Direct Tax Cases Weekly Round-Up: 11 To 17 February 2024

Supreme Court Reopening Of Income Tax Assessments : Supreme Court Refuses To Interfere With Delhi High Court's Guidelines To Tax Dept. Case Title: Asst. Commissioner Of Income Tax Versus Sabh Infrastructure Ltd. The Supreme Court has refused to interfere with a 2017 Delhi High Court judgment which issued a set of guidelines to the Income Tax Department regarding the reopening of assessments. Calcutta High Court Provisions Of Section 148 Under Old Regime Including TOLA Can't...

OYO Not Liable To Deduct TDS On Minimum Guarantee Payments Made To Hotels: ITAT

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the assessee OYO is not liable for TDS under Section 194C of the Income Tax Act on the minimum guarantee payments made to hotels.The bench of Kul Bharat (Judicial Member) and N.K. Billaiya (Accountant Member) has observed that the assessee, for the purpose of carrying on its business operations, enters into merchant agreements with various hotels for facilitating the reservation and booking of hotel rooms through the platform...

Direct Tax Cases Weekly Round-Up: 04 To 10 February 2024

Bombay High CourtHSBC Bank Carrying On Bona Fide Banking Business In Mauritius Exempt From Tax In India: Bombay High Court Case Title: Commissioner of Income Tax Versus M/s. HSBC Bank (Mauritius) Ltd. The Bombay High Court has held that HSBC Bank carrying on bona fide banking business in Mauritius is exempt from tax in India. Income Tax Deduction Available On Excise Duty Claim As It Does Not Amount To Double Deduction: Bombay High Court Case Title: M/s. Johnson and...

Income Tax Not Payable On Services Rendered Abroad By Non-Resident Deputed By Indian Employer: ITAT

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the income tax is not payable on services rendered abroad by non-residents deputed by Indian employers.The bench of Saktijit Dey (Vice President) and B. R. R. Kumar (Accountant Member) has observed that from the concurrent reading of Section 5 of the Income-tax Act, 1961, dealing with scope of total income, Section 15 dealing with computation of total income under the head salary and chargeability thereof, and Section 9...

Profit Element Embedded In Unexplained Sales Can Only Be Treated As Undisclosed: Rajkot ITAT

While rejecting the estimation of profit at 12.5% deduced by AO on account of undisclosed sales, the Rajkot ITAT held that there has to be a reasonable basis for applying a particular net profit rate in each case.The Bench of Annapurna Gupta (Accountant Member) & Madhumita Roy (Judicial Member) observed that “It is basic common sense that net profit to be applied is to be at justifiable rate depending upon nature of the business and other facts. It cannot be simply an adhoc rate”. (Para 12)...

Requirement Of 'Commencement Of Activity' Does Not Apply To Trusts Already Started Charitable Activity Before Obtaining Provisional Registration: Pune ITAT

Finding that the Assessee Trust had applied for registration within the time allowed under the Income Tax Act, the Pune ITAT directed the CIT(E) to treat the application being filed within statutory time after verifying assessee's eligibility for deduction u/s 80IA(4) as per act.The Bench comprising of Satbeer Singh Godara (Judicial Member) And Dipak P. Ripote (Accountant Member) observed that, “the words, 'within six months of commencement of its activities' has to be interpreted that it...

Proviso To Sec 80IA(12) Applies Only In Case Of Transfer Of Operation & Maintenance Of Industrial Park, Clarifies Chennai ITAT

Referring to CBDT Circular no. 10/2014, the Chennai ITAT emphasized that if an undertaking is transferred to another undertaking other than by way of amalgamation and demerger and in other cases, the transferee undertaking shall be eligible for deduction for remaining unexpired period u/s 80IA(4)(iii) of the Income Tax Act.The Bench comprising of Manomohan Das (Judicial Member) and Manjunatha. G (Accountant Member) observed that, “proviso to section 80IA(12) of the Act applies only when there is...

Funds Received By Charitable Trust Under Swachh Bharat Abhiyan In Fiduciary Capacity Is Not Their Income: New Delhi ITAT

On finding that the assessee society is not the owner of the funds but holding the same in fiduciary capacity, the New Delhi ITAT upheld the CIT(A)'s decision in deleting the addition made by AO of the funds received by assessee under “Swach Bharat Abhiyan”.The Bench comprising of Challa Nagendra Prasad (Judicial Member) and B.R.R. Kumar (Accountant Member) referred to CIT(A)'s observation that, “the assessee has to return these funds to the agency/PSU/Department who have contributed to the...

A Trust Is Not Barred From Getting Approval U/S 80G In Future Because It Has Not Opted For It Previously: Kolkata ITAT

The Kolkata ITAT ruled that simply because a trust/charitable institution has not opted for getting benefits under the Income-tax Act, then such institution is not barred in future from applying from registration/approval under the relevant provisions.The Bench of Sanjay Garg (Judicial Member) & Girish Agrawal (Accountant Member) found that the assessee for the first time started its activity after grant of provisional registration on Sep 15, 2022, on which date the trust received donation,...

Merely Making Incorrect Claim Does Not Tantamount To Furnishing Inaccurate Particulars: Mumbai ITAT Deletes Penalty U/s 271(1)(C)

Referring to the decision of Apex Court in the case of CIT vs. Reliance Petro Products Pvt Ltd, the Mumbai ITAT reiterated that for the purpose of levying penalty, the provisions of the Income tax Act to be strictly covered and that merely making an incorrect claim does not tantamount to furnishing of inaccurate particulars.The Bench of S Rifaur Rahman (Accountant Member) & Kavitha Rajagopal (Judicial Member) observed that “even in the present case, the assessee was not queried about the...

Nature Of Business Alone Is No Justification For Disallowance On Ad Hoc Basis, Without Pointing Any Deficiency In Books: New Delhi ITAT

On finding that without pointing out anything specific defect on wholesome basis, certain part of the expenses has been discarded on estimate basis, the New Delhi ITAT deleted the addition made by AO.The Bench comprising Anubhav Sharma (Judicial Member) and Shamim Yahya (Accountant Member) observed that, “However, Tax Authorities were supposed to consider the nature of the business of the assessee being in distribution business of very competitive project like mobile phones through distributors...

CIT(A) Merely Upholding AO's Action Without Considering Merits Of Case, Amounts To Non-Compliance Of Sec 250(6): Mumbai ITAT

In the interest of natural justice, the Mumbai ITAT restored the appeal of assessee back to the CIT with a direction to the assessee that as soon as the window is available for submission of details by the CIT(A), assessee must submit the detail within the prescribed time which is to be decided on merits of addition under section 56 (2) (x) (b) of the Income tax Act, 1961.The Bench of Rahul Chaudhary (Judicial Member) and Prashant Maharishi (Accountant Member) observed that, “it is also the fact...