Ravi Sud v. Assistant Commissioner of Income-tax*

IT: Where assessee filed revised return and had suo motu offered additional income and same was not detected during any course of action by revenue authorities, it could not be said to be a case of concealment of income inviting penalty action under section 271(1)(c)
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[2015] 60 taxmann.com 241 (Mumbai - Trib.)
IN THE ITAT MUMBAI BENCH 'D'
Ravi Sud
v.
Assistant Commissioner of Income-tax*
B.R. BASKARAN, ACCOUNTANT MEMBER
AND SANJAY GARG, JUDICIAL MEMBER
IT APPEAL NOS. 93 TO 98 (MUM.) OF 2012
[ASSESSMENT YEARS 1998-99 TO 2000-01]
MARCH  4, 2015
Section 271(1)(c) of the Income-tax Act, 1961 - Penalty - For concealment of income (Revised return) - Assessment year 1998-99 - Assessee filed original return declaring a certain income - Subsequently he filed revised return declaring additional income being share of profit from firm 'R', which was claimed as exempt in original return - Prior to filing of revised return, a search was conducted under section 132 upon firm 'R' and same was found to be a bogus firm - Thereafter Assessing Officer issued on assessee a notice under section 148, in response to which assessee submitted that revised return be treated as filed in response to said notice - Thereupon Assessing Officer completed assessment of assessee under section 143(3) read with section 147 determining total income as was declared in revised return - He also levied penalty upon assessee under section 271(1)(c) holding that assessee had filed revised return after detection of alleged bogus firm 'R' and, therefore, revised return was not voluntary and it was a case of concealment of income - Whether as assessee had suo motu offered additional income and same was not detected during any course of action by revenue authorities against assessee, it could not be said to be a case of concealment of income inviting penalty action under section 271(1)(c) - Held, yes [Para 4] [In favour of assessee]
G.P. Mehta for the Appellant. Love Kumar for the Respondent.

Life Shines Educational & Charitable Trust v. Assistant Commissioner of Income-tax*

IT: Where assessee-trust was only running a pre-school by collecting fees for imparting education to children, assessee's main objects were covered by charitable purposes 'education' under section 2(15) and it was entitled for registration under section 12AA
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[2015] 60 taxmann.com 155 (Chennai - Trib.)
IN THE ITAT CHENNAI BENCH 'A'
Life Shines Educational & Charitable Trust
v.
Assistant Commissioner of Income-tax*
A.MOHAN ALANKAMONY, ACCOUNTANT MEMBER
AND S.S. GODARA, JUDICIAL MEMBER
IT APPEAL NOS. 2818 AND 2819 (MDS.) OF 2014
MARCH  5, 2015
Section 2(15), read with sections 12AA and 80G, of the Income-tax Act, 1961 - Charitable purpose (Education) - Commissioner on perusal of details furnished by assessee trust found that trust was only running a pre-school for pre-KG, LKG and UKG classes by collecting fees for imparting education to children and it did not carry out any reasonable charitable activity ever since its creation - He rejected application for registration under section 12AA holding that assessee had not complied requirements of section 12AA - He also refused to grant registration under section 80G - Whether assessee's main objects were covered by charitable purposes 'education' under section 2(15) - Held, yes - Whether, therefore, assessee was entitled for registration under section 12AA - Held, yes [Para 4] [In favour of assessee/Matter remanded]

IP India Foundation v. Director of Income-tax (Exemptions)*

IT : Where assessee's primary purpose remained advancement of objects of general public utility, even if an incidental or ancillary activity for purpose of achieving main purpose was profitable in nature, denial of registration was unjustified
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[2015] 61 taxmann.com 59 (Hyderabad - Trib.)
IN THE ITAT HYDERABAD BENCH 'A'
IP India Foundation
v.
Director of Income-tax (Exemptions)*
P.M. JAGTAP, ACCOUNTANT MEMBER
AND SMT. ASHA VIJAYARAGHAVAN, JUDICIAL MEMBER
IT APPEAL NO. 739 (HYD.) OF 2014
JANUARY  30, 2015
Section 12A, read with section 2(15), of the Income-tax Act, 1961 - Charitable trust - Registration of (Business practices) - Assessee-trust filed an application for registration under section 12AA - Director of Income-tax (Exemption) rejected said claim by holding that assessee intended to engage business practices for purpose of economic growth, which did not come under purview of charitable purposes - It was observed that main object of assessee was to focus on area of education and environment, watershed management, women empowerment through skill development initiatives, provision of drinking water, youth empowerment, medical health camps, environmental conservation program, and promotion of sports and a host of extracurricular activities at local levels aimed towards community sustainability - Whether since assessee's primary purpose was advancement of objects of general public utility and it would remain charitable even after an incidental or ancillary activity for purpose of achieving main purpose was profitable in nature, order of Director of Income-tax (Exemptions) was not correct - Held, yes [Paras 7 and 8] [In favour of assessee]

Smt. Rekhaben Thakkar v. Assistant Commissioner of Income-tax, Central Circle-1, Baroda

IT : When cheque issued by assessee to searched person was found from searched person, cheque did no more continue to belong to assessee; further where no satisfaction was recorded by Assessing Officer of person searched and cheque was also undated, conditions for issuing notice to assessee under section 153C were not satisfied
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[2015] 61 taxmann.com 60 (Ahmedabad - Trib.)
IN THE ITAT AHMEDABAD BENCH 'A'
Smt. Rekhaben Thakkar
v.
Assistant Commissioner of Income-tax, Central Circle-1, Baroda*
G.D. AGRAWAL, VICE-PRESIDENT
AND S.S. GODARA, JUDICIAL MEMBER
IT APPEAL NOS. 3088 TO 3093 (AHD.) OF 2008 AND 666 TO 671 (AHD.) OF 2010
[ASSESSMENT YEARS 1999-2000 TO 2004-05]
JUNE  12, 2015
Section 153C of the Income-tax Act, 1961 - Search and seizure - Assessment of income of any other person (Condition precedent) - Assessment years 1999-2000 to 2004-05 - During search at premises of Group K, an undated cheque issued by assessee in favour of its director was seized - Assessing Officer issued notice under section 153C to assessee - Whether where no satisfaction was recorded by Assessing Officer of person searched, and satisfaction was recorded by Assessing Officer of assessee being 'other person', notice issued to assessee under section 153C was not valid - Held, yes - Whether since cheque, on basis of which notice was issued, was undated, it could not be said to pertain to any of years for which notice was issued - Held, yes - Whether since cheque was in name of director of Group K which was searched and cheque was found from person upon whom cheque was drawn, cheque, in fact, belonged to said group and could not be said to be continued to 'belonging to' assessee who issued cheque - Held, yes - Whether, therefore, conditions for issue of notice to assessee under section 153C were not satisfied - Held, yes [Para 17] [In favour of assessee]

Splitting up or reconstruction or transfer of used assets of its non STPI unit

IT : Where STPI unit established by assessee for which section 10A deduction was claimed, was not formed by splitting up or reconstruction or transfer of used assets of its non STPI unit , assessee would be entitled for said deduction
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[2015] 60 taxmann.com 127 (Karnataka)
HIGH COURT OF KARNATAKA
Commissioner of Income-tax
v.
Quest Informatics (P.) Ltd.*
N.KUMAR AND B. VEERAPPA, JJ.
IT APPEAL NOS. 188 TO 190 OF 2014
JANUARY  5, 2015
Section 10A of the Income-tax Act, 1961 - Free trade zone (Splitting up or reconstruction) - Assessment years 2007-08 to 2009-10 - Assessee, an Indian company, was engaged in business of computer software development and business process outsourceing - During financial year 2005-06, assessee was running its business from a non-STPI unit under a rented premises - During said period, assessee applied for permission to set up STPI unit at ground floor of said premises - STPI authorities granted approval for setting up of STPI unit at ground floor of said premises - STPI authorities duly granted approval - Assessee started its business in newly set up unit during financial year 2006-07 - Assessee also continued to carry out its business from non-STPI unit also - However, separate books of account were maintained by assessee for STPI unit and non-STPI unit - Whether where STPI unit established by assessee for which section 10A deduction was claimed was not formed by splitting up or reconstruction or transfer of used assets of an existing unit, assessee would be entitled for said deduction - Held, yes [Paras 3 and 4] [In favour of assessee]

Assessee/appellant was ill but got alright, illness cannot be any excuse for delay in filing appeal

IT: In order to constitute reason for delay in filing appeal under section 249, illness must be at time of expiry of limitation; if assessee/appellant was ill but got alright, illness cannot be any excuse for delay in filing appeal
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[2015] 61 taxmann.com 46 (Chandigarh - Trib.)
IN THE ITAT CHANDIGARH BENCH 'SMC
Satbarg Singh
v.
Income-tax Officer, Ward- 2 (3), Chandigarh*
H.L. KARWA, VICE-PRESIDENT
IT APPEAL NOS. 352 TO 356 (CHD.) OF 2015
[ASSESSMENT YEARS 1994-95 TO 1998-99]
JULY  3, 2015
Section 249 of the Income-tax Act, 1961 - Commissioner (Appeals) - Form of appeal and limitation (Condonation of delay) - Assessment years 1994-95 to 1998-99 - Assessee filed appeals against assessment orders for relevant assessment years after delay of almost 12 years - Reason stated for delay was that assessee was not keeping up good health, was in severe depression due to various issues and lenders were asking for money - Facts revealed that assessee was regularly performing his duties in his department till his retirement in 2009 - No proof was submitted to show that due to illness, assessee was utterly disabled to attend to any work or was unfit to assist his legal representative or advocate - Whether in order to constitute reason for delay in filing appeal, illness must be at time of expiry of limitation; if assessee/appellant was ill but got alright, there cannot be any excuse for delay in filing appeal - Held, yes - Whether there being no evidence on record to show that assessee was prevented by sufficient cause from filing appeals within time, delay in filing appeals before Commissioner (Appeals) could not be condoned and, accordingly, appeals were to be dismissed - Held, yes [Para 11] [In favour of revenue]

Printtech v. State of Haryana

CST & VAT : Haryana VAT : In terms of provisions of section 15(4), date of communication of assessment order could not be taken as date of making of order
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[2015] 59 taxmann.com 421 (Punjab & Haryana)
HIGH COURT OF PUNJAB AND HARYANA
Printtech
v.
State of Haryana*
AJAY KUMAR MITTAL AND JASPAL SINGH, JJ.
VATAP NO. 88 OF 2014 (O & M)†
JULY  25, 2014
Section 15 of the Haryana Value Added Tax Act, 2003 - Returns, assessment and tax administration - Registered dealer - Assessment of - Assessment year 2003-04 - Assessing Authority made assessment of assessee to best of his judgment and passed assessment order under section 15(4) on 29-3-2013 - He issued said order on 2-7-2013 and it was served on assessee on 13-7-2013 - Assessee submitted that date of issue of assessment order would constitute passing of assessment order and same being after 31-3-2013 was beyond limitation - Hence, assessment order was barred by limitation - Whether what is of essence under section 15(4) is to assess to best of Assessing Authority's judgment amount of tax due from assessee and it nowhere requires that assessment order must be served on assessee before expiry of period of limitation prescribed for framing assessment - Held, yes - Whether, therefore, date of communication of assessment order could not be taken as date of making of order - Held, yes - Whether in view of position of law assessment had been made within time prescribed under Act and it was not barred by limitation - Held, yes [Paras 7 and 17] [In favour of revenue]
Circulars, Notifications and Instructions : Instruction dated 13-12-2004 and Instruction dated 14-3-2006
__._,_.___

Otis Elevators Company (India) Ltd. v. Commissioner of Commercial Taxes, U.P. Lucknow

CST & VAT : Uttar Pradesh VAT - Where Assessing Authority made assessment relying upon judgment of Supreme Court in case of State of Andhra Pradesh v. Kone Elevators (India) Ltd.[2005] taxmann.com 1542 and raised tax demand upon assessee, since said judgment had now been overruled by Supreme Court in another case, assessee was entitled to complete stay of demand amount
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[2015] 59 taxmann.com 458 (Allahabad)
HIGH COURT OF ALLAHABAD
Otis Elevators Company (India) Ltd.
v.
Commissioner of Commercial Taxes, U.P. Lucknow*
ANIL KUMAR, J.
TRADE TAX REVISION NO. 46 OF 2015†
JULY  3, 2015
Section 55, read with section 57, of the Uttar Pradesh Value Added Tax Act, 2008 - Appeals, revision, etc. - Appeal - Assessment year 2009-10 - Assessee was engaged in business of supplying of parts and components of lifts and elevators in offices, etc. - Assessing Authority relying on judgment of Supreme Court rendered in case of State of Andhra Pradesh v. Kone Elevators (India) Ltd. [2005] taxmann.com 1542 treated transaction in question as sale and raised tax demand upon assessee - First Appellate Authority stayed demand to extent of 50 per cent - Tribunal modified order of First Appellate Authority and granted stay to extent of 80 per cent of total demand - Whether since earlier judgment of Supreme Court in Kone Elevators (India) Ltd.'s case (supra) had now been overruled by Constitution Bench of Supreme Court in Kone Elevator India (P.) Ltd. v. State of Tamil Nadu [2014] 45 taxmann.com 150, assessee was entitled to complete stay of demand amount - Held, yes [Para 13] [In favour of assessee]

TPO made addition to assessee's ALP in respect of selling ready to serve food to its AE without giving adjustment on account of difference in capacity utilisation

IT/ILT : Where TPO made addition to assessee's ALP in respect of selling ready to serve food to its AE without giving adjustment on account of difference in capacity utilisation between assessee and its comparable, impugned addition deserved to be set aside
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[2015] 59 taxmann.com 437 (Pune - Trib.)
IN THE ITAT PUNE BENCH 'B'
Tasty Bite Eatables Ltd.
v.
Assistant Commissioner of Income-tax, Circle-7, Pune*
MS. SUSHMA CHOWLA, JUDICIAL MEMBER
AND R.K. PANDA, ACCOUNTANT MEMBER
IT APPEAL NO. 1682 (PN) OF 2011
[ASSESSMENT YEAR 2007-08]
JUNE  10, 2015
Section 92C of the Income-tax Act, 1961 - Transfer pricing - Computation of arm’s length price (Comparables and adjustments/Adjustments - Capacity utilization) - Assessment year 2007-08 - Assessee-company was engaged in business of manufacture, marketing and distribution of ready to serve and ready to cook food products and food intermediates - During relevant year, assessee entered into international transaction relating to sale of ready to serve foods to its AE - Assessee adopted TNM method to benchmark its transaction with its Associated Enterprises - It selected ADF Foods Ltd., as a comparable company to benchmark its transactions with AEs - Assessee's case was that its PBDT on cost during year was 6.25 per cent whereas that of comparable company ADF Foods Ltd. worked out to 9.02 per cent considering average of sales and cost - Contention of assessee to consider PLI as OP/OE and adjustment on account of under utilization of capacity while determining ALP of international transaction was not found acceptable by TPO - He thus made certain addition to assessee's ALP - It was noted that capacity utilisation of assessee worked out to 15 per cent whereas capacity utilisation of comparable company was 53 per cent and therefore, difference between two was significant and material to impact profit margin of assessee - Moreover, assessee's contention that transfer pricing adjustment had to be made with respect to international transactions only and not on entire sales as done by TPO also required verification - Whether in view of aforesaid, impugned addition was to be set aside and, matter was to be remanded back for disposal afresh - Held, yes [Paras 33,36 and 37] [In favour of assessee/Matter remanded]

Section 69B, read with section 147 of the Income-tax Act, 1961 - Undisclosed investments (Reopening of assessment)

IT : Where Assessing Officer passed reassessment order taking a view that assessee made unexplained investment in different items exceeding funds available with him, since said belief of Assessing Officer was not based on any relevant material and, moreover, impugned order was passed for bringing to tax only those incomes in respect of which no reasons were recorded, same deserved to be set aside
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[2015] 58 taxmann.com 36 (Guwahati - Trib.)
IN THE ITAT GUWAHATI BENCH
Income-tax Officer, Ward-2, Assam
v.
Namwar Ali Mazumdar*
H.L. KARWA, PRESIDENT
AND RAJENDRA, ACCOUNTANT MEMBER
IT APPEAL NOS. 83 & 84 (GAU.) OF 2012
C.O. NOS. 2 & 3 (GAU.) OF 2013
[ASSESSMENT YEARS 2004-05 & 2005-06]
JANUARY  28, 2015
Section 69B, read with section 147 of the Income-tax Act, 1961 - Undisclosed investments (Reopening of assessment) - Assessment years 2004-05 and 2005-06 - For relevant assessment years, Assessing Officer issued notice under section 148 seeking to reopen assessment - Reason recorded for reopening assessment was that assessee had made investment in different items which exceeded funds available with him and, thus, there was certain unexplained investment escaping assessment - Assessing Officer thereupon passed assessment order under section 147 read with section 143(3) making certain additions and disallowances - It was noted that reasons recorded for reopening of assessment were not based on any relevant material on record - It was also apparent that no income was put to tax with reference to undisclosed investment but reassessment order was passed for bringing to tax only those incomes in respect of which no reasons were recorded - Whether on facts, impugned reassessment order was without jurisdiction and deserved to be set aside - Held, yes [Paras 15 and 16] [In favour of assessee]

Where there was no intention on part of assessee to avoid or intentionally delay payment of taxes as admitted under section 140A

IT: Where there was no intention on part of assessee to avoid or intentionally delay payment of taxes as admitted under section 140A and belated payment was made voluntarily without resort to any coercisve steps, authorities were justified in restricting penalty to 25 per cent
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[2015] 57 taxmann.com 442 (Delhi)
HIGH COURT OF DELHI
Commissioner of Income-tax
v.
Naresh Kumar Jaggi*
SANJIV KHANNA AND V. KAMESWAR RAO, JJ.
IT APPEAL NO. 654 OF 2014†
DECEMBER  22, 2014
Section 221, read with section 140A, of the Income-tax Act, 1961 - Collection and recovery of tax - Penalty payable when tax in default (Delayed payment of tax) - Assessment year 2009-10 - Assessee had admitted tax under section 140A, however, had not paid same - Assessee took a stand that he had paid advance tax of some amount and balance amount was paid in the month of April, 2011 before issuance of show cause notice under section 140A(3) - Assessing Officer was of view that assessee had not shown and established a reasonable cause for non-payment of admitted tax and thus, imposed penalty of 100 per cent - However, Commissioner (Appeals) and Tribunal were of opinion that since there was no intention on part of assessee to avoid or intentionally delay payment of taxes and belated payment was made voluntarily without resort to any coercisve steps, penalty was to be restricted to 25 per cent - Whether based on cogent material and finding authorities were justified in restricting penalty to 25 per cent - Held, yes [Para 8][In favour of assessee]

Issue of a notice under section 143(2) is mandatory in reassessment proceedings

IT: Issue of a notice under section 143(2) is mandatory in reassessment proceedings and notices issued prior to reopening would not satisfy requirement specified under section 143(2)
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[2015] 57 taxmann.com 415 (Bangalore - Trib.)
IN THE ITAT BANGALORE BENCH 'C'
G.N. Mohan Raju
v.
Income-tax Officer*
SMT. P. MADAHVI DEVI, JUDICIAL MEMBER
AND ABRAHAM P. GEORGE, ACCOUNTANT MEMBER
IT APPEAL NOS. 242 & 243 (BANG.) OF 2013
[ASSESSMENT YEARS 2006-07 & 2007-08]
OCTOBER  10, 2014
Section 143, read with section 147, of the Income-tax Act, 1961 - Assessment (Notice under section 143(2)) - Assessment years 2006-07 and 2007-08 - Assessing Officer issued notice under section 148 and accepted request of assessee to treat his earlier returns as return filed in pursuance of said notices - Assessing Officer accepted request of assessee and assessments were completed under section 143(3), read with section 147 without issue of a notice under section 143(2) - Whether issue of notice under section 143(2) is mandatory in reassessment proceedings and notices issued prior to reopening would not satisfy requirement specified under section 143(2) - Held, yes - Whether where there was no valid issue of notice under section 143(2), reassessment were invalid - Held, yes [Para 8] [In favour of assessee]

RECENT - ITAT DECISIONS

Bir Bahadur Singh Sijwali vs. ITO (ITAT-Delhi)

S. 147: Reopening an assessment on the ground that there is need of an inquiry which may result in detection of an income escaping assessment is not valid

The important point is that even though reasons, as recorded, may not necessarily prove escapement of income at the stage of recording the reasons, such reasons must point out to an income escaping assessment and not merely need of an inquiry which may result in detection of an income escaping assessment.

Direct  Sales Pvt. Ltd vs. ITO (ITAT-Delhi)

Ss. 147/151: Merely stating "Approved" is not sufficient sanction of CIT and renders reopening void

A simple reading of the provisions of section 151(1) with the proviso clearly show that no such notice shall be issued unless the Commissioner is satisfied on the reasons recorded by the AO that it is a fit case for the issue of notice which means that the satisfaction of the Commissioner is paramount for which the least that is expected from the Commissioner is application of mind and due diligence before according sanction to the reasons recorded by the AO.

Test of unjust enrichment is passed by service provider and he is entitled to refund of service tax wrongly paid

Service Tax : Where invoice does not show service tax and service recipient certifies that he did not bear/pay service tax, test of unjust enrichment is passed by service provider and he is entitled to refund of service tax wrongly paid
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[2015] 55 taxmann.com 460 (Mumbai - CESTAT)
CESTAT, MUMBAI BENCH
Vyankatesh Real Estate Developers
v.
Commissioner of Central Excise, Nagpur*
ASHOK JINDAL, JUDICIAL MEMBER
ORDER NO. A/211/2014/SMB/C-IV
APPEAL NO. ST/644/2010-MUM
JANUARY  17, 2014
Section 11B, read with section 12A, of the Central Excise Act, 1944, sections 65(25b), 65(30a) and 83 of the Finance Act, 1994 and section 27 of the Customs Act, 1962 - Refund - Doctrine of unjust enrichment - Assessee, a builder and developer, sold flats to ultimate buyers of residential unit and paid service tax thereon - Later on, assessee realised that service tax was not payable and therefore, filed refund claim - Assessee produced certificate from buyers that they have not paid service tax to assessee and assessee had not raise invoice of service tax - Department denied refund on ground that bar of unjust enrichment was not passed - HELD : Service tax was calculated on sale price of flats and service tax, though not payable, was paid by assessee on their own - Buyers had certified that they had not paid service tax - No service tax invoice was issued pertaining to said transaction - Thus, it cannot be held that service tax has been passed onto buyer of flat - Hence, assessee had passed bar of unjust enrichment and was entitled to refund - Even otherwise, as service tax was not payable, section 11B was also not applicable [Paras 4 and 5] [In favour of assessee]
Hemant Rajandekar, CA for the Appellant. D.D. Joshi, Supdt. (AR) for the Respondent.

An appeal under section 35 is available even against interim order of Appellate Tribunal

FEMA : Where proceedings by way of a show cause notice were initiated against petitioners during sun-set period, provisions of FERA can be invoked
FEMA : An appeal under section 35 is available even against interim order of Appellate Tribunal
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[2015] 56 taxmann.com 9 (Delhi)
HIGH COURT OF DELHI
Batool Dawood
v.
Additional Director, Directorate of Enforcement, Govt. of India
RAJIV SHAKDHER, J.
W.P. (C) NOS. 1055, 1063, 1311, 1312 OF 2015
CM NOS. 1874, 1875, 1884, 1885, 2312 TO 2314, 2317 TO 2319 OF 2015†
FEBRUARY  11, 2015
Section 49, read with section 19, of the Foreign Exchange Management Act, 1999/Section 52 of the Foreign Exchange Regulation Act, 1973 - Repeal and Saving - Whether where proceedings by way of a show cause notice were initiated against petitioners during sun-set period, it was well within powers of Enforcement Directorate to invoke provisions of FERA - Held, yes [Para 6]
Section 35 of the Foreign Exchange Management Act, 1999/Section 54 of the Foreign Exchange Regulation Act, 1973 - High Court - Appeal to - Whether since section 35 gives a right to an aggrieved party to prefer an appeal against 'any' 'order' or 'decision' of Appellate Tribunal, an appeal even against an interim order of Appellate Tribunal would be available to petitioners - Held, yes [Para 11]

Section 179 of the Income-tax Act, 1961 - Company in liquidation

IT : Unless it was shown that it was not possible to recover tax due from said company, no liability could be fixed on assessee-director of said company to pay due tax
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[2015] 55 taxmann.com 315 (Karnataka)
HIGH COURT OF KARNATAKA
A.S. Chinnaswamy Raju
v.
Union of India*
H.G. RAMESH, J.
WRIT PETITION NOS. 7212,7213 & 7880 OF 2014 (T-IT)
AUGUST  21, 2014
Section 179 of the Income-tax Act, 1961 - Company in liquidation - Liabilities of directors (Condition precedent) - Whether where Assessing Authority had not referred to any proceedings initiated against company to show that it was not possible to recover tax due from said company, no liability could be fixed on assessee-director of said company to pay due tax - Held, yes [Para 5] [In favour of assessee/Matter remanded]

Section 10A of the Income-tax Act, 1961 - Free trade zone (Condition precedent)

IT : Customs bonding is not a requirement or a condition precedent for granting exemption under section 10A
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[2015] 55 taxmann.com 473 (Karnataka)
HIGH COURT OF KARNATAKA
Commissioner of Income-tax
v.
Caritor (India) (P.) Ltd.*
N.KUMAR AND B. MANOHAR, JJ.
IT APPEAL NOS. 402 & 403 OF 2008
JUNE  20, 2014
Section 10A of the Income-tax Act, 1961 - Free trade zone (Condition precedent) - Whether customs bonding is not a condition precedent for granting exemption under section 10A - Held, yes - Whether once permission was obtained from STPI and unit was started in software technology park after April 1994, assessee was entitled to exemption under section 10A - Held, yes [Para 3] [In favour of assessee]

Section 68 of the Income-tax Act, 1961 - Cash credits (Sundry creditors)

IT: Where Assessing Officer had drawn an adverse conclusion only on account of non-verifiability of sundry creditors but there being no dispute as regards purchases, and trading results having been accepted, addition made under section 68 was not sustainable
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[2015] 55 taxmann.com 522 (Lucknow - Trib.) (TM)
IN THE ITAT LUCKNOW BENCH 'A' (THIRD MEMBER)
Income-tax Officer, Ward 29 (4), New Delhi
v.
Zazsons Exports Ltd.*
S.V. MEHROTRA, ACCOUNTANT MEMBER (AS A THIRD MEMBER)
SUNIL KUMAR YADAV, JUDICIAL MEMBER
AND A.K. GARODIA, ACCOUNTANT MEMBER
IT APPEAL NO. 219 (LUCK.) OF 2009
[ASSESSMENT YEAR 2005-06]
APRIL  25, 2014
Section 68 of the Income-tax Act, 1961 - Cash credits (Sundry creditors) - Assessment year 2005-06 - Assessee company was carrying on business of export of finished leather and manufacture of shoe uppers and shoes - While framing assessment, Assessing Officer required assessee to furnish complete list of persons from whom raw hides of goats were purchased and from whom advance in shape of credit had been taken by assessee and to whom huge amounts were payable - Not being satisfied with reply given by assessee, Assessing Officer made addition under section 68 on ground that assessee failed to give postal address, whereabouts, creditworthiness of vendors and also could not prove genuineness of transaction - Whether mere non-verifiability of sundry creditors ipso facto would not lead to conclusion that sundry creditors were bogus - Held, yes - Whether since Assessing Officer had drawn an adverse conclusion only on account of non-verifiability of sundry creditors but there being no dispute as regards purchases and trading results having been accepted, addition made under section 68 was not sustainable - Held, yes [Paras 15.2 & 15.3][In favour of assessee]

Expenditure on total renovation of old premise is only capital expenditure

IT : Where assessee was in construction business, advertisement, sponsorship and brand-building expenses which were only in nature of selling costs of construction business, would not be capitalized
IT : Expenditure on total renovation of old premise is only capital expenditure
IT : 50 per cent of personnel costs of construction business that included managerial and supervisory costs was to be included in project cost as managerial and supervisory costs for project execution
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[2015] 55 taxmann.com 370 (Mumbai - Trib.)
IN THE ITAT MUMBAI BENCH 'F'
Vardhman Developers Ltd.
v.
Income-tax Officer, Ward-2(3)(4), Mumbai*
JOGINDER SINGH, JUDICIAL MEMBER
AND SANJAY ARORA, ACCOUNTANT MEMBER
IT APPEAL NO. 6820 (MUM.) OF 2012
[ASSESSMENT YEAR 2009-10]
FEBRUARY  4, 2015
I - Section 145, of the Income-tax Act, 1961 - Method of accounting - Valuation of stock (Advertisement, Sponsorship and brand-building expenses) - Assessment year 2009-10 - Assessee was in construction business - Whether advertisement, sponsorship and brand-building expenses were only in nature of selling costs which would not, therefore, stand to be capitalized to be included in valuation of work in progress - Held, yes [Para 4] [In favour of assessee]
II - Section 30, read with section 37(1), of the Income-tax Act, 1961 - Rent, rates, taxes, repairs and insurance for buildings (Business expenditure) - Assessment year 2009-10 - Whether expenditure incurred on refurbishment and renovation of an old premise, so as to make it fit for use cannot be classified as 'repairs'; and it is clearly an expenditure in capital field - Held, yes [Para 6] [In favour as revenue]
III - Section 145 of the Income-tax Act, 1961 - Method of accounting - Valuation of stock (Personnel cost Work-in-progress) - Assessment year 2009-10 - Assessee was in construction business - It had some projects which were under progress during year end - Whether managerial and supervisory costs being necessary inputs to project execution, 50 per cent of personnel cost was liable to be included in project cost - Held, yes - Whether since no particulars in respect of rent, rates and taxes were specified by assessee, 20 per cent of such expenditure was to be allocated to WIP toward project overhead cost - Held, yes [Para 8] [Partly in favour of assessee]

__._,_.___

Section 271(1)(c), read with section 32, of the Income-tax Act, 1961 - Penalty - For concealment

IT : Where revenue authorities passed penalty order taking a view that assessee had raised a false claim of depreciation, in view of fact that assessee brought all relevant particulars on record in support of its claim, impugned penalty order deserved to be set aside.
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[2015] 55 taxmann.com 406 (Bombay)
HIGH COURT OF BOMBAY
Commissioner of Income-tax
v.
Indusind Bank Ltd.*
S.C. DHARMADHIKARI AND A.K. MENON, JJ.
IT APPEAL NO. 1293 OF 2012
SEPTEMBER  24, 2014
Section 271(1)(c), read with section 32, of the Income-tax Act, 1961 - Penalty - For concealment of income (Deduction wrongly claimed) - During relevant year, Assessing Officer rejected assessee's claim for depreciation in respect of certain lease transactions on ground that said transactions were not genuine - He also passed a penalty order under section 271(1)(c) for raising a false claim of deduction - Tribunal finding that there was no concealment of particulars of income nor furnishing of inaccurate particulars of income, set aside penalty order - Revenue filed instant appeal raising a plea that even if assessee had approached Settlement Commission during some assessment years and accepted order of Settlement Commission, still it raised a false claim for depreciation during relevant year - Whether since all relevant particulars were available on record, plea raised by revenue had no merit - Held, yes - Whether, therefore, Tribunal was justified in setting aside impugned penalty order - Held, yes [Para 4] [In favour of assessee]
Vimal Gupta, Sr. Counsel, Ms. Padma Divakar and Vipul Bajpayee for the Appellant. Sanjiv Shah for the Respondent.