INCOME TAX JUDGEMENTS
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Please find below some latest case laws of 2009 compiled specially for CA
and CS Students. This article covers 2009 series decided cases on Income Tax.
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be off some help in your Exam preparation:
You may also download the below case laws in the form of a handout from
the link mentioned below:
1.
Commissioner of Income Tax vs. Dass Trading & Holding (P) Ltd. (2009):
Penalty under s. 271(1)(c)- Concealment- Declaration of additional income
in revised return. Assessee had shown substantial agricultural income in its original
return. It is only after the Addl. Director of IT(Inv.) inquired into the matter
and found that the assessee had declared bogus agricultural income it filed the
revised return accepting the fact that the aforesaid income was not agricultural
income and declared the same as taxable income. Inquiries revealed that the assessee
had not sold any agricultural produced and that even the agricultural land in question
did not exist. Thus, the contention of the assessee that the revised return was
filed suo motu and that there was no concealment can not be accepted. There was
a deliberate concealment and/or filing of false return. Penalty rightly imposed.
Revenue’s appeal is allowed with costs of Rs. 25,000.
2.
Commissioner of Income tax, Delhi-iv vs. Escorts Finance Ltd. (2009):
Section 271(1)(c) of the Income Tax Act, 1961 Penalty – For concealment
of income. Whether if claim made in return of income appears to be ex facie bogus,
it would be treated as a case of concealment or furnishing of inaccurate particulars
and penalty proceedings would be as a case of concealment of furnishing of inaccurate
particulars and penalty proceeding would be justified. Held, yes-Assessee Company
was a finance company. In its return of income for relevant assessment year, it
had claimed deduction under section 35D relating to public issue of shares and 50
per cent of entertainment expenses on account of employee’s participation in business
meetings while entertaining company’s guests.
3.
UCO Bank, Regional Office Vs. Union of India (2009)
Writ – Maintainability – Clearance from Committee on Disputes – Writ
petition preferred by bank against the IT Department seeking to
quash the notice under s.226(3) issued by TRO to
the bank directing it to deposit the sale proceeds
of the defaulter’s property which was under attachment with the Department.
It is not a matter for the High Power Committee
to decide. Therefore, Single judge was not justified
in holding that a High Power Committee has to be constituted to
resolve the dispute.
4.
ATS Infrastructure Ltd. vs. Commissioner of Income Tax [2009]
Section 127 of the Income-tax Act, 1961-Income-tax authorities-Power
to transfer cases- Assessee’s cases were transferred from Delhi
to Meerut by an order under section 127 on ground
that a search was conducted in cases of ATS group
which included assessee’s case as well and there being an intimate
connection between assessee and said group, it was necessary that
cases be centralized with Assessing Officer handling
other cases of group-Assessee filed writ petition
challenging transfer of its cases-Whether, on facts, there being no
material to come to conclusion that decision to transfer asssessee’s
cases out of Delhi was mala fide, writ petition
was liable to be dismissed – Held, yes.
5.
Income Tax Officer Vs. Orbital Communications
(P) Ltd. (2009)
Income – Cash credit – Share application money
– Amount received as share application money added as unexplained
income by AO despite assessee furnishing details of the share applicant,
her PAN, copy of IT return, bank statement, etc. Said
share applicant on income tax assessee. Amount in question
figuring in the balance sheet of the share applicant.
Addition not sustainable solely on the ground that the share applicant was not
produced before the AO by the assessee. CIT justified in deleting the
addition.
6.
Commissioner of Income Tax Vs. Greenworld Corporation (2009)
Section 263 provides for a revisional
power. It has its own limitations. An order can be
interfered suo motu by the said authority not only when an order
passed by the AO is erroneous but also when it is prejudicial to
the interest of the Revenue. Both the
conditions precedent for exercising the
jurisdiction under s. 263 are conjunctive and not disjunctive. An
order of assessment passed by an ITO, therefore, should not be
interfered with only because another view is possible. The CIT,
however, has specified a number of reasons in support of its order.
7.
CIT Vs. Chemplast Sanmar Ltd. & Ors. (Mad) (2009)
Credit under s.115JAA should be given effect to before
charging of interest under ss/. 234B and 234C. In re: CIT Vs. Jindal
exports Ltd. & Ors. (2009)
8.
Shanti Ram Mehata Vs. Assistant Commissioner of Income Tax (2009)
Business expenditure – Disallowance
under s. 40A(3) – Multiple payments to
same party on a single day. Each payment below rs.20,000. AO made
disallowance under s. 40A(3) on the ground that the total payments
of one day exceeded Rs.20,000. Not justified.
Disallowance under s. 40A(3) is applicable
for each payment and not for the aggregate of the
various payments made to same party during one day. Thus, disallowance
can not be sustained.
9.
J.C. Bansal, Chief Engineer, Kanoria Sugar &
General Mfg. Co. Ltd.
Vs. Tax Recovery Officer (2009)
TDS – assessee in default – Tax duly paid by payee. Tax on the amount received
under licence having been paid by the licensor payee and evidence of the same having
been furnished before CIT(A), CIT(A) was justified in holding that tax could not
be recovered once gain from the assessee.
10.
Ganges Lines (India) Pvt. Ltd. Vs. Dy. CIT(Mumbai) (2009)
Appeal (Tribunal) – Rectification under s. 254(2). Suo Motu
rectification vis-à-vis subsequent Supreme Court decision. In view
of subsequent decision of Supreme Court holding that proviso
to s.113 was clarificatory and the levy of surcharge was
retrospective in nature, order of Tribunal deleting levy
of surcharge suffered from mistake apparent from record.
Mistake apparent rectified suo motu by Tribunal while
disposing of miscellaneous application of assessee and
levy of surcharge held justified. Tribunal is bound to correct such
mistake even if no petition is moved from either side.
11.
Commissioner of Income Tax Vs. Parnoy Roy & ANR. (2009)
Interest under s. 234A. Chargeability – Tax paid
before the due date though return filed late. Assessee having paid
the tax before the due date of filling of return which ws not less
than the tax payable on the returned income which has
been accepted, interest under s. 234A is not chargeable
or delayed filing of return.
12.
Commissioner of Income Tax Vs. A.G. Granites P. Ltd. [2009]
Rectification of mistakes – Interest income offered
by assessee under head “Other income” sought to be assessed
under head “Income from Other Sources” – Debatable Issue –
Not to be rectified under Section 154 – Income Tax Act, 1961, s. 154.
13.
Commissioner of Income Tax Vs. Hughes Escorts Communications Ltd. (2009)
Business Expenditure – Previous year - Year in
which expenditure is deductible. Business – Difference
between setting up and commencement of business. Business
of satellite business communication. Purchase order for
equipment in July, 1994. Installation of equipment completed
in March, 1995. Business set up in July, 1994. Expenditure on
equipment deductible in Assessment Year : 1995-96- Income Tax Act,
1961, s. 2(34).
14.
P.S. Kapur Vs. Assistant Commissioner of Income-Tax [2009]
Section 43(5) of the Income-tax Act, 1961 – Speculative
transaction – Whether insertion of clause (d) in proviso
to section 43(5) vide Finance Bill, 2005, with effect from
1.4.2006 is clarificatory in nature and, therefore, it has
retrospective operation – Held, yes.
15.
Commissioner of Income- Tax Vs. Woodward Governor India P. Ltd. [2009]
Business Expenditure – Mercantile System of Accounting
– Loan taken for revenue purposes – Additional liability
arising out of fluctuation in rate of exchange - Allowable
in year of increase in rate – Income – Tax Act, 1961,
ss. 28,29,37,145. o Depreciation – Actual
cost – Imported assets acquired in foreign currency –
Fluctuation in rate of exchange – Adjustment can be made
at each date of balance-sheet pending actual payment –
Income-Tax Act, 1961, ss. 32,43,43A
16.
Mimosa Investment Co. Vs. ITO (2009)
Section 271(1)(c) – When Assessing Officer recalculates total
income in accordance with law and such total income is different
from that calculated by the assessee, there is no concealment of
particulars of income or furnishing of inaccurate particulars of
income or deemed concealment in accordance with Explanation 1
to Section 271(1).
17.
Commissioner of Income Tax Vs. Contimeters Electrical (P) Ltd. (2009)
Revision – Validity – Revision on issue not mentioned
in show- cause notice- Not permissible –
Commr. of Customs Vs. Toyo Engg. India Ltd. (2006)
7 SSC 592 applied _ Chandi Ram
Vs. Commissioner of Income-Tax [2009]312 ITR 139(P & H)
: Capital Gains – Charge of Tax – Compulsory
Acquisition of Property – Enhancement of Compensation –
Dispute Regarding Enhancement – Amount Assessable only in
year of final award – Income – Tax, 1961, s. 45(5)(b).
18.
Commissioner of Income Tax Vs. Varinder Agro Chemicals Ltd. (2009)
Business expenditure – Capital or revenue expenditure
– Expenditure on computer software – There is nothing
to show that the software used by the assessee is of enduring
nature and will not become outdated – Therefore, expenditure
on computer software rightly allowed as revenue expenditure
– No substantial question of law arises.
19.
Commissioner of Income Tax Vs. Jyoti Prabha Society (2009)
Charitable trust – Exemption under
s. 11 – Income from letting out building – Assessee charitable
society registered under s. 12A could not be denied exemption
under s. 11 on the ground that its activity of letting out building
to other society to run educational institution did not constitute
charitable purpose because such rental income was again being
utilized for imparting education by maintaining and constructing
new buildings for same purpose.
20.
Arya Global Connect Ltd. Vs. Assisstant Commissioner of Income Tax (2009)
Business income – Business loss – Obsolete stock
written off – Complete details and break-up of obsolete
items and value thereof furnished by the assessee – Also,
method followed by the assessee was the same as in past
– Therefore, AO was not justified in disallowing the claim
of write off without pointing out as to how the write off was not
correct or bona fide.
21.
Travancore Cements Ltd. Vs. Assistant Commissioner of Income-tax [2009]
Section 147, read with section 148, of the Income – tax Act, 1961
– Income escaping assessment – Non-disclosure of primary facts –
Assessment years 2000-01 and 2001-02 – Whether Assessing
Officer gets jurisdiction under section 147 to assess or reassess
income which has escaped assessment only after sub-section (2)
of section 148 is complied with, i.e`., when reasons for issuing
such notice have been recorded – Held, yes-
Whether when proceedings under section 147 have
been initiated in respect of one item of income for which
Assessing Officer had already recorded reasons, it is
necessary for him to record reasons for assessing or reassessing
any other items of income which are totally unconnected
with proceedings already initiated – Held, yes –
Whether in reassessment proceedings, Assessing Officer can
make any fishing enquiry in concluded matters unconnected with
issue on basis of which proceedings under section 147 have been
initiated – Held, no
22. Commissioner
of Income Tax vs. Smt. Jyoti Devi (High Court of Rajasthan) (2008)
Reassessment – Change of opinion - Assessment
under s. 143(1)(a) – A.O. issued notice under s. 148 on the
ground that there was under assessment of income inasmuch as tractors
being agricultural implement, depreciation was
wrongly allowed to the assessee – Revenue could
not point out any information or material which had
subsequently come to the notice of the A.O. to enable him to form the requisite
belief that any income liable to be assessed had escaped assessment
–
Therefore, it was rightly held that the reopening of assessment was based
merely on a change of opinion about admissibility of claim of depreciation on tractors,
and the initiation of reassessment proceedings was not valid.
23. Commissioner
of Income Tax vs. Gold Coin Health Food P. Ltd.(2008)
Penalty-Concealment of Income-Provision
for imposing penalty even if after addition of concealed
income there was no positive income-Is clarificatory and retrospective
in nature-Applies with effect from April 1, 1976
– Income tax Act, 1961, s. 271(1)(c)(iii), Expln.4
– Circular no. 204, dated 24, 1976.
24. BHPE KINHILL
Joint Venture Vs. Additional Director of Income Tax ( 2008)
Assessment- Notice- Service of Notice-
Plea that notice had not been received-Onus on Revenue to prove proper
service of notice – No such proof- Assessment not valid – Income
tax Act, 1961, s. 143
25. Commissioner
of Income-tax, Delhi-IV vs. HCL Comnet Systems & Services Ltd. ( 2008)
Section 115JA of the Income tax Act, 1961-
Minimum alternate tax- Assessment year 1997-98- Whether
provision for bad and doubtful debts made by assessee in its profit and
loss account is an ascertained liability and therefore,
cannot be included in its book profits under section
115JA- Held, yes.
26. Delhi
Cloth & General Mills Co. Ltd. vs. Commissioner of Income tax ( 2008)
Section 37(1) of the Income Tax Act, 1961 –
Business expenditure – Allowability of – Whether expenses incurred on foreign
tour of director of assessee-company, who visited abroad as a member
of Federation of Indian Chambers of Commerce, was
in nature of an admissible deduction – Held, yes.
27. Commissioner
of Income tax, Delhi-II vs. Jai Parabolic Springs Ltd. (2008)
Section 37(1) of the Income Tax Act, 1961 –
Business expenditure – Allowability of – Assessment year 1990-91 – Whether
revenue expenditure, which is incurred wholly and exclusively for
purpose of business, must be allowed in its entirety
in year in which it is incurred even if assessee
has written it off in his books over a period of a number of years-
Held, yes.
28. Commissioner
of Income Tax Vs. Mysore Breweries Ltd (2009)
Company-Book profit under s.115JB – Provision for
diminution in the value of assets. In view of retrospective insertion
of cl. (i) in Expln. 1 to s. 115JB w.e.f. 1st April,
1998, by Finance (No.2) Act, 2009, the amount set
aside as provision for diminution in the value of assets is to be added back for
computation of book profit under s.115JB.
29.
ITO Vs. Takshila Distributors (P) Ltd. (2009)
Subsequent material collected during the course of reassessment proceedings
can not be taken into account and validity of reassessment is to be judged on the
basis of material available at the time of issuance of notice under s. 148. The
AO in the reasons recorded has not referred to any material. In fact he had no material
to have reasons to believe that income of the assessee had escaped assessment. There
was no application of mind and notice of reassessment was issued in a casual manner.
The situation did not improve before the CIT who granted approval under s. 151.
No material is available to give any sort of basis of alleged escaped income. Mere
references to the bank account which already stood disclosed to the Revenue authorities,
without pointing to any entry which was false or hawala and without giving basis
for such inference, it is not possible to hold that jurisdiction under s. 147 was
validly exercised. No detail, whatsoever is available in the reasons recorded to
have reasons to believe that income in the hands of the assessee had escaped assessment.
The Departmental Representative referred to subsequent enquiry and to the report
of Dy. Director of IT(Inv.). The abovesaid material is not shown to have been available
and used by the A.O to initiate reassessment proceedings and to issue notice under
s.148. Therefore, on facts and circumstances of the case, jurisdiction to make reassessment
proceedings and to issue notice under s. 148. Therefore, on facts and circumstances
of the case, jurisdiction to make reassessment was not validly assumed. The reassessment
proceedings are quashed and held to be bad in law.
30.
Commissioner of Income Tax Vs. Rajesh Kumar Sharma (2009)
Reassessment – Notice – Service – Requirements
– Notice received by person other than assessee. NO material
to show that he was authorized. Assessee not in receipt of
notice. Onus on revenue to prove deemed receipt not discharged.
31.
Citizen Co-operative Bank Ltd. Vs. Additional Commissioner of Income Tax
(2009)
Deduction under s. 80P(2)(a)(i) – Business of
banking - Income from banking business of co-operative
bank – Income of co-operative bank from banking business
with members as also nonmembers is allowable deduction
under s. 80P(2)(a)(i) – Condition of business with members
was attached with regard to providing credit facilities
only – This condition was also fulfilled because before
any loan was disbursed to any person, the borrower had to
become member of the assessee bank – Further, assessee was
functioning under the control and supervision of RBI and as per
license granted by RBI, which allowed lending of money both to
members as also non-members.
32. Commissioner
of Income Tax vs. Combustion Engineering Inc. (USA) (2008)
Appeal (Tribunal) – Maintainability –
Clearance from Committee on Disputes – For maintaining an
appeal by the Department before the Tribunal, it is not necessary to obtain
clearance from the Committee on Disputes where the assessee is
a nonresident company assessed through a public
sector undertaking as agent of non-resident – Tribunal
was not justified in rejecting the appeal of the
Department against non-resident company, who was represented for purposes
of assessment by a public sector undertaking, on the ground that
clearance from Committee on Disputes was not obtained
– Tribunal directed to restore the appeal and decide
the same on merits.
33.
Jai Bharat Maruti Ltd. Vs. CIT(Del) (2009)
Reassessment-Scope- Addition in respect of item totally unconnected
with reason to believe – Is Invalid - - AO had proceeded to issue a
notice under s. 148(1) by recording reasons that assessee’s
income chargeable to tax had escaped assessment by virtue
of the fact that the assessee had charged to its P & L
a/c, the closing balance in the sum of Rs.25 lacs (approx.)
appearing in its Modvat account. By notice under s. 142(1)
dt. 8th Jan., 1999 A.O called upon the assessee to file its return.
Howeve , by the second notice, dt. 10th March, 1999 he asked the
assessee to show cause as to why certain items of income and
expenditure (which were unconnected to the aspect of the assessee
debiting the sum of RS.25 lacs lying the Modvat account to the P &
L a/c) 7should not be added or disallowed. Same not permissible. Items referred
to in the A.O’s notice dt. 10th March, 1999 had no relation with the reasons recorded
on 27th March, 1997. Assessment order insofar as it dealt with items other than
those which formed the basis of the reasons disclosed
on 27th March, 1997 is bad in law and liable to be quashed.
34.
M. Shivanna Vs. Deputy Commissioner of Income Tax (High
Court of Karnataka) (2008)
Recovery – Stay – Opportunity of being
heard – Respondent has rejected the request of the petitioners seeking
stay of demand and also issued a communication – cum-order directly
to the manger of bank for attachment of debt under
s. 222, by a non-speaking order and without affording
any opportunity of hearing to the petitioners- Not justified
Respondent being a statutory authority has to pass an order exercising
the power as envisaged under the statute and in strict compliance with the relevant
provision of the Act and Rules and after affording reasonable opportunity to the
petitioners – Therefore, impugned order and the directions are set aside and the
matter is remitted back to the respondent for reconsideration afresh.
35. Scm Creations
Vs. Assistant Commissioner of Income Tax (2008)
Export – Special Deduction- Computation – Relief
under section 80IA- Not Deductible from profits and gains of business
before computing relief under section 80HHC – income
tax Act, 1961, ss. 80HHC, 80IA.
Best Regards
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