TEP-Based Income Tax Summons Can't Be Quashed Without Proof Of Mala Fide: Andhra Pradesh High Court

The Andhra Pradesh High Court has held that summons issued under Section 131(1A) of the Income Tax Act on the basis of a Tax Evasion Petition (TEP) cannot be quashed in writ jurisdiction in the absence of clear and convincing proof of mala fide, particularly where such allegations are raised belatedly and lack foundational pleadings or supporting material. A Division Bench of Justice Ravi Nath Tilhari and Justice Balaji Medamalli dismissed a writ petition filed by Koduru Picheswara Rao...

Delhi High Court Pulls Up Income Tax Department For Pursuing Tax Dues After Nine-Year Slumber, Quashes Notice

The Delhi High Court has recently pulled up the Income Tax Department for waking up after nine years to pursue tax dues, calling it “difficult nay impossible” to believe such prolonged inaction, and quashed the notice issued to APS Hydro Private Limited. A division bench of Justice Dinesh Mehta and Justice Vinod Kumar was dealing with a writ petition against a notice dated February 16, 2022, and a follow-up communication issued on May 12, 2022, by the Assistant Commissioner of Income Tax, which...

Virtual Services Treated As Rendered In India: Bombay High Court Denies NIL TDS Certificate To China-Based Entity

The Bombay High Court has refused to grant a nil withholding tax certificate under Section 197 to a China-based company, holding that services delivered through emails and video conferencing can be treated as rendered in India, while also declining to interfere as the core tax dispute is pending before appellate authorities. A bench of Justices B. P. Colabawalla and Amit S. Jamsandekar observed that “the rendition of these services, even if done virtually, equate to and is the same as a...

Delhi High Court Quashes Reassessment Against Sports Events Company As Time-Barred, Calls It Change of Opinion

The Delhi High Court has quashed reassessment proceedings against a Delhi-based sports events company, holding that the notice issued on July 30, 2022 was time-barred and that reopening the case on issues already scrutinized amounted to a mere change of opinion, rendering the entire exercise invalid.A Division Bench of Justices Dinesh Mehta and Vinod Kumar allowed the writ petition filed by the company, setting aside the reassessment notice, subsequent orders, and the ex-parte assessment order...

Delhi High Court Quashes Reassessment, Special Audit Against Huawei For AY 2013-14; Upholds Reopening For AY 2015-16

The Delhi High Court has granted partial relief to Huawei Telecommunications (India) in a batch of petitions challenging special audit directions and reassessment proceedings initiated by the Income Tax Department.A Division Bench of Justices V. Kameswar Rao and Vinod Kumar partly allowed the petitions, setting aside the special audit directions and reassessment notices for Assessment Year (AY) 2013-14, while sustaining the proceedings for AY 2015-16.The case arose from a search and seizure...

Limitation To Pass Transfer Pricing Order Cannot Be Extended By Treating Remand As Fresh Reference: Karnataka High Court

Rejecting the income tax department's attempt to treat a Tribunal remand as a fresh transfer pricing reference to extend limitation, the Karnataka High Court has held that no order can be passed once the statutory time limit expires. A single-judge bench of Justice Nagaprasanna emphasised that there is a “world of difference” between a reference made by the Assessing Officer to the Transfer Pricing Officer under Section 92CA(1) and a remand of the matter by the Tribunal, rejecting the Revenue's...

Search Year Included In Extended 10-Year Limit For Reopening Income Tax Assessments: Gujarat High Court

The Gujarat High Court has recently held that while computing the extended ten-year period for reopening income tax assessments following a search, the assessment year in which the search was conducted must be included in the reckoning.The bench stated that "..... the assessment year relevant to the previous year of search becomes the reference year and the ten-year period is counted from the end of that assessment year. This necessarily includes the search assessment year within the ten-year...

Gujarat High Court Quashes Reassessment Based On GST Proceedings Set Aside, Finds No Independent Material

The Gujarat High Court has quashed reassessment proceedings initiated against an individual taxpayer, holding that reopening of assessment was uncalled for where it was based on GST proceedings that had already been set aside by the appellate authority and where no independent material existed to indicate escapement of income. “Apart from this, there is no other material which is in possession of the respondent No.1, which could prove that there has been an escapement of income and hence the...

Gujarat High Court Condones Delay In Filing Income Tax Return, Finds Accountant's Error Caused Genuine Hardship

The Gujarat High Court has held that a taxpayer's delay in filing its income tax return due to a bona fide misunderstanding of audit requirements under Section 44AB of the Income Tax Act, resulting in denial of a tax deduction under Section 80-IAB for Special Economic Zone developers, constitutes “genuine hardship” warranting condonation.The case arose from the petitioner firm's failure to file its return of income for Assessment Year 2023–24 within the prescribed due date of 31 July 2023. The...

Bona Fide Delay Justifies Tax Benefit, “Genuine Hardship” Must Be Liberally Applied: Gujarat High Court

The Gujarat High Court on 16 March, held that a bona fide delay of 53 days in filing Form 10-IC cannot deprive an eligible taxpayer of concessional tax benefits. The expression “genuine hardship” under the Income Tax Act must be given a liberal, justice-oriented interpretation. Form 10-IC is a declaration filed by a company to opt for the concessional corporate tax rate under Section 115BAA of the Income Tax Act.A Bench comprising Justice A.S. Supehia and Justice Pranav Trivedi allowed...

Kerala High Court Upholds Relief To Kalyan Jewellers, Rules Unrealised Mark-To-Market Gains Not Taxable

The Kerala High Court on 11 March, held that unrealised gains arising from mark-to-market valuation of forward contracts are not taxable as income unless actually realised. The Division Bench comprising Justice Devan Ramachandran and Justice Basant Balaji dismissed the appeal filed by the Principal Commissioner of Income Tax against Kalyan Jewellers India Ltd. The judges held: “It is doubtless that, in a 'mark-to-market' forward commodities contract, the gains and losses fluctuate until the...

Balance Depreciation Allowed In Subsequent Year For Assets Used Less Than 180 Days: Madras High Court

The Madras High Court on 2 March held that a taxpayer is entitled to claim the balance 50% of additional depreciation in the subsequent assessment year where new plant and machinery are put to use for less than 180 days in the year of acquisition. A Bench of Justice G. Jayachandran and Justice Shamim Ahmed allowed an appeal filed by Wheels India Limited against an order of the Income Tax Appellate Tribunal for the assessment year 2007–08, which had upheld the partial disallowance of the...