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S. 147: Law on reopening of assessments with four years and beyond four years explained with reference to all important case laws. Strictures passed against the AO for making comments which are highly objectionable and bordering on contempt and for being oblivious to law. As the very same ACIT had passed series of orders reopening assessments in ignorance of legal position, a compilation of judgments on reassessment proceedings should be furnished to the Commissioner to study the same. The position of law regarding the writ remedy is so settled, that it is understood even by the law students
Zuari Foods and Farms Pvt. Ltd. vs. ACIT
(2018) TaxCorp(LJ) 15153 (HC-BOMBAY) · Section. 147
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S. 251(1): While the CIT(A) has the power to "enhance the assessment", he has no power to travel beyond the subject-matter of the assessment and is not entitled to assess new sources of income. In order for the CIT(A) to enhance, there must be something in the assessment order to show that the AO applied his mind to the particular subject-matter or the particular source of income with a view to its taxability or to its non-taxability and not to any incidental connection (all judgements considered)
Jagdish Narayan Sharma vs. ITO
(2018) TaxCorp(LJ) 15152 (ITAT-JAIPUR) · Section. 251(1)
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S. 271(1)(c) Penalty: Merely using the words that there is concealment of income and / or furnishing inaccurate particulars of income is not sufficient. The same should be particularized by the AO with a finding as to what particulars of income has been concealed or what particulars of income are inaccurate. The words 'concealment' or giving 'inaccurate particulars of income' have to be read strictly before penalty provisions u/s 271(1)(c) of the Act can be invoked. Zoom Communication 371 ITR 570 (Del) distinguished
CIT. vs. L&T Finance Ltd.
(2018) TaxCorp(LJ) 15151 (HC-BOMBAY) · Section. 271(1)(c)
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Bogus Long-term capital gains: As neither the statement of Mukhesh Choksi was provided to the assessee nor cross-examination was allowed and it was not even placed on record, the action of the AO in treating the LTCG and STCG as income from other sources was not warranted
ITO. Vs. K. Ramakrishna Reddy
(2018) TaxCorp(LJ) 15150 (ITAT-HYDERABAD)
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Applicability of s. 80 to s. 153A returns: A return filed u/s 153A is deemed to be a return filed u/s 139(1). Accordingly, the restrictive provisions of s. 80 do not apply. The return u/s 153A, once accepted and assessed, replaces the original return filed u/s 139. Therefore, the assessee is eligible for carry forward business loss
ACIT. Vs. Splendor Landbase Limited
(2018) TaxCorp(LJ) 15112 (ITAT-DELHI) · Section. 80 to 153A
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S. 44C: A non- resident assessee is entitled to claim deduction of an amount equal to 5% of the adjusted total income as expenditure in the nature of Head Office (HO) Expenses. The fact that the expenses are not debited in the Profit & loss account or the books of account is irrelevant. The entries in the books of account are not conclusive
Ernst & Young Ltd. vs. ACIT
(2018) TaxCorp(LJ) 15110 (ITAT-DELHI) · Section. 44C
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Entire law explained on (a) whether a subsidiary of a foreign company constitutes "business connection" and/ or "fixed Permanent Establishment" and/or "Dependent Agent Permanent Establishment" of assessee in India, (b) whether any attributes of profits on account of signing, network planning and negotiation of off-shore supply contracts in India could be attributed to such business connection/ permanent establishment and (c) whether notional interest on delayed consideration of supply of equipment and licensing of software taxable in the hands of assessee as interest from vendor financing
Nokia Networks OY vs. JCIT
(2018) TaxCorp(LJ) 15108 (ITAT-DELHI)
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S. 143(3)/ 292C: If the AO wants to rely upon documents found with third parties, the presumption u/s 292C against the assessee is not available. As per the principles of natural justice, the AO has to provide the evidence to the assessee & grant opportunity of cross-examination. Secondary evidences cannot be relied on as if neither the person who prepared the documents nor the witnesses are produced. The violation of natural justice renders the assessment void. The Dept cannot be given a second chance (All judgements considered)
CIT. Vs. Sunita Dhadda
(2018) TaxCorp(LJ) 15102 (SC) · Sections. 143(3), 292C
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It is painful to note that the Dept officials in order to achieve targets at the close of the FY not only are tempted to ignore the principles of law and natural justice but cross their limits, in complete violation of the orders issued by judicial authorities. They are pressurised by higher officials to do so and they have to choose the lesser risky option of the two i.e. either to face the departmental action for not achieving targets or to face contempt proceedings. They choose the later option because perhaps they think that courts will not opt for strict view in case the amount coercively recovered is refunded after passing of the cut off date i.e. 31st March, and an apology tendered to the Court
Greater Mohali Area Development Authority vs. DCIT
(2018) TaxCorp(LJ) 15101 (ITAT-CHANDIGARH)
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S. 2(47)/ 45: Argument that the allotment of shares by the assessee's holding co to foreign investors at huge valuation results in a "transfer"/ "indirect transfer" of the assessee's assets to the foreign investors is not correct. Argument that a multi layered holding structure was deliberately created to avoid taxes in India and to conceal the information about the ultimate beneficiaries is also not correct
Supermax Personal Care Private Limited vs. ACIT
(2018) TaxCorp(LJ) 15093 (ITAT-MUMBAI) · Sections 2(47), 45
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S. 147/148: If the reopening is based on information received from the investigation dept, the reasons must show that the AO independently applied his mind to the information and formed his own opinion. If the reopening is done mechanically, it is void. Also, if the reasons refer to any document, a copy should be provided to the assessee. Failure to do so results in breach of natural justice and renders the reopening void
Deepraj Hospital (P) Ltd vs. ITO
(2018) TaxCorp(LJ) 15092 (ITAT-AGRA) · Sections 147, 148
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S. 254(2): The limitation period for filing a Rectification Application has to be computed from the date of "communication" of the order and not from the date of passing the order. The fact that the order was pronounced in open court is not relevant because the parties will not be aware of the mistakes therein until after perusal of the order.
Jagmohan Gurbakshish Singh vs. DCIT
(2018) TaxCorp(LJ) 15065 (ITAT-CHANDIGARH) · Section. 254(2)
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S. 143(2) Limited scrutiny: The CBDT Circulars which restrict the right of the AO in limited scrutiny cases apply only in cases where the AO seeks to do comprehensive scrutiny to find if there is potential escapement of income on other issues. However, if the s. 143(2) notice seeks information on whether the share premium is from disclosed sources and is correctly offered to tax, the AO can also inquire into whether the premium exceeds the FMV and is taxable u/s 56(2)(viib)
Sunrise Academy of Medical Specialities (India) Private Limited v. ITO
(2018) TaxCorp(LJ) 15064 (HC-KERALA) · Section. 143(2)
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S. 147: Even a s. 143(1) assessment cannot be reopened without proper 'reason to believe'. If the reasons state that the information received from the VAT Dept that the assessee entered into bogus purchases "needed deep verification", it means the AO is reopening for doing a 'fishing or roving inquiry' without proper reason to believe, which is not permissible
PCIT. Vs. Manzil Dineshkumar Shah
(2018) TaxCorp(LJ) 15044 (HC-GUJARAT) · Section. 147
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S. 9/ 40(a)(i)/ 195: Explanation 2 to s. 195(1) inserted by Finance Act 2012 with retrospective effect from 01.04.1962 has bearing while ascertaining payments made to non-residents is taxable under the Act or not. However, it does not change the fundamental principle that there is an obligation to deduct TDS only if the sum is chargeable to tax under the Act. If the conclusion is arrived that such payment does not entail tax liability of the payee under the Act, s. 195(1) does not apply
PCIT. vs. Nova Technocast Pvt. Ltd.
(2018) TaxCorp(LJ) 15026 (HC-GUJARAT) · Sections. 9, 40(a)(i), 195
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S. 147/ 151: If the AO reopens on the basis of information received from another AO without further inquiry, it means he has proceeded "mechanically" and "without application of mind". If the CIT does not give reasons while according sanction, it implies that he has also not applied his mind. Both render the reopening void (All imp judgements referred)
Sunil Agarwal vs. ITO
(2018) TaxCorp(LJ) 15025 (ITAT-DELHI) · Sections. 147, 151
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S. 56(2)(viia)/ 47(iii): Capital gains on shares transferred via "Gift": Surprising that huge volume of shares in a public limited company is transferred by assessee to another company without any consideration, without any proper documentation being executed as per law and giving it a nomenclature of “gift”. Difficult to imagine Articles of Association of a company would provide for gifting of assets of the company to another company unless it be one which has been set up for some purpose. The assessee has to establish to the hilt, the factum, genuineness and validity of the transaction, the right to enter into such transaction and bonafides of such transaction, especially when, revenue challenges its genuineness. There is no agreement/document that has been executed between group companies forming part of family realignment. To postulate that a company can give away its assets free to another even orally, can only be aiding dubious attempts at avoidance of tax payable under the Act unless it is supported by documentary evidence
Gagan Infraenergy Ltd. Vs. DCIT
(2018) TaxCorp(LJ) 15021 (ITAT-DELHI) · Sections. 56(2)(viia), 47(iii)
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S. 40A(3) Rule 6DD: No disallowance can be made for cash payments if the transaction is genuine and the identity of the payee is known. Rule 6DD is not exhaustive. The fact that the transaction does not fall with Rule 6DD does not mean that a disallowance has to be per force made (all judgements considered)
M/s. A Daga Royal Arts vs. ITO
(2018) TaxCorp(LJ) 15020 (ITAT-JAIPUR) · Section. 40A(3)
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The fact that the parties to whom payments were made did not appear before the AO does not justify a disallowance if the assessee has discharged the initial onus and produced documentary proof. The assessee cannot compel the appearance of the parties before the AO. The onus is on the AO to carry out enquiries based on the PAN Nos to find out the genuineness of the parties
PCIT. Vs. Chawla Interbild Construction Co. Pvt. Ltd.
(2018) TaxCorp(LJ) 15019 (HC-BOMBAY)
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S. 80-IC: The fact that the assessee has earlier availed deduction u/s 80-IA & 80-IB is of no concern because deduction u/s 80-IC is available from the "initial year" i.e. the year of completion of substantial expansion. The inclusion of period for the deduction availed u/s 80-IA & 80-IB, for the purpose of counting ten years, is provided in sub-section (6) of s. 80-IC and it is limited to those industrial undertakings or enterprises which are set-up in the North-Eastern Region
Mahabir Industries vs. PCIT
(2018) TaxCorp(LJ) 14988 (SC) · Section. 80-IC
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