TODAY'S CASE (DIRECT TAX)

June 30, 2020

++ Cash seized during search operations & voluntarily offered as advance tax, merits being adjusted against pending tax dues: HC

++ Assessment order passed without having requisite jurisdiction & without serving necessary notices, is unsustainable: ITAT

++ It is trite law that bona fide error on part of assessee is per se insufficient grounds to invoke penalty proceedings, if such error is accepted & requisite amount is offered to tax: ITAT

++ Expenses incurred on purchase or upgradation of software cannot be treated as capital in nature, where no enduring benefit is seen to arise therefrom: ITAT

++ Exercising power of revision is sustained where assessment order omitted to examine issues like high rate of TDS refund, low net profit for large gross receipts & mismatch in audit report & ITR in respect of amounts paid to related persons: ITAT

June 29, 2020

++ Disallowance of foreign travel expenses incurred by employees & directors going abroad for official purposes, is unsustainable where no specific discrepancy in such claim is pointed out: ITAT

++ Assessee cannot be barred from examining relevant documents solely because they were not filed in counter to AO's submissions but were instead filed before CIT(A) immediately upon filing appeal: ITAT

++ Theory of peaking credit for ascertaining unexplained investment is applicable only if established on record that relevant bank a/c is used for business purposes & in which sale proceeds are deposited & purchases are made therefrom: ITAT

++ Amount given as unsecured loan, but which is fully repaid with interest after deducting TDS, cannot be termed as unexplained solely based on third party statements: ITAT

June 27, 2020

++ Black Money Act - appeal can be filed against provisions initiated u/s 43 which empowers AO to impose penalty for failure to furnish particulars about asset, including any financial interest in an entity located abroad: HC

++ In absence of jurisdictional High Court verdict, view of other High Courts which favour assessee's contention that provisions of section 234E are not retrospective in nature, is to be followed: ITAT

June 26, 2020

++ It is trite law that depreciation is allowed on payment of Non Compete Fee: HC

++ CIT(A) upheld re-assessment without considering that fire accident at assessee's premises hampered it from promptly replying to SCNs - case remanded - cost imposed on assessee for its non-compliance which led to wastage of public money: ITAT

++ It is settled law that the value of closing stock as on the end of the relevant AY would be the value of the opening stock as on the opening day of the subsequent AY: ITAT

June 25, 2020

++ Penalty notice u/s 271(1)(c) is unsustainable where it does not specify the exact charges levelled against assessee between concealment of income or furnishing inaccurate particulars thereof: ITAT

++ Expenditure of capital or personal nature is not allowable u/s 37(1) - only that expense which is incurred wholly & exclusively for business purpose is allowed: ITAT

++ Depreciation on an asset is allowed u/s 32 only if it is established that the claimant owns such asset in full or in part & also used such asset for business purposes: ITAT

++ The objective behind some incentive or subsidy is deciding factor to ascertain its nature - method of payment through which it is received is irrelevant: ITAT

June 24, 2020

++ Expenses incurred on improvement of premises taken on lease, cannot be treated as capital expenses since no capital asset comes into existence: HC

++ It is trite law that a tax statute is to be strictly construed - ergo, if a taxable person comes within letter of law, tax is leviale irrespective of any hardship: HC

++ When applying any precedent judgment, it is necessary to first compare its facts with those of the present case: ITAT

++ Extent of inquiry to be conducted in respect of a third party is the prerogative of the AO - CIT cannot superimpose own view upon AO regarding manner or extent of such inquiry: ITAT

June 23, 2020

++ Revisiting concluded assessments u/s 153A is not tenable if no incriminating material is found during search proceedings conducted in the relevant AY: ITAT

++ Sale of SIM cards & recharge coupons to distributors at discounted rate cannot be equated with paying commission - TDS u/s 194H is not deductible thereon: ITAT

++ An assessee can be assessed to tax only on actual income & not that income which is calculated based on estimates & surmises: ITAT

++ CIT(A)'s order accepting patent discrepancies in assessee's P&L a/c & statements is unsustainable, where no reasons are assigned for such findings: ITAT

June 22, 2020

++ Provisions of Section 292C cannot be invoked without putting forth any corroborative evidence, where documents seized do not reveal any income to have been earned by assessee: ITAT

++ Deemed dividend u/s 2(22)(e) cannot be said to arise where the transaction of payment of sum and receipt thereof were made on the same date itself by both parties: ITAT

++ Liability u/s 201(1) cannot be fastened upon assessee where TDS amount is paid by the deductee: ITAT

June 20, 2020

++ Deduction u/s 10(23C) is allowed where claimant is institute engaged in imparting education & whose annual receipts are less than Rs 1 crore: ITAT

++ Onus rests with assessee to prove agricultural nature of land, as per mandate of Section 2(14) - 60-day period for such purpose is extendable in exceptional circumstances: ITAT

June 19, 2020

++ Penalty u/s 271(1)(c) cannot be levied where all particulars are correctly disclosed & if no concealment of income is attributable to assessee: ITAT

++ Section 153C, being non obstantive provision, would override provisions of Section 147 - hence, AO has no jurisdiction over other persons u/s 147 if material backing the reasons recorded is seized during Search: ITAT

June 18, 2020

++ Funds received from abroad as share subscription money cannot be deemed to be unexplained cash credit, based solely on surmises & if RBI guidelines are followed in respect of such receipts: ITAT

++ Recovery of documents incriminating the assessee, during search proceedings, is a necessity for assuming jurisdiction u/s 153C: ITAT

++ AO cannot rely solely on figures of financial statements when making adjustment u/s 115JB & completely ignore books of accounts: ITAT

++ Any commercial activity carried out in organized manner in furtherance of charitable objects cannot be termed as business, trade or commerce as per proviso to section 2(15): ITAT

June 17, 2020

++ Not furnishing certain particulars does not warrant rejection of audited books of accounts without pointing out any specific defect therein: ITAT

++ Provisions regarding capital gains cannot be invoked on receipt of earnest money per se, irrespective of transfer of possession of property or execution of sale deed: ITAT

++ When no incriminating material is found during search, observations made in original assessment in respect of other AYs cannot be deemed to be incriminating so as to re-visit assessments for such AYs: ITAT

++ Penalty levied on bank merits being quashed where sufficient reasons are furnished for non-deduction of TDS: ITAT

June 16, 2020

++ Garnishee notice issued by AO merits being quashed where assessee is not advised to seek stay on recovery of duty demand: HC

++ Re-opening of assessment is unsustainable if based on material already available to the AO during original assessment proceedings: HC

++ Not furnishing certain particulars does not warrant rejection of audited books without pointing out any specific defect therein: ITAT

June 15, 2020

++ Statement taken in survey proceedings cannot be relied upon to frame additions u/s 69C, unless backed by cogent evidence: ITAT

++ Penalty order merits being quashed where penal provisions are invoked on non-existent grounds: ITAT

++ Case remanded where lower authorities omit to examine evidence put forth by assessee & if CIT(A) gives no reasons for upholding additions made by AO: ITAT

++Addition framed u/s 68 is not tenable where genuineness of transaction, creditworthiness & identity of investors has been established: ITAT

June 13, 2020

++ Withdrawal of an inadmissible claim through a letter, without filing revised return, is not enough to avoid the rigors of penalty u/s 271(1)(C): ITAT

++ AO has to take into account all amounts utilized for construction of a house for extending benefit of exemption u/s 54F: ITAT

++ Re-assessment proceedings are invalidated where not based on any independent enquiry conducted by AO: ITAT

June 12, 2020

++ Revenue directed to refrain from taking coercive recovery measures against assessee, where no legitimate tax demand is found to arise: HC

++ Significant cause of action does not arise before High Court of Madras, solely because SETCOM order being challenged is passed by its bench at Chennai, but where the assessing authorities concerned are located in some other state: HC

June 11, 2020

++ Re-assessment proceedings initiated after expiry of limitation proceedings are not sustainable if based solely on audit objections & without any fresh evidence being found against assessee: ITAT

++ Where assessee is engaged in the business of investment, expenditure incurred on borrowed capital would not come within the rigours of Sec 36(1 )(iii): ITAT

++ Search assessment initiated despite there being no material incriminating the assesse, is sustained if time limit to issue notice u/s 143(2) is available on the date of search: ITAT

++ Cash advance received against supply of goods does not qualify as loan or specified sum in relation to transfer of immovable property & so will not be affected by provisions of Section 269SS: ITAT

June 10, 2020

++ Family arrangement involving transfer of cash, cannot be treated as gift, benefit or perquisite or as a bogus transaction, where no benefits arise therefrom: ITAT

++ Additions framed on account of unexplained cash deposits, merit being reduced in quantum, where valid explanation is given for a part of such deposits: ITAT

++ Additions framed pursuant to re-assessment, merit being set aside where they are not framed based on any of reasons recorded for resorting to such proceedings: ITAT

++ Unexplained cash credit - additions framed are unsustainable if based solely on assessee's failure to secure attendance of creditors & where other evidence to prove identity, creditworthiness & genuineness of transaction is submitted: ITAT

June 09 , 2020

++ That the assessee is engaged in construction business does not per se become grounds to treat land & buildings as stock in trade: HC

++ An operation or process which renders any unusable commodity into being fit for use, qualifies as manufacture: ITAT

++ Addition in respect of bogus purchases is to be restricted to extent of difference between gross profit rate on genuine purchases & gross profit rate on hawala purchases: ITAT

++Ad hoc disallowance of expenses is unsustainable where the AO does not point out any specific defect in respect of books of accounts or such expenses incurred: ITAT

June 08 , 2020

++ Transfer of assessment is invalid where AO ignored objection thereto raised by the assessee - consequently, assessment order passed without having jurisdiction to do so, is unsustainable: ITAT

++ Processing of returns u/s 143(1) is not tantamount to formation of opinion by AO - hence, re-assessment can be resorted to even on internal material coming to notice subsequently: ITAT

June 06 , 2020

++ Current investment refers to an investment that was readily realizable and was held for not more than one year from the date on which such an investment is made: ITAT

++ Limitation - period of lockdown cannot be treated as an ordinary period during which the normal time limits are to remain in force: ITAT

++ Exemption u/s 54F is allowed on proceeds from sale of land, where the receipts are invested in purchasing a new property which is subsequently converted into a residential property: ITAT

June 05 , 2020

++ I-T services provided from India to foreign enterprises qualify for Sec 80-O deduction: SC

++ Re-assessment proceedings initiated solely on basis of information received from JCIT(OSD) are not tenable, if no independent investigation is done & no satisfaction is recorded: ITAT

++ Power of revision u/s 263 cannot be exercised where assessment order passed by AO is based on a certain decision passed by the jurisdictional High Court & which is later upheld by SC: ITAT

++ Cash gift received from parents & siblings cannot be treated as unexplained income, if assessee discharges onus of explaining nature & source of such deposits: ITAT

June 04 , 2020

++ Power of revision need not be exercised where original assessment order is neither erroneous nor prejudicial to Revenue's interests: ITAT

++ Disallowance of sindry debtors & creditors is sustainable where assessee fails to furnish relevant debit notes & if summons served to parties elicit no response: ITAT

++ Addition cannot be made in assessee's hands due to fraudulent nature of transaction entered into by other parties: ITAT

++ Penalty notice issued in general proforma, without application of mind & not specifying exact charges against noticee, is unsustainable: ITAT

June 03 , 2020

++ Proceeds from sale of shares are treatable as unexplained cash credit where no documents exist to prove purchase or sale of shares: ITAT

++ Denial of recognition u/s 80G is unsustainable where the application made in this regard is not properly examined: ITAT

++ Exemption u/s 10 in respect of agricultural land is rightly denied if such land lies vacant & no agricultural actitvities were carried out on it: ITAT

June 02 , 2020

++ Deduction u/s 10B can be allowed in respect of exports made to third parties as well as inter-unit transfers: HC

++ Interest earned by property developer on temporary deposits of surplus money out of advances received, is assessable as business income & not as income from other sources: ITAT

++ Benefit of Section 147 of I-T Act accrues only to the Revenue & assessee cannot benefit from making new claims in re-assessment proceedings: ITAT

June 01 , 2020

++ Set off against interest received from FDs cannot be allowed if payment of interest by assessee has no nexus with earning of income: ITAT

++ Judicial discipline requires that lower authorities follow decision of the jurisdictional High Court & the Apex Court, irrespective of difference of personal opinion: ITAT

++ Objective behind Section 50C is to tax a deeming income of capital gain where assessee executes a registered sale deed below guideline value prescribed by State Government: ITAT