Demand on account of tax /TDS credit mismatch cannot be enforced coercively

Demand on account of tax /TDS credit mismatch cannot be enforced coercively

No. 275/29/2014-IT-(B)
Government of India
Ministry of Finance
Department of Revenue
Central Board of Direct Taxes
Dated New Delhi, the 1st June, 2015
To,
The CCsIT (CCA)

Subject: Non-deposit of Tax Deducted at Source – regarding. Sir/Madam,

1. Grievances have been received by the Board from many taxpayers that in their cases the deductor has deducted tax at source from payments made to them in accordance with the provisions of Chapter-XVII of the Income-tax Act, 1961 (hereafter ‘the Act’) but has failed to deposit the same into the Government account leading to denial of credit of such deduction of tax to these taxpayers and consequent raising of demand.

Where papers were seized from custody of appellant and affidavits filed were neither based on any record nor corroborated with cogent evidence

IT: Assessee inflated expenditure by showing higher purchase price through fictitious invoices in name of 33 fictitious parties, Tribunal was justified in disallowing 25 per cent of purchase price
IT: Where papers were seized from custody of appellant and affidavits filed were neither based on any record nor corroborated with cogent evidence, levy of penalty was just
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[2015] 58 taxmann.com 44 (Gujarat)
HIGH COURT OF GUJARAT
Vijay Proteins Ltd.
v.
Commissioner of Income-tax*
K.S. JHAVERI AND K.J. THAKER, JJ.
IT REFERENCE NO. 139 OF 1996†
TAX APPEAL NO. 243 OF 2002
DECEMBER  9, 2014
I. Section 37(1), read with sections 40A(3) and 145, of the Income-tax Act, 1961 - Business disallowance - Allowability of (Bogus purchase) - Goods, being oil cakes, were not received from those parties who were shown in books - However, such goods were in fact received from a different source which was exclusively known to assessee only - It was also evident that assessee inflated expenditure by showing higher purchase price through fictitious invoices in name of 33 fictitious parties - Whether Tribunal was justified in disallowing 25 per cent of purchase price - Held, yes [Para 16] [In favour or revenue]

Section 2(14), read with sections 2(47) and 54, of the Income-tax Act, 1961 - Capital gains

IT: Even where assessee acquired property by provisional booking, he was eligible for section 54 deduction for cost of improvement along with cost of investment
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[2015] 55 taxmann.com 536 (Delhi)
HIGH COURT OF DELHI
Commissioner of Income-tax-XVI
v.
Ram Gopal*
S. RAVINDRA BHAT AND R. K. GAUBA, JJ.
IT APPEAL NO. 70 OF 2015†
FEBRUARY  9, 2015
Section 2(14), read with sections 2(47) and 54, of the Income-tax Act, 1961 - Capital gains - Capital asset (Immovable property) - Assessment year 2009-10 - Whether even booking rights or rights to purchase or rights to obtain title of property is also capital asset - Assessee sold capital assets - Assessee claimed that he acquired another property out of sale consideration and also claimed cost of improvement under section 54 - Assessing Officer held that in absence of an agreement to sell, rights acquired by provisional booking of property was not acquisition of new capital asset and cost of improvement was not deductible - Whether since right of acquiring of property by assessee amounted to capital asset, improvement cost was eligible for exemption along side cost of investments - Held, yes [Paras 5 and 7] [In favour of assessee]

Section 23 of the Income-tax Act, 1961 - Income from house property - Annual value (Interest free loans)

IT : Where assessee let out its hotel premises, in view of fact that apart from rent assessee also received interest free loan from tenant which had no nexus with leasing of property, notional interest on said loan could not be included while computing ALV of property
IT : Where letting out of furniture and fixture was incidental to letting out of hotel building, rental income derived in respect of same was to be taxed as 'income from house property'
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[2015] 55 taxmann.com 537 (Hyderabad - Trib.)
IN THE ITAT HYDERABAD BENCH 'B'
Care Institute of Medical Sciences Ltd.
v.
Deputy Commissioner of Income-tax, Circle-1 (2), Hyderabad*
B. RAMAKOTAIAH, ACCOUNTANT MEMBER
AND SAKTIJIT DEY, JUDICIAL MEMBER
IT APPEAL NO. 441 (HYD.) OF 2012
[ASSESSMENT YEAR 2007-08]
JANUARY  30, 2015
Section 23 of the Income-tax Act, 1961 - Income from house property - Annual value (Interest free loans) - Assessment year 2007-08 - Whether where assessee let out its hotel premises, in view of fact that apart from rent assessee also received interest free loan from tenant which had no nexus with leasing of property, notional interest on said loan could not be included while computing ALV of property - Held, yes [Para 11] [In favour of assessee]
Section 22, read with section 28(i), of the Income-tax Act, 1961 - Income from house property - Chargeable as (House property v. Business income) - Assessment year 2007-08 - Whether where letting out of furniture and fixture was incidental to letting out of hotel building, rental income derived in respect of same was to be taxed as 'income from house property' and not as business income - Held, yes - [Para 15] [Partly in favour of assessee]

Section 69A, read with sections 132 and 158BB, of the Income-tax Act, 1961 - Unexplained moneys (Seized documents

IT : Where Assessing Officer made addition to assessee's income on basis of a document seized in course of search, in view of fact that document seized was both undated and unsigned and even taken at face value did not lead to further enquiry on behalf of Assessing Officer, impugned order of Tribunal deleting addition was to be confirmed
IT : Where Assessing Officer in course of block assessment proceedings made addition in respect of unexplained investment relating to purchase of property, in absence of any incriminating evidence with respect to payment over and above reported amount, addition so made deserved to be deleted
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[2015] 56 taxmann.com 7 (Delhi)
HIGH COURT OF DELHI
Commissioner of Income-tax-XIV
v.
Vivek Aggarwal*
S. RAVINDRA BHAT AND R. K. GAUBA, JJ.
IT APPEAL NOS. 66 TO 69 & 75 TO 77 OF 2014†
FEBRUARY  9, 2015
I Section 69A, read with sections 132 and 158BB, of the Income-tax Act, 1961 - Unexplained moneys (Seized documents) - Block assessment years 2001-02 to 2007-08 - A search was carried out at assessee's premises in course of which Assessing Officer seized certain letters/e-mail - On basis of said documents, Assessing Officer made addition to assessee's income on account of undisclosed salary - Commissioner (Appeals) as well as Tribunal deleted addition holding that in absence of any corroborative material to link such e-mail letter or its contents with assessee, inference that some additional income was earned by him by way of salary, was incorrectly drawn - Whether since document seized was both undated and unsigned and even taken at face value did not lead to further enquiry on behalf of Assessing Officer, impugned order of Tribunal deleting addition was to be confirmed - Held, yes [Para 13] [In favour of assessee]
II - Section 69, read with section 158BB of the Income-tax Act, 1961 - Unexplained investments (Purchase of property) - Block assessment years 2001-02 to 2007-08 - Assessee purchased a property for a consideration of Rs. 3.70 lakh - During course of block assessment proceedings, Assessing Officer rejected transaction value and referred matter to AVO who in his report valued property at Rs. 10.65 lakh - Accordingly, addition of Rs. 6.95 lakh was made to assessee's income - Tribunal, however, set aside said addition - Whether in absence of any incriminating evidence with respect to payment over and above reported amount, it could not be concluded that transaction relating to property in question was undervalued, and, therefore, impugned order deleting addition was to be confirmed - Held, yes [Para 17] [In favour of assessee]

Section 158BD, read with section 254, of the Income-tax Act, 1961 - Block assessment in search

IT : There was an error apparent on record in Tribunal's order where Tribunal had not considered evidence of satisfaction recorded under section 158BD
IT : While recalling its order and placing it before a regular Bench to adjudicate/decide merits of appeal, Tribunal is not entitled to observe on merits of adjudication
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[2015] 55 taxmann.com 479 (Bombay)
HIGH COURT OF BOMBAY
Gyan Construction Co.
v.
Income Tax Appellate Tribunal, Mumbai Bench 'G'*
M.S. SANKLECHA AND G.S. KULKARNI, JJ.
WRIT PETITION NOS. 162 & 150 OF 2015†
JANUARY  23, 2015
Section 158BD, read with section 254, of the Income-tax Act, 1961 - Block assessment in search cases - Undisclosed income of any other person (Conditions precedent) - Tribunal by order, dated 29-12-2010 set aside assessment made under section 158BD in case of assessee on ground that no satisfaction under section 158BD was recorded by Assessing Officer of searched person in respect of assessee - While doing so Tribunal did not consider letter of Assessing Officer of searched person recording satisfaction of undisclosed income in case of assessee - On revenue's rectification application, Tribunal recalled order dated 29-12-10 and placed matter before regular bench for consideration by making observation that jurisdictional requirement to proceed against assessee was satisfied - Whether since there was an error apparent on record in Tribunal's order, dated 29-12-2010 as it did not consider communication recording satisfaction under section 158BD, Tribunal rightly recalled its order - Held, yes - Whether, however, while recalling its order it was impermissible for Tribunal to make observation on issue of jurisdiction and, therefore, such observation could not be upheld - Held, yes [Para 8] [In favour of revenue]
Section 254 of the Income-tax Act, 1961 - Appellate Tribunal - Orders of (Recall orders) - Whether once an order is recalled and appeal is to be placed before regular Bench for fresh consideration, it restores status quo ante - Held, yes - Whether, therefore, while recalling its order and placing it before a regular bench to adjudicate/decide merits of appeal, Tribunal is not entitled to observe on merits of adjudication - Held, yes [Para 12] [In favour of assessee]

Section 9 of the Income-tax Act, 1961 - Income - Deemed to accrue or arise in India

IT/ILT : Where assessee rendered services as senior drilling engineer at Nigeria to an Indian company, fees was received by assessee in foreign currency for rendering said services outside India could not be brought to tax in India
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[2015] 55 taxmann.com 484 (Hyderabad - Trib.)
IN THE ITAT HYDERABAD BENCH 'A'
Income-tax Officer (International Taxation)-I, Hyderabad
v.
Janardhan Pannir*
P.M. JAGTAP, ACCOUNTANT MEMBER
AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER
IT APPEAL NO. 721 (HYD.) OF 2014
[ASSESSMENT YEAR 2010-11]
DECEMBER  24, 2014
Section 9 of the Income-tax Act, 1961 - Income - Deemed to accrue or arise in India (Fee for technical services) - Assessment year 2010-11 - Whether where assessee was working as consultant-cum-independent contractor in order to render services as senior drilling/operation engineer at Nigeria (outside India) to an Indian company, amount received by assessee in foreign currency for rendering said services outside India could not be brought to tax in India - Held, yes [Para 14] [In favour of assessee]

Section 10(8A), read with section 271(1)(c), of the Income-tax Act, 1961

IT : Where assessee received certain amount from Asian Development Bank for rendering engineering consultancy services, in view of fact that assessee was under a bona fide belief that said amount was exempt from tax in terms of agreement between parties and having regard to obligation of Government to bear tax on behalf of assessee, AO could not pass penalty order under section 271(1)(c) taking a view that amount in question was taxable in assessee's hands
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[2015] 55 taxmann.com 407 (Delhi)
HIGH COURT OF DELHI
LEA International Ltd.
v.
Assistant Director of Income-tax*
SANJIV KHANNA AND V. KAMESWAR RAO, JJ.
IT APPEAL NO. 17 OF 2014†
SEPTEMBER  3, 2014
Section 10(8A), read with section 271(1)(c), of the Income-tax Act, 1961 - Consultant - Assessment year 2005-06 - Assessee was a foreign compay based in Canada - During relevant period, assessee was engaged in providing engineering consultancy services - Assessee received certain amount under a contract with Asian Development Bank (ADB), for providing consultancy service - In return of income, said amount was claimed as exempt from tax - Assessing Officer held that amount received from ADB was not exempt and was added to return income - He also passed penalty order under section 271(1)(c) - Tribunal noted that application for exemption under section 10(8A) was filed by assessee with Additional Secretary, Department of Economic Affairs, Ministry of Finance, Government of India, after filing of return and issue of notice under section 143(2) which showed lack of bona fides on part of assessee - Accordingly, penalty order was confirmed - It was noted that assessee was under bona fide belief that receipt was exempt on basis of agreement entered into between parties and having regard to obligation of Government of India to bear cost of any taxes etc. in India on behalf of assessee - Even otherwise, in return of income itself, assessee had taken care and caution to reveal full material facts relating to money received from ADB - Whether on facts, it was not a fit case for imposition of penalty and, thus, impugned order passed by Tribunal was to be set aside - Held, yes [Paras 9 and 10][In favour of assessee]
Ved Jain and Pranjal Srivastava, Advs. for the Appellant. Sanjeev Sabharwal, Sr. Adv., Ruchir Bhatia and Ms. Swati Thapa for the Respondent.

Section 43(5) of the Income-tax Act, 1961 - Speculative transactions (Currencies)

IT : Provisions of section 43(5) do not apply to currencies and, therefore, loss incurred by assessee in currency swap contract cannot be denied to be set off against other heads of income taking it as speculative loss
IT : Where assessee company had entered into currency swap contracts for working capital loans which was pre-requisite for its business of export and import of commodities, loss incurred in said contract being in respect of circulating/working capital was an allowable expense under section 37(1)
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[2015] 55 taxmann.com 375 (Ahmedabad - Trib.)
IN THE ITAT AHMEDABAD BENCH 'A'
Adani Enterprises Ltd.
v.
Additional Commissioner of Income-tax, Range-1, Ahmedabad*
SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER
AND N.S. SAINI, ACCOUNTANT MEMBER
IT APPEAL NO. 1545 (AHD.) OF 2014
[ASSESSMENT YEAR 2008-09]
JANUARY  30, 2015
Section 43(5) of the Income-tax Act, 1961 - Speculative transactions (Currencies) - Assessment year 2008-09 - Whether provisions of section 43(5) do not apply to currencies and, therefore, loss incurred by assessee in currency swap contract cannot be denied to be set off against other heads of income taking it as speculative loss - Held, yes [Para 4.10] [In favour of assessee]
Section 37(1) of the Income-tax Act, 1961 - Business expenditure - Allowability of (Currency swap loss) - Assessment year 2008-09 - Whether where assessee company had entered into currency swap contracts for working capital loans which was pre-requisite for its business of export and import of commodities, loss incurred in said contract being in respect of circulating/working capital was to be allowed under section 37(1) - Held, yes [Para 4.6] [In favour of assessee]

Section 251 of the Income-tax Act, 1961 - Commissioner (Appeals)

IT : When a stay application is to be considered and decided, it would be required for concerned authority to record reasons and then to reach to ultimate conclusion as to whether stay should be granted or not and if yes on what condition
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[2015] 55 taxmann.com 408 (Gujarat)
HIGH COURT OF GUJARAT
Hitech Outsourcing Services
v.
Income-tax Officer-Ward 6 (2)*
JAYANT PATEL AND S.H. VORA, JJ.
SPECIAL CIVIL APPLICATION NO.12606 OF 2014
JANUARY  19, 2015
Section 251 of the Income-tax Act, 1961 - Commissioner (Appeals) - Powers of (Power to grant stay) - Assessment year 2011-12 - Whether when a stay application is to be considered and decided, it would be required for concerned authority to record reasons and then to reach to ultimate conclusion as to whether stay should be granted or not and if yes on what condition - Held, yes [Para 5] [In favour of assessee/Matter remanded]
Circulars and Notifications : Instruction No. 1914 dated 2-12-1993

Section 271(1)(c), read with section 145, of the Income-tax Act, 1961 - Penalty For concealment of income (Estimation of income)

IT : Where no return had been filed by assessee and income was assessed on estimate basis by revenue, no penalty could be levied for concealment of income
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[2015] 55 taxmann.com 258 (Gujarat)
HIGH COURT OF GUJARAT
Income-tax Officer
v.
Bombaywala Readymade Stores*
K.S. JHAVERI AND K.J. THAKER, JJ.
TAX APPEAL NO.152 OF 2005
NOVEMBER  3, 2014
Section 271(1)(c), read with section 145, of the Income-tax Act, 1961 - Penalty - For concealment of income (Estimation of income) - During search excess stock was found on physical verification as against book stock worked out as on date of search - Assessee did not file return of income for relevant year in which search had been conducted - Assessing Officer completed assessment for relevant assessment year on basis of materials available with him - Penalty proceedings were initiated for concealing particulars of income - Whether since no income had been filed by assessee and income was assessed on estimate basis by revenue, no penalty under section 271(1)(c) could be levied for concealment of income - Held, yes [Para 6] [In favour of assessee]
K.M. Parikh, Advocate for the Appellant. J.P. Shah and Manish J. Shah, Advocates for the Respondent.

Assessee was willing to pursue remedy as provided in section 260A

IT : Where assessee was willing to pursue remedy as provided in section 260A, coercive proceedings against assessee would be kept in abeyance for a period of two weeks on condition that assessee satisfied 1/3rd of balance liability
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[2015] 55 taxmann.com 177 (Kerala)
HIGH COURT OF KERALA
Thomas George Muthoot
v.
Assistant Commissioner of Income Tax, Circle-I, Thiruvalla*
P.R. RAMACHANDRA MENON, J.
W.P. (C) NO. 27987 OF 2014 (W)
NOVEMBER  6, 2014
Section 260A of the Income-tax Act, 1961 - High Court - Appeal to (Coercive proceedings kept in abeyance) - Assessment years 2006-07 and 2007-08 - Whether where assessee was willing to pursue remedy as provided in section 260A, coercive proceedings against assessee would be kept in abeyance for a period of two weeks on condition that assessee satisfied 1/3rd of balance liability - Held, yes [Para 7] [In favour of assessee]

Section 28(i), read with section 153A, of the Income-tax Act, 1961

IT : Where assessee's claim regarding land development expenses was rightly allowed by Assessing Officer in original return and there was no material to deviate from earlier findings, ad hoc disallowance was not justified in assessment during search
IT : Where seized sale deed revealed that assessee had purchased a residential plot and there was no evidence to establish that said investment was out of past savings, addition as unexplained investment was justified
IT : Where assessee purchased agricultural land through cash payment of Rs.4.8 lakhs as assesse had not bank account where said land was situated, section 40A(3) could not be invoked to disallow said cash payments
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[2015] 55 taxmann.com 256 (Jodhpur - Trib.)
IN THE ITAT JODHPUR BENCH
Smt. Jiya Devi Sharma
v.
Assistant Commissioner of Income-tax*
HARI OM MARATHA, JUDICIAL MEMBER
AND N.K. SAINI, ACCOUNTANT MEMBER
I.T. APPEAL NOS. 211 & 212 (JD.) OF 2013
[ASSESSMENT YEARS 2008-09 & 2009-10]
SEPTEMBER  20, 2013
I. Section 28(i), read with section 153A, of the Income-tax Act, 1961 - Business loss/deduction - Allowable as (Land development expenses) - Assessment years 2008-09 & 2009-10 - Whether, where assessee's claim regarding land development expenses was rightly allowed by Assessing Officer in original return and there was no material to deviate from earlier finding, ad hoc disallowance was not justified in assessment during search by invoking section 153A - Held, yes [Para 3.3] [In favour of assessee]
II. Section 69, read with section 153A of the Income-tax Act, 1961 - Unexplained investments (Construction expenses) - Assessment years 2008-09 & 2009-10 - Search was conducted in assessee premises and a sale deed was seized - As per sale deed, assessee had purchased a residential plot and but same was not shown in books of account - Assessee claimed that said investment was out of her past savings although there was no evidence of same - Whether addition as unexplained investment under section 69 was sustainable - Held, yes [Para 4.2] [In favour of revenue]
III. Section 40A(3) of the Income-tax Act, 1961, read with Rule 6DD of the Income-Tax Rules, 1962 - Business disallowance - Cash payment exceeding prescribed limits (Rule 6DD/Exceptions) - Assessment years 2008-09 & 2009-10 - Whether where assessee purchased agricultural land through cash payments of Rs. 4.8 lakhs, as assessee had no bank account where said land was situated, section 40A(3) could not be invoked to disallow said cash payments made by assessee - Held, yes [Para 5.3] [In favour of assessee]

Where Tribunal arbitrarily reduced quantum of penalty for not depositing taxes before filing return

IT : Where Tribunal arbitrarily reduced quantum of penalty for not depositing taxes before filing return without assigning any tangible reason, matter was to be remanded to reconsider same
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[2015] 55 taxmann.com 280 (Punjab & Haryana)
HIGH COURT OF PUNJAB AND HARYANA
Kudos Chemie Ltd.
v.
Commissioner of Income-tax, Chandigarh*
RAJIVE BHALLA AND B.S. WALIA, JJ.
IT APPEAL NO. 134 OF 2014†
JANUARY  16, 2015
Section 221, read with sections 140A and 220, of the Income-tax Act, 1961 - Collection and recovery of tax - Penalty payable when tax in default (Quantum of penalty) - Assessment years 2008-09 and 2009-10 - Whether where Tribunal rightly held that assessee was liable to pay penalty for not depositing taxes before filing return but while doing so, arbitrarily and without assigning any reason reduced penalty, matter was to be remanded to reconsider same - Held, yes [Para 8] [In favour of revenue/Matter remanded]

Section 65(55b), read with sections 73, 75 and 76, of the Finance Act, 1994 - Taxable services

Service Tax : Where service tax itself was not leviable, assessee cannot be asked to pay interest and penalty merely because he has paid non-payable service tax
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[2015] 55 taxmann.com 242 (Madras)
HIGH COURT OF MADRAS
Commissioner of Central Excise, Tirunelveli
v.
Sundaram Textiles Ltd.*
A. SELVAM AND G. CHOCKALINGAM, JJ.
C.M.A. (M.D.) NOS. 1129 & 1515 OF 2008†
M.P. (M.D) NO. 1 OF 2008
DECEMBER  16, 2013
Section 65(55b), read with sections 73, 75 and 76, of the Finance Act, 1994 - Taxable services - Intellectual Property services - Period 1999 to 15-8-2002 - Assessee received IPR/patent services from a Japanese company and, on department's insistence, paid service tax thereon - Department raised notice demanding interest and penalty as well - Assessee argued that since, prior to 16-8-2002, service itself was not taxable and there was no reverse charge provision, service tax was not payable and consequently, interest and penalty could not be demanded - HELD : Amendment to Service Tax Rules providing for liability of service recipient under reverse charge came into effect only on 16-8-2002; hence, during relevant period, there was no liability to pay service tax - Since assessee was not liable to pay Service Tax, he was also not liable to pay penalty as well as interest - Hence, demand was set aside [Paras 6 to 8] [In favour of assessee]

Section 148 of the Income-tax Act, 1961 - Income escaping assessment

IT: Where order disposing of objection raised by petitioner was beyond reasons recorded for reopening of assessment, Assessing Officer was to be directed to dispose of objections of petitioner to notice, afresh keeping in mind reasons recorded for issuing notice under section 148
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[2015] 54 taxmann.com 327 (Bombay)
HIGH COURT OF BOMBAY
Pransukhlal Bros.
v.
Income-tax Officer-16(3)(1)*
M. S. SANKLECHA AND N. M. JAMDAR, JJ.
WRIT PETITION LODGING NO. 2124 OF 2014
AUGUST  20, 2014
Section 148 of the Income-tax Act, 1961 - Income escaping assessment - Issue of notice for (Objection to notice) - Assessment year 2007-08 - Whether where order disposing of objection raised by petitioner was beyond reasons recorded for reopening of assessment, Assessing Officer was to be directed to dispose of objections of petitioner to notice afresh keeping in mind reasons recorded for issuing notice under section 148 - Held, yes [Para 9][Matter remanded]

Assessee was entitled for deduction towards commission and brokerage

IT : Where statement recorded under section 132(4) had been retracted and revenue did not press into service any other supporting material, assessee was entitled for deduction towards commission and brokerage
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[2015] 55 taxmann.com 176 (Andhra Pradesh)
HIGH COURT OF ANDHRA PRADESH
Commissioner of Income-tax, Karnataka
v.
Shri Ramdas Motor Transport Ltd.*
L. NARASIMHA REDDY AND T. SUNIL CHOWDARY, JJ.
REFERRED CASE NO. 64 OF 2002
OCTOBER  24, 2014
Section 132, read with section 37(1) of the Income-tax Act, 1961 - Search and seizure (Statement under section 132(4)) - Assessment year 1984-85 - Assessing Officer relied upon a statement recorded under section 132(4) from managing director of assessee company, disallowed deduction towards commission and brokerage on sale of automobile parts - Whether Explanation to section 132(4) is retrospective in nature - Held, yes - Whether since statement recorded under section 132(4) had been retracted and revenue did not press into service any other supporting material, assessee was entitled for deduction towards commission and brokerage - Held, yes [Para 22] [In favour of assessee]

Supreme Court sets aside High Court judgment denying exemption u/s 10(23C) by quoting non-existing passage from Supreme Court judgment

IT : Supreme Court sets aside High Court judgment denying exemption u/s 10(23C) by quoting non-existing passage from Supreme Court judgment
• The High Court did not apply its mind independently. What has been copied is one paragraph from the Supreme Court's judgment in Aditanar Educational Institution v. ACIT [1997] 90 Taxman 528 (SC) followed by a paragraph of faulty reasoning by the Assessing Officer and the said faulty reasoning of the Assessing Officer has been wrongly said to be the law laid down by the Apex Court
• The Uttarakhand High Court has erred by quoting a non existent passage from an applicable Supreme Court judgment, namely, case of Aditanar Educational Institution (supra) and quoting a portion of a property tax judgment by Supreme Court which expressly stated that rulings arising out of the Income tax Act would not be applicable. Quite apart from this, it also went on to further quote from a portion of the property tax judgment which was rendered in the context of whether an educational society is supported wholly or in part by voluntary contributions, something which is completely unrelated to section 10(23C)(iiiad)
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[2015] 55 taxmann.com 255 (SC)
SUPREME COURT OF INDIA
Queen's Educational Society
v.
Commissioner of Income-tax
T.S. THAKUR AND R.F. NARIMAN, JJ.
CIVIL APPEAL NOS. 5167 & 5168 OF 2008
8962 OF 2010, 909 OF 2011 AND 2919 TO 2923 OF 2015
MARCH  16, 2015

__._,_.___

Section 115JA, read with section 147, of the Income-tax Act, 1961 - Minimum alternate tax

IT: Where Assessing Officer allowed assessee's claim for set off of loss of company amalgamated with it against its book profits while determining MAT liability, he could not initiate reassessment proceedings subsequently merely on basis of change of opinion that aforesaid loss was wrongly set off
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[2015] 55 taxmann.com 59 (Bombay)
HIGH COURT OF BOMBAY
Crompton Greaves Ltd.
v.
Assistant Commissioner of Income-tax, Circle 6(2)*
M.S. SANKLECHA AND M.S. SONAK, JJ.
WRIT PETITION NO. 224 OF 2007
DECEMBER  22, 2014
Section 115JA, read with section 147, of the Income-tax Act, 1961 - Minimum alternate tax (In case of amalgamation) - Assessment year 1999-2000 - Whether where in course of assessment under section 143(3), Assessing Officer considered all relevant materials disclosed by assessee and thereafter allowed assessee's claim for set off of loss of company amalgamated with it against its book profits while determining MAT liability, in absence of any failure on assessee's part to disclose truly and fully all material facts necessary for assessment, Assessing Officer could not initiate reassessment proceedings after expiry of four years from end of relevant year merely on basis of change of opinion that aforesaid loss was wrongly set off - Held, yes [Para 10] [In favour of assessee]

Increase in conversion charges paid to its sister concern, part of such conversion charges was disallowed under section 40A(2)

IT : Where assessee could not give satisfactory reason for increase in conversion charges paid to its sister concern, part of such conversion charges was disallowed under section 40A(2)
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[2015] 54 taxmann.com 411 (Calcutta)
HIGH COURT OF CALCUTTA
Prakash Engineering Works
v.
Commissioner of Income-tax*
SOUMITRA PAL AND DEBANGSU BASAK, JJ.
IT APPEAL NO. 59 OF 2004†
SEPTEMBER  18, 2014
Section 40A(2) of the Income-tax Act, 1961 - Business disallowance - Excessive or unreasonable payments (Conversion charges) - During relevant assessment year assessee paid conversion charges to a company in which it was having substantial interest - Assessing Officer disallowed payments being excessive/unreasonable - Assessee could not explain that conversion charges paid was equal to market price - Whether disallowance of conversion charges was justified - Held, yes [Para 8] [In favour of revenue]
Soumitra Mukherjee, H.B. Dubey, Mukesh Mishra and P. Dudhuria, Advs. for the Appearing Parties.