Reassessment – Sanction – Jurisdictional condition – Assessment Year 2017-18 – Notice under section 148 issued on 29-07-2022, beyond three years from end of relevant assessment year – Approval obtained from Principal Commissioner under section 151(i), whereas section 151(ii) required approval from Principal Chief Commissioner/Chief Commissioner – Sanction by authority not prescribed under applicable provision was a jurisdictional defect – Reassessment proceedings held void ab initio – Revisionary order quashed. [S. 147, 148, 148A, 151(i), 151(ii), 254 (1) ]

S. 40(a)(i): Amounts not deductible – Deduction at source -Non-resident –Royalty – Fees for technical services – Payments to foreign telecom operators – Voice termination, bandwidth and operation and maintenance services – Services rendered through sophisticated network and technology but assessee neither acquired equipment nor right to use any equipment/process – No technical knowledge or know-how made available – Payments not royalty or fees for technical services under applicable DTAAs – Recipients having no permanent establishment in India – Payments constituted business profits not taxable in India – No obligation to deduct tax under section 195 – Disallowance under section 40(a)(i) deleted – Revenue’s appeal dismissed. [ S.9(1)(vi), 9(1)(vii), 90(2), 195 .]

S. 37(1): Business expenditure – Capitalisation in books – Operational expenditure capitalised under CWIP in books but claimed as revenue expenditure for tax purposes – Assessee’s telecom business already commenced and was operational – Expenditure incurred towards interconnect charges, employee cost, professional fees, call-centre expenses, power and fuel, repairs and maintenance, network costs, selling and distribution expenses, customer service, etc. – No specific capital asset brought into existence – Accounting treatment not conclusive of tax character – Expenditure held allowable as revenue expenditure – Revenue’s appeal dismissed. [ S.32, 145 ]