SC: HC larger bench to decide on Sec. 244A interest entitlement
on self-assessment tax refund
SC sets-aside
Delhi HC judgement, remands matter back to HC for fresh decision by
larger bench on the issue of grant of Sec. 244A interest on self-assessment tax
refund; SC notes that HC had decided the issue against the assessee
and had differed with the view expressed by its co-ordinate bench in Sutlej Industries
Ltd. case for AY 1998-99 wherein it was held that assessee would be entitled to
interest u/s. 244A on the refund of self-assessment tax; SC remarks
that “In the circumstances, the appropriate course of action was to refer
the matter to the larger Bench and we fail to understand why it was not
done.”; Notes that the Delhi HC subsequently in later case of Sutlej
Industries has referred the matter to a larger bench considering the contrary
rulings; Accordingly, SC remands the appeal back to HC for its afresh decision
along with Sutlej case by a larger Bench.
HC: Wrong deduction claim cannot make earlier disclosure not
‘true’ to trigger re-assessment
Delhi HC quashes
re-assessment for AY 2003-04 initiated beyond 4 years period on assessee
(engaged in development and export of computer software and rendering ITES
services), holds that the jurisdictional requirement under first proviso to
Sec. 147 to show failure on assessee’s part to disclose full and true
material facts not fulfilled; Rejects Revenue’s stand that as assessee
wrongly excluded telecommunication charges from total turnover while computing
Sec. 10A deduction, such wrong claim of deduction would make earlier disclosure
as not ‘true’; Notes that assessee’s Sec. 10A claim was examined by AO,
remarks that “where
the AO, after examining the return and the documents submitted along with it …,
did not simply accept the version of the Assessee but issued a detailed
questionnaire…, it can no longer be said that such a disclosure was not ‘true’
or ‘full’ only on the basis of the same material more than four years
later.”; Further observes AO did not make effort of
disclosing, in the reasons, what constituted the failure by assessee to make a
full and true disclosure, holds that “A
mere reproduction of the language of the provision will not suffice”, but
the reasons should speak for themselves; Similarly, HC rejects other grounds of
reopening like wrong claim for software license, depreciation on computer
peripherals etc. in absence of assessee’s failure to make full and true
disclosure.
HC : Rejects Revenue's re-assessment of HCL’s export tax-holiday
on profits of foreign branches
Delhi HC allows
DSL Software Ltd.’s (assessee, an ITES company and presently amalgamated with
its parent i.e. HCL Technologies Limited) writ petition for AY
2004-05 and quashes reassessment initiated beyond four years period; AO had
re-opened assessment u/s 148 on the ground that assessee wrongly claimed
deduction u/s 10A on the profits of its overseas branches; Notes that there was
a true and full disclosure of all material facts by assessee and as such there
was no fresh tangible material for AO to conclude that income had escaped
assessment; Rejects Revenue’s contention that where there was a wrong
claim for deduction, then it would amount to be not ‘true’ disclosure by
assessee, holds that it was a mere review of earlier assessment order ; Remarks
that, “it is
not open to the AO to now claim, on the basis of the same assessment record,
that only because a wrong deduction was allowed or claimed there was no “true
disclosure of all material facts”.
HC: Linking seized-document with taxpayer’s undisclosed income
‘must’ for invoking Sec. 292C presumption
Calcutta HC
upholds ITAT order, deletes unexplained expenditure/purchase addition u/s. 69C,
Revenue had made such additions merely based on presumption u/s. 292C
that, the document (which only contained some scribbled figures with no
date) found during search and seizure operation belonged to assessee; Sec. 292C
provides that where any books of account, other documents, money, bullion,
jewellery or thing are or is found in the possession or control of any person
in the course of a search u/s. 132 or survey u/s. 133A, it may, be presumed
that such books of account, other documents, thing etc. belongs to such
person; HC opines that “when
the mandate of law is that authorities may presume certain facts under Section
292C of the Act to come to a conclusion in favour of Revenue, the nature of
information contained in or revealed by such document would have to be examined
to link such document to undisclosed income of the assessee.”; HC
observes that so far as the subject-document is concerned, both the Statutory
Appellate Authorities found insufficient evidence to link the document with the
assessee in the first place, hence, primary fact was not established from which
presumption could be drawn, relies on SC ruling in P. R. Metrani.
HC: Upholds deduction u/s. 37 for legal expenses incurred to
defend taxpayer’s mining lease
Karnataka HC
upholds ITAT order for AYs 2008-09 and 2009-10, allows deduction u/s. 37 for
legal expenditure incurred to protect the lease granted to assessee by
Government, rejects Revenue’s capital expenditure plea; Notes that
assessee was engaged in the business of mining of iron-ore by taking lands on
lease from the State Government, further notes that the grant of lease to
assessee was challenged in a writ petition by Jindal group company and to
defend the same, assessee has incurred the said legal expenditure; Observes
that the expenditure incurred towards legal fee and other litigation charges
was to protect assessee’s business interests in relation to the mining lease,
clarifies that “The
expenditure was not incurred to acquire the mining lease or to get rid of a
defect in the title.”, hence no capital asset was created or
brought to existence; Cites plethora of SC rulings including Dalmia Jain,
Mangalore Ganesh Beedi Works, Meenakshi Mills Ltd.
HC: Multiple establishments in same complex, not prerequisite
for 'commercial complex'; Grants wealth-tax exemption
Delhi HC upholds ITAT’s
order that the two properties held by assessee-company (one in Connaught Circus
and other in Connaught Lane of Delhi) were in the nature of ‘Commercial
Establishments or Complexes’ and therefore outside the purview of 'assets' u/s.
2(ea)(i)(5) of the Wealth Tax Act, 1957 (‘WTA’) for AYs 2004-05 to 2009-10;
Notes that one of the properties was given on rent by assessee whereas other
one was lying vacant, rejects Revenue’s stand that in order to fall outside the
purview of 'assets' u/s. 2(ea)(i)(5), the commercial building had to be let out
to several tenants and not just one and that the expression ‘commercial
establishments or complexes’ should be understood only in the plural and not in
the singular; Further rejects Revenue’s stand that a commercial establishment
means a building comprising more than one establishment meant for commercial
purpose and having the infrastructure and ancillary facilities and
establishments such as banking, financial institution, supermarket, bar etc. ;
HC observes that from reading of the entire Sec. 2(ea), the legislative intent
was not to restrict the benefit of exemption to any particular type of
commercial establishments or complexes; HC remarks that “By reading such a
restrictions into the said clause, the Court would be writing into Section 2
(ea) WTA something which is not there.”, relies on Gujarat HC ruling in
Vasumati Ben Chhaganlal Virani
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