TODAY'S CASE (DIRECT TAX)

April 30, 2021

++ I-T - If AO has reason to believe that reopening is necessary to consider such issue, which was never dealt with in regular proceedings, then reopening is legally sustainable: HC

++ I-T - Income Declaration Scheme does not provide for Revenue to retain taxes so paid, in respect of declaration which is

++ Writ petition seeking protection from notice proposing coercive steps for recovery of duty, cannot be entertained, where assessee does not file Stay application in respect of such notice: HC

++ Where assessment order is passed u/s 143(3) & not u/s 144 due to subsequent compliance during assessment proceedings, penalty u/s 271(1)(b) should not be levied: ITAT

++ Tribunal cannot review own decision unless it is permitted to do so by statute: ITAT

++ In case of a bogus purchase, AO can only disallow estimated profit margin that assessee would have enjoyed in such practices: ITAT

++ Assessee is entitled for deduction u/s. 35(1)(ii) in respect of donation to Herbicure Healthcare Bio Research Foundation : ITAT

April 29, 2021

++ Depreciation is allowed if ownership of equipment is established irrespective of whether it is leased or rented out: ITAT

++ Amount received by assessee from company cannot be treated as deemed dividend u/s 2(22)(e), where assessee is not a shareholder in company advancing loan: ITAT

++ Delay in issuing notice u/s 143(2) would be fatal and assessment is bad in law: ITAT

April 28, 2021

++ I-T - Scope of sub-section (5) of Section 80IA is limited to determination of quantum of deduction under sub-section (1) of Section 80IA, by treating eligible business as only source of income: SC

++ I-T - Pending AAR cases - Ordinance, 2021 - HC suggests interim arrangement till the Board for Advance Ruling is constituted - Matter listed: HC

++ AO while exercising jurisdiction on taxing legal beneficiaries of foreign assets, has to deal in accordance with provisions of Black Money Act: HC 

++ Order of stay, which is interim in nature, does not obliterate binding effect of judgment of concerned High Court as precedent: HC

++ Reopening of assessment is invalid & bad in law where AO mentions wrong & incorrect facts in reasons recorded for reopening of assessment: ITAT

++ Since assessee has provided for liquidated damages based on period of delay and on basis of percentage of contract, value payable as damages in terms of agreement can be allowed: ITAT

++ When no amount in real sense is received by the assessee, inquiry cannot be made for the purpose of sec. 68: ITAT

April 27, 2021

++ AO cannot reject method of valuation adopted by valuer, if he is unable to show that assessee adopted demonstrably wrong approach or that method of valuation was made on erroneous basis: HC

++ Registration granted to a charitable institution u/s 12A cannot be cancelled on grounds other than those specified u/s 12 AA(3): HC

++ Assessee is not entitled to set off of unaccounted income against unexplained investment u/s 69B, in absence of co-relation between unexplained cash receipts and unexplained investment: HC

++ Assessee cannot invoke Writ jurisdiction under Article 226 of Constitution, if he had adequate remedy open to him by statutory appeal before competent authority: HC

++ Illicit transfer of funds to foreign concerns on strength of fake import sufficiently establishes money laundering, and non-disclosure of same by making false entries, amounts to concealment warranting reassessment: HC

++ Benefit of deduction u/s 80JJ(AA) can be availed by employer if its employee (software engineer) had worked in continuity for period of 300 days in consecutive years: HC

++ Since bonafide mistake cannot be held as mens rea, penalty u/s 271(1)(c) cannot be imposed: ITAT

April 26, 2021

++ I-T - Mere issuance of scrutiny notice u/s 143(2) cannot stall remittance of refund due to taxpayer: HC

++ I-T– When reasons rendered by AO cannot be proved to have led to formation of any belief that income has escaped assessment u/s 147, notice issued u/s 148 cannot be sustained – HC

++ I-T - Power of revision u/s 263 cannot be exercised where any valid reasons are not given to establish that original assessment order is erroneous or prejudicial to Revenue's interests : HC

++ I-T - Assessment order warrants being quashed where SCN preceding such order is issued on the same date of personal hearing & after the time of hearing: HC

++ I-T - Re-assessment order merits being set aside where it is passed on the same date on which assessee furnishes reply to Show Cause Notice : HC

++ I-T - Reopening notice issued without obtaining approval u/s 153 and without forming independent satisfaction regarding escapment, merits to be quashed: HC

++ I-T - When purchases from the parties are accepted and sales made out of those purchases are not doubted, payments outstanding in name of those parties accepted in subsequent year, then there is no reason to doubt the genuineness of the outstanding balance: ITAT

++ I-T - When no real income arises in assessee's hand, assessee is not exigible to capital gains tax : ITAT

++ I-T - Since return of income originally filed discloses sale of immovable property and LTCG then there cannot be any reasons to believe that income has escaped assessment for very same transaction for assumption of jurisdiction u/s 147: ITAT

April 24, 2021

++ Re-assessment proceedings merit being stayed, where certain factual aspects such as assessee's eligibility for deduction u/s 80IB remain to be considered: HC

++ Making any claim which is later found to be unsustainable, does not per se amount to furnishing inaccurate particulars of income u/s 271(1)(c): ITAT

++ Appeal, otherwise complete & within limitation, should not be dismissed as not maintainable merely because it is not signed by persons specified u/Rule 45: ITAT

April 23, 2021

++ Order passed for re-opening assessment is unsustainable, where such order is not a speaking order: HC

++ When revision order u/s 263 is set aside as being invalid, subsequent proceedings pursuant to the order become infructuous: ITAT

++ Where purpose of a trust or institution is relief of poor, education or medical relief, it will constitute charitable purpose even if it incidentally involves carrying on of commercial activities: ITAT

April 22, 2021

++ Re-assessment proceedings are unsustainable where approval u/s 147 for commencing such proceedings is given without due application of mind: HC

++ Where Tribunal has no jurisdiction to review order passed by it, remedy for assessee is to file appeal against such order: HC

++ Expenditures in cash cannot be disallowed where supported by self made vouchers & if Revenue is unable to disprove that such expenses were incurred wholly for business purposes: ITAT

++ Capital gain liability does not arise when assessee sells immovable property in capacity of power of attorney holder & not as its owner: ITAT

April 21, 2021

++ I-T - Tribunal's order fixing higher rate of gross profit is sustainable, where erstwhile lower rate computed by CIT(A) was based on certain precedents of HC orders: HC

++ I-T - Fresh claim which was embedded in fresh return filed pursuant to proceedings carried out u/s 153A, does not amount to concealment, unless incriminating evidence is disclosed: HC

++ I-T - Advertisement expenditure incurred wholly & exclusively for purposes of business, is allowable revenue expenditure: HC

++ CBDT Circulars require Revenue authorities to dispose off Stay Petitions in time-bound manner - Revenue given 4 weeks' time to hear & decide upon assessee's Stay Applications: HC

++ I-T - Mere failure of taxpayer to pay tax, interest or penalty dues based on self-assessment, cannot be equated with offence of criminal liability u/s 276C: HC

++ I-T - No disallowance u/s 14A if assessee does not earn any exempt income: HC

++ I-T - U/s 201, tax liability relating to TDS deduction must be held as pending in recipient assessee's case and not that of deductor bank's case: ITAT

++ I-T - If there was no concealment in return filed by taxpayer which was ultimately accepted by Revenue, there cannot be any levy of penalty u/s 271(1)(c): ITAT

April 20, 2021

++ I-T - Additions cannot be made in respect of a security deposit amount which is a liability in the assessee's books of accounts: HC

++ I-T - Principle of mutuality relates to the notion that a person cannot make a profit from himself & an amount received from oneself is not regarded as income and is therefore not subject to tax: HC

++ I-T - No additions are permitted u/s 153C, if no specific observation is made in satisfaction recorded by AO that incriminating material shows availability of any undisclosed income: ITAT

++ I-T - Taxpayer can take benefit of Sec 234A(3) only if return was filed u/s 139 and assessment stood completed u/s 143(3)/144/147: ITAT

++ I-T - Assessee is entitled to claim 100% deduction u/s 80IC for further period of 5 years from the year in which substantial expansion has been undertaken: ITAT

++ I-T - Assessee's appeal can be dismissed having become infructuous in view of fresh assessment order passed by AO in which expenditure capitalized are already found genuine and claim of depreciation has been allowed - ITAT

++ I-T - Reopening of assessment based on borrowed satisfaction and without independent application of mind by AO is null : ITAT

++ I-T - Family member's agricultural income deposited in assessee's account can't be considered as unexplained income: ITAT

April 19, 2021

++ I-T - Where assessee files return of income on 17.10.2009, then it is allowed to claim benefit of amendment made in Finance Act to provisions of Sec 40(a)(ia) : HC

++ I-T - Without issuing summons u/s 131 to a party who filed confirmation, no adverse inference can be drawn : ITAT

++ I-T - ALV of property held by assessee as stock-in-trade of its business as a real estate developer is not liable to be brought to tax in its hands u/s 22: ITAT

++ I-T - As per 2nd proviso to sec 153C, date of initiation of search u/s 132 is from date of receiving of documents by AO having jurisdiction over assessee: ITAT

++ I-T - Once original assessment u/s 153C stood quashed, AO is not permitted to reopen same unless there is tangible material available before him to form belief regarding escaped income: ITAT

++ I-T - Prior period expenses must be allowed in subsequent years if they are crystallised in that year: ITAT

++ I- T - Strategic investment can be excluded for calculating disallowance under Rule 8D : ITAT

April 17, 2021

++ I-T - Since materials seized during search by Revenue incriminate assessee, notices issued u/s 153A and 153C necessarily sustain: HC

++ I-T - When no exempt income is received or receivable during the year, there cannot be any disallowance u/s 14A: ITAT

++ I-T - AO's treatment of business loss as speculative loss will not automatically lead to inference of concealment of income justifying imposition of penalty u/s 271(1)(c) - ITAT

April 16, 2021

++ I-T - Principle of reading down provision can be applied for limited purpose of making it workable & to harmonize it with other provisions of the statute, keeping in view the scheme of the Ac: HC

++ I-T - AO cannot pass assessment order without conducting any enquiry from relevant parties or independent source or evidence: ITAT

++ I-T - Assumption of revisional jurisdiction by PCIT is bad in law as AO has already in respect of share transaction taken a plausible view: ITAT

++ I-T - AO cannot deny deductions for legitimate expenses incurred in assessee's course of business, otherwise allowable, merely because assessee has changed its method of accounting: ITAT

++ I-T- Disallowance for bogus purchases can be reduced to the extent of profit element embedded in these purchase where sales are not in doubt: ITAT 

++ I-T - Addition for bogus purchases is liable to be restricted only to extent of profit which it would have made by procuring goods at a discounted value from grey market - ITAT

April 15, 2021

++ I-T - Making of wrong claim is not at par with concealment or giving of inaccurate information that might call for levy of penalty u/s 271(1)(c): HC

++ I-T - Forex travelling expense has to be reduced from total turnover as well as export turnover, for purpose of computation of deduction u/s 10A: HC

++ I-T - Penalty proceedings cannot be initiated where the issue at hand during assessment, is debatable in nature & where it is not observed that details provided by assessee in ITRs are false or erroneous : HC

++ I-T - Disallowance u/s 14A has to be restricted to dividend income earned by assessee in the relevant AY: HC

++ I -T - Transaction of issue of preference shares at an unjustified face value is not a commercial transaction but it is sham transaction arranged to overcome provisions of section 56(2)(viib): ITAT

++ I -T - Merely for non-appearance of party in response to 133(6) notice, no adverse inference can be drawn against assesse when all supporting evidences have been filed to substantiate claim of expenditure - ITAT

++ I-T - Expenses incurred on distribution & marketing of physician samples of certain medicines merit being allowed u/s 37(1), where such samples are meant for increasing sales of the manufacturing company & to study the medicine's effects: ITAT

++ I-T - Addition framed on account of purchases made from alleged hawala operators merits being restricted to 10% of total amount rather than total quantum of purchases, where the assessee has discharged onus of establishing genuineness of purchases : ITAT

++ I-T - Rate of depreciation cannot be reduced for relevant AY, where a higher rate in respect of the same software was allowed in preceding & succeeding AYs: ITAT

April 14, 2021

++ I-T - If after perusal of CA's certificate, AO proceeded to take independent decision, then assessment order cannot be held to be erroneous calling for revisionary jurisdiction u/s 263: HC

++ I-T - In absence of any income accruing to taxpayer, liability to deduct TDS cannot be fastened on him and consequently, proceeding u/s 201 & 201(1A): HC

++ I-T - Compensation received for refraining from carrying on competitive business, is capital receipt u/s 28(va): HC

++ I-T - Estimated profit addition made on value of ingenuine purchase should take into account average of gross profit made by assessee for relevant AY: ITAT

++ I-T - A society registered under provisions of Karnataka Souharda Sahakari Act, 1997, is a cooperative society u/s 2(19): ITAT

++ I-T - AO cannot make additions based on hypothesis, conjectures and suspicion without conducting independent enquiry: ITAT

++ I-T - Voluntary expenditure incurred at instance of Government, and to discharge taxpayer's obligations towards society as responsible corporate citizen, calls for allowance u/s 37(1): ITAT

++ I-T - If notice issued by AO is vague having not specified under which limb of Sec 271(1)(c) same stands issued, penalty proceedings initiated u/s 271(1)(c) are not sustainable: ITAT

++ I-T - Primary condition to be satisfied for taxing certain amount as deemed income u/s 41(1) is that allowance should have been claimed by taxpayer in respect of loss, expenditure or trading liability: ITAT

++ I-T - Provisions of sec 2(22)(e) for taxing deemed dividend can only be invoked in case of shareholder who is holding substantial interest: ITAT

April 13, 2021

++ I-T - Disallowance of 35% of remuneration of director can't be made particularly when genuineness of job profile is not been questioned: ITAT

++ I-T - No disallowance u/s 14A of interest expenditure can be made when interest free funds are in excess of investments in tax free securities - ITAT

++ I-T - AO cannot follow different methods of apportionment of expenses for each year when there is no change in facts and circumstances of assessee's case: ITAT

++ I-T - Once assessee's income is estimated u/s 44AF, further addition can be made either under S. 68 or 69C or by any other provisions of I-T Act : ITAT

++ I-T - A pplication filed by assessee for extension of stay on recovery of outstanding demand for impugned AY should be accepted when delay in proceedings cannot be attributed to any lapse on assessee's part: ITAT

++ I-T - Pr. CIT can invoke revisional jurisdiction u/s 263 only when AO passes an order that is not in accordance with law: ITAT

++ I-T - Reassessment proceedings initiated on wrong and incorrect facts make reopening u/s 148 null and void: ITAT

April 12, 2021

++ I-T - Expenditure accrued but not actually incurred by taxpayer during year merits to be allowed, if taxpayer follows mercantile system of accounting: HC

++ I-T - Deduction u/s 10A and 10B can be given particularly when concerned unit is formed by splitting up or reconstruction of business already in existence: HC

++ I-T - Society registered u/s 12AA but not registered to any board imparting education is not entitled to benefit of sec. 10(23C)(iiiab): ITAT

++ I-T - For purposes of sec. 69C, failure on part of assessee to prove its claim would lead to rejection of disallowance thereunder: ITAT

++ I-T - When assessee parks surplus fund temporarily by charging interest more than prevailing rate of interest on FDR, interest so charged cannot be held unreasonable: ITAT

++ I-T - Provisions of sec. 2(22)(e) are not applicable when assessee is not a shareholder: ITAT

++ I-T - Direction for apportionment of goodwill between assessee and its parent company, affiliates and subsidiaries without any material or basis is contrary to law: ITAT

++ I-T - At stage of issue of notice u/s 148, AO should only have reason to believe not established fact of escapement of income: ITAT

++ I-T - Once CIT(E) is satisfied about objects and genuineness of a trust's activities and sufficient compliance of other applicable law, provisions of secs. 11 and 12 shall apply from AY following FY in which application for grant of registration u/s 12A and u/s 80G(5)(vi) is made: ITAT

April 10, 2021

++ I-T - Quasi-judicial authority is statutorily obliged to pass reasoned orders - rejection of Stay application is unsustainable where no reasons are recorded for arriving at such a conclusion: HC

++ I-T - Delay in filing returns for the relevant AY can be condoned where sufficient reason is furnished for the same: HC

++ I-T - Interest accrued on corpus fund must be added in corpus fund only and cannot be treated as assessee's income: ITAT

++ I-T - Merely because AO adopts incorrect method for working out disallowance, entire disallowance does not become untenable in law: ITAT

April 09, 2021

++ I-T - Income accrued on loans advanced by investment company, is not be liable to be assessed under provisions of Interest Tax Act: ITAT Third Member

++ I-T - AO has no jurisdiction to enquire source of income earned overseas, if he is satisfied that such source for acquisition of property represents remittance from abroad from taxpayer himself: ITAT

++ Making a wrong claim is not at par with concealment or giving of inaccurate information that may call for levy of penalty u/s 271(1)(c): ITAT

++ When interest expenditure is allowed u/s 36(1)(iii), only net interest amount can be taxed: ITAT

++ Order passed by AO without conducting enquiry and recording his satisfaction is deemed to be erroneous and prejudicial to interest of Revenue for purposes of Sec 263: ITAT

++ Deduction u/s 80IA can be claimed in respect of income from ICDs: ITAT

++ In absence of any specific inaccuracies or shortcomings, AO cannot substitute his own value in place of value determined either on DCF method or NAV method: ITAT

April 08, 2021

++ I-T - Amalgamation reserve being capital in nature, cannot be treated as falling u/s 28(iv): HC

++ Re-opening of assessment is unwarranted when there is no failure on part of assessee to make full & true disclosure of material facts necessary for assessment: HC

++ Trust cannot be denied exemption u/s 11, where its registration certificate is lost in natural calamity of floods, due to which assessee is unable to present same before Revenue: HC

++ In come is to be taxed when it is actually received, if assessee follows project completion method: ITAT

++ Strategic investment is subject to disallowance u/s 14A: ITAT

April 07, 2021

++ Third proviso to Sec 254(2A) does not permit extension of stay order beyond 365 days even if taxpayer was not responsible for delay in hearing: SC Larger Bench

++ Power of revision is not to be exercised where the original assessment order is prejudicial to Revenue's interests, but is not erroneous: HC

++ Power of revision u/s 263 is rightly exercised where the AO allows deduction u/s 80P to assessee without making any enquiry or proper application of mind: HC

++ Carried forward MAT credit of amalgamating company can be availed by amalgamated company: ITAT

April 06, 2021

++ If a transaction is found to be bogus, based on subsequent information, then disclosure of same during original assessment is not disclosure of true & full facts: HC

++ Loan taken from bank cannot be treated as unexplained money: ITAT

++ TDS u/s 194H need not be deducted in respect of a transaction occurring between two persons on principal to principal basis : ITAT

++ Fasli Khasra is official document prepared by Revenue based on physical inspection of agricultural land & so a presumption of truth is attached to such document: ITAT

++ Assessee is eligible for deduction u/s 54F in respect of residential house property purchased in name of spouse : ITAT

April 05, 2021

++ I-T - Only those investments, which yield exempt income can be considered for arriving at average value of investments to compute the disallowance u/s 14A read with Rule 8D: ITAT

++ I-T - Since registration of institution u/s 12AA is cancelled after making donation by assessee, disallowance u/s 35(1)(ii) cannot be made on ground that institution engaged in laundering of unaccounted money: ITAT

++ I-T - Re-opening of assessment is bad in law as reasons recorded for re-opening of assessment does not show that there is failure on part of assessee to truly and fully disclose material facts necessary for the assessment: ITAT

++ I-T - As per proviso to sec. 50 , value of property determined for purpose of stamp value at time of property's registration shall not be taken as sale consideration for working out capital gain: ITAT

++ I-T - Expenses paid to relatives can be disallowed, if AO of opinion that such expenditure is excessive having regard to fair market of goods, services or facilities for which payment is made: ITAT

April 03, 2021

++ I-T - Benefit u/s 11(4A) can be allowed to Trust only upon compliance with twin conditions, namely any Institution or Trust being profits and gains of business: HC

++ Excess consumption of electricity resulting in suppressed production has no basis for computing alleged suppressed production on estimation: ITAT

++ Additions u/s 68 for assessee's failure to establish genuineness & creditworthiness of loan creditors are unsustainable, where additional evidence filed by assessee is not considered: ITAT

++ Search assessment u/s 153A is invalid if no material incriminating the assessee is found in course of Search operations: ITAT

April 02, 2021

++ I-T - A cricket association which qualifies as charitable institution, cannot be denied exemption u/s 11 & 12 on account of it having earned incidental profit from sale of match tickets: HC

++ I-T - Scope of Sec 254(2) is restricted to rectify any mistake in order apparent on face of it and would not extend to review such order: HC

++ Order of cancellation of registration granted u/s 12A must be held to be effective from date on which hearing on first show-cause notice was concluded such notice was formally acquiesced by trust: ITAT

++ I-T - Re-opening of assessment is unsustainable where PCIT sanctions notice u/s 148 without ensuring that the AO records reasons for such exercise, after due application of mind: ITAT

++ I-T - Expenditure incurred out of corpus funds can't be claimed as application of income: ITAT

++ I-T - Benefit of indexed cost of improvement can only be claimed where cost has been actually incurred by taxpayer till date of sale: ITAT

++ I-T - If there is repeated non-compliance by AO to letters issued by CIT(A), then it is open to CIT(A) to decide appeal on basis of materials available on record before him: ITAT

++ I-T - AO has to identify expenditure incurred by taxpayer which is directly attributable to earning of exempt income: ITAT

++ I-T - No disallowance can be made in highly debatable issue by conducting rectification proceedings u/s 154: ITAT

April 01, 2021

++ I-T - SCN can be questioned before Writ Court provided, taxpayer is able to establish that such notice was issued without any jurisdictional fact in existence: HC

++ I-T - AO has no jurisdiction to initiate reopening proceedings on mere change of opinion: HC

++ I-T - Sale proceeds of certified emission reduction credit should be treated as capital receipt: HC

++ I-T - If AO has not applied mind while recording reasons that income has escaped assessment and solely relied on information from Investigation Wing, then reopening is not permitted: HC

++ I-T - If Form 10 is filed within the stipulated time and during the course of assessment proceedings before the AO, there is no bar prohibiting the assessee from modifying the figure in the application : HC

++ I-T - Penalty u/s 271(1)(b) need not imposed if AO is satisfied with compliances made by assessee & where no additions are made to assessee's income: ITAT

++ I-T -It is fit case for remand where the assessee is not provided with sufficient opportunity of hearing before disposal of appeal: ITAT

++ I-T - Onus is on assessee to prove that no interest bearing funds were utilized for investment in these assets which yielded exempted income: ITAT

++ I-T- If sales are not in doubt then only profit element of bogus purchases can be brought to tax: ITAT

++ I-T - Interest paid by assessee to related parties @ 15% can't be considered to be excessive or unreasonable having regard to the fair market value of the goods, services or facility for which payment is made: ITAT

++ I-T - Only profit element from inflation of expenses is to be taxed and not the entire amount following direction issued by Settlement Commission in assessee's group company similar cases: ITAT

++ I-T - Assessee engaged in developing infrastructural facility is entitled to benefits of deduction u/s 80IA(4): ITAT