Red Bull, Williams Grand Prix Tax Cases: Delhi High Court To Examine AAR's Power To Decide Permanent Establishment Issue

The Delhi High Court has framed an additional question for consideration in a batch of income tax petitions involving Formula One racing teams, including Red Bull Racing Limited and Atlassian Williams.A division bench of Justices Dinesh Mehta and Rajneesh Kumar Gupta would examine "Whether the Authority for Advance Ruling, which is enjoined upon to decide questions of law, as provided under Section 245N of the Income Tax Act of 1961, can decide as to whether an entity is having a permanent...

Bombay High Court Pulls Up ITAT Over Failure To Pronounce Reserved Judgments Within 90-Day Deadline

The Bombay High Court has pulled up the Income Tax Appellate Tribunal (ITAT) over the repeated practice of releasing matters reserved for judgment without pronouncing orders. A Division Bench of Acting Chief Justice Ravindra V. Ghuge and Justice Gautam A. Ankhad observed that Rule 34(5)(c) of the Income Tax (Appellate Tribunal) Rules, 1963, requires the tribunal to pronounce its judgment within 60 days of concluding the hearing and, in exceptional circumstances, within a further period of 30...

Bombay High Court Rejects IT Appeals Over Search Assessment Based On Regular Books Instead Of Search Material

The Bombay High Court has dismissed two appeals filed by the Income Tax Department, upholding an Income Tax Appellate Tribunal order that deleted additions made to a company's completed income tax assessments after finding they were not based on incriminating material recovered during a search. The court found that no substantial question of law arose for consideration. A division bench of Justice G.S. Kulkarni and Justice Aarti Sathe agreed with the tribunal that the Assessing Officer had...

Gujarat High Court Reiterates Trade Associations Can Qualify As Charitable Institutions Under Income Tax Act

The Gujarat High court has recently upheld an Income Tax Appellate tribunal order directing the Commissioner of Income Tax (Exemptions) to reconsider a trade association's application for registration as a charitable institution.It held that trade promotion bodies established to advance trade and commerce can qualify as charitable institutions under the "general public utility" category of the Income Tax Act.A division bench of Justice Bhargav D. Karia and Justice Pranav Trivedi said the...

Mere Delay In Paying Income Tax Does Not Amount To Wilful Tax Evasion: Bombay High Court

The Goa bench of the Bombay High Court has held that mere delay in paying an admitted tax liability, without a deliberate intention to evade payment, does not amount to a "wilful attempt" to evade tax. Justice Amit S. Jamsandekar observed that criminal prosecution requires proof of mens rea and cannot be invoked merely because there has been a delay or failure in paying tax."The word 'wilful' introduces a mental element and requires looking into the mind of a person by gauging the person's...

Income Tax Act | Trustee's Shareholding Doesn't Make Public Trust A 'Concern' Under Deemed Dividend Provision: Gujarat High Court

The Gujarat High Court has recently held that a public trust cannot be treated as a "concern" under the deemed dividend provisions of the Income Tax Act (Section 2(22)(e)) merely because its trustee holds substantial shares in the lending company. Holding that the legal fiction created by the provision cannot be stretched to cover such trusts, the court observed, "The word "concern" used under the Act in such Explanation, which encompasses a Hindu Undivided Family (HUF), or a firm, or an...

Three Days To Reply To Income Tax SCN Not Reasonable: Gujarat High Court Quashes Assessment

The Gujarat High Court recently held that granting a taxpayer only three days to respond to an income tax show cause notice does not amount to a reasonable opportunity of hearing and violates the principles of natural justice.Setting aside an income tax assessment order passed after scrutiny proceedings, a Division Bench of Justice A.S. Supehia and Justice Vaibhavi D. Nanavati observed, "Thus, in view of the settled legal position, granting only three days' time to file a reply cannot be said to...

Gujarat High Court Quashes Reassessment Notice Issued Beyond COVID-Era TOLA Deadline

The Gujarat High Court has quashed a reassessment notice issued under Section 148 of the Income Tax Act, holding that it was issued beyond the "surviving time" available under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA), as interpreted by the Supreme Court in Union of India v. Rajeev Bansal.TOLA was enacted to extend statutory timelines for tax and other legal proceedings during the COVID-19 pandemic.A Division Bench of Justice A.S. Supehia and...

Why Should Delay Interest Not Be Recovered From Your Salary? : Delhi High Court To AO Over 4-Year Delay In Tax Refund

The Delhi High Court on Tuesday (July 28) directed an Assessing Officer to personally explain the four-year delay in taking steps to release over ₹15 crore due to Clix Capital Services Pvt. Ltd. A Division Bench of Justices Dinesh Mehta and Rajneesh Kumar Gupta directed the officer involved to personally appear before the Court and show cause why the interest payable for the delay should not be recovered from his salary.Petitioner-company submitted that the Assessing Officer had passed an...

Delhi High Court Rejects Revenue's Plea Against SpiceJet Over Foreign Currency Convertible Bond Tax Dispute

The Delhi High Court has dismissed two appeals filed by the Income Tax Department against SpiceJet Ltd., holding that the tax treatment of premium payable on redemption of Foreign Currency Convertible Bonds (FCCBs) is a settled issue.A division bench of Justices Dinesh Mehta and Rajneesh Kumar Gupta observed that the issue raised by the Revenue—whether the expenditure on FCCB redemption premium ought to be spread over the five-year life of the bonds instead of being claimed in the first...

Delhi High Court Sets Aside ₹16.74 Crore Tax Disallowance Enhancement Against Sahara India Over Lack of Notice

The Delhi High Court has held that the Commissioner of Income Tax (Appeals) cannot enhance a tax disallowance without first issuing a statutory notice to the assessee, observing that failure to do so violates both Section 251(2) of the Income Tax Act, 1961 and the principles of natural justice.The division bench of Justices Dinesh Mehta and Rajneesh Kumar Gupta thus set aside the enhancement of a disallowance from ₹11.05 crore to ₹16.74 crore made against Sahara India Commercial Corporation...

Delhi High Court Admits Appeal On Taxability Of Demonetisation-Era Cash Deposits

The Delhi High Court has admitted the Income Tax Department's appeal against an ITAT order deleting additions to income based on an assessee's cash deposits made during the demonetisation period.A Division Bench of Justices Dinesh Mehta and Rajneesh Kumar Gupta agreed to examine whether the Tribunal rightly deleted the addition under Section 69A of the Income Tax Act, relating to cash deposits made during the demonetisation period, despite the Revenue's contention that the deposits were...