INCOME TAX
120-Day Timeline In S.132B Income Tax Act For Deciding Assessee's Plea To Release Seized Assets Not Mandatory: Delhi High Court
The Delhi High Court has held that the 120-day period prescribed under the second proviso to Section 132B(1)(i) of the Income Tax Act, 1961 for deciding an assessee's request for release of seized assets is not mandatory, and a decision taken beyond the said period does not automatically become invalid.A division bench of Justices V. Kameswar Rao and Vinod Kumar was dealing with a petition challenging the Income Tax Department's refusal to release jewellery seized during search proceedings under...
Income Tax | Cannot Curtail Trust's Time Window For Availing Exemption On Existing Accumulations: ITAT Delhi
The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has allowed a Trust that had accumulated Income for Financial Year 2016-2017 to claim exemption under Section 11 of the Income Tax Act, 1961 and deleted addition of ₹37,99,090. In a recent order, a Division Bench, comprising Shri S. Rifaur Rahman (Accountant Member) and Shri Sudhir Kumar (Judicial Member) on effect of amendment restricting the accumulation period for income of charitable/religious trusts under Section 11, it was ...
Software Receipts Can't Be Taxed On PE Assumption Already Rejected By ITAT: Delhi High Court
The Delhi High Court has held that software receipts cannot be subjected to tax deduction at source (TDS) on the assumption of a Permanent Establishment (PE) when such an assumption has already been rejected by ITAT, setting aside a withholding certificate issued under Section 197 of the Income Tax Act.A division bench of Justices V. Kameswar Rao and Vinod Kumar was dealing with a petition filed by Zscaler Inc, a US-based software company, challenging the Assessing Officer's order granting TDS...
Income Tax | Revised 2024 Compounding Guidelines Cannot Be Applied After Case Attains Finality: Madras High Court
The Madras High Court held that once the assessee's entitlement to compounding had attained finality through earlier orders, then the Income Tax Department could not apply the revised Compounding Guidelines. Justice C. Saravanan referred to the Explanation to Section 279(6) of the Income Tax Act, 1961 and noted that the new compounding Guidelines dated 17.10.2024 bearing reference F.No.285/08/2014-IT (Inv.V) would apply, only if a new application is/was filed in terms of paragraph 3.2...
Income Tax | Govt Grant/Subsidy Under Rehabilitation Scheme Is Capital Receipt, Not Taxable As Revenue: Madras High Court
The Madras High Court held that the grant-in-aid/subsidy received by the assessee under a government rehabilitation scheme is a capital receipt and is not taxable as revenue. Chief Justice Manindra Mohan Shrivastava and G. Arul Murugan examined whether the grant-in-aid/subsidy received by the assessee from the Government under the rehabilitation scheme should be treated as a revenue receipt in the hands of the assessee or as a capital receipt, taking it out of the purview of the...
Income Tax Act | ITAT Mumbai Grants Major Tax Relief To Vodafone; Deletes Depreciation, TDS & S.14A Disallowances
The Mumbai Bench of the Income Tax Appellate Tribunal has held that multiple additions made by the Assessing Officer could not be sustained in law. The Bench held that the transfer of passive telecom tower assets pursuant to a court-approved demerger amounted to a genuine “gift” under Section 47(iii), and the Assessing Officer could not artificially impute consideration or deny depreciation. It further ruled that roaming services do not involve human intervention so as to qualify as...
Non-Filing Of ITR By Creditor Not Proof For Lack Of Creditworthiness: Patna High Court Deletes Income Tax Additions
The Patna High Court has held that the Income Tax Appellate Tribunal was not justified in restoring an addition of ₹1.91 crore under Section 68 of the Income Tax Act after reversing a reasoned order of the Commissioner of Income Tax (Appeals), where the assessee had produced documentary evidence and the Assessing Officer's remand report did not disclose any adverse material. A Division Bench of Justice Bibek Chaudhuri and Justice Dr. Anshuman held that the Tribunal interfered with the...
Non-Compete Fee Can Be Deducted As Revenue Expenditure Under Section 37(1) Income Tax Act: Supreme Court
The Supreme Court has held that payment of non-compete fee does not result in acquisition of a capital asset or alteration of the profit-making structure of the business, and is allowable as revenue expenditure under Section 37(1) of the Income Tax Act, 1961.“Thus non-compete fee only seeks to protect or enhance the profitability of the business, thereby facilitating the carrying on of the business more efficiently and profitably. Such payment neither results in creation of any new asset nor...
Income Tax Act | S.153C Trigger Starts On Handing-Over Date, Not Search Date: Delhi High Court
The Delhi High Court has dismissed an appeal filed by the Principal Commissioner of Income Tax (Central), Gurugram, upholding the Income Tax Appellate Tribunal's order which had rejected a reassessment notice issued under Section 153C of the Income Tax Act for AY 2013-14. A Division Bench of Justice V. Kameswar Rao and Justice Vinod Kumar held that the six-year block period under Section 153C must be computed from the date when seized documents were handed over to the Assessing Officer...
Income Tax Act | S.153C Notices Unsustainable When Search For 'Other Person' Initiated After 01.04.2021: Madras High Court
The Madras High Court held that the notices under Section 153C are unsustainable where a search for 'other person' was initiated after 01.04.2021. Section 153C of the Income Tax Act applies when documents or assets belonging to a third party are found during a search, and an assessment is made against that person. Section 153C(3) of the Income Tax Act states that Section 153C shall not apply to any search initiated under Section 132 or books/assets requisitioned under Section 132A...
Income Tax Act | Bombay High Court Allows Treaty-Based Cap Of 10% On DDT For Foreign Shareholder; Sets Aside BFAR Ruling
The Bombay High Court (Goa Bench) has held that Dividend Distribution Tax (DDT) paid by an Indian subsidiary to its foreign shareholder must be restricted to the treaty rate of 10% under Article 11 of the India-UK India Double Taxation Avoidance Agreement (DTAA) A Division Bench of Justice Bharati Dangre and Justice Nivedita P. Mehta allowed the appeal filed by the assessee, M/s Colorcon Asia Pvt. Ltd., and set aside the advance ruling passed by the Board for Advance Rulings, (BFAR)...
Income Tax Act | Bombay High Court Allows Treaty-Based Cap Of 10% On DDT For Foreign Shareholder; Sets Aside BFAR Ruling
The Bombay High Court (Goa Bench) has held that Dividend Distribution Tax (DDT) paid by an Indian subsidiary to its foreign shareholder must be restricted to the treaty rate of 10% under Article 11 of the India-UK India Double Taxation Avoidance Agreement (DTAA) A Division Bench of Justice Bharati Dangre and Justice Nivedita P. Mehta allowed the appeal filed by the assessee, M/s Colorcon Asia Pvt. Ltd., and set aside the advance ruling passed by the Board for Advance Rulings, (BFAR)...