1) Held by the Hon’ble Gujarat High Court in the case of Ball Aerosol Packaging India (P.) Ltd. V Assistant Commissioner of Income-tax, The Assessing Officer was not justified in reopening of the Re-assessment Proceedings u/s 148 as it stood prior to the Finance Act, 2021 w.e.f. 01.04.2021 as no fresh tangible evidence was put on record by the Assessing Officer as compare to the evidences submitted by the Assessee during the Regular or Scrutiny Assessment u/s 143(3) of the Income Tax Act, 1961.
Facts of the case – The Assessee is a Private Limited Company & issued shares to the non-resident allottees. The matter was later selected for Scrutiny Assessment u/s 143(3) of the Act. During the Assessment Proceedings AO raised specific queries regarding issues at a premium of shares including whether valuation of shares are in conformity with the prescribed rules U/R 11UA & 11U of the Income Tax Rules, 1962. The Assessing Officer was satisfied with the explanations offered by the assessee during the assessment proceedings. Hence, re-opening of Assessment u/s 148 in the absence of fresh tangible evidences & also ignoring the facts that the provisions of Section 56(2)(viib) is not applicable on the Closely Held Company when the shares are issued to the non-resident allottees is nothing but tantamount to the change of opinion.
Hence, Hon’ble Gujrat High Court quashes the writ petition in favour of the assessee and against the Revenue.
2) Held by the Guwahati bench of the Income Tax Appellate Tribunal in the case of Assistant Commissioner of Income-tax, Cir. – Shillong V Dhar Construction Company, No TDS on salary/commission paid to the partners. The Hon’ble bench held that the contention of the Assessing Officer that Tax is to be deducted u/s 194H on the commission paid by the Partnership firm to the partner is not tenable as per the law.
The bench further stated that ‘’any commission, salary, bonus etc. will be collectively termed as ‘’Remuneration’’ as per Section 40b(i) for the purpose of calculating the limits of allowances u/s 40(b)(v) of the Act. Since, commission paid to the partners is termed as ‘’remuneration’’ & allowed as business expenditure in the hands of firm within the prescribed limits u/s 40(b)(v) read with Section 28(v) hence, no TDS u/s 194H is applicable. Moving forward TDS u/s 192 is also not applicable on the salary paid by the firm to its partners due to specific exclusion in the definition of salary as per Explanation 2 to Section 15 of the Income Tax Act, 1961.
3). Held by the Hon’ble Supreme Court of India in the case of [2023] 146 taxmann.com 224 (SC) Red Chilli International Sales V Income Tax Officer that the matter of rejecting the writ by the High Court simply on the basis of alternative remedy available is not tenable & accordingly set aside by the Hon’ble Apex Court of India. The Hon’ble Supreme Court further stated that the provision of re-opening of the Assessment Proceedings have undergone an amendment by the Finance Act, 2021 and consequently the matter would required deeper & in-depth consideration by the Hon’ble High Court rejecting the writ against the Appellant.
4) Held by the Hon’ble Gujrat High Court in the case of Shahlon Silk Industries (P.) Ltd. V Assistant Commissioner of Income-tax, Circle 2(1)(2) that Assessing officer was not justified in reopening of the Assessment u/s 148 that too after completion of the earlier Scrutiny Assessment & time period of 4 years has been elapsed. The Assessee is a Private Limited Company. The Assessee claimed deduction against the Insurance Premium of Keyman Policy in the Return of Income. The matter was later selected for scrutiny assessment & the details of the policy along with the receipts of the premium were produced before the Assessing Officer during the proceedings. The AO was satisfied with the evidences & was of the view not to make any disallowances against such expenses. Hence, reopening of the case after completion of the four years will be tantamount to change of opinion & accordingly the HC disposed of the matter in favour of the assessee.
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Thanks for the update.