Assessee Cannot Be Penalised U/S 271(1)(c) Of Income Tax Act For Merely Raising A Plausible Claim: Bombay High Court

The Bombay High Court stated that the assessee cannot be penalised under Section 271(1) (c) of income tax act for merely raising a plausible claim. The Division Bench consists of Chief Justice Alok Aradhe and Justice Sandeep V. Marne opined that “the claim raised by the Assessee for claiming deduction in respect of the crystalised liability towards additional bonus was a plausible claim. Whether such claim is tenable in law or not is an altogether different issue. What is relevant to...

Once AO Scrutinises Identity & Creditworthiness Of Shareholders, No Reassessment Action Without 'Additional Info' About Income Escapement: Delhi HC

The Delhi High Court recently rejected Revenue's appeal against deletion of additions made to the income of an assessee-company alleged to have evaded tax, observing that the AO had already scrutinised the identity and creditworthiness of the shareholders and in the absence of any additional material coming to light, reassessment action could not have been initiated.A division bench of Justices Vibhu Bakhru and Tejas Karia observed,“During the original proceedings, the AO had issued a...

Reassessment Notice Can't Be Based On 'General Information' From Investigation Wing Of Income Tax Dept: Delhi High Court

The Delhi High Court has made it clear that the Income Tax Department cannot issue reassessment notice to an assessee based on general information shared by its Investigation Wing, until the Assessing Officer forms definite 'reason to believe' escapement of income.A division bench of Justices Vibhu Bakhru and Tejas Karia observed,“It is clear from the information received from the Investigation Wing…that the same was general in nature and did not point towards the involvement of the Petitioner...

Valuation Of Company's Unquoted Equity Shares By 'Discounted Cash Flow' Method Permissible Under Income Tax Rules: Delhi High Court

The Delhi High Court recently rejected the appeal preferred by the Income Tax Department against an ITAT order allowing the valuation of a software company's unquoted equity shares by discounted cash flow [DCF] method.In doing so, a division bench of Justices Vibhu Bakhru and Tejas Karia held that DCF method “is one of the methods that can be adopted by the Assessee under Rule 11UA(2)(b) of the [Income Tax] Rules for determining the FMV of unquoted equity shares in a company in which public are...

AO Cannot Alter Net Profit In Profit & Loss Account Except Under Explanation To S.115J Of Income Tax Act: Bombay High Court

The Bombay High Court stated that assessing officer do not have the jurisdiction to go behind net profit in profit and loss account except as per explanation to Section 115J Of Income Tax Act. The Division Bench consists of Chief Justice Alok Aradhe and Justice M.S. Karnik observed that “Section 115J of the 1961 Act mandates that in case of a company whose total income as computed under the provisions of the Act 1961 is less than 30% of the book profit, the total income chargeable to...

[Income Tax] Breach Of Article 265 Cannot Be Alleged Based On Inconclusive Opinion By Assessing Officer: Bombay High Court

The Bombay High Court stated that a breach of Article 265 of the constitution cannot be alleged or sustained based upon a tentative or inconclusive opinion formed by assessing officer. The Division Bench consists of Justices M.S. Sonak and Jitendra Jain stated that “If the communication dated 29 November 2018 is an order, it being like a preliminary, prima facie, or interlocutory order and not a final order, the Petitioner cannot base their claim on this communication to allege breach...

Does Payment For Transponder Services Constitute 'Royalty' U/S 9(1)(vi) Of Income Tax Act? Bombay High Court Asks CIT To Decide

The Bombay High Court has asked the Commissioner of Income Tax to decide whether payment for transponder services constitutes 'royalty' under Section 9(1)(Vi) of Income Tax Act. The Division Bench of Justices M.S. Sonak and Jitendra Jain observed that “the authorities have held the payment to constitute 'royalty' under the domestic law as well as under the Treaty, but by holding the said payment is towards 'royalty' under the Treaty, the revenue has relied upon the definition of...

Assessing Officer Can't Act As Prosecutor, Judge And Executor At The Same Time: Himachal Pradesh High Court

Himachal Pradesh High Court held that the Assessing officer must provide the university a fair opportunity to present its case and can't take law in his own hand by acting as a Prosecutor, Judge and Executor at the same time.Justice Tarlok Singh Chauhan & Justice Sushil Kukreja: “The Assessing officer took the law into his own hand and played as a Prosecutor, Judge and Executor at the same time.”Background Facts:The Petitioner, Jaypee University of Information Technology was established in...

Amount Of Subsidy Received By Assessee From RBI Cannot Be Treated As 'Interest' Chargeable U/S 4 Of Income Tax Act: Bombay High Court

The Bombay High Court held that the amount of subsidy received by the Assessee from RBI cannot be treated as 'interest' chargeable under Section 4 of Income Tax Act. The Division Bench of Chief Justice Alok Aradhe and Justice Sandeep V. Marne stated that “the amount of subsidy received by the Assessee is not relatable in loan or advance given by the assessee to the RBI and therefore, the amount of subsidy can neither be treated as commitment charges nor discount on promissory notes on...

No Provision To Reject Appeal On Non-Appearance Of Assessee, Must Be Decided By Mandate U/S 250(6) Of Income Tax Act: Kerala High Court

The Kerala High Court stated that there is no provision of rejecting the appeal merely on non-appearance of assessee and the appellate authority must decide an appeal by strictly following the mandate contemplated under Section 250(6) of the Income Tax Act, 1961. The Bench of Justice Ziyad Rahman A.A. observed that “evidently, going by Subsection 6 of Section 250, no other meaning can be assigned to the words “points for determination” as it obviously leads to the question that arises ...

Notice U/S 148 Of Income Tax Act Can't Be Issued Without Giving Proper Reasons: Himachal Pradesh High Court

Himachal Pradesh High Court held that a notice under Section 148 of Income Tax 1961 for initiation of reassessment proceedings, can't be issued by the assessing officer without giving proper reasons.“Section 148 enables the Assessing Officer to initiate reassessment proceedings where income chargeable to tax is believed to have escaped assessment”. Justice Tarlok Singh Chauhan & Justice Sushil Kukreja : “The Assessing Officer needs to realise that notice under Section 148 does have...

[Income Tax] Delhi HC Larger Bench To Decide On Retrospective Applicability Of Extended Limitation For Reassessment In Cases Involving Foreign Assets

A larger bench of the Delhi High Court will decide whether Section 149(1)(c) of the Income Tax Act 1961, inserted vide a 2012 amendment to provide an extended period of reassessment for cases involving foreign assets, applies retrospectively.Section 149(1)(c) prescribes that reassessment notice in respect of any income in relation to any asset located outside India, which had escaped assessment, is not proscribed for a period of 16 years from the end of the assessment year in which such income...