TODAY'S CASE (DIRECT TAX)

February 27, 2021

++ Genuineness of transaction can be established by discharging onus of proving identity & creditworthiness of the lending party: ITAT

++ Assessee failed to establish that change in revenue recognition policy is for bona fide reason - Additions framed are upheld: ITAT

++ Registration allowed to claimant trust, where requirements of Sec 12AA are satisfied: ITAT

February 26, 2021

++ I-T - Restoration of appeal - Application filed within limitation period as specified in Rule 24 of ITAT Rules, cannot be dismissed in limine: HC

++ I-T - Addition on account of unexplained loan can be deleted when AO fails to verify authenticity of transaction: ITAT

++ I-T - Rental income which is not received due to dispute between parties but has already accrued cannot be added to assessee's income: ITAT

++ I-T - No disallowance u/s 14A can be made when assessee has already made a suo moto disallowance: ITAT

++ I-T - Books of account produced after the date of survey, cannot be accepted: ITAT

February 25, 2021

++ I-T - A ssessee being primary agricultural cooperative credit society, is entitled to deduction u/s 80P(2)(a)(i): HC

++ I-T - Penalty u/s 271(1)(c) for furnishing inaccurate particulars of income cannot be imposed when suo-moto disallowance u/s 14A is made on a purely estimate basis : ITAT

++ I-T - Additions framed in respect of bogus purchases warrant being restricted to profits arising therefrom & not entire quantum of purchases: ITAT

++ I-T - Delay in filing audit report is condonable where furnished before due date prescribed u/s 139: ITAT

++ I-T - Penalty is unsustainable if AO is unsure about specific charge under which assessee has defaulted: ITAT

++ I-T - Original order of Tribunal can be recalled on ground that main issue was not decided: ITAT

February 24, 2021

++ Assessee is not entitled to refund of amount already deposited under Income Declaration Scheme, adjusted in any manner so far as tax liability is concerned: HC

++ Provisions of Sec 194C relating to TDS deduction are inapplicable onto a Government body discharging Constitutional mandate of imparting education: HC

++ Sec 271AAA & Exp 5A to Sec 271(1)(c) are distinct & operate in indepedent space; 200% penalty contemplated u/s 271(1)(c) only: ITAT

++ Non-obligatory compensation partakes character of interest payment covered u/s 194A of Act and would thus require deducting TDS: ITAT

++ Upon amalgamation, appeal ought to be filed in the name of new entity as the ersywhile entity ceases to exist: ITAT

++ CIT(A) is obliged to pass reasoned order on merits despite non-representation of assessee: ITAT

February 23, 2021

++ I-T - Depreciation on fixed assets, computed on basis of their fair market value, is allowed in current AY, where also allowed in preceding AYs: HC

++ I-T - Nature of expenditure for availing of the services of Society for Airlines, Telecommunication and Information Services is not capital in nature: HC

++ Addition for non-genuine purchases can be resctricted to profit arising therefrom, when all purchases are made via a/c payee cheques: ITAT

++ Re-assessment is not sustainable where SCN u/s 143(2) is not issued: ITAT

++ Deduction u/s 37(1) is allowed in respect of expenses incurred for securing foreign currency liability against exchange fluctuation: ITAT

++ It is assessee's choice to claim exemption u/s 54 on capital gain earned from investment in either of residential flats: ITAT

++ If entries made in a/c books & stock register are accepted by Auditor & VAT Department, then addition based on presumption of manipulation, are not tenable: ITAT

February 22, 2021

++ I-T - Amendments made to bye-laws of Society would only operate prospectively while granting registration u/s 12AA: HC

++ I-T - Tribunal cannot dismiss appeal without adverting to merits of case: HC

++ I-T - Cash deposits - No reasonable explanations therefor & whose topicality in context of Demonetisation drive points to their unaccounted nature: ITAT

++ I-T - Interest paid by cooperative society to its 'associate member' who has not subscribed to shares and who are not entitled to vote, is also exempted from TDS u/s 194A: ITAT

++ I-T - Precedent decision of Tribunal becomes binding for AO to follow, while carrying out assessment in case of identical facts & circumstances: ITAT

++ Reopening initiated by relying on seized documents unearthed during course of search, which belonged to other group companies, merits to be quashed: ITAT

++ I-T - Disallowance u/s 14A is to be computed after excluding dividend income: ITAT

++ I-T - In absence of a specific bar in law on travel, eligible for exemption u/s 10(5), employer cannot be faulted for allowing LFC on travel outside India: ITAT

++ I-T - Once information furnished by taxpayer as called for by AO, tallied AIR information, and same stood accepted, then reopening on basis of change of opinion is not permitted: ITAT

February 20, 2021

++ I-T - Penalty unsustainable where initiated in respect of AY different from that AY in which assessee committed default - Such defect is not rectifiable u/s 292: HC

++ I-T - AO must consider prima-facie case, balance of convenience and financial hardship, before directing assessee to pay tax demanded: HC

++ I-T - Exemption not to be denied merely on ground of typo error: ITAT

++ I-T - Re-assessment not valid if AO is to be blamed for not examining reasons furnished: ITAT

++ I-T - Addition on account of unsecured loan from individual lady who did not file ITR cannot be sustained merely because she did not any source of income: ITAT

++ Interest received u/s 28 of Land Acquisition Act, 1894 on compulsory acquisition of agricultural land qualifies as compensation & is exempt u/s 10(37) - Such receipts are not taxable as income from other sources u/s 56: ITAT

February 19, 2021

++ I-T - CIT(A) can entertain additional grounds in appeal if there has been no change in circumstances, law or grounds as the same stood at assessment stage before the AO: HC

++ I-T - Sec 50C applies only in case of transferor of land and not consenting party: HC

++ I-T - Disallowance u/s 14A r/w Rule 8D cannot be framed where assessee does not earn any dividend or exempt income in AY immediately preceding relevant AY: HC

++ I-T - Once all primary facts are before the assessing authority, he requires no further assistance by way of disclosure: HC

++ I-T - Income on sale of shares must be regarded as long-term capital gains and not business income : ITAT

++ I-T - AO is permitted to make addition only in respect of issues stated in notice u/s 147: ITAT

++ If taxpayer has discharged its primary onus in proving transaction on F&O by producing corroborating evidence, then it cannot be treated as bogus on basis of suspicion: ITAT

++ Interest u/s 234A can be levied when there is delay in serving the notice as well as delay in filing return thereafter: ITAT

++ Loss incurred by beverage producer due to passage of expiry date of finished goods is neither contingent nor non-existent & merits being allowed: ITAT

++ Only the income embedded in on-money receipt must be subjected to taxation: ITAT

++ Power of revision need not be exercised where original assessment order is passed after making due enquiry: ITAT

February 18, 2021

++ I-T - Tribunal cannot exercise its power in issuing suo motu Corrigendum, that too by undated order without hearing Revenue or Assessee: HC

++ I-T - Amended provisions of Section 234D cannot be applied retrospectively: HC

++ I-T - Reopening notice issued beyond period of four years on basis of mere change of opinion, and that too in case of scrutiny assessment u/s 143(3), is not sustainable: HC

++ I-T - Speed money paid for faster completion of projects is normal practice - 10% disallowance for producing self-made cash vouchers, is adequate: HC

++ I-T - Addition on account of unsecured loan cannot be made when assessee has adduced evidence to establish genuineness of transaction: ITAT

++ I-T - Penalty u/s 271AAA cannot be imposed when AO has not mentioned specific charge in SCN: ITAT

++ I-T - Expenditure incurred on Repairs & Maintenance qualifies as Revenue expenditure, even when it is done on substitution of old asset by new asset : ITAT

++ I-T - Additions made solely on presumptions u/s 292C cannot be sustained if presumption is not backed by direct evidence showing there to be no unexplained income: ITAT

++ Investments which yield dividend income must be considered for purpose of computing disallowance u/r 8D(2)(iii) of IT Rules: ITAT

++ Deduction u/s. 80G is allowed where donations are made as part of Corporate Social Responsibility: ITAT

February 17, 2021

++ I-T - Taxpayer should file objections to satisfaction note issued pursuant to notice u/s 153C and exhaust alternate remedy available to him under I-T Act, before approaching Writ Court: HC

++ I-T - Sec 80IA(4)(iv)(c) does not mandate that there has to be increase in value of plant & machinery in books of A/c: HC

++ Franchise fee paid to BCCI for facilitating participation in league and operating cricket teams for only relevant year for which payment pertained, qualifies as revenue expenditure: ITAT

++ Reopening of assessment based on wrong reasons recorded is unsustainable, more so when AO omits to verify the information received from Investigation wing: ITAT

++ Interest received in the period prior to the commencement of business can be termed as capital receipt: ITAT

++ Registration u/s 12AA cancelled for f carrying on commercial activity can be restored when there is no evidence to show such commercial activity: ITAT

February 16, 2021

++ CBDT to consider option of applicability of Sec 115JC in ITR e-filing utility - Matter posted for further hearing: HC

++ I-T - If returned loss is reduced or assessed as income, then tax effect would include notional tax on disputed additions: HC

++ Typographical errors cannot be made grounds to reject books of accounts, if such errors do not affect the computation of profits: ITAT

++ Notional income of property cannot be computed as per Sections 22 & 23(1), till assessee does not receive permission to occupy such property: ITAT

++ Reopening of assessment is not maintainable when a non-existent section is mentioned in the reasons recorded for the reopening: ITAT

++ Interest earned from the money temporarily deposited with the bank, in order to maintain the overdraft limit can be held as business income so as to claim deduction under section 80P: ITAT

February 15, 2021

++ I-T - Mesne profits received under direction of Civil Court for un-authorized occupation of immovable property by erstwhile tenant, is liable to tax as revenue receipt: HC

++ I-T - Interest cost on utilization of borrowed funds for non-business purpose cannot be disallowed u/s 36(1)(iii) when condition of usage for business purpose is already omitted from the section: ITAT

++ I-T - Fees paid for defending act of a partner can be considered to be an act committed during ordinary course of business of firm so as to be allowed as business expenditure : ITAT

++ Exemption u/s 54 54EC is allowed to person who is not owner of immovable property but is consenting party to agreement of sale: ITAT

++ Deduction u/s 80IC cannot be allowed where mandate of Sec 80AC is not satisfied: ITAT

++ Expenditure incurred by company for maintenance of company's own guest houses, is covered u/s 30(a) of I-T Act: ITAT

++ CIT(A) is obligated u/s 250(6) to dispose off appeals through written orders mentioning the points for consideration, decision taken & the reason behind such decision: ITAT

February 13, 2021

++ An entity engaged in the activity of object of general public utility, is engaged for registration u/s 12A: HC

++ Addition in case of unabated assessment cannot be made without reference to incriminating seized material for assessment u/s153A: ITAT

++ Penalty imposed u/s 271(1)(c) be quashed where additions to income are framed on estimate basis: ITAT

++ Addition of untilized MODVAT credit cannot be sustained u/s 145A particularly when the tax effect is revenue neutral: ITAT

February 12, 2021

++ Onus rests with Revenue to show that proper service of SCN is affected to assessee or on agent duly empowered by assessee to accept SCNs - Best of judgment assessment is quashed where AO did not attempt proper service of SCN: ITAT

++ Deduction u/s 80P(2)(d) cannot be disallowed merely on the ground that an appeal in similar matter is pending before jurisdictional High Court: ITAT

++ Additions u/s 68 are not tenable where assessee discharges onus of proving identity, creditworthiness of creditors & genuineness of transaction: ITAT

February 11, 2021

++ I-T - Valuation of property - As per settled law, municipal rateable value of property is to be adopted as Annual Rental Value: ITAT

++ I-T - Reopening of assessment not warranted if full disclosure of receipt of share application money is made at time of original assessment: ITAT

++ Disallowance of any claim raised by the assessee or any wrong claim raised, cannot per se be sufficient grounds to impose penalty u/s 271(1)(c): ITAT

++ Payment of contribution towards PF & ESI can be disallowed, where made after due date prescribed in parent Acts, but before due date for filing I-T returns: ITAT

++ Penalty cannot be imposed u/s 271(1)(c) on charges of furnishing inaccurate particulars of income, where the assessee had in fact disclosed all details, but these were not considered by lower authorities: ITAT

++ The Tribunal is obligated to confine itself to the issues raised in the matter for relevant AY & cannot give directions in speculation of outcome of appellate proceedings of AYs not under consideration: ITAT

February 10, 2021

++ Deduction is allowed in respect of expenditure incurred toward voluntary retirement compensation payment: HC

++ Additions framed u/s 68 are not tenable if assessee sufficiently discharges burden of proving genuineness of transactions: ITAT

++ If assessee adopts Percentage Completion Method in bona fide & continues to use such method in following AYs, then such method must be adopted when computing deduction u/s 80IB(10): ITAT

++ Re-assessment is unsustainable if based solely on information received from Investigation Wing & not involving independent inquiry by AO: ITAT

February 09, 2021

++ Delay of 1233 days in filing SLP - Explanation tendered is far from satisfactory - Assessee's SLP dismissed on limitation: SC

++ I-T - No addition u/s 68 can be made even if AO has not done any investigation on claim of bogus LTCG and proceeded merely on the basis of financials of the other company: HC

++ I-T - Exemption u/s 10(10C) is available in respect of amount received by bank employee upon early retirement: HC

++ I-T - Computation error made in ITR cannot attract penal consequences: ITAT

++ Addition on account of unexplained income is not tenable where assessee is a migrant from Pakistan & there is no official channel available for transfer of funds from Pakistan to India: ITAT

++ Weighted deduction u/s 35(2AB) can be allowed even if the assessee fails to prove that it applied for Form 3CM in relevant AY: ITAT

++ Dividend income being exempt u/s 10(34) cannot be taxed applying Sections 11 to 13 & amended provision restricting this exemption is applicable only from AY 2015-16: ITAT

++ Penalty u/s 271(1B) cannot be imposed when notice u/s 142(1) is not issued: ITAT

++ Deduction u/s 80IA is permissible in respect of works contract services performed by claimant: ITAT

February 08, 2021

++ Disallowance u/s. 36(1)(iii) is not tenable when assessee has share capital & in excess of capital work-in-progress: ITAT

++ Payments made to brokers cannot be disallowed where made through banking channels: ITAT

++ Re-opening of assessment can be resorted to only if new facts are disclosed which were unknown during original assessment: ITAT

++ Penalty u/s 271(1)(c) is unsustainable where the additions based on which such penalty is imposed, are themselves quashed: ITAT

++ Non-consideration of a CBDT Circular at time of passing an order, does not render such order erroneous, where said Circular is non existent on date of passing order: ITAT

February 06, 2021

++ I-T - Assessee cannot approach the HC again to seek the same relief which had already been sought in an earlier petition: HC

++ Re-opening of assessment is invalid where based solely on information received from Investigation Wing & where no independent inquiry is conducted by AO: ITAT

++ Monetary benefit from enhancement of value of a certain property, cannot be attributed to assessee who does not own such land: ITAT

++ Assessment order passed in respect of an entity which has since amalgamated with another, is non est in law: ITAT

++ Power of revision exercised in respect of a non-existent entity, is void ab initio : ITAT

February 05, 2021

++ Powers u/s 482 of CrPC are to be exercised sparingly & with much circumspection; use of such powers even after clearance of tax dues is tantamount to abuse of these powers: HC

++ As per settled law, SCN & assessment order passed in the hands of a deceased assessee are not sustainable: ITAT

++ Computation of book profit as per MAT provisions requires provision for bad and doubtful debts to be added back: HC

++ Re-opening of completed assessment cannot be resorted to in absence of any incriminating material found during search at third party premises: ITAT

++ Re-assessment proceedings cannot be upheld where initiated based on Audit objections which are accepted by Department & so fall under exception provided in CBDT Circular No.5/2017: ITAT

February 04, 2021

++ I-T - Refund cannot be adjusted against outstanding tax liability without a prior intimation u/s 245: HC

++ Revisionary power u/s 263 cannot be exercised solely because the AO took one of many possible views on the relevant issue & that the CIT has a differing opinion on the position so taken: ITAT

++ Unaccounted income - Additions made solely based on loose sheets found at third party's premises, are unsustainable: ITAT

++ Immunity provided in Exp 5 to section 271(1)(c) against penalty u/s 271(1)(c) cannot be granted when assessee has not filed voluntarily return of income: ITAT

++ Penalty u/s 271(1)(c) cannot be levied solely because any claim raised by assessee, is disallowed: ITAT

February 03, 2021

++ I-T - Exemption u/s 10(23C)(vi) is to be denied for delay in filing Form No. 56D if application gets time-barred: HC

++ I-T - Exemption u/s 11 & 12 to organization providing Yoga training - matter tagged for hearing: HC

++ Exemption u/s 11 is allowed to charitable hospital, despite it having made profits through its in-house pharmacy shop: ITAT

++ Unsecured loans - Assessee discharged primary onus of proving identity of creditors - Additions set aside: ITAT

++ Assessment selected for limited scrutiny & later converted to full scrutiny is invalid, if assessment order is passed on day following the day on which approval for conversion is given: ITAT

++ Job-work/labour work expenses are to be deleted even if assessee could not produce the party for verification of genuineness of expenses: ITAT

++ Computation of commission income should be restricted to quantum of investments & sales: ITAT

++ Addition u/s 69C cannot be made merely on the basis of a retracted statement: ITAT

February 02, 2021

++ I-T - High Court's intervention is unwarranted where assessee also has statutory option of appeal available: HC

++ I-T - 'Reason to believe' in context of Sec 147 cannot be based on mere change of opinion of AO: HC Larger Bench

++ I-T - Reopening of assessment cannot be done merely because assessee instead of making full disclosure has disclosed only primary facts relating to the case : ITAT

++ Revisionary jurisdiction is impermissible on basis of wrong assumption of facts: ITAT