Cruise Does Not Cease To Be 'Carriage Of Passengers' Under Income Tax Act Because Of Onboard Hospitality: Supreme Court

The Supreme Court has recently ruled that hospitality and entertainment offered on board a cruise do not alter the essential nature of the activity as the carriage of passengers under the Income Tax Act. Ruling on the applicability of the presumptive taxation regime for non-resident shipping companies under Section 44B, the court observed that ancillary services provided during a voyage do not take the operation outside the scope of the provision.A bench of Justices S.V.N. Bhatti and N.V....

Delhi High Court Asks Income Tax Department To Explain 13-Year Delay In Releasing Seized Jewellery

The Delhi High Court has directed the Income Tax Department to file a “comprehensive affidavit” explaining the 13-year delay in releasing jewellery seized from an assessee.The Department informed the Court that the jewellery had now been released and assured that the balance refundable amount, along with applicable interest, would be paid within four weeks.However, the Division Bench of Justices Dinesh Mehta and Rajneesh Kumar Gupta sought to know from the Assessing Officer, the reasons for the...

ITAT Mumbai Quashes PCIT Revision Against Mumbai Trader As 'Larger Issue' Was Already Under Appeal

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has refused to uphold the Principal Commissioner of Income Tax's (PCIT) attempt to revise the assessment of a Mumbai-based trading company over alleged bogus purchases, ruling that the dispute was already pending before the Commissioner of Income Tax (Appeals) [CIT(A)]. A coram of Judicial Member Challa Nagendra Prasad and Accountant Member Prabhash Shankar observed, "The larger issue as to whether the purchases made by the assessee...

Madras High Court Says Tax Authorities Must Consider Demerger Impact, Remands Grace Infrastructure Case

The Madras High Court on 20 July held that tax authorities must consider the impact of a court-approved demerger before revising an assessment and set aside a revision order passed without examining the effect of the restructuring on Grace Infrastructure Private Limited's financial statements. Justice C. Saravanan remitted the matter to the Principal Commissioner of Income Tax for fresh adjudication, directing it to reconsider the assessment after allowing the company to file a revised return...

Income Tax Findings Have Evidentiary Value In Benami Proceedings: Rajasthan High Court

On 3 August, the Rajasthan High Court held that findings under the Income Tax Act, though not conclusive in proceedings under the Prohibition of Benami Property Transactions (PBPT) Act, have evidentiary value and must be considered by authorities deciding benami proceedings. A Division Bench of Justices Arun Monga and Sandeep Shah allowed an appeal filed by Alishan Complex Private Limited against orders passed by the Appellate Tribunal, Adjudicating Authority and Initiating Officer, which had...

Delay In Filing Certificate Not Ground To Deny Property Tax Exemption To School: Chhattisgarh High Court

The Chhattisgarh High Court on 31 July held that a municipal authority cannot reject a property tax exemption claim merely because a school did not submit its Section 12AA registration certificate under the Income Tax Act, 1961 (which grants tax exemption to charitable institutions) along with its initial self assessment or representation.Justice Parth Prateem Sahu disposed of the writ petition filed by Riverdale World School, which challenged a demand notice seeking recovery of Rs. 30,808...

Delhi High Court Closes Long-Pending Challenge To Special Audit Order, Directs Centre To Bear Audit Cost

The Delhi High Court has closed a 19-year-old writ petition challenging an order directing a special audit under Section 142(2A) of the Income Tax Act, holding that the proceedings had become infructuous since the audit had already been completed.Petitioner had challenged an order dated March 30, 2006, by which the assessing officer had directed a special audit. The writ petition was instituted in 2007, and notices were issued on May 30 that year, without any interim stay.The division bench of...

Madras High Court Quashes Reassessment Against Stock Broker Over Misreading Client Funds As Income

The Madras High Court on 31 July held that reassessment proceedings cannot be initiated merely on the basis of suspicion arising from a misunderstanding of a stock broker's business model, ruling that client funds received by a broker in a fiduciary capacity cannot be treated as the broker's own income without tangible material. A Division Bench comprising Chief Justice Sushrut Arvind Dharmadhikari and Justice G. Arul Murugan dismissed the Revenue's appeal against the Income Tax Appellate...

Red Bull, Williams Grand Prix Tax Cases: Delhi High Court To Examine AAR's Power To Decide Permanent Establishment Issue

The Delhi High Court has framed an additional question for consideration in a batch of income tax petitions involving Formula One racing teams, including Red Bull Racing Limited and Atlassian Williams.A division bench of Justices Dinesh Mehta and Rajneesh Kumar Gupta would examine "Whether the Authority for Advance Ruling, which is enjoined upon to decide questions of law, as provided under Section 245N of the Income Tax Act of 1961, can decide as to whether an entity is having a permanent...

Bombay High Court Pulls Up ITAT Over Failure To Pronounce Reserved Judgments Within 90-Day Deadline

The Bombay High Court has pulled up the Income Tax Appellate Tribunal (ITAT) over the repeated practice of releasing matters reserved for judgment without pronouncing orders. A Division Bench of Acting Chief Justice Ravindra V. Ghuge and Justice Gautam A. Ankhad observed that Rule 34(5)(c) of the Income Tax (Appellate Tribunal) Rules, 1963, requires the tribunal to pronounce its judgment within 60 days of concluding the hearing and, in exceptional circumstances, within a further period of 30...

TPO Can't Treat Goodwill Amortisation As Operating Expense In Transfer Pricing: ITAT Delhi

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that amortisation of goodwill arising from acquisition of a business cannot be treated as an operating expenditure while computing the Profit Level Indicator (PLI) under the Transactional Net Margin Method (TNMM) for calcuating transfer pricing. Observing that such amortisation is "an abnormal item arising out of acquisition of business and not a regular operating expenditure", the tribunal ruled that the Transfer Pricing...

Payment Gateway Charges Paid By MakeMyTrip To Banks Are Not Commission, Not Liable For TDS: ITAT Delhi

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has dismissed the Revenue's appeal against MakeMyTrip India Pvt. Ltd., holding that payment gateway charges paid to banks are fees for banking services and not commission or brokerage. Upholding the Commissioner (Appeals)' order deleting the disallowance, the tribunal followed the Delhi High Court's ruling in MakeMyTrip's own case and observed, "Respectfully following the decision of the Hon'ble Jurisdictional High Court, we hold that...