TODAY'S CASE (DIRECT TAX)

September 30, 2020

++ Re-assessment proceedings initiated are vitiated where proper reasons for resorting to such proceedings, are not recorded: ITAT

++ Failure to frame specific charge between concealment of particulars of income or failure to file inaccurate particulars thereof, invalidates penalty proceedings: ITAT

++ Exemption u/s 54F is not available where some ownership right accrues to assessee within one year from sale of original asset, but is not attributable to transaction of purchase: ITAT

September 29, 2020

++ Assessee's appeal cannot be dismissed in limine where e-filing of appeal is delayed due to technical glitches in the e-filing portal: ITAT

++ Penalty notice is invalidated where it omits to specify as to which sub-section of Section 271(1)(c) has been contravened by assessee: ITAT

++ Deduction is allowed in respect of interest income arising from investment made in co-operative bank: ITAT

++ Unexplained cash credits - additions framed are unwarranted where assessee discharges onus of proving source of bank deposits & where AO cannot disprove the explanation & evidence so tendered: ITAT

September 28, 2020

++ It is incumbent upon the AO to issue an SCN to the assessee before proceeding with assessment: HC

++ Expenses which are revenue in nature cannot be allowed in a phased manner & must be claimed only that AY in which such expenses were incurred: ITAT

++ Re-assessment proceedings are unsustainable where based solely on information received from Investigation Wing & not involving independent application of mind by AO: ITAT

September 26, 2020

++ Re-assessment proceedings cannot be initiated in respect of assessments conducted under Chapter XIVB of the I-T Act: ITAT

++ Assessee cannot be charged with concealment of particulars of income if all information for determining income, is declared in returns or is placed on record during assessment or appellate proceedings: ITAT

September 25, 2020

++ Additions framed u/s 153A are unsustainable where not based on any incriminating material found in course of Search operations: ITAT

++ Additions framed on account of unexplained cash credit merit being set aside where AO accepts creditworthiness and genuineness of the parties: ITAT

September 24, 2020

++ Late filing fee u/s 234E cannot be levied where date of filing TDS statement & date of intimation are prior to date of introduction of Section 234E: ITAT

++ Once liability stands converted into share application money with consent of creditors, then same cannot be treated as cessation or remission of liability, either unilateral or bilateral: ITAT

++ In case of unabated assessments, no addition can be framed u/s 153A unless it based on tangible material incriminating the assessee, found in course of search operations: ITAT

++ Theory of extrapolation cannot be applied on mere theoretical or hypothetical basis in absence of any incriminating & corroborative evidence or material brought on record by the AO in this regard: ITAT

++ Statements of third parties per se do not qualify as incriminating evidence: ITAT

September 23, 2020

++ Expenses incurred by the company for holding a dealers' conference or towards sales promotion, cannot be considered for determining assessee's liability towards Fringe Benefit Tax u/s 115WB(2)(c): HC

++ Provisions of section 244A(1)(a) are applicable for computating purpose of the interest computable for the refund payable u/s 244A(1)(a): ITAT

++ Certain laid cannot be said to be agricultural land unless there is some measure of cultivation thereon & if some labor is perfomed on the land towards cultivation: ITAT

++ Fact of payment of consideration for purchase of property and handing over of such property cannot be questioned solely due to there being minor errors in the sale deed: ITAT

++ If machinery purchased is not used for expansion of existing business, then deduction can be allowed on interest paid on loan taken to acquire such machinery: ITAT

September 22, 2020

++ Penalty cannot be imposed for alleged breach of one limb of Sec 271(1)(c), if penalty proceedings were initiated for breach of other limb of Sec 271(1)(c): HC

++ Assessment u/s 153A can be resorted to only if any material incriminating the assessee is found during Search operation conducted u/s 132: ITAT

++ Reopening of assessment - AO cannot make additions in respect of any amount other than that amount for which such proceedings were resorted to: ITAT

September 21, 2020

++ Amounts received by employer from employees leaving service & in violation of employment agreement, is neither includable in total turnover nor in export turnover: HC

++ Assessee does not deserve extension of time for pre-depositing duty, where the Revenue's interests are grossly hampered in the process: ITAT

++ Additions framed by revisited issues already settled, merit being quashed, where based entired on report of Investigation Wing & not involving own inquiry on part of the AO: ITAT

++ Onus rests with assessee to submit evidence establishing that revenue expenses claimed were incurred wholly & exclusively for business purposes: ITAT

September 19, 2020

++ Ascertaining assessee's gross profits also requires examination of rates adopted in assessee's own case for earlier AYs or contemporaneous third party data found to be reliable: ITAT

September 18, 2020

++ Registration u/s 12AA cannot be denied to a trust even if its charitable activities have not yet commenced: ITAT

++ CIT(A) is obligated to decide an appeal on merits & cannot dismiss appeal for non-prosecution: ITAT

++ If an amount is offered to tax as income in suceeding AY, additions need not be framed in respect of such income, during the current AY: ITAT

++ Framing of any additions to assessee's income is per se insufficient grounds to impose penalty, where no concealment of income or funishing of inaccurate particulars is attributable: ITAT

++ Additions framed for unexplained cash credits are sustainable if assessee gave no justification for shares being subscribed at high premium, despite having a very nominal income: ITAT

September 17, 2020

++ Expenditure on assets which may yield exempt income as well as taxable income, need to be apportioned towards both exempted and non exempted income - excess provision made by assessee for allowances cannot be granted in absence of any justification for estimates: ITAT

++ A balancing figure between value of slump sale and value of WDV of assets taken over qualify as goodwill and is eligible for depreciation: ITAT

++ Pooja expenses incurred by the assessee for the smooth functioning of the business are allowable as business expenses: ITAT

++ Income arising from relinquishing rights under an agreement is to be assessed under the head income from capital gains: ITAT

September 16, 2020

++ Suo motu disallowance made by the taxpayer u/s 14A cannot be faulted with, in the absence of satisfaction shown by the AO regarding workings of assessee: ITAT

++ Satisfying test of ownership is not necessary for claiming depreciation on Content management software u/s 32: ITAT

++ Reassessment proceedings initiated based on the change of the opinion of AO is bad in law as not based on any fresh information or material in respect of the transaction in shares: ITAT

++ Application of Section 145(3) is premature, without first examining books of accounts initially not produced by assessee but submitted at later stage: ITAT

++ Deduction u/s 54 cannot be denied solely because fresh investment is made in name of assessee's spouse & cost of construction is only supported by valuation report: ITAT

++ Fair Market Value of property merits being adopted where DVO specifies no reasons for the rates adopted in final report: ITAT

++ Expenses incurred on account of transport charges cannot be disallowed on grounds of non-deduction of TDS, where assessee obtains PAN of transporters: ITAT

September 15, 2020

++ Interest income cannot be treated as business income of assessee, where business operations have not yet commenced - such income cannot be set off against expenditure incurred towards administration, exploration & mining: ITAT

++ Interest & dividend earned by a cooperative credit society, from investments with other cooperative banks/societies is entitled for deductions u/s 80P(2)(a)(i): ITAT

++ Interest paid is allowable u/s 36(1)(iii) where borrowed capital is invested in shares for the purpose of business: ITAT

++ Capital infused by partner of company, cannot be treated as income of the partner - ergo, if partner is unable to explain source of investment, additions in this regard must be made in the hands of the partner & not the company: ITAT

September 14, 2020

++ Due date of deposit of PF and ESI contribution is to be considered from close of the month, for which charges is required to be paid by the employer - deduction disallowed in respect of such payments, where made beyond due date: HC

++ Interest income is entitled to deduction u/s 57(iii) as there is a nexus between the interest paid to the creditors on the unpaid balance and interest earned on the deposits: HC

++ In view of illness of the Managing Director in relevant period, penalty imposed u/s 272A(2)(k) can be restricted to be computed from date of payment of TDS amount: ITAT

++ Provisions of Section 251(2) mandatorily require that an assessee be issued a Show Cause Notice before income declared by the assessee is enhanced by the CIT(A): ITAT

++ Exemption u/s 54F cannot be denied where new property is purchased in name of spouse, using proceeds from sale of old property: ITAT

September 12, 2020

++ Completed assessments can be interfered with by the AO while making the assessment u/s 153A only on the basis of some incriminating material unearthed during the course of search: ITAT

++ Expenditure incurred under the head gifts for employees is in the nature of personal expenses and cannot be construed as incurred wholly and exclusively for the purpose of business of the assessee: ITAT

++ AO cannot invoke provisions of section 40(a)(ia) towards payment made on account of interest without deducting tax at source: ITAT

September 11, 2020

++ Income Tax - For purpose of an income to qualify as business income, profit motive is not an essential ingredient: SC

++ Expenses incurred in respect of development of a new medication are treatable as capital expenses where an asset is brought into existence for enduring benefit of the business: HC

++ If payments by the BCCI to the State Cricket Associations has already been taxed at the hands of BCCI, the same cannot be taxed again as it would amount to double taxation: ITAT

++ Share premium account is to be included in the paid-up capital account, thus leading to it being treated on a par with the paid-up capital: ITAT

++ If parties under dispute cannot conclusively prove nature of pooja expenses with records, a nominal disallowance can be made as it will meet the ends of justice: ITAT

++ Where the very basis of reassessment proceedings does not survive, there is no basis for making additions towards failure to substantiate cost of construction so claimed by assessee: ITAT

September 10, 2020

++ Deduction is allowed in respect of expenses incurred to set up a business, even though the business has not commenced in the relevant period: ITAT

++ Addition cannot be made in respect of deemed rent of unsold flats being held as stock in trade: ITAT

++ AO is obligated to mention the specific charge in penalty order, as to whether it is levied for concealment of income or for furnishing inaccurate particulars of income by assessee: ITAT

++ Not depositing cash in bank account, is per se not reason enough to disprove genuineness of such opening cash which, in the peculiar facts and circumstances of the case, appears to be reasonable: ITAT

++ Disallowance of salary paid to Director in company, need not be disallowed where it is found to be wholly reasonable & appropriate: ITAT

September 09, 2020

++ Wealth Tax - A social club like Bangalore Club, having no profit motive, is an outlier for provisions of Sec 21AA: SC Larger Bench

++ Rejection of provisions of warranty is unsustainable, where such provision is made as per mandate of AS-29 and have been calculated on a scientific basis: HC

++ PCIT cannot invoke revisional jurisdiction on an issue, which AO has already examined in reassessment proceedings: ITAT

++ After issuance of SCN for cancellation of lease on which building was developed, the assessee is not entitled to let out occupied or constructed portion: ITAT

++ Forward contracts entered into in foreign exchange for covering loss arising due to difference in foreign exchange rate or valuation, is not speculative in nature & is incidental to assessee's business: ITAT

++ The CIT(A) is not vested with any authority and jurisdiction to hold any provisions as constitutionally invalid: ITAT

September 08, 2020

++ Forfeiture of security deposit qualifies as business loss arising out of business activities: ITAT

++ Disallowance u/s 36(1)(iii) is untenable where assessee establishes that interest free advances are given out of interest free funds available: ITAT

++ Order passed by CIT(A) is invalid where CIT(A) issues notice to notify date of hearing but proceeds to decide the appeal on merits based on written submissions: ITAT

September 07, 2020

++ Disallowance of TDS credit is not legally sustainable where the AO does not pass speaking orders in this regard: ITAT

++ It is unjustified to treat entire contract receipt as taxable income of assessee, without proving that assessee had facilitated accommodation entries: ITAT

++ Assessee cannot raise any new grounds directly before the Tribunal, while having not raised such grounds before the AO and the CIT(A): ITAT

++ Submission of confirmation letter is per se insufficient & assessee must establish that deductees filed returns showing payments received from the assessee & taxes are paid thereon: ITAT

September 05, 2020

++ Mere paperwork is insufficient to satisfy the AO where real existence of entities, subscribed share capital are suspected & AO insists on a higher degree of proof in that respect: ITAT

++ Onus lies on assessee to file claim of cash credit correctly along with supporting documents, to stave off additions on account of unexplained cash credits: ITAT

September 04, 2020

++ Administrative expenses & other expenses are allowable as business expenditure only from the AY in which the business of the assessee has commenced: ITAT

++ Where sale consideration of immovable property is shown more than DLC, there is no justification for making any addition u/s 50C: ITAT

September 03, 2020

++ Criminal prosecution launched against an assessee for not filing returns despite repeated notices, cannot be quashed, where trial has already commenced, prosecution witnesses have been examined & case is posted for hearing: HC

++ Exercise of revisionary power u/s 263 is upheld where AO does not apply mind when considering assessee's claim for deduction u/s 80IB(10): HC

++ Where assessee deposits tax under MAT, then no penalty can be imposed u/s 271(1)(c) in respect of additions framed under normal provisions: ITAT

++ Possessing ration card of low economic strata does not categorically prove that the assessee does not have any resources to earn reasonable income or is financially unsound: ITAT

September 02, 2020

++ Where CIT(A) has been directed by High Court to decide Stay Application merits, CIT(A) cannot proceed to dispose off the same by relying on Office Memoranda issued by CBDT: HC

++ Any proceedings arising from order passed u/s 263 will not survive, where the revisionary order itself is quashed: ITAT

++ That the AO has not received a copy of a precedent judgment of the Tribunal, is not valid reason for AO to not follow such judgment where it is applicable onto relevant facts & circumstances: ITAT

++ Re-assessment proceedings cannot be resorted to to enable the AO to take different stands in different AYs involving the same issue and the same assessee: ITAT

++ Additions framed for illicit cash deposits are upheld where investigation reveals that the assessee acted as a conduit for writing off bogus expenditure - quantum of additions reduced where assessee was made scapegoat by the real tax evaders: ITAT

++ Where the Tribunal, being the final fact finding authority, has recorded findings in respect of a certain issue, the AO is obliged to follow the findings laid down by the former: ITAT

++ Deduction is allowable in respect of expenditure incurred towards earning income from consultancy services: ITAT

September 01, 2020

++ Assessment order merits being quashed & recovery of duty be stayed, where such order is passed without due application of mind or allowing personal hearing to assessee: HC

++ For proving cash credit as genuine, onus rests with assessee to establish identity & creditworthiness of creditors & genuineness of transactions: ITAT

++ Additions framed u/s 68 are sustainable where assessee fails to demonstrate source of cash deposits: ITAT

++ Additions on account of bogus purchases can be framed in respect of the profit arising from evasion of VAT due to purchases made from grey market: ITAT

++ Whatever valuation of closing stock that is adopted for one AY becomes the valuation of opening stock for the immediately succeeding AY: ITAT