Non-Recourse Sale Of Future Rent Receivables Not Borrowing Or Interest For TDS Purposes: ITAT Chennai

The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) on 6 July held that discounting charges arising from the assignment of future rent receivables on a non-recourse basis cannot be treated as interest under the Income-tax Act, 1961, and therefore do not attract tax deduction at source (TDS) under Section 194A (which requires deduction of tax on interest other than interest on securities). A Single Member Bench comprising Judicial Member R. Muralidhar allowed seven appeals filed by OPC...

Gujarat High Court Quashes Income Tax Reassessment Over Pre-2012 Property Valuation Rule

The Gujarat High Court has quashed an income tax reassessment notice issued over the valuation of land sold in 2009. It held that the reassessment in the case was unsustainable because the assessing officer sought to adopt a lower fair market value despite the unamended law governing the assessment. A division bench of Justice A.S. Supehia and Justice Vaibhavi D. Nanavati held that the amendment made to Section 55A through the Finance Act, 2012 applied only prospectively. It therefore could not...

Pre-Search Material Cannot Be Basis For Additions In Completed Search Assessments: Bombay High Court

The Bombay High Court has recently reiterated that the Income Tax Department cannot make additions in a completed assessment under the search assessment provisions on the basis of material that was already in its possession before the search. Dismissing two appeals filed by the Revenue, the court also held that the Department had failed to establish that the assessee owned the foreign bank accounts sought to be taxed. A division bench of Justice B.P. Colabawalla and Justice Firdosh P....

Section 263 Assessment Cannot Survive After Original Order Is Quashed As Time Barred: ITAT Kolkata

On 8 July, the Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) held that a fresh assessment order passed pursuant to revision proceedings cannot survive once the original assessment has been quashed as time barred. It becomes “invalid and void ab initio” since the original assessment no longer exists in law. Judicial Member Pradip Kumar Choubey and Accountant Member Rajesh Kumar allowed the cross objection filed by Dozco India Private Limited and dismissed the Revenue's appeal as...

ITAT Delhi Deletes ₹13.97 Crore TP Adjustment Against Coca-Cola India Over Delayed Receivables

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has recently held that Coca Cola India Inc.'s Indian branch cannot be subjected to a transfer pricing adjustment over delayed recovery of receivables from its Associated Enterprises (AEs) where it had no borrowings and its working capital requirements were entirely funded by its US head office. A bench of Judicial Member Vimal Kumar and Accountant Member S. Rifaur Rahman partly allowed the Revenue's appeal only on the issue of interest...

ITAT New Delhi Quashes NIIT Revision, Says Action Was Triggered By Higher Authorities' 'Pressures'

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) on 8 July held that revision proceedings under Section 263 of the Income Tax Act cannot be sustained when the Commissioner of Income Tax acts under the pressure of higher authorities instead of independently applying his mind. Judicial Member Satbeer Singh Godara and Accountant Member M. Balaganesh partly allowed NIIT Ltd.'s appeals for Assessment Years 2000-01 to 2005-06 and quashed the revision proceedings initiated against the...

Revenue Cannot Disallow Purchases As Bogus After Accepting Corresponding Sales: ITAT Ahmedabad

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has recently quashed the reopening of an assessment and deleted an addition of ₹22.47 crore made against a trader in copper scrap and ingots, holding that the Revenue failed to establish that the purchases were bogus despite accepting the corresponding sales. A tribunal comprising Judicial Member Sanjay Garg and Accountant Member Annapurna Gupta observed: "If the assessee has made the sales, it is obvious that he has also made the...

Madras High Court Quashes Reassessment Based On Material Already Examined During Original Assessment

The Madras High Court has recently set aside reassessment proceedings initiated against an engineering equipment manufacturer after finding that the Income Tax Department reopened the assessment based on material that had already been disclosed and examined during the original assessment. Justice Senthilkumar Ramamoorthy observed that the reassessment amounted to an impermissible change of opinion. "On comparing the above reasons for reopening with the reply of the petitioner to the notice...

Gujarat HC Holds Reassessment Notice Cannot Be Challenged After Assessment Order, Directs Appeal Remedy

The Gujarat High Court on 29 June held that a reassessment notice cannot be challenged through a writ petition after reassessment proceedings have culminated in an assessment order. A Division Bench comprising Justices A.S. Supehia and Vaibhavi D. Nanavati dismissed the writ petitions filed by Jitendra Shankarlal Mistri and others, holding that the petitioners could avail the statutory remedy of appeal against the reassessment orders before the Commissioner of Income Tax (Appeals). The...

Madras HC Upholds Jurisdiction Of Assessing Officers To Issue Reassessment Notices Under Income Tax Act

The Madras High Court has held that Jurisdictional Assessing Officers have the authority to issue reassessment notices under Sections 148A, 148 and 147 of the Income Tax Act, 1961, observing that the retrospective insertion of Section 147A has clarified their jurisdiction to initiate proceedings for income escaping assessment. Justice C. Saravanan dismissed a batch of writ petitions challenging reassessment proceedings initiated by Jurisdictional Assessing Officers, holding that the petitioners...

Madras High Court Holds Employer Cannot Grant Section 89 Tax Relief Without Form 10E From Employees

The Madras High Court on 24 June held that employers deducting Tax Deducted at Source (TDS) on voluntary retirement compensation cannot be faulted for not granting relief under Section 89 of the Income Tax Act (relief for salary received in arrears or advance) unless employees submit the prescribed Form 10E. Justice C. Saravanan allowed the writ petition filed by the Hosur Bata Employees Union in part and directed the Income Tax Department to process the income tax returns of affected employees...

ITAT Ahmedabad Holds Shell Company Allegation Alone Cannot Justify ₹44.49 Crore Section 68 Addition

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) on 6 July held that the Income Tax Department cannot treat loans received by a company as unexplained cash credits merely on the basis of allegations that the lender companies are shell entities, when the taxpayer has furnished evidence establishing their identity, financial capacity and genuineness of the transactions. Judicial Member Sanjay Garg and Accountant Member Narendra Prasad Sinha upheld the order of the Commissioner of...