Tax Cases Monthly Round Up: September 2023

Direct Tax Supreme Court Material Disclosed To Income Tax Settlement Commission Needn't Be Something Which Wasn't Discovered By Assessing Officer : Supreme Court Case Title: KOTAK MAHINDRA BANK LIMITED vs COMMISSIONER OF INCOME TAX BANGALORE AND ANR Citation : 2023 LiveLaw (SC) 822 The Supreme Court has ruled that Section 245H of the Income Tax Act, 1961, which empowers the Settlement Commission to grant immunity from prosecution and penalty to the assessee if he...

ITAT Confirms Addition Of Expenses Incurred On Brand Reminders, Customer Gifts For Doctor

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has confirmed the addition towards expenses incurred on brand reminders, customer gifts, and the purchase of medical books and journals for doctors.The bench of Rahul Chaudhary (Judicial Member) and Prashant Maharishi (Accountant Member) has relied on the decision of the Supreme Court in the case of Apex Laboratories, in which it was held that any free gift in any manner is prohibited by the provisions of the Indian Medical Council’s...

ALP Of The ESOP Expenses Cannot Be Taken As ‘Nil’: ITAT

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that the arm's-length price (ALP) of the employee stock option plan (ESOP) expenses cannot be taken as ‘Nil’.The bench of Rahul Chaudhary (Judicial Member) and S. Rifaur Rahman (Accountant Member) has observed that the transfer pricing addition of INR 26,53,078 is, therefore, set aside, and the TPO/Assessing Officer is directed to re-compute the ALP and the transfer pricing adjustment, if any, by following the method adopted by...

Tax Cases Weekly Round-Up: 24 To 30 September, 2023

Supreme Court Material Disclosed To Income Tax Settlement Commission Needn't Be Something Which Wasn't Discovered By Assessing Officer : Supreme Court Case Title: KOTAK MAHINDRA BANK LIMITED vs COMMISSIONER OF INCOME TAX BANGALORE AND ANR Citation : 2023 LiveLaw (SC) 822 The Supreme Court has ruled that Section 245H of the Income Tax Act, 1961, which empowers the Settlement Commission to grant immunity from prosecution and penalty to the assessee if he has co-operated...

Assessee Resorts To Colourable Devices, Sham Transactions To Defraud Dept: ITAT

The Panaji Bench of Income Tax Appellate Tribunal (ITAT) has held that the assessee had resorted to colourable devices and sham transactions in order to defraud the Department by camouflaging its unaccounted income so that ultimately, the tax could be evaded.The bench of Partha Sarathi Chaudhury (Judicial Member) and Inturi Rama Rao (Accountant Member) has observed that tax planning is legitimate provided it is within the framework of law, and colourable devices cannot be part of tax planning....

Income From Nursery Activities Of Growing Various Types Of Lawns, Flower Plants And Vegetable Plants Is Agricultural In Nature: ITAT

The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has held that income from nursery activities such as growing various types of lawns, flower plants, and vegetable plants is agricultural in nature.The bench of Suchitra Kamble (Judicial Member) and Annapurna Gupta (Accountant Member) has observed that the activity of an agricultural nature in respect of engaging in nursery activities of growing various types of lawns, flower plants, and vegetable plants cannot be considered a commercial...

ITAT Deletes Penalty Of Rs.132 Cr. For Misreported Income Against Jaypee Cement

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has deleted the penalty of Rs. 132 crore for misreported income against the assessee, Jaypee Cement.The bench of Saktijit Dey (Vice President) and M. Balaganesh (Accountant Member) has observed that there was absolutely no mala fide intention on the part of the assessee to claim an excess deduction under Section 32AC. In the facts, even after the withdrawal of the differential 85% claim of deduction in the sum of Rs. 191 crores, the...

Freight Inward Charges Are Part And Parcel Of Purchase Of Goods, TDS Not Deductible: ITAT

The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has observed that freight inward charges were part and parcel of the purchase of the goods. It is settled law that the provisions of the TDS cannot be attracted to the transaction of the purchase and sale of the goods.The bench of Suchitra Kamble (Judicial Member) and Waseem Ahmed (Accountant Member) has observed that the assessee was not under the obligation to deduct TDS of inward freight expenses incurred for Rs. 16,15,291 under the...

Income With Respect To Contribution Received From Recognized Stock Exchange Is Eligible For Section 10 (23EC) Exemption: ITAT

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has held that the income of the assessee with respect to contributions received from recognized stock exchanges and the members thereof is eligible for exemption under Section 10 (23EC) of the Income Tax Act.The bench of Rahul Chaudhary (Judicial Member) and Prashant Maharishi (Accountant Member) has noted that the assessee has received an income of Rs. 92,458,750 by way of statutory contributions received from National Commodity...

ITAT Excludes Infosys From The List Of Comparables Under Software Development Services Segment

The Delhi bench of the Income Tax Appellate Tribunal (ITAT) has upheld the exclusion of Infosys from the list of comparables under the software development services segment.The bench of Saktijit Dey (Vice President) and Dr. Brr Kumar (Accountant Member) has observed that departmental authorities themselves have excluded Infosys for AYs 2014–15, 2015–16, and 2016–17.The respondent/assessee is a resident corporate entity that is primarily in the business of software programming and application...

Bogus Capital Gain By Sale Of Shares, Assessee Not A Beneficiary, ITAT Deletes Addition

The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has deleted the addition on account of bogus capital gain by the sale of shares of a penny stock company in the absence of incriminating material.The bench of Siddhartha Nautiyal (Judicial Member) and Waseem Ahmed (Accountant Member) has held that no material has been brought on record to suggest that the assessee was involved in any price rigging and that the case of the assessee has not been mentioned in the list of beneficiaries by...

Presumptive Taxation, Income From Profession Can’t Be In Absence Of Notified Professional Qualification: ITAT

The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has held that income from professions against which TDS is deducted cannot be taxed at 50% in the absence of notified professional qualification.The bench of Narender Kumar Choudhry (Judicial Member) and B.R. Baskaran (Accountant Member) has observed that the assessee is just a 10th grader who passed matriculation and does not fall under Section 44ADA, and therefore, the addition is liable to be deleted.Section 44ADA states that...