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Income Tax Updates for July 2019

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NEWS –

DIRECT TAX

1. Income Tax Department detects foreign assets in recent search.

2. NR earning income from investment fund set up in IFSC is exempt from filing of ITR.

3. CBDT extends due date for filing of ITR from 31-07-2019 to 31-08-2019.

4. Income earned by NR from off-shore investments routed through Category I/II AIFs not taxable in India.

5. Amending the Agreement between the Government of the Republic of India and the Government of the People’s Republic of China for the Avoidance of Double Taxation.

DOMESTIC TAX CASE LAWS 

SUPREME COURT

  1. Constitutional validity of any provision and especially taxing provision cannot be struck down on a plea based on equity or/and hardship. [Prashanti Medical Services & Research Foundation v UOI [2019] 107 taxmann.com 382 (SC)]
  1. Where High Court upheld Tribunal’s order deleting addition made under section 68 in respect of share application money received by assessee on ground that assessee had brought on record sufficient documentary evidence to prove identity and creditworthiness of share applicants, SLP filed against said order was to be dismissed. [Pr. CIT v. Adamine Construction (P.) Ltd. [2019] 107 taxmann.com 85 (SC)]
  1. Where High Court without admitting appeal and framing any question of law issued notice of appeal to respondent assessee, heard both parties on questions urged by appellant and dismissed it, order so passed not being in conformity with mandatory procedure prescribed in section 260A, was to be set aside. [Pr. CIT v. A.A. Estate (P.) Ltd. [2019] 107 taxmann.com 209 (SC)]
  1. SLP dismissed against High Court’s order holding that where commercial user permitted by local authority was within limits prescribed under Development control Rules/Regulation, deduction under section 80IB(10) upto 31-3-2005 would be allowable irrespective of fact that project was approved as ‘housing project’ or ‘residential plus commercial’. [CIT v. Indo Continental Hotels and Resorts Ltd. [2019] 107 taxmann.com 162 (SC)]
  1. SLP filed against High Court’s order recalling its earlier judgment on ground that it contained some factual inadvertent error committed while disposing of assessee’s petition; was to be dismissed. [Dy. CIT v. Ajay Surendra Patel [2019] 107 taxmann.com 222 (SC)]
  1. Where High Court upheld Tribunal’s order setting aside reassessment proceedings on ground that addition made in said proceedings was beyond scope of section 147, read with section 148, SLP filed against said order was to be dismissed. [Pr. CIT v. Mahendra Singh Asoliya [2019] 107 taxmann.com 81 (SC)]
  1. Where assessee surrendered its right, title and interest in plot allotted by MIDC in favour of third party, in view of fact that assessee did not carry on any business activity during relevant year and thus plot transferred became a capital asset which did not bring into existence any business income as held by High Court, SLP filed against said order was to be dismissed. [Pr. CIT v. Well Wisher Construction (P.) Ltd. [2019] 106 taxmann.com 260 (SC)]
  1. Where High Court upheld Tribunal’s order holding that income earned by assessee HUF as a partner of partnership firm from sale of goodwill and trademark of firm was taxable as capital gain, SLP filed against decision of High Court was to be dismissed. [Pr. CIT v. Prakashchandra S Soni, HUF [2019] 107 taxmann.com 87 (SC)]
  1. SLP dismissed against High Court ruling that where assessee did not honour its commitment to take delivery against some purchase orders placed on foreign sellers consequent upon price of palm oil declining and accepted foreign seller’s claims for damages, amount so paid could not be disallowed as speculative loss under section 43(5). [CIT v. Ambo Agro Products (P.) Ltd. [2019] 106 taxmann.com 306 (SC)]
  1. Assessee-Company has floated various schemes which require subscribers to deposit certain amounts by way of subscriptions in its hands, and, depending upon scheme in question, these subscribed amounts at end of scheme are ultimately repaid with interest. Scheme at hand also contained forfeiture clauses as a result of which if, mid-way, a certain amount was forfeited, then said amount would immediately become income in hands of assessee. [Peerless General Finance & Investment Co. Ltd. v. CIT [2019] 107 taxmann.com 228 (SC)]
  1. Where High Court upheld Tribunal’s order holding that Commissioner (Appeals) was justified in not allowing set off of losses of earlier years before granting deduction under section 10A, SLP filed against order of High Court was to be dismissed. [Pr. CIT v. Infosys BPO Ltd. [2019] 107 taxmann.com 57 (SC)]
  1. Where High Court held that assessee’s activity of compression of natural gas into CNG amounted to ‘manufacture’ within meaning of section 2(29BA), SLP filed against order of High Court was to be allowed. [Dy. CIT v. Central U.P. Gas Ltd. [2019] 106 taxmann.com 371 (SC)]
  1. Where High Court upheld Tribunal’s order holding that in absence of any exempt income reported by assessee, disallowance could not be made under section 14A, SLP filed against said order was to be dismissed. [Pr. CIT v. GVK Project and Technical Services Ltd. [2019] 106 taxmann.com 181 (SC)]
  1. Where High Court rejected revenue’s plea to effect that since assessee’s income was eligible for exemption under section 11, Tribunal should not have allowed assessee’s claim for depreciation as same would amount to granting double deduction, SLP filed against order of High Court was to be dismissed. [DIT v. Society for Applied Microwave Electronic Engineering & Research [2019] 106 taxmann.com 204 (SC)]
  1. Where High Court upheld addition made by authorities below relying upon statement made in course of search proceedings by director of assessee-company, since assessee failed to discharge its burden that admission made by director in his statement was wrong and said statement was recorded under duress and coercion, SLP filed against decision of High Court was to be dismissed. [Bannalal Jat Constructions (P.) Ltd. v. Asst. CIT [2019] 106 taxmann.com 128 (SC)]
  1. Where High Court upheld Tribunal’s order that land sold by assessee did not fall within meaning of capital asset under section 2(14) as it was classified as dry land for which Kishtu had been paid and, moreover, mere fact that adjacent land was divided into plots for sale could not a ground to conclude that land sold by assessee was for purpose of development, SLP filed against order of High Court was to be dismissed. [CIT v. Venkateswara Hospital [2019] 106 taxmann.com 283 (SC)]
  1. Where Settlement Commission rejected application filed by assessee holding that amount disclosed by assessee never belonged to him and High Court by impugned order upheld same, SLP filed against impugned order was to be granted. [Vishwa Nath Gupta v. Pr. CIT [2019] 106 taxmann.com 310 (SC)]

 HIGH COURT

  1. Decision which is quasi-judicial in nature, has to be taken by Assessing Officer under section 197(1) on objective criteria and be based on relevant material provided by applicant and available with department – It must be supported by reasons available on file which conform to requirement of section 197 of Act read with Rule 28AA of Rules – Those reasons must be communicated to applicant – It cannot be taken, on dictation of an officer superior to Assessing Officer. [Bently Nevada LLC v. ITO [2019] 107 taxmann.com 440 (Delhi)]
  1. Where recovery of demand was stayed on deposit of 20 per cent of outstanding demand, for purpose of computing demand, advance tax and TDS paid at time of filing of return should also be taken into consideration. [Keva Fragrances (P.) Ltd. v. Asstt. CIT [2019] 106 taxmann.com 345 (Bombay)]
  1. Provisions of section 50C could not be applied for making addition under section 69B. [Pr. CIT v Dharmaja Infrastructure [2019] 107 taxmann.com 281 (Gujarat)]
  1. Expenditure incurred by assessee-Cricket Club of India for renovation and interior work of stadium, construction of foundation of camera, staircase, control room, fabrication and erection of structural steels, fixing of MS sliding gates, different pipes for sprinkler system in main ground, excavation of soil, purchasing of LED replay screen, electric materials etc., for upgrading stadium in accordance with ICC Standards, was revenue in nature. [Pr. CIT v. Cricket Club of India [2019] 107 taxmann.com 280 (Bombay)]
  1. Merely on basis of Shah Commission’s Report opining that there was under-invoicing of export price by iron-ore miners and exporters, reassessment could not be initiated when there was nothing to indicate that any particular income had accrued to anyone as a result of price difference. [Sesa Sterlite Ltd. v. Asst. CIT [2019] 107 taxmann.com 388 (Bombay)]
  1. Where assessee-company, running a hotel in Ahmedabad, at Mount Abu and also serving flight catering in Indian Airines at Ahmedabad Airport, is served with notice directing for conducting special audit under section 142(2A) on ground that assessee is not in a position to submit detailed Profit and Loss account as called for and system of maintenance of accounts of assessee is so complex that assessee is not in a position to submit details of various heads of income and expenditure in a understandable and satisfactory manner and further it is found that for last couple of years assessee failed to get its books of accounts audited and submit audit report to department in time, since satisfaction recorded by Assessing Officer would indicate that same is not just an eyewash but Assessing Officer had applied his mind to various aspects like nature of accounts, method of maintaining accounts, entries recorded etc. and reached to conclusion that accounts were complex and it was in interest of revenue that special audit under section 142(2A) of Act should be directed, order passed by Assessing Officer in exercise of his powers under section 142(2A) is justified. [Cama Hotels Ltd. v. Samir Vakil or His Successor Dy. CIT [2019] 107 taxmann.com 385 (Gujarat)]
  1. Where assessee was engaged in development of housing projects and it in return of income filed for assessment year 2008-09 had not claimed deduction under section 80-IB(10) and subsequent to assessment framed by Assessing Officer it filed an application under section 264 before Commissioner and raised claim of deduction under section 80-IB(10) and Commissioner rejected revision application holding that since assessee had not made a claim under section 80-IB(10) in return of income, by virtue of section 80A(5), claim could not be granted, Commissioner was justified in his view. [EBR Enterprises v. UOI [2019] 107 taxmann.com 220 (Bombay)]
  1. Petitioners, Institute of Chartered Accountants of India, being an autonomous body which found their existence on account of a Central enactment of Parliament, appropriate Government to refer industrial dispute against petitioners to Industrial Tribunal would be Central Government and not State Government. [The Institute of Chartered Accountants of India v State of U.P. [2019] 106 taxmann.com 342 (Allahabad)]
  1. Attachment of properties of assessee for recovery of interest payable by assessee was unjustified if appeal under section 220(2A) filed by assessee before Commissioner for waiver of such interest was pending. [Kings Infra Ventures Ltd. v. TRO [2019] 107 taxmann.com 132 (Madras)]
  1. When assessee during pendency of its application under section 245C, made a voluntary offer of additional income i.e. income in excess of what was disclosed in application, Settlement Commission should not have proceeded with assessee’s application. [CIT v. Settlement Commission (Income-tax & Wealth–tax) [2019] 107 taxmann.com 137 (Kerala)]
  1. Where Commissioner (Exemptions) had accepted that main aim of assessee society was running of college and educational institutions and made no adverse observation regarding genuineness of objects or activities carried on by society, registration under section 12AA could not have been denied holding that it was entitled to exemption under section 10(23C)(vi). [CIT (Exp) v. Khatu Ji Para Medical Technology Educational & Research Society [2019] 106 taxmann.com 344 (Punjab & Haryana)]
  1. Where assessee firm on being asked to explain certain credits in its books of account, pointed out three partners (creditors) who had advanced loans and said creditors had produced credible material to show their source of income for specific advances made to firm, additions made under section 68 had rightly been deleted by Tribunal. [CIT v. Sree Ganesh Trading Company [2019] 107 taxmann.com 130 (Kerala)]
  1. Introduction of Modified Rules for Departmental Examination for 1998 Rules whereby ‘Pass Percentage’ in Rule VI prescribing requirement of 60 per cent of marks for passing each of subjects was modified and reduced to 50 per cent with effect from 26-5-2008, cannot be given retrospective effect. [C.V. Antony v. Chairman, Central Board of Direct Taxes [2019] 107 taxmann.com 210 (Kerala)]
  1. No approval was required to claim deduction of exp. related to scientific research u/s 35(1)(i). [CIT v. Rajapalayam Mills Ltd. [2019] 107 taxmann.com 129 (Madras)]
  1. Time limit for purchase of new house to avail sec. 54F relief to be reckoned from date of agreement to sell. [Kishorbhai Harjibhai Patel v. ITO [2019] 107 taxmann.com 295 (Gujarat)]
  1. Where assessee, NBFC, engaged in trading in shares, incurred loss (speculation loss) as a result of its activities of trading in shares, said loss could not be set off against income from others sources which were a refund of income-tax. [CIT v. Harrisons Malayalam Financial Services Ltd. v. [2019] 107 taxmann.com 77 (Kerala)]
  1. Payment for clerical services such as data storage, documents scanning, etc., require sec. 194C TDS. [CIT v. Reliance Life Insurance Ltd. [2019] 106 taxmann.com 400 (Bombay)]
  1. Where during search and seizure operation conducted upon premises of assessee, keys belonging to assessee’s lockers were found and seized in which certain jewellery was found, since there was proper authorization for impugned search and seizure operation, same could not be set aside. [Sumedha Dutta v. UOI [2019] 106 taxmann.com 394 (Madhya Pradesh)]
  2. Where in course of appellate proceedings, Commissioner (Appeals) directed assessee to pay 15 per cent of aggregate demand as reduced by demand already paid, since said order did not suffer from any infirmity, same was to be upheld. [Martin Puthumana Thomas v. Asst. CIT [2019] 106 taxmann.com 269 (Kerala)]
  1. Where assessee entered into an agreement dated 5-3-2010 with a company to pay liquidated damages to said company for cancellation of contract in three installments, and last installment was paid on 20-5-2010, deduction in respect entire amount of liquidated damages paid by assessee was to be allowed in assessment year 2011-12. [Pr. CIT v. Rajesh Prakash Timblo [2019] 106 taxmann.com 255 (Bombay)]
  1. No sec. 194C TDS where major part of materials was purchased from third parties for job work. [Kramski Stamping & Molding India (P.) Ltd. v. Asst. CIT [2019] 106 taxmann.com 247 (Madras)]
  1. HC rejected application for waiver of interest as there was wilful evasion of payment of tax by assessee. [Mansukhlal Pitalia v. Pr. CIT [2019] 106 taxmann.com 349 (Madhya Pradesh)]
  1. There being a unity of control and management and common fund apart from other features, assessee on showing that it has commenced several of its activities in bunch of activities for which it was incorporated would definitely qualify for deduction of expenditure incurred by it under head operating expenses, financial expenses and depreciation. [Daimler India Commercial Vehicles (P.) Ltd. v. Dy. CIT [2019] 107 taxmann.com 243 (Madras)]
  1. Where AO after expiry of four years from end of relevant assessment year, initiated reassessment proceedings by taking a view that assessee was in possession of certain cash amount which was not disclosed in return and thus escaped assessment, in view of fact that Assessing Officer was in possession of all relevant documents at time of assessment, initiation of reassessment proceedings merely on basis of change of opinion was not justified. [Rajbhushan Omprakash Dixit v. Dy. CIT [2019] 106 taxmann.com 307 (Bombay)]
  1. Where assessee had allegedly allowed his friend to use his credit cards, who refused having used assessee’s credit card, and, thus, amount in question was added to assessee’s income as unexplained expenditure, since assessee failed to prove nature of expenses incurred through credit cards despite adequate opportunity given by Tribunal, impugned addition made by authorities below was to be confirmed. [Sunil Balasubramaniam Shankar v. ITO [2019] 107 taxmann.com 55 (Madras)]
  1. Where assessee, incorporated to promote child education, claimed exemption under section 10(23C)(iiiad), in view of fact that assessee’s gross annual receipts from fee and interest along with addition made under section 68 exceeded Rs. one crore, claim so raised deserved to be rejected. [Satluj Shiksha Samiti v. CIT [2019] 107 taxmann.com 54 (Punjab & Haryana)]
  1. Revision petition under Sec. 264 is maintainable against sec. 143(1) intimation. [Epcos Electronic Components S.A v. UOI [2019] 107 taxmann.com 227 (Delhi)]
  1. Where pursuant to search at assessee’s premises, revenue formulated a prima facie belief that assessee had undisclosed income as well as undisclosed foreign investment and povisionally attached assessee’s bank accounts and two immovable properties, in view of fact that assessee’s tax, interest and possible penalty liabilities were unlikely to exceed valuation of aforesaid two immovable properties, provisional attachment of his bank accounts was to be lifted. [Darius Sammotashaw v. Dy. CIT [2019] 106 taxmann.com 393 (Bombay)]
  1. Assessee, a non-banking institution, engaged in providing financial assistance to its customers, was not liable to pay tax in respect of interest earned on non-performing assets (NPA) on accrual basis. [Bhind District Cooperative Central Bank Ltd. v. Income tax Department [2019] 106 taxmann.com 396 (Madhya Pradesh)]
  1. Where assessee-company claimed deduction of legal and professional expenses incurred in relation to buyback of shares of company from its shareholders, since said expenditure would not in any manner enhance capital structure of assessee company, expenditure in question being revenue in nature was eligible for deduction under section 37(1). [Pr. CIT v. Bayer Vapi (P.) Ltd. [2019] 106 taxmann.com 395 (Gujarat)]
  1. It is sine qua non for Assessing Officer to consider claims of deduction/exemption made by assessee and thereafter to return said claims if assessee is not entitled to same by assigning reasons. [Deepak Dhanaraj v. ITO [2019] 107 taxmann.com 76 (Karnataka)]
  1. Method of accounting provided for valuation of inventory u/s 145A doesn’t determine allowability of exp. [Mahindra World City Developers Ltd. v. Asst. CIT [2019] 107 taxmann.com 16 (Madras)]
  1. Where assessee, a medical practitioner by profession, used interest free funds obtained from her father for purchasing shares and had shown shares as investment in balance sheet and, further, in case of fall in value of shares, same was not claimed as a business loss, profit arose on sale of such shares was to be treated as capital gain and not as business income. [Pr. CIT v. Amrita P. Talwar [2019] 107 taxmann.com 71 (Bombay)]
  1. In case of service sector, even certain kinds of preliminary steps, such as engaging in negotiation or employment of personnel, could be regarded as an activity of commencement of business and, thus, where assessee being one of such undertaking took some preliminary steps such as appointment of key personnel, preparation of draft model development agreement and initiation of process to tender financial and advisory services, its claim for deduction of depreciation, preliminary expenses and employee’s remuneration was to be allowed. [Indian Railway Stations Development Corporation Ltd. v. Pr. CIT [2019] 107 taxmann.com 79 (Delhi)]
  1. Proviso to section 80-IA(4) does not require that there should be a direct agreement between transferee enterprise and specified authority for availing benefit under section 80-IA. [CIT v. Chettinad Lignite Transport Services (P.) Ltd. [2019] 107 taxmann.com 12 (Madras)]
  1. Profit from sale of slag, which was a by-product in manufacture of pig iron, was to be considered as profit from business of industrial undertaking engaged in manufacture and sale of pig iron for purpose of deduction under section 80-IB. [Sesa Industries Ltd. v. CIT [2019] 106 taxmann.com 118 (Bombay)]
  1. Where Assessing Officer made addition on account of bogus purchase of raw material by assessee company, since Commissioner (Appeals) and Tribunal concurrently found that assessee had yielded huge profits during year from sales which would not be possible without utilising huge raw material, Tribunal was wholly justified in restricting impugned additions on account of bogus purchased to 25 per cent. [Pr. CIT v. Synbiotics Ltd. [2019] 106 taxmann.com 316 (Gujarat)]
  1. Where TV broadcaster paid organiser for organising cricket series, if a cricket match in a particular series was cancelled while a match of another series was added and by a fresh contract, both broadcaster and organiser agreed neither to refund amount for cancelled match nor to charge for additional match, no addition of price difference in broadcasting rights of matches to be made under section 40A(2). [Pr. CIT v. NEO Sports Broadcast (P.) Ltd. [2019] 107 taxmann.com 17 (Bombay)]
  1. Survey at residential premises of assessee could not have been converted into search and seizure without tax authorities recording that assessee had failed to co-operate or there was a suspicion that income had been concealed by assessee warranting resort to process of search and seizure. [Pawan Kumar Goel v. UOI [2019] 107 taxmann.com 21 (Punjab & Haryana)]
  1. Before applying provisions of section 56(2)(viib), assessing authority is required to undertake exercise of determining fair Market Value of shares as provided in provisions of section 56(2)(viib). [CIT v. Vaani Estates (P.) Ltd. [2019] 107 taxmann.com 15 (Madras)]
  1. Repetitive applications under section 254(2) are not permissible and, therefore, an order passed under section 254(2) cannot be rectified nor amended by invoking provisions of sub-section (2) of section 254 once again. [Pr. CIT v. Smt. Alpana Bhartia [2019] 106 taxmann.com 397 (Karnataka)]
  1. Where notice under section 143(2) was issued to assessee prior to filing of return of income, said notice being invalid, assessment order passed in pursuance of same deserved to be set aside. [Pr. CIT v. Marck Biosciences Ltd. [2019] 106 taxmann.com 399 (Gujarat)]
  1. Assessing Officer could not make addition to assessee’s income under section 41(1) in respect of sundry creditors shown in books of account merely on ground that assessee failed to furnish PAN or correct address of those creditors. [Pr. CIT v. B.T. Nagraj Reddy [2019] 106 taxmann.com 308 (Karnataka)]
  1. Where assessee filed an appeal before Tribunal but did not appear on hearing due to reason that assessee was out of country, since assessee failed to make arrangement to represent her before Tribunal by an authorised representative and also failed to sought for another date of hearing, Tribunal was justified in dismissing impugned appeal filed by assessee. [Smt. Shobha Lakshman v. CIT [2019] 106 taxmann.com 313 (Karnataka)]
  1. Where Assessing Officer sought to reopen assessment in respect of income involving a matter which was subject matter of appeal before Commissioner (Appeals), said reopening of assessment was hit by third proviso to section 147 which was not permissible in law. [Jhankit Chandulal Prajapati v. Dy. CIT [2019] 106 taxmann.com 312 (Gujarat)]
  1. In case of service sector, even certain kinds of preliminary steps, such as engaging in negotiation or employment of personnel, could be regarded as an activity of commencement of business and, thus, where assessee being one of such undertaking took some preliminary steps such as appointment of key personnel, preparation of draft model development agreement and initiation of process to tender financial and advisory services, its claim for deduction of depreciation, preliminary expenses and employee’s remuneration was to be allowed. [Indian Railway Stations Development Corporation Ltd. v. Pr. CIT [2019] 107 taxmann.com 79 (Delhi)]
  1. Period of 182 days to be considered for calculating residential status of a person migrated to Foreign Country. [Pr. CIT v. Binod Kumar Singh [2019] 107 taxmann.com 27 (Bombay)]
  1. When assessee raised a ground before Tribunal, it was duty of Tribunal to dispose of such ground and give its opinion thereon. [Rolls-Royce Marine India (P.) Ltd. v. ITO [2019] 107 taxmann.com 26 (Bombay)]

INCOME TAX APPELLATE TRIBUNAL

  1. Where assessee sold one of its business undertakings with all its assets and liabilities together with all licences, permits, approvals, registration, contracts and other contingent liabilities for a slump price, its case would fall within meaning of section 50B and, thus, profit earned by assessee from said transaction would be taxable as long term capital gain. [Amalgam Foods Ltd. v. Dy. CIT [2019] 107 taxmann.com 316 (Cochin – Trib.)] 
  2. Where assessee-society was engaged in imparting education as a learning centre of a University i.e. PTU, since object of assessee was charitable in nature within meaning of section 2(15), a part of semester fee paid by PTU to assessee could not be regarded as commission and, assessee’s claim for exemption under section 10(23C)(iiiad) in respect of amount so received, was to be allowed. [Shaheed Udham Singh Educational Society v. ITO (Exp) [2019] 107 taxmann.com 282 (Amritsar – Trib.)] 
  3. Where at time of filing of return of income by assessee on 30-9-2009, sub-clause (e) to section 49(1)(iii) was not in statute as same was inserted by Finance Act, 2012, even though said amendment was retrospectively effective from 1-4-1999, it could not be applied for computing capital gain in relevant assessment year. [Utsav Cold Storage (P.) Ltd. v ITO [2019] 107 taxmann.com 184 (Jaipur – Trib.)] 
  4. Where assessee sold a residential house and invested sale consideration in a plot for purpose of construction of residential house, merely because assessee could not obtain possession of plot within period of three years due to developer’s failure to offer possession, assessee’s claim for exemption under section 54 could not be denied. [Varun Seth v. Asst. CIT [2019] 107 taxmann.com 133 (Delhi – Trib.)] 
  5. Where Assessing Officer computed assessee’s profits derived from ‘export of articles or goods’ manufactured at SEZ undertaking on standalone basis, deduction under section 10AA could not be denied. [DIC Fine Chemicals (P.) Ltd. v. Dy. CIT [2019] 107 taxmann.com 213 (Kolkata – Trib.)]
  6. Where business loss was arrived at by Assessing Officer while giving effect to order of Tribunal, said loss could be carried forward and benefit of set off against business income in subsequent assessment years could be allowed to assessee even in absence of such claim in return of income. [Maharashtra State Warehousing Corporation v. Dy. CIT [2019] 107 taxmann.com 92 (Pune – Trib.)] 
  7. Annual value of property could be assessed as income only in hands of ‘owner’ of property; therefore, where assessee was an SPV promoted by State Housing Board for undertaking construction of apartments and assessee was not an owner of apartments but its role was limited only to developer who held apartments under construction in trust to be ultimately owned by persons to whom allotments were approved by Board, annual value of unfinished flats could not be brought to tax in hands of assessee. [Bengal DCL Housing Development Co. Ltd. v. DY. CIT [2019] 106 taxmann.com 346 (Kolkata – Trib.)] 
  8. Where assessee deposited amount of capital gain in capital gain account scheme before expiry of date of filing return under section 139(4), her claim for deduction under section 54F was to be allowed. [ITO v. Nilima Abhijit Tannu [2019] 106 taxmann.com 256 (Mumbai – Trib.)]
  9. No sec. 194-I TDS on wharfage charges paid to Maharashtra Maritime Board for loading/unloading goods at waterfront. [Angre Port (P.) Ltd. v ITO [2019] 106 taxmann.com 252 (Pune – Trib.)] 
  10. Where assessee-society was set up with object of promoting sport of cricket and to bring out new talent in field of cricket and to organize coaching and camps for players, conduct matches at district and State level, it could not be said that assessee was providing any service in nature of trade, commerce or industry and assessee was entitled to registration under section 12AA. [Chhattisgarh State Cricket Sangh v. Dy. CIT [2019] 106 taxmann.com 347 (Raipur – Trib.)]
  11. 80P relief couldn’t be denied to co-operative credit society providing credit facilities to its members. [Asst. CIT v. People’s Co.Op. Credit Society Ltd. [2019] 107 taxmann.com 53 (Ahmedabad – Trib.) (SB)] 
  12. Discount received by assessee on buyback of Foreign Currency Convertible Bonds (FCCB) could not be taxed under section 28(iv) as said receipt in hands of assessee was in form of cash/money and, further, such proceeds were utilised partly for ongoing capitalization programs and, thus, same was capital receipt. [Dy. CIT v. Pidilite Industries Ltd. [2019] 107 taxmann.com 91 (Mumbai – Trib.)]
  13. Where assessee, having sold residential property, utilised sale consideration for booking a semi-finished flat with a builder in which assessee had to carry out internal fit-outs to make it liveable on its own, same was to be treated as case of construction of property and not purchase of property for claiming exemption under section 54. [Asst. CIT v. Seema Sobti [2019] 106 taxmann.com 350 (Delhi – Trib.)]
  14. Where assessee firm failed to comply with notices issued under section 142(1), Assessing Officer was right in framing assessment order under section 144 denying allowance of interest and salary paid to partners by taking support of provisions of section 184(5). [Eastern Engineering Venture v. ITO [2019] 107 taxmann.com 78 (Cuttack – Trib.)] 
  15. Delhi Metro Rail Corporation (DMRC) is not entitled to benefit of exemption under section 10(20A) – DMRC is a company which has been merely registered or incorporated under Companies Act, 1956 and failed to satisfy condition of ‘authority constituted by under any Central, State of Provincial Act’. [Delhi Metro Rail Corporation Ltd. v. Jt. CIT [2019] 107 taxmann.com 51 (Delhi – Trib.)] 
  16. Provisions of section 56(2)(vii) have application to ‘property’ which is in nature of a capital asset of recipient and, thus, where assessee purchased a piece of land as stock-in-trade, impugned addition made by AO in respect of said transaction by invoking provisions of section 56(2)(vii)(b)(ii), was to be set aside. [Satendra Koushik v. ITO [2019] 106 taxmann.com 244 (Jaipur – Trib.)] 
  17. ITAT restricts disallowance u/s 14A to 1% of exempt income considering identical ruling of earlier year. [Tata Motors Ltd. v. Dy. CIT [2019] 106 taxmann.com 273 (Mumbai – Trib.)] 
  18. No deemed dividend if interest was duly paid on loan taken from group company. [Mantri Tea Company (P.) Ltd. v. Pr. CIT [2019] 106 taxmann.com 272 (Kolkata – Trib.)]
  19.  68 couldn’t apply to income credited in income & exp. a/c by Trust. [Asst. CIT v. Shree Shiv Vankeshawar Educational & Social Welfare Trust [2019] 106 taxmann.com 249 (Delhi – Trib.)]
  20. A Court can recall order and change its mind in extreme case even if draft copy is signed and order is dictated in open Court. [Kamaljit Singh v. ITO [2019] 106 taxmann.com 251 (Amritsar – Trib.)]
  21. Where approval granted under section 35(1)(ii) to scientific research society was cancelled subsequently with retrospective effect, weighted deduction claimed by assessee donor under section 35(1)(ii) could not be denied, if there was valid and subsisting approval when donation was given. [Urnish Jewellers v. Asst. CIT [2019] 107 taxmann.com 19 (Mumbai – Trib.)] 
  22. Trust eligible for benefit of sec. 11, though ITR was filed in response to reassessment notice. [United Educational Society v. Jt. CIT [2019] 107 taxmann.com 127 (Delhi – Trib.)]
  23. Expenditure incurred by assessee, a signals distribution and cable networking company, for acquisition of Set Top Boxes (STB) generated permanent source of income for assessee by way of annual service maintenance charges and was therefore a capital expenditure. [Asst. CIT v. Kerala Communicators Cable Ltd. [2019] 106 taxmann.com 355 (Cochin – Trib.)] 
  24. On retirement, excess sum paid over and above sum standing to credit of capital account of assessee partner was to be taxed as capital gain. [Savitri Kadur v. Dy. CIT [2019] 106 taxmann.com 314 (Bangalore – Trib.)] 
  25. Assessee a pharmaceutical company engaged in manufacturing and sales of pharmaceuticals and allied products would be duly entitled to claim sales promotion expenses incurred on distribution of articles to stockists, distributors, dealers, customers and doctors. Circular No. 5/2012 dated 1-8-2012 issued by Central Board of Direct Taxes (CBDT) which cites such expenses as inadmissible as per section 37(1) would not be applicable to assessee. It was observed that as per circular it is the medical practitioners who are prohibited from accepting freebies. There is no restriction whatsoever on the pharmaceutical companies. [Aristo Pharmaceuticals (P.) Ltd. v. Asst. CIT [2019] 107 taxmann.com 119 (Mumbai – Trib.)] 
  26. Foreign remittances on export sales that were realized within specified time limit of six (6) months and those export sales proceeds for which extension of time limit was applied for by assessee to authorized bankers and applications had not been rejected, would be eligible for deduction under section 10A. [Dy. CIT v. Tecnotree Convergence Ltd. [2019] 107 taxmann.com 90 (Bangalore – Trib.)]

TRANSFER PRICING CASE LAWS

  1. Where High Court held consequent upon an order of TPO under section 92CA(3), it is incumbent upon Assessing Officer to pass a draft assessment order under section 144C SLP filed against said decision was to be dismissed. [Dy. CIT v. Control Risks India (P.) Ltd. [2019] 107 taxmann.com 83 (SC)]
  2. Where TPO was of opinion that purchase of know­-how made by assessee from its AE was not at Arm’s Length, he could have applied any specified methods for determining Arm’s Length Price of transaction, however, could not have replaced business decision of assessee and recorded justification for purchase made in context of incremental benefit earned by assessee out of such know­-how. [CIT v. SI Group-India Ltd. [2019] 107 taxmann.com 314 (Bombay-HC)]
  3. Where in course of appellate proceedings, Tribunal directed TPO to exclude depreciation; interest etc. to calculate operating profit, no substantial question of law arose from Tribunal’s order. [Pr. CIT v. Kirloskar Toyota Textile Machinery (P.) Ltd. [2019] 106 taxmann.com 309 (Karnataka-HC)]
  4. Where assessee had resold goods imported from AE without any value addition, most appropriate method which could be applied for determining arm’s length price would be RPM and TNMM could not be most appropriate method in such type of transaction. [Randox Laboratories (India) (P.) Ltd. v. ITO [2019] 107 taxmann.com 136 (Mumbai – Trib.)]
  5. Where pursuant to order of TPO proposing transfer pricing adjustment, Assessing Officer passed assessment order under section 143, read with section 92CA, issuance of a draft order of assessment would be a sine-qua-non before Assessing Officer could pass regular/final order of assessment under section 143(3), read with section 144C. [Inatech India (P.) Ltd. v. ITO [2019] 106 taxmann.com 318 (Bangalore – Trib.)]
  6. Where TPO made addition to assessee’s ALP in respect of excessive price paid to AE for purchase of Machinery, in view of fact that custom authorities had not disputed declared import price of machine and it was an acceptable method of valuation, impugned addition was to be deleted. [Dy. CIT v. Fresenius Kabi Oncology Ltd. [2019] 106 taxmann.com 403 (Delhi – Trib.)]
  7. Where AO came to a finding that control and management of business of assessee was wholly situated in India, then he had to proceed further; AO having failed to do so, action of TPO in applying Profit Split Method for bench-marking transactions without picking comparable was beyond his jurisdiction; further, where TPO has not exercised his jurisdiction, DRP in exercise of its powers cannot benchmark new transaction though reported by assessee, in hands of assessee. [Sava Healthcare Ltd. v. Asst. CIT [2019] 107 taxmann.com 226 (Pune – Trib.)]
  8. Where foreign group company provided technical know-how for manufacturing printing ink, if royalty paid was within range approved by Department of Industrial Policy and Promotion as well as by SIA and FIPB, said rate were at arm’s length. [Dy. CIT v. DIC India Ltd. [2019] 106 taxmann.com 404 (Kolkata – Trib.)]

INTERNATIONAL TAXATION CASE LAWS

  1. Amount paid by assessee to a foreign bank for rendering financial services in order to raise capital abroad through issuance of Global Depository Receipts (‘GDRs’), was not liable to tax in India as fee for technical services. [CIT v. Indusind Bank Ltd. [2019] 106 taxmann.com 343 (Bombay-HC)]
  1. Where subscription charges were received by assessee-TV channel operator from customers enabling them to view channels, since said receipt was not for transfer of any copyright in literary, artistic or scientific work, it could not be categorized as ‘royalty income‘. [CIT v. MSM Satellite (Singapore) Pte. Ltd. [2019] 106 taxmann.com 353 (Bombay-HC)]
  1. Where assessee, a US company, had entered into Network Participation Agreement with Citi Bank and granted non-exclusive right to Citi Bank for using know-how, technical process, etc., and received participation fee thereon which was offered as royalty in its regular return of income, but after termination of said agreement, assessee received compensation, which was claimed as business receipt, compensation received by assessee was to be treated only as business receipt in hands of assessee and not as royalty. [Diners Club International Ltd. v. Dy. CIT [2019] 106 taxmann.com 315 (Mumbai – Trib.)]

Disclaimer: Above said information are taken from publicly available resources and believed to be accurate.

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Name: CA Reetika Agarwal
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