ITR'S TRIBUNAL TAX REPORTS (ITR (Trib)) HIGHLIGHTS
F Liability to penalty arises where assessee repeatedly claiming inaccurate allocation of common expenses to inflate claim of deduction u/s. 10A : Bristlecone India Ltd. v. Asst. CIT (Mumbai) p. 141
F Charitable purpose : Trust cannot apply more than income received by it for purpose of section 11(1)(a) and (b) : Anjuman-E-Himayath-E-Islam v. Asst. DIT (Exemption)-IV (Chennai) p. 148
F Where entire cost of asset claimed as application of income, depreciation not allowable as assets : Anjuman-E-Himayath-E-Islam v. Asst. DIT (Exemption)-IV (Chennai) p. 148
F Notional deductions u/ss. 23 and 24 cannot be granted while computing income u/s. 11 : Anjuman-E-Himayath-E-Islam v. Asst. DIT (Exemption)-IV (Chennai) p. 148
F Income and expenditure relating to films certified and released in year in question alone covered by rule 9A : no disallowance when no claim made : RGV Film Factory Ltd. v. Deputy CIT (Hyd) p. 385 (23-9-2015)
F Revised declaration of income filed by assessee bona fide, voluntary and without detection of any irregularities by Department, imposition of penalty not justified : Ami Estates P. Ltd. v. Deputy CIT (Mumbai) p. 396 (23-9-2015)
F Where no other source of income found except business income, income surrendered except cash to be taxed under "business income" and business losses set off thereagainst, cash to be taxed as deemed income : Gaurish Steels P. Ltd. v. Asst. CIT (Chandigarh) p. 414 (17-9-2015)
F Where assessee selling cured coffee seed, rule 7B of 1962 Rules apply in computing income from coffee estate : ITO v. T. C. Abraham (Chennai) p. 422 (18-9-2015)
F Business expenditure : Commissioner (Appeals) to examine whether expenditure incurred in earning agricultural income or income taxable under 1961 Act : ITO v. T. C. Abraham (Chennai) p. 422
F Capital gains : Assessee entitled to exemption u/s. 54B on depositing amount in capital gains account scheme before extended due date of filing of return : Amit Gupta v. Asst. CIT (Delhi) p. 427 (9-9-2015)
F Joint ownership not bar to claiming exemption u/s. 54F : Amit Gupta v. Asst. CIT (Delhi) p. 427
F Addition cannot be made on surmises and conjectures : Amit Gupta v. Asst. CIT (Delhi) p. 427
F Expenses excluded from export turnover to be excluded from total turnover too whole computing deduction u/s. 10A : Asst. CIT v.Verizon Data Services India P. Ltd. (Chennai) p. 436 (4-9-2015)
F Where assessee not having any control over funds of irrevocable trust created exclusively for benefit of employees, entitled to deduction u/s. 36(1)(ib), (v) : Asst. CIT v.Verizon Data Services India P. Ltd. (Chennai) p. 436
F Expenses directly incurred for earning income, deductible : Asst. CIT v.Verizon Data Services India P. Ltd. (Chennai) p. 436
F Income from undisclosed source : Additions cannot be made on mere surmises and conjectures : Deputy CIT v. Ganpati Traders (Delhi) p. 445 (2-9-2015)
F Cross-objection to be dismissed as time barred on no sufficient cause being shown for delay : Lakshmi Energy and Foods Ltd. v. ITO (Chandigarh) p. 454
F Where self assessment tax not paid due to paucity of funds, levying penalty at 20 per cent. of arrears of tax not justified : Lakshmi Energy and Foods Ltd. v. ITO (Chandigarh) p. 454
F Capital gains : Condition precedent for exemption : Shree Bhagwanbhai Revabhai Prajapati v. Asst. CIT (Ahd) p. 465
F Imposition of penalty not proper on assessee not suppressing material facts : Bhavya Anant Udeshi v. ITO (International Taxation) (Hyd) p. 487 (4-9-2015)
F Matter remanded to enable Commissioner (Appeals) to examine authenticity of bills before taking decision : Asst. CIT v. Electro Allied Products (Kolkata) p. 493 (1-9-2015)
F Expenditure augmenting higher production, capital in nature : Asst. CIT v. Electro Allied Products (Kolkata) p. 493
F Where transaction only for supply of goods fabricated and no contract for job work, assessee not liable to deduct tax at source, disallowance not proper : Asst. CIT v. Electro Allied Products (Kolkata) p. 493
F Where payment not professional fee but in nature of salary, not liable to deduct tax at source, disallowance not proper : Asst. CIT v. Electro Allied Products (Kolkata) p. 493
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Post Companies Act, 2013 implementation, ICAI withdraws 5 Guidance Notes on Accounting
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Arbitration and Conciliation Act, 1996 amended via ordinance, published in official gazette
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Creditor DBS Bank gets interim relief in winding-up proceedings, 'relief undertaking' defence rejected
HC grants interim relief (in a winding up proceedings) to DBS Bank Ltd., creditor of respondent co., restrains respondent from disposing of any of its assets/ creating any third party rights without court's leave; Rejects respondent co's contention that no interim relief could be granted as it was declared as 'relief undertaking' by State Govt under Bombay Relief Undertakings Act, 1958 ('BRU Act'), holds "only those contracts, settlements etc. which is made under the laws specified in the schedule to BRU Act remain suspended (The present contract, with which we are concerned, is not under any of those laws.)"; Notes that declaration of relief undertaking is for a short period as an 'unemployment relief', and states that "No party could take advantage of this temporary measure and deal with the property of the relief undertaking to the prejudice of the other party.. If there was any such possibility, the Court was duty bound to protect the property during the period of stay"; Observes that an interim order granted in a proceeding filed for enforcement of any right/ liability is not in itself an enforcement of such right/ liability and the purpose of granting an interim order is to preserve co.'s property; Rejects respondent's reliance on SC ruling in Binod Mills Co. Ltd. Ujjain (M.P.) Vs. Suresh Chandra Mahaveer Prasad Mantri and co-ordinate bench ruling in Baroda Rayon Corporation Ltd. vs. ICICI Ltd :Bombay HC
The ruling was delivered by Justice S.C. Gupte.
Advocates Huzefa Nasitwala, Freddy Daruwala & Raman Misra argued on behalf of Applicant, while Advocates Ashish Kamat, Kunal Mehta and Shivani Parekh represented respondents.
Enforces business separation agreement; MD 'elbowing out' equal-stake partner violates Contract Act
CLB allows petition u/s 397/398 of Cos. Act, 1956, directs Managing Director who holds 50% shares of Respondent co. to provide exit to petitioner (holding other 50% shares) by payment of amount agreed in business separation agreement executed between them; Notes that under such agreement, 15 post dated cheques were issued for consideration of Rs. 30 lacs, but the cheques had bounced when presented, holds that non-payment of consideration under agreement and keeping away petitioner from management amounts to 'oppression'; Observes that Managing Director has been enjoying monopoly in respondent co. by elbowing out petitioner under the garb of agreement, states that conflict of interest steps-in as person entering into agreement and person managing company affairs being one and the same, and such acts cannot be seen independently; Peruses Section 54 of Contract Act (which states that when contract consists of reciprocal provisions, when one of them fails to perform his part, he cannot claim performance of other promise, and such defaulter shall pay compensation to other party for any loss sustained), observes that on one hand Managing Director has not paid consideration pursuant to the agreement and on other hand he is enjoying benefits / privileges as if company belongs to him; Holds "the bench cannot simply shirk away its responsibility by saying that since there is an agreement the party had to seek relief before civil court alone by seeking relief under Specific Relief Act", states that Specific Relief Act is an enabling legislation leaving it open to avail equally efficacious relief before any other forum:New Delhi CLB
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Advocates Saurabh Kalia, Ajay Garg, Mahesh Sharma, Harshit Agarwal argued on behalf of the petitioner, while Advocates Prabha Sharma, K.P. Dubey, Sanjeev Tyagi represented the respondents.
Mere transfer of title in immovable property is exempted from Service Tax
In order to resolve a long standing issue relating to levy of Service Tax on sale of flats/dwellings etc. after issue of occupancy
certificate but before issue of completion certificate in areas under the jurisdiction of Municipal Corporation of Greater Mumbai i.e.
Brihanmumbai Municipal Corporation (BMC), it has been conveyed to the Service Tax Authorities in Mumbai on Friday, 23rd
October, 2015 that sale of flats/dwellings etc., where the entire consideration is received after issue of occupancy certificate by
BMC, leading to a mere transfer of title in immovable property, falls outside the definition of "Service" provided in Section 65B (44)
of the Finance Act, 1994, and is therefore, not taxable.
In order to resolve a long standing issue relating to levy of Service Tax on sale of flats/dwellings etc. after issue of occupancy
certificate but before issue of completion certificate in areas under the jurisdiction of Municipal Corporation of Greater Mumbai i.e.
Brihanmumbai Municipal Corporation (BMC), it has been conveyed to the Service Tax Authorities in Mumbai on Friday, 23rd
October, 2015 that sale of flats/dwellings etc., where the entire consideration is received after issue of occupancy certificate by
BMC, leading to a mere transfer of title in immovable property, falls outside the definition of "Service" provided in Section 65B (44)
of the Finance Act, 1994, and is therefore, not taxable.
NEW DELHI, OCT 27, 2015: THE issue before the Bench is - Whether in order to make assessment u/s 143(3), it is mandatory for an AO to serve the notice under Section 143(2) only after the return filed by the Assessee is actually scrutinized. YES is the answer.
Facts of the case
The assessee company filed its return of income, which was accepted by the Department and an acknowledgement was issued u/s 143(1). Subsequently the return was picked up for scrutiny. After recording reasons, notice was issued by the AO to assessee u/s 148. It was not in dispute that this notice was never served on the Assessee. Subsequently, a notice was issued u/s 143(2) by AO stating that there were certain points in connection with the return filed for the AY in question on which the AO "would like some further information". Again, it was not in dispute that this notice u/s 143(2) was also never served on the Assessee. Finally on the hearing day, the assessee informed the AO that the return originally filed on 16th September, 2008 should be treated as the return filed pursuant to the notice u/s 148. AO then proceeded to pass an assessment order whereby, an addition of Rs.1 crore was made to the income of assessee u/s 68 as unexplained credits. On appeal before CIT(A), assessee raised the issue that in absence of a notice u/s 143(2) the order of re-assessment was invalid. The CIT(A) negatived the above contention holding that no specific notice was required to be issued u/s 143(2) and that questionnaires issued by the AO had provided the assessee's sufficient opportunity to support his return by documentary evidence. Secondly, it was held that non issue of notice u/s 143(2) did not render the reassessment invalid. On further appeal, Tribunal allowed the assessees' appeal and held that for completing the assessment u/s 148 compliance with the procedure u/s 143 (2) was mandatory. It was held that if notice was not issued to the Assessee before completion of the re-assessment, then such reassessment was not sustainable in law.
Held that,
++ no notice u/s 143(2) was issued to assessee after 16th December 2010, the date on which the Assessee informed the AO that the return originally filed should be treated as the return filed pursuant to the notice under Section 148. In DIT v. Society for Worldwide Interbank Financial Telecommunications 2010-TIOL-278-HC-DEL-IT, this Court invalidated an reassessment proceedings after noting that the notice under Section 143(2) was not issued to the Assessee pursuant to the filing of the return. In other words, it was held mandatory to serve the notice under Section 143(2) of the Act only after the return filed by the Assessee is actually scrutinised by the AO. In CIT v. Rajeev Sharma 2010-TIOL-381-HC-ALL-IT it was held that a plain reading of Section 148 reveals that within the statutory period specified therein, it shall be incumbent to send a notice under Section 143(2). In a subsequent judgment in CIT v. Salarpur Cold Storage (P.) Ltd. 2014-TIOL-1522-HC-ALL-IT it was held that once the deeming fiction comes into operation, the assessee is precluded from raising a challenge about the service of a notice, service within time or service in an improper manner. The proviso to Section 292BB, however, carves out an exception to the effect that the Section shall not apply where the assessee has raised an objection before the completion of the assessment or reassessment. Section 292 BB cannot obviate the requirement of complying with a jurisdictional condition. For AO to make an order of assessment under Section 143 (3), it is necessary to issue a notice under Section 143 (2) and in the absence of a notice under Section 143 (2), the assumption of jurisdiction itself would be invalid. In the same decision in v. Salarpur Cold Storage (P.) Ltd., the Allahabad High Court noticed that the decision of the Supreme Court in ACIT v. Hotel Blue Moon where in relation to block assessment, the Supreme Court held that the requirement to issue notice under Section 143(2) was mandatory. It was not "a procedural irregularity and the same is not curable and, therefore, the requirement of notice under Section 143(2) cannot be dispensed with;
++ the Madras High Court held likewise in Sapthagiri Finance & Investments v. ITO 2012-TIOL-608-HC-MAD-IT. The facts of that case were that a notice under Section 148 was issued to the Assessee seeking to reopen the assessment for AY 2000-01. However, the Assessee did not file a return and therefore a notice was issued to it under Section 142 (1). Pursuant thereto, the Assessee appeared before the AO and stated that the original return filed should be treated as a return filed in response to the notice under Section 148. The High Court observed that if thereafter, the AO found that there were problems with the return which required explanation by the Assessee then the AO ought to have followed up with a notice under Section 143(2). As already noticed, the decision of this Court in CIT v. Vision Inc. proceeded on a different set of facts. In that case, there was a clear finding of the Court that service of the notice had been effected on the Assessee under Section 143 (2). As already further noticed, the legal position regarding Section 292BB has already been made explicit in the aforementioned decisions of the Allahabad High Court. That provision would apply insofar as failure of "service" of notice was concerned and not with regard to failure to "issue" notice. In other words, the failure of the AO, in re-assessment proceedings, to issue notice under Section 143(2), prior to finalising the re-assessment order, cannot be condoned by referring to Section 292BB. The resultant position is that as far as the present case is concerned the failure by the AO to issue a notice to the Assessee under Section 143(2) subsequent to 16th December 2010 when the Assessee made a statement before the AO to the effect that the original return filed should be treated as a return pursuant to a notice under Section 148, is fatal to the order of re-assessment. Consequently, there is no legal infirmity in the impugned order of the ITAT. No substantial question of law arises. The appeal is dismissed.
(See 2015-TIOL-2477-HC-DEL-IT)
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