Section 69B, read with sections 69C, 69 and 37(1), of the Income-tax Act, 1961 - Undisclosed investments (Investment on building)

IT : Where building was already sold by developer and alleged excess amount of investment on building was actually in nature of expenditure, net tax would be nil

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[2015] 55 taxmann.com 443 (Karnataka)

HIGH COURT OF KARNATAKA

Commissioner of Income-tax, Bangalore

v.

Suraj Towers, Vaishnavi Infrastructure (P.) Ltd.*

N.KUMAR AND B. MANOHAR, JJ.

IT APPEAL NO. 1098 OF 2008†

OCTOBER  13, 2014

Section 69B, read with sections 69C, 69 and 37(1), of the Income-tax Act, 1961 - Undisclosed investments (Investment on building) - Assessment year 2002-03 - Assessee-property developer filed valuation report of approved valuer in respect of construction cost of building at Rs. 1.13 crore while DVO valued same at Rs. 1.71 crore - Said building was already sold and excess amount of investment on building was actually in nature of expenditure - Whether unexplained income had to be set off against expenditure and net tax in hands of assessee would be nil - Held, yes [Para 9] [In favour of assessee]

Section 245-I, read with section 271(1)(c), of the Income-tax Act, 1961 - Settlement Commission

IT: SLP dismissed against High Court ruling that even if there was an error of law or fact in calculating penalty by Settlement Commission, discretion exercised by it requires no interference unless exercise of power made by Settlement Commission was perverse requiring interference under article 226 of Constitution

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[2015] 56 taxmann.com 14 (SC)

SUPREME COURT OF INDIA

Arjun Singh Mohan Singh (HUF)

v.

Commissioner of Income-tax-I*

ANIL R DAVE, KURIAN JOSEPH AND MRS. R. BANUMATHI, JJ.

SPECIAL LEAVE TO APPEAL (C) NO. 19468 OF 2014†

DECEMBER  4, 2014

Section 245-I, read with section 271(1)(c), of the Income-tax Act, 1961 - Settlement Commission - Order to be conclusive (Penalty orders) - Assessment years 2001-02 and 2002-03 - High Court by impugned order held that even if there was an error of law or fact in calculating penalty by Settlement Commission, discretion exercised by it requires no interference unless exercise of power made by Settlement Commission was perverse requiring interference under article 226 of Constitution - Whether Special Leave Petition filed against impugned order was to be dismissed - Held, yes [In favour of revenue]

Section 69 of the Income-tax Act, 1961 - Unexplained investments (Estimated addition)

IT : In view of failure of assessee to explain source of investment for earning certain undisclosed income, reasonable addition suggested by revenue on account of unexplained investment on estimate basis was to be confirmed

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[2014] 52 taxmann.com 112 (Andhra Pradesh and Telangana)

HIGH COURT OF TELANGANA AND ANDHRA PRADESH

Commissioner of Income-tax

v.

Jaihind Cycle Co.*

L. NARASIMHA REDDY AND CHALLA KODANDA RAM, JJ.

IT TRIBUNAL APPEAL NO. 58 OF 2001†

JULY  16, 2014

Section 69 of the Income-tax Act, 1961 - Unexplained investments (Estimated addition) - Block assessment period 1993-94 to 1997-98 - During search proceedings certain undisclosed income was found - Assessing authority computed net addition at Rs. 1.34 crore with tax liability of Rs. 80.22 lakh while Tribunal reduced tax laibility to Rs. 32 lakh - Whether in view of assessee's failure to explain source of investment for earning said income, an addition of Rs. 50 lakh as unexplained investment as suggested by revenue was to be upheld - Held, yes [Para 11] [Partly in favour of assessee]

Section 271(1)(c), read with section 271AAA, of the Income-tax Act, 1961 - Penalty

IT: Section 271AAA and section 271(1)(c) have different concomitant scopes and are mandated to operate exclusively

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[2015] 55 taxmann.com 284 (Mumbai - Trib.)

IN THE ITAT MUMBAI BENCH 'C'

Assistant Commissioner of Income-tax, Central Circle-13, Mumbai

v.

Prakash Steelage Ltd.*

SANJAY ARORA, ACCOUNTANT MEMBER

AND AMIT SHUKLA, JUDICIAL MEMBER

IT APPEAL NO. 5221 (MUM.) OF 2012

[ASSESSMENT YEAR 2009-10]

JANUARY  28, 2015

Section 271(1)(c), read with section 271AAA, of the Income-tax Act, 1961 - Penalty - For concealment of income (Section 271AAA v. section 271(1)(c)) - Assessment year 2009-10 - Whether section 271AAA and section 271(1)(c) have different concomitant scopes and are mandated to operate exclusively - Held, yes - There was a search and seizure action under section 132 at premises of assessee - Several incriminating materials were found leading to disclosure of undisclosed income vide statement under section 132(4) - Addition was made by Assessing Officer - Thereafter, penalty under section 271AAA had been levied by Assessing Officer as assessee could not specify manner in which such income had been derived - Commissioner (Appeals) deleted penalty on basis of a finding that there was substantial compliance, not warranting any further denial of benefit of Explanation 5A to section 271(1)(c) - Commissioner (Appeals) having examined levy on basis and anvil of a different provision, matter was to be restored back to him for consideration afresh - Held, yes [Paras 4.3 and 4.4] [In favour of revenue/Matter remanded]

Section 10(23AAA) of the Income-tax Act, 1961, read with Rule 16C(5) of the Income-tax Rules

IT : Where commissioner had wrongly interpreted rule 16C and held that employer could not made any payment for corpus of employees welfare fund, order of Commissioner to reject registration under section 10(23AAA) was to be set aside

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[2015] 55 taxmann.com 184 (Gujarat)

HIGH COURT OF GUJARAT

KPT Employees Welfare Trust

v.

Commissioner of Income-tax, Rajkot-I*

K.S. JHAVERI AND K.J. THAKER, JJ.

SPECIAL CIVIL APPLICATION NO. 12659 OF 2014

DECEMBER  22, 2014

Section 10(23AAA) of the Income-tax Act, 1961, read with Rule 16C(5) of the Income-tax Rules, 1962 - Employees' welfare fund, exemption to (Employer's contribution) - Assessee-trust was constituted for benefit of employees of a port trust - It filed application for registration under section 10(23AAA) - Commissioner invoked rule 16C of rules and rejected said application holding that employer could not made any payment for corpus and, therefore, one of conditions laid down in section 10(23AAA) was not fulfilled - Whether since as per CBDT guideline, employer contribution in corpus was acceptable, impugned order passed by Commissioner was to be quashed and set aside - Held, yes [Para 13] [In favour of assessee]

Circulars and Notifications : Notification Nos. 9830 SO 672(E), dated 27-7-1995 and 33/11, dated 3-6-2011

Section 50, read with sections 45 and 49, of the Income-tax Act, 1961 - Capital gains

IT : Godown purchased in 1969, but not used since 1985-86 on which no depreciation was claimed in subsequent years, would not be included in block of assets in view of newly introduced section 50 w.e.f. 1-4-1988; profit arising on sale could not be taxed as short-term capital gain but as long-term capital gains

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[2015] 55 taxmann.com 287 (Gujarat)

HIGH COURT OF GUJARAT

Income-tax Officer

v.

Parikh Transport Co.*

K.S. JHAVERI AND K.J. THAKER, JJ.

TAX APPEAL NO. 245 OF 2001†

NOVEMBER  25, 2014

Section 50, read with sections 45 and 49, of the Income-tax Act, 1961 - Capital gains - Computation in case of depreciable asset (Scope of) - A godown was purchased in 1969, but it was not used for purpose of business since assessment year 1985-86 - No depreciation was claimed in subsequent years - Tribunal held that section 50 which is newly introduced w.e.f. 1-4-1988 would not be applicable in instant case and said asset would not form part of block of assets and profit arising on sale of said asset could not be taxed as short-term capital gain and that said asset was long-term capital asset and, accordingly, long-term capital gain would be computed by applying provisions of sections 45 and 49 - Whether view taken by Tribunal was just and proper - Held, yes [Paras 6 and 9] [In favour of assessee]