Recent Income Tax Judgments – Part 1

By | July 8, 2018
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(Last Updated On: July 14, 2018)

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Income Tax Judgments

No ‘ Anticipatory Bail ‘ against Income tax recovery notice because assessee was ‘ defaulter ’ & not an ‘ offender ’: HC

The petitioner in the instant case is not an ‘offender’ but a ‘defaulter’ as defined in the Second Schedule of the Income Tax Act . Rule 73 specifically provides that no order for the arrest and detention in a civil prison of a defaulter could be made unless the Tax Recovery Officer has issued and… Read More »

Son was legal representative of deceased father : Tax Recovery can be done

HIGH COURT OF CALCUTTA Arvind Kayan v. Union of India DEBANGSU BASAK, J. WP NO. 504 OF 2017 AUGUST  30, 2017 Koushik Chowdhury, Adv. and Ms. Sumita Shaw, Adv. for the Petitioner. Kaushik Chandra, ld. ASG, Md. Nizumuddin, Adv. and Ms. Smita Das De, Adv. for the Respondent. ORDER 1. The Court : The petitioner assails an order dated May 18, 2016 passed by… Read More »

NOIDA is not local authority , No Income Tax Exemption : Supreme Court

The submission of the appellant is that the appellant is covered by Clause (ii) of the Explanation i.e. “Municipality as referred to in clause (e) of Article 243P of the Constitution”. We, while discussing above provisions, have already held that the appellant is not covered by the word/expression of “Municipality” in clause (e) of Article… Read More »

Income Tax Notice served on security guard is Valid if Director appeared before AO : Delhi High Court

Held  Notices were sent by registered post as well as through Inspector. Service was affected at the factory office of the respondent-assessee. The case of the respondent-assessee is that notice was served on the security guard and not on the director or authorised person. Director of the respondent-assessee had thereafter appeared before the Assessing Officer… Read More »

Loss from derivative is not Speculative Loss , It is normal business loss, Set off allowed : ITAT

The loss incurred on account of derivatives would be deemed business loss under proviso to section 43(5) and not speculation loss and, accordingly Explanation to section 73 could not be applied. Their Lordships have further held that that the “loss (on account of sale of derivatives) would be allowed to be set off against income arising out… Read More »

No Reassessment on basis of disallowance in succeeding years ,if disclosure was made : ITAT Chandigarh

The AO could not have any reasons to believe that income had escaped assessment when the very basis of its belief, being the assessment order of a subsequent year, had been reversed by the ITAT before the recording of reasons by the AO. IN THE ITAT CHANDIGARH BENCH ‘A’ Deputy Commissioner of Income-tax, Chandigarh v.… Read More »

Indian subsidiary not permanent establishment under India-Saudi Arabia income tax treaty:

Indian subsidiary not permanent establishment under India-Saudi Arabia income tax treaty:  The Authority for Advance Rulings (AAR) found that the Indian subsidiary did not constitute a fixed place permanent establishment (PE) in India under Article 5(1) of the India-Saudi Arabia income tax treaty because the taxpayer (applicant) was not carrying on its main business from… Read More »

India-United States income tax treaty benefits apply without tax residency certificate

India-United States income tax treaty benefits apply without tax residency certificate:  The Ahmedabad Bench of the Income-tax Appellate Tribunal held that the taxpayer cannot be denied benefits under the India-United States income tax treaty because it has not furnished a tax residency. However, the taxpayer must satisfy eligibility for the tax treaty benefit, and it… Read More »

Reassessment Not Valid if Income Tax Notice not issued on officially notified address : CHHATTISGARH HC

A focused glance of the aforesaid provision would show that the maximum time limit for issuance of  notice under Section 148 of the IT Act is six years from the end of relevant assessment year. In the present case, the relevant assessment year is 2009-10 and the impugned notice is said to have been issued… Read More »

Amount received for providing training services not “fees for technical services”

mount received for providing training services not “fees for technical services” under treaty with the Netherlands: The Mumbai Bench of the Income-tax Appellate Tribunal held that consideration received by the taxpayer for providing training services and for access to a centralised reservation system (that is, common facilities provided to members of the taxpayer group) were… Read More »

Share premium received from foreign holding companies not income chargeable to tax

Share premium received from foreign holding companies not income chargeable to tax The Mumbai Bench of the Income-tax Appellate Tribunal held that a share premium received by the taxpayer from its non-resident holding company was a capital transaction and, thus, not income chargeable to tax in India. The case is: Finproject India (P.) Ltd. Read a June… Read More »

Expenses incurred to improve quality of existing product allowed : GUJARAT HC

what emerges is that the assessee who was engaged in manufacturing textile products, had expended the amount in question for product development undertaken by a sister concern of the assessee on its behalf. The research work did not involve development of a new product or even a new technique or technology to manufacture existing product… Read More »

Encashment of bank guarantee for non performance allowed as exp. :ITAT Delhi

Issue involved in this appeal is whether the bank guarantee encashed by the Delhi transport Corporation on the facts submitted above is an allowable expenditure or not or is allowable to the assessee under section 28 of the income tax act or not. Held The above loss because of an event of the bank guarantee… Read More »

60% depreciation allowed on Printer being part of computer system : Madras HC

Paragraph 6 of the order passed by the Commissioner of Income Tax (Appeals), it has been stated that it can be inferred that the machines “computer printers” under consideration can either be called computers-printers, since a lot of independent functions done by the computers are done by these printers and they can be called an… Read More »

Taxability of gift of shares to “sister concern” under family realignment

Taxability of gift of shares to “sister concern” under family realignment The Delhi Bench of the Income-tax Appellate Tribunal addressed the taxability of a gift of shares to a sister concern under a family realignment “without consideration.” The case is: Gagan Infraenergy Ltd. Read a May 2018 report[PDF 423 KB] Read KPMG Report   Income Tax on… Read More »

Deduction allowed for payment to sugarcane grower in excess of administered price : HC

Mere use of the word “advance” in the letter of the Sugarcane Growers Association by itself would not change the character of the payment, especially when the amount paid was an ascertained liability and the assessee was following mercantile system of accounting and the payment was also done during the relevant accounting year. Furthermore, the… Read More »

No Tax on sum received by partner on retirement from firm for goodwill : HC

HIGH COURT OF BOMBAY Principal Commissioner of Income-tax-26 Mumbai v. R.F. Nangrani HUF M.S. SANKLECHA AND SANDEEP K. SHINDE, JJ. IT APPEAL NO. 33 OF 2016 APRIL  18, 2018 A.R. Malhotra and N.A. Kazi for the Appellant. Ajaykumar R. Singh and Ravindra Poojary for the Respondent. ORDER 1. This Appeal under Section 260-A of the Income Tax Act, 1961 (the Act) challenges the order dated… Read More »

Determining when legislative changes apply retrospectively: Analysis of Supreme Court Judgment

Determining when legislative changes apply retrospectively Case Law : Calcutta Export Company (Civil Appeal No 4339-4340 of 2018) The Supreme Court of India held that when the amount of withheld tax is remitted to the government after the end of the financial year but before the due date for filing the tax return, a legislative… Read More »

Payments for marketing and distribution rights is taxable royalty : ITAT

Payments for marketing and distribution rights held taxable royalty The Bangalore Bench of the Income-tax Appellate Tribunal held that payments for marketing and distribution rights of an “adwords” program were taxable as income. Under the adwords program’s distribution and service agreements, the taxpayer was licensed to use certain confidential information, technical know-how, trade mark, brand… Read More »

No reassessment on basis of objections raised by audit party : Bombay HC : Dated 24.04.2018

The reasons recorded in support of the impugned notice was merely on the basis of borrowed satisfaction of the audit party. This also makes the impugned notice bad. HIGH COURT OF BOMBAY Commissioner of Income-tax-14, Mumbai v. Shankardas B. Pahajani M.S. SANKLECHA AND SANDEEP K. SHINDE, JJ. IT APPEAL NO. 1432 OF 2007 APRIL  24, 2018 P.C.… Read More »

Notice not served to all legal representatives to initiate reassessment proceedings against deceased person : ITAT

The rights and interest of the LRs in the estate of the deceased cannot be taken away from them without giving them a proper opportunity of defending their rights and interest, in accordance with the natural justice principle of audi alterem partem, as held in ‘Umedram’ It is held that the initiation of reassessment proceedings, in the… Read More »

Gift received by individual from his HUF not exempt under Income Tax : ITAT

HUF does not come under specified category of relative under section 56(2)(vii), Explanation (e); therefore, money received by an individual from HUF as gift would not considered as valid gift IN THE ITAT AHMEDABAD BENCH ‘D’ Gyanchand M. Bardia v. Income Tax Officer, Ward 1(2)(2), Ahmedabad S.S. GODARA, JUDICIAL MEMBER AND AMARJIT SINGH, ACCOUNTANT MEMBER IT… Read More »

Deposits in Bank from Credit card Withdrawal : No Penalty : ITAT

ITAT Kolkata Sri Joy Barman Vs. Income Tax Officer ITA No. 599-600/Kol/2016 Date of Judgement/Order : 07/02/2018 FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:- The above two captioned appeals are pertaining to the same assessee for assessment years 2008-09 & 2009-10. Since these appeals belong to the same assessee, therefore these have been… Read More »

Depreciation on Road constructed on BOT basis allowed as Intangible asset : ITAT

IN THE ITAT HYDERABAD BENCH (SPECIAL BENCH) Assistant Commissioner of Income-tax, Circle-16(2), Hyderabad v. Progressive Constructions Ltd. D. MANMOHAN, VICE-PRESIDENT J. SUDHAKAR REDDY, ACCOUNTANT MEMBER SAKTIJIT DEY, JUDICIAL MEMBER IT APPEAL NO. 1845 (HYD.) OF 2014 C.O. NO. 36 (HYD.) OF 2015 [ASSESSMENT YEAR 2011-12] FEBRUARY  14, 2017 J.V. Prasad, Sr. Standing Counsel for the Appellant. V.… Read More »

Apply TDS u/s 194J on provision for Audit Fees :ITAT Chennai

On perusal of section 194J of the Act, we find that tax is deductible at source either at the time of credit of expenditure to the account of the payee or at the time of payment whichever is earlier. In the instant case, the assessee had made provision for audit fees to the account of… Read More »

No Reassessment to verify bank account of assessee if already reflected in ITR : HC

HIGH COURT OF GUJARAT Sunrise Education Trust v. Income-tax officer (Exemption) AKIL KURESHI AND B.N. KARIA, JJ. SPECIAL CIVIL APPLICATION NO. 16726 OF 2017 FEBRUARY  19, 2018 Ms. Vaibhavi K. Parikh, Advocate for the Petitioner. Mrs. Mauna M. Bhatt, Advocate for the Respondent. ORDER   Akil Kureshi, J. – Petitioner has challenged a Notice dated 31st March 2017 issued by the respondent-Assessing Officer… Read More »

 Notice u/s 148 cannot be issued if time to issue notice u/s 143 (3) not expired

ITAT Hyderabad Venkata Siva Reddy Nellore Vs ITO  Appeal Number : ITA No. 962/HYD/2017 Date of Judgement/Order : 22/11/2017 FULL TEXT OF THE ITAT JUDGMENTThis is an appeal by assessee against the order of the Commissioner (Appeals)-Tirupati, dated 30-3-2017, for the assessment year 2012-13.2. The grounds raised by assessee are as under :– “1. The… Read More »

 CBDT instructions on seizure of jewellery & ornaments are discretionary

CBDT instructions on seizure of jewellery and ornaments are discretionary ITAT Indore Shri Keshav Lila Vs. Assistant Commissioner of Income Tax-1(2)  ITA No. 935/Ind/2016 Date of Judgement/Order : 19/01/2018 Related Assessment Year : 2011-12 CBDT instructions which in our view provides a guideline to the search conducting team that no seizure should be made of… Read More »

No reassessment because ITR not reflecting in IT system of dept. if it was filed manually by assessee

IN THE ITAT JAIPUR BENCH Narain Dutt Sharma v. Income-tax Officer, Ward- 6 (1), Jaipu VIJAY PAL RAO, JUDICIAL MEMBER AND VIKRAM SINGH YADAV, ACCOUNTANT MEMBER IT APPEAL NO. 203 (JP.) OF 2017 [ASSESSMENT YEAR 2007-08] FEBRUARY  7, 2018 P.C. Sharma and Prashant Sharma, Advs. for the Appellant. Ajay Malik (Addl. CIT) for the Respondent. ORDER   Vikram Singh Yadav, Accountant Member –… Read More »

 Basement is part of residential house; eligible for Sec. 54/54F : ITAT

IN THE ITAT MUMBAI BENCHES ‘J’ Assistant Commissioner of Income-tax Circle-16(1) Mumbai v. Shrey Sharma Guleri Prime Channel Software Communications (P.) Ltd. JOGINDER SINGH, JUDICIAL MEMBER AND N.K. PRADHAN, ACCOUNTANT MEMBER IT APPEAL NO. 6147 (MUM.) OF 2016 [ASSESSMENT YEAR 2009-10] MARCH  22, 2018 Saurabh Rai for the Revenue. Dilip V. Lakhani for the Assessee. ORDER   Joginder Singh,… Read More »

Amount paid by Prasar Bharati to advertising agencies liable to TDS u/s Sec. 194H TDS: SC

SUPREME COURT OF INDIA Director, Prasar Bharati v. Commissioner of Income-tax, Thiruvananthapuram R.K. AGRAWAL AND ABHAY MANOHAR SAPRE, JJ. CIVIL APPEAL NOS. 3496-3497 OF 2018 APRIL  3, 2018 JUDGMENT Abhay Manohar Sapre, J. – Delay condoned. 2. Leave granted. 3. These appeals are directed against the final judgment and order dated 20.11.2009 passed by the High Court of Kerala at… Read More »

Commission paid to NR for services rendered outside India not liable to tax even after withdrawal of Circular No. 23

IN THE ITAT AGRA BENCH Assistant Commissioner of Income-tax, Circle-1, Agra v. Nuova Shoes A.D. JAIN, JUDICIAL MEMBER AND DR. MITHA LAL MEENA, ACCOUNTANT MEMBER IT APPEAL NO. 435 (AGRA) OF 2015 [ASSESSMENT YEAR 2010-11] SEPTEMBER  28, 2017 Waseem Arshad, Sr. Dr. for the Appellant. Saheb P. Satsangee, C.A. for the Respondent. ORDER   A.D. Jain, Judicial Member – This… Read More »

 No TDS on reimbursement of expenses if it had no income element: HC

No TDS on reimbursement of expenses if it had no income element: HC if no income is attributable to the payee, there is no liability to deduct tax at source in the hands of the tax deductor. HIGH COURT OF KARNATAKA Commissioner of Income Tax v. Kalyani Steels Ltd. MRS. S. SUJATHA AND JOHN MICHAEL CUNHA, JJ.… Read More »

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