Sunday, August 16, 2015

[aaykarbhavan] Judgments and Infomration [4 Attachments]





Ketan V. Shah vs. ACIT (ITAT Mumbai)

COURT:
CORAM: ,
SECTION(S):
GENRE:
CATCH WORDS:
COUNSEL:
DATE: June 26, 2015 (Date of pronouncement)
DATE: July 21, 2015 (Date of publication)
AY: 2005-06, 2007-08
FILE: Click here to download the file in pdf format
CITATION:
S. 132(4A) presumption does not apply to loose papers found in some other person's possession. While the AO can make a protective assessment, the appellate authority cannot confirm a protective order. It has to either make it substantive or quash it
(i) The basis for making the addition of Rs. 19.98 crores is the loose paper. We failed to persuade ourselves to make any sense out of the notings in this loose paper. Merely by making additions of all the figures mentioned in the loose paper would not justify the addition of Rs. 19.98 crores. Secondly, the entire addition has been made on the presumption mentioned u/s. 132(4A) of the Act. However, we failed to understand how this presumption is applicable on the facts of the case. Firstly, the loose paper was found in the premises of Shri Sanjay Shah i.e. it was not found in the premises of the assessee. Secondly, it was in the possession of Shri Sanjay Shah so obviously it cannot be in possession of the assessee. Therefore, the provisions of Sec. 132(4A) of the Act is not applicable as the paper was not found from the possession of the assessee.
(ii) It is settled that when there is a doubt as to which person amongst the two was liable to be assessed, parallel proceedings may be taken against both and alternative assessments may also be framed. It is also equally true that while a protective assessment is permissible, it is not open to the income-tax appellate authorities constituted under the Act to make a protective order (CIT
Vs Smt. Durgawati Singh 234 ITR 249 (All), Smt. Hemlata Agarwal Vs CIT 64 ITR 428 (All) followed)

Related Judgements

  1. CIT vs. Mahindra Finlease Pvt Ltd (Delhi High Court) 
    In the context of regular assessment proceedings, it has been held in Lalji Haridas vs. ITO 43 ITR 387 (SC) that even when there is no specific provision in the Act for protective assessment, the AO has power to make such a protective assessment under certain circumstances. This principle…
  2. G.K. Consultants Limited vs. ITO (ITAT Delhi) 
    S. 147: Retracted statement cannot form the basis of reopening. Protective assessment without substantive assessment is not permissible
    (ii) The AO has not made any specific allegations against the assessee. He intended to make a protective assessment on the assessee. However, while there can be a substantive assessment without…
  3. Dr. Mansukh Kanjibhai Shah vs. ACIT (ITAT Ahmedabad) 
    The warrant of authorization u/s 132 was issued in the name of "K. M. Shah Charitable Trust, Mansukhbhai K. Shah". This cannot be regarded as a warrant of authorization issued in the name of assessee in his individual capacity. The search cannot be regarded as conducted against the assessee…
  4. Usha Chandresh Shah vs. ITO (ITAT Mumbai) 
    We have already seen that the tax authorities have applied the test of human probabilities explained by the Hon'ble Supreme Court in the cases of Sumati Dayal and Durga Prasad More (supra) to disbelieve the claim of Long term Capital…Read more ›
  5. Jignesh P. Shah vs. DCIT (ITAT Mumbai) 
    Since the assessment had attained finality before the date of search and does not get abated in view of second proviso to section 153A, therefore, without there being any incriminating material found at the time of search, no addition over and above the income which already stood assessed can…


Ketan V. Shah vs. ACIT (ITAT Mumbai)

by editor
It is settled that when there is a doubt as to which person amongst the two was liable to be assessed, parallel proceedings may be taken against both and alternative assessments may also be framed. It is also equally true that while a protective assessment is permissible, it is not open to the income-tax appellate authorities constituted under the Act to make a protective order
editor | July 21, 2015 at 4:01 pm | Categories: All Judgements, Tribunal | URL: http://itatonline.org/archives/?p=10834
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Google gives free patents to startups; 'Amul' trademark to get global shield; Nikkei buys Financial Times

Google gives free patents to startups; 'Amul' trademark to get global shield; Nikkei buys Financial Times

 



Dear Patrons,
In a recent case, the Bombay HC interpreted Section 196(3) of the Cos. Act. 2013 (relating to the appointment of Managing Director, Whole-Time Director or Manager), wherein it held that director turning 70 years will not to attract automatic 'mid-stream' disqualification [LSI-626-HC-2015-(BOM)].
The author, Anagha Anasingaraju (Practising Company Secertary, Partner, KANJMAG & Co.), discusses the impact of the above Bombay High Court ruling and analyses it. Examining the key question that whether there is an automatic termination of Managing Director on attaining 70 years, she opines that Section 196(3) does not operate to interrupt director's appointment made prior to the coming into force of Companies Act, 2013. The author further pointed out that the provision also does not interrupt director's appointment after April 1, 2014 where at the date of such appointment /re-appointment the director was below 70 years but crossed that age during his tenure.
The author agrees with the High Court's observations that Section 196 cannot be applied retrospectively and can be applied to appointments of directors made after April 1, 2014. While discussing the impact of the ruling, the author states that during secretarial audit, "the Practicing Company Secretary shall keep this judgment in view while ascertaining compliance with provisions of Section 196 of CA, 2013 by the company".
The author points out an interesting remark in the ruling that "turning 70 is an occasion for celebration and the person of 70 years should not be compared with fraudsters", and states that Section 196 is interpreted by the Court after understanding the law in its spirit. 
Click here to read the article title - "Director turning 70 years - celebration or disqualification?"
Best Regards,
LSI Team

Refuses Art. 19 protection to MOOV's disparaging advt. against Zandu Balm; Upholds injunction

Division Bench of ​Calcutta HC ​upholds Trial Court's injunction order restraining Reckitt Benckiser (appellant) from displaying advertisement ​of its product 'MOOV', infringing & containing disparaging references to its competitor Emami's product 'ZANDU BALM'; Observes appellant's advertisement, and notes that appellant compared its product with that of respondent, and stated that its product had additional 'active ingredients' which relieved backache etc, however, there was no proof of the same; Holds that appellant was duty-bound to furnish an expert opinion to substantiate its claim of better product and truthfulness of the advertisement, thus holds that wrong information was passed on to the public; Rejects appellant's contention that its commercial was protected under Article 19(1)(a) which grants freedom to speech and expression, holds that appellant's advertisement was an unhealthy comparison, thus was hit by Article 19(2) which provides for reasonable restriction on such freedom as granted under Article 19(1)(a); Relies on SC ruling in Tata Press Ltd. V. Manager Television Nigam Ltd, ​co-ordinate bench ruling in Rekitt Colman of India Ltd. v. Jyothi Laboratories Ltd., Delhi HC ruling in Pepsi Co Inc. & ors v. Hindusthan Coca Cola Ltd. and holds, "This unhealthy comparison, in our prima facie view, amounts to disparagement of the plaintiff's product and its trademark and copyright. Since a vast majority of the viewers of commercial advertisements aired very frequently through electronic media, are influenced by visual advertisement, we feel that the learned Trial Judge rightly passed the impugned order":Calcutta HC

The judgment is given by Justice Jyotirmay Bhattacharya and Justice Debi Prosad Dey
 Advocates C.M. Lall, N. Roy, Kausik Dey, Partha Basu, Sudhakar Prasad argued on behalf of appellants while Advocates Pratap Chatterjee, Debnath Ghosh, Soumya Roy Chowdhury, Soma Rahaman, Sarosij Das Gupta argued on behalf of respondents.

Shoreline Hotel Pvt. Ltd vs. CIT (ITAT Mumbai)

COURT:
CORAM: ,
SECTION(S):
GENRE:
CATCH WORDS: ,
COUNSEL:
DATE: June 19, 2015 (Date of pronouncement)
DATE: July 21, 2015 (Date of publication)
AY: 2011-12
FILE: Click here to download the file in pdf format
CITATION:
Bogus purchases: Manner of computing profits in the case of bogus purchases by an assessee who is not a dealer in the goods but has consumed the goods in his business explained
The assessee is in hotel business and running hotel in the name of Hotel Marine Plaza. The AO found that assessee has made purchases from black listed parties and obtained accommodation bill. Such parties were entry provider as identified by the Sales Tax Department of Maharashtra. To find out genuineness of the purchases so made/expenses so incurred and paid to these parties, the AO asked for documentary evidence. The AO further observed that since the assessee has failed to furnish the relevant information and also failed to disclose true and fair affairs of its business, he called the director of the assessee company by issuing notice under section 131, while recording statement, the director of the company categorically accepted and offered to tax the gross profit on the quantum of above purchases/expenses. Thereafter, AO rejected books of account under section 145(3) of the IT Act and after taking average GP rate of 15%, made an addition of Rs.54,03,687/- computed on such bogus purchases/expenses. As per our considered view, since the purchases so made were not sold by the assessee, the AO was not justified in estimating 15% profit on such bogus purchases. However, such bogus purchases/expenses were going to reduce the assessee's profits by the equal amount of such expenses and not only by 15% as taken by the AO. It was not a case where purchases so made were actually sold by the assessee. Where assessee is found to have sold the goods out of the bogus purchases, under those circumstances it is reasonable to estimate profit out of such sales so as to make appropriate addition. However, in the instant case the assessee was engaged in the business of hotel wherein the expenditure alleged to be incurred on plumbing, electrical items, furniture, printing and stationary etc appears to have reduced directly the profit earned by assessee. Even in respect of alleged bogus payment made for purchase of furniture items no inquiry was made by the AO to find out whether furniture was actually acquired and installed. Genuineness of the various expenditure so incurred or purchases so made whose suppliers were not traceable, were also not inquired by the AO. Thus, we find that AO has not made any inquiry with regard to the expenses claimed in respect of accommodation bill obtained by assessee which reduced profit of assessee by 100% instead of 15% considered by AO. In the absence of making any inquiry as well as applying wrong proposition of treating the assessee as dealer and applying the GP rate on such accommodation bill which is actually in the nature of expenses, the CIT (A)was justified in setting aside the order and restoring the matter back to the file of the AO for deciding afresh.

Related Judgements

  1. DCIT vs. Rajeev G. Kalathil (ITAT Mumbai) 
    S. 68: Fact that alleged supplier is not traceable and has been termed a "hawala dealer" by the VAT authorities is not sufficient to treat the purchases as "bogus"
    The fact that the supplier is declared as a "Hawala dealer" by the VAT department is a good starting point…
  2. Ganpatraj A Sanghavi vs. ACIT (ITAT Mumbai) 
    (i) A perusal of the orders passed by the tax authorities would show that they have suspected the genuineness of the purchases only for the reason that the above said five parties were not available in the given addresses. It…Read more ›
  3. CIT vs. Nangalia Fabrics Pvt. Ltd (Gujarat High Court) 
    S. 68: Purchases cannot be treated as "bogus" only on the ground that the suppliers are not traceable
    The Tribunal has found that the purchases are genuine because they are supported by bills, entries in the books of account, payment by cheque and quantitative details. The AO…
  4. ACIT vs. Ramila Pravin Shah (ITAT Mumbai) 
    If the addition made by the A.O. is accepted, then G.P. Ratio of the appellant during the present A.Y.will become abnormally high and therefore that is not acceptable because it onus of the A.O. by bringing adequate material on record to prove that such a high G.P. ratio exists…
  5. Preimus Investment And Finance Ltd vs. DCIT (ITAT Mumbai) 
    There is no doubt that the assessee is a corporate entity. Even if it is not carrying on any business activity it has to incur some expenditure to keep up its corporate entity. Therefore expenditure incurred by it has to be allowedRead more ›

Cheil India Pvt. Ltd vs. ITO (ITAT Delhi)

COURT:
CORAM: ,
SECTION(S): , , ,
GENRE:
CATCH WORDS:
COUNSEL:
DATE: July 16, 2015 (Date of pronouncement)
DATE: July 27, 2015 (Date of publication)
AY: 2007-08
FILE: Click here to download the file in pdf format
CITATION:
S. 40(a)(ia): In an appeal against an order passed by the AO to give effect to the ITAT's order, the CIT(A) has no jurisdiction to enhance the assessee with respect to a new source of income or disallowance of expenditure
The ITAT directed that the assessee be granted sufficient opportunity to rebut the evidence used by the Assessing Officer regarding the addition of Rs.89,39,92,188 made by the Assessing Officer on account of alleged short receipts declared in the profit and loss account violating the principles of natural justice. In compliance, the Assessing Officer made the assessment on the issue afresh under sec. 254 read with 143(3) of the Act making the addition of Rs.4,55,41,557 out of Rs.89,39,92,188 which was questioned before the CIT(Appeals). The CIT(Appeals) not only upheld the addition of Rs.04,55,41,557 made on account of short receipts declared in profit and loss account but enhanced the income by directing the Assessing Officer to disallow payments made by the assessee under sec. 40(a)(ia) of the Act. The assessee claimed that by directing the Assessing Officer to make the disallowance of payments made by the assessee under sec. 40(a)(ia) of the Act, the CIT(Appeals) has introduced in the assessment a new source of income, which is not allowed in an assessment which was made by the Assessing Officer strictly in compliance of the order of the ITAT for reconsideration of addition of Rs.89,39,92,188 after examining the evidence and upholding opportunity of being heard to the assessee. HELD by the Tribunal:
(i) The direction to the Assessing Officer by the CIT(Appeals) to disallow payments made by the assessee under sec. 40(a)(ia) of the Act was a question of taxability of income from a new source of income which has not been considered by the Assessing Officer, hence it was exceeding of jurisdiction by the CIT(Appeals) in a set aside matter by the ITAT in the present case. Though the CIT(Appeals) has co-terminus powers as of the Assessing Officer and is empowered to do what an Assessing Officer can do for the assessment, the directed disallowance was new source of income, which was not the subject matter of setting aside order by the ITAT, in compliance of which assessment under sec. 254 read with section 143(3) was framed.
(ii) The power of the CIT(Appeals) to set aside assessment, which does not involve a proposal for enhancement cannot be used for the purpose of expending the whenever the question of taxability of income from a new source of income is concerned, which had not been considered by the Assessing Officer, the jurisdiction to deal with the same in appropriate cases may be dealt with under sec. 147/148 of the Act and section 263 of the Act, if requisite conditions are fulfilled. It is inconceivable that in the presence of such specific provisions, a similar power is available to the appellate authority (CIT vs. Sardari Lal & Co. – 251 ITR 864 (Del) followed).

Related Judgements

  1. Donaldson India Filters Systems Pvt. Ltd vs. DCIT (Delhi High Court) 
    The order passed by the assessing authority extracted above unmistakably shows that even at that stage it had no fresh material available to it so as to exercise the jurisdiction available under Sections 147/148 of Income Tax Act. It was, thus, taking a fresh call on the subject of…
  2. Samsung India Electronics Pvt. Ltd vs. DDIT (Delhi High Court) 
    If it is held by the dept that no income arose to the recipient then notices to payer for TDS default u/s 201 & s. 40(a)(i) disallowance are bad
    (b) Thus the basis of both the notices (section 148 and 201) has been knocked out of existence by the…
  3. CIT vs. Teletronics Dealing Systems P. Ltd (Bombay High Court) 
    The assessing officer has been faulted for not following section 145(3) of the Act. The tribunal has held that before the assessing officer records satisfaction about the correctness or completeness of the accounts of the assessee, he ought to have…Read more ›
  4. ITO vs. Rakam Money Matters P. Ltd (ITAT Delhi) 
    The only issue here is the addition of Rs.60 lacs made by the Assessing Officer as unexplained credit on account of the share application money. On going through the facts of the case, we notice that assessee has filed the…Read more ›
  5. EXL India Business Services Pvt Ltd vs. ACIT (ITAT Delhi) 
    The assessee filed the return of income of 29th October 2007, and that the time limit for issuance of notice, under section 143(2), selecting the case for scrutiny assessment expired on 30th September 2008. It is also an admitted position…Read more ›




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Posted by: Dipak Shah <djshah1944@yahoo.com>


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