TODAY'S CASE (DIRECT TAX)

April 30, 2020

++ Professional charges incurred for investment advisory services & interest expenditure merit being disallowed where the company which incurred these charges is not carrying out any business activity: ITAT

++ Apportionment of expenses by AO is not tenable if satisfaction is not recorded in respect of suo motu disallowance made by assessee u/s 14A: ITAT

++ A company is obligated to file its return of income regardless of whether or not it earned profit - returns declaring loss must be filed in order to claim carry forward of such business loss: ITAT

++ Additions based on presumptions & assumption & not corroborated with any evidence, are not sustainable: ITAT

++ Penalty imposed on public bank is unwarranted if there is reasonable cause for not deducting TDS on LTC payments made towards foreign travel: ITAT

April 29, 2020

++ Income tax - Refund - Sub-section (1D) of Sec 143 contemplates no intimation or further application of mind before processing of return is kept in abeyance: Supreme Court

++ Exercising power of revision is unwarranted where AO thoroughly examines the relevant issue in original assessment & during re-assessment proceedings: ITAT

++ Tenancy right is a transferable asset - assessee entitled for LTCG on sale thereof, if it is proven that the asset was held for over three years: ITAT

++ Expenses on prayers & payments to contractors are allowed u/s 37 if proven to be incurred wholly & exclusively for business purposes: ITAT

++ Additions framed u/s 68 on account of unexplained cash credits are not tenable if investee is a penny stock company with no credentials, having no buyers & artificially hikes sale figures: ITAT

April 28, 2020

++ LTCG - enhancement of additions framed is not tenable if AO does not record reasons for rejecting figures of actual sale consideration: ITAT

++ Payment made through cheque is per se insufficient to establish that purchases were made from genuine parties: ITAT

++ When computing deduction u/s 10A, if telecom charges are reduced from export turnover, they must also be reduced from total turnover: ITAT

April 27, 2020

++ Transfer of assessment to a new jurisdiction is not tenable if the assessee is not given personal hearing & if there is no agreement between the PCITs concerned for transferring the case: HC

++ Order passed by CIT(A) for enhancement of assessment is nullified if notice u/s 251(2) has not been issued to assessee: ITAT

++ Loan given in foreign currency used to buy vessels, repayment of which leads to accrual of gain due to fluctuation in foreign exchange rate is capital receipt and is not taxable: ITAT

++ Enhancement of assessment by CIT(A) is sustainable when there is no reason to serve notice of enhancement, since there was no proposal of the AO to do so: ITAT

April 25, 2020

++Penalty notice is unsustainable if it does not specify the exact limb of Section 271(1)(c) which was invoked for issuing the same: ITAT

++ Assessment order passed ex parte is upheld where assessee does not show up for hearing despite several opportunities to represent itself: ITAT

++ Genuineness of cash gift received by assessee cannot be doubted where the assessee is able to provide sufficient evidence in its regard: ITAT

April 24, 2020

++ Income tax - Purpose of inserting Clause (f) in Sec 43B is not to control timing of payment but to control timing of claiming deduction in name of such liability: SC Larger Bench

++ Income tax - Doctrine of mutuality entails that mutual operations ought to be marked by an impossibility of profits: SC

++ Income tax - Additions made u/s 68 on account of unexplained cash credits cannot be sustained where AO neither doubts identity of dealers from whom assessee made purchases, nor records any adverse findings in their regard: SC

++ In absence of any legal sanction for not refunding any amount which was seized without authority of law, assessee is entitled to interest on delayed refund u/s 244A: HC

++ Re-assessment proceedings are unsustainable if there is no failure of assessee to make full & true disclosure of material facts: HC

++ Allegations of any mistake in tax calculation are not sustainable if no evidence is put forth to substantiate such charges: ITAT

++ Additions framed on account of unsecured loans are not tenable if based solely on dubitable statements & if cross examination of depositors is not permitted: ITAT

April 23, 2020

++ Additions framed u/s 68 are not tenable if identity & creditworthiness of investors & genuineness of transactions is established by assessee: ITAT

++ Penalty notice issued u/s 274 is unsustainable if it does not state the grounds on which penalty is sought to be imposed: ITAT

++ Depreciation is allowed even if claimed on the basis of copies of ledgers, which prove that vehicle was put to use: ITAT

++ Activity of assisting the Government in selling land does not disentitle a regional development authority from registration u/s 12AA: ITAT

April 22, 2020

++ Membership & subscription charges are treatable as preliminary expenditure where incurred for business purposes & to set up transaction meant for overseas capital market: ITAT

++ Additions framed on account of suppressed sales are untenable if based solely on seized documents which do not particularly name the assessee: ITAT

++ AO cannot convert Limited Scrutiny into normal scrutiny without obtaining necessary approval from appropriate authority: ITAT

++ Lease rent from developed space in SEZ carries trapping of business income, regardless of its wrong declaration under the head ‘income from house property’ & is eligible for deduction u/s 80IB: ITAT

April 21, 2020

++ Assessee disclosed total income arising from sale of property - hence, penalty imposed is not tenable: ITAT

++ Exemption u/s 54F cannot be claimed in respect of more than one residential property: ITAT

++ Disallowance u/s 14A r/w Rule 8D can be resorted to only where the AO is dis-satisfied with the explanation furnished by the assessee in respect of expenditure incurred for earning exempt income: ITAT

++ Re-assessment is to be resorted to only when the AO records sufficient & own reasons to believe that taxable income has escaped assessment: ITAT

April 20, 2020

++ Where a trust was not found to have indulged in commercial activities in past AYs, it cannot be charged with doing so in the current AY so as to invoke provisions of Section 2(15): ITAT

++ Rule of consistency - method adopted for computing assessee's income in past AYs must continue in current AY as well: ITAT

++ Re-assessment order was passed based on vague grounds - CIT(A)'s actions in quashing such order is sustained: ITAT

April 18, 2020

++ Additions framed on account of bogus purchases are to be restricted to the profit arising therefrom: ITAT

++ Power of revision u/s 263 cannot be exercised where original assessment order is neither erroneous nor prejudicial to Revenue's interest: ITAT

April 17, 2020

++ Exercise of revisional power u/s 263 is not tenable if AO consciously applies mind to facts and adopts one of two views possible in respect of the issue at hand: ITAT

++ AO is not vested with the jurisdiction to review an earlier order in the garb of rectifying any error therein: ITAT

++ Additions framed on account of unexplained cash credits are unsustainable if based solely on assumptions & where assessee discharged initial onus of proving genuineness of transaction: ITAT

++ Letting out of property by its owner for exploitation thereof cannot be construed as being business activity: ITAT

April 16, 2020

++ Disallowance u/s 14A is not tenable where suo motu disallowance of expenses incurred on earning exempt income, is 8.50% of total income: HC

++ Where assessee surrenders additional income post Search proceedings, higher net profit rate cannot be applied if no specific defects in books of accounts are pointed out: ITAT

April 15, 2020

++ Entire quantum of bogus purchases made from grey market need not be disallowed & only the profit element therefrom is to be taxed: HC

++ Provisions of Section 41(1) of I-T Act are inapplicable where assessee does not claim deduction on unsecured loan obtained: HC

++ Order passed ex parte merits is quashed & appeal is restored for fresh hearing if sufficient cause is shown for non-appearance on date of hearing: ITAT

April 14, 2020

++ Assessee cannot charged with offence u/s 276C(2) if there is no willful intent to evade payment of tax & where undisclosed income is volunatarily offered to tax: HC

++ When bank's liability to pay back amounts to customers in respect of stale demand drafts is not ceased, no addition is permitted u/s 41(1): HC

++ Power of revision cannot be invoked where AO adopts one of two possible views in respect of a certain issue: ITAT

++ Additions framed u/s 68 are unsustainable if AO conducts no investigation & where assessee establishes creditworthiness of creditors: ITAT

April 13, 2020

++ It is trite law that if an assessee has interest-free funds, it can be given credit thereof & need not establish nexus between such funds & their deployment: ITAT

++ Additions framed are unsustainable if based solely on presumptions or electronic records & statements taken from third parties: ITAT

++ Stay on recovery of outstanding amount of duty is allowed where part of duty demanded is already deposited: ITAT

April 11, 2020

++ Assessee cannot evade penal proceedings u/s 271(1)(c) even if error on its part was unintended & tax dues were paid voluntarily: ITAT

++ Failure to issue notice u/s 143(2) while framing assessment on basis of revised returns is bad in law & such assessment gets nullified: ITAT

++ Claims for bad & doubtful debts cannot be allowed u/s 57(iii) since these do not qualify as expenditures: ITAT

April 10, 2020

++ Garnishee notice issued to attach & recover dues payable by assessee is unsustainable if appeal against assessment proceedings is pending disposal: HC

++ As per relevant CBDT Instruction, AO is required to obtain approval from CIT before extending scope of scrutiny when making disallowance u/s 14A: ITAT

++ Additions u/s 145A are unwarranted if assessee's income is computed by applying inclusive method & which is accepted by the tax auditor: ITAT

++ Additions framed on account of bogus purchases are upheld if assessee is unable to offer any explanation for such purchases: ITAT

++ Power of revision is justly exercised where AO fails to examine difference between stamp duty valuation of property purchased, and consideration declared in returns: ITAT

April 09, 2020

++ Profits from sale of shares is taxable as LTCG if such shares were held as investment for period exceeding 12 months: ITAT

++ Proviso to Section 2(15) of I-T Act cannot be invoked to deny exemption to any trust found to be engaged in charitable activities: ITAT

++ Deduction can be allowed in respect of expenses which crystallize in same AY in which deduction is being claimed: ITAT

++ Entire cash deposits cannot be treated as unexplained, if it is clear that they are linked to assessee's business transactions: ITAT

April 08, 2020

++ Additions framed on account of advance money received from sale of land is tenable where assessee withholds relevant information so as to avoid scrutiny: HC

++ Bank guarantee does not qualify as technical service & any fee paid towards it does not warrant TDS deduction u/s 194J: ITAT

++ Re-opening of assessment is sustained if assessee is unable to explain credit entries mentioned in its financial statements: ITAT

++ Power of revision is rightly invoked where AO fails to enquire into issue of assessee claiming carry forward of Long Term Capital Loss despite being ineligible for it: ITAT

++ Disallowance u/s 40A(3) is unwarranted if cash payment to transporters for delivering coke at customers' doorstep, is made out of business necessity: ITAT

April 07, 2020

++ Assuming jurisdiction for assessment u/s 153C is invalid if no reasons are recorded in respect of the assessee subjected to Search proceedings: ITAT

++ Allegations levelled in complaint cannot per se form basis to infer suppression of sale/purchase consideration & evasion of tax: ITAT

++ Matter remanded where CIT(A) admits additional evidence which is so far not submitted before & is not examined by AO: ITAT

April 06, 2020

++ Memorandum of gift & affidavit from donor are insufficient to prove genuineness of high-value gift, more so where investigation shows that donor is actually an entry provider: ITAT

++ AO treated proceeds from sale of shares as business income whereas assessee claimed to be dealing in mutual funds only - case remanded: ITAT

++ Statements recorded during search or survey operations cannot be relied on to frame additions if not substantiated by corroborative evidence: ITAT

++ Report from Investigation Wing cannot solely be the basis for framing additions u/s 68 on account of bogus loan: ITAT

++ Interest expenditure incurred cannot be allowed as business expenditure, if it is not shown that such expenses were incurred for business purposes: ITAT

April 04, 2020

++ Expenses on issuing shares are eligible for amortization u/s 35D even if incurred upon expansion of undertaking or for setting up new unit: ITAT

++ Additions on account of undisclosed income in hands of seller of land are unsustainable, if based solely on statement of buyer & if uncorroborated by any evidence: ITAT

++ Imposing penalty u/s 271(1)(c) is upheld where assessee fails to rebut charges levelled against it: ITAT

++ If service of notice is not possible in ordinary manner, it can be served through affixture at last known address of assessee as given in registered sale deed: ITAT

April 03, 2020

++ Expenses on fuel & driver's salary are not allowable u/s 37(1) if it is not proven that they were incurred for assessee's business purposes: ITAT

++ Incidental profit from sale of prasad to devotees by charitable trust, qualifies as commercial activity & is hit by proviso to Section 2(15) of I-T Act: ITAT

++ Statements recorded during Survey proceedings cannot be relied upon as conclusive evidence: ITAT

++ Deduction u/s 54B cannot be denied solely because the assessee did not file revised returns: ITAT

++ Additions u/s 68 are sustained if assessee fails to establish genuineness of cash deposits despite opportunities given by AO: ITAT

April 02, 2020

++ Once reference u/s 142A is made, then DVO cannot issue notice u/s 55A independently without authorization from AO to ascertain the fair market value of property: ITAT

++ Appellate order quashing re-assessment is sustained if such proceedings are found to be based on change of opinion of AO: ITAT

April 01, 2020

++ Deduction u/s 37(1) is allowed only on those expenses which are incurred for business purposes - deduction allowed where payment made by a/c payee cheque & on which TDS is deducted: ITAT

++ Reimbursement of property tax to licensor is purely contractual liability & not statutory in nature & so cannot be treated as fee or cess u/s 43B: ITAT

++ Re-assessment proceedings are sustainable if FIRC furnished by assessee is insufficient to explain money received from abroad for services rendered in India: ITAT

++ Quantum of disallowance u/s 14A cannot exceed that of exempt income: ITAT