TODAY'S CASE (DIRECT TAX)

January 31, 2023

++ I-T - Deduction u/s 37(1) of the Act cannot be disallowed where assessee has displayed that expenditure in question was incurred for business purposes: HC

++ I-T - Re-assessment cannot be initiated based on unclear charges & where reasons recorded do not mention as to what material facts were not disclosed by assessee: HC

++ I-T - Pre-SCN procedure u/s 148A is codified mechanism; assessee cannot seek to artificially guide this procedure in its favor; writ court's intervention at pre-SCN stage will be counter-productive: HC

++ I-T - Exemption u/s 11 & 12 cannot be given to donation received by a trust, where such amount is not part of corpus fund, due to trustees being given discretion over utilisation of such amount: ITAT

January 30, 2023

++ I-T - Re-opening of assessment u/s 148 is invalidated where assessee is not granted opportunity of personal hearing: HC

++ I-T- Merely because interest of housing loan is claimed by son of the assessee in his computation, it is not enough to make him the owner of the property: ITAT

++ I-T- Employees' contribution deposited after respective due date cannot be allowed as deduction is applicable in case of an assessment farmed u/s 143(3) as well for intimation framed u/s 143(1) of Act: ITAT

++ I-T- PCIT rightly passed order u/s 263 as failure of AO to examine bank statement in correct perspective had led to under assessment of income :ITAT

++ I-T- Where taxes are shown to have been paid by the payee, no disallowance u/s 40(a)(ia) of the Act was called for in the hands of the payer for default in taxes deduction at source: ITAT

January 28, 2023

++ I-T- No distinction between term 'development of housing in India' and 'purchase & construction of housing in India for residential purposes' as given u/s 36(1)(viii): ITAT

++ I-T - Power u/s 263 can be exercised by PCIT as nothing on record to exhibit any enquiry by AO in the matter and no whisper of sec. 56(2)(vii)(b) in order passed : ITAT

++ I-T- Power division constitutes an 'eligible business' u/s 80IA(1), on the profit of which deduction can be claimed : ITAT

January 27, 2023

++ I-T - High Court's intervention is not needed where net tax effect is far below monetary limit specified in relevant Circular of CBDT: HC

++ I-T - Assessment order passed under erroneous assumption that relevant CBDT Instruction did not apply to assessee, merits being set aside for reconsideration of the matter : HC

++ I-T - Charging of any amount towards consideration for advancing general public utility, which is on cost-basis, cannot be considered to be in nature of trade, commerce, or business: HC

++ I-T - Re-assessment - SCN passed u/s 148A in name of deceased person is invalid; such defect cannot be cured u/s 292BB: HC

++ I-T - Jurisdictional notice issued in name of amalgamating company is illegal, since such entity ceases to exist and cannot be regarded as person u/s 2(31) against whom assessment can be initiated: HC

++ I-T - If there is no irretrievable benefit that had accrued to assessee, professional income cannot be brought to tax in hands of assessee u/s 28(iv): ITAT

++ I-T - No addition on account of undisclosed income can be made only on basis of statement recorded u/s 132(4), and without any corroborating evidence: ITAT

++ I-T - Annual letting value needs to be determined in terms of applicable rent control legislation: ITAT

++ I-T - If evidences filed by assessee proves identity & creditworthiness of loan transactions, fact that summon issued were returned un-served is of little significance to prove genuineness of transactions: ITAT

January 25, 2023

++ I-T - Power of revision u/s 263 can be invoked only where twin conditions of order being erroneous as well as prejudicial to Revenue's interests are satisfied : ITAT

++ I-T - Where the item or issue in respect of which order is revised u/s 263 of the Act is not subject matter of reassessment proceedings: ITAT

++ I-T- Deduction u/s 54B/54F of Act available in cases where investments are made in property purchased in name of wife: ITAT

++ I-T - Amount received as inter-corporate loan & declared as such in financial statement can be treated as deemed dividend u/s 2(22)(e) of the Act : ITAT

++ I-T - Power of revision u/s 263 is rightly exercised where AO accepts assessee's submissions & finalised assessment without factually verifying what is submitted & without calling for any details : ITAT

January 24, 2023

++ I-T - If ITAT while passing order did not see mistakes committed by AO which resulted in erroneous order which was prejudicial to interest of revenue, revisional power can be exercised by CIT by invoking Sec 263: HC

++ I-T - Assessee would not be entitled for deduction on account of alleged diminution in value of investment due to purported loss suffered by said company on such investment of assessee: HC

++ I-T- A case of change of opinion does not satisfy the jurisdictional foundation u/s 147 of the Act: HC

++ I-T - For purpose of making disallownce of expenses u/s 14A & Rule 8D, those investments are to be considered for computing average value of investments which yielded exempt income during relevant A.Y: HC

++ I-T - No TDS can be deducted by insurance companies on interest oncompensation with effect from 1-6-2015 even if interest is beyond Rs. 50,000 in particular year: HC

January 23, 2023

++ I-T - Order u/s 142 is required to be communicated to assessee, so as to know reasons, and, if required, assessee could choose to exercise option to challenge order: SC

++ I-T - Reopening could not be initiated, simply because income had escaped assessment on account of one claim having been wrongly allowed: HC

++ I-T - If assessee had satisfactorily discharged initial burden of proving genuineness of transactions, no additions u/s 69C is permitted merely on basis of suspicion: HC

++ I-T - CBDT Guidelines in respect of timeline for filing application u/s 279(2), does not hinder Revenue's jurisdiction from entertaining application for compounding of offence during pendency of proceedings: HC

++ I-T- Transmission of transfer pricing order from TPO to AO is internal administrative act and cannot impact statutory limitation, which is exclusive prerogative of Section 153 alone: HC

++ I-T - If recipient is eligible for benefit of DTAA then there is no scope for deduction of tax at rate of 20% u/s 206AA, and rate of taxation would be as dictated by provisions of treaty: HC

January 21, 2023

++ I-T- HC under Article 226 of the Constitution is inclined to exercise its powers to enable the petitioner to pay the balance tax : HC

++ I-T - It is only the Assistant Commissioner or Joint Commissioner rank AO who can sanction re-opening of assessment & sanction obtained from Additional Commissioner rank officer is not valid, being contra legem w.r.t. Section 151 of I-T Act: HC

January 20, 2023

++ I-T - AO should verify cash flow statement as submitted by assessee with transactions carried out in bank accounts by accepting opening cash balance, before making addition on basis of unexplained income: ITAT

++ I-T - Single transfer of money on behalf of clients with objective to earn commission, can't be treated as unexplained hawala transactions, simply on basis of non-responsive attitude of concerned persons: ITAT

++ I-T - Assessee cannot be made to suffer for bonafide delay at its end in filing requisite declarations for claiming exemption from TCS, if no limitation is prescribed for filing of declaration required u/s 206C(1A): ITAT

++ I-T - PCIT cannot invoke revisionary jurisdiction u/s 263, if he has not brought anything adverse to show lack of enquiry or an error in assessment order that is prejudicial to interest of revenue: ITAT

++ I-T - If there is bonafide in plea of assessee for raising new claim on account of depreciation by way of additional ground at belated stage, AO cannot disallow such depreciation calling it excessive: ITAT

++ I-T- Penalty u/s 271D r.w.s. 273B cannot imposed in cases where assessee has proved 'reasoable cause' for violating Section 269SS of the Act : ITAT

++ I-T- Employees contribution is money held by assessee employer in trust and is its income unless paid into the fund by 'due date' : ITAT

++ I-T - Scope and purpose of disallowance u/s 14A differs from Section 37/36(1)(iii): ITAT

January 19, 2023

++ I-T - Fact that statutory bodies whose income was eligible for exemption u/s 10(20A) ceased to enjoy that benefit after deletion of provision, does not ipso facto preclude their claim for benefit as GPU category charities u/s 11 r/w/s 2(15): HC

++ I-T - Assessee is not entitled for exemption u/s 54 as property in which part investments of capital gains is done continued to be plot and no construction has started - ITAT

++ I-T-Section 54F of the Act is not applicable, if assessee at time of transfer of original assets, owns more than one residential house other than the new assets acquired by him : ITAT

++ I-T- Assessee is entitled to deduction u/s 40b as AO wrongly relied upon incorrect amount mentioned by assessee in column of inadmissible of Form No. 3CD :ITAT

++ I-T - Genuineness of the transaction is proved by repayment of the loan by assessee to depositors by account payee cheques and interest also paid by assessee to creditors by account payee cheques: ITAT

January 18, 2023

++ I-T - There is no absolute right of assessee to be assessed in particular territory: HC

++ I-T- Every loss of revennue as a consequence of an order of AO cannot be treated as prejudicial to the interest of the Revenue: ITAT

++ I-T - In case of employee's contribution, failure to pay within prescribed due date under respective PF Act or Scheme will result in negating employer's claim for deduction permanently forever u/s 36(1)(va): ITAT

++ I-T - Provisions of Section 40A(3) of I-T Act are not absolute & certain consideration for business expediency & other factors is allowed : ITAT

January 17, 2023

++ I-T- Software and technology has to be tailor-made according to needs, aspirations and legal rights of tax payers and not vice-versa : HC

++ I-T - Compensation received for cancellation of lease by government itself has to be treated as capital receipt, and cannot be taxed as 'income from other sources': HC

++ I-T-Denial of personal hearing is violative of provisions of Section 144B(6)(vii) of Income Tax Act: HC

January 16, 2023

++ I-T - Indians settled in Sikkim prior to Apr 26, 1975 are eligible for exemption regardless of fact that their names are recorded or not in Register of Subjects of erstwhile Kingdom of Sikkim: SC

++ I-T - Assessee-persons other than searched persons shall be liable to pay interest on late filing of return u/s 158BC even in absence of notice: SC

++ I-T - Once there is request made to AO by any assessee for adjournment, it is expected always that same is responded to, more so, when there is faceless assessment: HC

++ I-T - Re-assessment SCN & consequent order merit being set aside where SCN does not clearly bring out allegations against assessee : HC

++ I-T- Invocation of Section 69C of the Act does not arise when source of expenditure already explained by assessee: ITAT

++ I-T- Statement of third party cannot be relied as sole criteria for making addition u/s 68 of the Act : ITAT

++ I-T- Assessee should be given proper opportunity during assessment proceeding and failure to do so, matter should be remitted back: ITAT

January 14, 2023

++ I-T - Additions made by I-T authorities under ex-parte assessment without making independent verification of documents received by investigation wing, cannot be sustained: ITAT

++ I-T - Accrual concept governed by accounting principles of conservatism and prudence, mandates making accounting estimate on basis of information available: ITAT

++ I-T - Pr CIT is justified in invoking his revisionary powers u/s 263(1), if AO while framing assessment has applied rate of tax as per pre-amended law and not as per law existing at relevant time: ITAT

++ I-T - Simply because Pr. CIT felt that AO should have made further enquiries on impugned issue or that case has to be examined from some another angle, it is no valid ground to set aside assessment order: ITAT

January 13, 2023

++ I-T - When issue is 'considered and decided' by appellate authority, then same cannot be revised u/s 263: ITAT

++ I-T - Brought forward business losses can be set off against foreign dividend income: ITAT

++ I-T - Merely cancelling assessment order on basis of observations that AO has carried out inadequate enquiry is not permissible u/s 263: ITAT

++ I-T - Reasonable amount of sales promotion expenses spent on distribution of gifts to dealers to promote goodwill and enhance business interests, cannot be disallowed on ad-hoc basis: ITAT

++ I-T - If assessee has receipts more than Rs. 1 crores, he is under obligation to audit books of account as per Sec 44AB and hence assessee's failure to do so, attracts penalty u/s 271B: ITAT

January 12, 2023

++ I-T - Merely because particular scrip is identified as penny stock by income tax department, it does not mean all transactions carried out in that scrip would be bogus: ITAT

++ I-T- Provisions u/s. 54 of Act, being beneficial provision, should be interpreted liberally in favour of assessee seeking deduction: ITAT

++ I-T - Deduction u/s 80IA is allowed so long as profits & gains emanate directly from business itself & that income earned is inseparably connected with business carried on by assessee: ITAT

++ I-T- Any disallowance cannot exceed the exempt income received during the year: ITAT

January 11, 2023

++ I-T - As Act of 1961 provides an able machinery for assessment/reassessment of tax, Assessee not permitted to abandon with machinery and invoke writ jurisdiction of High Court : HC

++ I-T- The requirement of giving assessee a reasonable opportunity of personal hearing is mandatory u/s 144B: HC

++ I-T - Search assessment u/s 153C is invalid where AO does not generate a satisfaction note w.r.t. material found in course of search operations : HC

++ I-T - Act of 1961 provides an able machinery for assessment/reassessment of tax, Assessee not permitted to invoke writ jurisdiction of High Court : HC

January 10, 2023

++ I-T - Re-assessment order warrants being set aside where it is not based on independent application of mind and is based entirely on report of Investigation Wing : HC

++ I-T - High Court cannot stay recovery of duty demand, where assessee did not take any measures when cause of action first arose & even when it was served SCN u/s 226(3) : HC

++ I-T - Assessment order passed u/s 148A merits being set aside where it was passed without granting a personal hearing: HC

++ I-T - Exemption u/s 11(1)(a) cannot be denied where assessee is registered as charitable organisation holding valid registration u/s 12A of I-T Act : ITAT

++ I-T- Once business is held to have been closed, assessee cannot claim depreciation u/s. 32(1) which could only be allowed if business had been running or was in existence: ITAT

++ I-T- To avoid multiplicity of proceedings, Section 153(5) of the Act gives shorter time-frame of 3 months from date of receipt of order of CIT (A) saving interest of Revenue : ITAT

++ I-T- If a statutory authority has been vested with jurisdiction, he has to exercise it according to its own discretion: ITAT

January 09, 2023

++ I-T - Assessment order merits being set aside where Revenue completely ignores assessee's response; assessee cannot be expected to produce evidence that it was never asked to submit : HC

++ I-T - Order passed by Revenue without affording opportunity of personal hearing and not following prescribed procedure as per section 144B for Faceless assessment, merits to be set aside: HC

++ I-T - PCIT cannot invoke jurisdiction u/s 263 simply because invoice booked for one A.Y was claimed in subsequent A.Y, if payment for both were crystallised in same A.Y & tax rates for both AYs are same: HC

++ I-T- In deciding an appeal , ITAT not confined to grounds set forth in memorandum of appeal or even that taken with its leave: ITAT

++ I-T - In absence of any material to show that cash in respect of which cheque was issued, had traveled back to assessee, it cannot be said that such cash was undisclosed income of assessee: ITAT

++ I-T - Failure to furnish details of claim of expenditure during assessment, merits examination once submitted before revenue authorities: ITAT

++ I-T - Bad debts which is reduced from asset side of debts which amounts to actual write off cannot be adjusted for purpose of book profits u/s.115JB: ITAT

January 07, 2023

++ I-T- If there is any typographical error, assessee has to invoke Section 154 of the Act and not the Appellate Jurisdiction to rectify the mistakes committed during assessment proceedings: ITAT

++ I-T - Assessee is eligible for deduction u/s 80JJAA if his gross total income includes any profits and gains derived from manufacture of goods in factory: ITAT

++ I-T- Revenue authorities were justified in upholding an addition when the employee's contribution if made after the due date for furnishing return of income : ITAT

January 06, 2023

++ I-T - Assessment order confirming a huge tax demand on the assessee, in invalidated, where assessee was not given proper opportunity to file reply to SCN : HC

++ I-T - Duty demand raised against the Directors of a company u/s 179 of the I-T Act is sustainable, where the Directors have shown that non-recovery of tax from the company is not due to any gross negligence, misfeasance or breach of duty on part of the Directors: HC

++ I-T- When assessee has factually demonstrated it had sufficient interest free fund available with it to take care of investment no disallowance of interest expenditure could have been made under Rule 8D(2)(ii): ITAT

++ I-T - If receipts reported in return are more than disclosed in Form 26AS and AO has accepted such receipts, then order passed by AO cannot be held as erroneous in so far as prejudicial to interest of Revenue: ITAT

++ I-T - Where payment for expenses are made by person to one agent who is required to make payment in cash on behalf of such person, then rigours of section 40A(3) are not applicable: ITAT

January 05, 2023

++ I-T - Extended limitation of 10 years u/s 149(1)(b) for reassessment of income escaped more than Rs. 50 lakhs cant be invoked by AO based only on assessee's express disclosure: HC

++ I-T- The issue of petitioner is justified in filing electronic return is to be examined at the stage of admission of writ petition: HC

January 04, 2023

++ I-T - Hire-purchase agreements have two elements, one of bailment and one of sale and they are not a simple transation of giving loan or advance on which interest is payable: SC

++ I-T - No addition of shares issued at high premium can be made if assessee has furnished all evidences proving identity and credit worthiness of investors : ITAT

++ I-T- AO has failed to follow guidelines issued by CBDT for converting limited scrutiny into complete scrutiny without prior approval of concerned PCIT/CIT: ITAT

++ I-T - Brought forward business loss which has occured due to merger of companies under approved scheme of amalgamation, can be adjusted against current year's business income: ITAT

++ I-T - When part of sale consideration along with date of cheque, its number and bank on which it is drawn matched with Draft Agreement, then such material evidence cannot be ignored: ITAT

++ I-T - Person responsible for paying any sum for carrying out any work in pursuance of contract between contractor and specified person, is liable to deduct TDS at time of credit of such sum to account of contractor: ITAT

++ I-T - Cash transactions made by way of colourable device and without explaining source of such cash, merits to be treated as bogus: ITAT

++ I-T - Disallowance u/s 14A r/w Rule 8D cannot exceed on investment expenses incurred for earning exempt income: ITAT

++ I-T- No infallible proof is required to be furnished to satisfaction of Revenue in every case by assessee : ITAT

++ I-T - Power of revision u/s 263 is rightly exercised where AO passes assessment order without considering nature of transactions & evidence on record: ITAT

January 03, 2023

++ I-T - Amendment to Section 43D was made effective w.e.f. 1st April, 2018, but is treated as retrospective in nature ; tax on interest on sticky loans/NPAs on receipt basis, is upheld: HC

++ I-T- Provisions of Section 68 attracted when assessee is unable to explain alleged cash credit and consistent escaped: ITAT

++ I-T - Notings in diary impounded during survey is relevant material for formation of belief that income has escaped assessment and start reassessment proceedings u/s 147 of Act : ITAT

++ I-T- In unabated assessement proceedings, scope of making additions by AO restricted only to income that is not disclosed but detected or which emanates from material found in course of search which are incriminating: ITAT

++ I-T - Addition for Freight Expenses can not be made where TDS is not to be deducted as per law and there is no allegation of bogus freight expenses : ITAT

January 02, 2023

++ I-T - Transfer of assessment u/s 127 is invalid where assessee is not given opportunity of personal hearing before transferring assessment between jurisdictions: HC

++ I-T - Penalty imposed u/s 271(1)(c) r/w Section 274 is invalid where penalty order is passed by AO not having jurisdiction to pass same, due to invalid transfer of assessment: HC