Transfer Pricing | Existence Of International Transaction Must Be Determined Before Benchmarking Analysis Is Commenced: Delhi HC

The Delhi High Court has held that before the Income Tax Department commences transfer pricing benchmarking analysis of an assessee's international transactions, the very existence of such 'international transaction' must be determined.A division bench of Justices Yashwant Varma and Harish Vaidyanathan Shankar, while dealing with the case of an Indian entity producing liquor for brands like Jim Beam, observed, “the commencement of a benchmarking analysis would have to necessarily be preceded by...

Income Tax Department Cannot Attach Properties Indefinitely Without Pursuing Steps To Resolve Matter: Delhi High Court

The Delhi High Court has held that the Income Tax Department cannot, suspecting escapement of tax on income by an assessee, indefinitely attach its properties without taking further steps to resolve the matter.Single judge Justice Sachin Datta observed that Section 222 of the Income Tax Act, 1961 which empowers the Tax Recovery Officer to proceed with “attachment and sale of assessee's movable property” to recover the due taxes, explicitly states “attachment and sale,” signifying a sequential...

'Entire Case Based On Records Already Considered During Scrutiny': Mumbai ITAT Quashes Reopening Of Assessment Against Shah Rukh Khan For AY 2012-13

The Mumbai ITAT has quashed the reopening of assessment proceedings against the Assessee/ Appellant i.e., Shah Rukh Khan for AY 2012-13.The tribunal held that the reasons recorded while initiating the re-assessment, were completely silent as regards the allegation that income chargeable to tax has escaped assessment due to failure on the part of the assessee to disclose fully and truly all material facts. The ITAT held so after perusing the AO's order disposing the assessee's objections,...

Respondent Cannot File Cross-Objections To Appeal Before High Court U/S 260A Income Tax Act: Delhi High Court

The Delhi High Court has held that Section 260A of the Income Tax Act, 1961, which pertains to appeals to High Courts, does not envisage the filing of cross-objections by the opposite party, unlike Order XLI Rule 22 CPC.A division bench of Justices Yashwant Varma and Harish Vaidyanathan Shankar observed, “The Legislature appears to have consciously desisted from adopting principles akin to Order XLI Rule 22 of the Code or specifically introducing provisions enabling the respondent in an appeal...

Delhi High Court Expresses Concern Over Delay In Disposal Of Matters Before National Faceless Appeal Centre

The Delhi High Court has expressed grave concern over the pendency of over 5.4 Lakh appeals before the National Faceless Appeal Centre (NFAC).The body was created for faceless assessment under Section 143 or 144 of the Income Tax Act, 1961, by the insertion of Section 144B via the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020.A division bench of Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela remarked, “This court is cognizant of the...

Transactions Between Holding & Subsidiary For Issuance Of Shares Not Covered U/S 56(2)(viib) Of IT Act: Delhi ITAT Quashes Revision Against OYO

The Delhi ITAT held that the transactions between holding and its wholly owned subsidiary entity towards issuance of shares are not covered within ambit of Sec 56(2)(viib) in absence of any benefit arising from such transactions. Referring to the Coordinate Benchs, the Bench of Pradip Kumar Kedia (Accountant Member) and Yogesh Kumar US (Judicial Member) reiterated that Sec 56(2)(viib) would not apply in the present case where the transaction is between the assessee (subsidiary...

S.153C Income Tax Act | Two-Tier Satisfaction Of Assessing Officers Of Both Searched & Non-Searched Entity Needed Even Prior To 2015 Amendment: Delhi HC

The Delhi High Court has held that even though Section 153C of the Income Tax Act, 1961 did not in its original form prescribe two-tier satisfaction of Assessing Officers of both the searched and non-searched entity for initiating reassessment, the same cannot be deemed absent.Section 153C allows the Revenue department to proceed against a party other than the person who is being searched, if incriminating articles belonging to the other person are found during the search.The provision was...

[S.292B Income Tax Act] Inadvertent Mistakes In Reassessment Can Be Saved But Assessment Order Overlooking Apparent Error Cannot: Delhi HC

The Delhi High Court has made it clear that Section 292B of the Income Tax Act, 1961 cannot be used to save an assessment order passed by overlooking errors apparent on face of the record.The provision provides that no notice or assessment or any proceedings can be deemed to be invalid merely for the reason of any mistake, defect or omission in such notice, assessment or other proceedings.A division bench of Chief Justice Devender Kumar Upadhyay and Justice Tushar Rao Gedela said while the...

Enterprise Manufacturing Specified Items In Designated States Can Seek Tax Deduction U/S 80IC Income Tax Act Without Agreement With Govt: Delhi HC

The Delhi High Court has held that Section 80IC of the Income Tax Act, 1961, which contemplates tax incentives for enterprises operating in specific industries and locations in India, does not require such enterprises to enter into an agreement with the Government.In doing so, a division bench of Justices Yashwant Varma and Harish Vaidyanathan Shankar distinguished the provision from Section 80IA, whereunder agreement with the Centre, State or local authority is a pre-condition for claiming...

CBDT Cannot Impose Limitations To Extinguish Rights Granted Under Income Tax Act: Delhi High Court

Recently, the Delhi High Court held that Central Board of Direct Taxes (CBDT) cannot impose limitations to extinguish rights granted under Income Tax Act, 1961. The Court held that the wide powers granted to the CBDT are not for extinguishing a right that is conferred by the Act. Accordingly, the Court Circular No. 07/2007 dated 23 October 2007 issued by the CBDT to the be ultra vires the Income Tax Act.Circular No. 07/2007 dated 23 October 2007 issued by the Central Board of Direct Taxes...

Man Accused Of Taking ₹2 Crore Dowry Seeks Income Tax Dept Probe Into Wife's Family, Delhi High Court Rejects Plea

The Delhi High Court has rejected the writ petition filed by a man, seeking an inquiry into the finances of his wife and her family who claimed to have paid him ₹2 crores dowry, in addition to spending crores of rupees on their wedding.A division bench of Chief Justice Devendra Kumar Upadhyaya and Justice Tushar Rao Gedela observed that the complaint stemmed from a matrimonial feud and the man was unable to indicate the provision under which such a complaint was made to the Income Tax...

Delhi High Court Quashes ₹2000 Crore Tax Reassessment Notice Against Maruti Suzuki For Alleged Escapement Of Income In AY 2009-10

The Delhi High Court has quashed the reassessment action initiated by the Income Tax Department against car manufacturer Maruti Suzuki India Ltd for alleged escapement of income in the Assessment Year 2009-10.A division bench of Justices Yashwant Varma and Ravinder Dudeja observed that the company had made full and true disclosure of all facts in the course of the assessment and the Department did not have jurisdiction to reopen the assessment under Sections 147/148 of the Income Tax Act,...