Tax Cases Weekly Round-Up: 23 April To 29 April, 2023

Bombay High Court Goa Value Added Tax (12th Amendment) Act, 2020 Defies The Doctrine Of Separation Of Powers: Bombay High Court Case Title: Rohan Lobo Versus State Of Goa The Bombay High Court has held that the Goa Value Added Tax (12th Amendment) Act, 2020, is an impermissible judicial override defying the doctrine of separation of powers. Material Triggering Reassessment Must Be Furnished To The Assessee: Bombay High Court Case Title: Anurag Gupta Versus ITO The...

ITAT Directs AO To Charge 6.5% Gross Profit Rate On Bogus Purchases

The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has directed the AO to charge a 6.5% gross profit rate on bogus purchases.The bench of Kuldip Singh (Judicial Member) and Gagan Goyal (Accountant Member) has observed that the entire addition has been made by the AO as well as CIT (A) on the basis of guesswork and estimation on the basis of some alleged information received from the Sales Tax Department of Maharashtra and from DGIT (Inv.), Mumbai.The assessee is an individual running a...

Employee Remuneration, Legal Expenses, Board Meeting Expenses etc. , Can’t Be Attributable To Interest From FDs: ITAT

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT), while refusing to allow the income tax deduction, has held that employee remuneration, salary, legal expenses, board meeting expenses, and director sitting fees cannot be attributable to the interest earned from the fixed deposits.The bench of C. M. Garg (Judicial Member) and Dr. B. R. R. Kumar (Accountant Member) has observed that as per the provisions of Section 57(iii), all the expenditure laid out or expended wholly and exclusively...

Amount Declared As Turnover Can’t Be Concealed Income: ITAT

The Amritsar Bench of the Income Tax Appellate Tribunal (ITAT) has held that once the amount is declared as turn-over, it cannot be called concealed income and be taxed twice on the same amount.The bench of Anikesh Banerjee (a judicial member) has observed that the AO has no right to calculate sales on a hypothetical basis, ignoring the evidence submitted during the course of assessment proceedings in the form of VAT returns, purchase bills, and quantitative details.The appellant/assessee...

Assessee Explained The Source Of The Excess Stock Found During The Course Of Survey: ITAT Deletes Addition

The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) has held that the assessee has explained the source of the excess stock found during the course of the survey.The bench of Aby T. Varkey (Judicial Member) and Manjunatha (Accountant Member) has observed that when the assessee has explained that the source of excess stock found during the course of the survey is income generated from current-year business and the explanation offered by the assessee is plausible, then income offered...

Section 10AA Deduction Can’t Be Denied Merely Not Receiving Convertible Foreign Exchange On The Deemed Exports: ITAT

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has held that the Section 10AA deduction cannot be denied merely on the reasoning that the assessee did not receive the convertible foreign exchange on the deemed exports.The bench of Madhumita Roy (Judicial Member) and Waseem Ahmed (Accountant Member) has observed that there was no condition applicable for the Assessment Year 2015-16 to bring foreign exchange into India on account of the exports of sales.The respondent/assessee is...

Without Corroborating Evidence, Addition Can’t Be Made On The Basis Of A Declaration Made U/s 132(4) Of The Income Tax Act: ITAT

The Guwahati Bench of the Income Tax Appellate Tribunal (ITAT) has held that without corroborating evidence, an addition ought not to be made on the basis of a declaration made under Section 132(4) of the Income Tax Act.The bench of Rajpal Yadav (Vice President) and Manish Borad (Accountant Member) has observed that apart from the disclosure statement, no other document is being referred to by the Assessing Officer. No doubt, the disclosure or admission made under Section 132(4) of the Act...

Non-Resident Shareholders Can’t Take Benefit Of Lower Tax Rate Prescribed In DTAAs For Taxation Of Dividend Where DDT Is Applicable: ITAT

The Mumbai Special Bench of the Income Tax Appellate Tribunal (ITAT) has held that non-resident shareholders cannot take advantage of the lower tax rate prescribed in Double Tax Avoidance Agreements (DTAAs) for taxation of dividends where Dividend Distribution Tax (DDT) is applicable.The bench of G. S. Pannu (President), N.V. Vasudevan (Vice President), and Vikas Awasthy (Judicial Member) has observed that the DDT rate shall prevail on dividends paid by Indian companies to non-resident...

AO Cannot Make Ad-Hoc Disallowance Of Expenses For Want Of Supporting For Each Expense, Without Pointing Defect In Vouchers: ITAT

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that the AO cannot make an ad hoc disallowance of expenses for want of support for each expense, without pointing to defects in vouchers on a sample basis furnished by the assessee.The bench of Yogesh Kumar US (Judicial Member) and B. R. R. Kumar (Accountant Member) has observed that the assessee has furnished copies of invoices and vouchers on a sample basis, and it is stated that the assessing officer did not find any defects...

Adjustment Of Difference In Depreciation To The Profits Eligible For Income Tax Exemption: ITAT

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has held that adjustment of the difference in depreciation to the profits makes them eligible for income tax exemption.The bench of Amit Shukla (Judicial Member) and Padmavathy S. (Accountant Member) has observed that the adjustment of the difference in depreciation to the profits eligible for exemption under Section 10A will not result in any addition to total income. This is so because any increase or decrease to the profit due to...

Once Additions Made Under Black Money Act The Same Addition Cannot Be Made Under Income Tax Act: ITAT

The Delhi Bench of the Income Tax Appellate Tribunal (ITAT) has held that once additions have been made under the Black Money Act, the same additions cannot be made under the Income Tax Act on the same set of facts.The bench of C.N. Prasad (Judicial Member) and N.K. Billaiya (Accountant Member) has upheld the order of the CIT(A), in which it was held that the addition so made by the AO amounts to double addition and, therefore, it should be deleted.A search and seizure operation was carried out...

ITAT Disallows Income Tax Deduction On Employees’ Contribution To PF & ESI Beyond The Due Dates

The Mumbai Bench of the Income Tax Appellate Tribunal (ITAT) has disallowed income tax deduction on employees’ contributions to PF and ESI beyond the due dates.The bench of Amit Shukla (Judicial Member) and Prashant Maharishi (Accountant Member) has observed that the auditor in the audited accounts only pointed out the date of payment and the due date prescribed under the PF and ESI Act, and it is incumbent upon the assessee that, while computing the income, he has to disallow the said payment...