Income Tax Act | Criminal Complaint For Tax Evasion Filed During Pendency Of Reassessment Proceedings Not Premature: Delhi High Court

The Delhi High Court recently dismissed a plea for quashing a criminal complaint lodged under Income Tax Act 1961 for alleged tax evasion, moved on the ground that reassessment action was pending and hence the complaint was premature.The bench of Justice Neena Bansal Krishna cited P. Jayappan vs. S.K. Perumal, First Income Tax Officer [1984] where it was held that pendency of re-assessment proceedings cannot act as a bar to the institution of criminal prosecution for the offences under Section...

Income Tax | S.194C & S.194LA Would Not Apply When TDR Certificates Are Issued In Lieu Of Compensation: Bombay High Court

The Bombay High Court held that Section 194C and Section 194LA of the Income Tax Act would not apply when TDR Certificates are issued in lieu of compensation. Justices B.P. Colabawalla and Firdosh P. Pooniwalla agreed with the assessee that the words “or by any other mode” appearing in Section 194C would have to be read ejusdem generis to the words “payment thereof in cash or by issue of a cheque or draft”. Similarly, in Section 194LA, the words “or by any other mode” would have to...

Stock Exchange & Banking Channels Cannot Mask Sham Transactions Carried Out Through Bogus Capital Loss Claim Companies: Calcutta High Court

The Calcutta High Court held that stock exchange and banking channels cannot mask sham transactions carried out through bogus capital loss claim companies. Justices T.S. Sivagnanam and Chaitali Chatterjee (Das) observed that “the entire information contained in the investigation report was apprised to the assessee by the assessing officer and thereafter the show cause notices was issued for which the assessee' submitted their reply and in the reply they did not raise any issue that...

Mere Incorporation Of Investing Companies Under Companies Act Not Enough To Prove Genuineness Of Share Transactions: Calcutta High Court

The Calcutta High Court held that mere incorporation of investing companies under the Companies Act is not enough to prove the genuineness of share transactions. The bench opined that, admittedly, the shares were by way of a private placement. Though the investing companies might have been incorporated under the provisions of the Company's Act, that by itself will not validate the transaction. Justices T.S. Sivagnanam and Chaitali Chatterjee (Das) stated that “though it can be...

Income Tax | Sale Proceeds Of One House Used For Purchasing Multiple Residential Houses Qualifies For Exemption U/S 54(1): Bombay High Court

The Bombay High Court held that sale proceeds of one residential house, used for purchase of multiple residential houses, would qualify for exemption under Section 54(1) of the Income Tax Act. The issue before the bench was whether Section 54(1) of the Income Tax Act allows the Assessee to set off the purchase cost of more than one residential units against the capital gains earned from sale of a single residential house. Chief Justice Alok Aradhe and Justice Sandeep V. Marne stated...

Burden To Prove That Best Assessment By Income Tax Authorities Is Perverse Is On Assesee: Allahabad High Court

The Allahabad High Court has held that the burden to prove that the findings of best assessment done by the authorities is perverse is on the assesee. The bench of Justice Shekhar B. Saraf and Justice Praveen Kumar Giri held that “when a best assessment is done, it is for the assessee to bring on record the facts that may reveal that the findings are perverse in nature.” Appellant filed the Income Tax Appeal against the order of the Income Tax Appellate Tribunal who upheld the...

Unauthenticated Documents From Foreign Govt Regarding Swiss Bank Account Of Assessee Can't Form Basis For Criminal Action: Delhi HC

The Delhi High Court has quashed the criminal proceedings initiated against an assessee under Section 276C, 276D and 277 of the Income Tax Act 1961 merely on the basis of some unauthorised documents alleging existence of an undisclosed Swiss Bank account in his name.In doing so, Justice Neena Bansal Krishna observed,“Merely on some unauthenticated information received from a third Country with no material evidence, is not sufficient to make out a prima facie case and there cannot be a...

Notice U/S 153C Income Tax Act Can Be Issued Only If Incriminating Material Has 'Bearing On Total Income' Of Non-Searched Assessee: Delhi HC

The Delhi High Court has made it clear that assessments under Section 153C of the Income Tax Act, 1961 can be made on a non-searched entity only when the Assessing Officer has incriminating material which “has a bearing” on its total income.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.A division bench of Justices Vibhu Bakhru and Tejas Karia...

[Income Tax] Filing Of Form 10-IC Prior To Filing Of Return Not Mandatory, Delay May Be Condoned In “Genuine Hardship”: Allahabad High Court

The Allahabad High Court has held that filing of Form 10-IC prior to filing of income tax return is not mandatory and the delay in filing the Form may be condoned in cases where “genuine hardship” is shown to exist. Form 10-IC, under the Income Tax Act, is required to filed only if a Domestic Company chooses to pay tax at concessional rate of 22% under Section 115BAA of the Income Tax Act,1961. Section 115BAA provides that subject to the provisions of Chapter XII of the Income Tax Act,...

Section 80IA Income Tax Act | Internal CUP Method Is Most Appropriate For ALP Determination In Captive Power Transactions: Calcutta High Court

The Calcutta High Court held that Internal CUP (Comparable Uncontrolled Price) method is most appropriate for ALP (Arm's Length Price) determination in captive power transactions. Chief Justice T.S. Sivagnanam and Justice Chaitali Chatterjee (Das) was addressing issue of whether the Internal Comparable Uncontrolled Price (CUP) method adopted by the assessee was right in determining the Arm's Length Price (ALP) for power supplied by the assessee's Captive Power Plants (CPPs) to ...

Insurance Claim Received On Dead Horses Is Capital Receipt, Not Taxable As Income U/S 41(1): Bombay High Court

The Bombay High Court held that insurance claim received on dead horses is capital receipt, not taxable as income under Section 41(1) Of Income Tax Act. The bench opined that horses in respect of which the insurance claim was received were Assessee's capital assets and that therefore insurance receipt arising therefrom could only have been considered as capital receipt, not chargeable to tax. The question before the bench consists of Chief Justice Alok Aradhe and Justice Sandeep...

[Income Tax Act] Amount Indicated In P&L Account As Provision For Doubtful Debts/Advances Cannot Be Treated As "Reserve" U/S 115JA: Bombay HC

The Bombay High Court has ruled that a provision for doubtful debts cannot be treated as either a "reserve" or a "provision for liability" under clauses (b) or (c) of the Explanation to Section 115JA of the Income Tax Act, 1961, and thus cannot be added back to the book profits for the purpose of minimum alternate tax (MAT). The Court accordingly overturned the addition of ₹2.49 crore made by the Assessing Officer and upheld by the Tribunal.A Division Bench of Chief Justice Alok Aradhe and...