Punjab & Haryana High Court Strikes Down Section 147A Income Tax Act As Unconstitutional

The Punjab & Haryana High Court has struck down the newly inserted Section 147A of the Income Tax Act, 1961, holding the provision unconstitutional. The provision was introduced retrospectively to clarify the role of the Jurisdictional Assessing Officer (JAO) in reassessment proceedings.A bench of Justice Deepak Sibal and Justice Rupinderjit Chahal pronounced the decision today. A detailed judgment is awaited.Section 147A was inserted with retrospective effect from April 1, 2021. It provides...

Madras High Court Upholds Deletion Of ₹70.95 Cr. Tax Additions In Bogus Long Term Capital Gains Cases

The Madras High Court on 28 August upheld the Income Tax Appellate Tribunal's orders deleting tax additions of Rs. 32.90 crore and Rs. 38.05 crore in cases concerning Long Term Capital Gains claimed from the sale of shares in PFL Infotech Limited and Risa International Limited. A Division Bench comprising Chief Justice Sushrut Arvind Dharmadhikari and Justice G. Arul Murugan dismissed the Revenue's appeals and the connected appeals concerning penalty under Section 271(1)(c) of the Income Tax...

TPO Cannot Reject Comparables Merely To Adopt Department's Preferred Set: Karnataka High Court

The Karnataka High Court on 28 August held that a Transfer Pricing Officer (TPO) cannot reject comparable companies selected by a taxpayer merely to replace them with a standard set of comparables preferred by the Income Tax Department, holding that the selection or exclusion of comparables must satisfy the requirements under the Income Tax Act and Rule 10B of the Income Tax Rules. A Division Bench of Justices S.G. Pandit and K.V. Aravind allowed the batch of transfer pricing appeals, including...

'Classic Case Of Change Of Opinion': Delhi High Court Rejects Reassessment Of NTPC's ₹17.59 Crore Income

The Delhi High Court has rejected the Income Tax Department's appeal challenging the annulment of reassessment proceedings against NTPC Limited, holding that the subsequent Assessing Officer (AO) had initiated the proceedings merely because he disagreed with the view taken by his predecessor.The Division Bench of Justices Dinesh Mehta and Rajneesh Kumar Gupta observed that the reassessment was a "classic case of change of opinion", particularly since the issues forming the basis of reassessment...

Three-Month Limitation For Consequential Orders Cannot Justify Delayed Vivad Se Vishwas Refunds Gujarat High Court

The Gujarat High Court has ruled that the tax department cannot rely on the three-month time limit for passing a consequential order under the Income-tax Act to justify delaying refunds under the Vivad se Vishwas scheme.It held that the department was required to pass the necessary order and issue the refund by July 31, 2021, as prescribed by the Central Board of Direct Taxes (CBDT), and directed it to pay interest at 6% per annum on the delayed refund from August 1, 2021 to March 2, 2024.“The...

Income Tax Prosecution Cannot Survive Once Assessment Is Set Aside On Merits: Gauhati High Court

The Gauhati High Court on 2 September held that an income tax prosecution cannot continue when the assessment on which it is based has been set aside on merits, and that separate complaints against company directors for the same alleged offence are not maintainable when the company itself has not been arraigned as an accused. Justice Robin Phukan allowed three petitions filed by Flamingo Breweries Private Limited and its two directors and quashed the criminal complaints pending before the...

Information-Seeking Notice Cannot Be Treated As Show Cause Notice In Transfer Pricing Case: Bombay High Court

The Bombay High Court has ruled that notices issued by a Transfer Pricing Officer seeking information from a taxpayer cannot substitute the show cause notice required before determining the arm's length price.A Division Bench of Justice B.P. Colabawalla and Justice Farhan P. Dubash observed, “Further the notice issued by the Transfer Pricing Officer under Section 92CA(2) of the Act seeking information from an Assessee cannot be said to be a Show Cause Notice issued as per the proviso to Section...

Telangana High Court Sets Aside 20% Pre-Deposit Condition For Tax Demand Stay In VSAIPPL-SMC Case

The Telangana High Court on 20 August set aside orders directing VSAIPPL-SMC (JV) to pay 20% of its outstanding tax demand as a condition for staying recovery of the remaining demand, while allowing three writ petitions concerning Assessment Years 2022-23, 2023-24 and 2024-25. A Division Bench comprising Justices P. Sam Koshy and Vakiti Ramakrishna Reddy noted that authorities cannot mechanically impose a condition requiring payment of 20% of an outstanding tax demand for granting stay of...

Rajasthan High Court Upholds TDS Disallowance Against Hindustan Zinc On UK Know-How Payment

The Rajasthan High Court on 5 September dismissed Hindustan Zinc Limited's appeal against an Income Tax Appellate Tribunal order sustaining the disallowance of a tax deduction claimed by the company for payment made towards technical know-how to a UK-based company. A Division Bench comprising Justices Pushpendra Singh Bhati and Praveer Bhatnagar upheld the disallowance for Assessment Year 1994-95, holding that the payment made to Davy McKee (Stockton) Limited (DML) was subject to tax deduction...

Gujarat High Court Quashes DVO Reference Made A Day Before Assessment Became Time-Barred

The Gujarat High Court has quashed an Assessing Officer's reference to the Departmental Valuation Officer (DVO) made just a day before the assessment was due to become time-barred. The court held that the reference was a colourable exercise aimed at extending the time available to complete the assessment.A bench comprising Justice A.S. Supehia and Justice Vaibhavi D. Nanavati found that the material relating to the company's assets and payments was already available with the Assessing Officer....

Kerala High Court Sets Aside Income Tax Assessment Treating PG Student's Stipend As Salary

The Kerala High Court on 17 August set aside an income tax assessment order treating the stipend received by a postgraduate medical student as salary, holding that the Assessing Officer failed to consider his claim that stipend paid to a student is exempt from income tax. A Division Bench comprising Justices Devan Ramachandran and Basant Balaji allowed the appeal filed by Nahas Kakkattummal and set aside both the Single Judge's judgment and the assessment order, directing the Assessing Officer...

Gujarat High Court Grants ₹1 Crore Tax Refund To Charitable Trust After Exemption Was Omitted

The Gujarat High Court on 25 August quashed the rejection of the revision application filed by Sheth Shree Karshandas Halu Dharamshala Jamnagar and held that the public charitable trust was entitled to exemption under Section 11(1A) of the Income-tax Act.A Division Bench comprising Justices A.S. Supehia and Vaibhavi D. Nanavati held that a bona fide omission to claim a statutory tax benefit in the original return can be corrected through revisional proceedings under Section 264 of the Act. The...