Tax Cases Weekly Round-Up: 10 September To 16 September, 2023

Delhi High Court Overlooking Assesssee’s Reply Demonstrates Non-Application Of Mind By The AO: Delhi High Court Case Title: Aphv India Investco. Private Limited Versus ACIT The Delhi High Court has quashed the draft assessment orders, final assessment orders, and consequential demand on the grounds that the assessing officer inadvertently overlooked the email reply of the assessee, in which the assessee disclosed vital facts pertaining to its case. Delhi High Court Directs AWS...

TDS Not Required To Be Deducted At The Time Of Grant Of ESOP: ITAT

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that TDS is not required to be deducted at the time of grant of an employee stock ownership plan (ESOP).The bench of Rahul Chaudhary (Judicial Member) and Prashant Maharishi (Accountant Member) has observed that the basic objective of TDS is to ‘pay tax as you earn, and the taxes are not required to be deducted at source at the time of grant of an ESOP, but at the time the option is exercised by employees of the assessee and...

Issuance Of Bonus Shares Does Not Amount To Transfer Of Property And Does Not Attract Section 56(2)(vii)(c): ITAT

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that in the issue of bonus shares, the money remains with the company and nothing comes to the shareholders as there is no transfer of the property and the provisions of Section 56(2)(vii)(c) of the Income Tax Act.The bench of Anubhav Sharma (Judicial Member) and M. Balaganesh (Accountant Member) has observed that when a shareholder gets bonus shares, the value of the original share held by him goes down, and the market value...

Assessment Invalid On Account Of A Mechanical Non-Speaking Approval Under Section 153D: ITAT

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that assessment invalid on account of a mechanical non-speaking approval under Section 153D of the Income Tax Act.The bench of Kuldip Singh (Judicial Member) and S. Rifaur Rahman (Accountant Member) has observed that the assessing officer has passed a draft assessment order making huge additions, and such huge additions were approved without there being any application of mind. The basis of the addition was also not shared...

Cognizant Technology Liable For Dividend Distribution Tax On Buyback Of Rs 19,000-Crore Shares: ITAT

The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has held that Cognizant Technology is liable to pay dividend distribution tax on the buyback of Rs. 19,000 crore shares.The bench of Mahavir Singh (Vice President) and Shrimanjunatha. G (Accountant Member) has observed that the purchase of its own shares through a scheme sanctioned by the jurisdictional HC in terms of provisions of Section 391-393 of the Companies Act, 1956 amounted to the distribution of accumulated profits which entails...

Damage On Account Of Right To Sue Is A Capital Receipt Not Chargeable To Tax: ITAT

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that the damage on account of the right to sue is a capital receipt not chargeable to tax.The bench of Amit Shukla (Judicial Member) and Amarjit Singh (Accountant Member) has observed that Section 6 of the Transfer of Property Act clearly provides that "a mere right to sue cannot be transferred", even if it is to be treated as "property" under Section 5 of the Transfer Property Act. Transfer of property means the act by which...

Income Tax Act; Mere Uploading Of Notice On Assessee’s E-Portal Is Not Proper Service: ITAT

The Chandigarh Bench of the Income Tax Appellate Tribunal (ITAT) has held that mere uploading of notice on the assessee’s e-Portal of the Income Tax Department is not proper service as per the Income Tax Act.The bench of Sanjay Garg (Judicial Member) and Vikram Singh Yadav (Accountant Member) has observed that service of notice on the portal alone without compliance with Section 282 of the Income Tax Act is bad, and the matter was therefore remanded for consideration afresh.The...

Tax Cases Weekly Round-Up: 3 September To 9 September, 2023

Delhi High Court Delhi High Court Limits Adjustment Of Tax Refunds Against Disputed Demands At 20% Case Title: Jindal Stainless Ltd Versus DCIT The Delhi High Court has limited the adjustment of tax refunds against disputed demands to 20%. GST | Show Cause Notice Must Clearly Indicate Reasons For Which Registration Cancellation Is Proposed: Delhi High Court Case Title: M/S Frequent Logistics Services PVT. LTD. v. Commissioner Goods and Service Tax Department And ORS. ...

Receipts From Provision Of Background Screening And Investigation Services To Clients In India Is Not Royalty/FTS: ITAT

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that receipts from the provision of background screening and investigation services to clients in India are not royalties or fees for technical services (FTS).The bench of G.S. Pannu (President) and Astha Chandra (Judicial Member) has observed that the services rendered by the assessee do not involve any technical skill or knowledge or consultancy or make available any technical knowledge, experience, skill, know-how, or...

Income Tax Raid, ITAT Finds Money Laundering, Directs Assessing Officer To Inform SEBI, PMLA Authorities

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has directed the AO to share information on all persons allegedly involved in the racket of money laundering.The bench of Sandeep Singh Karhail (Judicial Member) and Prashant Maharishi (Accountant Member) has issued the directions to the AO to communicate vital details on 32,855 beneficiaries involved in accommodation entering schemes.The ITAT's decision represents a key step towards dismantling a massive money laundering scheme. This...

No Income Tax Payable On Bonus Shares Under The Head ‘Income From Other Sources’: ITAT

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that income tax is not chargeable on bonus shares under the heading ‘income from other sources’.The bench of Anubhav Sharma (Judicial Member) and M. Balaganesh (Accountant Member) has observed that the bonus shares are issued only out of the capitalization of existing reserves in the company. The AO had not disputed the fact that the overall wealth of a shareholder, post-bonus or pre-bonus, remains the same. It is wrong on his...

Interconnectivity Utility Charges Can’t Be Taxed As Royalty Under India-Austria Tax Treaty: ITAT

The Bangalore Bench of the Income Tax Appellate Tribunal (ITAT) has held that interconnectivity utility charges (IUC) cannot be taxed as royalty under the India-Austria Double Taxation Avoidance Treaty (DTAA).The bench of Beena Pillai (Judicial Member) and Chandra Poojari (Accountant Member) has observed that payments received by the assessee towards interconnectivity utility charges from Indian customers or end users cannot be considered royalties to be brought to tax in India under Section...