INCOME TAX
Bombay High Court Rejects IT Appeals Over Search Assessment Based On Regular Books Instead Of Search Material
The Bombay High Court has dismissed two appeals filed by the Income Tax Department, upholding an Income Tax Appellate Tribunal order that deleted additions made to a company's completed income tax assessments after finding they were not based on incriminating material recovered during a search. The court found that no substantial question of law arose for consideration. A division bench of Justice G.S. Kulkarni and Justice Aarti Sathe agreed with the tribunal that the Assessing Officer had...
HCL's Corporate Guarantees For Overseas Subsidiaries Attract Transfer Pricing Provisions: Delhi ITAT
The Delhi Bench of the Income Tax Appellate Tribunal has held that corporate guarantees issued by HCL Technologies Ltd. to its step-down overseas subsidiaries amount to indirect financing and therefore qualify as international transactions requiring transfer pricing benchmarking. Rejecting the Transfer Pricing Officer's reliance on commercial bank guarantee rates with an additional 200-basis-point mark-up, the tribunal held that an arm's length guarantee commission of 0.50% was appropriate. ...
Delhi ITAT Holds AMP Spend Can't Be TP Transaction Without AE Understanding, Follows Sony India Ruling
On 30 July, the New Delhi Income Tax Appellate Tribunal (ITAT) held that AMP expenditure incurred by an Indian entity cannot be treated as an international transaction for transfer pricing purposes without any agreement, arrangement or understanding with its associated enterprise (AE), following the Delhi High Court's ruling in Sony India Pvt. Ltd. v. ACIT. A Bench comprising Judicial Member Satbeer Singh Godara and Accountant Member Manish Agarwal held that the issue of whether AMP expenditure...
Gujarat High Court Reiterates Trade Associations Can Qualify As Charitable Institutions Under Income Tax Act
The Gujarat High court has recently upheld an Income Tax Appellate tribunal order directing the Commissioner of Income Tax (Exemptions) to reconsider a trade association's application for registration as a charitable institution.It held that trade promotion bodies established to advance trade and commerce can qualify as charitable institutions under the "general public utility" category of the Income Tax Act.A division bench of Justice Bhargav D. Karia and Justice Pranav Trivedi said the...
Mere Delay In Paying Income Tax Does Not Amount To Wilful Tax Evasion: Bombay High Court
The Goa bench of the Bombay High Court has held that mere delay in paying an admitted tax liability, without a deliberate intention to evade payment, does not amount to a "wilful attempt" to evade tax. Justice Amit S. Jamsandekar observed that criminal prosecution requires proof of mens rea and cannot be invoked merely because there has been a delay or failure in paying tax."The word 'wilful' introduces a mental element and requires looking into the mind of a person by gauging the person's...
Income Tax Act | Trustee's Shareholding Doesn't Make Public Trust A 'Concern' Under Deemed Dividend Provision: Gujarat High Court
The Gujarat High Court has recently held that a public trust cannot be treated as a "concern" under the deemed dividend provisions of the Income Tax Act (Section 2(22)(e)) merely because its trustee holds substantial shares in the lending company. Holding that the legal fiction created by the provision cannot be stretched to cover such trusts, the court observed, "The word "concern" used under the Act in such Explanation, which encompasses a Hindu Undivided Family (HUF), or a firm, or an...
Three Days To Reply To Income Tax SCN Not Reasonable: Gujarat High Court Quashes Assessment
The Gujarat High Court recently held that granting a taxpayer only three days to respond to an income tax show cause notice does not amount to a reasonable opportunity of hearing and violates the principles of natural justice.Setting aside an income tax assessment order passed after scrutiny proceedings, a Division Bench of Justice A.S. Supehia and Justice Vaibhavi D. Nanavati observed, "Thus, in view of the settled legal position, granting only three days' time to file a reply cannot be said to...
Disseminating Bhagavad Gita Teachings Can't Be Treated As Religious Propagation: ITAT Chandigarh
Holding so, the ITAT set aside orders treating the World Sankirtan Tour Trust as a religious entity and denying it tax benefits.
Gujarat High Court Quashes Reassessment Notice Issued Beyond COVID-Era TOLA Deadline
The Gujarat High Court has quashed a reassessment notice issued under Section 148 of the Income Tax Act, holding that it was issued beyond the "surviving time" available under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA), as interpreted by the Supreme Court in Union of India v. Rajeev Bansal.TOLA was enacted to extend statutory timelines for tax and other legal proceedings during the COVID-19 pandemic.A Division Bench of Justice A.S. Supehia and...
Why Should Delay Interest Not Be Recovered From Your Salary? : Delhi High Court To AO Over 4-Year Delay In Tax Refund
The Delhi High Court on Tuesday (July 28) directed an Assessing Officer to personally explain the four-year delay in taking steps to release over ₹15 crore due to Clix Capital Services Pvt. Ltd. A Division Bench of Justices Dinesh Mehta and Rajneesh Kumar Gupta directed the officer involved to personally appear before the Court and show cause why the interest payable for the delay should not be recovered from his salary.Petitioner-company submitted that the Assessing Officer had passed an...
Limitation Begins On Jurisdiction Transfer When Same AO Handles Searched And Other Person: ITAT Delhi
The New Delhi Income Tax Appellate Tribunal (ITAT) on 29 July held that where the Assessing Officer of the searched person and the “other person” under Section 153C of the Income Tax Act is the same, the limitation period for completing assessment begins from the date of transfer of jurisdiction under Section 127 and not from the date of recording satisfaction. A Bench of Judicial Member Vimal Kumar and Accountant Member Manish Agarwal quashed the assessment orders passed against Sudhir Agrawal...
Delhi High Court Rejects Revenue's Plea Against SpiceJet Over Foreign Currency Convertible Bond Tax Dispute
The Delhi High Court has dismissed two appeals filed by the Income Tax Department against SpiceJet Ltd., holding that the tax treatment of premium payable on redemption of Foreign Currency Convertible Bonds (FCCBs) is a settled issue.A division bench of Justices Dinesh Mehta and Rajneesh Kumar Gupta observed that the issue raised by the Revenue—whether the expenditure on FCCB redemption premium ought to be spread over the five-year life of the bonds instead of being claimed in the first...