Income Tax Updates – March to June 2020

NEWS

DIRECT TAX

1. Employee opting for Sec. 115BAC eligible to claim exemption for tour, travel and conveyance exp.

[Ref: NOTIFICATION NO. G.S.R. 415(E) [NO. 38/2020/F.NO.370142/15/2020-TPL], DATED 26-6-2020]

2. CBDT further extends various due dates for compliance under Income-tax Act.

[Ref: NOTIFICATION S.O. 2033(E) [NO. 35 /2020/F. NO. 370142/23/2020-TPL], DATED 24-6-2020]

3. CBDT notifies ‘301’ as Cost Inflation Index for FY 2020-21.

[Ref: NOTIFICATION NO. S.O. 1879(E) [NO. 32/2020/F.NO. 370142/17/2020-TPL], DATED 12-6-2020]

4. will consider extending deadline of March 31, 2023 to take benefit of lower tax regime u/s 115BAB.

[Ref: PRESS RELEASE, DATED 8-6-2020]

5. CBDT notifies new Form 26AS; widen its scope to include info received under DTAA/TIEA.

[Ref: Not. No. 30/2020/F. No. 370142 /20/2020-TPL]

​6. Validity of TP Safe Harbour rules extended till Assessment Year 2020-21.

[Ref: NOTIFICATION G.S.R. 304(E) [NO. 25/2020/ F. NO. 370142/14/2020-TPL], DATED 20-5-2020]

7. FM launches facility of Instant PAN through Aadhaar based e-KYC.

[Ref: Press Release dated 28.05.2020]

8. CBDT revises norms for invoking Mutual Agreement Procedure (MAP)

[Ref: NOTIFICATION NO. G.S.R. 282(E) [No.23/2020/F.No.370142/31/2019-TPL], DATED 6-5-2020]

9. New procedure for registration/approval u/s 10(23C), 12AA, 35 & 80G deferred to 31-10-2020.

[Ref: PRESS RELEASE, DATED 9-5-2020]

10. CBDT allows Sec. 80G deduction on donations made to ‘Shri Ram Janmabhoomi Teerth Kshetra’.

[Ref: NOTIFICATION S.O. 1434 (E) [NO. 24/2020/F. NO. 176/8/2017/ITA-I], DATED 8-5-2020]

11. CBDT relaxes residency provisions for Individuals who unable to leave India due to COVID-19.

[Ref: CIRCULAR NO. 11 OF 2020 [F.NO.370142/18/2020-TPL], DATED 8-5-2020]

12. CBDT notifies reduced TDS/TCS rates applicable from May 14, 2020.

[Ref: PRESS RELEASE, DATED 13-5-2020]

13. CBDT notifies final norms for calculating remuneration payable to eligible fund manager u/s 9A.

[Ref: NOTIFICATION NO. G.S.R. 315(E) [NO. 29/2020/F. No. 142/15/2015-TPL ], DATED 27-5-2020]

14. Nil or Lower TDS/TCS certificate issued for particular period in FY 2019-20 also valid till June 30, 2020.

[Ref: CIRCULAR F. NO. 275/25/2020-IT(B), DATED 9-4-2020]

15. CBDT defers GST & GAAR reporting in Tax Audit Report by one more year amid COVID-19 pandemic.

[Ref: CIRCULAR NO. 10/2020 [F. NO. 370142/9/2018-TPL], DATED 24-4-2020]

16. notifies provisions of protocol amending India-Austria DTAA.

[Ref: NOTIFICATION S.O. 1370(E) [NO.22/F.NO. 505/01/1982-FTD-I(PT.)], DATED 24-4-2020]

17 Trust can make investments in Co. in which NPCI holds 51% shareholding.

[Ref: NOTIFICATION G.S.R. 159(E) [No. 15/2020/F.No. 370142/5/2020-TPL], DATED 5-3-2020]

18. notifies Tax Information Exchange Agreement (TIEA) with Brunei Darussalam.

[Ref: NOTIFICATION S.O. 1009(E) [No. 14/2020/F.No.503/02/2012-FTD-II], DATED 4-3-2020]

19. NR operating in accordance with SEBI Circular dated 04-01-2017 to be deemed as FII for the purpose of Sec. 115AD.

[Ref: NOTIFICATION S.O. 1057(E) [No. 17/2020/ F. No. 173/10/2014-ITA-I], DATED 13-3-2020]

OECD

[Ref:-https://www.oecd.org]

1. Portugal deposits its instrument of ratification for the Multilateral BEPS Convention.

2. OECD releases second peer review report on preventing treaty shopping (BEPS Action 6).

3. OECD issues recommendations on implications of the COVID-19 crisis on cross-border workers and other related cross-border matters.

4. OECD releases BEPS Action 14 reports for Austria, France, Germany, Italy, Liechtenstein, Luxembourg and Sweden.

DOMESTIC TAX CASE LAWS [MARCH]

SUPREME COURT

1. Where High Court upheld Tribunal’s order deleting addition made by Assessing Officer in course of scrutiny assessment primarily on ground that no fresh material was discovered during search and seizure proceedings under section 132 to justify addition under section 153A, SLP filed against said order of High Court was to be granted.

[Pr. CIT v Devi Dass Garg [2020] 114 taxmann.com 552 (SC)]

2. Where High Court set aside reassessment proceedings on ground that no valid notice under section 148 could be issued against a dead person, SLP filed against said order was to be dismissed.

[ITO v Durlabhbhai Kanubhai Rajpara [2020] 114 taxmann.com 482 (SC)]

3. Where High Court upheld Tribunal’s order deleting penalty under section 271(1)(c) on ground that assessee had rendered reasonable explanation in support of its claim for deduction under sec. 36(1)(iii), SLP filed against order of High Court was to be dismissed.

[Pr. CIT v National Dairy Development Board [2020] 114 taxmann.com 554 (SC)]

4. Where High Court held that provisions of section 14A would be applicable from assessment year 2007-08, SLP filed against said order was to be dismissed.

[CIT v State Bank of Travancore [2020] 114 taxmann.com 556 (SC)]

5. Where High Court upheld Tribunal’s order holding that since in scrutiny assessment Assessing Officer had gone into assessee’s claim for deduction of payment of royalty, he could not initiate reassessment proceedings on pretext that a binding decision of Supreme Court was overlooked at time of assessment, SLP filed against order of High Court was to be dismissed.

[Pr. CIT v Moser Baer India Ltd. [2020] 114 taxmann.com 549 (SC)]

6. Rigours of rule 2 and rule 16 of Schedule II to Act are not applicable where sale of attached property is pursuant to order passed by DRT over which a charge has already been created prior to issuance of notice under rule 2 of Schedule II to Act.

[Connectwell Industries (P.) Ltd. v UOI [2020] 115 taxmann.com 87 (SC)]

7. Where assessee’s application as to whether it was liable to pay tax on buy-back of shares under section 115-O was pending before AAR, impugned communication addressed by department treating assessee to be ‘assessee-in-default’ on account of non-payment of tax was to be treated as show-cause notice and, thus, matter was to be remanded back for disposal on merits.

[Cognizant Technology Solutions India (P.) Ltd. v Dy. CIT [2020] 115 taxmann.com 84 (SC)]

8. Where High Court held that show-cause notice issued to assessee to withdraw approval granted under section 10(23C)(vi) did not exhibit any thought process of Commissioner (Exemptions) and, thus, such notice being invalid, consequential order was void ab initio for want of jurisdiction, SLP filed against said order was to be dismissed.

[CIT v Modern School Society [2020] 114 taxmann.com 587 (SC)]

9. SLP dismissed as withdrawn due to low tax effect against High Court ruling that placement fees/carriage fees paid by assessee to cable operators and MSO/DTH operators would be covered under section 194C and not under section 194J.

[CIT v Zee Entertainment Enterprises Ltd. [2020] 114 taxmann.com 533 (SC)]

10. Where Assessing Officer of assessee and Assessing Officer of searched person was same and satisfaction note recorded by Assessing Officer clearly stated that documents seized belonged to other person assessee herein and not searched person, there can be one satisfaction note prepared by the Assessing Officer it could be concluded that High Court was justified in holding that mandatory requirement of section 153C had been fulfilled and, thus, matter was rightly remanded back to Tribunal for disposal afresh on merits.

[Super Malls (P.) Ltd. v Pr. CIT [2020] 115 taxmann.com 105 (SC)]

11. Successor company will be entitled to claim deduction under section 80-IA in view of erstwhile firm having entered into agreement with Government for carrying on business pertaining to infrastructure facility development.

[CIT v Chetak Enterprises (P.) Ltd. [2020] 115 taxmann.com 108 (SC)]

12. SLP dismissed as withdrawn due to low tax effect against High Court ruling that when undisclosed purchases are discovered in course of assessment, it is only profit embedded in said transactions which can be added to total income under section 69C.

[Pr. CIT v Subarna Rice Mill [2020] 114 taxmann.com 572 (SC)]

13. Where revenue sought to raise a question as to whether order of Tribunal was to be treated as void-ab-initio in light of Third Proviso to section 254(2A) which provides that stay of demand stands vacated after expiry of a period of 365 days, even if delay in disposal of appeal is not attributable to assessee, however, High Court opined that such a question was not a substantial question of law, SLP filed against said order was to be granted.

[Pr. CIT v Jindal Steel & Power Ltd. [2020] 114 taxmann.com 618 (SC)]

14. Where High Court held that while computing deduction under sections 80-IA, 80-I and 80HH, interest received by assessee from its trade debtors towards late payment of sale consideration was not required to be excluded from profits of industrial undertakings as same was income derived from business of industrial undertaking, SLP filed against said order was to be dismissed due to low tax effect.

[CIT v Nirma Ltd. [2020] 114 taxmann.com 575 (SC)]

15. SLP dismissed as withdrawn due to low tax effect against High Court ruling that where assessee society engaged in printing, publication and distribution of school text books at subsidized rates or even free, generated profits out of these activities, it could not be concluded that assessee ceased to carry on charitable activity of education.

[CIT v Delhi Bureau of Text Books [2020] 114 taxmann.com 615 (SC)]

16. Where in appellate proceedings, High Court opined that disallowance calculated under section 14A could not exceed value of investment itself, SLP filed against said order was to be dismissed.

[Pr. CIT v Indiabulls Capital Services Ltd. [2020] 114 taxmann.com 647 (SC)]

17. SLP dismissed as withdrawn due to low tax effect against High Court ruling that Official Assignee need not go before Central Board of Direct Taxes praying for waiver of interest under sections 234A, 234B and 234C as Insolvency Court itself can consider question of waiver of interest in terms of power conferred under section 7 of Presidency Towns Insolvency Act, 1909.

[CIT v Official Assignee, High Court, Madras [2020] 114 taxmann.com 616 (SC)]

18. SLP dismissed as withdrawn due to low tax effect against High Court ruling that provident fund/employees’ provident fund/contributory provident fund/general provident fund, etc., if paid after due date under respective Act but before filing of return of income under section 139(1), same cannot be disallowed.

[CIT v Rajasthan State Ganganagar Sugar Mills Ltd. [2020] 114 taxmann.com 573 (SC)]

19. Section 143(1A) can only be invoked when lesser amount stated in return filed by assessee is a result of an attempt to evade tax lawfully payable by assessee, thus, where there was no observation to effect that claim of 100 per cent depreciation by assessee, was with intend to evade tax, section 143(1A) could not have been mechanically applied to assessee.

[Rajasthan State Electricity Board v Dy. CIT [2020] 115 taxmann.com 330 (SC)]

HIGH COURT

1. Financial Stringency would not justify Non-Remittance of TDS amount to Government.

[KBR Infratech Ltd. v Asst. CIT [2020] 114 taxmann.com 495 (Karnataka)]

2. Where assesssee did not make submission before Tribunal that Assessing Officer should have referred valuation of gala (industrial building) to Valuation Officer, assessee could not be allowed to assail order of Tribunal before Court on grounds being not raised before Tribunal.

[Vipin Mehta v CIT [2020] 114 taxmann.com 459 (Bombay)]

3. Date of approval for entire housing project is seen for deduction u/s 80-IB and not date of approval for office.

[Sheetal Infrastructure (P.) Ltd. v Asst. CIT [2020] 114 taxmann.com 402 (Gujarat)]

4. Where from report of Halqa Patwari it was evident that land of assessee acquired by Government was ‘Gairmumkin’ in nature, and same was not agricultural land, compensation received by assessee in pursuance of land acquisition proceedings was subject to TDS.

[Gurudwara Sahib Patti Dhaliwal v CCIT [2020] 114 taxmann.com 505 (Delhi)]

5. Where AO initiated reassessment proceedings in case of assessee on ground that it had received accommodation entries from a sham concern, since assessee failed to controvert said finding of AO, validity of reassessment proceeding deserved to be upheld.

[Vedanta Ltd. v Asst. CIT [2020] 114 taxmann.com 510 (Delhi)]

6. Reopening notice issued on basis of amendment to Explanation 1 to section 115JB brought by Finance Act, 2009 with retrospective effect from 1-4-2001 which disallowed provision for bad and doubtful debt for purpose of computing book profits under section 115JB for imposition of tax, was not justified.

[CIT v Saint Gobain Glass India Ltd. [2020] 114 taxmann.com 507 (Madras)]

7. Disallowance under section 14A cannot be made more than exempt income itself.

[Pr. CIT v Reliance Ports and Terminals Ltd. [2020] 114 taxmann.com 529 (Bombay)]

8. Reopening of assessment could be made only when Assessing Officer has a reason which is present in his mind when he forms his reason to believe that income has escaped assessment; assessment cannot be reopened under section 148 on any hypothesis or contingency that may emerge in future.

[Vinodbhai Jivrajbhai Rabdiya v ITO [2020] 114 taxmann.com 535 (Gujarat)]

9. Loan given by assessee to its subsidiary company would be covered by meaning of ‘capital asset’ under section 2(14).

[CIT v Siemens Nixdorf Information Systemse GmbH [2020] 114 taxmann.com 531 (Bombay)]

10. Where Appellate Tribunal deleted addition in income of assessee but despite repeated reminders, refund was not released, revenue was directed to release same within a period of six weeks.

[Jugal Kishore Mahendra Biyani v ITO [2020] 114 taxmann.com 530 (Gujarat)]

11. Where industrial undertaking of assessee company was not located in industrial backward district as mentioned in Notification No. 714 (E) dated 7-10-1997, assessee could not be allowed deduction under section 80IA(2)(iv)(c).

[CIT v Endeka Ceramics (India) (P.) Ltd. [2020] 114 taxmann.com 532 (Karnataka)]

12. Voluntary contribution received by assessee, a registered trade union, from employer company as per industrial dispute settlement agreement between members/workers and employer company, which was distributed amongst employees/workers, was exempt under section 10(24).

[Gujarat Rajya Kamdar Sabha Union Machiwadi v ITO [2020] 114 taxmann.com 570 (Gujarat)]

13. Where Assessing Officer issued reassessment notice on basis of sanction granted by Chief Commissioner, since Chief Commissioner was not specified officer under section 151(2) to grant such sanction, impugned notice was to be quashed.

[Miranda Tools (P.) Ltd. v ITO [2020] 114 taxmann.com 584 (Bombay)]

14. Under section 244A interest on delayed refund becomes part of principal amount and, thus, delayed interest not only includes interest for not refunding principal amount but also interest on delayed refund.

[Pr. CIT v Ambuja Darla Kashlog Mangoo Transport Co-operative Society [2020] 114 taxmann.com 527 (Himachal Pradesh)]

15. Where assessee-association of third party administrators (ATPA) was engaged in primary aim and objective to organise and arrange all licensed third party administrators (TPAs) to be members of trust for mutual betterment of TPA business, merely because certain benefits accrued to TPA members and certain objects of trust were for advancement of business of TPA, it would not ipso facto render trust to be non-charitable.

[CIT v Association of Third Party Administrators [2020] 114 taxmann.com 534 (Delhi)]

16. Re-opening of assessment under section 147/148 invoking extended timeline under section 150 based on Tribunal’s earlier year’s findings was to be allowed as assessee had categorically agreed to be bound by findings of Tribunal for earlier year.

[Intec Corporation v Asst. CIT [2020] 114 taxmann.com 611 (Delhi)]

17. No addition could be made on account of undisclosed income only on basis of presumptions under section 132(4A) without recording any findings as to how loose sheets found during search were linked to assessee.

[Ajay Gupta v ITO [2020] 114 taxmann.com 577 (Allahabad)]

18. Where Assessing Officer rejected suo motu disallowance made by assessee under section 14A without recording any dissatisfaction, Tribunal was justified in holding that rule 8D could not be invoked.

[Pr. CIT v Godrej Investment Ltd. [2020] 114 taxmann.com 581 (Bombay)]

19. Web advertisement expenses claimed by assessee were to be disallowed where JSP (Java Server Page) technologies based on which website of advertisement service providers were claimed to have been launched, did not exist at relevant time and assessee failed to substantiate that it incurred such expenditure.

[Fiitjee Ltd. v Pr. CIT [2020] 114 taxmann.com 582 (Delhi)]

20. Legal expenses incurred by assessee-company to protect directors/shareholders in their individual capacity, not for their conduct in carrying out business of assessee could not be allowed as business expenditure under section 37(1).

[National Refinery (P.) Ltd. v Asst. CIT [2020] 114 taxmann.com 614 (Bombay)]

21. Where department filed a report before Settlement Commission submitting that quantum of additional income initially disclosed by assessee before commission was not true and full disclosure and, during course of hearing before Commission, assessee disclosed further additional income so as to put an end to controversy, Commission was right in considering said revised offer made by assessee.

[Pr. CIT v Shankarlal Nebhumal Uttamchandani [2020] 114 taxmann.com 638 (Gujarat)] 

22. As per CBDT Circular No. 1/2016, dated 15-2-2016, term ‘initial assessment year’ in section 80-IA(5) would mean first year opted by assessee for claiming deduction under section 80-IA out of applicable slab and not first year of commencement/operation of eligible business.

[CIT v Chola Spinning Mills (P.) Ltd. [2020] 114 taxmann.com 642 (Madras)]

23. Revenue could not avoid processing of return under section 143(1) and granting of refund to assessee on ground that notice under section 143(2) had been issued to assessee.

[Tata Communications Ltd. v Dy. CIT [2020] 114 taxmann.com 728 (Bombay)]

24. Where Assessing Officer issued a notice under section 179 against assessee director of a company seeking to recover tax dues of said company from assessee, since such notice was totally silent regarding fact that tax dues could not be recovered from company and, further, there was no whisper of any steps being taken against company for recovery of outstanding amount, impugned notice under section 179 against assessee was to be set aside.

[Ashita Nilesh Patel v Asst. CIT [2020] 115 taxmann.com 37 (Gujarat)]

25. Where son sought to obtain a declaration of being real and/or benami owner of property on ground that he had given money to his father and mother to purchase property which they got registered in their name but actually property belonged to him, however, no particulars of father and mother standing in any fiduciary capacity to son were disclosed, son would not be entitled to obtain a declaration of being real and/or benami owner of property.

[Vinay Khanna v Krishna Kumari Khanna [2020] 115 taxmann.com 9 (Delhi)]

26. No penalty shall be imposed on assessee for having failed to collect Securities Transaction Tax (STT) or having collected, failed to pay such STT to credit of Central Government without providing it a reasonable opportunity to prove that there was reasonable cause for such failure.

[Pr. CIT v National Stock Exchange [2020] 115 taxmann.com 302 (Bombay)]

27. Where Assessing Officer allowed deduction as regards Accountants Risk Policy Premium paid by assessee via order dated 31-12-2009, however, Commissioner (Appeals) passed order under section 263 on 27-3-2017 directing Assessing Officer to verify allowability of said premium, same being barred by limitation, was rightly quashed by Tribunal.

[Pr. CIT v Prince Water House [2020] 114 taxmann.com 579 (Calcutta)]

28. No coercive measures during pendency of writ challenging constitutional validity of Black Money Act.

[Anila Rasiklal Mehta v UOI [2020] 115 taxmann.com 321 (Bombay)]

29. Where assessee, builder, postponed revenue recognition of its construction project as same was subject to litigation in Court, considering bona fide action of assessee, imposition of penalty under section 271(1)(c) was unjustified.

[Pr. CIT v Abode Construction Ltd. [2020] 114 taxmann.com 721 (Bombay)]

30. Where evidence found during search in case of third party was sufficient to form belief that LTCG shown by assessee was in nature of accommodation entries and income to that extent had escaped assessment, issue of notice under section 148 was justified.

[Purnima Komalkant Sharma v Dy. CIT [2020] 114 taxmann.com 718 (Gujarat)]

31. Where notice for reopening under section 148 assessment was issued to petitioner as legal heir of dead person, it could not be said that impugned notice was issued in name of dead person and, thus, was without jurisdiction.

[Jagdish Madhavdas Ahuja v UOI [2020] 114 taxmann.com 722 (Bombay)]

32. Where assessee-company engaged in business of development of real estate had, in ordinary course of business, made certain advance for purchase of land to construct commercial complex but same was forfeited as assessee could not make payment of balance amount, forfeiture of advance would be allowed as business expenditure.

[Pr. CIT v Frontiner Land Development P. Ltd. [2020] 114 taxmann.com 688 (Delhi)]

33. Where Assessing Officer issued a notice under section 179 against assessee-director of a company seeking to recover tax dues of said company from assessee, since said notice was totally silent about fact that tax dues could not be recovered from company and, further, there was no whisper of any steps being taken against company for recovery of outstanding tax amount, impugned notice under section 179 against assessee was to be set aside.

[Sonal Nimish Patel v Asst. CIT [2020] 114 taxmann.com 705 (Gujarat)]

34. Where assessee was holding more than 10 per cent of shares in two companies and he obtained loan and advances from said companies on interest and Assessing Officer treated amount of loan and advances to be deemed dividend and added same to income of assessee, since both companies were having money lending as substantial part of their business, no addition could be made by way of deemed dividend in income of assessee.

[Pr. CIT v Mohan Bhagwatprasad Agrawal [2020] 115 taxmann.com 69 (Gujarat)]

35. Where no findings had been recorded by Director that activities of assessee Trust were not genuine or that activities were not being carried out in accordance with objects of Trust, cancellation of registration granted to assessee Trust on ground that it was directly hit by proviso to section 2(15) was not justified.

[CIT v Mumbai Metropolitan Region Development Authority [2020] 115 taxmann.com 71 (Bombay)]

36. Where reopening notice was issued against assessee for reason that assessee was not eligible for exemption under sections 53(b) and 54(1)(i) in respect of consideration received from sale of a property being an agricultural land in form of a farmhouse along with water tank, servant quarter, etc., constructed on it as property in question was an agricultural land, since assessee had disclosed fully and truly all relevant material facts regarding this issue during original assessment proceedings, impugned reassessment notice issued after four years from end of relevant assessment year was unjustified.

[Arun Munshaw HUF v ITO [2020] 115 taxmann.com 72 (Gujarat)]

37. Procedure of filing electronic return as per section 139D read with rule 12 cannot bar assessee from making claim which he was entitled to; assessee was directed to make representation before CBDT where he was not able to reflect set off available in terms of section 72 in prescribed return of income in electronic form.

[Samir Narain Bhojwani v Dy. CIT [2020] 115 taxmann.com 70 (Bombay)]

38. Where AO passed assessment order on assessee and levied huge tax and assessee against impugned order filed appeal along with petition for stay u/s 220(6), assessee was to be directed to remit Rs. 2 lakhs and on such deposit, order challenged before Appellate Authority stood stayed till disposal of appeal.

[Suresh Anuradha v CIT [2020] 115 taxmann.com 73 (Madras)]

39. Where assessee filed original return under section 139 and while assessment was pending, assessee again in response to notice under section 153A filed another return making a new claim for treating gain on pre-payment of deferred VAT/sales tax on Net Present Value (NPV) basis as capital receipt, since assessment got abated, it was open for assessee to lodge a new claim in a proceeding under section 153A(1) which was not claimed in his regular return of income, thus, impugned order of AO rejecting such claim of assessee was unjustified.

[Pr. CIT v JSW Steel Ltd. [2020] 115 taxmann.com 165 (Bombay)]

40. Where Commissioner (Exemption) did not decide application u/s 12AA within six months from date on which matter was remitted by Tribunal, registration u/s 12AA(2) would be deemed to be granted to assessee-society.

[CIT v Gettwell Health and Education Samiti, Sikar (Raj.) [2020] 115 taxmann.com 66 (Rajasthan)]

INCOME TAX APPELLATE TRIBUNAL

1. Where assessee had submitted complete books of accounts with bills and vouchers at time of completion of assessment under section 143(3), reopening of assessment denying benefit of section 11 on basis of change of opinion was not justified.

[Dy. CIT (Exp) v Surat Urban Development Authority (SUDA) [2020] 115 taxmann.com 8 (Ahmedabad – Trib.)]

2. Where assessee produced all relevant documents and evidence to prove source of cash deposits in its bank account before Commissioner (Appeals), merely because assessee had not filed an application to file such additional evidence before Commissioner (Appeals), such additional documents could not be rejected.

[Pabitra Mohan Samal v ITO [2020] 114 taxmann.com 403 (Cuttack – Trib.)]

3. Where assessee airlines collected passenger service fee comprised of security component and facilitation component from its customers and paid same to airport authority, assessee was liable to deduct TDS under section 194C on same.

[Inter Globe Aviation Ltd. v Asst. CIT [2020] 114 taxmann.com 460 (Delhi – Trib.)]

4. Where assessee claimed exemption under section 54F by making investment of long-term capital gain in two bungalows located adjacent to each other and used as one residential unit, assessee could not have been denied exemption on reasoning that there were two different registries of buildings/properties as both properties purchased by assessee were a single property located in same geographical area.

[Mohammadanif Sultanali Pradhan v Dy. CIT [2020] 114 taxmann.com 508 (Ahmedabad – Trib.)]

5. Where Assessing Officer made addition under section 68 treating long term capital gain on sale of shares as not genuine, said addition was to be deleted in view of fact that Assessing Officer failed to produce any material/evidence to dislodge or controvert genuineness of conclusive documentary evidences produced by assessee in support of his claim that he was a genuine investor from past many years.

[Anoop Jain v Asst. CIT [2020] 114 taxmann.com 550 (Delhi – Trib.)]

6. While computing amount of deduction u/s 10A, expenditures excluded from export turnover were also to be excluded from total turnover.

[ITO v Agile Software Enterprises (P.) Ltd. [2020] 114 taxmann.com 539 (Bangalore – Trib.)]

7. Sec. 11 exemption to be allowed if order of cancellation of trust’s registration was set aside by ITAT.

[Amateur Riders Club v Asst. DIT [2020] 114 taxmann.com 569 (Mumbai – Trib.)]

8. Where no incriminating evidence against assessee was found or seized during course of search, invocation of provisions of section 153A and making additions/disallowances on basis of a tax evasion petition found much after search was unjustified.

[Rajat Minerals (P.) Ltd. v Dy. CIT [2020] 114 taxmann.com 536 (Ranchi-Trib.)]

9. Restriction contained in section 72 on carrying forward of unabsorbed business losses for more than 8 years does not apply while computing adjusted book profits under section 115JB.

[Peerless Hospitex Hospital & Research Centre Ltd. v Dy. CIT [2020] 114 taxmann.com 583 (Kolkata – Trib.)]

10. Receipt of rent from children won’t change let-out property to self-occupied for Sec. 24(b) deduction.

[Md. Hussain Habib Pathan v Asst. CIT [2020] 115 taxmann.com 179 (Mumbai – Trib.)]

11. Where assessee had established before revenue that all receipts certified in TDS certificates were fully reconciled with receipts reported in assessee’s books of account and no factual infirmity or falsity was shown by revenue in these documents and explanations of assessee, impugned invocation of revision under section 263 merely observing that issue was not properly examined by Assessing Officer was unjustified.

[Eveready Industries India Ltd. v Pr. CIT [2020] 114 taxmann.com 610 (Kolkata – Trib.)]

12. Where cash payments were made by assessee-firm to truck drivers and to agents of coal suppliers towards supply of coal after banking hours and that too at village where there were no banking facilities as per trade practice in area, no amount was to be disallowed under section 40A(3) read with rule 6DD in respect of said payments.

[New Kalpana Ent Udyog v ITO [2020] 114 taxmann.com 637 (Agra – Trib.)]

13. Where assessee failed to produce controlling persons of share applicant companies along with supportive documentary evidence for examination and field enquiries in respect of share applicant companies revealed that such companies never existed in given addresses, Assessing Officer rightly inferred that assessee had rooted its own money in books of account through fictitious and bogus companies, and rightly made additions under section 68.

[Par Excellence Leasing and Financial Services (P.) Ltd. v Asst. CIT [2020] 115 taxmann.com 38 (Delhi – Trib.)]

14. Where revenue rejected assessee hotelier’s claim for deduction under section 35AD on ground that certificate approving four-star hotel category, in respect of hotel, qua which deduction was claimed was issued post-passing of assessment order, however, in view of fact that classification issued in favour of assessee had not been doubted and section 35AD, per se does not require any specific date of operation, deduction there under could not have been disallowed.

[Benares Hotels Ltd. v Dy. CIT [2020] 115 taxmann.com 39 (Varanasi-Trib)]

15. Where assessee’s transactions of purchase of shares in question, holding of shares for more than one year and then sale of shares through a registered share broker in a recognised stock exchange and payment of STT thereon, all were supported by documentary evidences and revenue could not point out any specific defect with regard to said documents, transactions of assessee could not be held as sham and LTCG on such transactions could not be treated as unexplained cash credit under section 68.

[Swati Luthra v ITO [2020] 115 taxmann.com 167 (Delhi – Trib.)]

16. Where assessee trust was engaged in providing asylum/shelter to cows and maintaining gaushalas and famine relief centres to provide proper treatment and fodder to needy stray cows, merely because assessee earned certain revenue from sale of milk, milk product, cattle feed etc., it could not be said that activities of assessee were not charitable so as to cancel its registration under section 12A.

[Rajasthan Gau Seva Sangh v CIT [2020] 116 taxmann.com 6 (Jaipur – Trib.)]

17. No Sec. 263 revision to disallow penalty paid for violation of KYC norms if AO had conducted detailed enquiry.

[Dena Bank v Pr. CIT [2020] 114 taxmann.com 639 (Mumbai – Trib.)]

INTERNATIONAL TAXATION

1. NR supplying software services to Oil Co. not eligible to take benefit of presumptive taxation u/s 44BB.

[Paradigm Geophysical (P.) Ltd. v CIT [2020] 115 taxmann.com 254 (Delhi-HC)]

2. Where assessee, a Mauritius based company, engaged in telecasting a sports channel called ‘Ten Sports’ in India, appointed ‘T’ as its distributor to distribute said channel to cable systems for exhibition to subscribers in India, in view of fact that ‘T’ was acting independently qua its distribution rights and entire agreement was on principal to principal basis, it could be concluded that ‘T’ did not constitute an agency PE of assessee in India in terms of article 5(4) of India-Mauritius DTAA.

[CIT v Taj TV Ltd. [2020] 115 taxmann.com 305 (Bombay-HC)]

3. Where assessee engaged services of a law firm in Indonesia for acquiring in insurance business in Indonesia, in view of fact that it was a case where services were provided by a person holding expertise in relevant field, it could be concluded that said services would fall in category of ‘consultancy services’ and, thus, it was not open for assessee to contend that services supplied by foreign firm fell within exception provided in section 9(1)(vii)(b) or outside Explanation 2 to said section.

[Shriram Capital Ltd. v DIT [2020] 115 taxmann.com 388 (Madras-HC)]

4. Where assessee made payment to a celebrity for having made an appearance at a product launch event in Dubai (UAE) for promoting business of assessee in India, assessee would be required to withhold tax on payment so made.

[Volkswagen Finance (P.) Ltd. v ITO [2020] 115 taxmann.com 386 (Mumbai – Trib.)]

5. Where, assessee, a US based company, engaged in business of providing management and consulting services, entered into ‘Management Provision Agreement’ (MPA) with an Indian company namely ‘GMIL’ which was carrying on business of manufacture, assembly, marketing, and sale of motor vehicles in India, in view of fact that in terms of said agreement, assessee sent its employees in India having technical expertise, who were not only managing affairs but also ensuring due adherence to standards of assessee, by continuously monitoring and mentoring production of GMIL, it could be concluded that they made available technical knowledge and expertise to GMIL and, thus, amount paid to assessee for rendering said services was chargeable to tax in India as ‘fee for technical services’.

[General Motors Overseas Corporation v Asst. CIT [2020] 115 taxmann.com 129 (Mumbai – Trib.)]

6. Where IT services rendered by assessee were subservient to royalty agreement and were ancillary and subsidiary to main royalty agreement entered into by both parties, assessee was not justified in holding that IT service was a separate and distinct agreement from main royalty agreement (Technology collaboration and technical assistance agreement) and, thus, it did not come under definition of FTS provided under India-Sweden tax treaty.

[Aktiebolaget SKF v Dy. CIT [2020] 114 taxmann.com 734 (Mumbai – Trib.)]

7. Explanation to section 9(1)(v)(c) inserted by Finance Act, 2015 with effect from 1-4-2016 would apply from assessment year 2016-17 onwards and; therefore, during assessment year 2012-13, interest paid by Indian branch of assessee non-resident bank to its Head Office and overseas branches being a payment to self would be governed by principle of mutuality and, therefore, same could not be brought to tax as per provision of section 9(1)(v)(c).

[JP Morgan Chase Bank N.A. v Dy. CIT [2020] 114 taxmann.com 700 (Mumbai – Trib.)]

8. Amendment to section 40(a)(ia) brought by Finance Act, 2014, restricting disallowance to 30 per cent of amount paid on which tax had not been deducted at source, will have no retrospective operation.

[SGS India (P.) Ltd. v Addl CIT [2020] 114 taxmann.com 723 (Mumbai – Trib.)]

9. Where assessee, a dutch company, had entered into Master Service Agreement (MSA) to provide IT services to various entities and provided restricted software/network access and access to software was not for use of any copyright albeit for copyrighted articles during course of providing service, payments received by assessee in pursuance to MSA could not be treated as ‘royalty’ under article 12(4) of the India-Netherland DTAA.

[Shell Information Technology International BV v Dy. CIT [2020] 114 taxmann.com 686 (Mumbai – Trib.)]

TRANSFER PRICING CASE LAWS

1. Where High Court held that Assessing Officer was obliged to give assessee an opportunity of being heard before making reference to TPO on question of determination of ALP of alleged international transactions involving assessee and its AE, SLP filed against said order was to be granted.

[Addl. CIT v Indorama Synthetics (India) (P.) Ltd. [2020] 114 taxmann.com 588 (SC)]

2. Where revenue challenged decision of Tribunal as regards selection of comparables, since Tribunal has considered case of each comparable company and discussed parameters of comparables for purposes of including same as a comparable and/or excluding same as comparable on basis of functionality of said companies in public domain, such a detailed exercise having been undertaken by Tribunal qua each and every comparable company, reasons given by Tribunal cannot be faulted with in respect of comparable companies, particularly when findings arrived at by Tribunal are entirely one of facts and revenue has failed to show as to how said findings are perverse in any manner whatsoever and, thus, no substantial question of law arose from Tribunal’s order.

[Pr. CIT v Eight Roads Investment Advisors (P.) Ltd. [2020] 115 taxmann.com 30 (Bombay-HC)]

3. Keeping with OECD guidelines, endeavor should be made to bring in comparable companies for purpose of broad comparison. Thus, where assessee gave all details required for working capital adjustment, revenue authorities were not justified in denying claim of assessee for said adjustment.

[Yahoo Software Development India P. Ltd. v Jt. CIT [2020] 115 taxmann.com 60 (Bangalore – Trib.)]

4. In respect of period prior to 1-4-2020 cases in which no variations in returned income or loss were proposed, draft assessment orders were not required to be issued.

[IPF India Property Cyprus (No. 1) Ltd. v Dy. CIT [2020] 115 taxmann.com 78 (Mumbai – Trib.)]

5. In case of a trader who purchases goods from its AE and sells them without any value addition, RPM is most appropriate method for determining ALP.

[Alcoa India (P.) Ltd. v Asst. CIT [2020] 114 taxmann.com 631 (Delhi – Trib.)]

6. Where revision was invoked against assessee on ground that one of reasons for selection of scrutiny by Assessing Officer was mismatch in amount paid to related persons under section 40A(2)(b) as reported in audit report and return of income, however, case was not referred to TPO, since reason for scrutiny nowhere reflected that assessee’s case was selected for scrutiny because there was ‘large value of international transactions’ so as to warrant mandatory reference under section 92CA to TPO, impugned revision was unjustified.

[Eveready Industries India Ltd. v Pr. CIT [2020] 114 taxmann.com 610 (Kolkata – Trib.)]

7. Where assessee-company, engaged in business of importing wines and spirits from its overseas AEs, incurred AMP expenses in order to boost its sale/business in India, said AMP expenditure having been incurred for commercial expediency were revenue in nature.

[Dy. CIT v Moet Hennessy (I) (P.) Ltd. [2020] 114 taxmann.com 733 (Delhi – Trib.)]

8. Where there was a Marketing Fund Agreement (MDF) between assessee and AE regarding AMP and shop display activities, scope and value of International Transaction could not have been expanded beyond reimbursement received under MDF agreement to cover entire gamut of AMP expenditure incurred by assessee during year.

[Samsung India Electronics (P.) Ltd. v Addl. CIT [2020] 114 taxmann.com 697 (Delhi – Trib.)]

9. Where assessee incurred losses in its initial year of operations and in order to assist assessee for transfer pricing purposes, its AE made subvention payments to reimburse part of operating expenses, said subvention amount received by assessee was operating in nature and was to be included as operating income while computing PLI in hands of assessee.

[MSD Pharmaceuticals (P.) Ltd. v Dy. CIT [2020] 114 taxmann.com 719 (Delhi – Trib.)]

10. Where DRP had not properly considered objections of assessee about inclusion and exclusion of certain comparables, such non-speaking order was to be set aside and matter was to be remanded.

[Delphi Connection Systems India (P.) Ltd. v Asst. CIT [2020] 114 taxmann.com 731 (Cochin – Trib.)] 

11. Where merely because certain comparables have been upheld for exclusion/inclusion by various decisions, does not ipso facto lead to exclusion/inclusion in a given set of facts and exclusion/inclusion of comparables must be strictly analysed on basis of FAR.

[Dy. CIT v Analog Devices India (P.) Ltd. [2020] 114 taxmann.com 729 (Bangalore – Trib.)]

12. Where assessee entered into international transactions with its AEs and TPO proposed additions on account of AMP expenses, since said AEs had not carried out any function in India and also had not assumed any risk and, further, even for license for use of trademark, no royalty was paid by assessee to its AEs, it was to be held that there was no international transaction in form of any agreement or arrangement on AMP expenditure incurred by assessee.

[PepsiCo India Holdings (P.) Ltd. v Dy. CIT [2020] 114 taxmann.com 730 (Delhi – Trib.)]

13. An adjustment can be allowed in computation of profit of comparables only if there is difference in rates of depreciation as charged by assessee and comparables on same assets.

[Vishay Components India (P.) Ltd. v Asst. CIT [2020] 114 taxmann.com 681 (Pune – Trib.)] 

14. Resale Price Method is to be used for determining ALP of an international transaction when goods purchased from AE are resold to unrelated parties and there is very little value addition to goods involved.

[Asst. CIT v Brother International (India) (P.) Ltd. [2020] 114 taxmann.com 695 (Mumbai – Trib.)]

15. Where DRP granted partial relief to assessee by holding transaction of payment towards reimbursement of expenses to its AE to be at arm’s length, however, while implementing directions of DRP in final assessment order, Assessing Officer determined ALP of said transaction at nil ignoring directions of DRP, addition made by Assessing Officer could not be upheld.

[U.T. Worldwide India (P.) Ltd. v Asst. CIT [2020] 114 taxmann.com 689 (Mumbai – Trib.)]

16. Where DRP excluded certain comparables as well as upheld inclusion of comparables without giving any proper reasoning for such exclusion and inclusion, such comparables were to be revisited.

[NXP India (P.) Ltd. v Dy. CIT [2020] 114 taxmann.com 698 (Bangalore – Trib.)]

17. Where DRP directed TPO to provide 1 per cent risk adjustment to average margin towards risk differential, same being provided on ad hoc basis without any scientific manner, TPO was to be directed to recompute such adjustment in accordance with law.

[NXP India (P.) Ltd. v Dy. CIT [2020] 114 taxmann.com 698 (Bangalore – Trib.)]

DOMESTIC TAX CASE LAWS [APRIL]

SUPREME COURT

1. Where assessee was incorporated for purpose of economisation of cost of advertising and promotion of member companies, to be operated on a non-profit basis on principles of mutuality but it accepted contributions both from members and non-members and one member was vested with powers to control functioning and interests of other members, such an assimilation could not be termed as a social intercourse devoid of commerciality; assessee, being not a mutual concern, could not be entitled to tax exemption.

[Yum! Restaurants (Marketing) (P.) Ltd. v CIT [2020] 116 taxmann.com 374 (SC)]

2. An employer seeking deduction from tax liability in advance, in name of discharging the liability of leave encashment, without actually extending such payment to employee and when time for such payment arises upon retirement (or otherwise) of employee, employer may simply refuse to pay. It is this mischief clause (f) of section 43B seeks to subjugate; thus, same is constitutionally valid.

[UOI v Exide Industries Ltd. [2020] 116 taxmann.com 378 (SC)]

3. SLP dismissed as withdrawn due to low tax effect against High Court ruling that ALV of flats built by assessee, engaged in construction business, lying unsold, is assessable as income from HP.

[CIT v Ansal Housing And Construction Ltd. [2020] 116 taxmann.com 322 (SC)]

4. Addition made by Assessing Officer towards cash credit amount shown against names of unregistered dealers was to be set aside as assessee during penalty proceedings had produced affidavits and statements of concerned unregistered dealers and Appellate Authority had accepted explanation offered by assessee.

[Basir Ahmed Sisodia v ITO [2020] 116 taxmann.com 375 (SC)]

5. For assessment years ending on/before 31-3-2017, if notice was issued under section 143(2), it would not be necessary to process refund under section 143(1) and no separate intimation is required to be given to assessee; however, for assessment years commencing on/after 1-4-2017, a different regime has been contemplated and section 241A requires separate recording of satisfaction of Assessing Officer, approval of Principal Commissioner/Commissioner and recording of reasons in writing to withhold refund.

[Vodafone Idea Ltd. v Asst. CIT [2020] 116 taxmann.com 393 (SC)]

HIGH COURT

1. Where Tribunal had treated certain amount expended by assessee as unexplained expenditure and it had not even considered assessee’s application seeking leave to produce additional evidence at stage of appeal, Tribunal was to be directed to consider assessee’s application and thereafter decide appeal.

[Braganza Construction (P.) Ltd. v Asst. CIT [2020] 116 taxmann.com 11 (Bombay)]

2. Assessing Officer is required to give pre-decisional hearing to assessee before making order proposing conduct of special audit under section 142(2A); in absence of pre-decisional hearing, decision to have special audit would be invalid.

[Pr. CIT v Vilson Particle Board Industries Ltd. [2020] 116 taxmann.com 12 (Bombay)]

3. Penalty to be levied only when it is proved that income was concealed or inaccurate particular was furnished. Burden of proof in penalty proceedings vary from that in assessment proceedings and findings in assessment proceedings would not automatically be adopted in penalty proceedings; in penalty proceedings revenue authorities have to arrive at independent finding related to ‘concealment of income’ or ‘inaccurate particular’.

[Pr. CIT v Dinesh Chandra Jain [2020] 116 taxmann.com 13 (Allahabad)]

4. Circulars issued by a Government department cannot have any primacy over decision of jurisdictional High Court, hence plea of assessee of considering criteria laid down by CBDT circular 133/6 of 2007 dated 9-5-2007 over ruling of High Court in Mavilayi Service Co-operative Bank Ltd. v. CIT 2019(2) KHC 287, while ascertaining whether a co-operative society is conducting banking business so as to dis-entitle it for deduction under section 80P(4) could not have been allowed.

[Kuthannur Service Co-operative Bank Ltd. v ITO [2020] 116 taxmann.com 33 (Kerala)]

5. Where first appellate authority had returned a clear finding of fact that assessee had discharged its onus of proving identity of creditors, genuineness of transactions and credit worthiness of creditors which finding of fact stood affirmed by Tribunal and revenue had not been able to show any perversity in aforesaid findings of fact by authorities below, Tribunal was right in holding that no addition could be made under section 68.

[Pr. CIT v Ami Industries (India) (P.) Ltd. [2020] 116 taxmann.com 34 (Bombay)]

6. Where assessee received subsidy for repayment of term loans for technology up-gradation undertaken for setting up new unit, said subsidy was towards capital stream and, consequently, was not taxable.

[Pr. CIT v Nitin Spinners Ltd. [2020] 116 taxmann.com 26 (Rajasthan)]

7. Where Assessing Officer completed assessment of assessee under section 143(3) and later reopened same for reason that income during year had escaped assessment and issued notice under section 148 beyond period of four years, since in facts of case there was hardly anything on record to indicate that there was failure on part of assessee to disclose truly and fully all material facts and also there was no tangible material available for purpose of issuing notice for reopening beyond period of four years, impugned notice under section 148 required to be quashed.

[Jivraj Tea Ltd. v Asst. CIT [2020] 116 taxmann.com 27 (Gujarat)]

8. Where no reason was forthcoming from revenue for delay in processing refund claim of assessee and undue hardship was suffered by assessee only because tax authorities were not discharging their duties, tax authorities were directed to process return of income as expeditiously as possible and pay refund to assessee if any due.

[Aegis Customer Support Services (P.) Ltd. v ITO [2020] 116 taxmann.com 50 (Bombay)]

9. Mere forwarding of a copy of notice, after effecting recovery, will not in any way serve object underlying legislative intent in introducing sub-section (ii) of section 226(3).

[Andoorkonam Services Co-operative Bank Ltd. v ITO [2020] 116 taxmann.com 49 (Kerala)]

10. Merely because activities of appellant were covered under proviso to section 2(15), that, by itself, would not render activities of appellant as non-genuine activities so as to entitle Commissioner to exercise powers under section 12AA(3) to cancel registration.

[Goa Industrial Development Corporation v CIT [2020] 116 taxmann.com 42 (Bombay)]

11. Where Assessing Officer had disallowed assessee’s claim for exemption under section 10(38) and raised demand of Rs. 61.99 lakhs, since assessee had already deposited a sum of Rs. 15.71 lakhs out of demand of Rs. 61.99 lakhs, he was to be directed to deposit a further sum of Rs. 15 lakhs and on such deposit there shall be an order of interim stay till disposal of appeal before Tribunal.

[Suneel Hirachand Shah v ITO [2020] 116 taxmann.com 41 (Madras)]

12. Where Assessing Officer sought to reopen assessment in case of assessee on ground that certain loan amount was outstanding and same was liable to be added to income of assessee as notional income under section 56, since, reasons were completely silent as to how provisions of section 56 were attracted in respect of outstanding liability of loan even if it remained unpaid and there being no material to justify reopening of assessment, proceedings were to be quashed and set aside.

[Vanita Sanjeev Anand v ITO [2020] 116 taxmann.com 39 (Delhi)]

13. Where assessee had entered into agreements with owners of land for construction of complex and it was to be allotted some area in complex and it was given full liberty to thereafter sell, transfer and convey area in favour of third party and it had assigned its rights in favour of one ‘P’, since neither assessee nor ‘P’ could be styled as contractors, section 194C was not attracted in subject case.

[Asst CIT v Alfran Construction P. Ltd. [2020] 116 taxmann.com 125 (Bombay)]

14. Where assessee aggrieved by penalty order filed appeal and stay petition before Commissioner (Appeals) and said authority dismissed appeal stating that appeal was defective and defects were not cured, assessee was to be directed to file additional memorandum of grounds of appeal as well as stay petition before Commissioner (Appeals), who would consider them and pass order on stay petition.

[Chirayinkeezhu Service Co-operative Bank Ltd. v ITO [2020] 116 taxmann.com 119 (Kerala)]

15. Where proof of identity of loan depositors, capacity of creditors to advance loans and genuineness of transaction was in serious dispute, assessee’s writ challenging recovery and collection of tax was to be set aside.

[Jindal ITF Ltd. v UOI [2020] 116 taxmann.com 154 (Delhi)]

16. Assessee’s contention of ignorance of provisions or lack of banking facilities in area, etc., could not be accepted as reasonable cause for accepting deposits in cash exceeding prescribed limit when admittedly assessee was doing large scale finance business dealing with public.

[N.S.S. Karayogam v CIT [2020] 116 taxmann.com 141 (Kerala)]

17. Where instant petition filed by assessee seeking benefit under Direct Tax Dispute Resolution Scheme, 2016, suffered from laches/delay of more than 3 years, same was to be dismissed.

[Magnolia Mayura CHS Ltd. v UOI [2020] 116 taxmann.com 134 (Bombay)]

18. Delhi HC upheld ITAT’s order allowing deduction for director’s commission by following the principle of consistency.

[Pr. CIT v MLS CBRE South Asia (P.) Ltd. [2020] 116 taxmann.com 133 (Delhi)]

19. Where only source of income for schools run by assessee – trust was fees collected from students and no free education or scholarship was provided, such schools were to be held established with profit motive.

[Rajah Sir Annamalai Chettiar Foundation v CCIT [2020] 116 taxmann.com 128 (Madras)]

20. Where Assessing Officer issued a notice to assessee’s bank requiring it to remit income tax dues of assessee; whereas before issuing of impugned notice assessee had made an application to Assessing Officer seeking a stay on recoveries, Assessing Officer was to be directed to dispose of assessee’s application expeditiously and until said application was disposed of, he would not insist upon compliance with impugned notice.

[Pirna Urban Co-operative Credit Society Ltd. v ITO [2020] 116 taxmann.com 124 (Bombay)]

21. Where assessee-firm, constituted for carrying on business of buying, developing and selling properties, purchased agricultural land and sold same after certain time, income derived on purchase and sale of agricultural land formed income from business.

[Afonso Real Estate Developers v CIT [2020] 116 taxmann.com 216 (Bombay)]

22. State Army Wives Welfare Association, not being established by armed forces of union and income earned by it not being on behalf of any regimental fund or non-public fund established by armed forces of union, could not be allowed exemption under section 10(23AA).

[CIT v Army Wives Welfare Association, Lucknow [2020] 116 taxmann.com 215 (Allahabad)]

23. Indexation benefit is available from year in which land acquired if capital gain tax was paid on its previous sale.

[CIT v A.R. Builders & Developers (P.) Ltd. [2020] 116 taxmann.com 214 (Madras)]

24. Where during pendency of appeal along with stay application, revenue authorities issued notices for recovery and had attached bank accounts of petitioners, in view of prevailing COVID-19 pandemic in country, interest of justice would be sub-served by directing banks of petitioners to allow petitioners to operate bank accounts subject to bankers’ of petitioner setting aside a sum of Rs. 5 lakhs.

[Niyasha Barman v ITO [2020] 116 taxmann.com 371 (Calcutta)]

25. Where partners of assessee-firm were all identifiable and separately assessed to tax and they had shown sufficient agricultural income in their personal returns of past years which had been accepted by department as such, source of investment by those partners in assessee firm having been explained, no addition could be made in hands of firm.

[Kesharwani Sheetalaya Sahsaon v CIT [2020] 116 taxmann.com 382 (Allahabad)]

INCOME TAX APPELLATE TRIBUNAL

1. Where expenses in cash were incurred by assessee at quarry site, where there was no banking facility they will be covered by clause (g) of rule 6DD and accordingly provisions of section 40A(3) shall not be applied to said expenses.

[Kempsz Trading (P.) Ltd. v Dy. CIT (Exp) [2020] 116 taxmann.com 21 (Bangalore – Trib.)]

2. Where assessee let out two units of its property and, further, entered into an option agreement with tenant with a covenant that other two units of property would not be let out to third party without consent of tenant for a period of 9 months and received a compensation for same, such amount received by assessee was assessable as income from other sources and not as income from house property.

[Redwood IT Services (P.) Ltd. v ITO [2020] 116 taxmann.com 223 (Mumbai – Trib.)]

3. Where Assessing Officer made certain addition as unexplained credit under section 68 which was amount of cash deposited in bank account held in name of assessee, since said cash deposit was maturity proceeds of hundis during year which were made out of unaccounted surrendered income offered to tax in return of income for impugned assessment year, no justification was found in action of Assessing Officer making addition; assessee was entitled for telescoping benefit of income surrendered during year to cash deposited in bank account.

[Vinod Bhandari v Pr. CIT [2020] 116 taxmann.com 264 (Indore – Trib.)]

4. Where assessee, a regulatory body, was created under Gujarat Town Planning and Urban Development Act, 1976 for proper development of specified area in State in a phased and planned manner, preparation and implementation of development measures, surveying for development of areas and land acquisition, managing urban development schemes, working for water systems, sewage and other facilities and services, it could be said that activities of assessee were for charitable purposes as per section 2(15).

[Surat Urban Development Authority (SUDA) v DY. CIT [2020] 116 taxmann.com 242 (Ahmedabad – Trib.)]

5. Where assessee hired cabs from cab owners and provided transportation services to its customers and made payments to these cab owners on account of hire charges from amount received by it from its customers, assessee was entitled to deduct TDS on said payment under section 194C.

[Singonahalli Chikkarevanna Gangadharaiah v Asst. CIT [2020] 116 taxmann.com 230 (Bangalore – Trib.)]

6. When there was a maturity of hundi as well as investment in hundis normal corollary would be that amount invested was out of money received from maturity of hundis; telescoping of maturity amount being undisclosed cash receipts from undisclosed hundi loans was to be allowed.

[Bhandari Hospital and Research Center v Pr. CIT [2020] 116 taxmann.com 258 (Indore – Trib.)]

7. Power to make reference under section 142A is restricted to matters concerning sections 69, 69A or 69B and since subject matter of examination in said sections is understatement in value of investments acquired during year, reference under section 142A could not have been made for finding out extent of alleged overstatement in value of investment.

[Dashrathbhai G. Patel v Dy. CIT [2020] 116 taxmann.com 229 (Ahmedabad – Trib.)]

8. Where assessee had written off certain amount against irrevocable debts, since since assessee had placed on record complete details of all debtors, merely because notice could not be served upon randomly selected six debtors, same could not a ground to disbelieve existence of all debtors so as to consider them as bogus, thus, impugned amount was to be allowed.

[Vantage Advertising (P.) Ltd. v Dy. CIT [2020] 116 taxmann.com 336 (Kolkata – Trib.)]

9. ITAT dismissed stay of demand appeal as assessee failed to prove financial difficulties faced by it.

[Shantananda Steels (P.) Ltd. v ITO [2020] 116 taxmann.com 335 (Chennai – Trib.)]

10. Gain arising to a company from sale of agricultural land could not be taxed under section 115JB.

[Dy. CIT v Motisons Buildtech (P.) Ltd. [2020] 116 taxmann.com 337 (Jaipur – Trib.)]

11. Where assessee made payments towards toll free telephone charges for toll free telephone number provided by telecom operators whereby charges for calls made by consumers to toll-free number were borne by assessee, payment made by assessee for such services amounted to royalty under section 9(1)(vi) and assessee was liable to deduct TDS under section 194J on same.

[Vidal Health Insurance TPA (P.) Ltd. v Jt. CIT [2020] 116 taxmann.com 250 (Bangalore – Trib.)]

12. Where assessee had already filed original return of income accompanied with P/L Account, Balance Sheet and such assessment had completed prior to date of search and no assessment was abated, as no new/ incriminating material was unearthed during search, no addition could be made u/s 153A.

[Alankar Saphire Developers v Dy. CIT [2020] 116 taxmann.com 389 (Delhi – Trib.)]

13. If acquisition of jewellery is explained with proof, said quantity to be allowed separately over and above weight of jewellery allowed in CBDT Instruction No. 1916, dated 11-5-1994.

[Ram Prakash Mahawar v Dy. CIT [2020] 115 taxmann.com 241 (Jaipur – Trib.)]

14. Compensation received by a partner from other existing partners for reduction in profit sharing ratio would not tantamount to Capital Gains chargeable to tax under section 45(1).

[Anik Industries Ltd. v Dy. CIT [2020] 116 taxmann.com 385 (Mumbai – Trib.)]

INTERNATIONAL TAXATION

1. Liaison Office of UAE Co. in India couldn’t be held as PE as it was only carrying on preparatory/auxiliary activities.

[UOI v U.A.E. Exchange Center [2020] 116 taxmann.com 379 (SC)]

2. Where assessee had paid export freight to a shipping agent of non-resident ship owner or charter without deduction of tax at source, provisions of section 172 would be applicable in instant case and provisions of section 194C or section 195 which provide for deduction of tax at source shall not be applicable.

[Pr. CIT v Summit India Water Treatment and Services Ltd. [2020] 116 taxmann.com 107 (Gujarat-HC)]

3. Where assessee had entered into an agreement with an Indian buyer for equipment supply and service for commissioning of machinery and transaction including offshore supply of equipment which represented a single composite contract done with involvement of Indian PE, significant part of profit on offshore supply of equipment under supply agreement was to be attributed to PE in India.

[Voith Paper GmbH v Dy. DIT [2020] 116 taxmann.com 127 (Delhi – Trib.)]

4. There being no provision in DTAA between India and Philippines to tax Fees for Technical Services, payment made by assessee to avail technical service from its AE, would be taxed as per article 7 but, in absence to PE in India, same could not be taxed in India as business profits.

[Paramina Earth Technologies Inc v Dy. CIT [2020] 116 taxmann.com 347 (Visakhapatnam – Trib.)]

5. Payment received by assessee for sale of a copyrighted/shrink-wrapped software, which could not be treated as consideration for transfer of any copyright, thus, could not be treated as royalty under article 12 of India-US DTAA.

[Netcracker Technology Solutions LLC v Dy. CIT [2020] 116 taxmann.com 243 (Mumbai – Trib.)]

TRANSFER PRICING CASE LAWS

1. When there is an agreement that overseas associated enterprise will share AMP expense of assessee when benefitted, undoubtedly AMP expense becomes an international transaction and, TPO cannot be debarred from examining said international transaction with respect to arm’s length price.

[Diageo India (P.) Ltd. v Asst. CIT [2020] 114 taxmann.com 699 (Mumbai – Trib.)]

2. Where assessee did not charge interest either from its AEs or from third parties towards extended credit period for payment of contract revenue for providing them ITES services, no notional interest was to be charged on receivables from AEs for such extended credit period.

[Addl. CIT v WNS Global Services (P.) Ltd. [2020] 116 taxmann.com 20 (Mumbai – Trib.)]

3. Where assessee applied turnover filter of Rs. 1 crore and TPO accepted same comparable company having turnover of more than Rs. 2 crores, was to be accepted as valid comparable.

[Schindler India (P.) Ltd. v Asst. CIT [2020] 116 taxmann.com 222 (Mumbai – Trib.)]

4. TNMM couldn’t be rejected merely on ground that economic life of technology had an impact on Most Appropriate Method.

[Toyota Kirloskar Auto Parts (P.) Ltd. v Dy. CIT [2020] 116 taxmann.com 266 (Bangalore – Trib.)]

5. Arm’s length price of interest on loan advanced by assessee to its AEs should be computed by applying rate of interest prevailing in country where loan had been given/consumed.

[Godrej Consumer Products Ltd. v Dy. CIT [2020] 115 taxmann.com 138 (Mumbai – Trib.)]

6. Proposition that broad functionality is sufficient to find comparable entity though TNMM method allows broad flexibility tolerance in selection of comparables, is to be rejected.

[Infogain India (P.) Ltd. v DY. CIT [2020] 116 taxmann.com 386 (Delhi – Trib.)]

DOMESTIC TAX CASE LAWS [MAY]

SUPREME COURT

1. SLP dismissed as withdrawn due to low tax effect against High Court ruling that where assessee had received share application money and produced documents to establish genuineness of parties such as PAN of all creditors along with confirmation, their bank statements showing payment of share application money, merely because those persons had not appeared before Assessing Officer would not negate case of assessee so as to invoke section 68.

[CIT v Orchid Industries (P.) Ltd. [2020] 116 taxmann.com 113 (SC)]

HIGH COURT

1. Where assessee was under a legal and financial disability for a long period due to subsistence of winding up order, no interest would be payable under sections 234A, 234B and 234C for aforesaid period.

[Tvl. Sanmac Motor Finance Ltd. v CCIT [2020] 116 taxmann.com 437 (Madras)]

2. Suit seeking undivided share in predecessor’s property can’t be rejected outrightly u/s 4(3) of unamended Benami Act.

[Neeru Dhir v Kamal Kishore Dhir [2020] 116 taxmann.com 405 (Delhi)]

3. Where reassessment notice was issued for non-compliance with section 80-IB, but it was found that during original assessment, relevant disclosures were made in relation to sale transactions and it was even suggested that some of sale transactions might not be compliant with provisions of section 80-IB(10)(f) and no details were forthcoming as to material which was allegedly not disclosed either truly or fully by assessee, reassessment was unjustified.

[Anand Developers v Asst. CIT [2020] 116 taxmann.com 361 (Bombay)]

4. Where amount of interest which accrued on grants received by assessee-society from State Government for various purposes including construction of houses for police officials could be used only for that purpose and in event it could not be used for that purpose, same has to be refunded back to Government, assessee was not recipient of income arising on account of interest earned on deposits with banks.

[Pr. CIT v Punjab Police Housing Corporation Ltd. [2020] 116 taxmann.com 400 (Punjab & Haryana)]

5. Where Commissioner invoked revision jurisdiction for reason that against consideration of Rs. 45.61 lakh paid by assessee, for purchase of land, stamp duty of Rs. 22.90 lakh was paid and it was to be presumed that value of property would be higher and there was an undisclosed investment made by assessee since no addition could be made under said section merely on basis of presumption, impugned revision was unjustified.

[Gayatri Enterprise v ITO [2020] 116 taxmann.com 359 (Gujarat)]

6. Where reassessment notice was issued on basis of information received from DIT (Investigation) that a parent company of assessee at Singapore had made an investment of huge amount in assessee company but said investing company did not appear to be carrying out any regular business activities and was floated to act as a conduit to funnel funds into Indian companies, impugned notice was justified.

[Experion Developers (P.) Ltd. v Asst. CIT [2020] 115 taxmann.com 338 (Delhi)]

7. Where Assessee Company incurred expenditure for purchasing plant for mining of limestone to be used as a raw material, since assessee had obtained a long term captive source of raw material by purchase of plant, impugned expenditure incurred by assessee would be on capital account.

[CIT v Zuari Industries Ltd. [2020] 115 taxmann.com 337 (Bombay)]

8. Where assessee claimed deduction under section 80P and both Assessing Officer and Commissioner (Appeals) disallowed deduction and assessee aggrieved by order of Commissioner (Appeals) file application for rectification of mistake and in meanwhile Assessing Officer initiated steps to recover disputed tax from assessee, Commissioner (Appeals) was to be directed to consider application of assessee without much delay.

[Manambur Service Co-Operative Bank Ltd. v ITO [2020] 115 taxmann.com 336 (Kerala)]

9. Where assessee had not deposited employees’ contributions towards PF and ESI amounting Rs. 15.20 lakhs within prescribed period in law and Assessing Officer by invoking provisions of section 36(1)(va) read with section 2(24)(x) made addition of aforesaid amount to income of assessee, impugned addition made to income of assessee was justified.

[Pr. CIT v Suzlon Energy Ltd. [2020] 115 taxmann.com 340 (Gujarat)]

10. Where assessee or Assessing officer brings to notice of Tribunal an error apparent on face of record in its order within limitation period, in such a case, if Tribunal is unable to pass order under section 254 (2) within prescribed time period, neither assessee nor revenue should suffer on that account as time period can be extended beyond period of six months in such a case.

[Pr. CIT v Income tax Appellate Tribunal [2020] 116 taxmann.com 451 (Bombay)]

11. Section 41(1) will not apply to waiver of loan as waiver of loan does not amount to cessation of trading liability.

[Pr. CIT v SICOM Ltd. [2020] 116 taxmann.com 410 (Bombay)]

12. Where petitioner had received no loan from company in which he had more than 10% shareholding, nor did amount advanced by said loan giver company to concerns in which also petitioner had substantial interest, was out of accumulated profits of loan giver company, reassessment after 4 years was to be held without due application of mind.

[Jayesh T Kotak v Dy. CIT [2020] 116 taxmann.com 426 (Gujarat)]

13. Interest exp. not allowable if assessee deliberately discounting LC to bore interest burden of sister concern.

[Yenepoya Resins & Chemicals v Dy. CIT [2020] 116 taxmann.com 457 (Karnataka)]

14. Making disallowances which weren’t subject matter of remand proceedings is unjustified.

[Engineering Professional Co. (P.) Ltd. v Dy. CIT [2020] 115 taxmann.com 288 (Gujarat)]

15. Where Assessing Officer sought to reopen assessment in case of assessee on ground that it was a beneficiary of entries from a transaction with two entry operators and their sister concerns, however assessee in response to notice under section 133(6) had informed that they had no transaction with both entry operators and were not aware of their sister concerns, re-opening of assessment was not justified.

[Shreenathji Cotgin (P.) Ltd. v ITO [2020] 115 taxmann.com 292 (Gujarat)]

16. When no expenditure was incurred by assessee in earning dividend income, no disallowance could be made under section 14A. Section 14A read with rule 8D are prospective in nature and cannot be applied to any assessment year prior to assessment year 2008-09.

[CIT v Syndicate Bank [2020] 115 taxmann.com 287 (Karnataka)]

17. Where assessee had declared certain purchases to be made during year and Assessing Officer added entire quantum of purchases to income of assessee on plea that purchases were bogus purchases and Tribunal held that only reasonable profit at rate of 5 per cent on purchases should be added back to income of assessee, Tribunal was justified in its view.

[Pr. CIT v Rishabhdev Technocable Ltd. [2020] 115 taxmann.com 333 (Bombay)]

18. Non-specific reply to AO’s query revealed complexity in accounts; initiation of special audit justified.

[NBCC (India) Ltd. v Addl CIT [2020] 116 taxmann.com 486 (Delhi)]

19. No infirmity if real estate developer changes its method of accounting in view of revised AS-7.

[CIT v Prestige Estate Projects (P.) Ltd. [2020] 116 taxmann.com 554 (Karnataka)]

20. Where reopening notice was issued against assessee on ground that cash of certain amount found on premises of assessee was to be treated as unexplained cash credit, since there was full disclosure about such amount by assessee during original scrutiny assessment and further said amount was also subject matter of block assessment under section 158BC, impugned reassessment notice was unjustified.

[Audhut Timblo v Asst. CIT [2020] 116 taxmann.com 478 (Bombay)]

21. Where reassessment notice issued on ground of failure of assessee to disclose investment in shares and immovable property was set aside by Commissioner (Appeals) on technical grounds that reassessment was completed without complying with mandatory requirement of section 143(2) and not on merits, fresh reopening notice issued on similar grounds which formed basis for first reassessment notice was justified.

[T. Krishnamurthy v ITO [2020] 116 taxmann.com 476 (Madras)]

22. Where State Government undertaking is engaged in wholesale and retail trade of beverages within State, levy of Gallonage Fee, Licence Fee and Shop Rental (kist) with respect to FL-9 licences granted with respect to wholesale of foreign liquor will clearly fall within purview of Section 40(a)(iib) and, hence, amount paid in this regard is liable to be disallowed while similar amounts paid with respect to FL-1 licences granted with respect to retail business in foreign liquor is not an exclusive levy on appellant and, hence, not liable to be disallowed; Surcharge on sales tax and turnover tax is not a ‘fee or charge’ coming within scope of Section 40(a)(iib) and is not an amount which can be disallowed under said provision.

[Kerala State Beverages (Manufacturing and Marketing) Corporation Ltd. v Asst. CIT [2020] 116 taxmann.com 555 (Kerala)]

23. Where assessee succeeded before Commissioner (Appeals) in ultimate analysis and was, thus, not an aggrieved party, in Revenue’s appeal, Tribunal committed a mistake by not permitting assessee (respondent before it) to support final order of Commissioner (Appeals) by assailing findings of Commissioner (Appeals) on issues that had been decided against him.

[Sanjay Sawhney v Pr. CIT [2020] 116 taxmann.com 701 (Delhi)]

24. Expenditure incurred on replacement of damaged parts of plant and machinery would be revenue expenditure.

[Precision Wires India Ltd. v Asst. CIT [2020] 116 taxmann.com 608 (Gujarat)]

25. Where Assessing Officer invoking provisions of section 68 added outstanding sundry credit balance found in account books of assessee for financial year 2006-07 to income of assessee for assessment year 2009-10, aforesaid credit balance could not be brought to tax as income of assessee for assessment year 2009-10.

[Ivan Singh v Asst. CIT [2020] 116 taxmann.com 499 (Bombay)]

26. In case, notices under section 153C have been issued for assessment years beyond six assessment years, such notices would be without jurisdiction.

[Mukesh Manekchand Sheth v Asst. CIT [2020] 116 taxmann.com 618 (Gujarat)]

27. Where during Income-tax search and seizure proceedings, Assessing Officer stumbled upon contraband substance, it did not amount to seizure under Narcotic Drugs and Psychotropic Substances Act, 1985 and thus it could not be that search and seizure operation by officer was not empowered or authorized under NDPS Act and was without mandate of law.

[Anant Vardhan Pathak v UOI [2020] 116 taxmann.com 729 (Bombay)]

28. SetCom cannot accept calculations made by applicant without any deliberation.

[CIT v Income Tax Settlement Commission [2020] 116 taxmann.com 735 (Madras)]

29. No sec. 271AAA penalty where assessee had admitted undisclosed income and discharged tax and interest thereon.

[Pr. CIT v Patdi Commercial and Investment Ltd. [2020] 115 taxmann.com 291 (Gujarat)]

30. Where assessee was residing at Madurai, Tamil Nadu prior to assessment year 2011-12 and no return of income was filed during his stay at Madurai as he had not earned any taxable income in that period and from assessment year 2010-11 onwards, assessee shifted to Shimoga, Karnataka, carrying on business there and returns of income were filed from assessment year 2012-13 till date at Shimoga, appropriate officer to assess assessee would be officer at Shimoga and not Madurai even though assessee obtained his PAN from Madurai.

[Abdul Azeez Haroon v Dy. CIT [2020] 115 taxmann.com 289 (Madras)]

31. Where assessee had filed an application for compounding of offence punishable under section 276C(1), compounding of offence under section 276C(1) would be permissible on payment of 100 per cent of tax sought to be evaded and not 100 per cent of amount sought to be evaded.

[Mehta Laboratories v Pr. CIT [2020] 115 taxmann.com 285 (Gujarat)]

32. Where invoking Rule 9A of IT Rule, Assessing Officer disallowed advertisement and publicity expenses incurred after date of certification of film, Tribunal was justified in allowing same by holding that amount not allowable under rule 9A may be allowed under section 37.

[Pr. CIT v Red Chillies Entertainment (P.) Ltd. [2020] 116 taxmann.com 770 (Bombay)]

INCOME TAX APPELLATE TRIBUNAL

1. Commissioner (Appeals) was justified in holding that expenditure incurred towards date link charges/telecommunication charges and foreign travel expenses attributable to delivery of computer software for providing technical services outside India was to be excluded both from export turnover and total turnover for purpose of computation of deduction under section 10A.

[Dy. CIT v Yahoo Software Development (P.) Ltd. [2020] 116 taxmann.com 403 (Bangalore – Trib.)]

2. The word “assessable ” inserted in section 50C with effect from 01-10-2009, is prospective in nature and, thus, where assessee sold her immovable property by way of agreement to sell dated 01-04-2009, provisions of section 50C were not applicable and, in such circumstances, deemed sale consideration as per stamp valuation authorities could not be invoked for determining long term capital gain arising from sale of said property.

[Smt. Alka Jain v Asst. CIT [2020] 116 taxmann.com 413 (Delhi – Trib.)]

3. No addition in case of unabated assessment if no incrimination material was found during search proceedings.

[Asst. CIT v Majestic Commercial (P.) Ltd. [2020] 116 taxmann.com 412 (Kolkata – Trib.)]

4. NBFC financing ‘Fastway’ for purchase of STBs was loan though title of asset was retained by NBFC as security.

[Fastway Transmission (P.) Ltd. v Asst. CIT [2020] 116 taxmann.com 427 (Chandigarh – Trib.)]

5. Annual development fees collected by assessee-society from students for development of school building and purchase of capital assets and kept in separate account solely for said purpose, could not be treated as income or revenue receipt for purpose of section 11.

[Vidya Bharati Society for Education & Scientific Advancement v Asst. CIT (EXP) [2020] 115 taxmann.com 152 (Kolkata – Trib.)]

6. No additions on basis of search proceeding carried out in case of third party without providing hearing opportunity.

[Modern Malleables Ltd. v Dy. CIT [2020] 116 taxmann.com 425 (Kolkata – Trib.)]

7. No section 68 additions if assessee proved that amount introduced as capital or premium belongs to assessee itself.

[Agson Global (P.) Ltd. v Asst. CIT [2020] 115 taxmann.com 342 (Delhi – Trib.)]

8. Depreciation was to be allowed on cost of golf course developed on land by considering same as “plant and machinery”.

[Landbase India Ltd. v Asst. CIT [2020] 116 taxmann.com 574 (Delhi – Trib.)]

9. Where assessee developed ‘digital content/animation software’ utilized in multimedia and entertainment industry which are stored in hard disc of computer, this digital content was a copyrighted intangible asset to be used in various films etc. and, therefore, assessee was eligible for depreciation at rate of 25 per cent.

[Pentamedia Graphics Ltd. v Dy. CIT [2020] 116 taxmann.com 564 (Chennai – Trib.)]

10. Where from show-cause notice issued by Assessing Officer under section 274 it was not clear whether he had levied penalty for concealment of income or furnishing of inaccurate particulars of income, penalty order passed under section 271(1)(c) in pursuance of said notice had rightly been set aside.

[ITO v A. Shihabudeen [2020] 116 taxmann.com 495 (Cochin – Trib.)]

11. Where assessee had not earned any tax exempt income in relevant previous year, no disallowance under section 14A could have been made.

[Dy. CIT v JSW Ltd. [2020] 116 taxmann.com 565 (Mumbai – Trib.)]

12. Where Visakhapatnam Metro Region Development Authority was not engaged in commercial activity and registration granted to it under section 12AA had been cancelled on presumptions and assumptions without having proper material, registration so cancelled had to be restored.

[Visakhapatnam Metropolitan Region Development Authority v CCIT [2020] 116 taxmann.com 711 (Visakhapatnam – Trib.)]

13. For availing benefit of not collecting tax at time of sale of goods aimed for specified purposes, a verified declaration in prescribed Form should be provided by buyers to seller; however, no time limit is prescribed for furnishing such declarations.

[Eid Mohammad Nizamuddin v ITO [2020] 116 taxmann.com 579 (Jaipur – Trib.)]

14. No denial of Sec. 54B exemption if certificate issued by Revenue Dept. provided that sold land was agricultural land.

[Anil Kumar Nuwal v Asst. CIT [2020] 116 taxmann.com 710 (Jodhpur – Trib.)]

15. No Sec. 54F relief if construction was done on residential house exclusively owned by father & not by HUF.

[Arpit Khairari v ITO [2020] 116 taxmann.com 720 (Jaipur – Trib.)]

16. Where in a company assessee’s minor sons held 99% shares and assessee held only 125 shares, when entire shareholding was sold, sale proceeds would belong to minor sons of assessee and same was required to be brought to tax by invoking provisions for clubbing income of minors.

[K. Srikanth v Asst. CIT [2020] 116 taxmann.com 721 (Chennai – Trib.)]

17. No embargo to declare income under diff. head subsequently if it was declared under wrong head in prior year.

[Anant Raj Ltd. v Asst. CIT [2020] 116 taxmann.com 741 (Delhi – Trib.)]

18. Where assessee failed to place on record any evidence to suggest that own funds were advanced to sister concerns on account of commercial expediency, Assessing Officer had rightly disallowed interest expenses on advancement of loans.

[Mangalam Publications (India) (P.) Ltd. v Asst. CIT [2020] 116 taxmann.com 731 (Cochin – Trib.)]

19. Commissioner (Appeals) has coterminous powers with Assessing Officer hence, issue regarding valuation adopted by Stamp Valuation Authority and assessment order having been passed without considering fact that difference amount was negligible in amount as compared to purchase consideration amount, raised first time before Commissioner (Appeals), he ought to have referred matter for valuation to Departmental Valuation Officer.

[Jaykishan Parchani v ITO [2020] 116 taxmann.com 727 (Indore – Trib.)]

INTERNATIONAL TAXATION

1. Assessee committee formed by cricket boards or associations of Pakistan, India and Sri Lanka for purpose of conducting 1996 World Cup Cricket would be liable to deduct tax at source in terms of section 194E on payments made to Non-Resident Sports Associations in relation to matches held in India, as, it represented their income which accrued or arose or was deemed to have accrued or arisen in India.

[PILCOM v CIT [2020] 116 taxmann.com 394 (SC)]

2. Gain on indirect transfer of Indian Co’s share not taxable in lack of corresponding amendment in India-Belgium DTAA.

[Sofina S.A. v Asst. CIT [2020] 116 taxmann.com 706 (Mumbai – Trib.)]

3. There being no requirement under DTAA between India and USA to deduct tax at source out of payments towards purchase of off-the-shelf software from foreign companies, assessee was not in default for non-deduction of tax at source out of such payments.

[Eaton Technologies (P.) Ltd. v Dy. CIT [2020] 115 taxmann.com 341 (Pune – Trib.)]

4. Where Assessing Officer held assessee-in-default for not deducting TDS on payment made to a non-resident towards import of certain commodities, since assessee had furnished various documents to demonstrate that non-resident did not have any regular agent in India and it was exporting through broker who was general commission agent having independent status, no TDS was to be deducted on payments and, thus, assessee could not be held in default.

[RSV Global v ITO [2020] 115 taxmann.com 335 (Indore – Trib.)]

5. Where Assessing Officer, held receipt on account of rectification and rework done by assessee was FTS without considering details of rectification and rework provided by assessee, matter was to be remanded to Assessing Officer/TPO for proper adjudication in consonance with evidences filed by assessee.

[JCB Heavy Products Ltd. v Dy. CIT [2020] 115 taxmann.com 137 (Delhi – Trib.)]

6. Where assessee provided corporate guarantee to foreign banks for money borrowed by its India Associate Enterprise and received corporate fee, since services of corporate guarantee were not in nature of managerial, technical or consultancy services, said fee could not be termed as fee for technical services either under section 9(1)(vii) or under article 13 of DTAA between India-France.

[JC Decaux S.A. v Asst. CIT [2020] 116 taxmann.com 408 (Delhi – Trib.)]

7. Where assessee-company, incorporated in and tax resident of USA, was engaged in business of providing data warehousing services, seconded employees who rendered services on behalf of assessee in India constituted service PE of assessee in India.

[Teradata Operations Inc. v Dy. CIT [2020] 116 taxmann.com 404 (Delhi – Trib.)]

8. Where agent of assessee a UK based company in India had been paid arm’s length remuneration, and income embedded in such remuneration had been taxed in India, no further profits could be taxed in hands of Dependent Agent Permanent Establishment (DAPE).

[OT Africa Line Ltd. v Dy. CIT [2020] 116 taxmann.com 855 (Mumbai – Trib.)]

TRANSFER PRICING CASE LAWS

1. Where Assessee Company was involved in software development services for its AE and having no intangibles, a company engaged in diversified, core design research and development and marketing and sale of its software, having huge intangibles, cannot be selected as comparable.

[Pr. CIT v Open Solutions Software Services (P.) Ltd. [2020] 116 taxmann.com 708 (Delhi-HC)]

2. Where TPO made addition to assessee’s ALP on ground that assessee should have been compensated by AE at cost plus mark up of 7.19 per cent for undertaking AMP expenses purely for AE, in view of fact that revenue authorities had not been able to prove existence of an international transaction involving AMP expenses between assessee and its AE, impugned addition was to be deleted.

[Bausch & Lomb India (P.) Ltd. v Dy. CIT [2020] 116 taxmann.com 369 (Delhi – Trib.)]

3. Where a company whose business model was different from assessee because it outsourced 35 per cent of its activities during year as compared to 0.97 per cent by assessee, same could not be accepted as comparable.

[Haldor Topsoe India (P.) Ltd. v Dy. CIT [2020] 116 taxmann.com 370 (Delhi – Trib.)]

4. CUP method couldn’t be rejected for bench-marking import of computer parts if same was accepted in earlier years.

[Lenovo India (P.) Ltd. v ITO [2020] 116 taxmann.com 409 (Bangalore – Trib.)]

5. Where assessee-company was a software development services provider and, other hand, comparable company was engaged in providing Geographical Information Services comprising of Photogrammetry, Remote Sensing, Cartography, Data Conversion, state of the art terrestrial and 3D geo-content including location based and other computer based related services, said company was functionally different from assessee.

[NXP India (P.) Ltd. v Dy. CIT [2020] 116 taxmann.com 421 (Bangalore – Trib.)]

6. Where TPO made addition to assessee’s ALP in respect of notional interest on overdue receivables, since it was undisputed that working capital adjustment had been given to assessee which would subsume impact of outstanding receivables, impugned addition was to be set aside.

[Turner International India (P.) Ltd. v Asst. CIT [2020] 115 taxmann.com 334 (Delhi – Trib.)]

7. Where parent company of assessee ‘EGL’ took loan from a bank, Hong Kong branch and Singapore branch, and assessee undertook not to transfer, assign and dispose 49 per cent of equity shares in its wholly owned Indian subsidiary company ‘ELL’ without prior written approval of lenders during pendency of loan i.e. a lien was provided on transfer of shares, seeing which Assessing Officer held that assessee ought to have charged guarantee commission at rate of 0.5 per cent and accordingly worked out adjustment, Assessing Officer was to be directed to make adjustment by applying 0.25 per cent to said transaction.

[Essar Shipping Ltd. v Asst. CIT [2020] 116 taxmann.com 424 (Mumbai – Trib.)]

8. Where turnover of comparables companies was more than Rs. 200 i.e. 10 times greater than that of assessee, these companies could not be considered as comparable companies.

[Mformation Software Technologies (I) (P.) Ltd. v ITO [2020] 116 taxmann.com 458 (Bangalore – Trib.)]

9. Where assessee-company, a non-resident, granted loan and advance to its Indian AE in foreign currency (Euro) and received principal/interest on same in foreign currency, Euro-LIBOR would be appropriate benchmark that conforms to arm’s length standard under CUP method.

[AT & S Austria Technologie & Systemtechnik Aktiongesellschaft v Dy. CIT [2020] 116 taxmann.com 466 (Kolkata – Trib.)]

10. Where corporate guarantee was extended by assessee as a shareholder activity, i.e., solely because of ownership interest with primary object to help its subsidiary company, protect its interest and not to earn interest income on same, therefore, said corporate guarantee was outside ambit of international transactions for making ALP adjustments.

[AT & S Austria Technologie & Systemtechnik Aktiongesellschaft v Dy. CIT [2020] 116 taxmann.com 466 (Kolkata – Trib.)]

11. Where assessee, a routine software development service provider, was a risk mitigated company, a high risk bearing company could not be considered to be a comparable with it.

[iPass India (P.) Ltd. v ITO [2020] 116 taxmann.com 559 (Bangalore – Trib.)]

12. Where in course of transfer pricing proceedings, TPO determined ALP of technical know-how fee paid by assessee to its AE at nil by applying Benefit Test which is not as per rules prescribed under Rules 10AB and 10B of 1962 Rules, order so passed was to be set aside and, matter was to be remanded back for disposal afresh in accordance with Rules 10AB and 10B of 1962 Rules, read with section 92C.

[UPS Express (P.) Ltd. v Dy. CIT [2020] 116 taxmann.com 563 (Mumbai – Trib.)]

13. AO is bound to make a reference to TPO if in Form No. 3CEB, aggregate value of international transactions reported by assessee exceeds Rs. 15 crore and/or that of specified domestic transactions exceeds Rs. 5 crore. Assessee can’t raise claim before Tribunal that it committed a mistake in reporting the figures of the international transactions and the SDTs correctly; hence there is no infirmity in reffering matter back to TPO.

[Extentia Information Technology (P.) Ltd. v Dy. CIT [2020] 116 taxmann.com 567 (Pune – Trib.)]

14. A company engaged in software development implementation and support service and also engaged in software product development and which earns revenue from sale of user licenses cannot be compared with software development service segment of assessee.

[FIS Solutions (India) (P.) Ltd. v Dy. CIT [2020] 116 taxmann.com 571 (Pune – Trib.)]

15. Assessee engaged in business of core auto components i.e. suspension breaking parts including brakes and brake assemblies, brake lining, shock absorbers and leaf springs, could not be comparable with an entity engaged in business of non-core auto components i.e. auto components other than core auto components.

[Nissin Brake India (P.) Ltd. v Dy. CIT [2020] 116 taxmann.com 576 (Delhi – Trib.)] 

16. Where assessee-company was providing software research development and market support services to its AEs, a company which earned income from sale of software services and products but no segmental details were available in this respect was to be excluded from final list of comparables to assessee.

[Infineon Technologies India (P.) Ltd. v Asst. CIT [2020] 116 taxmann.com 580 (Bangalore – Trib.)]

17. Where assessee had ownership of leased out asset and lessee had not claimed any depreciation on leased assets, assessee was entitled to claim depreciation on such leased asset.

[Reliance Corporate IT Park Ltd. v Dy. CIT [2020] 116 taxmann.com 632 (Mumbai – Trib.)]

18. Where a company was involved in high-end KPO services whereas assessee was providing IT enabled services by rendering remote data processing in field of reinsurance, said company could not be functionally comparable with a BPO service provider like that of assessee.

[Swiss Re Global Business Solutions India (P.) Ltd. v Dy. CIT [2020] 116 taxmann.com 716 (Bangalore – Trib.)]

19. Where assessee-company was a captive software development service provider, a company which was carrying out research and development activities and had created large intangibles was to be excluded from final list of comparables to assessee.

[Applied Materials India (P.) Ltd. v Dy. CIT [2020] 116 taxmann.com 718 (Bangalore – Trib.)]

20. No allocation of AMP exp. to Foreign AE just because it got benefitted incidentally due to brand building in India.

[Pernod Ricard India (P.) Ltd. v Dy. CIT [2020] 116 taxmann.com 724 (Delhi – Trib.)]

21. Where DRP denied working capital adjustment on ground that assessee failed to demonstrate that such differences had any impact on assessee’s profit, since information available in public domain was insufficient and only revenue had sufficient powers under section 133(6) to compel production of required details from comparable companies, therefore, it was no defense to say that assessee had not furnished required details to deny any working capital adjustment.

[Goldman Sachs Services (P.) Ltd. v Jt. CIT [2020] 115 taxmann.com 286 (Bangalore – Trib.)] 

22. Distribution of software license & its maintenance is inter-linked activity; no re-characterization for TP study.

[Parametrics Technology (P.) Ltd. v Dy. CIT [2020] 116 taxmann.com 744 (Bangalore – Trib.)]

23. Where in earlier assessment year TPO had restricted margins of assessee’s AE to 0.5 per cent of sales of AE and said methodology had been accepted by assessee as well as revenue, rule of consistency to be followed in relevant year also.

[Dy. CIT v Aranca (Mumbai) (P.) Ltd. [2020] 116 taxmann.com 790 (Mumbai – Trib.)]

DOMESTIC TAX CASE LAWS [JUNE]

SUPREME COURT

1. Where High Court upheld Tribunal’s order allowing assessee’s claim of deduction of loss suffered due to fluctuation in foreign exchange rate at time of recovering loan advanced to subsidiary company, SLP filed against said order was to be dismissed.

[Pr. CIT v Albasta Wholesale Services Ltd. [2020] 117 taxmann.com 166 (SC)]

2. Where High Court upheld Tribunal’s order holding that in case of assessee, a builder, profit earned on sale of land kept as investment was to be taxed as long-term capital gain, SLP filed against said order was to be dismissed.

[Pr. CIT v Jogani and Dialani Land Developers and Builders [2020] 117 taxmann.com 140 (SC)]

2. SLP dismissed against High Court ruling that where details of amortization of brand value was provided by assessee in notes to balance sheet and profit and loss account and while computing books profit under section 115JB, depreciation was claimed on amortised value and in assessment Assessing Officer issued notice under section 142(1) and allowed same accepting assessee’s explanation, subsequent reassessment on ground that there was no provision for deduction of depreciation for amortization not charged in profit and loss account was without jurisdiction.

[Asst. CIT v Marico Ltd. [2020] 117 taxmann.com 244 (SC)]

3. Where High Court upheld Tribunal’s order allowing assessee’s claim for deduction under section 36(1)(iii) by taking a view that assessee’s decision to give loan to its subsidiaries was derived by business exigency, SLP filed against said order was to be dismissed.

[Pr. CIT v E City Investments And Holdings Company (P.) Ltd. [2020] 117 taxmann.com 124 (SC)]

4. Where High Court upheld Tribunal’s order granting registration under section 80G(5) to assessee by taking a view that Assessing Officer had not brought any specific instances suggesting that activities of assessee were religious in nature, SLP filed against said order was to be dismissed.

[CIT v Rajkot Jilla Gayatri Parivar Trust [2020] 117 taxmann.com 122 (SC)]

5. Where High Court upheld Tribunal’s order deleting addition made to assessee’s income in respect of unsecured loan, SLP filed against order of High Court was to be dismissed.

[Pr. CIT v Gyan Enterprises (P.) Ltd. [2020] 117 taxmann.com 114 (SC)]

6. Where High Court upheld Tribunal’s order deleting addition made under section 153A by taking a view that no incriminating documents during course of search were found, SLP filed against said order was to be granted.

[Pr. CIT v Gahoi Foods (P.) Ltd. [2020] 117 taxmann.com 118 (SC)]

7. Where High Court set aside reassessment proceedings on ground that issue relating to allowability of research and development expenses had duly been examined by Assessing Officer and, thus, initiation of reassessment proceedings was not permissible on basis of mere change of opinion, SLP filed against said order was to be dismissed.

[Dy. CIT v Sun Pharmaceutical Industries Ltd. [2020] 117 taxmann.com 116 (SC)]

8. Where High upheld Tribunal’s order holding that AO was not justified in making addition to assessee’s income in reassessment proceedings in respect of profit earned on suppressed sales because there was no independent material brought on record by Assessing Officer other than those which, were already collected by Excise Department and which, were yet to be verified SLP filed against order of High Court was to be dismissed.

[Pr. CIT v Ganga Glazed Tiles (P.) Ltd. [2020] 117 taxmann.com 108 (SC)]

HIGH COURT

1. Institute of Chartered Accountants of India is under an obligation to provide reasons to complainant for its prima facie conclusion of member being not guilty of any misconduct.

[Trideep Raj Bhandari v Institute of Chartered Accountants of India [2020] 117 taxmann.com 380 (Delhi)]

2. Where Google Study done by Tribunal to confirm disallowance of cent percent depreciation on pollution control devices was not put to notice to assessee-­company, order of Tribunal was to be set aside.

[Ramco Industries Ltd. v Dy. CIT [2020] 117 taxmann.com 382 (Madras)]

3. Mere issuance of notice under section 143(2), would not be a sufficient ground to withhold refund under section 241A.

[Ericsson India (P.) Ltd. v Addl CIT [2020] 117 taxmann.com 381 (Delhi)]

4. Assessee’s claim for deduction under section 54F(1) was to be allowed where two apartments owned by him even though had been sanctioned for residential purpose, yet same were infact being used for commercial purpose as service apartments.

[Navin Jolly v ITO [2020] 117 taxmann.com 323 (Karnataka)]

5. Where assessee accepted cash from customers/beneficiaries and in lieu thereof issued them cheques of slightly lower amount after charging its commission, provisions of section 68 were not applicable and, thus, entire amount of cash received from customers/beneficiaries could not be added to assessee’s taxable income.

[Pr. CIT v Alag Securities (P.) Ltd. [2020] 117 taxmann.com 292 (Bombay)]

6. Fees levied under section 234E to ensure that assessee files statement in time, so that department can clear returns of persons connected with assessee i.e. from whom tax has been deducted at source without any delay is not a penalty and is Purely compensatory and; levy is not violative of Constitution.

[Qatalys Software Technologies (P.) Ltd. v UOI [2020] 115 taxmann.com 345 (Madras)]

7. Where Tribunal after considering census report and population certificate of a village and other relevant documents found that population of village was 5,912 which was less than statutory requirement of 10,000, Tribunal was justified in holding land in question sold by assessee which was situated in said village was an agricultural land not forming part of capital asset within meaning of section 2(14) and, hence, profit earned on transfer of such land was not liable to capital gains tax.

[Pr. CIT v Anthony John Pereira [2020] 115 taxmann.com 368 (Bombay)]

8. Where question of genuineness of investors who introduced share capital and capacity of persons from whom loan was borrowed and genuineness of transactions, had been considered at length by First Appellate Authority and revenue had failed to point out any infirmity in fact or law, said sums could not be added as unexplained investments of assessee under section 68.

[Pr. CIT v Amravati Infrastructures Developers (P.) Ltd. [2020] 117 taxmann.com 152 (Punjab & Haryana)]

9. Where assessee engaged in business of manufacturing ATMs and distribution of NCR books products, took a premises on lease for a period of three years and incurred expenditure on improvement of said premises such as improvement of interiors and electrical works, ceiling work for networking of computers in connection with set up of office etc., expenditure so incurred was to be allowed as revenue expenditure.

[CIT v NCR Corporation (P.) Ltd. [2020] 117 taxmann.com 252 (Karnataka)]

10. Upon purchase of flat from builder, purchaser certainly acquires right or interest in proportionate share of land but its realisation is deferred till formation of co-operative society by flat owners and transfer of entire property to co-operative society; cost of of land is to be considered while computing capital gains in hands of builder.

[J.S. & M.F. Builders v A.K. Chauhan [2020] 117 taxmann.com 228 (Bombay)]

11. 12A registration to be granted within 6 months regardless to fact that Society was entitled to exemption or not.

[DIT v ST. Ann’s Education Society [2020] 117 taxmann.com 215 (Karnataka)]

12. Advance tax liability can be adjusted against cash lying in account of revenue, which was seized from assessee.

[Marble Centre International (P.) Ltd. v Asst. CIT [2020] 117 taxmann.com 208 (Karnataka)]

13. Where during pendency of rectification application filed by assessee seeking set off of brought forward loss against taxable profits computed for relevant years, department raised tax demand, matter was to be remanded back with a direction to revenue authorities to dispose of rectification application first and till then impugned tax demand would remain in abeyance.

[Paiva Manufacturing Co. v ITO [2020] 117 taxmann.com 211 (Kerala)]

14. Where assessee filed its return claiming deduction of bad debts under section 36(1)(vii) and submitted entire factual matrix in support of said claim, mere fact that revenue authorities found said claim inadmissible, it did not amount to furnishing of inaccurate particulars of income and, thus, impugned penalty order passed under section 271(1)(c) for raising such a claim, was to be set aside.

[Ventura Textiles Ltd. v CIT [2020] 117 taxmann.com 182 (Bombay)]

15. Education Cess and Higher and Secondary Education Cess are liable for deduction in computing income chargeable under head of ‘profits and gains of business or profession’.

[Sesa Goa Ltd. v Jt. CIT [2020] 117 taxmann.com 96 (Bombay)]

16. Sections 142(1) and 148 cannot operate simultaneously; if notice has already been issued under section 142 and proceedings are pending, income cannot be said to have escaped assessment.

[Pr. CIT v Govind Gopal Goyal [2020] 116 taxmann.com 995 (Gujarat)]

17. High Court did not accept finding of Tribunal that for purpose of section 115JB, net profits had to be determined as per provisions of Companies Act and thereafter adjustments had to be made, and that assessee could not adjust book profit except as provided under Companies Act.

[Yokogawa India Ltd. v Dy. CIT [2020] 117 taxmann.com 72 (Karnataka)]

18. High Court Court under Article 226 of Constitution of India could not exercise role of an appellate authority to decide whether imposing penalty reflected adherence to provisions of CBDT Circular No.13 dated 6.7.2015 or in terms of provisions of Black Money Act; assessee had to assail impugned order before appellate authority.

[Thomas Mathew v ITO [2020] 117 taxmann.com 63 (Kerala)]

19. Where both assessee and assessing authorities were under jurisdiction of Bangalore, merely because post search settlement application for two years was filed before Chennai Bench of Settlement Commission, order passed by Chennai Bench of Settlement Commission denying section 80HHC deduction could not be challenged before Madras High Court.

[Mulberry Silks Limited v Settlement Commission (IT & WT) [2020] 117 taxmann.com 62 (Madras)]

20. Where assessee, a society registered under section 12AA, filed an application seeking condonation of delay in filing return of income , in view of Circular F.No.197/55/2018 dated 22-05-2019, revenue authorities were to be directed to dispose of said application first and in meantime impugned demand notice in respect of assessed income would remain in abeyance.

[Sree Narayana Educational and Charitable Society v CIT (Exp.) [2020] 117 taxmann.com 44 (Kerala)]

21. No assessment could be made u/s. 158BC without issuing a notice u/s. 143(2).

[CIT v Sodder Builder & Developers (P.) Ltd. [2020] 115 taxmann.com 251 (Bombay)]

22. Commissioner (Appeals) was directed to decide appeal and stay application of assessee-co-operative society without asking for deposit of 20 per cent of tax demand.

[Aranattukara Oriental Service Co-Operative Bank Ltd. v CIT [2020] 116 taxmann.com 900 (Kerala)]

23. 2013 Act, does not leave any doubt in mind that if the land is acquired in result of an agreement, it would not fall within mischief of the Act and, thus, exemption is liable to be granted in respect of compensation received on land acquired under the provisions of 2013 Act.

[Viswanathan M. v CC [2020] 116 taxmann.com 894 (Kerala)]

24. Where transfer price of undertaking was based on individual assets and liabilities, said sale would not qualify as ‘Slump Sale’ as per section 2(42C).

[CIT v Shiva Distilleries Ltd. [2020] 116 taxmann.com 929 (Madras)]

25. Since Tribunal had no power to condone delay in filing miscellaneous application beyond period of six months, writ petition filed by assessee under Articles 226 and 227 seeking for condonation of delay of 497 days in filing miscellaneous petition could not be held to be unjustifiable.

[Karuturi Global Ltd. v Dy. CIT [2020] 116 taxmann.com 924 (Karnataka)]

INCOME TAX APPELLATE TRIBUNAL

1. Assessee eligible for sec. 80G deduction after furnishing relevant details if donation exp. was disallowed.

[Max Life Insurance Co. Ltd. v. Dy. CIT [2020] [2020] 117 taxmann.com 345 (Delhi – Trib.)]

2. Retention money retained by contractee being deferred payment and contingent upon satisfactory completion of contract work, assessee would have no vested right to receive same in year in which it was retained; income was to be booked in year of actual receipt.

[Dy. CIT v EMC Ltd. [2020] 117 taxmann.com 340 (Kolkata – Trib.)]

3. Levy of late fee under section 234E is mandatory in nature and AO has no discretion to take its own decision but he has to make adjustment on account of levy of late fee as provided under section 234E in case there is a delay in submitting TDS statement.

[Block Development Officer v Dy. CIT [2020] 117 taxmann.com 337 (Jaipur – Trib.)]

4. Where in penalty notice, Assessing Officer had not spelt out what was fault for which assessee was being proceeded against for levy of penalty, notice was vague; hence, penalty order was also bad.

[North Eastern Constructions v ITO [2020] 117 taxmann.com 321 (Gauhati – Trib.)]

5. Where assessee­-company issued shares at high premium and genuineness of transaction and identity and creditworthiness of share applicants were proved additions under section 68 could not be made merely on ground that assessee company’s performance did not justify high value of share premium.

[ITO v Singhal General Traders (P.) Ltd. [2020] 115 taxmann.com 119 (Mumbai – Trib.)]

6. As per proviso to section 32(iia) new machinery or plant should be used by an assessee, engaged in business of manufacture or production of any article or thing, and it is not necessary that new machinery or plant should be used in manufacturing or production of any article or thing; therefore, assessee, engaged in business of software development, could not be denied additional depreciation on its asset for reason that plant and machinery on which additional depreciation was claimed should mandatorely be used in manufacture of article or thing.

[Texas Instruments (India) (P.) Ltd. v Addl. CIT [2020] 115 taxmann.com 154 (Bangalore – Trib.)]

7. Where assessee had taken a premises on lease for a long period of time and further given it on lease to a bank for period of more than 12 years, assessee was to be considered as deemed owner of said premises for purpose of section 27(iiib) read with section 269UA(f)(i) and, therefore, lease rental earned by assessee was taxable as income from house property.

[Nahalchand Laloochand (P.) Ltd. v Dy. CIT [2020] 115 taxmann.com 367 (Mumbai – Trib.)]

8. Without show causing assessee, Commissioner could not presume that incentive had not been actually paid to employees; addition of incentive was not sustainable.

[Shailesh Kumar Gandhi v Pr. CIT [2020] 117 taxmann.com 279 (Cuttack – Trib.)]

9. Date of taking possession flat to be taken as date of purchase to allow benefit of section 54F.

[Rajiv Madhok v Asst. CIT [2020] 117 taxmann.com 232 (Delhi – Trib.)]

10. Where borrower took plot loan but failed to construct on plot of land for residential house within 3 years, plot loan was to be classified as commercial loan and assessee-housing finance company had to forego deduction under section 36(1)(viii) in respect of such plot loans classified as commercial loans.

[Dy. CIT v Repco Home Finance (P.) Ltd. [2020] 117 taxmann.com 233 (Chennai – Trib.)]

11. Amendment made by Finance Act (No. 2) to section 40(a)(ia) with effect from 01-04-2015, is curative in nature and thus said provision has to be applied retrospectively.

[Muradul Haque v ITO [2020] 117 taxmann.com 251 (Delhi – Trib.)]

12. Where in terms of one time settlement, creditor bank waived off principal amount of loan payable by assessee, said amount could not be brought to tax under section 41(1) because assessee never claimed same as deductible expenditure in earlier assessment years.

[ITO v Sri Vasavi Polymers (P.) Ltd. [2020] 117 taxmann.com 236 (Visakhapatnam – Trib.)] 

13. Where monetary effect in appeal filed by revenue did not exceed Rs. 50 lakhs, in view of Circular No. 17 dated 08-08-2019, appeal so filed was to be dismissed as not maintainable.

[ITO v Dushyant Manilal Pandya [2020] 117 taxmann.com 235 (Ahmedabad – Trib.)]

14. Merely because intimation was issued under section 143(1), same would not preclude assessee from filing revised return of income.

[Asst. CIT v Padma Logistics & Khanij (P.) Ltd. [2020] 117 taxmann.com 210 (Kolkata – Trib.)] 

15. Where assessee, earning income from sale of IMFL, failed to maintain books of account as per provisions of section 44AA even when her income exceeded prescribed limit, impugned order levying penalty under section 271A was to be upheld.

[Smt. Sanghamitra Pattnaik v ITO [2020] 117 taxmann.com 179 (Cuttack – Trib.)] 

16. Where Assessing Officer did not invoke provisions of section 69 at first place while completing assessment under section 143(3), in such a case, provisions of section 115BBE which were contingent on satisfaction of requirements of section 69, could not be independently applied by invoking provisions of section 154.

[Asst. CIT v Sudesh Kumar Gupta [2020] 117 taxmann.com 178 (Jaipur – Trib.)]

17. Where identity, creditworthiness and genuineness of share applicants were established by assessee, if Assessing Officer was still dissatisfied about source of cash deposited, proper course would be to enquire from such creditor and assess such credit in their hands; addition in hands of assessee was not warranted.

[Satyam Smertex (P.) Ltd. v Dy. CIT [2020] 117 taxmann.com 93 (Kolkata – Trib.)] 

18. Action of Assessing Officer of rectifying a mistake which did not emanate from record available at time of assessment, could not be regarded as a mistake apparent from record rectifiable under section 154.

[Dy. CIT v Gulshan Chemicals Ltd. [2020] 117 taxmann.com 68 (Delhi – Trib.)] 

19. Where assessee was discharged by SICA and its net worth turned positive by virtue of implementation of revival scheme, assessee would be precluded from relief under section 115JB.

[Windsor Machines Ltd. v Dy. CIT [2020] 117 taxmann.com 65 (Mumbai – Trib.)] 

20. Assessee is entitled to deduction under section 80-IA(4) when there is positive Income in hands of assessee on account of disallowances made by Assessing Officer in course of assessment proceedings.

[Gujarat State Energy Generation Ltd. v Asst. CIT [2020] 117 taxmann.com 58 (Ahmedabad – Trib.)]

21. Where assessee, a society, registered under section 12AA, collected rent from tenants and paid it back to Government, in view of fact that tenanted building was owned by the Government and assessee was merely collecting rent as its agent, rent collected by assessee was definitely its Income and rent paid back to the Government was its expense and, thus, assessee was to be granted benefit of refund of TDS made by tenants under section 194-I while making payments of rent when assessee paid back said rent amount to Government.

[Council of Handicrafts Development Corporation v ITO [2020] 117 taxmann.com 57 (Delhi – Trib.)] 

22. Where assessee, engaged in business of telecommunication services, entered into roaming arrangements with other telecom operators, according to which, they could enjoy service facilities outside territory, since roaming charges were not paid for rendering any managerial technical or consultancy services , said charges would not fall under category of “fee for technical services ” and, thus, assessee was not required to deduct tax on such roaming charges under section 194J.

[Vodafone Idea Ltd. v Asst. CIT [2020] 117 taxmann.com 42 (Cuttack – Trib.)] 

23. No discrepancy in CIT(A)’s order deleting additions by examining cash book and tallying it with sales register.

[ITO v Yashovardhan Tyagi [2020] 116 taxmann.com 899 (Delhi – Trib.)]

24. Where Assessing Officer failed to examine application of section 56(2)(vii)(b) to purchase agreements entered into by asseessee and also failed to examine genuineness of loan taken by assessee, order passed by Assessing Officer without conducting proper investigation and without proper application of mind being an erroneous order, revision proceedings initiated by Principal Commissioner under section 263 were justified.

[Kirtidevi S. Tejwani v Pr. CIT [2020] 116 taxmann.com 965 (Mumbai – Trib.)]

25. Rental income from land can’t be held as house property income if lessee never used bungalow consisted on it.

[Atul Babubhai Shah v Jt. CIT [2020] 116 taxmann.com 966 (Ahmedabad – Trib.)] 

26. Sum received post construction can’t be included in determining percentage of completion method as per AS-7.

[Veolia India (P.) Ltd. v Dy. CIT [2020] 116 taxmann.com 893 (Delhi – Trib.)]

27. Where amount of long term capital gain (LTCG) from sale of residential property was not utilised in construction of residential house till expiry of period of 3 years from date of transfer and assessee offered said LTCG to tax after expiry of 3 years from date of transfer, Assessing Officer was to be directed to grant exemption of said LTCG for assessment year 2013-14 and to charge said LTCG to tax in assessment year 2016-17.

[Deepak Bhardwaj v ITO [2020] 116 taxmann.com 891 (Delhi – Trib.)] 

28. Suo motu disallowance offered couldn’t be rejected merely because such disallowance would be more under Rule 8D.

[Tata Industries Ltd v Dy. CIT [2020] 116 taxmann.com 875 (Mumbai – Trib.)]

29. Section 40A(2)(b) does not envisage complete disallowance of expenditure unless it is proved to be excessive or unreasonable having regard to fair market value. Where no such finding with regard to excess payment had been established by revenue while invoking provisions of section 40A(2)(b), disallowance made was to be deleted.

[Amit Mehra v ITO [2020] 116 taxmann.com 870 (Delhi – Trib.)] 

30. Where there was practically no difference in physical inventory taken by survey team vis-a-vis inventory as per Books of Account, impugned addition made on account of difference in value of stock was to be deleted.

[Stone Age (P.) Ltd. v Dy. CIT [2020] 116 taxmann.com 930 (Jaipur – Trib.)] 

31. Where assessment in case of assessee, carrying on business of mining and trading of iron ore, was completed under section 143(3), since there was no any material on record, assessment could not be reopened merely on basis of report of a Commission appointed by Central Government that there was under invoicing of exports by assessee.

[Ashapura Minichem Ltd. v Dy. CIT [2020] 116 taxmann.com 860 (Mumbai – Trib.)]

32. Where assessee engaged in purchase and sale of immovable properties acquired land as stock-in-trade and land continued to be held for business purpose and continued to be shown as closing stock for all years, income earned from same had rightly been treated as business income.

[Kohli Estates (P.) Ltd. v ITO [2020] 116 taxmann.com 867 (Delhi – Trib.)]

INTERNATIONAL TAXATION

1. Where DCIT found nature of payment by assessee to associate concerns based in foreign countries was merely reimbursement of expenses and, hence, no TDS was to be made but DCIT proceeded with reassessment on ground only to safeguard interest of Revenue, such reassessment was to be quashed.

[Lionbridge Technologies (P.) Ltd. v Asst. CIT   [2020] 117 taxmann.com 298 (Mumbai – Trib.)] 

2. 90 days time period permitted under Rule 34(5) for pronouncing order was to be computed by deducting Covid-19 pandemic lockdown period.

[Lionbridge Technologies (P.) Ltd. v Asst. CIT   [2020] 117 taxmann.com 298 (Mumbai – Trib.)]

3. Where in support of not including amount of an arbitral award in respect of a dredging contract in business profit, assessee annexed a Note in ITR based on relevant DTAA that said amount was not taxable in India, imposition of penalty was not justified. Further, In computing time limitation for pronouncement of order by Tribunal, nationwide COVID 19 lockdown period was to be excluded.

[Van Oord Dredging and Marine Contractors BV v Asst. DIT [2020] 117 taxmann.com 194 (Mumbai – Trib.)] 

4. Where assessee company is a member of IATP and DTAA between India and France clearly set out that those who are members of pool are exempt from tax in India, Assessing Officer was not right in rejecting claim of assessee that profit from technical handling services was covered by Article 8 and in treating Technical Income as “fee for technical services” covered u/s 115A, read with Section 44D and taxed same at 20% of gross receipts.

[Air France v Addl CIT [2020] 116 taxmann.com 882 (Delhi – Trib.)] 

5. Where assessee was seconded to Australia during year where he received salary from its employer in Australia for services rendered in Australia, impugned salary income would be taxed in Australia and it would not be taxed in India merely because Australian employer had remitted salary to assessee’s bank account in India.

[Paul Xavier Antony Samy v ITO [2020] 115 taxmann.com 143 (Chennai – Trib.)] 

6. Where assessee paid corporate guarantee fee to its AE based in Netherlands which was brought to tax by revenue authorities in India under article 12 of India-Netherlands DTAA as ‘fee for technical services’, in view of fact that it was a case of rendering financial services and by no stretch of imagination it could be regarded as providing ‘consultancy services’, payment in question was not taxable in India under article 12 of India-Netherlands DTAA.

[Lease Plan India (P.) Ltd. v Dy. CIT [2020] 117 taxmann.com 343 (Delhi – Trib.)] 

7. Where nonresident supplier carried out transaction of sale of goods to assessee-company through its subsidiary/ group company located in India, ‘business connection’ was established and, therefore, section 9 would come into operation; transaction needed to pass through section 195.

[Sanghvi Foods (P.) Ltd. v ITO [2020] 117 taxmann.com 322 (Indore – Trib.)] 

8. Non-compete fee paid to two employees who had accepted assessee’s employment and rendered services in USA, was to be regarded as salary/profit in lieu of salary under article 16 of India- USA, DTAA, and, thus, same was not liable to tax in India.

[DIT v Sasken Communication Technologies Ltd. [2020] 117 taxmann.com 278 (Karnataka)] 

9. Whether where royalty payment to assessee US company was duly disclosed and offered to tax in return of income filed by Indian company in capacity of representative assessee, reassessment of assessee could not be initiated on ground that assessee had not offered tax on royalty.

[American Express Travel Related Services Company Inc. v Asst. DIT [2020] 116 taxmann.com 887 (Delhi – Trib.)]

TRANSFER PRICING CASE LAWS

1. Where High Court upheld Tribunal’s order holding that second provision to section 92C (2) which allows +/- 5 per cent range to an assessee could be applied even in a case where transactions involved were an account of trading in foreign exchange and where RBI rates were considered to be a bench-mark for arm’s length study, SLP filed against said order was to be dismissed as withdrawn due to law tax effect.

[Pr. CIT v UAE Exchange and Financial Service Ltd. [2020] 117 taxmann.com 106 (SC)]

2. Where assessee had not rendered any marketing support services to its AE in supplying gas turbines to Public Works Department (PWD) in carrying out construction for CWG, impugned addition made to assessee’s ALP in respect of said services was to be deleted.

[Pr. CIT v Solar Turbines India (P.) Ltd. [2020] 117 taxmann.com 324 (Bombay-HC)] 

3. Where having regard to order passed in case of non-resident holding company of assessee, reason for initiating reassessment proceedings in case of assessee itself did not survive, all consequential orders passed thereto including draft assessment order under section 144C(1), read with sections 143(3) and 147 whereby assessee’s claim for carry forward and set off of accumulated loss was denied, were also not sustainable.

[Aberdeen Asia Pacific Including Japan Equity Fund v Dy. CIT [2020] 117 taxmann.com 185 (Bombay-HC)]

4. Where DRP, following decision rendered by Co-ordinate Bench, directed AO that foreign exchange gain should be considered as part of operating income, there was no infirmity in direction given by DRP.

[Dy. CIT v EYBGS India (P.) Ltd. [2020] 117 taxmann.com 294 (Bangalore – Trib.)] 

5. Where assessee voluntarily made transfer pricing adjustment and added same to total income while filing return of income and claimed deduction under section 10AA on profits of business arrived at after inclusion of abovesaid amount, assessee would be eligible for deduction under section 10AA in respect of voluntary Transfer Pricing adjustment made by it.

[Dy. CIT v EYBGS India (P.) Ltd. [2020] 117 taxmann.com 294 (Bangalore – Trib.)] 

6. Where additional evidences were not admitted, determination of correct ALP adjustments as well as correct determination of tax liability was not be possible, additional evidences were to be admitted.

[Linde Global Support Services Private Limited v Dy. CIT [2020] 117 taxmann.com 250 (Kolkata – Trib.)] 

7. Where TPO had not considered issue regarding computation of ALP of corporate guarantee issued by assessee, Assessing Officer could not himself determine same without referring same to TPO.

[New Delhi Television Ltd. v Asst. CIT [2020] 117 taxmann.com 212 (Delhi – Trib.)] 

8. Where documentary evidences on record clearly showed rendition of services by AE to assessee company and TPO himself having accepted fees received by assessee from rendering these services and TNMM having been accepted as most appropriate method, TPO could not have singled out one transaction and applied Comparable Uncontrolled Price (CUP)as most appropriate method to determine arm’s length price to be NIL and made additions.

[GBT India (P.) Ltd. v Asst. CIT [2020] 117 taxmann.com 357 (Delhi – Trib.)] 

9. Where TPO accepted benchmarking of assessee under TNMM to be at ALP, imposition of penalty under section 271G was to be deleted.

[Dy. CIT v Decent Dia Jewels (P.) Ltd. [2020] 117 taxmann.com 358 (Mumbai – Trib.)]

10. When Assessing Officer had specifically stated that order was passed under section 144C and had given heading of order as ‘Draft Assessment Order’, it would be legally incorrect to hold that order was actually a ‘Final Assessment Order’ passed under section 143(3).

[Pricewaterhouse Coopers (P.) Ltd. v Dy. CIT [2020] 117 taxmann.com 276 (Kolkata – Trib.)] 

11. Once facility is recognised by prescribed authority and an agreement between facility and prescribed authority is entered, then role of Assessing Officer is to allow expenditure incurred on in-house R&D facility as weighted deduction under section 35(2AB).

[Omni Active Health Technologies Ltd. v Asst. CIT [2020] 117 taxmann.com 229 (Mumbai – Trib.)] 

12. Where assessee was only a captive service provider entirely funded by AEs and was running business without any working capital risk as compared to comparables, no negative working capital adjustment could be made.

[Tivo Tech (P.) Ltd. v Dy. CIT [2020] 117 taxmann.com 259 (Bangalore – Trib.)]

13. AO/TPO should bring out reasons for considering provisions for bad debts as non-operating only in case of three companies while AO/TPO had to follow a uniform and consistent manner in adopting filter.

[United Online Software Development (India) (P.) Ltd. v Dy. CIT [2020] 117 taxmann.com 193 (Hyderabad – Trib.)] 

14. Where objection by assessee against additions made by Assessing Officer in draft order were invalid as time barred having not been filed within time prescribed under sub-section (2) of section 144C, Assessing Officer was suppose to complete assessment within one month from end of month in which period of filing of objections under sub-section (2) expires.

[TDK Electronics AG v Asst. CIT [2020] 116 taxmann.com 986 (Pune – Trib.)] 

15. Delhi ITAT excluded Co. from final set of comparables due to functional dissimilarity at entity level.

[Global Logic India Ltd. v Dy. CIT [2020] 117 taxmann.com 39 (Delhi – Trib.)] 

16. Where Assessing Officer made reference to TPO for determining ALP of specified domestic transaction (SDT), however, TPO observing that value of this SDT was actually in relation to international transactions and not SDT determined ALP of international transaction, there was no infirmity in TPO’s action in determining ALP of international transaction.

[Extentia Information Technology (P.) Ltd. v Dy. CIT [2020] 115 taxmann.com 92 (Pune – Trib.)] 

17. Where assessee entered into international transaction of import of parts and components from its AEs and unrelated third parties for purpose of manufacturing personal computers, in view of Tribunal’s decision in assessee’s own case for earlier assessment years, CUP method was most appropriate method for benchmarking said international transaction.

[Lenovo India (P.) Ltd. v ITO [2020] 115 taxmann.com 271 (Bangalore – Trib.)] 

18. Neither ALP adjustments can be equated with disallowances of expenses, even though effect may be same, nor TPO has authority to disallow expenses.

[Hamon Cooling Systems (P.) Ltd. v Dy. CIT [2020] 116 taxmann.com 879 (Mumbai – Trib.)] 

19. Where selected company was a Government subsidiary whose activities were advisory-cum-consultancy and it was provided work entirely by holding company/Government companies/Departments, it was functionally dissimilar vis-à-vis taxpayer which was 100 per cent exporter of its engineering support services to US AEs.

[Dy. CIT v Bechtel India (P.) Ltd. [2020] 116 taxmann.com 877 (Delhi – Trib.)] 

20. Where assessee received from Japanese AE patented technology and support for manufacturing float glass, royalty payment could not be taken as nil on ground that such expenditure had failed to generate any economic value for taxpayer’s business.

[Dy. CIT v Asahi India Glass Ltd. [2020] 116 taxmann.com 871 (Delhi – Trib.)] 

21. A functional similar company to assessee could not be excluded from list of comparables merely because it had acquired another company during relevant year particularly when said acquisition did not have any effect on working of PLI.

[Ocwen Financial Solutions (p.) Ltd. v Jt. CIT [2020] 116 taxmann.com 903 (Bangalore – Trib.)] 

22. TPO has power to reject of most appropriate method adopted by assessee for determining Arm’s Lenfth Pricebut same is subject to judicial scrutiny.

[Mott MacDonald (P.) Ltd. v Dy. CIT [2020] 116 taxmann.com 858 (Mumbai – Trib.)] 

23. Where prior to year 2007, there was a legal debate as to whether multiple year data could be used or current year data had to be used, TP addition made by rejecting multiple year data would not result penalty under section 271(1)(c).

[Giesecke & Devrient India (P) Ltd. v Dy. CIT [2020] 116 taxmann.com 908 (Delhi – Trib.)]

24. Where a comparable company undertook complete responsibility of entire life-cycle involved in a software development whereas assessee participated only to a limited extent on behalf of its Associated Enterprises at their behest, functions performed by assessee could not be compared to a full-fledged software development service provider like said comparable company.

[Synamedia India (P.) Ltd. v Dy. CIT [2020] 116 taxmann.com 852 (Bangalore)]

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