NEWS 

DIRECT TAX

1. CBDT notify the rules for making permanent account number inoperative.

[Ref: Notification No.11/2020/F.No. 370149/166/2019-TPL]

2. ​Procedure of PAN allotment through Common Application Form (CAF) along with registration of Foreign Portfolio Investors (FPIs) with SEBl under Department of Economic Affairs and KYC for opening Bank and Demat Account.

[Ref: Notification No.11/2020/F.No. Pr. DGIT (S)/ ADG (S)-1/FPI/04/2019-20/Part]

3. CBDT issues clarification on the applicability of TDS provisions on Mutual Fund dividend.

4. CBDT issues clarification on the new provision pertaining to residence in India.

5. CBDT revises definition of ‘Unauthorised Colony’ for the purpose exemption u/s 56(2)(x).

[Ref: NOTIFICATION G.S.R. 124(E) [NO. 12/2020/F. NO. 370142/29/2019-TPL], DATED 17-2-2020]

6.CBDT notifies Forms to exercise option under new regime of section 115BAA and 115BAB

[Ref: NOTIFICATION G.S.R. 110(E) [NO. 10/2020/F.NO./370142/34/2019-TPL], DATED 12-2-2020]

7. CBDT notifies ‘Pr. DGIT (System)’ as ‘specified Income-tax authority’ for furnishing info. to SEBI.

[Ref: ORDER NO. [F. NO. 225/297/2019/ITA.II], DATED 10-2-2020]

8. CBDT releases MLI synthesised text for India- Malta & India-Georgia tax treaties.

9. Govt. approves protocol amending India-Sri Lanka DTAA

[Ref: PRESS RELEASE, DATED 12-2-2020]

10. CBDT releases MLI synthesised text for India-Luxembourg tax treaty.

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Income tax

DOMESTIC TAX CASE LAWS

SUPREME COURT

1. SLP granted against High Court ruling that where assessee had set up a captive power generating unit and provided electricity to its another unit and claimed deduction under section 80-IA in respect of profits arising out of such activity, valuation of electricity provided to another unit should be at rate at which electricity distribution companies were allowed to supply electricity to consumers. [CIT v Reliance Industries Ltd. [2020] 114 taxmann.com 320 (SC)]

2. SLP dismissed as withdrawn due to low tax effect against High Court ruling that where assessee made payment of non-compete fee to two of its directors, since advantage of restraining individuals from engaging in competition was in field of facilitating assessee’s own business and rendering it more profitable and there was no increase in fixed capital, payment in question was to be allowed as revenue expenditure. [Jt. CIT v Hatsun Agro Products Ltd. [2020] 114 taxmann.com 172 (SC)]

3.  A newly registered Trust is entitled for registration under section 12AA on basis of its objects, without any activity having been undertaken. [Ananda Social & Educational Trust v CIT [2020] 114 taxmann.com 693 (SC)]

4. SLP granted against High Court ruling that provisions of section 115JB as it stood prior to its amendment by virtue of Finance Act, 2012, would not be applicable to a banking company governed by provisions of Banking Regulation Act, 1949. [Pr. CIT v Bank of India [2020] 114 taxmann.com 257 (SC)]

5. SLP granted against High Court ruling that where in respect of share capital received from various shareholders, assessee failed to establish identity, genuineness and creditworthiness of said persons, revenue authorities were justified in adding amount in question to assessee’s taxable income under section 68. [Jet Lite (India) Ltd. v CIT [2020] 114 taxmann.com 248 (SC)]

6. SLP dismissed as withdrawn due to low tax effect against High Court ruling that where assessee-company carrying on business of broadcasting of television channels, paid placement charges to cable operators for placing signals on a preferred band, it was a part of work of broadcasting and telecasting covered by sub-clause (b) of clause (iv) of Explanation to section 194C and thus, assessee was justified in deducting tax at source under section 194C while making payments in question. [CIT v Disney Broadcasting (India) Ltd. [2020] 114 taxmann.com 249 (SC)]

7. Where High Court upheld Tribunal’s order deleting addition made in case of assessee under section 68 on account of share application money in assessment under section 153C, read with section 143(3) on ground that during search, no incriminating material was found to support such addition, SLP filed against order said was to be granted. [Pr. CIT v Dhananjay International Ltd. [2020] 114 taxmann.com 351 (SC)]

8. Where High Court upheld Tribunal’s order holding that amount paid by assessee to ‘G’ towards vacating its premises was to be regarded as revenue expenditure, SLP filed against said order was to be dismissed. [CIT v Hongkong & Shanghai Banking Corporation Ltd. [2020] 114 taxmann.com 276 (SC)]

9. Where High Court upheld Tribunal’s order holding that interest under section 244A was to be allowed on self assessment tax refunded to assessee, SLP filed against said order was to be granted. [Pr. CIT v Bank of India [2020] 114 taxmann.com 189 (SC)]

10. Where In appellate proceedings, High Court held that provisions of section 115JB, as it stood at relevant time, would not apply to Banking Companies or Insurance Companies, SLP filed against said order was to be granted. [Pr. CIT v New India Assurance Co. Ltd. [2020] 114 taxmann.com 223 (SC)]

11. Where High Court upheld Tribunal’s order holding that reassessment proceedings could not be initiated on ground that only one fourth of expenses on acquisition of film rights could be allowed as deduction because said issue had been examined at time of assessment itself, SLP filed against said order was to be dismissed. [Pr. CIT v Zee Media Corpn. Ltd. [2020] 114 taxmann.com 193 (SC)]

12. Where in case of assessee, a public charitable trust, reassessment proceedings were initiated on ground that it did not offer anonymous cash donations to tax under section 115BBC and, validity of said reassessment proceedings were challenged by filing a writ petition, High Court justifiably held that it would not be appropriate to exercise jurisdiction under article 226 as similar issue was already pending before Commissioner (Appeals) for subsequent assessment year. [Shri Saibaba Sansthan Trust (Shirdi) v UOI [2020] 114 taxmann.com 489 (SC)]

13. Where High Court upheld Tribunal’s order allowing assessee’s claim for registration under section 12AA by taking a view that entire expenditure incurred by assessee was for purposes of running a school only, SLP filed against order of running of High Court was to be dismissed. [CIT v Rural Education And Women Welfare Society Sas Nagar [2020] 114 taxmann.com 191 (SC)]

14. Where High Court upheld Tribunal’s order holding that certain amount received by assessee, a director of ‘C’ Ltd., from said company constituted deemed dividend under section 2(22)(e) and not as advance in respect of sale of land, SLP filed against said order was to be dismissed. [Vikram Krishna v Pr. CIT [2020] 114 taxmann.com 197 (SC)]

15. Where High Court held that assessee undertaking which carried out ‘substantial expansion’ within specified window period i.e. between 7-1-2003 and 1-4-2012, would be entitled to deduction on profits at rate of 100 per cent, under section 80-IC post said expansion, SLP filed against said order was to be dismissed. [Pr. CIT v SBS Biotech Unit-I [2020] 114 taxmann.com 100 (SC)]

16. Where High Court finding that in view of dispute relating to amount received in violation of provisions of section 269SS, impugned penalty order passed under section 271D was to be set aside and, matter was to be remanded back for disposed afresh, SLP filed against said order was to be dismissed. [Dy. CIT v Asian Consolidated Industrial Ltd. [2020] 114 taxmann.com 106 (SC)]

17. Where High Court upheld Tribunal’s order holding that in case of assessee, a builder, expenses incurred on brokerage and commission on booking of properties being a finance/selling expenses, were allowable in full, SLP filed against said order was to be dismissed. [Pr. CIT v DLF Home Developers Ltd. [2020] 114 taxmann.com 98 (SC)]

18. SLP granted against High Court ruling that while considering claim made by an assessee-society for deduction under section 80P after introduction of sub-section (4) thereof, Assessing Officer cannot extend benefits available, by merely looking at class of society as per certificate of registration issued under Central or State Co-operative Societies Act and Rules made thereunder, rather he has to conduct an enquiry into factual situation as to activities of assessee-society and arrive at a conclusion whether benefits can be extended or not in light of provisions under sub-section (4) of section 80P. [Mavilayi Service Cooperative Bank Ltd. v CIT [2020] 114 taxmann.com 85 (SC)]

19. SLP dismissed due to low tax effect against High Court ruling that mere charging of fee from members or non-members for rendering services like training, conducting seminars would not ipso-facto lead to denial of exemption under section 11 when dominant object of assessee remained charitable and aforesaid activities were only incidental to main activity of assessee. [Pr. CIT v Fertilizer Association of India [2020] 114 taxmann.com 83 (SC)]

20. Where High Court upheld Tribunal’s order holding that search carried in case of assessee was valid because warrant had been issued in name of individual who was actively involved in affairs of assessee-firm, SLP filed against said order was to be dismissed. [Chekkattu Chitty Funds v CIT [2020] 113 taxmann.com 606 (SC)]

21. Where High Court, merely following principle of consistency, upheld Tribunal’s order setting aside revisional order passed by Commissioner under section 263, SLP filed against said order was to be granted. [Pr. CIT v Indian Farmers Fertilizers Cooperative Ltd. [2020] 113 taxmann.com 599 (SC)]

22. Where High Court upheld Tribunal’s order holding that Assessing Officer could not have initiated and passed an assessment order under section 153C for relevant assessment year as same was beyond period of six years from end of financial year in which satisfaction note was recorded by Assessing Officer, SLP filed against said order was to be dismissed. [Pr. CIT v Raj Buildworth (P.) Ltd. [2020] 113 taxmann.com 601 (SC)]

23. Where High Court Confirmed levy of penalty under section 271(1)(c) on ground that assessee had wrongly debited certain amount in profit and loss account as loss in dealing with non-banking business even though said amount was not an expense but an appropriation of profit, SLP filed against said order was to be dismissed. [Hamirpur District Cooperative Bank Ltd. v CIT [2020] 113 taxmann.com 447 (SC)]

24. Where Hight Court upheld Tribunal’s order deleting penalty imposed under section 158 BFA on ground that addition to undisclosed income of assessee was on estimate basis rather than on account of deliberate suppression of income, SLP filed against said order was to be dismissed due to low tax effect. [CIT v Bagga Distilleries Hyderabad (P.) Ltd. [2020] 113 taxmann.com 603 (SC)]

25. SLP granted against High Court ruling that where assessee, engaged in business of manufacturing of ENA (Extra Neutral Alcohol), gave an affidavit to Excise department that excise verification issued by Excise Authority of importing State would be submitted within 90 days of exporting ENA from its distillery, since assessee failed to comply with said condition, payment made in respect of discharging contractual obligation to indemnify Excise department could not be regarded as penal in nature and, thus, assessee’s claim for deduction of same under section 37(1) was to be allowed. [Pr. CIT v Agribiotech Industries Ltd. [2020] 113 taxmann.com 391 (SC)]

26. SLP dismissed against High Court ruling that where assessee educational society, set up with various aims and objects including improvement in standard of education of backward students of rural areas, was running a school and Commissioner had not doubted genuineness of its aims and objects, application under section 12A could not be rejected merely on ground that secretary of society was getting lease rent for land given to society for running school or his wife who had requisite qualification was teaching in school and was being paid salary. [CIT v Ambala Public Educational Society [2020] 113 taxmann.com 404 (SC)]

27. Unutilised credit under MODVAT scheme does not qualify for deductions under section 43B. [Maruti Suzuki India Ltd. v CIT [2020] 114 taxmann.com 129 (SC)]

28. SLP dismissed against High Court ruling that when in terms of section 151(2), sanction to issue notice under section 148 has to be issued by Additional Commissioner, reopening of assessment with approval of Commissioner was unsustainable. [CIT v Aquatic Remedies (P.) Ltd. [2020] 113 taxmann.com 451 (SC)]

29. Where High Court held that in case of assessee, a non-resident company, which executed projects in India, it was obligation of payer to deduct entire tax at source and, assessee was not liable to pay any advance tax and, thus, interest under section 234B could not be charged from it, SLP filed against said order was to be granted. [CIT v Andritz AG [2020] 113 taxmann.com 408 (SC)]

30. SLP dismissed against High Court ruling that where Tribunal set aside directions issued by Commissioner (Appeals) to Assessing Officer to conduct enquiries for verifying genuineness of certain purchases made by assessee, in view of fact that Tribunal being last fact finding authority, should have considered materials on record, especially, when it had came on record subsequently that parties in question had not filed return of income impugned order passed by it was to be set aside. [Meerut Roller Flour Mills (P.) Ltd. v Pr. CIT [2020] 113 taxmann.com 522 (SC)] 

31. SLP dismissed against High Court ruling that there is no bar for an assessee or declarant to claim credit of advance tax and TDS paid previously relating to assessment years for which it seeks benefit under Income Declaration Scheme, 2016. [Central Board of Direct Taxes v Kumudam Publications (P.) Ltd. [2020] 113 taxmann.com 454 (SC)]

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HIGH COURT

1. Mere acquittal of assessee in criminal proceedings could not itself result in deletion of addition in assessee’s hands in income-tax proceedings; authorities under Act should arrive at their own findings on basis of material collected during criminal proceedings. [CIT v R.N. Jayaprakash [2020] 114 taxmann.com 169 (Madras)]

2. Where PCIT considering wilful evasion of payments of tax, rejected assessee’s application for waiver of interest under section 220(2A), since there was no error apparent on record, review petition filed by assessee was to be dismissed. [Mansukhlal v ITD [2020] 114 taxmann.com 177 (Madhya Pradesh)]

3.Interest paid on foreign currency loan is exempt under section 10(15)(f) even when assessee-company has utilised said loan for repayment of another loan taken earlier towards its working capital requirement meaning that loan was utilised indirectly for industrial development in India; there would be no disallowance under section 40(a). [CIT v Seven Seas Distillery (P.) Ltd. [2020] 114 taxmann.com 166 (Madras)]

4. Where assessee member’s club claimed that interest on fixed deposits with bank security deposits was outside purview of taxation on principle of mutuality and assessment was completed accordingly but proceedings were initiated under section 147 as after expiry of four years from end of relevant assessment year on basis of subsequent judgment dated 14-1-2013, of Supreme Court in case of M/s Bangalore Club v. Commissioner of Income Tax & Anr. reported in (2013) 29 taxmann.com 29 (SC) holding that income earned by way of interest for corporate members of a club is taxable income and does not come under ambit of mutuality principle and therefore, interest earned on deposits with bank which were members of club was taxable, since subsequent decision of Supreme Court reversing legal position prevailing at time of regular assessment cannot be called an omission or failure on part of assessee in disclosing fully and truly material facts necessary for relevant assessment impugned proceedings were to be quashed. [Calcutta Club Ltd. v ITO [2020] 114 taxmann.com 560 (Calcutta)]

5. Where assessee trust’s object was to pay pension to employees of GCDA or their dependents from corpus created out of contributions made by said employees themselves, such an object could not be an object of general public utility, therefore, registration under section 12AA could not be granted to assessee. [GCDA Employees Pension Fund Trust v CIT [2020] 114 taxmann.com 170 (Kerala)]

6. Assessment proceeding concluded without proper determination of facts by proper exchange and flow of correspondence between assessee and Assessing Officer were to be set aside, as, in view of introduction of E-Governance for conduct of assessment proceedings electronically, assessment proceedings no longer involved human interaction and were based on records alone. Thus, such proceedings could lead to erroneous assessment if officers were not able to understand transactions and statement of accounts of an assessee without a personal hearing. [Salem Sree Ramavilas Chit Company (P.) Ltd. v Dy. CIT [2020] 114 taxmann.com 492 (Madras)]

7. Amendment brought in section 115BBE(2) by Finance Act, 2016 whereby set off of losses against income referred to in section 68 was denied, would be effective from 1-4-2017. [Vijaya Hospitality and Resorts Ltd. v CIT [2020] 114 taxmann.com 91 (Kerala)]

8. Where India Habitat Centre, inter alia set up with primary aim and objective to promote habitat concept, was registered as a charitable trust, principle of mutuality for computation of its income was not required to be gone into as income was to be computed as per sections 11, 12 and 13. [CIT v India Habitat Centre [2020] 114 taxmann.com 84 (Delhi)]

9. Assessment order for purpose of chapter XIX-A, could be said to have been made when it was served upon assessee concerned, not when it was passed and dispatched through post. [M3M India Holdings (P.) Ltd. v ITSC [2020] 114 taxmann.com 92 (Punjab & Haryana)]

10. Where in course of survey operation under section 133A of the Income-tax Act, 1961, revenue authorities found that petitioner helped in tax evasion by facilitating payments against bogus bills and invoices raised to ‘P’ Ltd. by entities based in foreign jurisdiction and, thus, proceedings for Look Out Circular (LOC) were initiated against him under section 53, in view of fact that petitioner had joined investigation as and when called by IO and his statements had already been recorded wherein he had made some admissions as well, it was opined that there was no justification in keeping the LOC alive and same was, therefore, directed to be recalled by the issuing authority. [Lakshmi Satyanarayana Dutt Tadikonda v UOI [2020] 114 taxmann.com 424 (Delhi)]

11. Where appellant-company alleged that member of ICAI i.e. ‘J’ was guilty of professional misconduct on account of verifying audit report containing false statements in respect of seven companies, in view of fact that appellant had no dealing with said companies and complaint was made after seven years of last audit report being signed by ‘J’ in respect of said companies, Director (Discipline) of ICAI was justified in dismissing complaint filed by appellant. [Wholesale Trading Services (P.) Ltd. v ICAI [2020] 114 taxmann.com 39 (Delhi)]

12. Where assessee’s appeal challenging penalty imposed under section 271(1)(c) was pending for disposal before Tribunal, and meanwhile application for stay of demand of penalty was filed by assessee, it was obligatory on part of Assessing Officer to consider said application subject to decision of Tribunal. [Sasken Technologies Ltd. v Jt. CIT [2020] 113 taxmann.com 589 (Karnataka)]

13. Where assessee was unable to cull out requisite details from books of account furnished during assessment proceedings and further accounts of assesses were voluminous and complex to handle for Assessing Officer and, further, a fact of diversion of funds by assesses had also came out in forensic audit report of SEBI, Assessing Officer was justified in issueing notice for special audit under section 142(2A). [Religare Finvest Ltd. Dy. CIT [2020] 113 taxmann.com 573 (Delhi)]

14. Where remand made by Tribunal to Assessing Officer was a complete and wholesale remand for framing a fresh assessment, Assessing Officer could not deny evaluating fresh claim raised by assessee during remand assessment proceedings. [Curewel (India) Ltd. v ITO [2020] 113 taxmann.com 583 (Delhi)]

15. Where in case of assessee, engaged in business of real estate, Assessing Officer initiated reassessment proceedings on ground that EDC paid by assessee to Haryana Urban Development Authority (HUDA) were subject to TDS under section 194 and in absence of TDS, amount would be subject to disallowance under section 40(a)(ia), in view of fact that Assessing Officer had not given any basis for forming his opinion that how EDC which was in nature of statutory fee, was subject to deduction of tax at source under section 194, impugned reassessment proceedings deserved to be quashed. [BPTP Ltd. v Pr. CIT [2020] 113 taxmann.com 587 (Delhi)]

16. Unless an order finally adjudicates lis, it cannot be treated as an order from which appeal lies and hence, an appeal against interim order passed by Single Judge would not be maintainable. [Amolak Singh Bhatia v Pr. CIT [2020] 113 taxmann.com 576 (Chhattisgarh)]

17. Where there was no record of satisfaction by Assessing Officer in relation to any concealment of income or furnishing of inaccurate particulars by assessee in notice issued for initiation of penalty proceedings under section 271(1)(c), same being sine qua non for initiation of such proceedings, Tribunal had rightly ordered to drop penalty proceedings. [Pr. CIT v Goa Coastal Resorts and Recreation (P.) Ltd. [2020] 113 taxmann.com 574 (Bombay)]

18. Where assessee an army officer with a bona fide mistake paid income tax on his income from disability pension which was completely exempted from tax, such amount was to be refunded to assessee. [Madan Gopal Singh Nagi v CIT [2020] 113 taxmann.com 581 (Madhya Pradesh)]

19. Assessee’s plea of genuine hardship for waiver of interest under section 220(2A) could not have been rejected by revenue without calling for additional particulars, just by citing reason, that assessee was having land and machineries as even balance sheet of assessee did not reflect any liquid cash, deposit, share capital or debentures in name of assessee. [TCV Engineering Ltd. v Asst. CIT [2020] 113 taxmann.com 578 (Madras)]

20. Where assessee statutory authority was constituted under provision of Karnataka Urban Development Authority Act, 1987 with an object of planing and promoting and securing development of an urban area and for that purpose to acquire, hold, manage and dispose off movable and immovable property and to carry out building and engineering operations for development of an urban area, activity of assessee would be considered as charitable activity as per section 2(15). [CIT v Hubli Dharwad Urban Development Authority [2020] 113 taxmann.com 580 (Karnataka)]

21. Where Assessing Officer issued notice under section 148 on ground that income chargeable to tax had escaped assessment doubting genuineness of transaction of issue of shares by assessee-company to its existing shareholders, since said issue was subject matter of regular assessment proceedings under section 143(3), it was case of change of opinion by Assessing Officer, therefore, impugned notice was to be quashed. [Uni VTL Precision (P.) Ltd. v Dy. CIT [2020] 113 taxmann.com 533 (Bombay)]

22. Interest paid on borrowed funds utilized for investment in group companies for strategic business purpose was allowable as deduction under section 36(1)(iii). [CIT v KEC International Ltd. [2020] 113 taxmann.com 532 (Madras)]

23. Where in case of assessee, Assessing Officer initiated reassessment proceedings on ground that assessee had received accommodation entries in form of share capital from two sham companies, in view of fact that even though identity of investor companies might have been established, neither financial capacity/ creditworthiness of said investor companies, nor genuineness of transaction was examined at time of assessment, validity of impugned reassessment proceedings deserved to be upheld. [RDS Project Ltd. v Asst CIT [2020] 113 taxmann.com 534 (Delhi)]

24. Where AO had already considered one-time settlement by assessee with its banker during original scrutiny assessment proceedings as capital receipt, thereafter AO could not initiate reassessment proceedings merely on basis of change of opinion that said relief was revenue receipt. [Pr. CIT v Everlon Synthetics (P.) Ltd. [2020] 113 taxmann.com 442 (Bombay)]

25. Where assessee accepted that it was providing accommodation entries to various parties and for same it had opened a fictitious bank account in which amounts were deposited and later on transferred to an assessee’s concern, merely because these amounts were included in total turnover would not ipso facto shut out an inquiry into credits, thus, addition of peak credit under section 68 was justified. [CIT v JRD Stock Brokers (P.) Ltd. [2020] 113 taxmann.com 453 (Delhi)]

26. Where High Court quashed assessment order passed in case of assessee with direction to make fresh assessment but on appeal, Supreme Court stayed High Court’s order, fresh assessment order could not have been passed by AO. [Anju Singh v Asst. CIT [2020] 113 taxmann.com 383 (Patna)]

27. Where in case of assessee, a contractor, Assessing Officer made addition in respect of two bills which were raised by assessee but not accounted for in its return even though it was following mercantile system of accounting, in view of fact that one of said bill was raised after termination of contract whereas nothing was received in respect of second bill because payer was in severe financial crisis, impugned addition was to be deleted. [CIT v Bechtel International Inc. [2020] 113 taxmann.com 514 (Bombay)]

28. Where appellant failed to Furnish report of audit in prescribed form accompanied with a further report by an Accountant in prescribed form, however, failed to prove that there existed no ‘sufficient cause’ for failure or that there existed any ‘reasonable cause’ for such failure, order of penalty was justified. [Peroorkkada Service Co-operative Bank Ltd. v ITO [2020] 114 taxmann.com 18 (Kerala)]

29. Prior to working out disallowance under section 14A by applying Rule 8D, Assessing Officer must record a conclusion that he is not satisfied with suo motu disallowance offered by assessee. [Pr. CIT v Bombay Stock Exchange Ltd.n [2020] 113 taxmann.com 303 (Bombay)]

30. Where penalty was imposed on assessee-society under sections 271D and 271E, in view of weak financial position, appeal was directed to be passed within three months and till then recovery was kept in abeyance. [Panniyankara Service Co-operative Bank Kallai, Kozhikode-673-003 v Jt. CIT [2020] 113 taxmann.com 335 (Kerala)]

31. Where there was a clear admission by assessee firm that excess stock found during survey was added in its stock register but no corresponding entry was passed in books of account, it could be considered that investment in such stock was made out of undisclosed source, thus, addition was to be made under section 69B in respect of such excess stock. [SVS Oil Mills v Asst CIT (non-Corporate) [2020] 113 taxmann.com 388 (Madras)]

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INCOME TAX APPELLATE TRIBUNAL

1. Where assessee owned property which remained vacant throughout relevant year due to obstruction caused by ongoing Metro Project just before entrance of premises, no addition on account of notional rent was warranted. [Empire Capital (P.) Ltd. v. Asst. CIT [2020] 114 taxmann.com 180 (Mumbai – Trib.)]

2. Where assessee sold shares to a non-resident company and Assessing Officer observing difference between share premium received in excess of valuation as determined under rule 11UA treated same as income from other sources as per provisions of section 56(2)(viib), since those very shares were sold in next financial year at much higher amount to a non-resident buyer and, further, there was no case of unaccounted money being brought in by assessee in garb of stated share premium, impugned addition under section 56(2)(viib) was unjustified. [Clearview Healthcare (P.) Ltd. v ITO [2020] 114 taxmann.com 167 (Delhi – Trib.)]

3. Where assessee, an export oriented undertaking, earned interest from fixed deposits from profits of business, even though it did not partake character of profit and gain from sale of article, it was income derived from consideration realized by export of article, therefore, receipt of such interest income was allowable as exemption under section 10A. [Affliated Computer Services of India (P.) Ltd. v Dy. CIT [2020] 114 taxmann.com 178 (Bangalore – Trib.)]

4. Where assessee sought a stay on collection/recovery of outstanding tax and interest in respect of demand created as a result of assessment under section 143(3) read with section 144C(13) and Commissioner (International Taxation) had already granted stay on collection of disputed demands till disposal of appeal on condition that assessee paid 30 per cent of demand, since authorities below had dealt with stay petitions of assessee in a reasonable manner and there was no perversity or unreasonableness in their approach, no occasion was there for Tribunal to interfere in impugned matter. [Kersiwood Holdings Ltd. v Asst. CIT [2020] 114 taxmann.com 171 (Mumbai – Trib.)]

5.Tribunal cannot review and amend its own decision unless it is permitted to do so by statute. [Sujauddian kasimsab Sayyed v ITO [2020] 114 taxmann.com 168 (Mumbai – Trib.)]

6. Where assessee made provision for leave encashment on actuarial basis, same being in nature of ascertained liability, could not be added back for purpose of determining ‘book profit’ under section 115JB. Further, In terms of clause (a) of ‘Explanation’ to section 115JB ”amount of income­tax paid or payable, and provision therefore” is liable to be added for computing ‘book profit’ under section 115JB, however, as there is no such provision for making addition with regard to wealth tax, Assessing Officer cannot add same for computing ‘book profit’ of assessee company under section 115JB. [Caprihans India Ltd. v Dy. CIT [2020] 114 taxmann.com 538 (Mumbai – Trib.)]

7. Assessee engaged in import of diamonds for re-export from SEZ unit, same being trading activity falling within ambit of ‘services’ as per SEZ Rules, was entitled to deduction under section 10AA. [Solitaire Diamond Exports v ITO [2020] 114 taxmann.com 176 (Mumbai – Trib.)]

8. Amendment brought in by Finance Act 2013 in Explanation 1 to section 10 (10D) is prospective in nature and, thus, where keyman insurance policy taken by a company in name of assessee’s husband was assigned to assessee in year 2013, it would continue to be an ordinary policy and consequently, sum received by her on maturity of said policy would not be taxable by virtue of amended section 10(10D). [Smt. Harleen Kaur Bhatia v Pr. CIT [2020] 114 taxmann.com 183 (Indore – Trib.)]

9. Assessee Company was primarily engaged in business of trading and manufacturing of mobile handsets, spare parts and accessories. It entered into an agreement for supply of cellular mobile phones with HCL and from this agreement between assessee and HCL, it was evident that relationship between assessee and HCL was that of principal to principal and not that of principal to agent and discount which was offered to distributors was given for promotion of sales. There was absence of a principal-agent relationship and thus, benefit extended to distributors could not be treated as commission liable for withholding tax under section 194H. [Nokia India (P.) Ltd. v Dy. CIT [2020] 114 taxmann.com 442 (Delhi – Trib.)]

10. Where AO made addition to assessee’s income under section 68 on ground that assessee had taken accommodation entry from a penny stock company i.e. ‘U’ Ltd., in view of fact that there was no reference whatsoever to fact that SEBI had held ‘U’ Ltd. to be a bogus/sham company for its activities during relevant period, impugned addition was to be set aside. [Smt. Rajbir Kaur v ITO [2020] 114 taxmann.com 82 (Chandigarh – Trib.)]

11. Merely where in return of income assessee did not offer capital gain on receipt of new residential flat against surrender of old flat but claimed deduction only during assessment that too under wrong section 54F, same would not disentitle him from availing deduction under section 54. [Satish S. Prabhu v Asst. CIT [2020] 114 taxmann.com 88 (Mumbai – Trib.)]

12. Period of six months as mentioned in section 54EC is to be considered as six calendar months and not 180 days for considering eligibility for exemption. [Kartick Chandra Mondal v Pr. CIT [2020] 113 taxmann.com 586 (Kolkata – Trib.)]

13. Assessee not having exhausted deduction under section 10A for ten consecutive assessment years on date of introduction of section 10AA as was available to him under section 10A on commencement of SEZ Act, 2005 will be entitled for additional period of deduction for five years as is allowed to SEZ units by provisions of section 10AA(1)(ii), subject to fulfilment of other conditions for grant of deduction under section 10AA. [Classic Linens International (P.) Ltd. v Dy. CIT [2020] 113 taxmann.com 590 (Chennai – Trib.)]

14. Disclosure of additional income in statement recorded under section 132(4) itself is not sufficient to levy penalty under section 271AAB until and unless income so disclosed by assessee falls in definition of undisclosed income defined in Explanation to section 271AAB(1). [Padam Chand Pungliya v Asst. CIT [2020] 113 taxmann.com 446 (Jaipur – Trib.)]

15. Where AO finding that there was debit balance in one of partner’s current account and at same time assessee-firm had paid interest on borrowed capital, made disallowance of interest paid on borrowed capital by assessee, in view of fact that debit balance in one of partner’s current account was appearing for last several years and in none of earlier years any such hypothetical income had been subjected to tax in hands of assessee, following principle of consistency, impugned disallowance was to be deleted. [Dy. CIT v India Housing [2020] 113 taxmann.com 535 (Kolkata – Trib.)]

16. Where on account of non-payment of corporate loan as per agreed terms, a charge on mortgaged property was created by assessee himself in terms of section 13(2) of SARFAESI Act, 2002, in such a case, upon sale of property so mortgaged, assessee could not claim deduction of principal amount of loan either as expenditure under section 48 or as ‘diversion of income by overriding title’. [Perfect Thread Mills Ltd. v Dy. CIT [2020] 113 taxmann.com 384 (Mumbai – Trib.) (TM)]

17. Interest received on enhanced compensation under section 28 of Land Acquisition Act, 1894 is eligible for exemption under section 10(37). [Smt. Lakshmamma v ITO [2020] 113 taxmann.com 572 (Bangalore – Trib.)]

18. Mere fact that assessee was associated with the builder would not disentitle his claim of Sec. 54F exemption. [Lalitkumar Kesarimal Jain v Dy. CIT [2020] 113 taxmann.com 387 (Pune – Trib.)]

19.Where assessee-company received share capital money from several individuals and filed various evidences and details to prove identity of share subscribers and share capital monies were directly paid to assessee by cash out of sufficient bank balances available in their bank accounts, thus, creditworthiness of subscribers and genuiness of transactions were also proved, Assessing Officer was unjustified in making addition in respect of such share capital money under section 68. [Tradelink Carrying (P.) Ltd. v ITO [2020] 113 taxmann.com 520 (Kolkata – Trib.)]

20. Action of Assessing Officer accepting assessee’s computation of value of shares issued at premium could not be considered as erroneous or prejudicial to interest of revenue where Commissioner had neither conducted any enquiry on issue nor recorded finding that assessee’s calculation was unsustainable in law. [Trimex Fiscal Services (P.) Ltd. v Pr. CIT [2020] 113 taxmann.com 441 (Kolkata – Trib.)]

21. Where remittance of TDS was made online on prescribed date, credit to Government’s account was instant and thus, no interest could be levied under section 201(1A) for delay in remitting TDS to credit of Government even if online portal showed a delayed date. [Moody’s Analytics Knowledge Services (India) (P.) Ltd. v ITO [2020] 113 taxmann.com 448 (Bangalore – Trib.)]

22. Where receipts of rents as recorded in books of account was in consonance with agreement between assessee and lessee and no defect whatsoever had been pointed out by revenue authorities in books of account, no addition to income is warranted in hands of assessee owing to difference in income based on Form No. 26AS and income as reflected in books of account maintained by assessee. [D M Estates (P.) Ltd. v Dy. CIT [2020] 113 taxmann.com 386 (Bangalore – Trib.)]

23. Where facts sufficiently demonstrated that delay of 615 days in filing appeal was non-deliberate and by filing of appeal late, assessee had not derived any undue advantage, Tribunal was justified in condoning delay. [Emsons Organics Ltd. v Dy. CIT [2020] 113 taxmann.com 269 (Chandigarh – Trib.)] 

24. Where assessee filed an original return claiming carry forward of loss of certain amount but without filing an audit report and, subsequently, assessee voluntarily filed a revised return claiming said loss at a lesser figure along with audit report, impugned revision so as to hold return of income filed originally as defective and denying benefit of carry forward of loss to assessee in terms of section 139(1) read with sections 139(3) and 80, was unjustified. [B.E. Billimoria & Co. Ltd. v Pr. CIT [2020] 113 taxmann.com 444 (Mumbai – Trib.)]

25. Additional Commissioner can function as an Assessing Officer only when jurisdiction has been assigned to him by virtue of directions or orders issued under section 120(4)(b); there being no directions or orders under section 120(4)(b), assessment order passed by Additional Commissioner was illegal and without jurisdiction. [Nasir Ali v Addl. CIT [2020] 113 taxmann.com 515 (Delhi – Trib.)]

26. Income from mushroom spawn grown in nursery qualifies as agricultural income as per section 2(1A), Explanation 3, and is, therefore, eligible for exemption under section 10(1); on facts issue restored to file of Assessing Officer to determine whether spawn was actually grown by assessee. [Doon Valley Foods (P.) Ltd. v ITO [2020] 113 taxmann.com 516 (Chandigarh – Trib.)]

27. Where assessee engaged in business of real estate development paid certain amount to associated concern for providing and securing of fund requirements, bank guarantee and technical expertise in successful completion of project, since it was accepted even by revenue authorities that said associated concern made substantial contribution towards completion of project by providing financing and technical expertise, providing brand name and other technical assistance for completion of project, payment in question made to said concern was not subject to disallowance under section 30A(2)(b). [Asst. CIT v Vishnu Apartments (P.) Ltd. [2020] 114 taxmann.com 2 (Delhi – Trib.)] 

28. Where assessee claimed deduction under section 24(b) on account of interest paid on borrowed fund while computing income from house property, in view of fact that assessee had utilized loan amount for construction of commercial property a part of which was let out and, Assessing Officer had not pointed out any major deficiency in allocation of interest expenditure between area used for commercial purpose and area let out, assessee’s claim for deduction was to be allowed. [Alpex International (P.) Ltd. v Asst. CIT [2020] 113 taxmann.com 385 (Mumbai – Trib.)]

29. When it is consciously decided by assessee to not avail of right of filing appeal and instead only avail of right of filing cross objection, then fact that revenue did not file appeal, and thereby did not present assessee with an opportunity for filing cross objection, cannot constitute ‘sufficient cause’ for assessee for not filing appeal within time limit prescribed under section 253(3). [Boutique Hotels India (P.) Ltd. v Asst. CIT [2020] 113 taxmann.com 381 (Delhi – Trib.)]

30. Where parent company was not holding whole of share capital of subsidiary company along with nominees, transaction of buy back of shares was not covered under section 47(iv). [Acciona Wind Energy (P.) Ltd. v Dy. CIT (Intl. Taxn.) [2020] 113 taxmann.com 443 (Bangalore – Trib.)] 

31. Disallowance of expenses under section 14A read with rule 8D of 1962 Rules cannot be made in absence of exempt income. [Dy. CIT v Asian Grantio India Ltd. [2020] 113 taxmann.com 445 (Ahmedabad – Trib.)]

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INTERNATIONAL TAXATION

1. SLP dismissed against High Court ruling that where assessee earned interest income and offered same to tax at reduced rate relying on DTAA between India and Cyprus and disclosed all material facts pertaining to interest income at time of scrutiny assessment, Assessing Officer’s reference to further exercise undertaken while carrying out scrutiny assessment for subsequent year where he decided to tax assessee at higher rate would not enable Assessing Officer to reopen assessment beyond 4 years. [Dy. CIT v Precilion Holdings Ltd. [2020] 114 taxmann.com 173 (SC)]

2. Where High Court upheld Tribunal’s order holding that amount received by assessee for licence of its product, which was embedded software, was not royalty rather it was business income, SLP filed against said order was to be granted. [CIT v Bently Nevada LLC [2020] 114 taxmann.com 102 (SC)]

3. Where High Court upheld Tribunal’s order holding that payment received by assessee for use or right to use scientific or commercial equipment, was not royalty within meaning of section 9(1)(vi), Explanation (2)(iii) and (iva) as well as article 12(3) of India-USA DTAA, SLP filed against said order was to be granted. [CIT v Intelsat Corporation [2020] 113 taxmann.com 597 (SC)]

4. No Indo-Mauritius DTAA benefit as Co. was set-up in Mauritius to route funds for South African based holding Cos. [Bid Services Division (Mauritius) Ltd., In re [2020] 114 taxmann.com 434 (AAR – Mumbai)] 

5. Introduction of Explanation 4 to section 9(1)(vi) with retrospective effect would make payment for transfer of use or right to use computer a royalty; however, in absence of corresponding amendment in Indo-Belgium DTAA, such payment could not be treated as royalty liable to tax. [Agfa Healthcare NV v Dy. CIT [2020] 114 taxmann.com 89 (Mumbai – Trib.]

6. Grant of non-exclusive non-transferable license in computer software with no right to sub-lease or transfer would fall within purview of ‘Royalty’ both under India Italy DTAA as well as under section 9(1)(vi) and would be chargeable to income-tax under provisions of Act. [Asst. CIT v Saipem India Projects (P.) Ltd. [2020] 113 taxmann.com 592 (Chennai – Trib.)]

7.Where assessee foreign company received an amount towards subscription fees from its customers in India for providing certain services, since in assessee’s own case for earlier assessment year, Tribunal held that amount received by assessee from its customers in India was in nature of royalty as per article 13(3) of India-UK Tax treaty, facts being similar, impugned amount received by assessee was to be considered to be in nature of royalty. [Reuters Transaction Services Ltd. v Dy. CIT [2020] 113 taxmann.com 536 (Mumbai – Trib.)]

8. Fees for technical services received by assessee a Swiss entity from an Indian company is taxable on gross basis under article 12(2) of Indo Swiss tax treaty. [AGT International GmbH v Dy. CIT [2020] 114 taxmann.com 51 (Mumbai – Trib.)]

9. Where assessee, a Singapore based company, opened a Liaison Office (LO) in India, in view of fact that LO was not only involved in preparatory and auxiliary activities but also actively involved in ascertaining customer requirements, price negotiations obtaining of purchase orders, etc., it could be concluded that said LO Constituted assessee’s PE in India in terms of articles 5 of India-Singapore DTAA. [Hitachi High Technologies Singapore Pte Ltd. v Dy. CIT [2020] 113 taxmann.com 327 (Delhi – Trib.)]

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TRANSFER PRICING CASE LAWS

1. Where High Court upheld Tribunal’s order holding that in case of assessee, providing internet based medical health related services, a company rendering high end online software solutions, could not be accepted as comparable, SLP filed against order of High Court was to be dismissed on ground of low tax effect. [Pr. CIT v Inductis India (P.) Ltd. [2020] 114 taxmann.com 352 (SC)]

2. Where High Court upheld Tribunal’s order holding that in case of assessee-company acting as investment sub-advisor to AE, companies operating as merchant bankers or investment bankers could not be accepted as comparables, SLP filed against said order was to be dismissed. [Pr. CIT v Blackstone Advisors India (P.) Ltd. [2020] 114 taxmann.com 221 (SC)]

3. Where TPO made addition towards interest on delayed payment, however perusal of transactions undertaken by assessee with AE showed no pattern discernible which would suggest any arrangement or understanding between assessee and its AE that would qualify said transaction as an international transaction, no addition could have been made. [Pr. CIT v Amadeus India (P.) Ltd. [2020] 113 taxmann.com 393 (Delhi)-HC]

4. Where office copies of draft assessment order passed against assessee was duly stamped and signed by Assessing Officer and copy of said order forwarded to assessee was not signed due to inadvertent mistake, such non-signing of draft assessment order forwarded to assessee would not invalidate final assessment order passed under section 143(3) read with section 144C(13). [Reuters Transaction Services Ltd. v Dy. CIT [2020] 113 taxmann.com 536 (Mumbai – Trib.)] 

5. Where assessee paid trademark royalty at rate of 1 per cent over and above technical know-how royalty paid at rate of 1.25 per cent to an entity, since same had been approved by RBI, TPO was not justified in disallowing trademark royalty being of view that technical know-how royalty subsumes royalty for trademark. [Mondelez India Foods (P.) Ltd. v Addl. CIT [2020] 114 taxmann.com 184 (Mumbai – Trib.)] 

6. Where TPO proposed an addition of certain amount in respect of interest receivable on funds advanced by assessee to its AE, since assessee had given more than one calculation for charging such interest, issue was to be restored to file of Assessing Officer/TPO to adjudicate issue afresh. [Jindal Dyechem Industries (P.) Ltd. v Addl. CIT [2020] 114 taxmann.com 174 (Delhi – Trib.)]

7. Payments of royalty could not be bundled with transactions of import of raw materials, for transfer pricing adjustments. [Sika India (P.) Ltd. v Dy. CIT [2020] 114 taxmann.com 182 (Kolkata – Trib.)] 

8. ALP of charges paid by assessee to AE for intra group services could not be determined as NIL on ground of difficulty in allocation of expenses between assessee and its AE. [Sika India (P.) Ltd. v Dy. CIT [2020] 114 taxmann.com 182 (Kolkata – Trib.)]

9. Where assessee was rendering software development services to AE, a company engaged in rendering IT services and in development of software products without there being support segmental information, could not be accepted as comparable. [Symantec Software India (P.) Ltd. v Dy. CIT [2020] 114 taxmann.com 435 (Pune – Trib.)]

10. Where assessee availed certain intra-group services from its AE and Commissioner (Appeals) computed ALP of such services being 30 per cent of value, since incurring of expenditure by assessee was not in dispute and only reason given by Revenue authorities was that assessee did not need such services as same were duplicative and that assessee did not file sufficient details to establish that it received some benefit, order of Commissioner (Appeals) was to be set aside and AO/TPO was to be directed to delete addition. [Cargill Global Trading India (P.) Ltd. v Dy. CIT [2020] 113 taxmann.com 389 (Delhi – Trib.)]

11. Company earning revenue from goods transport, bus operation, sale of wind power and air charter business about which segmental accounts were also not clear could not be accepted as comparable for assessee company engaged in business of international air and ocean export and imports shipments. [JAS Forwarding Worldwide (P.) Ltd. v Dy. CIT [2020] 113 taxmann.com 390 (Delhi – Trib.)]

12. Even when assessee was eligible for tax exemption at rate of hundred percent under section 10A/10B, then also arm’s length price on its international transactions deserved to be determined under section 92C. [Doshi Accounting Services (P.) Ltd. v Dy. CIT [2020] 113 taxmann.com 521 (Ahmedabad – Trib.)] 

13. Where assessee, engaged as a sub-agent in business of providing services for distribution of channels to Star Ltd., paid certain amount as brand fee for brand name and design of channels featuring Star marks and Star Corporate mark, in view of fact that said fee had been approved by RBI, ITO was not justified in determining ALP of said payment at nil. [Star India (P.) Ltd. v Asst. CIT [2020] 113 taxmann.com 512 (Mumbai – Trib.)]

14. Dispute Resolution Panel can only confirm, reduce or enhance variations proposed by TPO in draft assessment order but cannot set aside issue to Assessing Officer/TPO for passing altogether fresh order. [Capstone Securities Analysis (P.) Ltd. v Dy. CIT [2020] 113 taxmann.com 518 (Pune – Trib.)] 

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

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