Case Law Details
PCIT Vs Wig Investment (Delhi High Court)
Introduction: The recent decision of the Delhi High Court in the case of PCIT vs Wig Investment involves a complex assessment related to the Assessment Year 2006-07. The appeal challenges the order passed by the Income Tax Appellate Tribunal (ITAT) on October 16, 2018. The case has gone through multiple rounds of litigation, with significant issues related to the treatment of gains from the redemption of mutual funds and the taxation of capital contributions received by the assessee.
Background:
1. First Round of Litigation: In the initial phase, the Commissioner of Income Tax (CIT) set aside the assessment order dated December 8, 2008, under Section 263 of the Income-tax Act, 1961 (the Act). The CIT argued that the order was both erroneous and prejudicial to the revenue’s interests. The primary contentions were that the gains from mutual funds redemption should be treated as business income, not short-term capital gain, and that the capital contribution received should be taxed as deemed dividend under Section 2(22)(e) of the Act.
The assessee appealed against this decision, leading to the Tribunal holding that while the CIT correctly identified the issues, he could not both return findings on specific issues and direct the Assessing Officer (AO) to reframe the assessment order. The Tribunal modified the CIT’s order and directed the AO to reframe the assessment without being bound by the CIT’s findings.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
Author Bio
