Monday 23 March 2015

Seven Important Judgements On Core And Controversial Issues


Sardar Balbir Singh vs. ITO (ITAT Lucknow)

S. 147/ 151: Sanction of CIT instead of JCIT renders reopening void. The error cannot be saved u/s 292BB
Since the approval was not obtained from the competent authority, notice issued under section 148 of the Act is void ab-initio and the assessment framed consequent thereto is not a valid assessment. The error is fatal and cannot be saved under section 292BB
 

CIT vs. Kei Industries Ltd (Delhi High Court)

S. 10A/10B: loss suffered in s. 10A/10B units cannot be set-off against the profits of taxable units
The Act of Parliament in consciously retaining this section in Chapter III indicates its intention that the nature of relief continues to be an exemption. Chapter VII deals with the incomes forming part of the total income on which no income-tax is payable. These are the incomes which are exempted from charge, but are included in the total income of the assessee. Parliament, despite being conversant with the implications of this Chapter, has consciously chosen to retain section 10A in Chapter III
 

ACIT vs. Kunvarji Finance Pvt. Ltd (ITAT Ahemdabad)

(i) Modification to client code of client is not necessarily a mala fide act, (ii) Disclosure made in a statement recorded at unearthly hours cannot be given credence, (iii) if a voluntary disclosure is retracted, the AO has to make addition on the basis of documentary evidence
If a statement is recorded at midnight, much credence cannot be given to such statement because the person would not be in a position to make any correct or conscious disclosure in a statement recorded at odd hours. When the statement made during the course of search has been retracted, then it is duty of the Assessing Officer to make further inquiries
 

ACIT vs. Ajit Ramakant Phatarpekar (ITAT Panaji)

S. 40(a)(ia): If an amount becomes taxable due to a retrospective amendment, payments prior to the amendment cannot be disallowed for want of TDS
This is a fact that the retrospective amendment brought by the Finance Act, 2010 was not in existence at the time when the Assessee had made the payments. The Assessee cannot be penalized for performing an impossible task of deducting TDS in accordance with the law which was brought into the statute book much after the point of time when the tax deduction obligation was to be discharged
 

ACIT vs. Bhavook Chandraprakash Tripathi (ITAT Pune)

S. 40(a)(ia): Merilyn Shipping 136 ITD 23 (SB) cannot be followed but Q whether the second proviso to s. 40(a)(ia) is retrospective or not requires to be considered by the AO
The legal argument that the second proviso to section 40(a)(ia) of the Act (which was inserted by the Finance Act, 2012 w.e.f 01.04.2013 to provide that the disallowance u/s 40(a)(ia) of the Act would not be made if the assessee is not deemed to be an assessee in default under the first proviso to section 201(1) of the Act) is retrospective in nature as it has been introduced to eliminate unintended consequences which may cause undue hardships to the tax payers requires to be restored to the file of the Assessing Officer
 

Shubhmangal Portfolio Pvt. Ltd vs. CIT (ITAT Mumbai)

S. 271(1)(c): Disclosing income but classifying it under a wrong head amounts to furnishing inaccurate particulars and attracts penalty
The assessee’s argument supra of the same being only a differential treatment of the very same, i.e., rental, income, so that there has been thus neither any concealment nor furnishing of inaccurate particulars of income, though appealing, is misconceived. The reason is simple. Yes, the assessee has apparently stated the quantum and nature of the income correctly. However, penalty u/s 271(1)(c) is not only qua the misstatement of fact/s but also of law
 

DCIT vs. KDA Enterprises Pvt. Ltd (ITAT Mumbai)

Companies, if authorized by the MoA & AoA, are competent to make and receive gifts. Natural love and affection is a not necessary requirement for a gift. The gift is neither taxable as income s. 56 (pre-amendment) nor as capital gain nor as income u/s.2(22)(e) nor u/s.115JB
Three elements are essential in determining whether or not a gift has been made, a) delivery. b) donative intent,’ and c) acceptance by the donee. Companies are competent to make and receive gifts and natural love and affection are not necessary requirement. Only requirement for company is to make gifts as per respective memorandum and article of association, which authorize the company for the same

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