Charges Paid For Bandwidth To Overseas Telecom Operators Not Royalty U/S 9(1)(vi) Of Income Tax Act: Delhi HC Rejects Plea Against Airtel

The Delhi High Court has dismissed an appeal preferred by the Income Tax Department claiming that Bharti Airtel should have deducted TDS on payments made to overseas telecom service providers for bandwidth services.A division bench of Justices Vibhu Bakhru and Tejas Karia relied on CIT v. Telstra Singapore Pte. Ltd. (2024) the High Court had held that where those availing services provided by a foreign telecom company were not accorded a right over the technology, infrastructure or any...

Jharkhand HC Quashes ITAT Relief To Assessee For Relying On Overruled Precedent In TDS Default Case, Remands Matter For Fresh Adjudication

The Jharkhand High Court has quashed an order of the Income Tax Appellate Tribunal (ITAT), Circuit Bench, Ranchi, after finding that it was solely based on a precedent that had been overruled by the Supreme Court. The Tribunal had earlier deleted the entire addition made by the Assessing Officer under Section 40(a)(ia) of the Income Tax Act, 1961, on the ground that the payments in question had already been made. The Division Bench comprising Justice Sujit Narayan Prasad and Justice Rajesh Kumar...

S.10(26) IT Act | Gauhati HC Upholds Refund Of Income Tax Deducted From Scheduled Tribe Officer's Salary, Says He Was Entitled To Exemption

The Gauhati High Court has upheld a single-bench decision asking the Central government to refund the income tax deducted from the salary of a BSF Assistant Commandant belonging to the Scheduled Tribe community.A division bench of Chief Justice Vijay Bishnoi and Justice N. Unni Krishnan Nair passed the direction in view of Section 10(26) of the Income Tax Act, 1961, which prescribes tax exemption to members of recognised Scheduled Tribe communities posted in specified areas.It observed, “It...

Routing Of Funds Through Tax Havens Not Disclosed During Original Proceedings: Bombay HC Confirms Reassessment

Finding that the Petitioner had failed to disclose all material facts necessary for assessment of tax, the Bombay High Court ruled that the circuitous movement of funds through various companies located in tax havens had not been disclosed in the course of the original proceedings.The High Court therefore confirmed the reopening proceedings initiated against the petitioner.A division bench of Justice Jitendra Jain and Justice M.S Sonak observed that “if based on subsequent...

JCIT Not Empowered To Issue Sanction For Reassessment Under Proviso To S.151(1) Of Income Tax Act: Delhi High Court

The Delhi High Court has held that sanction for initiation of reassessment action against an assessee under the proviso to Section 151(1) of the Income Tax Act 1961, cannot be issued by the Joint Commissioner of Income Tax.Section 151(1) contemplates issuance of sanction by JCIT for initiating reassessment action under Section 148 against an assessee who has already undergone scrutiny assessment.The proviso to Section 151(1) however adds that if the reassessment action is sought to be initiated...

Income Escapement | Value Determined At S.148A(d) Stage Relevant To Determine Threshold U/S 149 Of Income Tax Act: Delhi HC

The Delhi High Court has held that when determining whether a reassessment action meets the ₹50 lakh threshold prescribed under Section 149 of the Income Tax Act 1961, the value of income that allegedly escaped assessment as determined by the Assessing Officer at Section 148A(d) stage is relevant.A division bench of Justices Vibhu Bakhru and Tejas Karia clarified that the value alleged by the AO at Section 148A(b) stage, i.e. before considering the Assessee's stand, is not relevant for the...

Income Alleged To Have Escaped Assessment In Different Years Can't Be Consolidated To Meet ₹50 Lakh Threshold U/S 149 Of Income Tax Act: Delhi HC

The Delhi High Court has held that an Assessing Officer cannot add income that allegedly escaped assessment in different previous years, to meet the threshold of ₹50 lakh prescribed under Section 149(1)(b) of the Income Tax Act 1961 for initiating reassessment action after lapse of three years.The provision bars issuance of reassessment notice under section 148 if three years have elapsed from the end of the relevant assessment year. Sub-clause (b) thereof adds that reassessment can be initiated...

Delhi HC Sets Aside Reassessment Over Cash Deposits During Demonetisation, Says Order U/S 148A(d) Income Tax Act Transgressed Notice U/S 148A(b)

The Delhi High Court has set aside the reassessment action initiated against a partnership firm under Section 148A(d) of the Income Tax Act, 1961 over cash deposits made by it during demonetisation, stating that this ground was not mentioned in the notice issued to the firm under Section 148A(b).Section 148A(b) contemplates issuance of a notice asking assessee to show cause why reassessment proceedings should not be initiated against it.Notice under Section 148A(d) is issued after considering...

S.13 Income Tax Act | Charitable Trust's Status Not Affected For Making Reasonable Payments On Services Rendered By Related Party: Delhi HC

The Delhi High Court has held that a Charitable Trust's status cannot be taken away citing violation of Section 13 of the Income Tax Act, 1961 merely because it made reasonable payment for services rendered by a related party.Ordinarily, Charitable Trusts are not allowed to make payments for the benefit of 'prohibited parties'.Section 13 states that exemptions to Charitable Trust under Section 11/12 of the Act would not be available to the extent that the said income is applied for the benefit...

Delhi High Court Rejects Income Tax Dept's Appeal Raising ₹42 Crore Demand On NTPC Subsidiary

The Delhi High Court dismissed an appeal preferred by the Income Tax Department raising a demand of ₹42,16,04,786/- from a wholly owned subsidiary of National Thermal Power Corporation Limited (NTPC).The demand was raised in view of alleged income from sale of fly ash, transferred to it by NTPC.As per factual matrix of the case, the fly ash was transferred to the assessee in view of Environment Ministry's notification requiring all thermal plants to utilize the fly ash generated from the power...

Penalty U/S 271(1)(c) Of Income Tax Act Not Applicable If Assessee Voluntary Discloses Bona Fide Mistake: Chhattisgarh High Court

In a recent ruling, the Chhattisgarh High Court held that penalty under Section 271(1)(c) of Income Tax Act not applicable if assessee voluntary discloses bona fide mistake. Section 271(1)(c) of the Income Tax Act, 1961 deals with penalties for concealment of income or furnishing inaccurate particulars of income. The Division Bench of Justices Sanjay K. Agrawal and Deepak Kumar Tiwari noted that “it is a case where the assessee came up fairly before the Assessing Officer correcting...

Income Tax | Amount Received As Compensation For Compulsory Acquisition Of Landed Property Is Income Under 'Capital Gains': Kerala High Court

In a recent judgment, the Kerala High Court stated that the amounts received by an assessee as compensation or enhanced compensation for compulsory acquisition of his landed property would be treated as income under the head of 'Capital Gains' for the purposes of the I.T. Act. The Division Bench of Justices A.K. Jayasankaran Nambiar and Easwaran S. stated that “Interest amounts received by an assessee in respect of delayed payment of compensation under the LAA will be treated as...