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Gains from Penny Stocks: If the purchase of shares has been made solely and exclusively with the intention to resell at a profit and the purchaser has no intention of holding them, the transaction is an "adventure in the nature of trade" and the gains are assessable as "business profits" and not as "short-term capital gains"
Prem Jain vs. ITO
(2018) TaxCorp(LJ) 14606 (ITAT-DELHI)
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Transfer Pricing: CBDT's Instruction No. 3/2003 is binding on the AO. Consequently, the ALP of international transactions where the quantum is less than Rs. 5 crore has to be determined by the AO and cannot be referred to the TPO. If such reference is made, it is invalid and the extended time for completing the assessment is not available to the AO. The assessment is void as it is time-barred
Calance Software Pvt. Ltd. vs. DCIT
(2018) TaxCorp(LJ) 14605 (ITAT-DELHI)
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Bogus Capital gains from penny stocks: Capital gains from penny stocks cannot be assessed as unexplained cash credit u/s 68 if the assessee has produced documentary evidence to prove the source, identity and genuineness of the transaction and the AO has not found any fault with it. The fact that the investigation dept has alleged that there is a modus operandi of bogus LTCG scheme is not relevant if the same is not substantiated
Meenu Goel vs. ITO
(2018) TaxCorp(LJ) 14594 (ITAT-DELHI)
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S. 271(1)(c) Penalty: The primary burden of proof is on the Revenue to show that the assessee is guilty of concealment/ furnishing inaccurate particulars. Making an incorrect claim does not tantamount to furnishing inaccurate particulars by any stretch of imagination. Wrong claim of depreciation by crediting capital subsidy to reserves instead of reducing from actual cost/ WDV does not attract s. 271(1)(c) penalty
Prafful Industries (P) Ltd. Vs. DCIT
(2018) TaxCorp(LJ) 14593 (ITAT-DELHI) · Section. 271(1)(c)
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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. 254(2): Tribunal orders (in sister concern's case) are binding on the Tribunal unless set-aside or stayed. A rectification application on the ground that the orders in the sister concern's case are not correct is not permissible as it amounts to a review
Procter & Gamble Home Products Pvt. Ltd. vs. ITAT
(2018) TaxCorp(LJ) 14559 (HC-BOMBAY) · Section. 254(2)
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S. 10A/ 10B: The bar in s. 92CA(4) that the assessee is not entitled to s. 10A/ 10B deductions in respect of transfer pricing adjustments applies only where the adjustment is made by the AO/ TPO. If the assessee suo motu makes the adjustment and offers higher income, s. 10A/10B deduction cannot be denied. Also, as such notional income is not "export turnover", the condition in s. 10A/10B that foreign exchange must be brought to India does not apply (Deloitte Consulting (ITAT Mum) not followed as it is contrary to iGate Global (Kar HC))
Approva Systems Pvt. Ltd. Vs. DCIT
(2018) TaxCorp(LJ) 14558 (ITAT-PUNE) · Sections. 10A, 10B
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S. 143(2) Notice: The issue of a s. 143(2) notice by an AO not having jurisdiction over the assessee is irrelevant. If the proper AO does not issue the notice within the time limit, the assessment is null and void. The argument that the non-jurisdictional AO issued the s. 143(2) notice as per PAN or computerized system or internal procedure is not relevant as it violates the law
ITO. Vs. NVS Builders Pvt. Ltd.
(2018) TaxCorp(LJ) 14557 (ITAT-DELHI) · Section. 143(2)
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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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HC- Writ dismissed - Reassessment - Since it is observed that the objection raised by the petitioner is devoid of substance as there is very much reference to the objection in the communication indicating “reasons for belief”.
J.B.Amin & Brothers (HUF) vs. Assistant Commissioner of Income Tax
(2018) TaxCorp(LJ) 14491 (HC-BOMBAY)
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Certain Advocates have forgotten the code of eithcs. They facilitate the unethical misadventures of their clients, encouraging their clients' dishonest practices, causing grave stress to the Judiciary, and bringing the entire judicial system to disrepute. It has become a vicious and despicable cycle wherein dishonest litigants with malafide intentions seek out unethical Advocates, who for hefty fee and the lure of attracting similar new and unscrupulous clients, choose to disregard all ethics and the code of conduct enjoined upon this august profession
Anand Agarwal vs. Vilas Chandrakant Gaokar
(2018) TaxCorp(LJ) 14482 (HC-BOMBAY)
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Transfer Pricing: The Comparable Uncontrolled Price (CUP) method is not the Most Appropriate Method for determining the Arm's Length Price (ALP) in respect of the transactions of (sales of goods and sales commission) with Associated Enterprises (AEs) if there are geographical differences, volume differences, timing differences, risk differences and functional differences. If it is not shown that the selection of TNMM as the Most Appropriate Method is perverse, the same cannot be challenged
Pr. CIT. vs. Amphenol Interconnect India P. Ltd.
(2018) TaxCorp(LJ) 14481 (HC-BOMBAY)
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S. 47(iv) Transfer/ Capital Gains: The term 'subsidiary company’ is not defined under the Income-tax Act and so will have to be given the meaning in s. 4(1)(c) of the Companies Act. A subsidiary of a subsidiary (step-down subsidiary) is also a subsidiary of the parent. Consequently, transfers between the holding company and the step-down subsidiary are not "transfers" which can give rise to capital gains or loss
Emami Infrastructure Ltd. Vs. ITO
(2018) TaxCorp(LJ) 14480 (ITAT-KOLKATA) · Section. 47(iv)
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Law on reopening u/s 147 pursuant to an audit objection opposed by the AO explained in the context of (i) the notice being silent on whether it was issued pursuant to the audit objection, (ii) there being a gap between the AO's opposition and the issue of notice and (iii) the reasons for reopening being supported by a subsequent Supreme Court judgement
CIT vs. Rajan N. Aswani
(2018) TaxCorp(LJ) 14457 (HC-BOMBAY) · Section 147
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S. 143(1)(a): Submission of Dept that decisions of Courts and Tribunals interpreting a provision is to be ignored by the AO will ring the death knell of Rule of law in the Country. It ignores the hierarchical system of jurisprudence in our country. The AO is bound by the views of the Court. Law on s. 36(1)(viii) (Bad debts) explained
Bajaj Auto Finance Ltd vs. CIT
(2018) TaxCorp(LJ) 14456 (HC-BOMBAY) · Section 143(1)(a)
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S. 147 Reopening: The grant of approval by the CIT with the words “Yes. I am satisfied” proves that the sanction is merely mechanical and he has not applied independent mind while according sanction as there is not an iota of material on record as to what documents he had perused and what were the reasons for his being satisfied to accord the sanction to initiate the reopening of assessment u/s 148 of the Act
ITO vs. Virat Credit & Holdings Pvt.Ltd
(2018) TaxCorp(LJ) 14455 (ITAT-DELHI) · Section 147
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Bogus Purchases: The fact that s. 133(6) notices could not be served upon the alleged vendors and they were not physically available at the given addresses does not falsify the claim of the assessee that the purchases are genuine if the assessee has produced other evidence and made payments through banking channels
Prabhat Gupta vs. ITO
(2018) TaxCorp(LJ) 14454 (ITAT-MUMBAI) · Section 133(6)
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