Compilation of Few interesring Income Tax cases

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Compilation of Few interesring Income Tax cases

• Earnest money forfeited by HSIDC on surrender of industrial plot allotment is capital loss not deductible (Delhi)
• No section 14A disallowance unless there is receipt of exempt income during the year (Punj.&Har.) :-Principal Commissioner of Income-tax-I ,Chandigarh V/S Vardhman Chemtech (P.) Ltd.
• Interest could not be disallowance on mere presumption that assessee would earn tax-free dividend in future (Cal.) :- Vikram Somany V/S Commissioner of Income-tax, Kolkata
• Interest paid to sister concern deductible if interest received on inter-corporate deposits was taxable as income (Delhi) :- Principal Commissioner of Income-tax-5 V/S Jubilant Energy Nelp-V-(P.)Ltd.
• Where assessee’s claim for deduction of provision made for project expenses in respect of work carried out by contractor was rejected on ground that it was a contingent liability, in view of fact that assessee had made provision in respect of work already done by contractor on basis of contract/prevalent rates, impugned order rejecting assessee’s claim was to be set aside (Raj.) :- Principal Commissioner of Income-tax , Udaipur V/S Grace Colonizers(P.) Ltd.
• No denial of exemption just because trust failed to specify purpose of accumulation of funds in Form10 (Guj.) :- Commissioner of Income-tax (Exemptions) V/S Bochasanwasi Shri Akshar Purshottam Public Charitable Trust
• Income from sale of land used for nursery not taxable if same was declared as agricultural land in revenue records (SC)
• Delay in filing appeal due to negligence of assessee’s counsel to be condoned (Himachal Pradesh) :- E-Governance Society V/S Commissioner of Income-tax (Exemption)
• Capital gains arose if possession of land was transferred , though agreement to sell was terminated later on (Ker.)  :- Commissioner of Income-tax V/S Harbour View
• Section 12AA registration not mandatory if trust was claiming exemption under section 10(23c)(iiiad)(Punj.&Har.) :- Commissioner of Income-tax (Exemptions) V/S Smt. Shanti Devi Educational Trust
• Sale of booking rights of flat couldn’t be treated as sale of residential house; section 54F relief available Bom.) :- Commissioner of Income-tax-17 V/S Kalpana Hansraj
• TP: Loan of HDFC Ltd. purchased by HDFC Bank couldn’t be held as ‘ Specified Domestic Transaction’ (Bom.) :- HDFC Bank Ltd. V/S Assistant Commissioner of Income-Tax , Mumbai
• Delhi HC upheld constitutional validity of section 10(34) and section 115BBDA (Delhi) :- Rajan Bhatia V/S Central Board Of Direct Taxes
• SLP granted against ruling that payer who failed to deduct TDS was liable for interest though payee had filed nil ITR (SC) :- Punjab Infrastructure Dev. Board V/S Commissioner of Income Tax TDS-1, Chandigarh
• Grant received by Govt. company was capital receipt though it was used for salary & PF payments ; SLP dismissed (SC) :- Principal Commissioner of Income-Tax , Kolkata V/S State Fisheries Development Corporation Ltd.
• No disallowance of foreign travel expenditure just because trustees visited   abroad for business purpose on tourist visa (Kar.)
• Start-ups – New definition (St.) :-An entity shall cease to be a Start-up on completion of ten years from the date of its incorporation / registration or if its turnover for any previous year exceeds one hundred crore rupees and an entity formed by splitting up or reconstruction of an existing business shall not be considered a `Start-up’
• Full value of consideration to compute capital gains u/s 45(3) is recorded value of assets on date of transfer (Mad.) :- Principal Commissioner of Income-tax , Coimbatore V/S Dr. D. Ramamurthy
• Date of allotment of flat to be constructed by DDA to be demanded as purchase date for computing capital gain tax (Bom.) :- Principal Commissioner of Income-tax-3 , Mumbai V/S Vembu Vaidyanathan
• TP: Securities and stock brokers can’t   be compared with merchant bankers (Bom.) :- Principal Commissioner of Income-tax-4, Mumbai V/S J.P. Morgan India (P.) Ltd.
• Reinsurance premium paid by insurance company to non – resident – reinsurance company is allowable expenditure (Mad.) :- Cholamandalam MS General Insurance Co. Ltd. V/S Deputy Commissioner of Income-tax, LTPU, Chennai
• SLP dismissed as warrant of authorization was based on information that society was engaged in siphoning off funds (SC) :- Adarsh credit Co-operative Society Ltd. V/S Joint Director of Income-tax (Inv.)
• HC slams AO for making disallowance   of payment merely relying on statement of payer recorded during search (Bom.) :-  Commissioner of Income-tax-LTU V/S Reliance Industries Ltd.
• CIT is not empowered to cancel section 12AA registration retrospectively (Mad.) :- Auro Lab. V/S Income-tax Officer , Ward-II(4) , Range-II, Madurai
• Appeal proceedings can continue against company whose name has been struck off from Register of Company (SC) :-  Commissioner of Income-tax, Jaipur V/S Gopal Shri Scrips (P.)Ltd.
• Amendment in Form No. 16 and Form No. 24Q (St.) :- These rules may be called the Income-tax (3rd Amendment ) Rules,2019. They shall come into force on 12th day of May , 2019.
• Trust ‘s registration not to be cancelled if part of land was handed over to company for supplying concrete for school building (Bom.) :- Principal Commissioner of Income-tax(Central) V/S Ashoka Education Foundation.
• Where assessee claimed deduction of slum development expenditure which was contingent upon authority was unable to handover vacant possession of land , impugned claim was to be disallowed (Bom.) :-  Grace Shelter V/S Assistant Commissioner of Income-tax, Range-21(2).
• Trading liability of business discontinued 10 years ago is deemed as business profit u/s 41(1) (Mad.) :- West Asia Exports & Imports (P.) Ltd. V/S Assistant Commissioner of Income-tax, Company Circle III(3), Chennai.
• Section 43B will not apply if service tax claimed as an expense was not paid by assessee due to non-receipt form customer (SC) :- Principal Commissioner of Income-tax 11 V/S Tops Security Ltd.
• FMV u/s 50C can be used to compute capital gains only after giving opportunity of being heard to assessee  (Mad.) :- Jagannathan Sailaja Chitta V/S Income-tax Officer , International Taxation-2(2), Chennai.
• Expenses not deductible u/s 37 in case liability is contingent &not crystallized during the year (Bom.) :- Grace Shelter V/S Assistant Commissioner of Income-tax, Range-21(2)
• Amended Prohibition of Benami Property Transactions Act, 1988 having defined ‘ Benami transaction’ and specifically defined exception to benami transactions, it could not be said that vested rights were taken away by including exempted transactions in amended Benami Act (Delhi)
• ICAI has jurisdiction to entertain complaint against CA for sexual harassment (Delhi)
• Land purchased for extension of school building cannot make assessee ineligible for exemption under section 10(23C) (vi) (SC)
• Banks are allowed to claim share issue expenses are preliminary expenses (Kerala)
• Expenditure incurred by assessee towards repair and renovation of its hotel is allowable as revenue expenditure (Bom.)
• Interest on NPAs is taxable in the year of receipt only (Bom.)
• Consideration received by confirming party not to be considered while calculating capital gain (SC)
• Section 68 additions justified as assessee failed to justify huge Cash gift received from  nephew being salaried person (Mad.)
• TP : Delay in realization of trading debt from AE may attract TP adjustments towards notional interest (SC)
• No action could be under taken under section 153C if seized  documents were not in name of assessee (SC)
• HC allowed condonation of delay as refund of TDS was not claimed due to mistaken of auditor (Delhi)
• Exemption limit specified under sub-clause (iii) of clause (10) of section 10 (St.)
• Exemption from provisions of section56(2)(viib) in case of start-ups (St.)
• Society imparting training to officers involved in criminal justice system eligible foe section 12AA registration (SC)
• Transfer of entire shareholding in subsidiary to third company would not amount to slump sale (Bom.)
• Person making contribution for purchase of property are not owners of property but property in law is of persons in whose name title with respect thereto has been recorded (Delhi)
• Weighted deduction under secton 35 (2AB) allowed towards expenses incurred on refreshments for visiting scientists (SC)
• Full value of consideration to compute capital gains under section 45(3) is recorded value assets on date of transfer (SC)
• Law does not restrict corporate to make gifts; no capital gain on shares gifted by NBFC to group concerns (Mum.)
• Interest received on enhanced compensation on acquisition of agricultural land entitled to exemption u/s 10(37) (Delhi)
• Maharashtra State Board of Technical Education falls under definition of ‘ State’ as per Article 12 of Constitution and its income is eligible for exemption under section 10(46) (Mum)
• No question of accumulation of income if trust had spent more than 100% of its income during the year (Surat)
• Where assessee received certain amount as voluntary donations towards corpus fund , such donations would be capital receipts , not includible in its income (Surat)
• Where assessee was transferor and not recipient and moreover shares in question were those of listed companies , provisions of section 56(2)(viia) would not apply (Mum.)
• ITAT justified section 68 additions as shares issued at huge premium were subscribed to by persons having nominal income (Ahd.)
• Relief to persons suffering from HIV/AIDS falls into category of ‘medical relief‘ under section 2(15) (Delhi)
• Section 12AA application could not be rejected merely on ground that all trustees were non-residents(Delhi)
• Expenses being in nature of revenue expenditure to be allowed despite different treatment in books of account (Mum.)
• ROC fees paid for increase in authorities capital for issuance of bonus shares is revenue expenditure allowable under section 37(1)(Mum.)
• No disallowance on cash purchase of ‘GUR’ from farmers as they did not have bank account (Kol.)
• Remuneration to partners allowable if deed provides for remuneration computation in accordance with section 40(b)(v)(Mum.)
• No section 54F relief on cost of land of newly constructed house if it was purchased one year before sale of capital asset (Beng.)
•  Employees of Statutory Corporations are not regarded as Govt. emoployees for section 10 (10AA) exemption (Bang.)
• Auditor of company who signed tax audit report couldn’t value shares of company under rule 11UA (Bang.)
• For claiming deduction of capital gains under section 54F , new residential house need not be purchased by assessee in his own name (Bang.)
• Date of holding property to be taken from date on which lease-cum-sale agreement holder paid entire consideration(Bang.)
• No section 10(26BBB) exemption if assessee-company was not a corporation established under Central or State Act (Delhi)
• Loss from switching mutual funds was business loss if profit on its sale was held as business income (Ahd.)
• Transfer of asset received  as compensation on compulsory acquisition of agricultural land attracts capital gains tax (Mum)
• Date of conversion of capital asset into stock-in-trade to be reckoned from date of entry passed in books of account (Mum)
• Sale of building alone without transfer of furniture ,fixtures & other equipments not to be held as slump sale (Indore)
• Loss from unrealized contracts in commodities due to suspension of trading on NSEL platform is speculative loss (Jaipur)
• Section 54F relief allowable on deposit of amount in saving bank A/c opened for capital gain exemption (Jaipur)
• ITAT unhappy with delay in hearing of Special Bench cases; formulated guidelines for expeditious hearing (Ahd.)(SB)
• Surrendering income to avoid litigation won’t save section 271AAA penalty unless its earning manner is disclosed  (Delhi)
• Plant and machinery installed by city development authority for water supply project would be eligible for 100 per cent deduction under section 80-IA(4)(1) (Kol.)
• Where registration granted to assessee cricket association , cancelled earlier , had been restored , section 11 relief could not have been denied (Ahd)
• Amounts received by assessee cricket association under TV subsidy from Board of Control Cricket in India (BCCI) being under a resolution which specifically stated that TV subsidies were towards corpus funds and not under any leagal obligation , were to be treated as corpus donations (Ahd.)
• Under section 2(42A) period of holding of ESOPs shall be counted from date of grant even when assessee did not have vesting rights (Bang.)
• No section 13 (1) (C) violation if trustee was exclusively working for trust; section 11 exemption allowable (Mum.)
• Compensation paid by NDMC to Government for conducting mining beyond its sanctioned lease area allowable as deduction (Hyd)
• Interest earned on FD out of money granted by government for metro project is not taxable (Kol.)
• AO could not reject setting off accumulated loss merely stating that assessee did not comply with section 72A condition (Delhi)
• Royalty payment to Italian company pursuant to agreement effective from 1-4-2008 was taxable at 10% (Pune)
• AO can modify book profit for computation of MAT in case of non-compliance of Accounting Standard by assessee
• Rule of fair hearing is necessary before passing any order by ITAT (Surat)
• In case of assessee , engaged in providing accommodation entries to entry seekers on commission basis , gross amount received had to be taken into consideration for computing monetary limit of Rs. 40 lakhs as specified under section 44AB and not commission income earned by him (Mum.)
• Issue of shares to director to comply with a covenant in loan agreement with bank could not be taxed under section 56(2) (vii) (Mum.)
• Loss on account of premium paid to banks in order to secure against Forex fluctuations is not speculation loss (Delhi)
• Bank statements are not books maintained by assessee ; no section 68 additions on credit found in it (Delhi)
• Invocation of section 68 sans valid and proper books of account of assessee is invalid (Delhi)
• No denial of section 80P relief if no deduction on respect of interest earned on FDs was claimed (Surat)
• Payments to various artists participating in reality shows are liable for section 194C TDS & not section 194J TDS (Cochin)
• Where pursuant to merge of company namely ‘KAPL’ with assessee , all investments in  mutual funds as done by KAPL got transferred to assessee at book value and said mutual funds were shown as ‘investment’ , profit earned on sale of said funds  was liable to tax as ‘capital gain’ (Delhi)
• ITAT allows section 54F relief on purchase of semi-finished apartment(Delhi)
• Bank statements are not books of account; sum credited thereon cannot be treated as unexplained cash credit(Ahd.)
• Claim of LTCG exemption was genuine as even SEBI did not find any manipulation in scrip price (Delhi)
• No section 69C additions if assesse established identity of sellers and furnished payment details(Kol.)
• Where assessee-company received share application money from four farmers and a company and had given complete and had given complete details of share applicants which clearly established their identity and creditworthiness as also source of their income , no addition could be made under section68 on account of share application money (Mum.()
• Where appellant had not claimed any exempt income , no disallowance of expenditure was required to be made(Ahd.)
• Commission paid to NR agents to carry out activities outside India not taxable in  India (Ahd.)
• ITAT allowed write-off of advance given to wife by jackie shroff for production of ‘BOOM’ (Mum.)
• Provision for payment of salary arrears not allowable if same had not crystallized during the year (Delhi)
• Assessee is not permitted to follow cash system of accounting for some of items while following mercantile system of accounting for rest of items in computation of income chargeable under head ` profits  and gains of business or profession’ or `income from other sources’ as mixed system of accounting has lost statutory mandate with effect from assessment year1989-90 in view of amendment to section 145 (Delhi)
• Where assessee had clearly demarcated shares as investment in its balance sheet, profit arising on sale of shares was chargeable to tax as capital gains (Rajkot)
• Agricultural land whether held as capital asset or stock-in-trade is covered under ambit of section 56(2)(vii)(b)(Jaipur)
• No denial of exemption u/s 11 just because society earned profit while carrying out charitable activities (Indore)

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