Income Tax Update - Aug 2013
August 22, 2013:
In case of failure to obtain PAN and Quote PAN of deductees as provided u/s 139-A(5B) where is no revenue loss and mere technical breach, clearly satisfies the test of reasonable cause under section 273B of the Act - HC
In case of TDS u/s 194I for lumpsum payment of lease premium, the assessee has capitalized the lease premium in its books of accounts and treated the same as capital expenditure for tax purposes the provisions of section 194-I of the Act to deduct TDS on the lease premium paid by the assessee is not attracted - Tri
Where land sold is agricultural land or it is to be treated as a capital asset in the terms of section 2(14) of the Act and even if no agricultural production was done by the assessee on this land, this mere fact will not take out the land out of the nomenclature of 'agricultural land' - Tri
Addition on account of bogus sale which were accommodation entries and the assessee has failed to produce any credible evidence to establish that cash sales were effected of brass scrap. The surrounding circumstances also show that there was no man-power available with the assessee to deal with the huge quantity of brass scrap. - additions confirmed - Tri
Amount paid to the Registrar of Companies, as filing fee for enhancement of capital was not revenue expenditure - Tri
Specified intangible assets acquired under slump sale agreement were in the nature of “business or commercial rights of similar nature” specified in Section 32(1)(ii) and were accordingly eligible for depreciation. It is not necessary to decide the alternative submission made on behalf of the assessee that goodwill per se is eligible for depreciation u/s 32(1)(ii) - Tri
In case of TDS u/s 194H where the commission retained by the credit card company is therefore in the nature of normal bank charges and not in the nature of commission/brokerage for acting on behalf of the merchant establishment - No TDS - Tri
August 21, 2013:
In case of set off of business losses the expression “any“ business clearly includes all businesses, without making any distinction between speculation and non-speculation business, and, therefore, going by the plain language of the statutory provision losses in a business, other than in speculation business, can be set off against profits of speculation business as also non speculation business - Tri
In case of cancellation of registration granted to a Charitable Trust u/s 12A where The CIT by his own motion added one more condition in section 12AA (3) that the object of the assessee, Agra Development Authority is not charitable as per amended provisions of section 2(15) for which the CIT is not empowered to add such own condition in the statute - Tri
Entertainment tax subsidy and where there was no obligation on assessee to utilize it for any specific purpose will not be hit by Explanation 10 to Sec. 43(1) - Tri
August 19, 2013:
In case of depreciation u/s 32 for a going concern business plant ready for used but not used in actual due to unavailability of raw-material. In such a case depreciation will be allowed - HC
TDS u/s 194J for sales, servicing and managing a workshop for maintenance of vehicle. The dealer has not rendered technical services as contemplated u/s 194J to the assessee for which the assessee paid a particular amount to the dealer and non-deduction of tax at sources on such payments does not attracts disallowance u/s 40(a) (ia) - Tri
Selling of trees which were grown spontaneously for which there is no cost of acquisition. It has to be treated as capital in nature and since there is no cost of acquisition, it is not liable for taxation. - Tri
Assessing Officer has every right to look into the genuineness of expenses claimed by the assessee and in the absence of non production or inadequate documentary evidence in support of expenses claimed can disallow a part of expenses after recording finding of facts. - Tri
August 17, 2013:
Application of percentage completion method for computation of profit real-estate business where a ratio of the basic cost (total) to the other (total) costs (for the entire project) be worked out, which percentage would then be applied for each year, including the current year, in proportion to the other cost for that year. - Tri
Penalty proceedings u/s 271(1)(c) accepting or rejecting the assessee's claim is based on appreciation of those evidences, forming part of the assessee's explanation, and for which reference is made to a series of decisions by the apex court, as follows - Tri
Disallowance u/s 40(a)(ia) for provision for Auditor's remuneration. The stand of the assessee that the concerned payees were not identifiable at the time of making the provision is required to be verified keeping in view that the auditors generally are appointed in the relevant financial year itself. - Tri
Penalty u/s 271(1)(c) in dispute has been imposed is purely on estimation basis and the Assessing Officer has not brought any material on record to establish any mala fide intention of the assessee to evade tax. There shall be no penalty in such case - Tri
August 16, 2013:
The language of Section 14A r.w.r. 8D itself provides the mandate inasmuch as it prescribes or authorizes a disallowance only qua investment, income from which is not taxable, so that in limiting the amount worked out with reference to the total investment; the same also yielding taxable income - Tri
Special Audit of the Trust under section 142(2A) of the Income Tax Act, 1961 where AO has properly exercised its jurisdiction to order a special audit after obtaining the approval of the Chief Commissioner for the same. - HC
Addition u/s. 40A(2)(b) of the Income Tax Act purely on the ground that the assessee has increased remuneration to its Directors not allowed - Tri
Assessment orders server after expiry of period of limitation. In the given case assessment orders in these cases though made on December 31, 2009, those were served on the assessee on May 10, 2010, i.e., after 130 days from the date of order. Hence, assessments are barred by limitation and non est and ineffective - Tri
Assessee firm is holding less than 10 percent of shareholding, irrespective of the fact that the shareholding of the firm to whom advance had been made and the partners of the said firm have shareholding more than 10 percent of the said concern, which had advanced the amount. Hence no Deemed dividend u/s 2(22)(e)- Tri
August 14, 2013:
Application of section 50C of the Act to the transfer of leasehold rights in the industrial plot - Addition made by the AO on the basis of circle rate gathered from Sub-Registrar office of Rampur showing circle rate of properties cannot be applied as there was no application of section 50C in the case - Tri
Merely because the Settler of the trust has claimed deduction under section 80G of the Act on the donations made to the assessee Trust, does not merit the cancellation of registration granted to the Trust u/s 12AA - Tri
In case of Book profit for the purpose of MAT (Minimum alternate Tax) the lower of the solitary figures of the unabsorbed depreciation or loss brought forward for all the earlier years taken together is to be reduced for the purposes of computing book profit u/s 115 JB of the Act and the case was decided against the revenue. - Tri
In case of deduction u/s 80IB interpretation merely permits the assessee to produce the said report even after the date of the filing of the return as passed; it does not wholly do away with the requirement of filing the report altogether - HC
August 13, 2013:
In case revenue misses out giving credit of the TDS assessee is also being permitted to make additional claim of refund. Revenue was directed to take into account the total sum of TDS as is reflected in Form 26AS and after computing such TDS amount, issue refund in the name of the assessee - HC
Quantum of deduction under Section 80IA is not dependent upon the assessee claiming or not claiming depreciation, because, under Section 80IA the quantum of deduction has to be determined by computing total income from business after deducting all deductions allowable under Section 30 to 43D of the Act - Tri
Possession given by the society to the developer under joint development agreement which is irrevocable general power of attorney which leads to over all control of the property in the hands of the Developer, even if that means no exclusive possession by the Developer would constitute transfer u/s 2(47) and amount to Long Term Capital Gain u/s 45 - Tri
Demutualization expenses is such an expansion of the capital base of the company was required to fulfill the requirements of SEBI but still the fact remains that the expenditure has resulted into expansion of the capital base of the assessee company. Held as capital expenditure - Tri
August 12, 2013:
AO cannot force the assessee to earn interest income or save interest expenses for running the business. The Assessing Officer was unable to demonstrate that interest bearing loans were used by the assessee other than business purpose. Hence, claim of interest u/s 36(1)(iii) was allowed - Tri
Expenditure u/s 37(1) - There was nothing illegal about carrying on the lottery business or mobilizing opinion for continuation of sale of lottery tickets of other States within the State of Madhya Pradesh. Nothing has been brought on record to show that it was even against the public policy - Tri
Penalty u/s 271(1)(c) - Where Computation of book profit not done u/s 115JB there is definitely a failure on the part of the assessee to furnish particulars necessary for its assessment. Rigours of Section 271(1)(c) was attracted - Tri
The stand of the AO is that assessee should have used its own fund instead of interest bearing borrowings for running the business. AO cannot force the assessee to earn interest income or save interest expenses for running the business. - Tri
August 10, 2013:
Notice u/s 148 - The Department without ever questioning filing of such returns before a wrong officer, having accepted the tax paid under such returns, now cannot be allowed to contend that such returns were filed before wrong officers who had no jurisdiction to accept the same. - HC
Deduction of additional deduction - The use of electricity in the manufacturing activity of the core business of the assessee is not a precondition for the grant of additional depreciation under the statue - Tri
Deduction u/s 80IC - It cannot be accepted that the assessee should be manufacturing all the components. Further merely showing that that the profits are on higher side, is not sufficient and no defects are pointed out and therefore deduction cannot be denied - Tri
Computation of Capital gains u/s 50 - deduction of notional depreciation on unused assets - When assets not is use no notional depreciation - Section 50 nowhere provides that certain deemed depreciation needs to be allowed - Tri
August 9, 2013:
Exemption u/s. 54F - definition of the word ‘transfer’ under section 2(47) includes situation where transaction involving allowing of possession of any immovable property in part performance of the contract. If there is no evidence of possession, no deduction will be available - HC
Disallowance of Foreign Travel Expenses - since it is customary in the European countries for the wives to accompany their husbands, the travelling of the wives along with their husbands cannot be said to be personal visits of the wives and hence its considered as for the purpose of business - HC
Income u/s 5(2) - Once the entire operations are confined to the purchase of goods in India for the purpose of export, the income derived therefrom shall not be deemed to accrue or arise in India and it shall not be deemed to be an income under Section 9 of the Act - HC
August 8, 2013:
Additions are made u/s 68 for unexplained credits and an explanation is called for from the assessee, he or she must take care to substantiate her explanation by such supporting evidence as may be in his or her power to produce - HC
Whether realization of income-tax dues from the assesses under the Income Tax Act, 1961 will not have priority over the secured debt in terms of the State Financial Corporations Act, 1951 - HC
Agricultural land sold by the assessee is not a 'capital asset' since it is in rural area within the meaning of section 2(14)(iii), the impugned receipt cannot be brought to tax as capital gain by invoking section 54B. - Tri
Forward contract cancellation loss can be treated as business loss or speculation loss. The assessee was not a dealer in foreign exchange and the export contracts entered into by the assessee for export in some cases failed. Hence, allowed as business loss - Tri
Procedure and criteria for selection of scrutiny cases under compulsory manual during the financial-year 2013-2014
August 7, 2013:
If no claim of deduction of exempt income has been made in the return of income and A.O. accepted the return of income filed by assessee as it is, therefore, there was no mistake apparent on record of the Revenue Department. Thus, the rectification application under Section 154 was not maintainable - Tri
Income by way of cash incentive accrued to the assessee at the time of filing of the claim in respect of which the assessee has not stated any factual reason/s with regard to the uncertainty that is stated to exist with regard to the claim for VAT refund. Additions on the same confirmed - Tri
Profit on sale of shares and securities. The high number of transactions shown in the statement is misleading because these are computer-split transactions and not independent transactions - taxable as capital gains and STCG - Tri
August 6, 2013:
Undervaluation of closing stock. If the AO was not satisfied with the market value taken by the assessee, he could have taken the assistance of the expert but the AO merely rejected the method of valuation consistently followed by the assessee. Additions on account of the same were deleted by HC.
In case of refund by the Income-tax Department which included interest, revenue taxed it at 20% as per section 115A as per Article 24 of Indo-Singapore DTAA wheres assessee claimed taxation of such interest @ 15% as per Article 11 of the DTAA. Action of revenue sustained - Tri
August 5, 2013:
If they are inseparable and the intention is to carry on the business of letting out the commercial property and carrying at complex commercial activity and getting rental income therefrom, then such a rental income falls under the heading of profits and gains of business or profession. Hence deduction u/s 80IA allowed - HC
In case of registration u/s 12A and 12AA only because the Trust has not commenced the activities, the Commissioner would have no authority to ipso facto reject the application for registration on that count alone - HC
Exemption u/s 10(13A) w.r.t. house rent allowance (HRA) as per AO assessee and his wife are living together as a family. Therefore, it can be inferred that the house owned by wife of the assessee is occupied by the assessee also. The assessee has fulfilled twin test and hence exemption allowed - Tri
August 4, 2013:
When the specific case of the assessee was that the income arising from the sale of shares could not be treated as income from business, in fairness to the claim of the assessee, the Tribunal ought to have considered the same in detail to arrive at a factual finding - HC
Notice u/s 148 with a change of opinion - If, in the process, AO made a legal error, the succeeding Assessing Officer cannot correct such an error, through the process of re¬opening of the assessment - HC
Addition u/s 68 - the assessee had no justification for borrowing such amounts at high rate of interest, even without disturbing the well established principle of not insisting on the assessee proving source of the source, on the robust facts of the revenue authorities, additions confirmed - HC
Levy of Fringe Benefit Tax (FBT) - The assessee being a company, the club expenses incurred would be so only for its employees and, therefore, in clear view fall to be covered u/s. 115WB(2)(N). - TRI
August 3, 2013:
Gifts/awards on winning of the Olympic Medal u/s 56(2)(v) - In the case of the assessee, viz., Shri Abhinav Bindra, all the rewards/prizes/gifts received by him are covered by Circular No.447 dated 22nd January, 1986 and, therefore, should not be treated as income in his hands. - TRI
Principle of res-judicata or estoppel is not applicable in the income tax proceedings, as each assessment year is an independent assessment year. - But fact remains that where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent years - HC
Loss from foreign exchange transaction in the forward market (speculative loss v/s business loss). The assessee was entitled to claim deduction in respect of payment made on account of cancellation of forward booking of foreign exchange with banks as a business loss. - TRI
August 2, 2013:
In case of failure to obtain PAN and Quote PAN of deductees as provided u/s 139-A(5B) where is no revenue loss and mere technical breach, clearly satisfies the test of reasonable cause under section 273B of the Act - HC
In case of TDS u/s 194I for lumpsum payment of lease premium, the assessee has capitalized the lease premium in its books of accounts and treated the same as capital expenditure for tax purposes the provisions of section 194-I of the Act to deduct TDS on the lease premium paid by the assessee is not attracted - Tri
Where land sold is agricultural land or it is to be treated as a capital asset in the terms of section 2(14) of the Act and even if no agricultural production was done by the assessee on this land, this mere fact will not take out the land out of the nomenclature of 'agricultural land' - Tri
Addition on account of bogus sale which were accommodation entries and the assessee has failed to produce any credible evidence to establish that cash sales were effected of brass scrap. The surrounding circumstances also show that there was no man-power available with the assessee to deal with the huge quantity of brass scrap. - additions confirmed - Tri
Amount paid to the Registrar of Companies, as filing fee for enhancement of capital was not revenue expenditure - Tri
Specified intangible assets acquired under slump sale agreement were in the nature of “business or commercial rights of similar nature” specified in Section 32(1)(ii) and were accordingly eligible for depreciation. It is not necessary to decide the alternative submission made on behalf of the assessee that goodwill per se is eligible for depreciation u/s 32(1)(ii) - Tri
In case of TDS u/s 194H where the commission retained by the credit card company is therefore in the nature of normal bank charges and not in the nature of commission/brokerage for acting on behalf of the merchant establishment - No TDS - Tri
August 21, 2013:
In case of set off of business losses the expression “any“ business clearly includes all businesses, without making any distinction between speculation and non-speculation business, and, therefore, going by the plain language of the statutory provision losses in a business, other than in speculation business, can be set off against profits of speculation business as also non speculation business - Tri
In case of cancellation of registration granted to a Charitable Trust u/s 12A where The CIT by his own motion added one more condition in section 12AA (3) that the object of the assessee, Agra Development Authority is not charitable as per amended provisions of section 2(15) for which the CIT is not empowered to add such own condition in the statute - Tri
Entertainment tax subsidy and where there was no obligation on assessee to utilize it for any specific purpose will not be hit by Explanation 10 to Sec. 43(1) - Tri
August 19, 2013:
In case of depreciation u/s 32 for a going concern business plant ready for used but not used in actual due to unavailability of raw-material. In such a case depreciation will be allowed - HC
TDS u/s 194J for sales, servicing and managing a workshop for maintenance of vehicle. The dealer has not rendered technical services as contemplated u/s 194J to the assessee for which the assessee paid a particular amount to the dealer and non-deduction of tax at sources on such payments does not attracts disallowance u/s 40(a) (ia) - Tri
Selling of trees which were grown spontaneously for which there is no cost of acquisition. It has to be treated as capital in nature and since there is no cost of acquisition, it is not liable for taxation. - Tri
Assessing Officer has every right to look into the genuineness of expenses claimed by the assessee and in the absence of non production or inadequate documentary evidence in support of expenses claimed can disallow a part of expenses after recording finding of facts. - Tri
August 17, 2013:
Application of percentage completion method for computation of profit real-estate business where a ratio of the basic cost (total) to the other (total) costs (for the entire project) be worked out, which percentage would then be applied for each year, including the current year, in proportion to the other cost for that year. - Tri
Penalty proceedings u/s 271(1)(c) accepting or rejecting the assessee's claim is based on appreciation of those evidences, forming part of the assessee's explanation, and for which reference is made to a series of decisions by the apex court, as follows - Tri
Disallowance u/s 40(a)(ia) for provision for Auditor's remuneration. The stand of the assessee that the concerned payees were not identifiable at the time of making the provision is required to be verified keeping in view that the auditors generally are appointed in the relevant financial year itself. - Tri
Penalty u/s 271(1)(c) in dispute has been imposed is purely on estimation basis and the Assessing Officer has not brought any material on record to establish any mala fide intention of the assessee to evade tax. There shall be no penalty in such case - Tri
August 16, 2013:
The language of Section 14A r.w.r. 8D itself provides the mandate inasmuch as it prescribes or authorizes a disallowance only qua investment, income from which is not taxable, so that in limiting the amount worked out with reference to the total investment; the same also yielding taxable income - Tri
Special Audit of the Trust under section 142(2A) of the Income Tax Act, 1961 where AO has properly exercised its jurisdiction to order a special audit after obtaining the approval of the Chief Commissioner for the same. - HC
Addition u/s. 40A(2)(b) of the Income Tax Act purely on the ground that the assessee has increased remuneration to its Directors not allowed - Tri
Assessment orders server after expiry of period of limitation. In the given case assessment orders in these cases though made on December 31, 2009, those were served on the assessee on May 10, 2010, i.e., after 130 days from the date of order. Hence, assessments are barred by limitation and non est and ineffective - Tri
Assessee firm is holding less than 10 percent of shareholding, irrespective of the fact that the shareholding of the firm to whom advance had been made and the partners of the said firm have shareholding more than 10 percent of the said concern, which had advanced the amount. Hence no Deemed dividend u/s 2(22)(e)- Tri
August 14, 2013:
Application of section 50C of the Act to the transfer of leasehold rights in the industrial plot - Addition made by the AO on the basis of circle rate gathered from Sub-Registrar office of Rampur showing circle rate of properties cannot be applied as there was no application of section 50C in the case - Tri
Merely because the Settler of the trust has claimed deduction under section 80G of the Act on the donations made to the assessee Trust, does not merit the cancellation of registration granted to the Trust u/s 12AA - Tri
Disallowance u/s 14A under Rule 8D is toward estimating the expenditure that can be attributed to the tax exempt income and, thus, could not, in any case, exceed the actual expenditure incurred and claimed by the assessee - Tri
In case of deduction u/s 80IB interpretation merely permits the assessee to produce the said report even after the date of the filing of the return as passed; it does not wholly do away with the requirement of filing the report altogether - HC
August 13, 2013:
In case revenue misses out giving credit of the TDS assessee is also being permitted to make additional claim of refund. Revenue was directed to take into account the total sum of TDS as is reflected in Form 26AS and after computing such TDS amount, issue refund in the name of the assessee - HC
Quantum of deduction under Section 80IA is not dependent upon the assessee claiming or not claiming depreciation, because, under Section 80IA the quantum of deduction has to be determined by computing total income from business after deducting all deductions allowable under Section 30 to 43D of the Act - Tri
Possession given by the society to the developer under joint development agreement which is irrevocable general power of attorney which leads to over all control of the property in the hands of the Developer, even if that means no exclusive possession by the Developer would constitute transfer u/s 2(47) and amount to Long Term Capital Gain u/s 45 - Tri
Demutualization expenses is such an expansion of the capital base of the company was required to fulfill the requirements of SEBI but still the fact remains that the expenditure has resulted into expansion of the capital base of the assessee company. Held as capital expenditure - Tri
August 12, 2013:
AO cannot force the assessee to earn interest income or save interest expenses for running the business. The Assessing Officer was unable to demonstrate that interest bearing loans were used by the assessee other than business purpose. Hence, claim of interest u/s 36(1)(iii) was allowed - Tri
Expenditure u/s 37(1) - There was nothing illegal about carrying on the lottery business or mobilizing opinion for continuation of sale of lottery tickets of other States within the State of Madhya Pradesh. Nothing has been brought on record to show that it was even against the public policy - Tri
Penalty u/s 271(1)(c) - Where Computation of book profit not done u/s 115JB there is definitely a failure on the part of the assessee to furnish particulars necessary for its assessment. Rigours of Section 271(1)(c) was attracted - Tri
The stand of the AO is that assessee should have used its own fund instead of interest bearing borrowings for running the business. AO cannot force the assessee to earn interest income or save interest expenses for running the business. - Tri
August 10, 2013:
Notice u/s 148 - The Department without ever questioning filing of such returns before a wrong officer, having accepted the tax paid under such returns, now cannot be allowed to contend that such returns were filed before wrong officers who had no jurisdiction to accept the same. - HC
Deduction of additional deduction - The use of electricity in the manufacturing activity of the core business of the assessee is not a precondition for the grant of additional depreciation under the statue - Tri
Deduction u/s 80IC - It cannot be accepted that the assessee should be manufacturing all the components. Further merely showing that that the profits are on higher side, is not sufficient and no defects are pointed out and therefore deduction cannot be denied - Tri
Computation of Capital gains u/s 50 - deduction of notional depreciation on unused assets - When assets not is use no notional depreciation - Section 50 nowhere provides that certain deemed depreciation needs to be allowed - Tri
August 9, 2013:
Exemption u/s. 54F - definition of the word ‘transfer’ under section 2(47) includes situation where transaction involving allowing of possession of any immovable property in part performance of the contract. If there is no evidence of possession, no deduction will be available - HC
Disallowance of Foreign Travel Expenses - since it is customary in the European countries for the wives to accompany their husbands, the travelling of the wives along with their husbands cannot be said to be personal visits of the wives and hence its considered as for the purpose of business - HC
When CIT [A] and the Tribunal both concurrently came to the conclusion that there is no evidence supporting the AO's version that the assessee had invested large amount in purchase of the land, then no substantial question of law arises - HC
Additions are made u/s 68 for unexplained credits and an explanation is called for from the assessee, he or she must take care to substantiate her explanation by such supporting evidence as may be in his or her power to produce - HC
Whether realization of income-tax dues from the assesses under the Income Tax Act, 1961 will not have priority over the secured debt in terms of the State Financial Corporations Act, 1951 - HC
Agricultural land sold by the assessee is not a 'capital asset' since it is in rural area within the meaning of section 2(14)(iii), the impugned receipt cannot be brought to tax as capital gain by invoking section 54B. - Tri
Forward contract cancellation loss can be treated as business loss or speculation loss. The assessee was not a dealer in foreign exchange and the export contracts entered into by the assessee for export in some cases failed. Hence, allowed as business loss - Tri
Procedure and criteria for selection of scrutiny cases under compulsory manual during the financial-year 2013-2014
August 7, 2013:
If no claim of deduction of exempt income has been made in the return of income and A.O. accepted the return of income filed by assessee as it is, therefore, there was no mistake apparent on record of the Revenue Department. Thus, the rectification application under Section 154 was not maintainable - Tri
Income by way of cash incentive accrued to the assessee at the time of filing of the claim in respect of which the assessee has not stated any factual reason/s with regard to the uncertainty that is stated to exist with regard to the claim for VAT refund. Additions on the same confirmed - Tri
Profit on sale of shares and securities. The high number of transactions shown in the statement is misleading because these are computer-split transactions and not independent transactions - taxable as capital gains and STCG - Tri
August 6, 2013:
Undervaluation of closing stock. If the AO was not satisfied with the market value taken by the assessee, he could have taken the assistance of the expert but the AO merely rejected the method of valuation consistently followed by the assessee. Additions on account of the same were deleted by HC.
In case of refund by the Income-tax Department which included interest, revenue taxed it at 20% as per section 115A as per Article 24 of Indo-Singapore DTAA wheres assessee claimed taxation of such interest @ 15% as per Article 11 of the DTAA. Action of revenue sustained - Tri
August 5, 2013:
If they are inseparable and the intention is to carry on the business of letting out the commercial property and carrying at complex commercial activity and getting rental income therefrom, then such a rental income falls under the heading of profits and gains of business or profession. Hence deduction u/s 80IA allowed - HC
In case of registration u/s 12A and 12AA only because the Trust has not commenced the activities, the Commissioner would have no authority to ipso facto reject the application for registration on that count alone - HC
Exemption u/s 10(13A) w.r.t. house rent allowance (HRA) as per AO assessee and his wife are living together as a family. Therefore, it can be inferred that the house owned by wife of the assessee is occupied by the assessee also. The assessee has fulfilled twin test and hence exemption allowed - Tri
August 4, 2013:
When the specific case of the assessee was that the income arising from the sale of shares could not be treated as income from business, in fairness to the claim of the assessee, the Tribunal ought to have considered the same in detail to arrive at a factual finding - HC
Notice u/s 148 with a change of opinion - If, in the process, AO made a legal error, the succeeding Assessing Officer cannot correct such an error, through the process of re¬opening of the assessment - HC
Addition u/s 68 - the assessee had no justification for borrowing such amounts at high rate of interest, even without disturbing the well established principle of not insisting on the assessee proving source of the source, on the robust facts of the revenue authorities, additions confirmed - HC
Levy of Fringe Benefit Tax (FBT) - The assessee being a company, the club expenses incurred would be so only for its employees and, therefore, in clear view fall to be covered u/s. 115WB(2)(N). - TRI
August 3, 2013:
Gifts/awards on winning of the Olympic Medal u/s 56(2)(v) - In the case of the assessee, viz., Shri Abhinav Bindra, all the rewards/prizes/gifts received by him are covered by Circular No.447 dated 22nd January, 1986 and, therefore, should not be treated as income in his hands. - TRI
Principle of res-judicata or estoppel is not applicable in the income tax proceedings, as each assessment year is an independent assessment year. - But fact remains that where a fundamental aspect permeating through the different assessment years has been found as a fact one way or the other and parties have allowed that position to be sustained by not challenging the order, it would not be at all appropriate to allow the position to be changed in a subsequent years - HC
Loss from foreign exchange transaction in the forward market (speculative loss v/s business loss). The assessee was entitled to claim deduction in respect of payment made on account of cancellation of forward booking of foreign exchange with banks as a business loss. - TRI
August 2, 2013:
Disallowance of interest u/s 40A(2)(b) - Money was first diverted by the assessee from his business as a gift to the three persons and thereafter the same money was given to the assessee at the rate of 16% per annum. It was held that the entire series of transactions were illusory, colourable and not genuinely for the purpose of the business - HC
Depreciation allowed on vehicles registered in the names of the purchasers and financed by the assessee under a hire purchase agreement - HC
DVO's report may be a useful tool in the hands of the AO, nevertheless it is an estimation and without there being anything more, cannot form basis for additions u/s 69B of the Act - HC
August 1, 2013:
Assessee would be entitled to benefit under section 54F if he had invested amount of capital gain in purchasing or constructing a residential house, even though transaction was not completed within stipulated period.
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