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Law on whether amount received by an employee from redemption of Stock Appreciation Rights (SARs) can be assessed as "perquisite" u/s 17(2) (iii) or as "profits of business" u/s 28 (iv) or as "capital gains" (despite no "cost of acquisition") u/s 45 explained. CBDT Circular No. 710 dated 24.07.1995 considered
ACIT. vs. Bharat V. Patel
(2018) TaxCorp(LJ) 14837 (SC)
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Diversion of income by overriding title: Only income that has actually accrued to the assessee is taxable. What income has really occurred to be decided, not by reference to physical receipt of income, but by the receipt of income in reality. The fact that there is no written agreement to show that the assessee was acting as a broker is not relevant. The relationship of the assessee vis-a-vis others can be inferred from the conduct of the parties
DCIT. vs. T. Jayachandran
(2018) TaxCorp(LJ) 14836 (SC)
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Bifurcation of lease rentals into interest and loan recovery: An assessee can only be taxed on "real income". The bifurcation of lease rental is not an artificial calculation. Lease equalization is an essential step in the accounting process to ensure that real income from the transaction in the form of revenue receipts only is captured for the purposes of income tax. The Guidance Note issued by the ICAI carries great weight. The method of accounting prescribed in such a Guidance Note, in order to compute real income and offering the same for taxation, cannot be disregarded by the AO unless such action falls within the scope and ambit of S. 145(3) of the IT Act
CIT. vs. Virtual Soft Systems Ltd.
(2018) TaxCorp(LJ) 14835 (SC)
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S. 158BD Block Assessment: Although s. 158BD does not speak of ‘recording of reasons’ as postulated in s. 148, but since proceedings u/s 158BD may have monetary implications, such satisfaction must reveal mental and dispassionate thought process of the AO in arriving at a conclusion and must contain reasons which should be the basis of initiating the proceedings u/s 158BD. Notice u/s 158BC issued on the same date to the searched person and the other person is not valid as no reasonable or prudent man can come to the satisfaction that any undisclosed income belongs to the other person unless the seized books of accounts etc are verified. The AO is empowered to issue a second notice u/s 158BD to the other person
Tapan Kumar Dutta vs. CIT
(2018) TaxCorp(LJ) 14834 (SC) · Section. 158BD
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S. 80-O: Law on meaning of "technical assistance" and when services can be said to have made available "information concerning industrial, commercial or scientific knowledge, experience or skill" explained
B. L. Passi vs. CIT
(2018) TaxCorp(LJ) 14833 (SC) · Section. 80-O
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It is a fundamental rule of law of taxation that, unless otherwise expressly provided, income cannot be taxed twice. A taxing Statute should not be interpreted in such a manner that its effect will be to cast a burden twice over for the payment of tax on the taxpayer unless the language of the Statute is so compelling that the court has no alternative than to accept it. In a case of reasonable doubt, the construction most beneficial to the taxpayer is to be adopted
Mahaveer Kumar Jain vs. CIT
(2018) TaxCorp(LJ) 14809 (SC)
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S. 292-B: A s. 148 notice issued in the name of a company which does not exist upon its conversion into a LLP is valid if there is material to show that the issue in the name of the company was a clerical mistake. The object and purpose behind s. 292-B is to ensure that technical pleas on the ground of mistake, defect or omission should not invalidate the assessment proceedings, when no confusion or prejudice is caused due to non-observance of technical formalities
Skylight Hospitality LLP vs. ACIT
(2018) TaxCorp(LJ) 14716 (SC) · Section. 292-B
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S. 194-H/201 TDS Liability: Law on whether relationship is that of "principal and agent" and whether payment is of the nature of "commission" explained. Non-compliance of s. 194H attracts the rigor of s. 201 which provides for consequences of failure to deduct or pay the tax. Jagran Prakashan vs. DCIT 345 ITR 288 (All) distinguished on facts
The Director, Prasar Bharati vs. CIT
(2018) TaxCorp(LJ) 14671 (SC) · Sections. 194-H, 201
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S. 148: The AO is not entitled to issue a reopening notice only on the basis that the foreign company has a permanent establishment (PE) in India if the transactions in respect of which it is alleged that there has been an escapement of income had already been disclosed by the Indian subsidiary and found by the Transfer Pricing Officer (TPO) to be at arm's length
Honda Motor Co. Ltd. Vs. ADIT
(2018) TaxCorp(LJ) 14592 (SC) · Section. 148
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S. 14A/ Rule 8D - Applicability to shares held for controlling interest or as stock-in-trade: The argument that S. 14A & Rule 8D will not apply if the "dominant intention" of the assessee was not to earn dividends but to gain control of the company or to hold as stock-in-trade is not acceptable. S. 14A applies irrespective of whether the shares are held to gain control or as stock-in-trade. However, where the shares are held as stock-in-trade, the expenditure incurred for earning business profits will have to be apportioned and allowed as a deduction. Only that expenditure which is "in relation to" earning dividends can be disallowed u/s 14A & Rule 8D. The AO has to record proper satisfaction on why the claim of the assessee as to the quantum of suo moto disallowance is not correct
Maxopp Investment Ltd. vs. CIT
(2018) TaxCorp(LJ) 14508 (SC) · Section. 14A
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Principles of Mutuality: Receipts by housing co¬-operative societies such as non¬-occupancy charges, transfer charges, common amenity fund charges and certain other charges from their members are exempt from income-tax based on the doctrine of mutuality. The fact that the receipts are in excess of the limits prescribed by the State Government does not mean that the Societies have rendered services for profit attracting an element of commerciality and thus was taxable
ITO. vs. Venkatesh Premises Co-op Society Ltd.
(2018) TaxCorp(LJ) 14501 (SC)
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Foreign law firms and foreign lawyers cannot practice profession of law in India either in the litigation or in non-litigation side though they can "fly in and fly out" for the purpose of giving legal advice to their clients in India regarding foreign law. The expression “fly in and fly out” will only cover a casual visit not amounting to “practice”. If the Rules of Institutional Arbitration apply or the matter is covered by the provisions of the Arbitration Act, foreign lawyers are not debarred from conducting arbitration proceedings arising out of international commercial arbitration but will be governed by code of conduct applicable to the legal profession in India. B.P.O. Companies providing wide range of customized and integrated services and functions to its customers like word processing, secretarial support, transcription services, proof reading services, travel desk support services, etc. may come within the purview of the Advocates Act, 1961 or the Bar Council of India Rules if in pith and substance the services amount to practice of law
Bar Council of India vs. A. K. Balaji & Ors
(2018) TaxCorp(LJ) 14500 (SC)
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Hindu Undivided Family (HUF) Law: The very factum of birth in a coparcenary creates the coparcenary. Therefore the sons and daughters of a coparcener become coparceners by virtue of birth. The amendment to s. 6 of the Hindu Succession Act, 1956 in 2005 statutorily recognizes the rights of coparceners of daughters as well since birth. Consequently, married daughters can be said to be the coparceners in the HUF and are entitled to the ancestral property even if they were born prior to the amendment to the Hindu Succession Act
Danamma @ Suman Surpur Vs. Amar
(2018) TaxCorp(LJ) 14499 (SC)
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S. 143(2) service of notice: If the assessee is not available to take service of the s. 143(2) notice, service on the authorized representative is sufficient to draw inference of deemed service of notice on the assessee. The fact that the authorized representative is disowned by the assessee is irrelevant
ITO. Vs. Dharam Narain
(2018) TaxCorp(LJ) 14392 (SC) · Section. 143(2)
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Section. 12A: The CIT has no power to cancel/withdraw/recall the registration certificate granted u/s 12A until express power to do so was granted by s. 12AA(3). Though the grant of certificate is a quasi judicial function, s. 21 of the General Clauses Act cannot be applied to support the order of cancellation of the registration certificate
Industrial Infrastructure Development Corporation (Gwalior) M.P. Ltd. vs. CIT
(2018) TaxCorp(LJ) 14342 (SC)
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Appointment of Tribunal Members under new rules: interim directions issued regarding the method for selection of Tribunal Members and their terms and period of appointment
Kudrat Sandhu vs. UOI
(2018) TaxCorp(LJ) 14302 (SC)
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SC - Rule 8D is prospective in operation and could not have been applied to any assessment year prior to Assessment Year 2008-09.
Commissioner of Income Tax 5 Mumbai Versus M/s. Essar Teleholdings Ltd. Through Its Manager
(2018) TaxCorp(LJ) 14260 (SC) · http://taxcorp.in/FileOpenDT.aspx?ID=70904&Category=Judgment&CategoryType=Zip
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S. 14A/ Rule 8D: Entire law on whether the computation provisions of Rule 8D is retrospective explained in the light of established principles of interpretation of statutes read with verdicts in Vatika Townships 367 ITR 466 (SC), Gold Coin Health 304 ITR 308 (SC) and other verdicts
CIT vs. Essar Teleholdings Ltd
(2018) TaxCorp(LJ) 14259 (SC) · Section 14A
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S. 2(22)(e) Deemed Dividend: The term “shareholder”, post amendment, has only to be a person who is the beneficial owner of shares. One cannot be a registered owner and beneficial owner in the sense of a beneficiary of a trust or otherwise at the same time. The moment there is a shareholder, who need not necessarily be a member of the Company on its register, who is the beneficial owner of shares, the Section gets attracted without more. To state that two conditions have to be satisfied, namely, that the shareholder must first be a registered shareholder and thereafter, also be a beneficial owner is not only mutually contradictory but is plainly incorrect. Prima facie, Ankitech/ Madhur Housing is wrongly decided and should be reconsidered by larger bench
National Travel Service vs. CIT
(2018) TaxCorp(LJ) 14241 (SC) · Section. 2(22)(e)
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S. 11(1)(a) vs. 32: Even if the entire expenditure incurred for acquisition of a capital asset is treated as application of income for charitable purposes u/s 11(1)(a) of the Act, the assessee is also entitled to depreciation u/s 32. The argument that the grant of depreciation amounts to giving double benefit to the assessee is not acceptable. S. 11(6) which bars depreciation on expenditure applied for charitable purposes is prospective and applies only from AY 2015-16
CIT vs. Rajasthan And Gujarati Charitable Foundation Poona
(2017) TaxCorp(LJ) 14041 (SC) · Sections 11(1)(a), 32
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