1

THE CHAMBER OF TAX CONSULTANTS

3, Rewa Chambers, Ground Floor, 31, New Marine Lines, Mumbai - 400 020 Tel.: 2200 1787 / 2209 0423 Fax: 2200 2455 E-mail: office@ctconline.org

Visit us at: Website: http://www.ctconline.org

CA DINESH R SHAH

Date: 30/07/2015 Study Group Meeting

A. OTHERS.

(1) Deemed Dividend

The current Account and Business transactions among group companies are not

deemed dividend.

Ishwar Chand Jindal V/s. Asst. CIT (2015) 121 DTR (Delhi Tribunal) 241

(2) Recovery Stay: Demand prima facie excessive Prima facie assessee’s liability not

exceeding Rs.60 lakhs tax demand Rs. Nine Crores stayed pending appeal before CIT

(A) on deposit of Rs. 60 lakhs.

SHCIL Service V/.s. Asst. CIT (2015) 121 DTR (Bombay H.C) 155

(3) Car Park Area: U/ s 801B (10) (A.Y. 2004-05) is not includible in the built up area of

the residential unit for the purpose of determing the maximum built up area under S.80-

1B (10) CIT V/s Subha Reddy HUF

(2015) 121 DTR (Madras HC) 115 (121)

(4) Income from undisclosed Sources. Addition u/s 69.

A.O correctly added the excess Jewellery other than what has been found in the wealth

tax assessment as unexplained Investment in Jewellery and demanded tax and

penalty instruction No 1916 dt. 11/5/1994 were of no avail VGP Ravidas V/s Asst. CIT

(2015) 121 DTR (Madras HC) 44 (122)

(5) Proceedings:- Power of I.T Authorities Survey to verify compliance with TDS

provisions – Term- proceedings as defined under Se.133A includes TDS proceedings

and therefore Survey could be conducted for obtaining information regarding

compliance with TDS provisions even prior to insertion of sub-s (2A) in Se.133A. [w.e.f

1/10/2014)

2

Nokia India (P) Ltd V/s. Dy Director of IT (IT) (2015) 121 DTR (Delhi Tribunal)

(6) Non Complete clause:- A.. 1994-95 (prior to amendment.)

The Assessee group surrendered his share holding at Rs.400 per shares and the

agreement. Combined various negative or restrictive covenants regarding non-

Competition intellectual property right etc assessee were justified in apportioning a sum

of Rs.100 out of Rs.400 as consideration towards negative covenants. Tribunal was

therefore justified in law in treating a sum of Rs.100 per share as Capital receipt not

chargeable to tax.

CIT V/s. Usha Sabool (2015) 121 DTR (P & H High Court) 1 or 374 ITR 695.

(7) Income from other sources:- Se.57 (III) Investment in optionally convertible debenture

yielding lower rate of Interest while borrowing at a higher rate of Interest if it is genuine

transaction- same should be accepted. Atir textile Industries (P) Ltd. V/s Dy CIT

(2015) 120 DTR (Gujarat H.C) 338

(8) Loss- Set off:- Se. 94 (7) CIT V/s Globe Capital Market Ltd. (2015) 120 DTR (SC)

311

Loss on sale of Securities vis-a vis dividend stripping transactions. Loss arising in

course of dividend stripping transaction before the insertion of S.94 (7) w.e.f. 1st April

2002 can not be disallowed:-

(9) Gift received by company: Liability to MAT/ Deemed dividend

Dy CIT V/s KDA Enterprises.

(2015) 68 SOT 349 (Mumbai)

No tax or Mat on donee- Company in respect of gift received from another concern

ITAT affirms gifting powers of a company.

(10) Capital Gain or Business Income.

Arun Toshniwal V/s Dy CIT

(2015) 375 ITR 270 (Bombay) (2)

Non Complete fees Deprivation of business taxable .

B. INCOME FROM HOUSE PROPERTY.

(11) Annual Letting Value

(2015) 375 ITR 66 (Bombay) High Court.

Income from House Property. Annual letting value

3

Mode of determination I.T Act 1961.

C. BUSINESS INCOME AND EXPENDITURE.

(12). Speculative Loss: Jobbing and arbitrage by member of stock exchange is business

Loss and net speculative Loss.

CIT V/s. First Securities (P) Ltd. (2015) 121 DTR (Karnataka H.C) 279

(13) Setting up of business:- Company incorporated in Sep.2007 having made

correspondence with renowed companies in India rented office premises taken shop

and establishment licence assessee had set up business and hence eligible to claim

business expenditure for A.Y. 2008-09.

Carefour WC & C India (P) Ltd. V/s. Dy CIT

(2015) 121 DTR (Delhi H.C) 249

(14) Excessive or unreasonable payment u/s 40A (2).

The Assessee paid transport charges of molasses two transporters did not appear for

cross exam and the AO having not brought any material on record to prove that the

payments made by the assessee were excessive made on estimated basis on the

assumption that the payments were excessive can not be sustained Asst. VIT V/s.

Superb Agroved Industries (P) Ltd. (2015) 121 DTR(Chd Tribunal) 130 (127)

(15) Profits chargeable to tax u/s 41(1) unproved credit. Assessee having not adduced any

evidence or even explanation as to why the impugned amount outstanding for periods

from 3 to 25 years were not paid in normal course only inference under the

circumstances is that the liability no longer exists. It has been held Se.41 (1) is

attracted.

Natural Gas Company (P) Ltd V/.s. Dy CIT (2015) 121 DTR Mumbai (Tribunal) 86

(125)

(16) Disallowance under Se.43B:- Conversion of Interest payable into loan- In view of

explanation 3C appended to Se.43B with retrospective effect from 1st April 1989

conversion of interest amount of loan cannot be regarded us actually paid within the

meaning of Se.43B and therefore same to be disallowed:-

CIT V/s. Pemar Profits Ltd. (AP) 120 DTR (APHE) 296.

(17) Profit chargeable to tax under Se. 41 (1)

CIT V/s. Velocient Technologies Ltd (2015) 120 DTR Del ITAT (201)

4

Forfeiture of Loan amount does not attract Se.41 (1) of I.T Act 1961.

(18) Loss incurred on trading in derivatives.

ITO V/s Emperor International Ltd. (2015) 121 DTR Delhi Tribunal) 195 (129)

In view of Se.43(5) proviso (d.) Loss incurred by the assessee from trading in

derivatives could not be treated as speculative loss.

BUSINESS INCOME – DEDUCTION.

(19) Bad Debts.

Asst. CIT V/s. Living Media India Ltd.

(2015) 40 ITR (Tribunal) 610 (Delhi)

Law after 1989- Assessee writing off Debts in its Books of Account sufficient. Not

necessary for assessee to establish debt became irrecoverable SS 36 (1) (vii) 36 (2)

TRF Ltd. V/s. CIT (2010) 323 ITR 397 (SC) followed.

(20) Interest on borrowed Capital

Dy CIT V/s. Alliance Retreat (P) Ltd.

(2015) 40 ITR Tribunal 661 (Chennai)

Interest on borrowed Capital Failure to establish that assessee advanced Loan to

Sister concern only out of interest hearing funds- Assessee furnishing details of Interest

free funds and utilization of entire secured Loan for Business purposes Department can

not dictate assessee to conduct business affairs in particular manner Disallowance not

proper.

(21) Housing Projects- Special deduction u/s 801B (10)

Income tax Officer V/s Paras Builders.

(2015) 40 ITR Tribunal 507 Pune.

Condition precedent. Assessee combining two Raw Houses into one unit in violation of

Section 801B 10 © deduction can not be denied in entirety- assessee entitled to

deduction in respect of remaining unit constructed in accordance with conditions

prescribed under Act.

D. CAPITAL GAIN.

(22) Se.54F Benefit.

Smt. Maya A Ajwani V/s ITO 7 (2) (4) Mumbai

(2015) 68 SOT 543: (6)

5

Section 54F relief allowed to wife as she gifted one house to her husband and held

only single house on date of transfer.

(23) Transferable Tenancy: and benefit of Se.54F

Archana Parasrampuria V/s ITO 24 (1) (3) Mumbai.

(2015) 68 SOT 550 (6)

Where assessee has purchased transferable tenancy i.e. the assessee had substantial

right over property which were almost identical o ownership of property exemption

under Se.54F was to be allowed.

(24) Development of property when transfer completed (?)

Dilip Anand Vasirani V/s. ITO

(2015) 69 SOT 1 (1)

Where assessee entered into a development agreement and (by facts it can be proved

he has not given the possession of property] and had given only licence to developer to

entered into property but and possession there of was given transfer of property did

not taken place on the execution of development agreement.

(25) Se.50C & Se.54

Nandlal Sharma V/s. ITO

(2015) 40 ITR (Tribunal) 518 Jaipur (4)

Capital Gains- Exemption- computation Actual Sale consideration to be taken- No

necessary to compute Stamp duty valuation under Section 50C Assessee entitled to

exemption.

(26) Transfer conversion of Capital Asset to Stock in trade

Fardeen Khan V/s. Asst. CIT (2015) 40 ITR (Tribunal 487 (Mumbai)

Series of activities- Facts and Circumstances undertaken by assessee showing Land

convertered in stock in trade much before previous year. No development activity by

Developer- No transfer within meaning of Section 2 (47) (v) Section 2 (47) (VI) Not

applicable to assessee being Individual. No consideration from Developer towards

project to be excluded./ No Income accruing to assessee. Capital gains not

assessable.

(27) Capital Gains Exemption. Se.54 V/s. Se.50C.

Nandlal Sharma V/s ITO (2015) 40 ITR Tribunal 518 (Jaipur)

6

Capital Gains Exemption- Computation Actual Sales consideration to be taken. No

necessity to compute Stamp duty valuation under 50C. Assessee entitled to

exemption.

E. CHARITABLE TRUST.

(28) The DIT (Exemption can not deny registration u/s 12A only on the ground of non

registration of Charitable Trust under (Local trust Act} i.e. under the Haryana

Registration and Regulation of Societies Registration Act 2012. Assessee- trust is

entitled for registration under 12A. Paramount Education Charitable Trust V/s. CIT

(2015)120 DTR ( Chandigrah ITAT) 461(120) or (2015) 40 ITR Tribunal 555

(Chandigarh).

(29) Charitable Purpose: Exemption

Association of State Road Transport Undertaking V/s CIT (2015) 40 ITR Tribunal 622

Delhi.

Revision, Commissioner- Charitable Purpose- Exemption Association of apex

Government body of State Road Transport undertaking created by Government of

India- Carrying out test Laboratory Services and consultancy Activities carried out with

charitable purpose. No object to earn profit A.O making reasonable inquiry- Notice u/s

263 not sustainable exemption allowable on receipts from test laboratory chares and

consultancy.

(30) Meaning of Charitable Purpose:-

National Horticulture Board V/.s Asst. CIT

(2015) 40 ITR Tribunal 710 (Delhi)

Society set up by Government of India and disbursing subsidies society charging fees

for processing subsidiary application Not business activity. Society’s activities do not

cease to be charitable- Society entitled to exemption I.T Act 1961 Se. 2 (15) 10 (23C

(iv) .

(31) Charitable Purpose: Exemption.

Lions Club of Anna Nagar Charitable Trust V/s Dy CIT

(Exemptions) (2015) 40 ITR Tribunal 746 (Chennai).

7

Assessee providing diagnostic Services at minimum cost No diversion of funds-

charging fees can not be reasons to deny exemption. Diagnostic Services can be

treated as medical relief. Entitled to deduction under Section 11.

(32) Change in trust deed-Effect: Permission from court (?)

Heal a child foundation V/s Director of I.T (Exemptions)

(2015) 40 ITR (Tribunal) 550 Hydrabad.

Special deduction- donation to charitable Insstitution.

Trustees empowered to make amendment to trust deed and approval of Civil Court not

required. Approval not to be denied for want of approval of Civil Court for amendment

of trust deed Income tax Act 1961. Se 80G (5) (VI).

F. ASSESSMENT APPEAL REVISION ETC.

(33) The Tribunal adjourned the appeal on basis of letter than Intimation of notice be given

to the assessee.

Ananda Nilayam V/s ITO (AP) 121 DTR (APHC) 311 (133)

(34) Rule of consistency.

A.O having never disallowed assessee’s claim of deduction of Expenditure under the

head temporary site accommodation in any earlier assessment year, Similar claim can

not be disallowed UP State Bridge Corp. Ltd. V/s Dy. CIT.

(2015) 121 DTR (Lucknow Tribunal) 266 (133)

(35) Addition on Basis of some Loose Paper. Impugned.

Addition of Rs.3.64 Crores made only on the basis of some Loose Papers and a chit

could not be sustained in the absence of any concrete evidences:-

CIT V/s. Vivek Aggarwal (2015) 121 DTR (Delhi Tribunal) 241.

(36) Loss: Speculative Loss: Loss Incurred on trading in derivatives

In view of Se.43(5) proviso(d) by the assessee from trading in derivatives could not be

treated as speculative Loss ITO V/s Emperor International Ltd.

(2015) 121 DTR (Delhi Tribunal) 195 (129)

(37) Addition Under Se.69B Reference to DVO:L Books of A/cs maintained by assessee

as regard the cost of construction same has never been rejectd reference DVO by the

AO was invalid: Family of SP Subramanian Chettiar V/s. ITO (2014) 121 DTR Madras

H.C 196.

8

(38) Appeal Maintainability before High Court- Tribunal etc.

Small tax effect- Monetary limit as per the latest Instruction of CBDT should apply to

pending appeal also CIT V/s. Shyam Bin Works (2015) 121 DTR (Allahbad H.C) 121

(127).

(39) Reassessment on basis of Audit objection:-

The assessment can not be reopened merely on the basis of an audit objection.

Shree Ram Builders V/s., Asst. CIT (2015) 121 DTR Gujarat 101

(40) Scope of Remand by the Income tax Tribunal and Prospective amendment of law:

The A.O has to followed the direction of Tribunal and has to followed the special bench

decision and the A.O can not take advantages of the order of Tribunal for repeating the

disallowance by applying amendment of the relevant provision of Se. law Se,801B (IV)

Dy. CIT V./s. Prescon Builders (P) Ltd. (2014) 121 DTR Mumbai Tribunal 75. (122).

(41) Statement recorded during Survey. Evidentiary value.

Survey having been validly conducted the Statements recorded during the survey have

evidentiary value- Even otherwise evidence collected during illegal Survey can also be

relied upon.

Nokia India (P) Ltd V/s. Dy Director of IT (IT)

(2015) 121 DTR (Tribunal Del;hi) 1 (121)

(42) The Additional grounds based on the facts of the case can not be raised for the first

time before Income tax Tribunal.

Kerala Minerals and Metals Ltd. V/s CIT (2015) 120 DTR 394 Jerala H.C (119)

(43) Exemption under Se. 10A. Allowability. Assessee’s claim that it had 31

Independent Software development Units or undertaking set up at district

locations which were eligible for exemption under Se. 10A and not merely 13

undertaking considering 13 Mother licenses issued by the STPI authorities was

rightly rejected on the facts of the case. HCL Technologies V/s. Asst. CIT

(2015) 120 DTR (Delhi HC) 361 (119)

(44) Assessment Notice u/s. 143 (2): The Service of notice under speed post and the

Authorized Representative of the assessee having appeared before the A,O(and not

raised objection) and co. operated in the Assessment proceedings it has to be held, in

9

view of Se.292BB that the notice u/s 143 (2) has been served properly on the assessee

by the A.O and consequently the assessment is valid.

Mundra Woolen Mills (P) Ltd V/s Asst. CIT (2015) 120 DTR

Jaipur Bench of ITAT} 433 (119)

(45) Appeal (Tribunal) Adjournment- Lock of preparation.

Dy CIT V/s Reliance Communications Infrasture Ltd.

(2015 120 DTR Mumbai Tribunal 329 (116)

The files were received on Friday and hearing was on Monday- The Department

representative could not prepare the case is not valid reasons. (The Government

Servants are 24 hours on duty.

(46) Advance Interest Liability (?)

Rajshri Production (P) Ltd. V/s Addln., CIT 11 (1 Mumbai

(2015) 154 ITD 47 (1)

Assessee liable to pay interest u/s 234B & C if he did not pay advance tax liability on

specified dates.

(47) Reassessment u/s 147 of I.T Act 1961.

Hemant Traders V/s ITO 375 ITR 167 (Bombay HC)

Notice on basis of Survey Report and other materials not indicating any Income

chargeable to tax has escaped assessment Notice invalid.

(48) Club Membership fees.

Asst. CIT V/s. H.T Media Ltd.

(2015) 40 ITR Tribunal 185 Delhi.

Held that club membership fees is a business Expenditure.

(49) Monetary ceiling limit:- Instruction No.5 of 2014

ITO V/s. Bhupendra Singh Monga.

(2015) 40 ITR Tribunal 749 (Delhi)

Instructions No 5 of 2014 of C.B.D.T are applicable to pending cases also instruction

No 5 of 2014 dated July 10, 2014 issued by C.B.D.T was applicable to pending cases

and the monetary tax limit for filing appeal before the Tribunal was Rs.4 lakhs.

10

Therefore The Department ought not to have filed the appeal. Since the tax effect was

less than the amount prescribed for filing the appeal.

SEARCH A ND SEIZURE Assessment U/S. 153 A.

(50) A.O would make assessment and compute the total Income of the assessee including

the undisclosed Income. Whether the assessee had filled the return before the date of

search which processed u/s 143 (1)(a) Tribunal was not justified. In invalidating an

assessment u/s 153A only on the ground that no material was found during search.,

CIT V/s Rj Kumar Arora (2015) 120 DTR (Allahbad H.C) Page 401 (120)

(51). Penalty under Se.271 (1) ( c) & 271AAA of I.T Act 1961.

Marvel Tea Estate (I) Ltd. V/s. Dy. CIT

(2015) 120 DTR 305 (Delhi Tribunal)

Surrender of share capital after search operation. Assessee having admittedly

disclosed all the information relating to the increase in share capital. Penalty under

Se.271 (1) ( c) can not be levied.

H. T.D.S, TCS ETC.

(52). TDS: Under legal obligation: Payment to Punjab Water Supply & Sewerage Board out

of legal obligation - payment made by the assessee for execution of work relating to

sewerage pipelines and treatment of polluted water and out of legal obligation rather

than contractual arrangement and therefore the same do not attract the provision of

Section 194C. Executive Officer Jalandhar Improvement Trust V/s ITO (2015) 121

DTR Amristar Tribunal 127 (126)

(53). Late fee payable under Se.234E:- levy by way of intimation under Section 200A prior to

1st June 2015 there was no enabling provision in Se.200A for raising a demand in

respect of levy of fees under Se.234E and therefore the impugned levy of fees u/s

234E by way of intimation u/s 200A dt. 11th Jan.2014 is unsustainable in law. Sobia

Health Care (P) Ltd. V/s. Dy. CIT (2015) 121 DTR Amritsar (125) also Smt. T.G.

Indhirani V/s. Dy CIT [ITA No 1019/ 1020/ 1021) Madras/2015. Late filing fees can

not be charged u/s 234E.

(54). Credit for foreign TDS.

Blue Star Info tech Ltd. (2015) 154 ITD 81 (1) Mumbai Tribunal.

11

Credit for foreign TDS can not be denied even against tax levied on corresponding

Income eligible for Section 10A relief.

(55). Asst. CIT V/s. Ajit Ramakant Phatarpekar.

(2015) 154 ITD 144 (1)

Law prevalent at time of making payments would decide TDS liability, no disallowance

due to retro- amendment.

(56). Premium for acquiring leasehold right, whether Se.194I applicable.

ITO V/s. Earnest Towers (P) ltd.

(2015) 121 DTR (Kolkata Tribunal) 177 (129)

Assessee having paid lease premium for acquisition of right in the leasehold property

and not for use of land. Se 194I is not applicable.

(57). Failure of deductor to deposit TDS. Consequences on deductees.

Zulfikar Jeewanjee Moriswala V/s. Dy CIT (TDS)

(2015) 375 ITR 148 Bombay High Court.

Developer deducting tax but not depositing TDS amount in Government Treasury-

Assessee unable to load I.T Return. Writ Petition filed:- deductor depositing tax . No

Interest payable on late filing of return u/s 234A, 234B & 234C of I.T Act 1961.

(58). Doctors Working in Hospital:

CIT V/s. Grant Medical Foundation (Ruby Hall Clinic)

(2015) 375 ITR 49 (Bombay H.C)

Different terms and conditions under which various doctors rendered services- Terms

and conditions must be examined in each case to determine character of payment

received.

CASH CREDIT.

(59) Share Appliction Money.

ITO V/s. Neelkanth Fin build Ltd.

(2015) 40 ITR Tribunal 665 (Delhi)

Cash credit unexplained cash credis commissioner.

(Appeals) deleting addition based on documentary evidence., Proceed by assessee

No. infirming in order of commissioner. (Appeals) Se.68 (Please his decision best on

Se.68).

12

(60) Income from undisclosed Sources:-

Gurpeet Singh V/s ITO

(2015) 40 ITR (Tribunal) 467 Chandigarh.

Cash deposits in bank Assessee re depositing amount on withdrawals from account

and sufficient cash available with Bank. Nothing on record to show amount utilized by

assessee on withdrawals matter remanded for re adjudication.

PENALTY.

(61) Concealment of Income u/s 271 (1) ( c)

Dharni Developers V/s Asst. CIT (20150 40 ITR (Tribunal) 720 (Mumbai)

Assessing Officer initiating proceedings for concealing particulars of Income. l Initiating

proceeding for one default and levying penalty for another default not sustainable.

INTERNATIONAL TAXATION.

(62) Se.206AA V/s Double Taxation Avoidance Agreement.

Dy CIT (IT) V/s Serum Institute of India Ltd.

(2015) 40 ITR (Tribunal) 684 Pune.

Non resident Taxability in India Double taxation avoidance. Provisions of Act or

agreement more beneficial to assessee applicable DTAA providing lower tax Rate than

prescribed under Se.206AA of Act. A.O can not invoke Se.206AA of Act to Insist tax

to be deducted at 20 percent of payment to non-resident I.T Act SS.90 (2) 206AA.

OTHERS.

(63) Interpretation of taxing Statutes

CIT V/s Nitish Ramesh Chandra Chordia

(2015) 374 ITR 531

Amendments in taxing Statute: Prospective unless a different legistative intention is

clearly expressed. Circular No 3 of 2014 dated 24/1/2014 I.T Act 1961.

(64) 40 (c ) Business Expenditure Disallowance.

CIT V/s Rupam Pictures (P)Ltd (2015) 374 ITR 450 (Bombay)

Film production amounts paid as professional charges to directors for directing and

producing film- amount not paid in their capacity as memberts of board of directors.

No disallowance can be made.

(65) Se.55A: Rallis India Ltd V/s CIT

13

(2015) 374 ITR 462

CIT (A) if he is not satisfied that value done by the Registered valuer as on 1st April

1981 is less than market value. The CIT (A)can refer matter to the District Valuation

Officer.