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Welcome to Taxmann.com | Newsletter – Reporting the Facts with Taxmann’s Analysis. Today’s Edition Brings to You with a Section-wise Digest of Statutes | Judgments.
INCOME TAX
SECTION 14A OF THE INCOME-TAX ACT, 1961 - EXPENDITURE INCURRED IN RELATION TO INCOME NOT INCLUDIBLE IN TOTAL INCOME
AO's satisfaction: Where Assessing Officer being not satisfied with disallowance of Rs. 3.88 crores made by assessee under section 14A, had made disallowance of Rs. 87.85 crores without giving any reasons as to why he was not satisfied with disallowance of made by assessee, therefore, Tribunal was justified in restricting expenses under section 14A at 0.5 per cent of exempted income - Commissioner of Income-tax, (LTU) v. Reliance Industries Ltd. - [2024] 161 taxmann.com 423 (Bombay)
SECTION 23 OF THE INCOME-TAX ACT, 1961 - INCOME FROM HOUSE PROPERTY - ANNUAL VALUE
Where assessee had declared rental income of certain amount from basement and ground floor of a property, since assessee had filed documents to prove that there was no first floor in said property, impugned addition made on account of alleged rental income for first floor which was not in existence was to be deleted - Kedar Nath Babbar v. Income-tax Officer - [2024] 159 taxmann.com 1597 (Delhi - Trib.)
SECTION 28(i) OF THE INCOME-TAX ACT, 1961 - BUSINESS LOSS/DEDUCTIONS – ALLOWABLE AS
Where assessee sold goods to a party but since assessee got some other client for these goods, goods were purchased back from said party with a small margin and sold again to new purchaser, since transaction was carried out by assessee with earlier buyer with a mala fide intention of claiming refund of customs duty, Commissioner (Appeals) had been magnanimous enough to grant deduction of purchase value and disallow only loss arising out of total purchase and sales transaction with said previous buyer and that once element of mala fide intention or fraud was proved beyond doubt, no further concession needed to be given to assessee and that assessee had already obtained more than eligible relief from Commissioner (Appeals) - Kedar Nath Babbar v. Income-tax Officer - [2024] 159 taxmann.com 1597 (Delhi - Trib.)
SECTION 32 OF THE INCOME-TAX ACT, 1961 - DEPRECIATION - ALLOWANCE/RATE OF
Explanation 5: Depreciation claim was optional up to insertion of Explanation 5 to section 32(1) with effect from 1-4-2002 - Commissioner of Income-tax, (LTU) v. Reliance Industries Ltd. - [2024] 161 taxmann.com 423 (Bombay)
SECTION 37(1) OF THE INCOME-TAX ACT, 1961 - BUSINESS EXPENDITURE - ALLOWABILITY OF
Expenditure for drawing electricity line: Sales tax exemption granted by Government of Gujarat is capital receipt exempt from tax - Commissioner of Income-tax, (LTU) v. Reliance Industries Ltd. - [2024] 161 taxmann.com 423 (Bombay)
Travelling expenses: Where assessee claimed travelling expenses in respect of a person and submitted that person for whom travelling expenses incurred was an expert in repairing of coffee machines and he was sent to repair same for which travelling expenses, boarding and lodging expenses were incurred by assessee, since none of these facts were controverted by revenue, entire travelling expenses were to be allowed as business expenditure - Kedar Nath Babbar v. Income-tax Officer - [2024] 159 taxmann.com 1597 (Delhi - Trib.)
Vehicle and telephone expenses: Where assessee claimed vehicle and telephone related expenditure including interest on car loan and depreciation of car, disallowance should be restricted only to 10 per cent of these expenditure on account of personal element against 20 per cent disallowance made by Assessing Officer - Kedar Nath Babbar v. Income-tax Officer - [2024] 159 taxmann.com 1597 (Delhi - Trib.)
SECTION 40(a)(ia) OF THE INCOME-TAX ACT, 1961 - BUSINESS DISALLOWANCE - INTEREST ETC. PAID TO A RESIDENT WITHOUT DEDUCTION OF TAX
Tax paid by payee: Where assessee made payment towards processing charges, closure charges and exhibition expenses to three different parties without deducting tax at source on these payments, since assessee submitted that payees had duly included receipts in their respective hands and paid due taxes on same, Commissioner (Appeals) had correctly directed Assessing Officer to verify aforesaid claim of assessee in respect of all payments and if payees had included subject mentioned receipt in their respective returns and paid taxes then no disallowances should be made in hands of assessee under section 40(a)(ia) - Kedar Nath Babbar v. Income-tax Officer - [2024] 159 taxmann.com 1597 (Delhi - Trib.)
SECTION 40A(3) OF THE INCOME-TAX ACT, 1961 - BUSINESS DISALLOWANCE - CASH PAYMENTS EXCEEDING PRESCRIBED LIMITS
Salary: Where assessee paid salary to an employee in cash, since payee was stationed in Delhi where bank facilities were available in every nook and corner of Delhi, and further, assessee was not able to demonstrate business exigencies which warranted him to make payment of salary in cash, impugned disallowance made under section 40A(3) was to be upheld - Kedar Nath Babbar v. Income-tax Officer - [2024] 159 taxmann.com 1597 (Delhi - Trib.)
SECTION 41(1) OF THE INCOME-TAX ACT, 1961 - REMISSION OR CESSATION OF TRADING LIABILITY
Allowance or deduction: Where assessee filed belated return for assessment years 1991-92, 1992-93 and 1993-94 disclosing loss on account of accrued bank interest and AO disallowed carry forward of said loss, thereafter in relevant assessment year, AO made additions under section 41(1) on account of waiver of interest on bank loan, since assessee had neither subsequently obtained any amount in respect of bank interest debited in his books of account in assessment years 1991-92, 1992-93 and 1993-94 nor waiver of interest on bank loan in relevant assessment year was remission or cessation of a trading liability, interest waived by bank would not be chargeable to tax in hands of assessee under section 41(1) - Emec (P.) Ltd. v. Commissioner of Income-tax - [2024] 161 taxmann.com 415 (Calcutta)
SECTION 50B OF THE INCOME-TAX ACT, 1961 - CAPITAL GAINS - SLUMP SALE, COST OF ACQUISITION IN CASE OF
Scope of: SLP dismissed against order passed by High Court that where assessee-firm entered into a contract with a company to sell its soft drink business assets and earned surplus, since, assets such as goodwill, know how, etc. were transferred and cost of acquisition of these assets could not be ascertained, Tribunal rightly held that sale of business assets was not an itemized sale, but a slump sale and thus was not exigible to tax - Commissioner of Income-tax v. Shri Ganganagar Bottling Co. - [2024] 161 taxmann.com 426 (SC)
SECTION 54F OF THE INCOME-TAX ACT, 1961 - CAPITAL GAINS - EXEMPTION OF, IN CASE OF INVESTMENT IN RESIDENTIAL HOUSE
Triplex flat purchased by assessee which had common living area, common kitchen and several rooms satisfied definition of a single residential unit and would qualify for exemption under section 54F - Bhaskar Prataprai Shah v. DCIT - [2024] 161 taxmann.com 412 (Mumbai - Trib.)
SECTION 68 OF THE INCOME-TAX ACT, 1961 - CASH CREDIT
Unexplained credit: Where assessee had shown a receipt of certain amount from a party, since assessee had failed to give any satisfactory explanation that said receipt was genuine, said receipt of money credited in books of assessee during year was to be added as unexplained credit under section 68 for year under consideration - Kedar Nath Babbar v. Income-tax Officer - [2024] 159 taxmann.com 1597 (Delhi - Trib.)
Bank deposits during demonetization: Where assessee, a dal manufacturer, made cash deposits into bank account during demonetization period, since assessee had pre-dominantly cash sales and he was able to file various evidences to prove availability of cash-in-hand as on 8-11-2016 and that there was no abnormal variation in total sales, cash sales and cash deposits, impugned addition made towards such cash deposited in bank account of assessee under section 69A read with section 115BBE was to be deleted - Raju Dinesh Kumar v. Deputy Commissioner of Income-tax - [2024] 159 taxmann.com 1598 (Chennai - Trib.)
SECTION 80-IA OF THE INCOME-TAX ACT, 1961 - DEDUCTIONS - PROFITS AND GAINS FROM INFRASTRUCTURE UNDERTAKINGS
Computation of deduction: Where assessee had set up a captive power generating unit and provided electricity to its another unit and claimed deduction under section 80-IA in respect of profits arising out of such activity, valuation of electricity provided to another unit should be at rate at which electricity distribution companies were allowed to supply electricity to consumers - Commissioner of Income-tax, (LTU) v. Reliance Industries Ltd. - [2024] 161 taxmann.com 423 (Bombay)
SECTION 92C OF THE INCOME-TAX ACT, 1961 - TRANSFER PRICING - COMPUTATION OF ARM’S LENGTH PRICE
Corporate guarantee: Where TPO made guarantee commission adjustment at 2.90 per cent without giving any reasons, Tribunal was justified in restricting guarantee commission to 0.38 per cent of guaranteed amount - Commissioner of Income-tax, (LTU) v. Reliance Industries Ltd. - [2024] 161 taxmann.com 423 (Bombay)
Adjustments - Others: When, as a result of computation of income on basis of arm's length price, income of assessee is lowered or loss is increased, provisions of computation of income on basis of arm's length price would not be applicable - Principal Commissioner of Income-tax v. Mercer Consulting India (P.) Ltd. - [2024] 161 taxmann.com 420 (Delhi)
SECTION 119 OF THE INCOME-TAX ACT, 1961 - INCOME-TAX AUTHORITIES - POWER TO MAKE ORDERS, ETC.
Condonation of delay: Where assessee's revision petition under section 264 was dismissed on ground that assessee had not applied for revision within limitation time prescribed and there was delay of more than two years, Legislature had conferred power on Principal Commissioner to condone delay under section 119 to enable authorities to do substantive justice to parties by disposing matter on merits, impugned delay was to be condoned and matter was to be decided on merits - Pankaj Kailash Agarwal v. Assistant Commissioner of Income-tax - [2024] 161 taxmann.com 383 (Bombay)
SECTION 148A OF THE INCOME-TAX ACT, 1961 - INCOME ESCAPING ASSESSMENT - CONDUCTING INQUIRY, PROVIDING OPPORTUNITY OF HEARING, ETC.
Non-speaking order: Where Deputy Commissioner passed an order under section 148A(d) without considering response/reply submitted by assessee with respect to notice issued under section 148A(b), impugned order was liable to be set aside and matter was to be remitted to Deputy Commissioner for reconsideration afresh - GMR Airports Ltd. v. Deputy Commissioner of Income-tax - [2024] 161 taxmann.com 417 (Karnataka)
SECTION 194C OF THE INCOME-TAX ACT, 1961 - DEDUCTION OF TAX AT SOURCE - CONTRACTORS/SUB-CONTRACTORS, PAYMENTS TO
General: Where assessee, a registered employer under Dock Workers (Regulation of Employment) Act, 1948, made payment of wages to its employees i.e. dock workers through Administrative Committee/Board, it was not liable to deduct tax at source under section 194C - Kamal Mookerjee & Co. (Shipping) (P.) Ltd. v. Commissioner of Income-tax - [2024] 161 taxmann.com 419 (Calcutta)
SECTION 241 OF THE INCOME-TAX ACT, 1961- REFUNDS - POWER TO WITHHELD IN CERTAIN CASES
Adjustments against arrears: Where adjustments were made by CPC against refund due to assessee for assessment year 2007-08 on account of there being outstanding amounts from assessee in respect of earlier assessment years, however, assessee submitted that no intimations or demand notices were issued in respect of alleged arrears , assessee was to be permitted to submit a consolidated grievance petition before jurisdictional Assessing Officer in respect to assessment years in relation to which adjustments were made - Mukundan Vijayan v. Income-tax Officer - [2024] 161 taxmann.com 421 (Madras)
SECTION 260A OF THE INCOME-TAX ACT, 1961 - HIGH COURT - APPEAL TO
Rescheduling of CA exams: Where CA examinations were scheduled in such a manner that no examination was scheduled for any date when general elections were being held and, thus, right of candidates to cast their votes was not affected, plea for postponement of CA examinations on account of general elections could not be accepted - Harish Chandar T v. Institute of Chartered Accountants of India - [2024] 161 taxmann.com 418 (Delhi)
SECTION 271B OF THE INCOME-TAX ACT, 1961 - PENALTY - FOR FAILURE TO GET ACCOUNTS AUDITED UNDER SECTION 44AB
Scope of : Where assessee was earning commission income of only Rs. 3.24 lakhs on sales from Mother Dairy products and deposits of Rs. Rs. 2.77 crores in its bank were sales on behalf of Mother Dairy and that assessee was under a reasonable/bona fide belief that he was not needed to get his accounts audited as transactions belonged to Mother Dairy, impugned levy of penalty under section 271B upon assessee was to be deleted - Ved Singh v. Income-tax Officer - [2024] 159 taxmann.com 1568 (Delhi - Trib.)
GOODS AND SERVICES TAX LAWS
GSTN recommends CBIC to extend due date for filing of GSTR-1 of March 2024 for the monthly taxpayers
Editorial Note: The GSTN has noticed that taxpayers are facing difficulties in filing GSTR-1 intermittently since yesterday due to technical issues leading to slow response on the portal. GSTN has accordingly recommended to CBIC that the due date for filing of GSTR-1 for the monthly taxpayers be extended by a day i.e. till 12/04/2024.
SECTION 18 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 - INPUT TAX CREDIT - CREDIT IN SPECIAL CIRCUMSTANCES, AVAILABILITY OF
Where input tax credit utilized for payment of SGST by assessee was subsequently transferred and appropriated to respective state, said specific averments/allegations made by appellant were not addressed in the affidavit-in-opposition, therefore Instant case was to be adjourned for further proceedings directing revenue to get specific written instructions from appropriate authority of department with regard to these averments/allegations made by assessee - Cosyn Ltd. v. Assistant Commissioner of State Tax - [2024] 161 taxmann.com 413 (Calcutta)
SECTION 29 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 - REGISTRATION - CANCELLATION OF
Where petitioner-assessee had filed appeal within a period of three months from date of communication of said cancellation order dated on 20.09.2022, therefore, by virtue of provisions of Section 107(1), appeal filed by petitioner-assessee was within limitation; impugned order dated 25.10.2023, which held that appeal of petitioner-assessee was barred by limitation, was directed to be set aside - Tribest Fine Yarns Ltd. v. Union of India - [2024] 161 taxmann.com 370 (Bombay)
SECTION 73 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 - DEMANDS AND RECOVERY - TAX OR INPUT TAX CREDIT DUE NOT INVOLVING FRAUD MISSTATEMENT OR SUPPRESSION
Where assessee's GST registration was cancelled, and revenue authority attempted to serve show cause notice and personal hearing notice through GST portal, despite assessee being unable to access portal due to cancellation, such service was deemed invalid and in violation of principles of natural justice - Thirumalai Sales Corporation v. Assistant Commissioner (Circle) - [2024] 161 taxmann.com 427 (Madras)
SECTION 74 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 - DEMANDS AND RECOVERY– TAX OR INPUT TAX CREDIT INVOLVING FRAUD OR MISSTATEMENT OR SUPPRESSION
Where show cause notice was issued to assessee in relation to discrepancy between GSTR 1 statement and GSTR 3B returns and upon receipt thereof, assessee had remitted a sum of Rs.3,00,000/- towards tax liability before issuance of assessment order, which was 10 percent to total tax, since assessee was not heard before assessment order was issued, interest of justice warrants provision of an opportunity to assessee, and thus, assessment order was to be set aside subject to condition that assessee remits an additional sum of Rs.3,00,000/- as agreed - K.C. Mathaiyan v. Assistant Commissioner (ST) - [2024] 161 taxmann.com 365 (Madras)
SECTION 75 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 - DEMANDS AND RECOVERY - GENERAL
Where order under section 75(4) of CGST Act was passed without providing opportunity of personal hearing, though requested by assessee, was in violation of principles of natural justice and exfacie contrary to provisions of section 75(4) of CGST / MGST Act, impugned order was to be set aside - Cowtown Software Design (P.) Ltd. v. Union of India - [2024] 161 taxmann.com 363 (Bombay)
Where assessee had changed their address on GST portal twice, but show-cause-notice was sent to old address, thus assessee was not served show cause notice and could not participate in adjudication of show cause notice and eventually revenue proceeded to adjudicate show cause notice while passing ex-parte order-in-original, impugned order adjudicating show-cause-notice was in breach of principle of natural of justice, and was to be set aside - Fino Paytech Ltd. v. Union of India - [2024] 161 taxmann.com 416 (Bombay)
SECTION 107 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 - APPELLATE AUTHORITY - APPEALS TO
Where respondent-appellate authority could only allow extension of period of four months within which appeal could have been filed and petitioner-assessee filed appeal beyond period of four months, further, application of section 5 of Limitation Act, 1963 was implicitly excluded in tax-related matters, therefore, writ petition was dismissed - Yadav Scrap Traders v. Additional Commissioner - [2024] 161 taxmann.com 432 (Allahabad)
SECTION 130 OF THE CENTRAL GOODS AND SERVICES TAX ACT, 2017 - CONFISCATION OF GOODS OR CONVEYANCES AND LEVY OF PENALTY
Where stock was not weighed or counted, specifically when same could have very well been done in premises of assessee, calculation of stock by appellate authority on basis of an estimate was without any basis in law, thus, entire procedure followed by authorities indicates not only a lackadaisical approach but also showcases incompetence and inefficiency of authorities, therefore order related to confiscation and penalty related to additional stock was to be set aside - Eco Plus Steels (P.) Ltd. v. State of U.P. - [2024] 161 taxmann.com 414 (Allahabad)
FEMA BANKING AND INSURANCE LAWS
SECTION 16 OF THE FOREIGN EXCHANGE MANAGEMENT ACT, 1999 - APPOINTMENT OF ADJUDICATING AUTHORITY
Where a case against petitioner company pending before Special Director of ED was transferred to Additional Director of ED in view of enhancement of pecuniary jurisdiction by Ministry of Finance vide Notification in exercise of power under section 16, once pecuniary jurisdiction underwent changes, pending cases would be to transfer cases to appropriate Court, appointment of an Adjudicating Authority of a lower rank would not disentitle said Authority from conducting an adjudication, thus, petition filed by petitioner against such transfer was to be dismissed - Auro Logistics Ltd. v. Assistant Director (SRO) - [2024] 161 taxmann.com 404 (Madras)
SECTION 17 OF THE SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002 - APPLICATION AGAINST MEASURES TO RECOVER SECURED DEBTS
SC deprecates the practice of HCs entertaining WPs arising out of DRT Act/SARFAESI Act in an effective alternative remedy being available - PHR Invent Educational Society v. UCO Bank - [2024] 161 taxmann.com 410 (SC)
SECTION 19 OF THE PREVENTION OF MONEY LAUNDERING ACT, 2002 - POWER TO ARREST
Delhi HC rejects Delhi CM Kejriwal's plea to declare his arrest by ED as illegal - Arvind Kejriwal v. Directorate of Enforcement - [2024] 161 taxmann.com 403 (Delhi)
SECTION 34 OF THE SECURITISATION AND RECONSTRUCTION OF FINANCIAL ASSETS AND ENFORCEMENT OF SECURITY INTEREST ACT, 2002 - CIVIL COURT NOT TO HAVE JURISDICTION
Since, SARFAESI Act is a complete code in itself providing specific remedies for any grievance which may arise on account of proceedings taken thereunder and interference by High Court in such cases has to be minimal and actuated only in extraordinary or exceptional circumstances, and thus, instant petition by petitioner-successful bidder for quashing sale proceedings, being violative of provisions of SARFAESI Act as well as rule 8(6)(A) and (F) as well as rule 8(7) of 2002 rules, was to be dismissed with liberty to petitioner to avail remedies as available to it in accordance with law - Oswal (India) v. State Bank of India - [2024] 161 taxmann.com 409 (Punjab & Haryana)
OPINIONS
World Tax News: UK abolishes 'non-dom' tax regime; new arrivals to pay tax on global income after 4 years and more….. - Taxmann, Editorial Team - [2024] 161 taxmann.com 436 (Article)
Detailed Audit checklist on SA 510 Initial audit engagements-Opening Balances - Srinivasan Anand G., CA - [2024] 161 taxmann.com 435 (Article)
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