Commissioner (Appeals) has to give convincing reasoning while upholding order of Assessing Officer

IT: Commissioner (Appeals) has to give convincing reasoning while upholding order of Assessing Officer
IT: Where assessee did not continue as small scale industrial undertaking during assessment year under consideration, it was not entitled to claim deduction under section 80-IB
IT: Where depreciation and loss prior to initial year had already been set off against other business income of respective years, there was no need for notionally carrying forward and setting off of same depreciation and loss in computing deduction under section 80-I
IT: Benefit of weighted deduction on in-house Research and Development expenditure is allowed only from year in which assessee has made application and entered into an agreement with Department of Science and Industrial Research
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[2014] 51 taxmann.com 245 (Pune - Trib.)
IN THE ITAT PUNE BENCH 'A'
Advik Hi tech (P.) Ltd.
v.
Additional Commissioner of Income-tax, Range-8, Pune*
SHAILENDRA KUMAR YADAV, JUDICIAL MEMBER
AND R.K. PANDA, ACCOUNTANT MEMBER
IT APPEAL NOS. 1743 & 1744, 1706 & 2041 (PN.) OF 2012
[ASSESSMENT YEARS 2008-09 & 2009-10]
JULY  30, 2014
I. Section 28(i), read with section 45 of the Income-tax Act, 1961 - Business income - Chargeable as (Business income v. Capital gains - Share transactions) - Assessment year 2008-09 - Assessee Company engaged in manufacturing of auto components earned a profit from purchase and sale of shares and showed same as short-term capital gain - Assessing Officer treated same as business income and Commissioner (Appeals) confirmed same - Whether in view of assessee's own case for assessment year 2007-08 wherein identical issue was pending disposal, matter was to be restored to file of Commissioner (Appeals) for fresh adjudication - Held, yes [Para 2.3] [Matter remanded]
II. Section 80-IB of the Income-tax Act, 1961 - Deductions - Profits and gains from industrial undertakings other than infrastructure development undertakings (Small scale industrial undertaking) - Assessment year 2008-09 - Whether in order to claim deduction under section 80-IB(3)(ii), eligibility of being SSI unit continues for entire period of claim and not only in initial assessment year - Held, yes - Whether, therefore, Commissioner (Appeals) was justified in rejecting assessee's claim for deduction under section 80-IB where assessee did not qualify to be a small scale industrial undertaking in previous year relevant to year under consideration as value of its plant and machinery exceeded Rs. 3 crores - Held, yes [Para 5.2] [In favour of revenue]

Where appeal was filed before wrong forum within stipulated time leading to delay in filing appeal before proper forum, said delay must be condoned

Service Tax : Where appeal was filed before wrong forum within stipulated time leading to delay in filing appeal before proper forum, said delay must be condoned
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[2014] 51 taxmann.com 179 (Kolkata - CESTAT)
CESTAT, KOLKATA BENCH
Horticulture Development Foundation
v.
Commissioner of Service Tax-Kolkata*
DR. D.M. MISRA, JUDICIAL MEMBER
ORDER NO. FO/A/75534/2014
STAY PETITION NO. 241/2012
SERVICE TAX APPEAL NO. 130/2012
SEPTEMBER  5, 2014
Section 85, of the Finance Act, 1994, read with sections 35 and 35A, of the Central Excise Act, 1944 and sections 128 and 128A, of the Customs Act, 1962 - Appeals - Condonation of Delay - Commissioner (Appeals) - Assessee filed appeal against adjudication order before Assistant Commissioner of Service Tax within prescribed period instead of before Commissioner (Appeals) - Later, assessee filed appeal before Commissioner (Appeals) claiming that delay occurred on account of filing of appeal before wrong forum was condonable - Commissioner (Appeals) held that Preamble of impugned order stated that appeal would lie before Commissioner (Appeals); in spite thereof, assessee filed appeal before wrong forum and hence, delay was not condonable - HELD : Filing of appeal before wrong forum within stipulated time but delay in filing appeal before proper forum, deserves to be condoned - Hence, delay in question was condoned and appeal was remitted back to Commissioner (Appeals) for consideration afresh [Para 7] [In favour of assessee]

Income from house property and not a business income

IT: Income derived by assessee from leasing out of its building simplicitor was because of ownership of building and not from personal exertion; hence it was an income from house property and not a business income
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[2014] 50 taxmann.com 422 (Allahabad)
HIGH COURT OF ALLAHABAD
Hotel Arti Delux (P.) Ltd.
v.
Assistant Commissioner of Income-tax, Circle 2(1), Kanpur*
TARUN AGARWALA AND DR. SATISH CHANDRA, JJ.
IT APPEAL NO. 493 OF 2005†
SEPTEMBER  9, 2014
Section 22, read with section 28(i), of the Income-tax Act, 1961 - Income from house property - Chargeable as (Rental income) - Assessment year 1990-91 - Assessee leased out its building to a nursing home and showed rental receipt from building as business income - Whether building which was leased out by assessee was nothing else but a building simplicitor and was not a building, which was equipped with specialized plant and machinery - Held, yes - Whether, since income derived by assessee was from ownership of building and not from personal exertion, income derived by assessee from leasing out of its property was an income from house property and not a business income - Held, yes 

Reassessment proceedings could not be initiated after expiry of four years

IT : Reassessment proceedings could not be initiated after expiry of four years from relevant assessment year merely on ground that in view of retrospective amendment to provisions of section 80-IA, assessee was not entitled to deduction granted under said section earlier
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[2014] 51 taxmann.com 369 (SC)
SUPREME COURT OF INDIA
Commissioner of Income-tax
v.
Avadh Transformers (P.) Ltd.*
R. M. LODHA AND KURIAN JOSEPH, JJ.
SPECIAL LEAVE TO APPEAL (CIVIL) NO. 21477 OF 2013†
APRIL  11, 2014
Section 80-IA, read with section 147 of the Income-tax Act, 1961 - Deductions - Profit and gains from infrastructure undertaking (Reassessment) - Assessment year 2006-07 - High Court by impugned order held that reassessment proceedings could not be initiated after expiry of four years from relevant assessment year merely on ground that in view of retrospective amendment to provisions of section 80-IA, assessee was not entitled to deduction granted under said section earlier - Whether Special Leave Petition filed against impugned order was to be dismissed - Held, yes [In favour of assessee]
--

Claim for deduction under section 80-IB(10)

IT: Where Assessing Officer allowed assessee's claim for deduction under section 80-IB(10) after making detailed enquiries, he could not initiate reassessment proceedings taking a view that said claim was wrongly allowed
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[2014] 51 taxmann.com 375 (SC)
SUPREME COURT OF INDIA
Assistant, Commissioner of Income-tax
v.
Sarla Raj Kumar Varma*
MADAN B. LOKUR AND C. NAGAPPAN, JJ.
SCA NO. 125 OF 2014†
OCTOBER  8, 2014
Section 80-IB, read with section 147, of the Income-tax Act, 1961 - Deductions - Profits and gains from industrial undertakings other than infrastructure undertakings (Housing project) - Assessment year 2009-10 - Reassessment proceedings were initiated against assessee taking a view that assessee's claim for deduction under section 80-IB(10) was wrongly allowed - High Court held that since Assessing Officer allowed assessee's claim for deduction under section 80-IB(10) after making detailed enquiries, he could not initiate reassessment proceedings on basis of same material - Whether special leave petition filed against impugned order was to be dismissed - Held, yes [In favour of assessee]

Sale/purchase of land which did not face any rebuttal and, moreover, assessee had paid due tax on said income, impugned penalty order deserved to be set aside

IT: Where Assessing Officer having completed assessment, passed a penalty order under section 271AAA for default of not substantiating manner in which undisclosed income was derived, in view of fact that assessee made statement that he had earned undisclosed income for various transactions of sale/purchase of land which did not face any rebuttal and, moreover, assessee had paid due tax on said income, impugned penalty order deserved to be set aside
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[2014] 48 taxmann.com 327 (Delhi - Trib.)
IN THE ITAT DELHI BENCH 'F'
Sita Ram Gupta
v.
Assistant Commissioner of Income-tax, Central Circle-I, Faridabad*
A.D.JAIN, JUDICIAL MEMBER
AND J.S. REDDY, ACCOUNTANT MEMBER
IT APPEAL NOS. 1835 & 1836 (DELHI) OF 2013
STAY APPLICATION NO. 433 (DELHI) OF 2013
[ASSESSMENT YEAR 2009-10]
JUNE  30, 2014
Section 271AAA of the Income-tax Act, 1961 - Penalty - Where search has been initiated (Applicability of) - Assessment year 2009-10 - In course of search proceedings carried out in case of assessee, cash was found at different places belonging to him - In statement recorded under section 132(4), assessee admitted that said cash represented undisclosed income - Assessing Officer having completed assessment, passed a penalty order under section 271AAA for default of not substantiating manner in which undisclosed income was derived - It was noted from records that assessee made statement that he had earned undisclosed income from various transactions of sale/purchase of land and said statement did not face any rebuttal or rejection at hands of Assessing Officer - It was also undisputed that assessee had paid due tax on admitted undisclosed income - Whether on facts, impugned penalty order passed by authorities below deserved to be set aside - Held, yes [Para 21] [In favour of assessee]

Amount borrowed for government project which was later on repaid when monies were received from government could not be treated as income of assessee

IT : Expenditure incurred by a charitable trust on international conference or training could not be disallowed on ground that it was not notified in a circular issued by CBDT
IT : Amount borrowed for government project which was later on repaid when monies were received from government could not be treated as income of assessee
IT : Exemption under section 11 could not be denied to assessee merely because assessee was not registered under AP charitable and Hindu Religious Institutions and Endowments Act, 1987
IT : Where assessee had distributed cash to Tsunami victims, no disallowance could be made on ground that incorrect method was adopted for identifying victims
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[2014] 48 taxmann.com 330 (Hyderabad - Trib.)
IN THE ITAT HYDERABAD BENCH 'B'
Deputy Director of Income-tax (Exemption)-II, Hyderabad
v.
Society For Integrated Development in Urban & Rural Areas (SIDDUR)*
B. RAMAKOTAIAH, ACCOUNTANT MEMBER
AND SAKTIJIT DAY, JUDICIAL MEMBER
IT APPEAL NO. 674 (HYD.) OF 2011
[ASSESSMENT YEAR 2007-08]
JANUARY  3, 2014
Section 11 of the Income-tax Act, 1961 - Charitable or religious trust - Exemption of income from property held under (Application of income) - Assessment year 2007-08 - Assessee, a charitable trust, incurred certain expenditure towards attendance of international conference or training - Assessing Officer disallowed same on ground that it could not be treated as spent for purpose of charitable activities under section 11(1)(a) as it was not supported by special or general order of CBDT - Whether since expenditure was incurred for purpose of advancing objects of society and not for personal benefit of secretary, it could not be said that expenditure incurred was not for charitable purpose - Held, yes - Whether it was neither necessary nor required as per statute that for availing exemption under section 11 a particular charitable activity had to be notified in a circular issued by CBDT - Held, yes [Para 11] [In favour of assessee]

Proceedings before arbitration so appointed without objection could not be permitted to raise it for first time before Supreme Court

Arbitration: Where appellant failed to raise plea of jurisdiction before Arbitral Tribunal and participated in proceedings before arbitration so appointed without objection could not be permitted to raise it for first time before Supreme Court
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[2014] 48 taxmann.com 281 (SC)
SUPREME COURT OF INDIA
Union of India
v.
Pam Development (P.) Ltd.
SURINDER SINGH NIJJAR AND RANJANA PRAKASH DESAI, JJ.
CIVIL APPEAL NO. 5618 OF 2006†
FEBRUARY  18, 2014
Section 4, read with section 16 of the Arbitration and Reconciliation Act, 1996 - Waiver of right to object - Appellant entered into an agreement with respondent to construct an electric loco shed - Later, it terminated contract alleging delay on part of contracting firm and inferior quality of work - Respondent moved High Court to appoint an arbitrator - High Court appointed a retired judge as sole arbitrator who decided in favour of respondent - Appellant then moved High Court to set aside award - Court dismissed application, leading to appeal in Supreme Court - In Apex Court, appellant argued that Arbitral Tribunal was not properly constituted as appointment was against terms of contract - Whether since appellant had not raised any objection with regard to competence/jurisdiction of Arbitral Tribunal before arbitrator, same would be deemed to have been waived and could not be raised before instant Court at this belated stage - Held, yes [Para 15]

Section 220 of the Income-tax Act, 1961 - Collection and recovery of tax

IT : Considering assessee's request that its business was not good and it was not in a position to pay 50 per cent of total demanded tax as directed by Assessing Officer, assessee was directed to pay 25 per cent of total demanded tax in two instalments
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[2014] 48 taxmann.com 353 (Madras)
HIGH COURT OF MADRAS
Smart Professional Services (P.) Ltd.
v.
Deputy Commissioner of Income-tax, Co. Circle VI(3)*
B. RAJENDRAN, J.
W.P. NO. 14951 OF 2014
M.P. NO. 1 OF 2014
JUNE  12, 2014
Section 220 of the Income-tax Act, 1961 - Collection and recovery of tax - When tax payable and when assessee deemed in default (Stay) - Assessment year 2011-12 - Assessee claimed that it was an investment company and during relevant assessment year, there was no trading of shares - However, Assessing Officer, without considering this fact, determined taxable turnover and demanded huge amount of tax - Pending appeal before Commissioner (Appeals), assessee filed application for stay of demand - Assessing Officer rejected stay application and directed assessee to pay 50 per cent of demand - Whether it is discretion of authority regarding demand of percentage to be deposited; however, taking into consideration assessee's request that its business was not good and it was not in a position to pay 50 per cent of demand as directed by Assessing Officer, assessee was to be directed to pay 25 per cent of demand in two instalments - Held, yes [Para 6] [Partly in favour of assessee]
R. Sivaraman for the Petitioner. T. Pramod Kumar Chopda for the Respondent.

Where assessee since its inception was being assessed at New Delhi, Assessing Officer, Srinagar had no jurisdiction to make assessment of assessee

IT: Where Assessing Officer issued notice under section 148 prior to date of approval from Jt. Commissioner /Addl. Commissioner, notice was bad in law and liable to be quashed
IT: Where assessee since its inception was being assessed at New Delhi, Assessing Officer, Srinagar had no jurisdiction to make assessment of assessee
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[2014] 49 taxmann.com 40 (Amritsar - Trib.)
IN THE ITAT AMRITSAR BENCH
Mrs. Amina Rasool
v.
Income-tax Officer*
H.S. SIDHU, JUDICIAL MEMBER
AND B.P. JAIN, ACCOUNTANT MEMBER
IT APPEAL NO. 362 (ASR.) OF 2013
[ASSESSMENT YEAR 2003-04]
JANUARY  30, 2014
I. Section 151, read with section 148, of the Income-tax Act, 1961 - Income escaping assessment - Sanction for issue of notice (Condition precedent) - Assessment year 2003-04 - Assessing Officer issued notice under section 148 to assessee stating therein why amount credited in his bank account could not be brought to tax - Whether since satisfaction of Jt. Commissioner/Addl. Commissioner was taken only on 30-3-2009 whereas notice under section 148 was issued on 23-1-2008 which was prior to said satisfaction or approval of Jt. Commissioner /Addl. Commissioner, notice issued under section 148 was bad in law and liable to be quashed - Held, yes [Para 8.2][In favour of assessee]
II. Section 124, read with section 143, of the Income-tax Act, 1961 - Assessing Officer - Jurisdiction of (General) - Assessment year 2003-04 - Assessee had been filing return of income since assessment year 2005-06 till assessment year 2010-11 with ITO, New Delhi - However, Assessing Officer, Srinagar issued notice to assessee asking him to explain details of his income for relevant assessment year - Whether assessee since its inception was being assessed at New Delhi, jurisdiction of case lay at New Delhi and not at Srinagar and, accordingly, assessment could not be made by Assessing Officer, Srinagar - Held, yes [Paras 9 and 10][In favour of assessee]

CTO had failed to follow Circular No. 8/13, dated 18-7-2013 prescribing time schedule, for taking consequential action

CST & VAT : Where CTO conducted inspection at business premises of assessee on 27-6-2003 and thereafter he passed an order dated 16-6-2014 on assessee, since CTO had failed to follow Circular No. 8/13, dated 18-7-2013 prescribing time schedule, for taking consequential action, matter was remanded back for fresh adjudication

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[2014] 49 taxmann.com 28 (Madras)

HIGH COURT OF MADRAS

Pancy Ceramics

v.

Commercial Tax Officer*

M. SATHYANARAYANAN, J.

W.P. NO.19326 OF 2014

M.P. NO. 1 OF 2014

JULY  22, 2014

Section 65, read with section 22, of the Tamil Nadu Value Added Tax Act, 2006 - Inspection of accounts and other documents, etc. - Time limit for consequential action - On 27-6-2013, Commercial Tax Officer conducted a surprise inspection at business premises of assessee and collected certain amount by way of cheque - Later he passed an order dated 16-6-2014 on assessee - Circular No. 8/13, dated 18-7-2014 prescribed time schedule for consequential action in case of inspection - Whether since Commercial Tax Officer had failed to follow said circular, matter required to be remanded back to him for fresh adjudication - Held, yes [Para 10] [In favour of assessee/Matter remanded]

Notifications and Circulars : Circular No. 8/13, dated 18-7-2014

Complaint under section 138 cannot be quashed on ground that there was no proof of service of notice as same is matter of evidence

Negotiable Instruments Act: Complaint under section 138 cannot be quashed on ground that there was no proof of service of notice as same is matter of evidence

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[2014] 48 taxmann.com 333 (SC)

SUPREME COURT OF INDIA

Ajeet Seeds Ltd.

v.

K. Gopala Krishnaiah

SMT. RANJANA PRAKASH DESAI AND N.V. RAMANA, JJ.

CRIMINAL APPEAL NO. 1523 OF 2014†

JULY  16, 2014

Section 138 of the Negotiable Instruments Act, 1881, read with section 114 of the Evidence Act - Dishonour of cheque for insufficiency etc., of funds in account - A complaint was filed alleging that cheque issued by respondent-accused for repayment of a legally recoverable debt bounced - Process was issued and accused contended that demand notice was not served on him - High Court quashed complaint on ground that there was no recital in complaint that notice under section 138 was served upon accused - Whether since proof of service of notice is a matter of evidence, High Court erred in quashing complaint - Held, yes [Paras 11 & 13]

__._,_.___

Where income tax department had raised no objection to proposed scheme of amalgamation and same was in interest of company and its members, proposed scheme was to be sanctioned

CL : Where income tax department had raised no objection to proposed scheme of amalgamation and same was in interest of company and its members, proposed scheme was to be sanctioned

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[2014] 49 taxmann.com 35 (Gujarat)

HIGH COURT OF GUJARAT

Welspun Fintrade (P.) Ltd., In re

MS. HARSHA DEVANI, J.

CO. PETITION NO. 17 OF 2014

CO. APPLICATION NO. 15 OF 2014

APRIL  16, 2014

Section 232 of the Companies Act, 2013/ Section 394 of the Companies Act, 1956 - Amalgamation - Petitioner companies belonging to same group of management sought for sanction of their scheme of amalgamation - Regional Director stated that companies should have a common appointed date and petitioner should undertake compliance of Income tax Act - Whether since there is no legal bar on choice of appointed date and income tax department had no objection to proposed scheme, scheme being in interest of companies and its members was to be sanctioned - Held, yes [Paras 6 & 7]

__._,_.___

Where despite stay granted by Tribunal revenue attached and took away proceeds of assessee's bank account, revenue was directed to lift attachment

 IT : Where despite stay granted by Tribunal revenue attached and took away proceeds of assessee's bank account, revenue was directed to lift attachment

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[2014] 48 taxmann.com 354 (Delhi)

HIGH COURT OF DELHI

A.T. Kearney India (P.) Ltd.

v.

Income Tax Officer*

S. RAVINDRA BHAT AND R.V. EASWAR, JJ.

W.P. (C) NO. 1937 OF 2014

MARCH  28, 2014

Section 222, read with sections 220 and 254, of the Income-tax Act, 1961 - Collection and recovery of tax - Certificate proceedings (Attachment) - Tribunal allowed assessee's application for stay against demand of tax for a period of 180 days - Despite stay granted by Tribunal, revenue attached and took away proceeds of assessee's bank account - Whether since income-tax authorities were represented by CIT-DR before Tribunal and order on stay application was also pronounced in open Court on that date, submission of revenue that concerned Assessing Officer was not intimated, could not be accepted - Held, yes - Whether, therefore, revenue should lift attachment and ensure that amounts recovered were deposited back in assessee's account within a week - Held, yes [Paras 3 to 5] [In favour of assessee]

Salil Kapoor, Ankit Gupta, Sanat Kapoor, Vikas Jain and S. Varun Gupta for the Petitioner. Sanjeev Sabharwal for the Respondent.

Where income of hospital as well as factory were estimated by estimating total receipt, expenditure should also be considered as out of total receipt

IT: Where gross receipt of assessee was enhanced in original assessment proceedings, no further addition to be made on basis of survey proceedings

IT: Where income of hospital as well as factory were estimated by estimating total receipt, expenditure should also be considered as out of total receipt

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[2014] 49 taxmann.com 148 (Rajasthan)

HIGH COURT OF RAJASTHAN

Commissioner of Income-tax

v.

Dr. Suresh Sharma*

DINESH MAHESHWARI AND ARUN BHANSALI, JJ.

IT APPEAL NO. 47 OF 2012†

JANUARY  14, 2013

I. Section 69 of the Income-tax Act, 1961 - Unexplained investment (General principles) - Assessment year 2002-03 - Assessee run a nursing home and owned a marble cutting plant - In survey proceedings, Assessing Officer found that assessee had not included certain purchase of medicine in purchases shown during year and, therefore, made an addition as undisclosed purchases - Assessing Officer further found that sale of medicines and fee charged by assessee was in ratio of 60:40 and, therefore, he enhanced sales and after giving adjustment for profit on sale of medicines, computed fee and made addition after deducting declared profit - Appellate authorities having noticed that total receipts shown by assessee was reasonable and Assessing Officer had already enhanced gross receipt in original assessment, deleted addition made by Assessing Officer - Whether there was no infirmity in impugned order - Held, yes [Para 7][In favour of assessee]

First Appellate Authority for adjudication afresh with respect to Form 'H' relied by assessee

CST & VAT : Where lower authorities had disallowed assessee's claim for sale in course of export on account of non-production of Form 'H', matter was restored to First Appellate Authority for adjudication afresh with respect to Form 'H' relied by assessee
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[2014] 49 taxmann.com 113 (Punjab & Haryana)
HIGH COURT OF PUNJAB AND HARYANA
Raj Trading Company
v.
State of Punjab*
RAJIVE BHALLA AND DR. BHARAT BHUSHAN PARSOON, JJ.
VATAP NO. 30 OF 2013
SEPTEMBER  16, 2013
Section 5 of the Central Sales Tax Act, 1956 - Sale - In course of export - Assessing Authority as well as appellate authorities disallowed assessee's claim for sale in course of export on account of non-production of Form 'H' before them - Form 'H' relied by assessee prima facie proved that goods were exported out of India - Whether matter required to be restored to First Appellate Authority for adjudication afresh with respect to form 'H' relied by assessee - Held, yes [Para 4] [In favour of assessee/Matter remanded]