Summary of 10 Judgements of SC in FY 2019-20 in Favour of Revenue

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Summary of Some Judgements of Honourable Supreme Court in FY 2019-20 in the Favour of Revenue

S. No.	Name of Case	Date of Judgement	Summary
1	Super Malls Private Limited v. Principal Commissioner of Income-tax 8, New Delhi NJRS Citation: 2020-LL-0305-11 Taxmann Citation: [2020] 115 taxmann.com 105 (SC)	05.03.2020	Issue relating to Section 153C-Whether there was a sufficient compliance of sec 153C, where the satisfaction note by the AO clearly stated that the documents so seized belonged to the assessee and not the searched person? Held that, the AO was satisfied that the documents so seized from the residence of the searched person belonged to the assessee–the other person. The satisfaction note by the AO clearly stated that the documents so seized belonged to the other person– the assessee and not the searched person. Thus, the HC was justified in observing that the requirement of sec 153C was fulfilled. On facts, thus, the SC was in complete agreement with the view taken by the HC on the requirement of sec 153C being fulfilled by the AO before initiating the proceedings u/s 153C.
2	Vardhman Textiles Limited v. Commissioner of Income-tax NJRS Citation: 2020-LL-0218-11	18.02.2020	Issue related to Section 80HHC(Explanation) (baa)-Whether 90 percent of interest received from customers on belated payments could be reduced from profit and gains of business under clause (baa) of Explanation below sec 80HHC(4B)? Held that, the stated issue in reference to AY 1998-99 was answered by the HC on 05.09.2008. That decision having become final would apply proprio vigore to the subject AY i.e. 1996-97, in terms of aforementioned order of the Tribunal.
3	Maruti Suzuki India Ltd. (Earlier Known as Maruti Udyog Ltd.) v. Commissioner of Income-tax, Delhi NJRS Citation: 2020-LL-0207-11 Taxmann Citation: [2020] 114 taxmann.com 129 (SC)	07.02.2020	Issues relating to Section 43B: Whether deduction could be allowed in respect of MODVAT credit of excise duty that remained unutilised at the end of the relevant accounting year? Whether deduction could be claimed u/s 43B in respect of Sales Tax Recoverable Account? Whether deduction could be allowed in respect of unutilised MODVAT credit of excise duty on the ground that the unutilised credit was utilised for payment of excise duty on the manufactured vehicles? Held that, the deductions u/s 43B was allowable only when sum was actually paid by the assessee. In the present case, the excise duty leviable on assessee
			on manufacture of vehicles was already adjusted in the concerned AY from the credit of excise duty under the MODVAT scheme. The unutilised credit in the MODVAT scheme could not be treated as sum actually paid by the assessee. The assessee when paid the cost of raw materials where the duty was embedded, it did not ipso facto mean that the assessee was the one who was liable to pay excise duty on such raw material/inputs. It was merely the incident of excise duty that had shifted from the manufacturer to the purchaser and not the liability to the same. Thus, the unutilised credit under MODVAT scheme did not qualify for deductions. Held that, the sales tax paid by the assessee was debited to a separate account titled sales tax recoverable account. The assessee could have set off sales tax against his liability on the sales of finished goods i.e. vehicles. Thus, deduction could not be claimed u/s 43B in respect of sales tax recoverable account. Held that, there was no liability to adjust the unutilised MODVAT credit in the year in question since had there been liability to pay excise duty by the assessee on manufacture of vehicles, the unutilised MODVAT credit could have been adjusted against the payment of such excisedDuty. In the present case, the liability to pay excise duty of the assessee was incurred on the removal of finished goods in the subsequent year i.e. year beginning from 01.04.1999 and what the SC was concerned with is unutilised MODVAT credit as on 31.03.1999 on which date the asseessee was not liable to pay any more excise duty. Hence, present was not a case where the assessee could claim benefit of proviso to sec. 43B. Thus, deduction could not be allowed in respect of unutilised MODVAT credit of excise duty.
4	Seshasayee Steels P. Ltd. v. Assistant Commissioner of Income-tax, Company Circle VI(2), Chennai NJRS Citation: 2019-LL- 1204-102 Taxmann Citation: [2020] 115 taxmann.com 5 (SC)	04.12.2019	Issues related to 2(47)(vi): Whether entire sale consideration received by the assessee could not be treated as a capital gain and brought to tax on the ground that the assessee’s case fell within sec. 2(47)(vi), where owner’s rights were completely intact both as to ownership and to possession even de facto? Whether entire sale consideration received by the assessee could not be treated as a capital gain and brought to tax on the ground that compromise deed did not fall within any of the clauses u/s 2(47), where all the cheques mentioned in the compromise were encashed? Held that, the expression “enabling the enjoyment of” must take colour from the earlier expression “transferring”, so that it could be stated on the facts of a case, that a de facto transfer of immovable property had, in fact, taken place making it clear that the de facto owner’s rights stood extinguished. It was clear that as on the date of the agreement to sell, the owner’s rights were completely intact both as to ownership and to possession even de facto, so that this section equally, could not be said to be attracted. Held that, all the cheques mentioned in the compromise deed were encashed. This being the case, it was clear that the assessee’s rights in the said immovable property were extinguished on the receipt of the last cheque, as also that the compromise deed could be stated to be a transaction which had the effect of transferring the immovable property in question. The pigeonhole, therefore, that would support the orders under appeal would be sec 2(47) (ii) and (vi) in the facts of the present case.
5	Genpact India Private Limited v. Deputy Commissioner of Income- tax & Anr. NJRS Citation: 2019-LL-1122-6 Taxmann Citation: [2019] 111 taxmann.com 402 (SC)	22.11.2019	Issue related to Section 115QA-Whether appellate remedy was available in the matter regarding determination of liability u/s 115QA? General-Whether writ petition could be entertained by the HC, where adequate appellate remedy was available? Held that, sec 115QA stipulated that in case of buy back of shares referred to in the provisions of said section, the company shall be liable to pay additional income tax at the rate of 20 percent on the distributed income. Any determination in that behalf, be it regarding quantification of the liability or the question whether such company was liable or not would be matters coming within the ambit of the first postulate referred to hereinabove. Similar was the situation with respect to provisions of sec 246A(1)(a) where again out of certain situations contemplated, one of them was “an order against the assessee, where the assessee denied his liability to be assessed under this Act”. The computation and extent of liability was determined under the provisions of sec 115QA. Such determination under the Act would squarely get covered under said expression. There was no reason why the scope of the such expression be restricted and confined to issues arising out of or touching upon assessment proceedings either u/s 143 or sec 144. The SC, therefore, rejected the submissions advanced by the assessee and held that an appeal would be maintainable against the determination of liability u/s 115QA. Held that, there was no infirmity in the approach adopted by the HC in refusing to entertain the writ petition. The submission that once the threshold was crossed despite the preliminary objection being raised, the HC ought not to have considered the issue regarding alternate remedy, might not be correct. The SC, therefore, find no error in the approach of and conclusion arrived at by the HC. Consequently, the appellant, as a matter of fact, would have a fuller, adequate and efficacious remedy by way of appeal before the appellate authority.
6	H.S. Ramchandra Rao v. Commissioner of Income- tax, Bangalore & Anr. NJRS Citation: 2019-LL- 1121-44 Taxmann Citation: [2019] 112 taxmann.com 135 (SC)	21.11.2019	Issue-Whether amount received the assessee could be treated as capital receipt, where the assessee was holding the post of secretary in a institution, which he left after new members were elected? Held that, the assessee was holding the post of secretary of the Institution, which he left after new members were elected. That being the case, the question of assessee invoking the principle of capital asset did not arise. It might have been a different matter if it was a case of life time appointment of the assessee as secretary of the concerned institution. No such evidence was produced by the assessee. Taking over-all view of the matter, the court upheld the conclusion reached by the HC that the amount received in the hands of assessee could not be treated as capital receipt. Thus, the order of the AO was affirmed.
7	Principal Commissioner of Income-tax (Central)-1 v. NRA Iron & Steel Pvt. Ltd. NJRS Citation: 2019-LL- 1025-13 Taxmann Citation: [2019] 110 taxmann.com 491 (SC)	25.10.2019	Issue-Whether ex parte judgment could be recalled on the ground that the assessee was not served with the notice of the SLP, where the notice was duly served on the assessee through its power of attorney holder? Held that, this court was satisfied that the assessee was duly served through their authorized representative, and were provided sufficient opportunities to appear before this court, and contest the matter. The assessee chose to let the matter proceed exparte. The grounds for recall of the judgment are devoid of any merit whatsoever. The assessee having failed to make out any credible or cogent ground for recall of the judgment, the application for recall was dismissed.
8	Motilal Khatri v. Commissioner of Income- tax I NJRS Citation: 2019-LL- 1017-48	17.10.2019	Issue related to Sec. 69-Whether addition could be made by invoking provisions of sec. 69, where explanation offered by the assessee was not satisfactory? Held that, the HC had considered all relevant aspects of the matter and concluded that the Appellate Tribunal misdirected itself in assuming certain facts which were not relevant and unsubstantiated. In opinion of the court, the approach of the HC was in accord with the material on record and the legal position. That being a possible view, no interference was warranted. Thus, addition could be made by invoking provisions of sec. 69, where explanation offered by the assessee was not satisfactory.
9	Murlibhai Fatandas Sawlani v. Income-tax Officer NJRS Citation: 2019-LL- 0712-29	12.07.2019	Issue related to Section 148-Whether appeal against notice u/s 148 could be entertained, where the assessee had proper remedy to raise all pleas before the AO? Held that, the proper remedy of the assessee would be to raise all pleas before the AO in assessment proceedings and if it was decided against him then to carry the issue further in appeal to the CIT(A) and then to the Tribunal in second appeal and then to the HC u/s 260A, if the occasion so arose in appeal. The court was not, therefore, inclined to interfere with order passed by the HC in view of the liberty granted above.
10	Snowtex Investment Limited v. Principal Commissioner of Income- tax, Central-2, Kolkata NJRS Citation: 2019-LL- 0430-117 Taxmann Citation: [2019] 105 taxmann.com 282 (SC)	30.04.2019	Issue related to Section 43(5)-Whether loss from speculation for the AY 2008-09 could be set off against the profits from business, where amendment to explanation to sec. 73 was w.e.f 1 April 2015? Held that, the amendment which was brought to the Explanation to Section 73 by the Finance (No 2) Act 2014 was w.e.f 1 April 2015. In its legislative wisdom, the Parliament amended sec. 43(5) w.e.f 1 April 2006 in relation to the business of trading in derivatives, Parliament brought about a specific amendment in the Explanation to sec. 73, insofar as trading in shares was concerned, w.e.f 1 April 2015. The latter amendment was intended to take effect from the date stipulated by Parliament and the court saw no reason to hold either that it was clarificatory or that the intent of Parliament was to give it retrospective effect. The consequence was that in AY 2008-09, the loss which occurred to the assessee as a result of its activity of trading in shares (a loss arising from the business of speculation) was not capable of being set off against the profits which t had earned against the business of futures and options since the latter did not constitute profits and gains of a speculative business. For the reasons the court found no error in the decision of the HC. The appeal was, accordingly, dismissed.