----- Forwarded Message -----
From: Kapil Goel <advocatekapilgoel@gmail.com>
To: CA.KAPIL GOEL <kapilnkgoelandco@gmail.com>
Sent: Thursday, 9 May 2013 9:41 AM
Subject: [Gzb_CA Group -CA. VINAY MITTAL] Charitable trust taxation special edition: Uttarakhand high court & chennai ITAT; P&H high court holding CA's Writ against ITAT members integrity (Amritsar bench) as Gross abuse of law; Abhishekh Industries 36(1)(iii) commercial expediency issue; Share application Allahabad high court holds no addition in hands of company (where all authorities held against assessee); Reopening on basis of subsequent assessment Valid Bombay High court
From: Kapil Goel <advocatekapilgoel@gmail.com>
To: CA.KAPIL GOEL <kapilnkgoelandco@gmail.com>
Sent: Thursday, 9 May 2013 9:41 AM
Subject: [Gzb_CA Group -CA. VINAY MITTAL] Charitable trust taxation special edition: Uttarakhand high court & chennai ITAT; P&H high court holding CA's Writ against ITAT members integrity (Amritsar bench) as Gross abuse of law; Abhishekh Industries 36(1)(iii) commercial expediency issue; Share application Allahabad high court holds no addition in hands of company (where all authorities held against assessee); Reopening on basis of subsequent assessment Valid Bombay High court
Included in this update:
a) P&H high court dismissing writ by CA against ITAT members Amritsar which alleged illegal demands by members: Held it to be GROSS ABUSE of LAW writ dismissed (bereft of merits);
b) ITAT Chennai on net income assessment in hands of unregistered CHARITY; Uttarakhand high court host of propositions of charitable trust taxation & NPO& ITAT Mumbai on educational activity with profit utilized for charity;
c) P&H high court on section 36(1)(iii) commercial expediency Abhishekh Industries clarified
d) Bombay high court on reopening on basis of subsequent year assessment valid
e) Allahabad high court in no situation share application from Known parties can be added in hands of company receiving the same (ITAT;CIT-A;AO orders against the assessee reversed applying Stellar SC order)
IN THE HIGH COURT OF PUNJAB AND HARYANA
AT CHANDIGARH C.W.P. No.9731 of 2013
Date of Decision:08.05.2013 Yoginder Kumar Sud The petitioner is a Chartered Accountant and has been appearing before the Income Tax Authorities as well as before various Benches of the Income Tax Appellate Tribunal. The grievance of the petitioner is that the petitioner is facing lot of harrassment at the hands of
respondents No.2 and 3, who are Judicial and Accountant Member of the Tribunal at Amritsar as the petitioner has not been able to meet their expectations and illegal demands. It appears that the present writ petition is to settle the scores which the petitioner might have raised during the course of his conduct as representative of the assessees. The petitioner has asserted that he is not
able to meet the expectations and illegal demands raised by the Members but there is no details as to when and how the demands were raised. Not only the writ petition is bereft of any material particulars but also the petitioner has no right to claim mandamus for restraining an authority constituted under the Act from discharging the functions entrusted to it by the Statute. The present writ petition is gross abuse of process of law and, therefore, it is dismissed.
IN THE INCOME TAX APPELLATE TRIBUNAL
'B' BENCH, CHENNAI I.T.A.Nos. 84 & 85/Mds/2013
AND
C.O.Nos. 38 & 39/Mds/2013
Assessment years : 2005-06 & 2006-07 M/s. Jeppiaar Remibai
Charitable Trust The only ground raised in the appeals filed by the Revenue
is that the Commissioner of Income-tax(Appeals) has failed to
note that the income of the assessee is donation and there is no
nexus of expenses to earn this income and the expenditure
claimed by the assessee is only an application of income and not
genuine expenditure incurred to earn the income. The amounts
for the assessment year 2005-06 are donation of ` 7,06,000/- and
expenses of ` 6,71,200/-. The figures for the next assessment
year 2006-07 are donation of ` 23,48,980/- and expenses of
`22,65,000/-. It is seen that the Assessing Officer has levied tax on the
gross receipts of the assessee and not on the total income. As
rightly held by the Commissioner of Income-tax(Appeals), tax is
chargeable on the total income of the assessee. In view of sec.167A, the assessee has to be assessed in the status of an
A.O.P., where shares of the members are indeterminate; i.e.
Maximum Marginal Rate. The Commissioner of Incometax(
Appeals) has given the right direction to the Assessing Officer
to compute the total income of the assessee and thereafter levy
tax at the Maximum Marginal Rate. The Commissioner of
Income-tax(Appeals) has correctly rectified the mistake committed
by the Assessing Officer in levying the tax on the entire gross
receipts of the assessee.
4. We do not find any infirmity in the order passed by the
Commissioner of Income-tax(Appeals). The order of the
Commissioner of Income-tax(Appeals) is just and proper in law.
IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL
Income Tax Appeal No. 6 of 2010 01.04.2013
Uttaranchal Organic Commodities Board.
In the instant case, assessee received certain amount of money from the State Government for the purpose of distributing the same to the distributing agencies. Some part of such amount was distributed and the remaining remained with the assessee. Those were treated to be income and, accordingly, additions were made. The Commissioner of Appeals accepted those additions. The Tribunal has reversed holding that the money, thus received, could not be shown to be income of the assessee. It has held, on the admitted facts and circumstances of the case, that the assessee was only a trustee holding those monies for the benefit of others and, accordingly, no income accrued in its hands
IN THE HIGH COURT OF UTTARAKHAND
AT NAINITAL Income Tax Appeal No. 92 of 2007
Uttarakhand Voluntary Health Association
Respondent assessee made an application for being registered under Section 12A of the Income Tax Act, 1961. This application was rejected by the Commissioner of Income Tax, Dehradun, on the ground that he is not satisfied about the objects of the assessee and genuineness of its activities. This conclusion was derived from the finding that the accounts for the year ending 31.03.2003 of the respondent assessee do not show expenses for any charitable activities. Respondent assessee, accordingly, approached the Tribunal and succeeded before it. The Tribunal held that when an application under Section 12AA is filed for being registered under Section 12A, the Commissioner of Income Tax is required to see, whether the application is in accordance with Section 12AA read with Rule 17A and, whether Form 10B has been properly filled up. In addition to that, the Commissioner of Income Tax is also required to see the objects of the Trust / Society and to ascertain, whether they are exclusively charitable or not. At the stage of considering such an application, the Tribunal held that the Commissioner of the Income Tax was not required to examine the application of income, which can be examined only by the Assessing Officer. In this appeal, we have not been able to take a contrary view. The appeal is, accordingly, dismissed.
IN THE HIGH COURT OF UTTARAKHAND AT NAINITAL
Income Tax Appeal No. 23 of 2008
Shri Sai Baba Super Spirituality Hospital Trust The Trust sought benefits of Sections 11 and 12 of the Income Tax Act in respect of the income derived by it from the property in question. That was purported to be denied by the Assessing Officer applying Section 13 of the Income Tax Act. It was not contended that the income of the property was being used for any private religious purpose or for the benefit of any particular religious community or cast. It was also not contended that any income was used for any purpose other than charitable purposes. It was, at the same time, not contended that any income of the property was being used directly or indirectly for the benefit of any person. It was not contended that the income was invested in any of the funds or shares mentioned in Section 13 of the said Act.
2. In the circumstances, two fact finding authorities concurrently held that there is no scope of applying the provisions of Section 13 of the said Act in the instant case. The basic facts of the case remained undisputed. The question is, whether the law thereon was appropriately applied or not? In the background of the facts narrated above, we are unable to hold that the same was not done by the Tribunal
THE HIGH COURT OF PUNJAB AND HARYANA AT
CHANDIGARH Date of Decision : 07.05.2013 ITA No.225 of 2004 M/s Southern Bottlers Pvt. Ltd. Though the Commissioner of Income Tax (Appeals) has returned a finding that the Directors were interested in the assessee and advanced interest free loan to the assessee but the question; whether such Directors, who have advanced loan to the assessee, are also the Directors,
who are beneficiary of interest free loan from the assessee, has not been examined. The commercial expediency cannot be mere availing of interest free loan from one assessee and giving interest free loan to another. The assessee in order to prove commercial expediency has to prove that it was a prudent act of a reasonable person in the trade to avail interest free loan and to advance interest free loan to some other persons. The assessee cannot be inter-mediatory for availing and granting interest free loan
Court No. - 32
Case :- INCOME TAX APPEAL No. - 266 of 2005
Petitioner :- Saket Advertisemnt (P) Ltd. Allahabad
Respondent :- Income Tax Officer, Allahabad The appeal has been admitted on the following two substantial questions of law by the order
dated 12.9.2007: -
"1. Whether the share capital of the appellant could be assessed at the hands of the
appellant?
2. Whether share holders being existing natural persons, their investment to the
share capital of the appellant could be added to the income of the appellant?" All the three authorities below have held that Rs. 3,08,000/- share capital be added in the income of the assessee. The case of the appellant was that the said money was contributed by the applicants who applied for allotment of shares of the In view of the fact that the aforesaid amount represents the share application money and the
investors are known persons, there was no justification for making an addition of Rs. 3,08,000/-
in the hands of the assessee as unexplained investment. We therefore do not agree with the order of the Tribunal. The order of the Tribunal is faulty. The same is hereby set aside and it is held that the addition of Rs. 3,08,000/- made in the hands of the appellant could not have been added.
It is deleted. The appeal is allowedappellant company. The contention of the appellant was not accepted on the ground that the economic condition of the applicants, who applied for allotment of shares, was not good and the investment thus made have not been proved to have been made by them.
THE HIGH COURT OF JUDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
WRIT PETITION (LODG.) NO.592 OF 2013 M/s. Rabo India Finance Limited 3/5/2013 The judgments of the Supreme Court on the subject contain a clear
elaboration of principle in which it has been held that an Assessing Officer acts
within jurisdiction in reopening an assessment on the basis of information which
comes to him after the original assessment and during the course of the
assessment proceedings for a subsequent assessment year. In the present case, the order of the Transfer Pricing Officer dated 14
February 2008 under Section 92 CA(3) contained only the following reasoning :
"Considering the facts and circumstances of the case, and the
assessee's submissions and documents furnished, the value of the
international transactions with the associated enterprises, with regards to
the Arm's length price is not being disturbed."
Similarly, the order of the Assessing Officer under Section 143(3) for Assessment
Year 2006-07 contains absolutely no evaluation or consideration whatsoever in
respect of the issues on the basis of which the assessment has been sought to
be reopened. During the course of the assessment proceedings for Assessment
Year 2007-08, an order of assessment came to be passed on 24 November 2010. During the course of the order of assessment, the Assessing Officer on
the basis of material in his possession came to the conclusion that the assessee
had failed to demonstrate the nature of the services or support received, the
necessity of the said services, that the payments were made for commercial
reasons of business exigency, as a result of which the expenses were
inadmissible under Section 37(1). At this stage, the Court is not concerned with
the correctness of that determination, since the only issue is as to whether the
material which emerged during the course of the assessment proceedings for
Assessment Year 2007-08 and the order of assessment could furnish tangible
material on the basis of which the assessment for Assessment Year 2006-07
could be reopened. Having regard to the law as expounded by the Supreme
Court in the several judgments which we have noted earlier, we have come to
the conclusion that the assessment for Assessment Year 2006-07 could
legitimately be reopened on the basis of the material which came before the
Assessing Officer during the course of the assessment proceedings for
Assessment Year 2007-08. The mere fact that the income has been assessed in the hands of the parent company of the assessee would not be demonstrative of the allowability of the expenditure under Section 37(1).
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