Bombay High Court Judgments — 2018

The High Court allowed the writ petition, quashing the impugned order and reference. The Court found that none of the three transactions in question qualified as Specified Domestic Transactions (SDTs) under Section 92BA(i) of the Income Tax Act, 1961. Regarding the purchase of loans, the Court noted that it was not an expenditure and thus outside the purview of Section 92BA(i). Furthermore, the Petitioner's shareholding in HDFC Ltd. and its subsidiaries did not meet the criteria for related parties under Section 40A(2)(b). For the payment to HBL Global, the Court found that the Petitioner's shareholding in the ultimate holding company was not sufficient to deem HBL Global as a related party under Section 40A(2)(b). Concerning the payment to HDB Welfare Trust, the Court held that the Petitioner was not entitled to 20% of the Trust's profits, thus it did not fall under Section 40A(2)(b). The Court also dismissed the revenue's reliance on CIT v. Amco Power Systems Ltd. and CIT v. Podar Cement Pvt. Ltd. as misplaced, as those cases dealt with different provisions of the Act. Consequently, Respondent No. 1 erred in treating these as SDTs and referring them for ALP determination.

The High Court allowed the writ petition in terms of prayer clause (a). This prayer sought a Writ of Certiorari or any other appropriate writ, order, or direction to call for the records leading to the passing of the impugned order dated November 29, 2017, and the impugned reference dated December 8, 2017, and to quash, cancel, and set aside these impugned actions. The Court stated that for the detailed reasons already set out in Writ Petition No. 462 of 2017, this writ petition was also allowed for the same reasons. The operative direction was to quash the impugned order and reference. No specific issue was left undecided; the entire challenge was allowed. The ratio decidendi would be that the impugned order and reference were vitiated by illegality, as elaborated in the prior judgment.

The High Court allowed the petition and set aside the impugned notice of reopening. The Court found that the facts, though not identical, were similar to the case of Sanjeev Lal (supra). The assessee had entered into an agreement for purchase in 1992, but the sale deed could not be executed due to compulsory acquisition. The High Court declared this acquisition illegal and void, ordering the execution of the sale deed in favor of the petitioner. The Court accepted the petitioner's contention that the execution of the sale deed by virtue of the High Court's judgment would relate back to the original agreement to sell. Therefore, the assessee was entitled to claim the benefit of cost indexation from the date of the original agreement. The Court concluded that the entire basis of the department's objection to the petitioner's computation of capital gain was rendered invalid. Consequently, the impugned notice of reopening was set aside. The Court adopted the logic from the Supreme Court's decision in Sanjeev Lal (supra).

The High Court held that the Assessing Officer (AO) had sufficient 'reason to believe' that the assessee's income had escaped assessment, thereby upholding the reopening of the assessment under Section 147 of the Income Tax Act, 1961, for AY 2007-08. The Court reasoned that the AO's belief was justified by the ITAT's observation in the assessee's son's case, which indicated that investments where the assessee was the first holder should have been taxed in her hands. Furthermore, the assessee's failure to explain the source of these investments in her original return filed under Section 139(1), and the fact that her exempt dividend income was not included in that return, provided the AO with cause or justification to believe that income had escaped assessment. The Court found no perversity or error in the AO's subjective satisfaction, citing the Supreme Court's decision in Rajesh Jhaveri Stock Brokers P.Ltd. The reliance on Maniben Valji Shah was deemed misconceived given the facts. The appeal was dismissed.

The High Court noted that the learned counsel for the Appellant pointed out that the Appellant-Assessee had challenged an order passed by the Commissioner of Income Tax under Section 263 of the Income Tax Act, 1961, before the ITAT. The ITAT had dismissed the Appellant's appeal. The present appeal was admitted against the ITAT's order. The Appellant's counsel further stated that pursuant to the remand, the Commissioner of Income Tax had decided the issue by order dated 14 August 2014, and the ITAT had dismissed the Revenue's appeal by an order dated 12 August 2015. In view of this subsequent development, the Appellant's counsel submitted that the present appeal does not survive. The Court agreed with this submission and disposed of the appeal. The Court explicitly stated that it had not examined the correctness of either of the subsequent orders, and the rival contentions on those orders were kept open.

The High Court held that no useful purpose would be served by sending the matters back to the ITAT, as it was conjecture that the Revenue would necessarily succeed. The Court noted that the ground of appeal concerning the quantum of on-money collected to the extent of Rs. 2,19,47,700 was specifically raised before the ITAT. The Court found that the additions made by the Income Tax Department were to the extent of Rs. 11,52,15,097, and the First Appellate Authority sustained additions of Rs. 4,64,59,769, which was the extent of sustenance by the ITAT. The Court observed that the on-money additions were in the realm of guesswork, pure conjectures, and surmises. Therefore, to bring finality, the Court directed that if the petitioner deposits Rs. 3,25,00,000 within two months, all appeals and the writ petition would stand disposed of, and no further amount would be due. If the deposit is not made, the additions sustained under the initial ITAT order would be upheld. The rule in the writ petition was made absolute.

The High Court held that the impugned orders of the ITAT did not give rise to any substantial question of law. The Court found that the assessee held more than 10% of the voting power in the lending company (MLPL) and had a substantial interest in the borrowing company (OFPL), satisfying the conditions of Section 2(22)(e) of the Income Tax Act, 1961. The Court noted that there was no provision for proportionate addition under Section 2(22)(e) and that the language of the section was unambiguous. The Court dismissed the appeals, finding the reliance on the cited judgments by the assessee to be misplaced. The decisions in Universal Medicare Pvt. Ltd. and Impact Containers Pvt. Ltd. were affirmed, and the Supreme Court's decision in National Travel Services was distinguished as dealing with a different factual matrix. The Delhi ITAT's decision was also found inapplicable due to differing facts. The addition was confirmed in the hands of the assessee.

The High Court held that the impugned orders of the ITAT did not give rise to any substantial question of law and dismissed both appeals. The Court found that the assessee held more than 10% of the voting power in the lending company (MLPL) and had a substantial interest in the borrowing company (OFPL), fulfilling the conditions under Section 2(22)(e). The Court reasoned that there is no provision for proportionate addition under Section 2(22)(e), and the language of the section is unambiguous. The Court distinguished the cases relied upon by the assessee. The decision in CIT Vs Universal Medicare Pvt. Ltd. (324 ITR 263), affirmed by this Court in Impact Containers Pvt. Ltd., was found to be directly applicable. The Supreme Court's decision in National Travel Services Vs Commissioner of Income Tax, Delhi VIII was deemed inapplicable as the issue there concerned a partnership firm where only partners were shareholders, not the firm itself. The Delhi ITAT's decision was also distinguished based on its peculiar facts where both companies had only two shareholders. Therefore, the ITAT's decision to treat the entire loan as a deemed dividend in the hands of the assessee was upheld.

The High Court held that the ITAT's order of June 29, 2001, contained apparent mistakes, particularly regarding the estimation of 'on-money' as income. The Court found that the Tribunal's approach of estimating 40% of 'on-money' without adequate basis or prior discussion was unexplained and unclarifiable, even by the Revenue's counsel. The Court noted that the grounds of appeal before the Tribunal clearly raised the issue of 'on-money' additions and sought their deletion. Given the significant delay in adjudication (over 22 years from the end of the assessment year), the Court decided against remanding the matters back to the Tribunal. Instead, the Court disposed of the appeals and the writ petition by directing the petitioner to deposit Rs. 3,25,00,000/- within two months. Upon deposit, all appeals and proceedings would stand disposed of, with nothing further due. In case of default, the additions sustained by the initial ITAT order would be upheld.

The High Court held that while the Revenue's argument regarding the maintainability of the writ petition was noted, it was not acceded to. The Court found no useful purpose in remanding the matters back to the ITAT, considering the significant time elapsed (over 22 years since the assessment year's end). The Court observed that the original appeal grounds clearly indicated a grievance regarding the 'on-money' additions, including a specific plea for deletion. The Court noted that the ITAT's initial order, which sustained additions to the extent of Rs. 4,64,59,769/-, was not justified by the Revenue's counsel. Consequently, the Court disposed of the appeals and the writ petition by directing the petitioner to deposit Rs. 3,25,00,000/- within two months. Upon deposit, all appeals and proceedings would stand disposed of, with no further amount due. In case of default, the additions sustained by the ITAT would be upheld. The rule in the writ petition was made absolute.

The High Court held that sending the matters back to the Tribunal would serve no useful purpose and could lead to further delays. The Court found that the original appeal memo for Assessment Year 1989-90 contained specific grounds challenging the confirmation of 'on-money' collection to the extent of Rs. 2,19,47,700 and a plea for deletion of additions. The Court noted that the Revenue's counsel could not justify the ITAT's approach. Consequently, the Court set aside the impugned order and allowed the miscellaneous applications for rectification. The Court directed that if the petitioner deposits Rs. 3,25,00,000 within two months, all appeals and the writ petition would stand disposed of, with no further amount due. If there is a default, the additions sustained by the initial ITAT order would be upheld. The Court made the rule in the writ petition absolute.

The High Court decided to dispose of the writ petitions without delving into the larger issue of the validity of the special audit notice. The Court noted that the assessment proceedings pursuant to the Section 148 notice were ongoing, and the petitioner possessed a copy of the PWC report. The Court directed that all contentions related to the PWC report and other relevant matters could be raised by the petitioner during the assessment proceedings under Section 148. The Assessing Officer was instructed to allow the petitioner to raise objections regarding the contents of the PWC report, consider them, and pass an order in accordance with the law. The Court found no useful purpose in resorting to a special audit, as it would only delay the pending proceedings. Consequently, the impugned actions (the notice under Section 142(2A) and the approval) were quashed. The operative direction was that the special audit need not be undertaken, and the assessment under Section 148 should proceed with the petitioner being allowed to raise all necessary contentions.

The High Court decided to dispose of the writ petitions without examining the larger issue of the validity of the special audit notice. The court noted that the assessment proceedings pursuant to the Section 148 notice were underway, and the petitioner possessed the PWC report. The court directed that all contentions related to the PWC report and other issues could be raised during the assessment proceedings initiated under Section 148. The Assessing Officer was instructed to allow the petitioner to raise objections regarding the contents of the PWC report if the Assessing Officer intended to rely on it, and to pass an order in accordance with the law after dealing with these contentions. The court found that resorting to a special audit would serve no useful purpose and would only delay the pending proceedings. Consequently, the impugned notice and approval for the special audit were quashed.

The High Court decided to dispose of the writ petitions without delving into the larger issue of the validity of the special audit notice. The Court noted that the assessment proceedings pursuant to the Section 148 notice were ongoing, and the assessee possessed the PWC report. The Court suggested that all contentions related to the PWC report and other issues could be raised during the assessment proceedings. The Court directed that the special audit, as per the impugned notice and approval, need not be undertaken. Instead, the Assessing Officer was directed to allow the petitioner to raise objections regarding the contents of the PWC report during the assessment, deal with them, and pass an order in accordance with the law. The Court found that resorting to a special audit would serve no useful purpose and would only delay the pending proceedings. Consequently, the impugned actions (notice and approval for special audit) were quashed. The Court did not expressly leave any issue undecided, as the petitions were disposed of on the basis of the suggested course of action accepted by both parties.

The High Court held that the appeal did not raise any substantial question of law. The Tribunal's decision was based on factual matters, specifically concerning the benchmarking of international transactions and the comparability of entities used by the Transfer Pricing Officer (TPO). The Court noted that the ITAT had followed its own detailed order for the immediately preceding assessment year (2008-2009), finding the grounds and records to be identical. The Tribunal had concluded that the services rendered by the assessee, such as Infrastructure Management Services and E-learning and Digital Consulting (constituting 17% and 35% of total revenue respectively), were IT-enabled services and not akin to software design and development services. Consequently, the comparables relied upon by the TPO were deemed not comparable. The High Court found no perversity or error of law in the Tribunal's findings and, in its limited appellate jurisdiction, could not re-appreciate factual findings. The appeal was dismissed.

The High Court found the revenue's submissions wholly unmeritorious. It noted that Question No. 2, concerning the proviso to Section 24, was not raised before the ITAT and thus did not give rise to a substantial question of law. Questions 1, 3, and 4 were also found not to raise substantial questions of law as they were based on factual aspects. The Court observed that the ITAT had consistently followed its own prior decisions for earlier assessment years (2006-07, 2007-08, 2008-09, 2009-10) where sub-lease income was held as business income and interest expenditure was allowed if capital was used for acquiring/constructing assets for earning taxable income. The ITAT had confirmed the CIT(A)'s deletion of additions made by the AO on these grounds. The Court concluded that the impugned order was neither perverse nor vitiated by any error of law apparent on the face of the record, and therefore, did not warrant interference under Section 260A. The appeal was dismissed.

The High Court held that this appeal, like Income Tax Appeal No. 370 of 2016, does not give rise to any substantial question of law. Consequently, the appeal is dismissed. The reasoning is that the questions of law are identical to those in the previously dismissed appeal. No specific findings on substantive issues are recorded as the appeal is dismissed on the preliminary ground of not raising a substantial question of law. No order as to costs is made.

The High Court held that the questions of law projected by the revenue were not substantial questions of law. The ITAT's findings were purely based on facts placed before it, which were not controverted by the revenue. The ITAT had correctly concluded that Motilal Oswal Investment Advisors Pvt. Ltd. was engaged in a qualitatively different and diversified business compared to the assessee, which was confined to rendering non-binding investment advisory services. The ITAT's reliance on its earlier decision in Carlyle India Pvt. Ltd. (ITA 2200/MUM/2014) was noted, where it was held that despite declaring advisory fees, Motilal Oswal was engaged in diversified fields with no separate financial results for each segment. The High Court found no perversity or error in the ITAT's factual findings and agreed with its conclusion that comparing Motilal Oswal to the assessee would be like comparing apples and oranges. Therefore, the ITAT's exclusion of Motilal Oswal from the comparables was upheld, and no substantial question of law arose. The appeal was dismissed.

The High Court held that the appeals did not give rise to any substantial question of law. The findings of the AO, CIT(A), and ITAT were based purely on factual aspects. The assessee itself treated the receipt of Rs. 1.69 Crores as income in its profit and loss account. The authorities below correctly relied on the Supreme Court decision in "Commissioner of Income Tax Vs. T.V. Sunderam Iyengar & Sons Ltd." (222 ITR 344) to hold the amount as a taxable revenue receipt. The argument regarding the "matching concept" was rejected because it was raised for the first time before the High Court and lacked the necessary factual foundation before the lower authorities. Furthermore, the High Court noted that the decision in "Taparia Tools Ltd." relied upon by the assessee was subsequently set aside by the Supreme Court, which held that the "matching concept" for income is a different matter and has been restricted to cases of debentures or where amortization is specifically provided for under the Act. Therefore, the appeals were dismissed.

The High Court held that the appeals did not give rise to any substantial question of law. The findings of the AO, CIT(A), and ITAT were based on factual aspects, specifically that the assessee itself treated the Rs. 1.69 Crores as income in its profit and loss account. The authorities below correctly relied on the Supreme Court decision in *CIT Vs. T.V. Sunderam Iyengar & Sons Ltd.* to hold the amount as a taxable revenue receipt. The argument regarding the 'Matching Concept' was rejected as it was a mixed question of fact and law, with no factual foundation laid before the lower authorities. Furthermore, the High Court noted that the Supreme Court had set aside the *Taparia Tools Ltd.* decision, rendering it inapplicable. The Court did not decide whether the 'Matching Concept' applies to income.

The High Court held that Section 194L and 194LA of the Income Tax Act, 1961, were not applicable to the facts of the case. The Court reasoned that the squatters/hutment dwellers were unauthorized occupants and trespassers on state-owned land, and therefore, there was no compulsory acquisition of property from them. The land always belonged to the State, and the assessee merely removed the encroachment and rehabilitated the dwellers. The Revenue's assumption that squatters are deemed owners was incorrect, as they had no title to the land. Consequently, the first three questions of law did not give rise to any substantial question of law. Regarding the fourth question, the Court found no merit, upholding the ITAT's view that the maintenance contracts involved minor repairs and replacement of spare parts, not requiring specialized technical expertise as contemplated under Section 194J. The payments correctly fell under Section 194C. Thus, all appeals were dismissed as no substantial question of law arose.

The High Court held that Section 194L and 194LA of the Income Tax Act, 1961, were not applicable. The ITAT had correctly noted that the MMRDA was evacuating illegal squatters/hutment dwellers for road widening. These individuals were unauthorized occupants and trespassers on state land, not owners. Therefore, there was no compulsory acquisition of property from them. The ITAT's conclusion that the land belonged to the State, was encroached upon, and the encroachment was removed, with squatters being rehabilitated, was upheld. The Revenue's assumption that squatters are deemed owners was incorrect. Regarding the second issue, the ITAT correctly held that payments for AMCs related to minor repairs and maintenance, not requiring specialized technical expertise, thus falling under Section 194C and not Section 194J. Consequently, no substantial question of law arose.

The High Court held that Section 194L and 194LA of the Income Tax Act, 1961, were not applicable to the facts of the case. The Court found that the assessee evacuated illegal squatters/hutment dwellers who were unauthorized occupants and trespassers on state land. There was no acquisition of land from these individuals, as they had no title to the land. The ITAT correctly concluded that the land belonged to the State, was encroached upon, and the encroachment was removed, with the encroachers rehabilitated. Therefore, the first three questions of law did not give rise to any substantial question of law. Regarding the fourth question, the Court held that the payments for AMCs related to minor repairs and replacement of spare parts, not requiring specialized technical expertise. Thus, these were correctly categorized under Section 194C (payments to contractors) and not Section 194J (fees for professional or technical services). The Court found no substantial question of law in this regard either. All appeals were dismissed.

The High Court held that Section 194L and 194LA of the IT Act, 1961, were not applicable. The ITAT correctly noted that the assessee evacuated illegal squatters/hutment dwellers for a government road widening project. These individuals were unauthorized occupants and trespassers, not owners of the land. Therefore, there was no compulsory acquisition of property from them. The land belonged to the State, and the squatters were rehabilitated. The Revenue's assumption that squatters are deemed owners was incorrect, as they had no title to the land. Consequently, the first three questions of law did not give rise to substantial questions of law. Regarding the fourth question, the ITAT correctly found that the payments were for minor repairs and maintenance not requiring specialized technical expertise, thus falling under Section 194C and not Section 194J. This additional question also did not present a substantial question of law. All appeals were dismissed.

The High Court held that no substantial question of law arises in these appeals. Regarding the first three issues (Questions a, b, and c), the Court found that Section 194L or 194LA of the Income Tax Act, 1961, had no application. The ITAT correctly noted that the MMRDA evacuated illegal/unauthorized squatters/hutment dwellers who were trespassers on State land. There was no compulsory acquisition of land from these individuals as they had no title. The land belonged to the State, was encroached upon, and the encroachment was removed. Therefore, the premise of compulsory acquisition of immovable property from these individuals was incorrect. The Revenue misunderstood the law by assuming squatters are deemed owners. Regarding the fourth issue (Question d), the Court agreed with the ITAT that payments for Annual Maintenance Contracts (AMCs) for AC and Lifts related to minor repairs and replacement of spare parts, which did not require specialized technical expertise. These services fell under Section 194C (payments to contractors) and not Section 194J (fees for professional or technical services). The assessee had correctly deducted TDS under Section 194C. Consequently, all appeals were dismissed.

The High Court held that Section 194LA (and 194L) of the Income Tax Act, 1961, deals with compensation on compulsory acquisition of immovable property. In this case, the assessee evacuated illegal squatters/hutment dwellers for road widening. The Court found that these individuals were unauthorized occupants and trespassers, not owners of the land. Therefore, there was no compulsory acquisition from them, and the land belonged to the State. Consequently, Sections 194L and 194LA were held to have no application. The Court found that the Revenue misunderstood the law by considering squatters as deemed owners. Thus, the first three questions of law did not give rise to substantial questions of law. Regarding the fourth question, the ITAT correctly held that the payments for AMCs related to minor repairs and did not require specialized technical expertise, thus falling under Section 194C and not Section 194J. This additional question also did not give rise to a substantial question of law. All appeals were dismissed.

The High Court held that Section 194L and 194LA of the Income Tax Act, 1961, were not applicable to the facts of the case. The Court reasoned that the squatters/hutment dwellers were unauthorized occupants and trespassers on land owned by the State. There was no compulsory acquisition of property from them, as they had no title or ownership rights. The assessee merely removed encroachments and rehabilitated the squatters. Therefore, the first three questions of law did not give rise to any substantial question of law. Regarding the additional question concerning AY 2008-09 and 2009-10, the Court found no merit. The ITAT had correctly held that the AMC payments were for minor repairs and maintenance not requiring specialized technical expertise, thus falling under Section 194C and not Section 194J. Consequently, this question also did not present a substantial question of law. All appeals were dismissed.

The High Court held that the ITAT was justified in deleting the penalty for points 1 and 2. The reasoning was that the assessee's claims were based on existing judicial decisions at the time of filing the return, and the admission of appeals in the quantum proceedings by the High Court indicated debatable and arguable questions of law. This, coupled with the fact that the claims were reflected in the assessee's accounts and particulars submitted were not faulted, meant that penalty under Section 271(1)(c) was not warranted. Regarding point 3 (depreciation for AY 2003-04), the Tribunal had deleted the penalty because no penalty was levied for similar disallowances in earlier assessment years, and the assessee admitted a bonafide mistake in claiming 100% depreciation, which was a genuine error. The Court found no perversity or error of law in the ITAT's view and dismissed the Revenue's appeals. The ratio is that penalty under Section 271(1)(c) should not be levied when the assessee's claims are based on prevailing judicial pronouncements, when arguable questions of law exist in quantum proceedings, or when a bonafide mistake is admitted.

The High Court held that the ITAT's decision was plausible and did not suffer from any perversity or error of law. Regarding the first question (AY 2003-04), the Court noted that the ITAT deleted the penalty for Point No. 3 based on the fact that no penalty was levied for a similar disallowance in preceding years, and that the assessee admitted a bonafide mistake regarding depreciation. The ITAT also relied on a coordinate bench decision. For Points No. 1 and 2, the Court found that the appeals in quantum proceedings were admitted, indicating debatable and arguable questions, which is a factor to consider for penalty under Section 271(1)(c). The Court distinguished the Revenue's relied-upon case (Shree Gopal Housing and Plantation Corporation) by emphasizing that the assessee's claims were governed by judicial decisions at the time and that the questions raised were debatable and arguable, thus not warranting penalty. The Court dismissed all three appeals filed by the Revenue.

The High Court addressed the issues raised by the Revenue. Regarding issue 1 (guarantee commission), the Court held that the issue was squarely covered by its own decision in CIT Vs. Everest Kento Cylinders Ltd. (2015) 378 ITR 57 (Bom), which distinguished between bank guarantees and corporate guarantees, finding that the commission charged for a corporate guarantee to an associated enterprise could not be questioned in the manner done by the TPO. This decision was also followed in CIT Vs. Glenmark Pharmaceuticals Ltd. (2017) 398 ITR 439 (Bom). Consequently, the Court found no substantial question of law on this issue. Regarding issue 2 (share application money), the Court noted the delay in issuing shares but accepted the assessee's explanation for the delay (obtaining approval from the Securities and Exchange Commission, Philippines) and the subsequent issuance of shares as evidenced by a share certificate. Citing the High Court's decision in DIT Vs. Besix Kier Dabhol S.A. (ITA No. 776 of 2011), which held that there were no thin capitalization rules in India to re-characterize debt as equity, the Court concluded that share application money, even with a delay in share issuance, should not be treated as a loan. The Court also noted similar Tribunal decisions. Therefore, the Court held that this issue also did not give rise to a substantial question of law. As the appeal was based on these two issues, and the Court found no substantial question of law on either, the appeal was dismissed.

The High Court held that the ITAT's decision was plausible and did not suffer from any perversity or error of law. Regarding Point Nos. 1 and 2, the Court found that the assessee's claims were made based on existing judicial pronouncements, and the admission of quantum appeals by the High Court indicated debatable and arguable issues, which justified the deletion of penalty. The Court distinguished the Revenue's cited case, Shree Gopal Housing, by emphasizing that in the present case, the claims were governed by judicial decisions at the time of filing and the issues were indeed debatable. For Point No. 3, the Court noted the ITAT's finding that a bonafide mistake was made regarding depreciation and that no penalty was levied in preceding years for similar disallowances. The ITAT's reasoning that penalty ought not to have been levied due to a bonafide mistake and the absence of penalty in prior years was upheld. Consequently, the High Court found no merit in the Revenue's appeals and dismissed them.

The High Court held that the ITAT was correct in setting aside the CIT's order passed under Section 263. The primary reason was that the CIT's final order under Section 263 introduced two new grounds (that the Kallakal and Kamdod units were not engaged in manufacture/production, and that profits should be computed on an overall business basis) which were not part of the show-cause notice issued to the assessee. This deprived the assessee of an opportunity to be heard on these crucial points. The Court also found that the Assessing Officer had conducted a detailed inquiry, considered the assessee's explanations and arguments, and applied his mind before allowing the deduction. The CIT's action was merely substituting his own views for those of the Assessing Officer, which is not permissible under Section 263, as per the ruling in CIT v/s Gabriel India Limited. The office note appended to the assessment order further supported that the Assessing Officer had considered all aspects. Therefore, the CIT was not justified in invoking Section 263. The substantial question of law was answered in the affirmative, in favour of the assessee.

The High Court held that the Tribunal failed to act as the last fact-finding authority. The Tribunal's own observations indicated that it had considered factual matters and crystallized the issues, yet it still remanded the case. The Court found it surprising that the Tribunal would remand the case when it seemingly concluded that the assessee did not have a fixed place of business in India, which would have made the CIT(A)'s order correct. The Court stated that if there was no material on record, such a conclusion would have been impossible. The Tribunal's cryptic order and resort to remand were seen as a shortcut, wasting judicial time and delaying revenue collection. The Court answered the substantial questions of law in favour of the assessee and against the revenue. The operative direction was to set aside the Tribunal's order and restore the Revenue's appeal to the file of the Tribunal for a fresh decision on merits. The initial order of the Tribunal and the rectification orders were quashed.

The High Court held that the Tribunal failed to act as the last fact-finding authority. The Court noted that the Tribunal itself referred to factual matters and crystallized the issues, yet remanded the case without sufficient justification. The Tribunal's own observation that there was nothing on record to prove the applicability of Article 5(1) of the DTAA, while simultaneously concluding that the Assessee did not have a fixed place of business in India and that the First Appellate Authority was right, indicated a contradiction. The Court found that the Tribunal should have summoned all records and arrived at a categorical conclusion. Therefore, the High Court answered both substantial questions of law in favour of the Assessee and against the Revenue. The order of the Tribunal was set aside, and the Revenue's Appeal was restored to the file of the Tribunal for a fresh decision on merits. The initial ITAT order dated April 1, 2015, and the subsequent orders on rectification applications were quashed.

The High Court held that the ITAT failed to act as the last fact-finding authority. The Court noted that the Tribunal, in its order, itself concluded that the assessee was not having a fixed place of business in India and that the First Appellate Authority rightly held Article 5(1) of the DTAA inapplicable. The Court found it surprising that despite reaching such conclusions, the Tribunal still remanded the case. The Court reasoned that if there was no material on record, such conclusions would have been impossible to reach. The Court stated that the Tribunal ought to have summoned all records and arrived at a categorical conclusion on whether the CIT(A) or the AO was correct. Since this was admittedly not done, the Tribunal failed to discharge its duty. Consequently, the Court answered both substantial questions of law in favour of the assessee and against the revenue. The Court set aside the order of the Tribunal and restored the Revenue's Appeal to the file of the Tribunal for a decision afresh on merits. The initial order of the Tribunal and the orders on rectification applications were quashed and set aside.

The High Court held that the substantial questions of law were answered in favor of the Revenue and against the assessee. Regarding questions (i), (ii), and (iii), the Court found that Section 80-O of the Act restricts the benefit of deduction only to technical services rendered from India. Routine services, such as supervising, loading/unloading, and storage, were undisputedly rendered in India and not from India, thus not qualifying for deduction under Section 80-O, even if they formed part of a consolidated report. The Court distinguished the case of Eicher Consultancy Services Ltd., stating that in that case, services were rendered to a foreign party from India, whereas here, services were rendered in India to a foreign company. Regarding question (iv), the Court held that activities like supervising, loading, and storage, even if requiring technical know-how, were services rendered in India and not from India, thus hit by Explanation (iii) to Section 80-O. The Court also noted that Clause (5) of the agreement categorized special expertise and experience required for Indian conditions as services over and above the technical services, implying they might not be considered technical services for the purpose of Section 80-O.

The High Court held that all substantial questions of law were answered in favor of the Revenue and against the assessee. Regarding questions (ii) and (iii), the Court found that the case of Eicher Consultancy Services Ltd. was not applicable because the services in question (inspection, loading/unloading) were rendered in India, not from India to a foreign party abroad. The Court emphasized that Section 80-O restricts the deduction benefit to technical services rendered *from* India. Routine services, such as supervising, loading/unloading, and storage, were undisputedly rendered in India and thus did not qualify for deduction under Section 80-O, even if they formed part of a consolidated report. Regarding question (iv), the Court held that while some services might require expertise, they are still rendered in India and not from India, thus falling under the exclusion of Explanation (iii) to Section 80-O. The Court concluded that the activities of supervising, loading, and storage of goods, even if requiring technical know-how, were services rendered in India and not from India, making them ineligible for the Section 80-O deduction.

The High Court answered all substantial questions of law in the negative, in favor of the Revenue and against the assessee. Regarding the first question, the court implicitly found that the Tribunal was justified in re-evaluating the issue for the current assessment years. For questions two and three, the court held that services like inspection, loading/unloading, and storage, which are rendered in India, do not qualify for deduction under Section 80-O, even if they form part of a consolidated report. The court distinguished the case from Eicher Consultancy Services Ltd., stating that the services in question were rendered in India to the foreign company, not rendered from India to a foreign party abroad. Regarding question four, the court found that activities like supervising, loading, and storage, even if requiring technical know-how, are services rendered in India and thus hit by Explanation (iii) to Section 80-O, and further noted that Clause (5) of the agreement treated such expertise as over and above technical services. Consequently, all appeals were dismissed.

The High Court held that all substantial questions of law were answered in favor of the Revenue and against the assessee. Regarding question 1, the Tribunal had jurisdiction to take a view on the categorization of services. For questions 2 and 3, the Court found that the Eicher Consultancy Services Ltd. case was not applicable because the services in question (inspection, loading/unloading) were rendered in India to the foreign company, unlike the Eicher case where services were rendered from India to a foreign party who then used them in India. The Court reiterated that Section 80-O restricts the benefit to technical services rendered from India. Routine services, such as supervising, loading/unloading, and storage, are undisputedly rendered in India and do not qualify for deduction under Section 80-O, even if they form part of a consolidated report. For question 4, the Court noted that while some services might require expertise, they are still rendered in India and not from India, thus falling under Explanation (iii) to Section 80-O and being hit by its provisions. Therefore, the appeals were dismissed.

The High Court held that the Appellant was not carrying out manufacturing activity of electronic computer products within the meaning of Section 80-IB of the Act. The Court found that the findings recorded by the Assessing Officer, CIT(A), and the Tribunal were findings of fact. The Appellant failed to adduce convincing evidence to show it retained control over the manufacturing of electronic computers at the factory premises of M/s. Kobian ECS India Pvt. Ltd. in Silvassa. The Appellant could not produce primary evidence like books of accounts, resolutions, or details of deployed manpower, attendance registers, or employee qualifications. The fact that packaging material was supplied by the Appellant to the contract manufacturer further indicated a lack of direct control. Consequently, Questions (a) and (b) were answered in the negative, in favour of the Revenue and against the Assessee. Question (c) became academic and was not answered. The appeal was dismissed.

The High Court dismissed the petition. Regarding the issue of mala fides, the Court noted that the petitioner's allegations were not substantiated and that the persons against whom mala fides were alleged were not impleaded. The Court found that the petitioner failed to participate in the inquiry to make good her allegations. Concerning the non-payment of subsistence allowance, the Court observed that the order for payment was made on 17.7.1987, requiring the petitioner to furnish a certificate of no other employment. The petitioner was informed of this requirement on 7.4.1989 but failed to produce the certificate. Therefore, the Court held that the petitioner could not claim prejudice due to non-payment. The Court distinguished the cases of Jagdamba Prasad Shukla and M.Paul Anthony, finding them factually different. The Court also found that the petitioner's requests for adjournment were not unreasonably declined, and inquiry dates were fixed well in advance. Regarding the non-consideration of defenses, the Court held that raising defenses in reply to the charge-sheet is insufficient; they must be made good during the inquiry. Since the petitioner failed to participate in the inquiry and adduce evidence, her defenses could not be considered for the first time by the Court. The CAT's findings were deemed to be neither jurisdictional error nor perverse.

The High Court held that the appeal was meritless and deserved to be dismissed. The core issue was whether the assessee failed to disclose material facts. The Court found that the assessee, a Co-operative Bank, had consistently disclosed its status as such and never claimed to be a scheduled or non-scheduled Bank. The reliance on the judgment in Calcutta Discount Company Ltd. was noted, but the Court distinguished the present case by emphasizing that the assessee's status was always known. The Court found that the AO could not have raised the ground of failure to disclose material facts, especially when the reassessment was initiated belatedly and without proper approval. The Court held that the ITAT committed no error in its decision, finding the reassessment proceedings unsustainable due to the belated initiation and the lack of proper grounds for reassessment. The appeal was dismissed at the threshold.

The High Court held that the mode adopted by the Wealth Tax Officer, CWT (Appeals), and the Tribunal to determine the value of the Bills of Exchange/hundis was contrary to the provisions of Section 7 of the Wealth-Tax Act. Section 7(1) mandates that the value of any asset shall be determined in the manner laid down in Schedule-III. Rule 14 of Schedule-III provides that the value of an asset in its books should be taken for wealth tax purposes. The authorities instead adopted the value found in income-tax proceedings. The Tribunal itself noted that the instruments were "inchoate," realization was not possible, and a discount was appropriate. The Court answered the admitted question in the negative, in favour of the assessee. The appeal was allowed, implying the addition based on the value determined in income-tax proceedings was set aside.

The High Court held that the mode adopted by the Wealth Tax Officer, CWT(A), and the ITAT to determine the value of the Bills of Exchange/hundis by recourse to proceedings under the Income-Tax Act was contrary to the provisions of Section 7 of the Wealth-Tax Act. Section 7(1) mandates that the value of any asset shall be determined in the manner laid down in Schedule-III. Rule 14 of Schedule-III states that the value of an asset in its books should be taken for wealth tax purposes. The Tribunal itself noted in paragraph 6 of its order that the Bills of Exchange were 'inchoate' negotiable instruments, litigation was pending, the asset was in the possession of the department, and realization of actual value was not possible. The Tribunal acknowledged that ends of justice would be met by allowing a discount. The High Court agreed with the assessee's contention that the market value should be appropriately discounted. Therefore, the question was answered in the negative, in favour of the assessee. The appeal was allowed.

The High Court held that the substantial questions of law were answered in favour of the assessee. Regarding the first question, the Court found that the amendment to Section 80IA by introducing sub-section (9A) was explicitly prospective, effective from April 1, 1999. It was neither declaratory nor clarificatory. Therefore, it could not be applied retrospectively to AY 1997-98. The Court relied on the Supreme Court decision in DCIT Vs. Core Health Ltd. and the CBDT Circular dated 23rd December, 1998, which clarified that the amendment was prospective. The Court noted that even if the Finance Bill initially proposed retrospective effect, the enacted Act made it prospective. Consequently, the assessee was entitled to claim deduction under Section 80IA without excluding the profits already claimed under Section 80HHC for the assessment year in question. Both substantial questions of law were answered in the negative, in favour of the assessee.

The High Court held that the Tribunal did not err in disallowing the expenditure. The court reasoned that while the Assessee presented an agreement for the employee to serve for ten years, this alone was insufficient to establish a nexus between the expenditure and the business activities. The Business Administration course undertaken by the son of a director was considered 'general' in nature and lacked a direct nexus to the company's specific business of manufacturing copper foils. The Assessee failed to provide detailed particulars, such as the employee's basic qualifications, the specific subjects studied in the administration course, and how these subjects related to the company's business. The court drew parallels with the cases of Shrinath Motors and Divyakant C. Mehta, where similar expenditures for higher education of directors' relatives were disallowed for lack of a direct business nexus. Therefore, the expenditure was not incurred wholly and exclusively for the purpose of the Assessee's business. The question of law was answered in the negative, in favour of the Revenue.

The High Court held that the impugned assessment order dated January 31, 2018, was passed without jurisdiction. The Court found that the petitioner, being a foreign company, is an eligible assessee under Section 144C of the Act and is entitled to the special procedure outlined therein. This procedure mandates the passing of a draft assessment order under Section 144C(1) before a final assessment order can be issued, allowing the eligible assessee to file objections before the Dispute Resolution Panel (DRP). The Court noted that the impugned order invoked Section 144C(13) without complying with the prerequisite of issuing a draft assessment order under Section 144C(1), thereby violating the mandatory provisions of Section 144C. The Court rejected the Revenue's contention that the order was merely giving effect to the Tribunal's order, stating that the "fresh adjudication" implied a decision on the lis. The Court followed the principle laid down in JCB India Ltd. v. Deputy Commissioner of Income-tax, holding that even in remand proceedings, the Assessing Officer is obliged to pass a draft assessment order if variations to the returned income are proposed. Consequently, the impugned order was quashed and set aside. The Court clarified that this would not prevent the Revenue from taking further steps in accordance with law.

The High Court held that the Income Tax Appellate Tribunal passed its order on findings of fact. The Court found considerable merit in the submission of the respondent assessee, noting that similar grounds raised in the present appeal were considered in Income Tax Appeal No. 62 of 2015, where the Division Bench dismissed the appeal finding no substantial question of law. The Court also referred to the judgment in Income Tax Appeal No. 1121 of 2009, which was upheld by the Apex Court. This judgment established that an assessee can maintain separate portfolios for investment and business dealing in shares, and that delivery-based transactions should be treated as investments, with profits classified as capital gains based on holding period. The Court concluded that the findings of fact by the ITAT did not warrant interference and no substantial question of law was raised in the appeal. Therefore, the appeal was dismissed.

The High Court held that the question of whether expenses were capital or revenue in nature depends on the business and activity, making it a mixed question of law and fact. If such a factual question is conceded by the assessee before the Assessing Officer, the Appellate Tribunal is not in error in refusing to consider the issue in view of the concession. The Court found the Tribunal's approach to be neither illegal nor beyond jurisdiction, and concluded that no substantial question of law arises. Consequently, the appeal was dismissed.

The High Court held that no substantial question of law arose for consideration in the present appeal. This decision was based on the fact that the issues involved were no longer res integra, having been conclusively decided by previous judgments. The Court noted that Tax Appeal No. 56/2016, filed against the husband of the present respondent and raising identical questions of fact and law from a common ITAT order, had been disposed of on March 28, 2018. This disposal followed an order dated July 24, 2017, in Tax Appeals Nos. 27 and 55 of 2016, wherein the Division Bench had dismissed those appeals. The reasoning in the July 24, 2017 order was that the appeals were covered by an earlier decision of the Apex Court in GE India Technology Centre Pvt. Ltd. vs. Commissioner of Income Tax, which held that tax is deductible only if the amounts payable result in income chargeable to tax in India. The ITAT had also relied on this proposition and a decision of its Coordinate Bench in Sesa Goa. Furthermore, the Full Bench of the High Court had also ruled on this issue in Commissioner of Income Tax vs. V.S. Dempo & Co. Pvt. Ltd. Consequently, the appeal was dismissed as covered by the aforementioned precedents.