NEWS

1. CBDT notifies agreement between India-USA on exchange of Country-by-Country reports.

[Notification no 37/2019 Dated 25.04.2019]

2. CBDT notifies SEBI (Mutual Finds), Regulations, 1996 as ‘specified regulations’ for sec. 9A purpose.

[Notification No. 27/2019 Dated 20th March 2019]

3. CBDT increases tax free gratuity limit from Rs. 10 lakh to Rs. 20 lakh.

[Notification No. 16/2019 [S.O. 1213(E)], Dated 8th March 2019]

4. India and Brunei sign Tax Information Exchange Agreement

OECD

5. The Kingdom of the Netherlands and Georgia deposit instruments of acceptance or ratification for the Multilateral BEPS Convention

[Ref:-https://www.oecd.org/ctp/beps/the-kingdom-of-the-netherlands-and-georgia-deposit-instruments-of-acceptance-or-ratification-for-the-multilateral-beps-convention.htm ]

6. Global Forum on tax transparency reveals compliance ratings for further seven jurisdictions

[Ref:-http://www.oecd.org/tax/global-forum-on-tax-transparency-reveals-compliance-ratings-for-further-seven-jurisdictions.htm]

7. Public comments received on the possible solutions to the tax challenges of digitalisation

[Ref:-http://www.oecd.org/tax/beps/public-comments-received-on-the-possible-solutions-to-the-tax-challenges-of-digitalisation.htm]

8. Cameroon and Morocco launch new South-South co-operation programme under the Tax Inspectors Without Borders initiative

[Ref:-http://www.oecd.org/tax/cameroon-and-morocco-launch-new-south-south-co-operation-programme-under-the-tax-inspectors-without-borders-initiative.htm]

9. Morocco joins the Inclusive Framework on BEPS

[Ref:-http://www.oecd.org/tax/beps/inclusive-framework-on-beps-composition.pdf]

DOMESTIC TAX CASE LAWS

SUPREME COURT

1. Merely because some financial assistance has been given by father to sons to purchase properties, transactions cannot be said to be benami in nature. [Smt. P. Leelavathi v V. Shankarnarayana Rao [2019] 104 taxmann.com 153 (SC)]

2. HC couldn’t reject review petition merely on ground that SLP filed against its order was dismissed by SC. [Khoday Distilleries Ltd. v Mahadeshwara Sahakara Sakkare Karkhane Ltd. [2019] 104 taxmann.com 25 (SC)]

3. Nokia India case remanded to HC to frame substantial question of law. [Pr. CIT v Nokia India (P.) Ltd. [2019] 104 taxmann.com 156 (SC)]

4. Where High Court upheld Tribunal’s order deleting penalty under section 271(1)(c) by taking a view that alleged excess stock was not as a result of purchases made outside books of account, but was only on account of wrong entries in books of account, SLP filed against decision of High Court was to be dismissed. [Pr. CIT v Deccan Mining Syndicate (P.) Ltd. [2019] 104 taxmann.com 111 (SC)]

5. Where High Court upheld Tribunal’s order deleting penalty under section 271(1)(c) by taking a view that alleged excess stock was not as a result of purchases made outside books of account, but was only on account of wrong entries in books of account and, thus, there was no concealment of income on part of assessee, SLP filed against decision of High Court was to be dismissed. [Pr. CIT v Deccan Mining Syndicate (P.) Ltd. [2019] 104 taxmann.com 29 (SC)]

6. Tribunal being last Court of appeal on facts, its finding on question of fact is of significance, thus, where Tribunal did not correctly appreciate as to what Assessing Officer and CIT (A) held and what was their reasoning which led to their respective conclusion, matter was to be remanded back for adjudication afresh. [Pr. CIT v Ballarpur Industries Ltd. [2019] 104 taxmann.com 394 (SC)]

7. Where issue with regard to applicability of section 35D to assessee-bank was already pending consideration before High Court at instance of assessee in one appeal, present appeal was remanded to High Court for its decision on merits in accordance with law involving same issue. [Pr. CIT v Yes Bank Ltd. [2019] 104 taxmann.com 252 (SC)]

8. Appeal proceedings can continue even in case of company whose name has been struck off from ROC under section 560(5) of the Companies Act, 1956.[CIT v Gopal Shri Scrips (P.) Ltd. [2019] 104 taxmann.com 192 (SC)]

9. SLP dismissed against High Court ruling that audit objection being only information, reassessment notice based on said audit objection is not sustainable. [Asstt. CIT v FIS Global Business Solutions India (P.) Ltd [2019] 104 taxmann.com 169 (SC)]

10. SLP dismissed against High Court ruling that where amount on which service tax was payable had not been received by assessee from its clients to whom services were rendered and assessee had claimed unpaid service tax as its liability, same could not be disallowed under section 43B. [Pr. CIT v Tops Security Ltd [2019] 104 taxmann.com 168 (SC)]

11. Quoting of Aadhaar in ITR of A.Y. 2019-20 is mandatory even if return for preceding year is processed without it. [UOI v Shreya Sen [2019] 104 taxmann.com 160 (SC)]

12. Where High Court does not dismiss appeal in limine but has dismissed it after hearing both parties, in such a situation, High Court should frame questions and answer them by assigning reasons. [CIT v Rashtradoot (HUF) [2019] 104 taxmann.com 136 (SC)]

HIGH COURT

1. Where assessee-company, engaged in providing investment research services, paid an amount to its foreign associate entity which helped assessee to identify potential investors in different countries and its efforts had benefitted assessee in its business, impugned payment made by assessee was to be allowed under section 37(1). [Pr. CIT v Lok Advisory Services (P.) Ltd. [2019] 104 taxmann.com 67 (Delhi-HC)]

2. It is only after hearing objections of assessee, that Fair Market Value of capital asset as per ‘Guidance Value’ can be determined by authorities. [Jagannathan Sailaja Chitta v ITO [2019] 104 taxmann.com 131 (Madras-HC)]

3. No penalty u/s 158BFA if income disclosed during search by assessee doesn’t exceed the income determined by AO. [CIT v C. Najeeb [2019] 104 taxmann.com 250 (Kerala-HC)] 

4. Blending of tea leaves doesn’t amount to manufacturing; Sec. 154 rightly invoked to rectify the apparent mistake. [Hindustan Lever Ltd. v JCIT [2019] 104 taxmann.com 215 (Calcutta-HC)]

5. Where Assessing Officer did not furnish reasons for issuing reassessment notice so as to enable assessee to file objections and passed reassessment order without hearing assessee, it would be a breach of principles of natural justice against which writ petition could be filed before High Court. [North Eastern Electric Power Corporation v Pr. CIT [2019] 104 taxmann.com 268 (Meghalaya-HC)]

6. Where in order to set up a joint venture in insurance sector, a foreign company gave capital subsidy to assessee in order to enable it to contribute its share in share capital of joint venture company, amount of subsidy so received was to be regarded as capital receipt not liable to tax. [Sundaram Finance Ltd. v Asst CIT [2019] 104 taxmann.com 282 (Madras-HC)]

7. In case of hire purchase transactions, assessee was justified in adopting EMI method for taxability of interest income in its return even though assessee had adopted SOD method in its books of account on basis of guidelines issued by ICAI. [Sundaram Finance Ltd. v Asst CIT [2019] 104 taxmann.com 280 (Madras-HC)]

8. Where after expiry of four years from end of relevant year, Assessing Officer initiated reassessment proceedings on basis of information received from Investigation wing that ‘N’ Ltd. was a penny stock listed in BSE which used to facilitate introduction of unaccounted income of members in form of share capital and, assessee was one of those beneficiaries, in view of fact that there was no company by name of ‘N’ Ltd. which was in existence at relevant time period, impugned reassessment proceedings deserved to be quashed. [South Yarra Holdings v ITO [2019] 104 taxmann.com 216 (Bombay-HC)]

9. Where assessee-hospital availed catering services from ‘M’, in view of fact that services rendered by ‘M’ of cooking and serving food would fall within definition of ‘work’, assessee rightly deducted tax at source under section 194C while making payments to ‘M’.[CIT v Saifee Hospital Trust [2019] 104 taxmann.com 217 (Bombay-HC)]

10. Capital gain exemption shall be limited to actual sale consideration and not stamp duty value. [Jagdish C. Dhabalia v ITO [2019] 104 taxmann.com 208 (Bombay-HC)]

11. Where during pendency of appellate proceedings, Assessing officer directed assessee to remit 20 per cent of tax demand in order to allow its stay application without examining appropriateness of facts and circumstances of assessee’s case, impugned order passed by him was to be set aside. [Uthangarai Sri Vidya Mandir Educational and Social Welfare Trust v Asstt. CIT [2019] 104 taxmann.com 248 (Madras-HC)]

12. Payment gateway charges paid by Make My Trip to banks couldn’t be treated as commission to attract TDS u/s 194H. [Pr. CIT v [2019] 104 taxmann.com 263 (Delhi-HC)] 

13. HC set-aside CBDT’s Central Action Plan encouraging CIT(A) to pass revenue favoring orders. [Chamber of Tax Consultants v Central Board of Direct Taxes [2019] 104 taxmann.com 397 (Bombay-HC)]

14. Excise duty to be included in value of closing stock even if it was due but not paid by assessee. [CIT v Chhata Sugar Co. Ltd. [2019] 104 taxmann.com 206 (Allahabad-HC)]

15. Port trust constituted by Govt. to facilitate import and export is eligible for registration u/s 12AA. [CIT v Cochin Port Trust [2019] 104 taxmann.com 269 (Kerala-HC)]

16. HC justified additions as sum already paid to Abhishek Bachchan was claimed as liability. [Sunil T. Doshi v Addl. CIT [2019] 104 taxmann.com 376 (Bombay-HC)]

17. Where trading liability was incurred by assessee in course of its erstwhile timber business, which was discontinued ten years ago, Assessing Authority rightly inferred that such trading liability ceased to exist and trading credits were liable to be taxed as profits of business under section 41(1). [West Asia Exports & Imports (P.) Ltd. v Asstt. CIT [2019] 104 taxmann.com 170 (Madras-HC)]

18. HC grants unconditional stay on recovery of tax considering favourable ruling delivered by CIT(A) in another case. [ARCIL Retail Loan Portfolio 001-D- Trust v Pr. CIT [2019] 104 taxmann.com 355 (Bombay-HC)]

19. HC directs AO not to carry out recovery proceedings as disputed additions deleted by CIT(A) in other cases. [ARCIL Retail Loan Portfolio 001-D- Trust v Pr. CIT [2019] 104 taxmann.com 246 (Bombay-HC)]

20. Trust’s registration not to be cancelled if part of land was handed over to Co. for supplying RMC for school building. [Pr. CIT v Ashoka Education Foundation [2019] 104 taxmann.com 167 (Bombay-HC)]

21. Where impugned sums related to bogus accommodation entries were already verified and assessed in previous assessment year, Assessing Officer could not reopen assessment in current assessment year. [Jalaram Enterprises (P.) Ltd. v ITO [2019] 104 taxmann.com 134 (Bombay-HC)]

22. Sharing sum received from patients with consultant doctors in fixed ratio was liable for sec. 194J TDS. [CIT v Asian Heart Institute and Research Centre (P.) Ltd [2019] 104 taxmann.com 125 (Bombay-HC)]

23. Assessee couldn’t take shelter of non-communication of sec. 143(1) intimation for filing revised return. [Sham Anand Salunkhe v Pr. CIT [2019] 104 taxmann.com 108 (Bombay-HC)]

24. Where a search was carried out in course of which it was found that assessee was engaged in activity of ensuring admissions of students in educational institutions by paying illegal capitation fees, since assessee did not bring any material on record to enable revenue authorities to determine assessee’s earning from said dealings, addition made to his income by authorities below on estimate basis was to be confirmed. [Arvind Janardhan Pandey v ITO [2019] 104 taxmann.com 127 (Bombay-HC)]

25. Question couldn’t be raised for first time before HC if same wasn’t framed during appellate proceedings. [Pr. CIT v Envision Investment & Finance (P.) Ltd [2019] 104 taxmann.com 126 (Bombay-HC)]

26. Section 43B doesn’t cover the enhanced licence fee enforced for allotment of certain land by railways. [CIT v Jagdish Prasad Gupta [2019] 104 taxmann.com 232 (Delhi-HC)]

27. Exp. incurred to earn dividend income on investment made in sister concern was allowable exp. [Pr. CIT v Premier Finance & Trading Co. Ltd [2019] 104 taxmann.com 97 (Bombay-HC)]

28. Benefit of carry forward of loss wasn’t available if assessee didn’t file ITR for earlier assessment year. [Aberdeen Institutional Commingled Funds LLC v AAR [2019] 104 taxmann.com 63 (Bombay-HC)]

29. Gains on account of exchange rate variations of foreign loan taken for purchase of ships being connected to assessee’s core activities of operating qualifying ships would be entitled to benefit under Chapter XII-G. [Pr. CIT v M. Pallonji Shipping (P.) Ltd [2019] 104 taxmann.com 101 (Bombay-HC)]

30. Where assessee earned business income from renting out its property, and claimed depreciation on said building, claim of deduction under section 24 could not be allowed. [Shri Hardoi Baba Roller Flour Mills (P.) Ltd. v CIT [2019] 104 taxmann.com 100 (Allahabad-HC)]

31. Penalty u/s 271C could be levied only for failure to deposit TDS deducted u/s 194B and not u/s 194C. [Lakshadweep Development Corporation Ltd. v Addl. CIT [2019] 104 taxmann.com 10 (Kerala-HC)]

32. Where assessee-hospital made payments for services rendered towards maintenance of its medical equipments for proper and long functioning, it was required to deduction TDS under section 194C, and not under section 194J. [CIT v Saifee Hospital [2019] 104 taxmann.com 64 (Bombay-HC)]

33. No question of law arose if lower authorities held that assessee was involved in making bogus purchases. [Pooja Paper Trading Co (P.) Ltd. v ITO [2019] 104 taxmann.com 95 (Bombay-HC)]

INCOME TAX APPELLATE TRIBUNAL

1. ITAT allowed sec. 54F exemption on purchase of plot and making an advance to builder for construction thereon. [Smt. Sabita Devi Agarwal v ITO [2019] 104 taxmann.com 12 (Kolkata – Trib.)]

2. Where assessee transferred land but transaction could not be materialized as payments were stopped by purchaser, no profit or gains which could arise from such transfer would be brought to tax under section 45. [Appasaheb Baburao Lonkar v ITO [2019] 104 taxmann.com 130 (Pune – Trib.)]

3. Where, on amalgamation, assessee acquired shares held by amalgamating company and same were revalued on basis of fair market value (FMV), since such revaluation was mandated by order of High Court approving amalgamation scheme, difference arising between book value of shares shown in books of amalgamating company and FMV of shares which formed capital reserve of assessee, could not be added while computing book profit under section 115JB. [Priapus Developers (P.) Ltd. v Asst CIT [2019] 104 taxmann.com 298 (Delhi – Trib.)]

4. Amendment made to section 115BBE w.e.f. 1-4-2017 denying set off of losses is prospectively applicable; assessee could claim set off of losses, both current and brought forward, against its business income as well as deemed income under sections 68 to 69C in assessment years period to 1.4.2017. [Famina Knit Fabs v Asst CIT [2019] 104 taxmann.com 306 (Chandigarh – Trib.)]

5. Disallowance of exp. for TDS default shall be made even if payment is made by other person on behalf of assessee. [Addl CIT v Hiravati Marine Products (P.) Ltd. [2019] 104 taxmann.com 271 (Rajkot – Trib.)]

6. Bangalore Development Authority (BDA) constituted for setting up of residential layouts to ensure planned urban development of city and also providing plots and sites to economically weaker section of society at affordable and reasonable rates, could be said to be providing general public utility service within meaning of section 2(15). [Bangalore Development Authority v Addl. CIT [2019] 104 taxmann.com 266 (Bangalore – Trib.)]

7. Assessee a franchisee of BSNL, engaged in installing, maintaining and operating EPEX system to support functioning of BSNL, could be treated to have provided ‘basic telephonic services’ and, thus, was eligible for deduction under section 80-IA(4)(ii). [Asstt. CIT v Himanshu v Shah [2019] 104 taxmann.com 279 (Ahmedabad – Trib.) (SB)]

8. Share valuation report duly accepted by AO couldn’t be by tinkered with by CIT(A). [India Today Online (P.) Ltd. v ITO [2019] 104 taxmann.com 385 (Delhi – Trib.)]

9. Where assessee-company made donation to a Trust for training of its employees and their children who were, in turn, recruited by assessee-company, business purpose of assessee-company being fulfilled, assessee-company was entitled to deduction of donation amount. [Technocraft Industries (India) Ltd. v Dy. CIT [2019] 104 taxmann.com 265 (Mumbai – Trib.)]

10. Where fees were paid for registration of products in Iraq, same could not be said to be payment of kickbacks to Iraqi regime for doing business; hence, deduction was to be allowed under section 37. [Dy.CIT v Core Healthcare Ltd. [2019] 104 taxmann.com 264 (Ahmedabad – Trib.)]

11. No addition in hands of company’s director if cash seized from him belonged to Co. itself. [Awanindra Singh v Dy. CIT [2019] 104 taxmann.com 171 (Delhi – Trib.)]

12. No addition can be made u/s 68 if assessee has complied with requirements of RBI for issue of shares. [ITO v Chiripal Poly Films Ltd [2019] 104 taxmann.com 172 (Mumbai – Trib.)]

13. No disallowance of interest on loan if AO failed to prove that such loan was used to provide interest-free advances. [Unitech Ltd. v Dy. CIT [2019] 104 taxmann.com 165 (Delhi – Trib.)]

14. Service tax reimbursed by ONGC to NR to be excluded from presumptive taxation u/s 44B. [DIT v Schlumberger Asia Services Ltd. [2019] 104 taxmann.com 353 (Uttarakhand-HC)]

15. ITAT allowed sec. 54 exemption in respect of land purchased 1 year before transfer of original asset. [Sohanlal Mohanlal Bhandari v Asstt. CIT [2019] 104 taxmann.com 161 (Pune – Trib.)]

16. No concealment penalty if concealed income/inaccurate income had no effect on taxable income. [Dy. CIT v Kulwant Singh [2019] 104 taxmann.com 340 (Chandigarh – Trib.)]

17. No denial of exemption to school merely because it earned profit from selling books and uniforms to students. [New Amazing Shiksha Society v ITO [2019] 104 taxmann.com 164 (Delhi – Trib.)]

18. Brought forward business loss and long term capital loss can be set off against short term capital gain computed under section 50 on sale of factory building being depreciable asset. [ITO v Smart Sensors & Transducers Ltd. [2019] 104 taxmann.com 129 (Mumbai – Trib.)]

19. Where investment in purchase of a residential house was made within stipulated period, belated construction or possession would not be a ground to deny claim of exemption. [ITO v Smt. Saroj Rani Gupta [2019] 104 taxmann.com 132 (Kolkata – Trib.)]

20. Banking companies maintaining their accounts as per Banking Regulation Act, 1949 are not covered by section 115JA. [Standard Chartered Bank v Jt. CIT [2019] 104 taxmann.com 236 (Mumbai – Trib.)]

21. Revisionary proceedings could be initiated by CIT if view taken by AO was clearly unsustainable in law. [Babulal S. Solanki v ITO [2019] 104 taxmann.com 155 (Ahmedabad – Trib.)]

22. ITAT justified sec. 68 additions as shares issued at huge premium were subscribed to by persons having nominal income. [Ayaana Comtrade (P.) Ltd. v ITO [2019] 104 taxmann.com 66 (Ahmedabad – Trib.)]

23. Validity of scrutiny notice became academic if search was carried out on assessee’s premises. [Dy. CIT v Rajlaxmi Denim [2019] 104 taxmann.com 65 (Jaipur – Trib.)]

24. Maharashtra State Board of Technical Education falls under definition of ‘State’ as per Article 12 of Constitution and its income is eligible for exemption under section 10(46). [Maharashtra State Board of Technical Education v ITO [2019] 104 taxmann.com 98 (Mumbai – Trib.)]

25. Rectification application can be filed only for issues which are decided by order passed by authority. [Winphoria Networks India (P.) Ltd. v Jt. CIT [2019] 104 taxmann.com 93 (Bangalore – Trib.)]

TRANSFER PRICING CASE LAWS

1. TPO erred in computing brand value of “Sony” on basis of Cos whose brands were abandoned. [Sony India (P.) Ltd. v Addl. CIT [2019] 104 taxmann.com 238 (Delhi – Trib.)] 

2. providing support services to its AE couldn’t be compared with a Co. doing World Bank sponsored projects. [Dy. CIT v Terex India (P.) Ltd. [2019] 104 taxmann.com 281 (Delhi – Trib.)] 

3. AO couldn’t raise the issue of determination of ALP at appellate stage for which no reference was made to TPO earlier. [Star India (P.) Ltd. v Asst CIT [2019] 104 taxmann.com 251 (Mumbai – Trib.)] 

4. Internal CUP method can’t be used for computing ALP if transactions with AEs are fundamentally of different nature. [Gulbrandsen Chemicals (P.) Ltd. v Dy. CIT [2019] 104 taxmann.com 253 (Ahmedabad – Trib.)] 

5. ALP of interest on loan advanced to foreign subsidiary should be computed on basis of foreign lending rate. [Technocraft Industries (India) Ltd. v Dy. CIT [2019] 104 taxmann.com 265 (Mumbai – Trib.)] 

6. TPO couldn’t deny working capital adjustment merely on ground that assessee was in service industry. [Asstt. CIT v Comverse Kenan India (P.) Ltd [2019] 104 taxmann.com 214 (Delhi – Trib.)] 

7. Company making losses for 3 consecutive years excluded from the list of comparables. [Sabic Innovative Plastics India (P.) Ltd. v Dy. CIT [2019] 104 taxmann.com 162 (Ahmedabad – Trib.)] 

8. Assessing Officer is bound by order passed by TPO as he is required to compute total income in conformity with ALP determined by TPO. [Carraro India (P.) Ltd. v Dy. CIT [2019] 104 taxmann.com 166 (Pune – Trib.)]

9. If payment of royalty is below rate prescribed under Press Note No. 9 (2000 series) issued by Govt. of India, Ministry of Commerce and Industry, same has to be considered at ALP.[Carraro India (P.) Ltd. v Dy. CIT [2019] 104 taxmann.com 166 (Pune – Trib.)]

INTERNATIONAL TAXATION CASE LAWS 

1. Where assessee succeeded in establishing that he was a resident of US under article 4 of DTAA between India and USA for period he was on Indian assignment, assessee would be entitled to treaty exemption and accordingly, his income for aforesaid period could not have been brought to tax in India. [Dy. CIT v Shri Kumar Sanjeev Ranjan [2019] 104 taxmann.com 183 (Bangalore – Trib.)]

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

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2 Comments

  1. CHIRAG GALA says:

    Superb compilation, never seen such an information in single article till date. Thanks a lot for such a painstaking article in brief.

    Regards.

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