S. 149 Income Tax Act | Reassessment Beyond Limitation Period Is Valid Where 'Bogus' Royalty Payments Exceed ₹50 Lakh: Bombay High Court

The Bombay High Court has stated that reassessment beyond 3 years is valid where bogus royalty expenses exceed Rs. 50 lakhs. Justices Bharati Dangre and Nivedita P. Mehta upheld the reassessment proceedings initiated beyond three years, in the present case, where the alleged bogus royalty expenses exceeded 50 Lakhs. The bench opined that Section 149(1)(b) of the Income Tax Act is a jurisdictional fact which must be established prior to reopening of assessment on the ground that...

Tax Liability Under JDA Arises Only Upon Conveyance Of Property, Not On Execution Of Agreement: Bombay High Court

The Bombay High Court held that tax liability under JDA (joint development agreement) arises only upon conveyance of property, not on execution of agreement. The bench consists of Justices Bharati Dangre and Nivedita P. Mehta stated that no liability actually fell upon the assessee at the time when JDA was entered into, as the liability arises only upon the conveyance of the property. The assessee developer becoming the owner of the property for which the JDA was executed....

Right To Travel Abroad Can't Be Curtailed Solely On Grounds Of Pending Tax Prosecution: Bombay High Court

The Bombay High Court has stated that facing tax prosecution does not automatically bar an accused from foreign travel. Justice S.M. Modak stated that, "It is true right to travel abroad is recognized as a fundamental right. Merely because a person is facing with prosecution, it does not mean that he cannot travel abroad till the time the investigation is under progress or criminal case is pending." The respondent is an accused in connection with a File registered with the...

AO Can Determine Annual Value Of Property Higher Than Municipal Rateable Value U/S 22 Income Tax Act: Bombay High Court

The Bombay High Court stated that the assessing officer (AO) can determine the annual value of the property higher than the municipal rateable value under Section 22 of the Income Tax Act. Section 22 of the Income Tax Act, 1961 deals with the "taxability of 'Income from House Property”. It says the annual value of property consisting of any buildings or lands appurtenant thereto of which the assessee is the owner, other than such portions of such property as he may occupy for the...

Income Tax | Interest On Fixed Deposits, TDS Refund Linked To Business Qualifies For S. 80IA Deduction: Bombay High Court

The Bombay High Court held that interest on fixed deposits, TDS refund linked to business qualifies for deduction under Section 80IA of the Income Tax Act. Section 80IA of the Income Tax Act, 1961 provides tax incentives for businesses operating in certain sectors such as infrastructure, power, and telecommunications. Justices B.P. Colabawalla and Firdosh P. Pooniwalla stated that the placement of fixed deposits was imperative for the purpose of carrying on the eligible business of...

Three-Month Deadline For Passing Arbitral Award Under NSE Byelaws Is Directory And Not Mandatory: Bombay High Court

The Bombay High Court Bench of Justice Somasekhar Sundaresan while deciding a petition under Section 34, Arbitration and Conciliation Act, 1996 (“ACA”) had an occasion to interpret Rule 13, National Stock Exchange (“NSE”) Byelaws. The Court held that Rule 13(b) which provided that arbitral award under the Rules must be rendered within three months from the date of entering upon reference was directory and not mandatory in nature. Facts The present petition was filed under Section...

[GST] Reverse Charge Mechanism Notifications Denying ITC To Service Providers Are Constitutionally Valid: Bombay High Court

The Bombay High Court held that RCM notifications denying ITC credit to service providers are constitutionally valid and does not violate Article 14 and 19(1)(g) of the Constitution. The bench opined that in case of RCM, the person receiving the services, i.e. the recipient pays the tax and can claim credit of the same. The provider of service is exempt from paying tax. Merely because persons covered by RCM cannot claim credit of ITC cannot be seen in a microscopic way to hold the ...

Income Tax | Sale Proceeds Of Vintage Cars Taxable Unless Assessee Proves That Car Was Used As Personal Asset: Bombay High Court

The Bombay High Court held that sale proceeds of vintage car taxable unless the assessee proves that the car was used as a personal asset. Chief Justice Alok Aradhe and Justice Sandeep V. Marne stated that the capability of a car for personal use would not ipso facto lead to automatic presumption that every car would be personal effects for being excluded from capital assets of the Assessee. In this case, the Assessee had purchased a vintage car for a consideration of Rs.20,000/-....

Bank Guarantee Which Expired Almost Ten Years Before CIRP Was Initiated, Cannot Be Enforced: Bombay High Court

The Bombay High Court stated that expired bank guarantee can't be enforced post CIRP (corporate insolvency resolution process). Justices M.S. Sonak and Jitendra Jain stated that, “The argument that a personal guarantee survives the CIRP does not apply in the case because the guarantee had expired even before the CIRP. During the validity period of the guarantee, admittedly, no claim was lodged by the department. This petition was instituted almost 10 years after the guarantee expired,...

No Sales Tax On HDPE Bags Used To Pack Cement When Sold Separately: Bombay High Court

The Bombay High Court stated that no sales tax can be levied on HDPE (High-Density Polyethylene) bags at cement rate when sold separately. Justices M.S. Sonak and Jitendra Jain were addressing the issue of whether there is an express and independent contract on the sale of HDPE bags in which cement is packed. “HDPE bags used to pack the cement were a distinct commodity with its own identity and were classified separately. There was no chemical or physical change in the packing...

Serving Order On Chartered Accountant Doesn't Count As Service On Assessee: Bombay High Court

The Bombay High Court held that serving order on chartered accountant doesn't count as service on assessee. The issue before the bench was whether the copy of the order passed by the Tribunal when served upon the Chartered Accountant is sufficient service and whether it can be construed as 'copy received by the assesse/applicant'. Justices Bharati Dangre and Nivedita P. Mehta stated that the Chartered Accountant since is not also authorised specifically to accept copy of the order,...

Income Tax | S.194C & S.194LA Would Not Apply When TDR Certificates Are Issued In Lieu Of Compensation: Bombay High Court

The Bombay High Court held that Section 194C and Section 194LA of the Income Tax Act would not apply when TDR Certificates are issued in lieu of compensation. Justices B.P. Colabawalla and Firdosh P. Pooniwalla agreed with the assessee that the words “or by any other mode” appearing in Section 194C would have to be read ejusdem generis to the words “payment thereof in cash or by issue of a cheque or draft”. Similarly, in Section 194LA, the words “or by any other mode” would have to...