Income tax : Weekly case law updates ( 3rd Dec 2018 to 07th Dec 2018)

Income tax : Weekly case law updates ( 3rd Dec 2018 to 07th Dec 2018)

1. Amendment to sec. 200A empowering AO to levy sec. 234E fees on delayed filing of TDS return has no retro-effect


Amendment to provisions of section 200A with effect from 1-6-2015 empowering Assessing Officer levying fees under section 234E has prospective operation and, therefore, Assessing Officer while processing TDS statements for period prior to 1-6-2015, was not empowered to charge fees under section 234E [Refer [2018] 100 taxmann.com 39 (Jaipur – Trib.)]



2. HC confirmed sec. 14A disallowance towards dividend earned on specified securities purchased on RBI directions


IT : Where pursuant to directions of RBI, assessee invested certain amount in specified securities, bonds etc. in order to continue its licence to carry on business as a residuary non-banking financial company, said securities/bonds could not be regarded as trading assets of assessee and, thus, impugned disallowance made under section 14A in respect of dividend income earned on said securities was to be upheld
IT : Where for relevant assessment year assessee paid its provident fund contribution beyond due date but before date of filing return under section 139(1), amount so paid could not be disallowed by invoking provisions of section 43B
[Refer [2018] 100 taxmann.com 41 (Calcutta)]

3. Assessee couldn’t challenge constitutional validity of proviso to Rule 9A during pendency of appeal: HC



IT : Where during pendency of appeal against assessment order passed under section 143(3), assessee filed a petition challenging constitutional validity of proviso to rule 9A, since assessee’s appeal was pending before Commissioner (Appeals) on merits, interest of justice would be served by not examining presently issue of constitutional validity and legality of proviso to rule 9A

[Refer [2018] 100 taxmann.com 40 (Bombay)]

4. Provision of sec. 43B couldn’t be invoked with regards to duty & surcharge collected by state electricity board


IT: Section 43B could not be invoked for making assessment of liability of assessee State Electricity Board with regard to amount of electricity duty and surcharge collected by it as an agent of State of Kerala
IT: Kerala State Electricity Board is not covered by section 36(1)(viia)

[Refer [2018] 100 taxmann.com 132 (Cochin – Trib.)]

5. Dep. was allowable on public roads by treating them as buildings; SLP dismissed



IT : Where High Court upheld order passed by Tribunal allowing assessee’s claim of depreciation on public roads treating same as building, SLP filed against said order was to be dismissed
IT : Where High Court upheld Tribunal’s view that optical fibres used exclusively for computer configuaration were part of computer system and thus eligible for higher rate of depreciation, SLP filed against said order was to be dismissed

[Refer [2018] 100 taxmann.com 96 (SC)] 



6. No denial of exemption in absence of proof that assessee introduced unaccounted money to earn LTCG


IT : Assessing Officer received information from DGIT (Inv.), Kolkata that some companies were engaged in business of issuing penny stocks for which there were large number of beneficiaries claiming bogus long term capital gain – Assessing Officer, based on said information, found that assessee is one of beneficiaries of said racket and, thus long term capital gain from sale of shares of a company (Rutron) declared by assessee and claimed as exempt income under section 10(38) was treated by Assessing Officer as bogus and added said amount to total income of assessee under section 68
• The Tribunal noted that assessee had produced relevant record to show allotment of shares by company on payment of consideration by cheque, all entries are part of bank account of assessee and assessee dematerialized shares in D-mat account.
• The Tribunal held that Assessing Officer has not brought any material on record to show that assessee has paid over and above purchase consideration as claimed and evident from bank account and, thus, in absence of any evidence, it cannot be held that assessee has introduced his own unaccounted money by way of bogus long term capital gain

[Refer [2018] 100 taxmann.com 172 (Mumbai – Trib.)]

7. Karta was eligible to claim TDS credit wrongly deposited in his name if HUF hadn’t availed benefit of such TDS




IT : Where due to mistake, TDS related to HUF of assessee whereof assessee was karta was credited to assessee’s TDS account, assessee could claim refund of such TDS credit, provided HUF had not availed benefit of such TDS certificate



8. No sec. 68 additions towards trade advances if these were adjusted against subsequent sales; SLP dismissed



IT : Where High Court upheld Tribunal’s order to delete addition made under section 68 in respect of trade advances on ground that said advances were adjusted against sales made in subsequent years, SLP filed against said decision was to be dismissed.

Refer [2018] 100 taxmann.com 100 (SC)]

9. ITAT deleted additions as amount deposited in assessee’s Foreign Bank a/c didn’t belong to him


IT: Where addition was made to income of assessee on account of amount deposited in foreign bank account through a trust owned by an NRI, since it was found that said amount in foreign bank account was actually owned by said NRI and he had also admitted some, impugned addition was unjustified


[2018] 100 taxmann.com 43 (Mumbai – Trib.)

10. Amount paid to partners in view of partnership deed to be excluded while computing sec. 10AA



IT: Where assessee-firm, in view of partnership deed which clearly laid down that no interest on capital and remuneration was payable to partners, did not pay any interest and remuneration to its partners, such interest on capital and remuneration were not to be excluded from amount of profit eligible for exemption under section 10AA

[Refer [2018] 100 taxmann.com 44 (Surat-Trib.)]




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