Tuesday, September 1, 2015

[aaykarbhavan] Judgments and Infomration [5 Attachments]







Pr. CIT vs. Control And Switchgear Ltd (Delhi High Court)

COURT:
CORAM: ,
SECTION(S):
GENRE:
CATCH WORDS: , ,
COUNSEL:
DATE: August 24, 2015 (Date of pronouncement)
DATE: September 1, 2015 (Date of publication)
AY: 2004-05
FILE: Click here to download the file in pdf format
CITATION:
S. 271(1)(c): Claim that compensation received from foreign party is a capital receipt, though wrong on merits, does not attract penalty if assessee disclosed facts in ROI and was supported by a legal opinion
The Court finds that in the present case the order of the CIT (A) explaining why Section 271(1)(c) is not attracted in the facts and circumstances of the case merits no interference. The issue that arose for determination in the quantum appeal does appear to have been debatable as is evident from the above narration of facts. There was a reference made by the Assessee itself in the note of computation, that pursuant to the settlement agreement with Schneider, it had received compensation "in lieu of giving up their right under Press Note 18, which debarred the collaborator from carrying out business in India, without the permission of JV partners". The compensation was also "in lieu of agreeing not to use the name after an interim period i.e. to give up the benefit over a period of time of being known in the market as a joint venture partner of TE". Secondly, the Assessee armed itself with a legal opinion. These facts are sufficient to distinguish the present case from the facts in CIT Delhi v. Zoom Communication 327 ITR 510 (Del) where the Court observed that apart from a making wrong claim, the Assessee did so not on the basis of any advice given to it by an auditor or tax expert. Even in MAK Data P. Ltd. v. CIT 358 ITR 593 (SC), the Supreme Court held on facts that the Assessee there had no intention to declare its true income and no explanation was offered by it for the concealment of income. In the facts of the present case, the Court is satisfied that no error of law was committed either by the CIT (A) or the ITAT in holding that Explanation 1 to Section 271(1)(c) of the Act was not attracted. This was not a case of an Assessee furnishing inaccurate particulars.

Related Judgements

  1. Khanna and Annadhanam vs. CIT (Delhi High Court) 
    On facts, the compensation was for loss of a source of income, namely referred work from Deloitte because it is somewhat difficult to conceive of a professional firm of chartered accountants entering into such arrangements with international firms of CAs, as the assessee in the present case had done,…
  2. CIT vs. M. M. Aqua Technologies Ltd (Delhi High Court) 
    In view of the Explanation 3C appended to Section 43B with retrospective effect from 01.04.1989, conversion of interest amount into loan would not be deemed to be regarded as actually paid amount within the meaning of Section 43B of the ActRead more ›
  3. CIT vs. M/s Muthoot Financiers (Delhi High Court) 
    Transaction effected between a firm and its partners cannot partake the colour of loan or deposit and as such, Section 269-SS nor Section 271-D of the Act would come into playRead more ›
  4. CIT vs. Bisleri Sales Ltd (Bombay High Court) 
    To invoke clause (b) of the Explanation below Section 115JB (identical to Section 115JA) of the Act, two conditions must be satisfied cumulatively viz. there must be a debit of the amount to the Profit and loss account and the amount so debited must be carried to Reserves. Admitted…
  5. CIT vs. Bharat Hotels (Delhi High Court) 
    The very concept of depreciation suggests that the tax benefit on account of depreciation legitimately belongs to one who has invested in the capital asset, is utilizing the capital asset and thereby loosing gradually investment caused by wear and tear, and would need to replace the same by having…

Pr. CIT vs. Control And Switchgear Ltd (Delhi High Court)

by editor
These facts are sufficient to distinguish the present case from the facts in CIT Delhi v. Zoom Communication 327 ITR 510 (Del) where the Court observed that apart from a making wrong claim, the Assessee did so not on the basis of any advice given to it by an auditor or tax expert. Even in MAK Data P. Ltd. v. CIT 358 ITR 593 (SC), the Supreme Court held on facts that the Assessee there had no intention to declare its true income and no explanation was offered by it for the concealment of income. In the facts of the present case, the Court is satisfied that no error of law was committed either by the CIT (A) or the ITAT in holding that Explanation 1 to Section 271(1)(c) of the Act was not attracted. This was not a case of an Assessee furnishing inaccurate particulars


Simran Singh Gambhir vs. DDIT (ITAT Delhi)

COURT:
CORAM: ,
SECTION(S):
GENRE:
CATCH WORDS: , ,
COUNSEL:
DATE: July 21, 2015 (Date of pronouncement)
DATE: September 1, 2015 (Date of publication)
AY: 2008-09
FILE: Click here to download the file in pdf format
CITATION:
S. 271(1)(c): Offering interest on maturity on Bonds as "long-term capital gains" instead of as "income from other sources" is a mere change in the head of income and a case of bona fide mistake which does not attract penalty
The assessee offered to tax, the income from the sale / maturity of National Housing Bond under the head long term capital gain. The A.O. chooses to tax the same under the head 'income from other sources'. The interest of all the three years was offered to tax in the year of maturity and not year-wise. This is just change in the head of income under which the income is offered to tax. The taxation of the receipt is changed to the head of income 'other sources' from the head of income 'capital gain'. The explanation filed by the assessee is bona fide. This is a case of a bona fide mistake on part of the assessee. All the information has been disclosed in the income tax return filed by the assessee. Income had been offered under the head 'capital gain' T.D.S. Under these circumstances, we cancel the penalty levied u/s 271(1)(c) of the Act.

Related Judgements

  1. CIT vs. Somany Evergreen Knits Ltd (Bombay High Court) 
    No S. 271(1)(c) penalty if wrong claim due to mistake/ wrong advice of CA Read more ›
  2. CIT vs. Sania Mirza (Andhra Pradesh High Court) 
    There is nothing to suggest that the assessee acted in a manner such as to lead to the conclusion that she had concealed the particulars of her income or had furnished inaccurate particulars of income. As the amount of Rs.30,63,310 was shown by her in the return, it…
  3. ACIT vs. Cecilia Haresh Chaganlal (ITAT Mumbai) 
    When there is no attempt on the part of the assessee to show the Long Term Capital Gain in a different category then merely because a concessional rate of tax was applied in the revised return does not ifso facto…Read more ›
  4. CIT vs. Bennett Coleman & Co. Ltd (Bombay High Court) 
    No s. 271(1)(c) penalty if income not offered due to "inadvertent mistake"Read more ›
  5. Toscana Lasts Limited vs. ITO (ITAT Delhi) 
    S. 271(1)(c): Fact that assessee has huge carry forward losses and depreciation and filed a nil return suggests that there is no motive or incentive to make a bogus claim in the return
    Quantum additions and penalty proceedings are two separate and distinct proceedings. Penalty cannot be levied for…


Simran Singh Gambhir vs. DDIT (ITAT Delhi)

by editor
The interest of all the three years was offered to tax in the year of maturity and not year-wise. This is just change in the head of income under which the income is offered to tax. The taxation of the receipt is changed to the head of income 'other sources' from the head of income 'capital gain'. The explanation filed by the assessee is bona fide. This is a case of a bona fide mistake on part of the assessee

CIT vs. Kabul Chawla (Delhi High Court)

COURT:
CORAM: ,
SECTION(S): ,
GENRE:
CATCH WORDS:
COUNSEL:
DATE: August 28, 2015 (Date of pronouncement)
DATE: September 1, 2015 (Date of publication)
AY: 2002-03, 2005-06, 2006-07
FILE: Click here to download the file in pdf format
CITATION:
S. 153A/ 153C: Entire law on the scope of additions that can be made in a pending assessment and in a completed assessment pursuant to a search u/s 132 explained
On a conspectus of Section 153A(1) of the Act, read with the provisos thereto, and in the light of the law explained in the aforementioned decisions, the legal position that emerges is as under:
(i) Once a search takes place under Section 132 of the Act, notice under Section 153 A (1) will have to be mandatorily issued to the person searched requiring him to file returns for six AYs immediately preceding the previous year relevant to the AY in which the search takes place.
(ii) Assessments and reassessments pending on the date of the search shall abate. The total income for such AYs will have to be computed by the AOs as a fresh exercise.
(iii) The AO will exercise normal assessment powers in respect of the six years previous to the relevant AY in which the search takes place. The AO has the power to assess and reassess the 'total income' of the aforementioned six years in separate assessment orders for each of the six years. In other words there will be only one assessment order in respect of each of the six AYs "in which both the disclosed and the undisclosed income would be brought to tax".
(iv) Although Section 153 A does not say that additions should be strictly made on the basis of evidence found in the course of the search, or other post-search material or information available with the AO which can be related to the evidence found, it does not mean that the assessment "can be arbitrary or made without any relevance or nexus with the seized material. Obviously an assessment has to be made under this Section only on the basis of seized material."
(v) In absence of any incriminating material, the completed assessment can be reiterated and the abated assessment or reassessment can be made. The word 'assess' in Section 153 A is relatable to abated proceedings (i.e. those pending on the date of search) and the word 'reassess' to completed assessment proceedings.
(vi) Insofar as pending assessments are concerned, the jurisdiction to make the original assessment and the assessment under Section 153A merges into one. Only one assessment shall be made separately for each AY on the basis of the findings of the search and any other material existing or brought on the record of the AO.
(vii) Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment.
Conclusion
The present appeals concern AYs, 2002-03, 2005-06 and 2006-07.On the date of the search the said assessments already stood completed. Since no incriminating material was unearthed during the search, no additions could have been made to the income already assessed.
(CIT v. Anil Kumar Bhatia [2013] 352 ITR 493 (Del), Madugula Venu v. Director of Income Tax [2013] 29 Taxmann.Com 200 (Delhi), CIT v. Chetan Das Lachman Das), Filatex India Ltd. v. CIT-IV [2014] 49 Taxmann.Com 465 (Delhi), Jai Steel (India), Jodhpur v. ACIT [2013] 36 Taxmann.Com 523 (Raj), ITA No.36/2009 (CIT v. M/s. Murli Agro Products Ltd.) and (M/s. Canara Housing Development Company v. The DCIT) referred).

Related Judgements

  1. Sanjay Aggarwal vs. DCIT (ITAT Delhi) 
    S. 153A: Addition in a search assessment for a AY which is not pending can be made only if incriminating material is found during search
    (i) The language of s. 153A has been structured in such a way so as not to permit the making of addition for the assessment…
  2. CIT vs. Anil Kumar Bhatia (Delhi High Court) 
    U/s 153A, the AO is empowered to assess or reassess the "total income" (which includes the disclosed & undisclosed income) of 6 years. This is a significant departure from the earlier block assessment scheme (s. 158BC) in which only the undisclosed income could be assessed. U/s 153A, there can…
  3. MGF Automobiles Ltd vs. ACIT (ITAT Delhi) 
    S. 153A: In case of completed assessments, addition can be made only if incriminating document found during search
    There are three possible circumstances that emerge on the date of initiation of search u/s 132 (1): (a) proceedings are pending; (b) proceedings are not pending but some incriminating material found…
  4. Anil Kumar Bhatia vs. ACIT (ITAT Delhi) 
    S. 153A does not authorize the making of a de novo assessment. While under the 1st Proviso, the AO is empowered to frame assessment for six years, under the 2nd Proviso, only the assessments which are pending on the date of initiation of search abate. The effect is that…
  5. Gurinder Singh Bawa vs. DCIT (ITAT Mumbai) 
    In All Cargo Global Logistics 137 ITD 287 (Mum)(SB), the Special Bench held that in a case where the assessment has abated the AO can make additions in the assessment, even if no incriminating material has been found. However, in a case where the assessment has not abated, an…

CIT vs. Kabul Chawla (Delhi High Court)

by editor
Completed assessments can be interfered with by the AO while making the assessment under Section 153 A only on the basis of some incriminating material unearthed during the course of search or requisition of documents or undisclosed income or property discovered in the course of search which were not produced or not already disclosed or made known in the course of original assessment

CIT vs. Divine Infracon Pvt. Ltd (Delhi High Court)

COURT:
CORAM: ,
SECTION(S):
GENRE:
CATCH WORDS:
COUNSEL:
DATE: August 13, 2015 (Date of pronouncement)
DATE: September 1, 2015 (Date of publication)
AY: 2008-09
FILE: Click here to download the file in pdf format
CITATION:
S. 253/ Rule 27: While the Tribunal can examine all questions which relate to the subject matter of an appeal but, once an issue has attained finality and is not a subject matter of the dispute before the Tribunal, it would not be open for the Tribunal to reopen the issue on the pretext of examining a question of law
The assessee filed an appeal before the Tribunal to challenge the decision of the CIT(A) to sustain the addition on merits. The Revenue did not appeal against the decision of CIT(A) holding that the addition made was beyond the scope of the assessment under Section 153A of the Act. Yet, the Counsel for the Revenue sought to assail the said finding in the appeal preferred by the Assessee. The Tribunal permitted the Counsel for the Revenue to agitate the issue but finally decided the same against the Revenue. The Revenue filed an appeal to the High Court. Before the High Court, the assessee contended that it was not permissible for the Tribunal to permit the Revenue to challenge the decision of the CIT(A) in an Appeal preferred by the Assessee. The principal controversy that the High Court had to consider was whether the Revenue could assail the finding returned by the CIT(A) in favour of the Assessee in an appeal preferred by the Assessee before the Tribunal, limited to the issue decided by the CIT(A) against the Assessee. HELD by the High Court:
(i) Concededly, the issue whether the additions made by the AO were beyond the scope of Section 153A had been decided by the CIT(A) in favour of the Assessee and the decision on the said issue had attained finality as the Revenue had not preferred any appeal with regard to the CIT(A)'s order. It is also relevant to note that by virtue of Section 253(2) of the Act, the Principal Commissioner or Commissioner may, if he objects to an order passed by the CIT(A) under Section 250 of the Act, direct the AO to prefer an appeal to the Tribunal. It is not disputed that no such directions to file an appeal against the CIT(A)'s order dated 21st January, 2014 were issued by the concerned Income Tax Authority.
(ii) In the circumstances, there could be no dispute that the CIT(A)'s order in so far as it relates to the issue regarding the assessment being beyond the scope of Section 153A of the Act had attained finality, and thus, could not have been disturbed by the Tribunal. Indisputably, the Revenue could also not take recourse to Rule 27 of the Income Tax (Appellate Tribunal) Rules, 1963. By virtue of the said Rule, a respondent before the Tribunal can support the decision appealed against not only on the grounds decided in favour of the respondent but also on grounds decided against it. However, Rule 27 of the said Rules would not extend to permitting the respondent to expand the scope of an appeal and assail the decision on issues, which are not subject matter of the appeal. In CIT vs. Edward Keventer (Successors) Pvt. Ltd (supra), this court had reiterated that "it would not be open to a respondent to travel outside the scope of the subject matter of the appeal under the guise of invoking r 27" .
(iii) While in National Thermal Power Corporation Ltd. vs. Commissioner of Income Tax: 229 ITR 383 (SC) it was held that it is open for the Tribunal to consider all questions of law where no investigation into facts are necessary, the aforesaid decision is wholly inapplicable to the facts of the present case. It is trite law that the Tribunal may, under Section 254(1) of the Act, pass such orders as it thinks fit; nonetheless, the decision must be in respect of the subject matter of the dispute. Indisputably, the Tribunal can examine all questions which relate to the subject matter of an appeal but, once an issue has attained finality and is not a subject matter of the dispute before the Tribunal, it would not be open for the Tribunal to reopen the issue on the pretext of examining a question of law.

Related Judgements

  1. CIT vs. State Bank Of India (Bombay High Court) 
    When the Revenue challenges the order of the Tribunal which in turn relies upon another decision rendered by it on the same issue, then in cases where the Revenue has accepted the order by not preferring any Appeal against the earlier order, the Revenue should not challenge the subsequent…
  2. Bilag Industries Pvt. Ltd vs. CIT (Gujarat High Court) 
    It is clear that the assessee and the revenue both had preferred the appeals raising all the grounds, over and above the ground of deduction under Section 80HHC and 80IA of the Act, the order of the AO stood merged…Read more ›
  3. CIT vs. Tony Electronics (Delhi High Court) 
    Under the Doctrine of Merger, once an appeal against the order passed by an authority is preferred and is decided by the appellate authority, the order of the said authority merges into the order of the appellate authority. With this merger, the order of the original authority ceases to…
  4. CIT vs. DLF Commercial Project Corp (Delhi High Court) 
    Section 194C (TDS for "work") and Section 194J (TDS of income from "professional services"- the latter expression defined expansively by Section 194J (3) Explanation (a)). Neither provision obliges the person making the payment to deduct anything from contractual payments such as those made for reimbursement of expenses, other than…
  5. R. K. Jain vs. Chairman, Settlement Commission (Delhi High Court) 
    The principal controversy to be addressed is whether the Chairman of the Income Tax Settlement Commission could, as administrative head of the Income Tax Settlement Commission, declare the order passed by the CPIO and Joint Commissioner of Income Tax directing…Read more ›

CIT vs. Divine Infracon Pvt. Ltd (Delhi High Court)

by editor
Indisputably, the Revenue could also not take recourse to Rule 27 of the Income Tax (Appellate Tribunal) Rules, 1963. By virtue of the said Rule, a respondent before the Tribunal can support the decision appealed against not only on the grounds decided in favour of the respondent but also on grounds decided against it. However, Rule 27 of the said Rules would not extend to permitting the respondent to expand the scope of an appeal and assail the decision on issues, which are not subject matter of the appeal


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