Bulletin No.A127 dated 04 December 2020

BULLETIN(Issue No.127)DT.04-12-2020

Compiled by Vinod Kumar Goel, Advocate

CASE LAWS

Commissioner of Income-tax, Ward03, Terunelveli Vs. Padmavathi [2020] 120 taxmann.com 187 (Madras)

Where in limited scrutiny with regard to purchase of property by assessee, Assessing Officer after hearing assessee and verifying source of funds made addition but Commissioner revised said order on the ground that guideline value of said property at relevant time was higher than sale consideration reflected in registered document, since guideline value is only an indicator and same is fixed by State Government for purposes of calculating stamp duty on a deal of conveyance, invoking of section 263 not sustainable.

Rajendra Kumar jain Vs. Income Tax Officer, Non-Corporate Ward-2(3), Chennai [2020] 120 taxmann.com 293 (Madras)

Where assessee claimed deduction under section 57(iii) on interest paid on loans taken by it from its relatives, since assessee had specifically stated that loans were availed through proper banking channels and interest amounts were paid to lenders, who had disclosed same in their respective return of income and tax was remitted by them on interest income, revenue was unjustified in disallowing assessee's claim for deduction under section 57(iii) in respect of interest paid and, thus, matter was to be remanded.

Asian Satellite Broadcast (P.) Ltd. Vs. Income-tax Officer [2020] 119 taxmann.com 481 (Bombay)

Where assessee during assessment submitted that it had transferred equity shares of ZEE to its related entity at nil consideration to consolidate onshore media assets including shares of listed companies and requested to treat said transfer as gift not liable to tax under section 45 and Assessing Officer passed assessment order accepting said claim but after more than four years, section 148 notice was issued to assessee on basis of CIT(A)'s decision in case of group entity that said transfer was nothing but colourable device, since communication between assessee and Assessing Officer clearly demonstrate that assessee had disclosed all primary facts regarding said transfer during assessment, it was a clear case of change of opinion and, thus, section 148 notice would no longer survive.

Commissioner of Income Tax, Chennai [2020] 120 taxmann.com 171 (Madras)

Amendment by insertion of proviso to section 50C(1) introduced with effect from 1-4-2017 which provides that where date of agreement, fixing amount of consideration and date of registration for transfer of capital assets are not same, value adopted or assesssed or assessable by stamp valuation authority on date of agreement may be taken for purpose of computing full value of consideration for such transfer seeks to relieve assessee from undue hardship and, thus, should be taken to be retrospectively effective.

State Bank of India Vs. Vineet Agrawal [2020] 119 taxmann.com 322 (Bombay)

Where assessee-bank offered to tax entire interest receipt from money advanced as credit without claiming any exemption under section 10(15) as details were not fully collected and when said details were received from other branches, same were submitted during assessment but AO denied said exemption to assessee and, it approached Commissioner (Appeals) who gave direction to Assessing Officer to allow exemption which was allowed accordingly, issuance of section 148 notice to disallow said exemption after 4 years of completion of assessment was without jurisdiction and illegal, particularly when assessee bank had made full and true disclosure.

Commissioner of Income Tax (Exemptions) Vs. Naroda Enviro Projects Ltd. [2020] 120 taxmann.com 126 (Gujarat)

Where assessee-trust was engaged in activity of management of liquid and solid waste in industrial area and thereby earned profit, and Assessing Officer concluded that assessee was not engaged in activities which were charitable in nature but were business activities as per section 2(15), since dominant object of assessee was preservation of environment as envisaged under section 2(15), it was carrying out charitable activities and was entitled to seek exemption under section 11.

Commissioner of Income Tax Vs. L & T Valdel Engineering (P.) Ltd. [2020] 119 taxmann.com 443 (Karnataka)

Where assessee claimed exemption under section 10A in respect of its new unit, since assessee was engaged in site development of software program and programs were delivered at premise of client at work site in foreign country and activities of assessee finally culminated at work site of clients outside India and there was no need for full fledged infrastructure facility in India, thus, industrial undertaking of assessee was independent of all undertakings which it already possessed, assessee was to be allowed exemption under section 10A on its new unit.

Principal Commissioner of Income Tax Vs. Rameshbhai Jivraj Desai [2020] 120 taxmann.com 82 (Gujarat)

In absence of any incriminating material related to relevant assessment year found during search, assessment under section 153A could not be made for such assessment year for which assessment had been concluded on date of search and not abated.

Principal Commissioner of Income Tax Vs. HSI Automative Ltd. [2020] 119 taxmann.com 445 (Madras)

Where assessee gave up its claim of deduction under section 35(1)on account of scientific expenses paid to a research association as admittedly conditions required for claiming such expenditure under said section was not satisfied by assessee, since there was no dispute that said expenditure was incurred in ordinary course of business, Tribunal was right in allowing alternate claim of assessee toward scientific expenses under section 35(1) as revenue expenditure under section 37(1).

Sri Ram Samaj Vs. Joint Director of Income Tax (Exemptions) [2020] 119 taxmann.com 334 (Madras)

Where assessee-trust engaged in running educational institutions, earned income from letting out of community hall, Kalyana Mandapam and Gnanvapi and utilized surplus income from letting out for objects of trust i.e. running educational institution and providing medical relief to poor, assessee-trust is entitled to exemption under section 11.

L.S. Cable and System Ltd., Vs. Union of India [2020] 118 taxmann.com 469 (Delhi)

Section 241, read with sections 143, 244A and 154, of the Income-tax Act, 1961 - Refund - Power to withhold, in certain cases - Assessment year 2017-2018 - Petitioner filed instant petition seeking refund determined vide assessment order dated 29-11-2019 under section 143(3) along with remaining interest from 30-11-2019 till date of issuance of refund and to decide petitioner's rectification application dated 19-11-2019 and grant consequential refund along with interest under section 244A from 1-7-2017 till date of issuance of refund - Petitioner submitted that refund due to it had been withheld for without any reason and/or explanation - He submitted that under section 241A, Assessing Officer could pass an order withholding grant of refund (after satisfying all parameters laid down under section 241A) only during pendency of scrutiny assessment and not once an order under section 143 (3) had been passed and scrutiny assessment had concluded - He further submitted that under section 154(8), statutory period to dispose of a rectification application is six months from end of month in which application was received, which already stood expired on 30-6-2020 - He also relied upon circular No.14/2001 dated 9-11-2001 and CBDT Instruction No. 01/2016, dated 15-2-2016 wherein it is stated that time-limit of six months is to be strictly followed by Assessing Officer while disposing applications filed by assessee/deductor/collector under section 154 - Notice was issued which was accepted by respondents - Whether therefore, respondents were to be directed to dispose of petitioner's rectification application within six weeks by way of reasoned order and respondent was also to pay petitioner's refund within three weeks thereafter- Held, yes.

Kamaraj Educational Trust Vs. Chief Commissioner of Income Tax [2020] 118 taxmann.com 273 (Madras)

Section 10(23C) of the Income-tax Act, 1961 - Educational institutions (Availability of exemption) - Assessment year 2014-15 - Assessee-trust was established with an object of running an educational institution - During relevant year assessee incurred certain expenses for awareness on agriculture, scientific research, blood donation camp etc. - Assessee filed its return claiming exemption of income under section 10(23C)(vi) - Chief Commissioner rejected assessee's claim by taking a view that assessee trust was not only for education but also for other activities - Tribunal confirmed order passed by Chief Commissioner - Whether expenditure incurred for awareness on agriculture, medical camps and eye camp activity could very well be treated as part of activities carried out in school itself and, thus, view taken by Chief Commissioner that said expenses were not related to educational activities, could not be accepted - Held, yes - Whether in view of aforesaid, impugned order passed by authorities below was to be set aside - Held, yes [Para 10] [In favour of assessee]

Sayqul Islam Vs. Income Tax Officer [2020] 118 taxmann.com 347 (Gauhati – Trib.)

Section 44AD, read with sections 44AB and 144 of the Income-tax Act, 1961 - Presumptive taxation (Rejection of books of account) - Assessment year 2014-15 - Assessee, running a hardware store, filed its return declaring net profit of 0.99 percent of turnover - Assessing Officer finding that turnover of assessee's business was more than one crore but assessee had failed to get accounts audited under section 44AB, applied provisions of section 44AD and estimated business profit at 8 percent of assessee's turnover - Accordingly, certain addition was made to assessee's income - Whether, on facts, assessee could have ventured into estimation only after rejecting books of account of assessee and thereafter by best judgment assessment under section 144 - Held, yes - Whether, since. Assessing Officer had gone for estimation of income without rejecting books of account of assessee, impugned order passed by him was to be set aside - Held, yes [Para 13] [In favour of assessee]

 

Commissioner of Income-tax Vs. Smt. Umayal Annamalai [2020] 118 taxmann.com 80 (Madras)

Section 54F of the Income-tax Act, 1961 - Capital gains - Exemption of, in case of investment in residential house (Condition precedent) - Assessment year 2005-06 - Assessee sold property and invested sale proceeds in new property before due date of filing belated return and took possession within three years from date of transfer/sale of original asset - Assessee, however, had not invested sale proceeds in Capital Gain Account Scheme before due date filing of return under section 139(1) - Whether since assessee had complied with conditions under section 54F(1), she was entitled for availing benefit of exemption under section 54F - Held, yes [Para 6] [In favour of assessee]

Ms. Pallavi Sood Vs. ACIT, Circle-32(1), New Delhi vide ITA No. 1746/Del/2015

Therefore, considered in the aforesaid light, in our view, the fact that the amended section 140(3) with effect from 01.04.1989 does not envisage any penalty for non-payment of self-assessment tax, the Assessing Officer was not justified in levying the impugned penalty by making recourse to section 221 of the Act. We, accordingly, direct the Assessing Officer to delete the penalty imposed under section 140A read with section 221(1) of the Act.

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