NOTIFICATION

it16not123

CBDT amends Black Money Act to clarify expressions Approved Valuer u/s 77 & Form for registration of valuer

CASE LAWS

2016-TIOL-3154-HC-AHM-CX + Story

ACCRA PAC INDIA PVT LTD Vs GOVERNMENT OF GUJARAT: GUJARAT HIGH COURT (Dated: December 22, 2016)

Penalty - Respondent authority is not justified to levy penalty upon petitioners u/r 17 of the Medicinal and Toilet Preparations (Excise Duties) Rules, 1956 as documents for claiming rebate viz. proof of export have been furnished - While imposing the penalty, Rule 103 shall not be applicable at all as Rule 103 is with respect to presentation of claim for rebate - respondents to return the same to the petitioners within a period of six weeks from today, failing which it shall carry the interest at the rate of 9% per annum - Petition succeeds in part : High Court [para 2.1 to 2.3, 3]

Petition partly allowed

2016-TIOL-3153-HC-DEL-IT

PR CIT Vs LEMON TREE HOTELS PVT LTD: DELHI HIGH COURT (Dated: December 2, 2016)

Income tax - disallowance of expenses & cost of ESOP.

The Revenue preferred this appeal challenging the order, whereby the ITAT had deleted the disallowance of expenses deducted as cost of Employees Stock Option Plan.

On appeal, the HC held that,

Whether previous orders passed by the Tribunal relating to disallowance of ESOP expenses, after taking note of the relevent judgments of higher forums, warrants writ interference - NO: HC

++ The Revenue contends that both the assessee/Revenue fell into error inasmuch as even though took note of the decision of this Court for the previous year in ITA No.107/2013 to the extent it relied on CIT Vs. Oswal Agro Mills Limited has not applied the law correctly. In this regard, the Revenue's counsel relied upon the judgment of the Supreme Court in Punjab State Industrial Development Corporation Ltd., Chandigarh Vs. Commissioner of Income Tax, Patiala;

++ The judgment in Commissioner of Income Tax Vs. Havells India Limited, was considered specifically in Oswal Agro's case. Further, Havells'case had taken note of the various judgments including Punjab State's case. Moreover, this Court notices that the question of law arose only for two years i.e. A.Ys 2008-09 and 2009-10. There were previous orders which cover A.Y 2008-09. In the circumstances, having regard to the overall circumstances and the fact that the previous orders took note of the relevant judgments, it is held that no substantial question of law arises.

Revenue's appeal dismissed

2016-TIOL-3152-HC-ALL-IT

CIT Vs NOIDA GOLF COURSE SOCIEITY: ALLAHABAD HIGH COURT (Dated: December 15, 2016)

Income tax - principle of mutuality - investment in mutual fund & transaction with non-member.

The Revenue preferred this appeal challenging the order, whereby the ITAT held that the doctrine of mutuality would also apply to assessee society even when the question of earning interest income of FDRs and mutual funds arises out of the funds invested with non-members, which is not the case of the assessee.

On appeal, the HC held that,

Whether interest earned by a club out of the investment made in mutual funds with a non-member bank, would attract the principle of mutuality - NO: HC

++ on facts there is no dispute that in the present case FDRs were taken by the assessee club from the banks and the bank cannot be said to be regular members of the assessee club. Therefore, any transaction between the assessee club and the bank could not be said to be the transactions between the members and the interest earned on the amount in the bank would not attract the principle of mutuality. From the perusal of the observations of CIT(A), it is clear that the assessee club had made investments in the mutual fund it was not an investment with the member but with an outsider or a non-member, therefore, the principle of mutuality would not apply.

Revenue's appeal allowed

2016-TIOL-2373-ITAT-PUNE

THERMAX SOCIAL INITIATIVE FOUNDATION Vs ITO: PUNE ITAT (Dated: December 22, 2016)

Income Tax - Sections 11(1)(a), 11(1)(d) & 12A.

Keywords - Charitable organizations - Corpus donation - Donation - Trust.

Whether deviation from past pattern can be allowed to consider corpus donation as income which is based on presumptions - NO: ITAT

Whether a charitable trust can promote its charitable objects by giving donation to other charitable organizations and such donations would amount to application of income of the trust - YES: ITAT

The assessee is a company, registered u/s 12A of the Act with the main object of carrying on activities that would support, promote and encourage education among masses.To achieve its object the assessee trust had partnered with the Pune Municipal Corporation, State Govt. and central Govt. agencies to carry out affiliated charitable and educational projects to further its objects. Similar types of Corpus Donations as in relevant year had been excluded from income by the income tax department in earlier years. During the relevant year assessee had given certain donations to institutions engaged in activities in the field of education. The charitable profile of these institutions was submitted before AO. This methodology of application of regular and corpus donations as well towards objects to the trust was also done in the past years and accepted by the department. The AO in relevant year, however deviated from the consistent course of assessment and held that assessee had violated the provisions of Sections 11(1)(a) and 11(1)(d) of the Act. AO assumed that purpose of corpus donations was defeated and amounted to going against the wishes of the corpus fund donors. It was held that the real intention of receiving such corpus donations was to avoid the ambit of Income Tax Act. The amount which was in excess of amount applied by assessee to charitable purposes during the year over income which included corpus donation did not qualify for exemption and was held as taxable income, resulting in impugned demand. Being aggrieved, assessee preferred appeal before CIT(A), which dismissed assessee's appeal. Aggrieved assessee filed appeal before Tribunal.

On appeal, Tribunal held that,

++ Tribunal noted that impugned donations were given by Thermax Ltd to the assessee as corpus donation. Since Thermax Ltd, the donor, had given specific direction for corpus of the assessee trust hence Tribunal noted that the same could not be interpreted in a different manner by intendment and presumptions by Authorities below. Similar methodology as of Thermax Ltd's Donation and their similar utilization had been accepted by the department in past years. Hence the adoption of different view was held to be based on misinterpretation and presumptions, which was unsustainable. Tribunal held that voluntary contribution of Thermax Ltd towards corpus of the trust could not be included in the income of the assessee in terms of section 11(1)(d).

++ Tribunal noted there was allegation on assessee that it had violated the provision of sec. 11 and 12 by giving donation for furtherance of its objects to the other registered charitable trust having similar objects. But Tribunal found that nothing was brought on record to suggest that assessee's to carry out its objects there is any clause in the memorandum prohibiting this. It had been settled law that the charitable objects can also be promoted with own efforts and by donating other trust having charitable objects.

Assessee's appeal allowed