Tax
Delhi ITAT Holds AMP Spend Can't Be TP Transaction Without AE Understanding, Follows Sony India Ruling
On 30 July, the New Delhi Income Tax Appellate Tribunal (ITAT) held that AMP expenditure incurred by an Indian entity cannot be treated as an international transaction for transfer pricing purposes without any agreement, arrangement or understanding with its associated enterprise (AE), following the Delhi High Court's ruling in Sony India Pvt. Ltd. v. ACIT. A Bench comprising Judicial Member Satbeer Singh Godara and Accountant Member Manish Agarwal held that the issue of whether AMP expenditure...
Madras High Court Rules Omission Of 'Wilful Suppression' In Order Not Fatal, Upholds TNVAT Penalty
The Madras High Court on 27 July held that a penalty under the Tamil Nadu Value Added Tax (TNVAT) Act cannot be invalidated merely because the assessment order does not use the expression “wilful suppression” if the material on record establishes deliberate suppression of turnover. A Division Bench of Justices G. Jayachandran and N. Mala dismissed the tax case filed by Paharpur Cooling Towers Ltd. and upheld the Tamil Nadu Sales Tax Appellate Tribunal's order restoring the penalty imposed by...
Karnataka High Court Rules Secret Commission Claims Need Evidence, Upholds ₹53.48 Lakh Disallowance
The Karnataka High Court on 9 July held that a taxpayer cannot claim deduction for alleged secret commission payments as business promotion expenditure without proving the claim through adequate evidence, and upheld the disallowance of Rs. 53.48 lakh claimed as a business deduction. A Division Bench of Justices S.G. Pandit and K.M. Manmadha Rao dismissed Rampur Arvind's (taxpayer) appeal and upheld the orders of the Income Tax Appellate Tribunal, the Commissioner of Income Tax (Appeals) and the...
Delhi High Court Slams Customs-CONCOR Standoff Over Container, Says Dispute Driven By 'Ego' Not 'Law'
The Delhi High Court recently observed that a dispute between the Customs Department and the Container Corporation of India (CONCOR) over the release of a shipping container appeared to be "driven more on account of ego than on any question of law," after the container remained stranded for more than three years.A Division Bench of Justices Anil Kshetrapal and Shail Jain made the observation while hearing a plea filed by Ukraine-based freight forwarding company, seeking release of its container...
Father, Employee Can't Be Penalised Solely For Relationship With Gold Smuggling Accused: CESTAT Kolkata
The Kolkata bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) has recently held that a person cannot be penalised for allegedly aiding or facilitating gold smuggling merely because he is the father or an employee of the principal noticee.The tribunal said such penalties can be imposed only where the Revenue produces cogent and independent evidence showing that the person consciously participated in or abetted the alleged smuggling. "The relationship of appellant no. 1...
Gujarat High Court Reiterates Trade Associations Can Qualify As Charitable Institutions Under Income Tax Act
The Gujarat High court has recently upheld an Income Tax Appellate tribunal order directing the Commissioner of Income Tax (Exemptions) to reconsider a trade association's application for registration as a charitable institution.It held that trade promotion bodies established to advance trade and commerce can qualify as charitable institutions under the "general public utility" category of the Income Tax Act.A division bench of Justice Bhargav D. Karia and Justice Pranav Trivedi said the...
Mere Delay In Paying Income Tax Does Not Amount To Wilful Tax Evasion: Bombay High Court
The Goa bench of the Bombay High Court has held that mere delay in paying an admitted tax liability, without a deliberate intention to evade payment, does not amount to a "wilful attempt" to evade tax. Justice Amit S. Jamsandekar observed that criminal prosecution requires proof of mens rea and cannot be invoked merely because there has been a delay or failure in paying tax."The word 'wilful' introduces a mental element and requires looking into the mind of a person by gauging the person's...
Income Tax Act | Trustee's Shareholding Doesn't Make Public Trust A 'Concern' Under Deemed Dividend Provision: Gujarat High Court
The Gujarat High Court has recently held that a public trust cannot be treated as a "concern" under the deemed dividend provisions of the Income Tax Act (Section 2(22)(e)) merely because its trustee holds substantial shares in the lending company. Holding that the legal fiction created by the provision cannot be stretched to cover such trusts, the court observed, "The word "concern" used under the Act in such Explanation, which encompasses a Hindu Undivided Family (HUF), or a firm, or an...
Nicotine Sulphate Not Tobacco Product, Examiner Can't Decide Tariff Classification: CESTAT Ahmedabad
The Ahmedabad Customs, Excise and Service Tax Appellate Tribunal (CESTAT) on 29 July held that Nicotine Sulphate falls under Tariff Heading 29399900 as a vegetable alkaloid and not under Tariff Heading 24039990 as a tobacco product. It clarified that a chemical examiner can only provide analytical findings and cannot determine the tariff classification of a product. A Bench of Judicial Member Dr. Ajaya Krishna Vishvesha and Technical Member Satendra Vikram Singh set aside the excise duty demand...
Three Days To Reply To Income Tax SCN Not Reasonable: Gujarat High Court Quashes Assessment
The Gujarat High Court recently held that granting a taxpayer only three days to respond to an income tax show cause notice does not amount to a reasonable opportunity of hearing and violates the principles of natural justice.Setting aside an income tax assessment order passed after scrutiny proceedings, a Division Bench of Justice A.S. Supehia and Justice Vaibhavi D. Nanavati observed, "Thus, in view of the settled legal position, granting only three days' time to file a reply cannot be said to...
Gujarat High Court Quashes Reassessment Notice Issued Beyond COVID-Era TOLA Deadline
The Gujarat High Court has quashed a reassessment notice issued under Section 148 of the Income Tax Act, holding that it was issued beyond the "surviving time" available under the Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 (TOLA), as interpreted by the Supreme Court in Union of India v. Rajeev Bansal.TOLA was enacted to extend statutory timelines for tax and other legal proceedings during the COVID-19 pandemic.A Division Bench of Justice A.S. Supehia and...