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872 orders · Page 17 of 18
The High Court agreed with the view taken by the Income Tax Appellate Tribunal. The Tribunal had found merit in the assessee's claim that the loss on sale of securities/bonds, which were initially categorized as "available for sale" (AFS), was of a trading nature. This was despite the securities being grouped under the head "investment" due to RBI prescribed formats. The Tribunal considered this consistent with CBDT instructions and the facts of the case, thus declining to interfere with the CIT(A)'s order. The High Court found no question of law arising from the ITAT's decision.
The High Court dismissed the Revenue's appeal. While the Tribunal had proceeded on the ground that a further addition under Section 40(a)(ia) was impermissible when additions were made on an estimated basis, the High Court chose to decide the matter on the factual stand accepted by the Commissioner. The Court noted that the Commissioner had accepted the assessee's factual assertion that tax was deducted at source and deposited with the government revenue, along with interest, before the due date of filing the return. Since the Revenue was unable to dispute these facts, the Tax Appeal was dismissed. The Court explicitly kept the question regarding the Tribunal's reasoning on estimated basis additions open.
The High Court dismissed the appeal filed by the Revenue. The Court noted that the issue pertained to a penalty under Section 271E for contravention of Section 269T. The facts indicated that the assessee made repayments to distributors through adjustments. The CIT(A) had accepted the assessee's explanation that these were regular distributors and that the transactions involved sales, delayed payments, and adjustments of deposits and interest. The final payment, after adjustments, was made via cheque or demand draft. While the CIT(A) and ITAT proceeded on the basis of sufficient cause for not making repayment through prescribed sources, the High Court expressed doubt as to whether the provisions regarding demand before payment of tax would apply in such a scenario. Ultimately, the Court concluded that no question of law arose for consideration and therefore dismissed the appeal.
The High Court held that the loss from hedging contracts was not speculative. Citing its own decision in CIT vs. Friends and Friends Shipping (P) Ltd. and the Calcutta High Court's decision in CIT v. Soorajmull Nagarmull, the Court reasoned that since the assessee was not a dealer in foreign exchange and the contracts were entered into to hedge against foreign exchange fluctuation risks incidental to its export business, the loss did not fall under the definition of speculative transaction under Section 43(5). Regarding the disallowance under Section 40(a)(ia), the Court referred to its recent order in Tax Appeal No. 290 of 2018, which relied on the Supreme Court's decision in G.E India Technology Centre P. Limited vs. Commissioner of Income-Tax & Anr. The Court reiterated that TDS under Section 195 is applicable only if the sum paid is chargeable to tax in India. Since the Revenue did not seriously contend that the payment to the foreign commission agent was taxable in India, the addition was rightly deleted. The appeal was dismissed.
The High Court decided to permit the assessee to proceed with its appeal without any pre-deposit. Until the appeal is disposed of, there shall be no recovery of the tax demand arising from the assessment order. The reasoning provided is that the assessment was completed ex-parte, and the Assessing Officer erroneously recorded that the assessee had not filed a return. Furthermore, in the past, the assessee had shown cash deposits from patients for treatment, and its accounts are duly audited. The court found these factors compelling enough to grant a full stay on recovery pending the appeal's disposal.
The High Court held that the issue is squarely covered by its previous judgment in the case of Commissioner of Income Tax vs. Shri Mahila Sevea Sahakari Bank Ltd. reported in 395 ITR 324. In that precedent, the Division Bench had ruled that the assessee bank was bound by the RBI guidelines. Consequently, since the assessee had not shown interest on non-performing assets as income in its books of account in compliance with these guidelines, the same could not be taxed in the hands of the assessee. The reasoning is that the RBI guidelines dictate the accounting treatment of such interest, and the taxability should follow this treatment when it prevents the income from being recognized. The ratio decidendi is that income not recognized as per binding regulatory guidelines cannot be subjected to tax on an accrual basis. The operative direction was to dismiss the appeal.
The High Court held that the issue was squarely covered by its own previous judgment in the case of Commissioner of Income Tax vs. Shri Mahila Sevea Sahakari Bank Ltd. (reported in 395 ITR 324). In that precedent, the Division Bench had ruled that an assessee bank is bound by the RBI guidelines. Consequently, if the bank, following these guidelines, did not show interest on non-performing assets as income, then such interest could not be taxed in the hands of the assessee. The High Court found no reason to deviate from this established position. Therefore, the appeal filed by the Revenue was dismissed.
The High Court held that the Tribunal had not erred in quashing the order passed by the Commissioner under Section 263. The Court focused on the fundamental issue of whether the assessee had actually received the sale consideration of Rs. 4,43,52,100/-. It was noted that while the sale deed stated this amount, the assessee herself only received Rs. 38,74,431/-. The substantial portion of the sale consideration, Rs. 4,04,77,669/-, was received by Melody Complex Pvt. Ltd, which was a confirming party and had rights under the initial agreement to sell. The Court reasoned that the assessee could not be taxed on capital gains for an amount she never received. The Court also observed that the Revenue had not probed the unusual rise in land price to question the genuineness of the transaction. The remaining sale consideration received by Melody Pvt. Ltd could be taxed in their hands. The operative direction was that the Tax Appeal is dismissed.
The High Court held that it found no error in the view of the Tribunal. The Tribunal had restored the matter to the Assessing Officer because the CIT (Appeals) had not specified complete information, including the date of filing of the declaration in Form 27C, making it difficult for the Tribunal to adjudicate the issues. The Tribunal's decision to restore the file was in line with the principles laid down in the High Court's own previous decision in Commissioner of Income Tax vs. Siyaram Metal Udyog (P) Ltd. [(2016) 71 taxmann.com 204]. The ratio decidendi is that when crucial information is lacking from lower appellate authorities, restoring the matter to the Assessing Officer for verification and proper decision-making is a valid course of action, especially when guided by precedent. The operative direction was to restore the file to the Assessing Officer.
The High Court held that the Income Tax Appellate Tribunal (ITAT) did not err in restoring the matter to the Assessing Officer. The Tribunal had noted that the assessee had filed a declaration in Form 27C. However, the CIT (Appeals) had not provided complete information, including the date of filing the declaration, which made it difficult for the ITAT to decide the issues. Citing the High Court's own decision in Commissioner of Income Tax vs. Siyaram Metal Udyog (P) Ltd. [(2016) 71 taxmann.com 204], the Tribunal restored the matter to the Assessing Officer for verification and examination of facts. The High Court found no error in this approach. The operative direction was to restore the file to the Assessing Officer. No specific issue was left undecided.
The High Court held that the impugned notice for reopening the assessment was invalid and set it aside. The Court analyzed the three reasons provided by the Assessing Officer for reopening. Firstly, regarding the profit share from M/s. Satyam Gokul Corporation, the Court found the AO's calculation erroneous. The assessee had correctly pointed out that the Rs. 7.65 crores share of profit was from two separate firms, not one, and the AO's assumption of 20% of Rs. 32 crores from a single firm was factually incorrect. Secondly, concerning M/s. Satva Associates, the Court found that the AO erred in presuming the entire Rs. 26 lakhs was received in the current year, whereas the record indicated it was received in the previous year. The third reason, relating to the disallowance of expenses under Section 14A, was not considered on merits because the reopening itself was found to be impermissible beyond the four-year period without any failure on the part of the assessee to disclose full facts. Since all the reasons for reopening were found to be invalid or based on erroneous premises, the notice was set aside.
The High Court dismissed the Revenue's appeal. The Court noted that the Tribunal had relied on its own judgment for an earlier assessment year, which was upheld by the High Court in Tax Appeal No. 1050 of 2009. In that prior decision, the High Court had observed that the Government Resolution specifically provided that the grant was a contribution towards the corpus fund. Therefore, such contributions fall within the excluded category under Section 12 of the Act, as they were made with a specific direction to form part of the corpus. Consequently, these amounts are not considered income derived from property held under trust for charitable purposes for the purposes of Section 11. The Court further held that in light of Section 11(1)(d), such income is not to be included in the total income. The High Court reiterated its earlier view, finding support from its decision in Commissioner of Income-tax v. Sthanakvasi Vardhman Vanik Jain Sangh, which held that voluntary contributions made with a specific direction to form part of the corpus are not deemed income derived from property held under trust for charitable purposes. Thus, the Tribunal was justified in holding the grant-in-aid as part of the corpus and exempt under Section 11(1)(d).
The High Court held that the ITAT did not commit any error in exercising its power of rectification. The Tribunal, upon reviewing the assessee's rectification application, found that its earlier order disposing of the tax appeal had been made without reference to certain documents contained in the paper book. These documents were considered necessary for a proper verification and decision on the issue of TDS on ocean freight according to law. Consequently, the Tribunal restored the issue to the file of the Assessing Officer for a fresh adjudication after verifying these documents. The High Court viewed this action not as an error, but as a correction of an oversight where a relevant issue was decided without considering the available material. Therefore, the Tribunal's action of placing the issue back before the Assessing Officer for a fresh decision was deemed appropriate.
The Tribunal deleted the addition of Rs. 32.56 crores. The Tribunal found that the loose document relied upon by the AO did not pertain to the assessee's schemes, Ratnakar 3 and Ratnakar 4, as it referred to areas and rates of penthouses, while Ratnakar 3 did not have penthouses, and Ratnakar 4's penthouse area did not match the document. The Tribunal also found that the admissions made by the representative of M/s. Sambhav Infrastructure Pvt. Ltd. were not correlated with the assessee's sales, as there was no comparison of rates for sales during the same period for properties offering similar advantages. The material collected from websites was also found to be bereft of comparability in terms of area, location, and period. Consequently, the Tribunal held that there was no reliable or independent evidence to conclude that the assessee had accepted on-money. The High Court found that the issue was substantially factual and no question of law arose.
The High Court held that the ITAT was correct in deleting the addition of Rs. 32.56 crores. The Tribunal had discarded the loose documents because they did not pertain to the assessee's specific schemes, Ratnakar 3 and Ratnakar 4, as the document referred to penthouses and flat configurations that did not match the assessee's projects. The Court found that the remaining evidence, namely the admissions by M/s. Sambhav Infrastructure Pvt. Ltd. and the market rates collected from the website, lacked comparability. The AO and CIT(Appeals) had not compared the rates of M/s. Sambhav Infrastructure Pvt. Ltd. or other constructed properties sold during the same period in the same area with similar advantages. The material from the website was also bereft of comparability. Therefore, the entire issue was factual in nature, and the Tribunal, having considered the relevant facts, correctly concluded that no question of law arose. The appeals were dismissed.
The High Court held that the process of cutting and polishing diamonds amounts to manufacture or production of an article or thing. The Court noted the detailed technical processes involved, such as sawing, bruting, and polishing, which transform rough diamonds into finished products with distinct appearances, values, and uses. The Court found that these processes bring into existence a new commodity with a different marketable identity. Consequently, the assessee was entitled to deduction under Section 10B. The Court answered Question 1 in favour of the assessee and Question 2 against the assessee, but allowed the appeal based on the answer to Question 1, setting aside the ITAT's judgment. The assessee was held entitled to deduction under Section 10B.
The Tribunal decided that no question of law arises from the ITAT's order. The High Court found that the CIT(A) and the Tribunal had examined the material on record and concluded that the land was, in fact, transferred to the assessee-firm. This finding of fact, based on the evidence, meant that the primary objection of the Assessing Officer regarding land ownership was not sustainable. Consequently, the disallowance made by the Assessing Officer under Section 80IB(10) was deleted by the Tribunal. The Tribunal also directed to allow deduction under Section 80IB(10) on the disallowance pertaining to vehicle and telephone expenses. The High Court, agreeing with the Tribunal's factual findings and its conclusion that no substantial question of law arises, dismissed the Revenue's appeal. The ratio decidendi is that where the lower appellate authorities have made factual findings based on material evidence, the High Court should not interfere unless a substantial question of law is involved.
The High Court held that the activity of cutting and polishing diamonds amounts to manufacture or production of an article or thing. The Court noted the detailed process involved in cutting and polishing, emphasizing that it transforms rough diamonds into a new product with different appearance, value, and uses. The Court found that the explanation inserted into Section 10B was indeed clarificatory in nature. Consequently, the deduction under Section 10B was held to be available to the assessee for the assessment year in question. The Tribunal's decision confirming the revenue authorities' view was set aside. The assessee was held entitled to the deduction under Section 10B. Question No. 1 was answered in favour of the assessee, and Question No. 2 was answered against the assessee, but the appeal was allowed based on the answer to the first question.
The High Court held that the ITAT did not commit any error in exercising its power of rectification. The Tribunal, upon reviewing the assessee's rectification application, found that its earlier order disposing of the tax appeal had been made without reference to certain documents contained in the paper book. These documents were considered necessary for a proper verification and decision on the issue of TDS on ocean freight according to law. Consequently, the Tribunal restored the issue to the file of the Assessing Officer for a fresh adjudication after verifying these documents. The High Court viewed this action not as an error, but as a correction of an oversight where a relevant issue was decided without considering the available material. Therefore, the Tribunal's action of placing the issue back before the Assessing Officer for a fresh decision was deemed appropriate.
The High Court held that both issues raised in the appeal were squarely covered against the Revenue by a previous judgment of the same court in the case of Principal Commissioner of Income-Tax v. Shre Mahila Sewa Sahakari Bank Limited, reported in [2017] 395 ITR 324 (Guj.). Consequently, the Court found no question of law arising from the ITAT's order. The reasoning is based on the precedent set by the Shre Mahila Sewa Sahakari Bank Limited case, which presumably dealt with similar issues regarding the taxability of interest on NPAs and disallowances under Section 40(a)(ia). The operative direction was to dismiss the Tax Appeal. No issues were expressly left undecided.
The High Court dismissed the Tax Appeal. The Tribunal had correctly held that Section 195 of the Income-tax Act, 1961, requires TDS only on sums chargeable to tax in India. The Tribunal noted that the commission was paid to non-residents for services rendered outside India, and these non-residents had no fixed base or business operations in India. The Tribunal relied on the Supreme Court's decision in GE India Technology Centre P. Limited vs. CIT, which held that Section 195 is attracted only when the payment is chargeable to tax in India. While the Revenue pointed to Explanation 2 of Section 195(1) (retrospectively inserted), the Court found that this explanation does not alter the fundamental principle that TDS is only applicable if the sum is chargeable to tax. The Revenue had not seriously contended that the payment to the foreign commission agents was taxable in India. Therefore, the disallowance under Section 40(a)(ia) was not appropriate.
The High Court held that all three questions raised by the Revenue were purely questions of fact and no question of law arose from the ITAT's order. Regarding the first issue, the Tribunal confirmed the CIT(A)'s view, noting that the AO's basis for rejecting the assessee's books was not doubted, especially after a remand report was called for and no objections were raised by the AO. Concerning the second issue, the Tribunal found that the commission expenses were admittedly paid to the assessee's agent, were genuine, and supported by evidence. For the third issue, the Tribunal concluded that the expenditure of Rs. 3,56,100/- on account of legal and professional fees was a revenue expenditure. The High Court found no error in the concurrent findings of the CIT(A) and the ITAT.
The High Court held that no question of law arose from the ITAT's order. The Tribunal had confirmed the deletion of the penalty by the Commissioner (Appeals) based on the facts presented. The assessee had initially claimed exemption under Section 54F based on a registered agreement to purchase land. However, the deal did not materialize as the vendor failed to clear encumbrances. The assessee had voluntarily withdrawn this claim during the assessment proceedings. The Tribunal found that since the assessee withdrew the claim during the assessment proceedings itself, the deletion of the penalty by the CIT(A) was justified. The High Court found no reason to interfere with the ITAT's decision and dismissed the appeal. The ratio decidendi is that if an assessee voluntarily withdraws an exemption claim during assessment proceedings before any adverse findings, the imposition of penalty under Section 271(1)(c) may not be sustainable.
The High Court decided the appeal based on its previous pronouncements. Regarding question [A], the Court noted that a similar question was considered and rejected in Tax Appeal No. 40 of 2015 by an order dated January 23, 2015. For question [B], the Court referred to Tax Appeal No. 39 of 2015, where a similar issue was considered and the question was rejected by an order dated January 23, 2015. Similarly, for question [C], the Court found that a similar issue had been considered in Tax Appeal No. 39 of 2015 and the question was rejected by an order dated January 23, 2015. Question [D] was considered to be in the nature of a contention supporting question [C]. Based on these prior decisions, the High Court dismissed the Tax Appeal.
The Tribunal's decision to delete the addition of Rs. 74,45,639 was upheld. The High Court focused on the fundamental question of whether the entire addition could be made in the hands of the assessee based solely on the disclosure statement. The Court noted that the assessee's statement under section 132(4) was not solely for himself but was made on behalf of the entire family, with the Rs. 1.74 crore of jewellery and ornaments bifurcated among different family members. The Court found it doubtful whether additions could be made in the hands of other family members based on such a statement, especially since no such additions were made in their assessments. Furthermore, the Court held that it was not possible for the AO to make the entire addition in the hands of the assessee, as the disclosure statement was qualified and did not exclusively concern the assessee. The ratio is that a disclosure statement made on behalf of multiple individuals cannot be the sole basis for making the entire addition in the hands of one individual, particularly when other family members were also beneficiaries of the disclosure and no additions were made in their cases.
The High Court held that no question of law arises from the ITAT's order. The Tribunal, in its impugned judgment, referred to detailed correspondence between the AO and the assessee during the assessment proceedings. Based on this, the Tribunal concluded that the AO had carried out detailed inquiries, including those concerning the assessee's on-money transactions. Therefore, the Tribunal found the PCIT's conclusion that no inquiries were carried out to be incorrect, justifying the reversal of the revision order. The High Court agreed with the Tribunal's finding that the AO had conducted detailed inquiries, which negated the PCIT's basis for exercising revisional powers under Section 263. Consequently, the Tax Appeal was dismissed.
The High Court held that no substantial question of law arises from the ITAT's order. The Tribunal, in its judgment, referred to detailed correspondence between the AO and the assessee during assessment proceedings. Based on this correspondence, the Tribunal concluded that the AO had conducted detailed inquiries, including those related to the assessee's on-money transactions. Therefore, the Tribunal found the Commissioner's view that no inquiries were carried out to be incorrect, and consequently, the revisional powers under Section 263 could not have been exercised. The High Court found no perversity in the Tribunal's findings and upheld its decision. The appeal was dismissed.
The High Court held that no question of law arises from the ITAT's order. The Court relied on its own previous decision in the case of Principal Commissioner of Income Tax-3 v. Nirma Credit and Capital Pvt. Ltd. (Tax Appeal No. 409 of 2017), where a similar view was taken. In that precedent, the Court had accepted that the addition under Section 14A should be computed on the net interest expenditure, not the gross. Therefore, the High Court found no error in the ITAT's confirmation of the CIT(A)'s deletion of the addition. The appeal filed by the Revenue was dismissed.
The High Court held that no question of law arises concerning the first issue. It noted that the Commissioner of Income Tax (Appeals) accepted the applicability of Section 14A but held that only net interest expenditure, not gross, should be added. The Tribunal confirmed this view. The High Court referred to its own decision in Principal Commissioner of Income Tax-3 v. Nirma Credit and Capital Pvt. Ltd. (Tax Appeal No. 409 of 2017), which took a similar view. Consequently, the Court found no substantial question of law on this point. Regarding the second issue, the CIT(A) and Tribunal observed that it became inconsequential in view of the relief granted under Section 14A. The Court did not provide separate reasoning for this issue but implicitly accepted the lower authorities' approach. The appeal was dismissed.
The High Court held that it was not inclined to interfere with the ITAT's order, although it did not fully agree with the Tribunal's reasoning. The Court noted that the assessee filed the manual appeal at a time when the deadline for electronic filing had not yet expired, making it doubtful whether electronic filing was the only mode available at that specific moment. The Court observed that once the manual appeal was filed, the assessee had an opportunity to replace it with an electronic appeal, which the Tribunal had directed. This direction, in the Court's view, addressed the Revenue's concern about a manually filed appeal being decided on merits. Essentially, the Tribunal had, in this specific case, extended the time for rectifying the defect of not filing the appeal electronically. The Court concluded that no question of law arose.
The High Court held that the Assessing Officer had sufficient material to form a belief that income chargeable to tax had escaped assessment, thereby justifying the reopening of the assessment. The court noted that the original return was accepted under Section 143(1) without scrutiny. The seized documents, including cash vouchers and a summary sheet from the search of the Venus Group, prima facie indicated substantial unaccounted cash transactions in land dealings in which the assessee was a co-purchaser. The AO's reasons, detailing the analysis of these documents, the coded entries, the ante-dating of transactions, and the discrepancy between registered sale deeds and the actual consideration indicated by the seized material, were considered adequate to initiate the reopening process. The court reiterated the principle laid down by the Supreme Court in ACIT v. Rajesh Jhaveri Stock Brokers Private Limited and Raymond Woolen Mills Limited, stating that the 'reason to believe' cannot be equated with finally established facts, and the sufficiency of reasons for forming such a belief would not be gone into at the stage of reopening. Therefore, the writ petitions challenging the reopening were dismissed.
The High Court dismissed the Revenue's appeal. The Tribunal's decision was based on its own prior order concerning the same assessee for an earlier assessment year. The Court noted that the Revenue had filed an appeal against that earlier ITAT judgment but had consciously chosen not to agitate the issue of whether the expenditure was capital or revenue. Given this, the Court found it would not be open for the Revenue to pursue the same issue in the present year without any special reason or distinguishing feature. Therefore, for the sake of consistency, the Revenue's appeal was dismissed. The operative direction was the dismissal of the Tax Appeal.
The High Court held that the ITAT had not erred in law or facts in upholding the CIT(A)'s order treating the income from the sale of six plots as capital gain. The Court observed that the assessee, a cooperative housing society, had entered into multiple development agreements for its land, which ultimately failed. After the cancellation of these agreements, the assessee sold six plots in the impugned assessment year. The Court agreed with the CIT(A) and the ITAT that the assessee had not undertaken any risk in the development process and had not acted as a developer. The ITAT's finding was based on factual material, including the nature of the agreements and the absence of evidence of the assessee undertaking development activities or risks. Therefore, the ITAT's conclusion that the income was capital gain and not business income was justified. The appeals filed by the Revenue were dismissed.
The High Court dismissed the petition. The Court noted that the Assessing Officer (AO) had not even called for any information or document from the assessee or any other person in relation to the proposed assessments. Instead, the AO had contacted the Investigation Wing of the Income Tax department at Kolkata and, based on their process of shortlisting, had called for information regarding the dealings of such shortlisted companies. The Court referred to various High Court and Supreme Court judgments, including Kathiroor Service Co-operative Bank Ltd. vs. CIT and ors and Karnataka Bank Ltd vs. Secretary, Government of India and ors, which clarified that powers under Section 133(6) are in the nature of survey and general inquiry to identify persons likely to have taxable income, and such information can be sought even when no proceeding is pending, provided prior approval is obtained. The Court observed that the AO's action of contacting the Investigation Wing and obtaining information was permissible, and the mere fact that the information was sought rather than being supplied by the Investigation Wing would not be of consequence. The Court concluded that if, based on the information collected, no further information was made available to the AO that would enable him to form a belief that income chargeable to tax had escaped assessment, he would not be justified in issuing the notice for reopening. However, the judgment does not explicitly detail the AO's independent application of mind or the specific findings on the other contentions raised by the assessee, focusing primarily on the permissibility of information gathering.
The Tribunal held that the first issue concerning the addition of Rs. 56,55,522 under section 68 of the Income Tax Act, 1961, was purely a factual matter. The assessee had provided supporting evidence to the Commissioner of Income Tax (Appeals), who deleted the addition. The Tribunal confirmed this deletion after appreciating the evidence. Therefore, no question of law arose for consideration on this issue. Regarding the second issue, concerning the addition under section 2(22)(e) of the Act, the Tribunal upheld the decision of the Commissioner of Income Tax (Appeals). The CIT(A) had accepted the Revenue's contention regarding the applicability of section 2(22)(e) but granted partial relief to the assessee by limiting the addition to the extent of the company's accumulated profit, which was Rs. 29,76,000. The Tribunal rejected both the Revenue's and the assessee's appeals, thereby confirming the partial relief granted by the CIT(A).
The High Court allowed the assessee's appeal, holding that the Assessing Officer's decision to restrict the deduction for expenditure incurred prior to April 1, 2008, was set aside. The Court reasoned that the purpose of Section 35(2AB) is to promote research and development, and once a facility is approved, the entire expenditure incurred in developing it should be allowed as a deduction. The Court relied on its own decision in Commissioner of Income-tax v. Claris Lifesciences Ltd. and the Delhi High Court's decision in Maruti Suzuki India Ltd. v. Commissioner of Income-tax. These judgments established that the period during which approval is granted is not relevant, as long as approval has been granted and the expenditure was incurred for the specified purpose. The Court noted that the assessee had applied for approval on December 22, 2006, and approval was granted on October 22, 2008. The Court directed the Assessing Officer to recompute the deduction and give effect to it for the relevant assessment year. The question of law was answered in favour of the assessee.
The High Court held that the ITAT had not erred in law or facts in upholding the CIT(A)'s order treating the income from the sale of six plots as capital gain. The Court observed that the assessee, a cooperative housing society, had entered into multiple development agreements for its land, which ultimately failed. After the cancellation of these agreements, the assessee sold six plots in the impugned assessment year. The Court agreed with the CIT(A) and the ITAT that the assessee had not undertaken any risk in the development process and had not acted as a developer. The ITAT's finding was based on factual material, including the nature of the agreements and the absence of evidence of the assessee undertaking development activities or risks. Therefore, the ITAT's conclusion that the income was capital gain and not business income was justified. The appeals filed by the Revenue were dismissed.
The Gujarat High Court dismissed the petition. The Court acknowledged that the assessee had not filed a return for the relevant assessment year and that the AO's reasons for reopening were serious, pointing to the receipt of bogus share premium money from shell companies. The core issue was whether the taxing event occurred within AY 2010-11. The petitioner argued it occurred before, while the AO contended it occurred on allotment or that some funds were received in April 2009. The Court held that at the threshold stage of challenging a reopening notice, it was neither necessary nor inclined to decide the precise date of the taxing event finally. Such a determination would require further detailed inquiry and was best left to the Assessing Officer during the assessment proceedings. The Court emphasized that if the reasons for reopening lacked validity, the notice could be struck down, but in this case, it was not possible to arrive at a final conclusion without further inquiry. Therefore, the proceedings were permitted to continue. The Court explicitly stated it had not expressed any final opinion on the petitioner's principal contention or any other issues raised by the AO.
The High Court held that no question of law arises in the appeal. Regarding the first issue, the Court found no error in the Tribunal's order remanding the matter to the Assessing Officer for fresh adjudication in light of the Gujarat High Court's Full Bench judgment in CIT v. Vodafone Essar Gujarat Ltd. The Court noted that this judgment was not available when the AO and CIT(A) made their decisions, and the Revenue had not objected to the remand before the Tribunal. Therefore, the Court saw no reason to interfere with the Tribunal's direction. Regarding the second issue, the Court implicitly agreed with the Tribunal's finding that the excess payment was towards goodwill and that goodwill is a depreciable asset as per settled law, citing the Supreme Court's decision in CIT v. Smifs Securities Ltd. The Tribunal had allowed the claim for depreciation on goodwill. The Court dismissed the Tax Appeal.
The High Court dismissed the Revenue's appeal. The Court found that the ITAT had placed heavy reliance on CBDT Circular No. 6 of 2016. The circular provides directives for resolving disputes regarding the tax treatment of income from the sale of shares. It states that if listed shares held for more than 12 months are treated as stock-in-trade by the assessee, the income will be business income. Conversely, if the assessee desires to treat income from such shares as capital gains, the AO shall not dispute it, provided this stand is consistent across assessment years. The Court noted that the exclusion clause in paragraph 4 of the circular applies only when the genuineness of the transaction is questionable, such as bogus claims or sham transactions. The Revenue had not even alleged that the transactions were sham. The Court considered the AO's and CIT(A)'s observations about rigging as suspicion rather than established conclusions, and therefore, the circular's directives were applicable, leading to the income being treated as capital gains.
The High Court held that the entire issue was fact-based and no question of law arose. The Tribunal had compared the assessee's purchases from its sister concern (M/s. S.M.I.) with purchases from other correlated parties. The Tribunal's analysis, as presented in the judgment, indicated that the rates offered by M/s. S.M.I. were substantially lower than those from other parties. Specifically, purchases from M/s. S.M.I. averaged Rs. 95/kg (gross) and Rs. 84/kg (net), while purchases from others averaged Rs. 113/kg (gross) and Rs. 103/kg (net). Based on this comparison and the material on record, the Tribunal found no apparent justification for invoking Section 40A(2)(b) of the Act. Consequently, the High Court dismissed the Revenue's appeal.
The High Court, while acknowledging the petitioner's contention that it had not received Rs. 30,00,000 as share application money from the five specified entities, noted that the AO's reasons for reopening were not without validity on the face of it, especially given the information from the investigation wing. However, the Court found that the AO had exhibited callousness in disposing of the petitioner's objections by not properly addressing the specific factual ground raised. Similarly, the revenue's affidavit in reply did not adequately address this ground. Upon examining the original files, the Court found computer-generated departmental records indicating an investment of Rs. 30 lakhs from the five companies for the relevant period. Considering this a disputed question of fact, the Court was not inclined to conduct further inquiry. The Court did not conclusively reject the petitioner's ground but relegated the petitioner to raise this ground during the assessment proceedings and pursue the appeal route thereafter if aggrieved by the final order. The petition was disposed of subject to these observations.
The High Court held that the Assessing Officer had sufficient tangible material to form a belief that income chargeable to tax had escaped assessment. The material indicated that the assessee had made 2557 Client Code Modifications (CCMs) worth Rs. 21.43 Crores during the relevant financial year. Analysis of these CCMs, applying criteria for genuine versus non-genuine modifications provided by NSE, suggested that the CCMs were not genuine. The Assessing Officer's belief that the assessee earned undisclosed income from providing contrived losses/profits to clients through these CCMs, in addition to regular brokerage, was considered a valid reason to believe income had escaped assessment. The Court emphasized that at the stage of issuing a notice for reopening, the Assessing Officer only needs "reason to believe" and not conclusive proof of escapement, citing *Rajesh Jhaveri Stock Brokers Pvt. Limited* and *Raymond Woollen Mills Limited v. ITO*. Therefore, the reopening of the assessment was permitted to proceed. The Court explicitly stated that it was not expressing any opinion on the merits of the proposed additions, leaving all issues on the merits of the reassessment open for the Assessing Officer to decide.
The High Court held that the Tribunal was correct in treating the income from the sale of VEOL shares as capital gain. The Court found that CBDT Circular No. 6 of 2016 provided directives to reduce disputes, allowing assessees to opt to treat income from listed shares held for over 12 months as capital gains, provided they maintained this stand consistently. The Court noted that the Revenue's argument regarding price rigging was based on suspicion rather than established facts of sham transactions. The exclusion clause in paragraph 4 of the circular, which pertains to questionable genuineness of transactions like bogus claims or sham transactions, was not applicable as the Revenue did not allege the transactions themselves were sham. Therefore, the Tribunal's reliance on the circular was justified. The Tax Appeal was dismissed.
The High Court held that no question of law arises from the ITAT's order. The Tribunal correctly observed that Section 32(1)(iia) of the Income Tax Act, 1961, does not refer to the concept of owning the mining rights. The ITAT's reliance on the Supreme Court judgment in Commissioner of Income Tax v. Sesa Goa Ltd. and the High Court's own judgment in General Contracts Co. v. Commissioner of Income-tax was appropriate. The Tribunal had considered the agreements the assessee had with Mineral Corporations of Gujarat and Rajasthan, which outlined the assessee's scope of work, including mining of lignite and loading it into trucks using specialized equipment. The Court found no error in the Tribunal's decision to grant additional depreciation.
The High Court held that the requirement of Section 151(2) of the Income Tax Act was fulfilled. The Court noted that the approval form contained an entry for the Additional Commissioner's satisfaction regarding the reasons recorded by the Assessing Officer for issuing a notice under Section 148. The Joint Commissioner had made a handwritten remark stating, "I am satisfied with the reasons recorded by the AO," and signed it. The Court found that this demonstrated the Joint Commissioner's satisfaction, which was the statutorily required satisfaction. The fact that the papers were subsequently placed before the Commissioner, who also recorded his satisfaction, did not negate the prior satisfaction of the Joint Commissioner. The Court distinguished the cited cases of Anirudhsinhji Karansinhji Jadeja and SPL's Siddhartha Ltd. on the grounds that in those cases, the prescribed authority had not recorded its satisfaction, unlike in the present case. Therefore, the reassessment proceedings were not vitiated. The appeal was dismissed.
The Tribunal decided both issues in favour of the assessee. Regarding the first issue, the Tribunal found no merit in the Revenue's plea. It was established that the difference in sales value between the financial books and the VAT return arose due to the exclusion of excise duty in the assessee's books, a fact that the Revenue failed to rebut. The Tribunal affirmed the CIT(A)'s action in deleting this addition. For the second issue, the Tribunal noted that the Assessing Officer had invoked disallowance for raw material purchases. However, the Revenue failed to demonstrate under which statutory provision of Chapter XVIIB of the Act these raw material purchases were liable for TDS deduction. The Tribunal agreed with the CIT(A)'s reasoning and found no case made out by the Revenue to revive the disallowance. The ratio decidendi is that differences in sales reporting due to accounting practices like excluding excise duty are explainable, and disallowances for non-deduction of TDS require specific statutory provisions to be invoked, especially concerning raw material purchases where such a requirement is not evident.
The High Court held that the reopening of assessment was permissible. Regarding the contention of change of opinion, the Court observed that the information from the Investigation Wing regarding accommodation entries constituted fresh information, and the AO's conclusion that these were not genuine transactions was based on this new material, not a mere re-examination of previously considered facts. The Court noted that the AO had carefully considered the assessee's objections and found that the transactions involving Rs. 51,15,000 represented undisclosed income. The Court distinguished the present case from precedents where reopening was quashed due to lack of independent application of mind or reliance on unreliable information. The Court found that the AO had applied his mind to the information received and the subsequent verification, and that the information from the Investigation Wing was a valid basis for forming a belief of escaped assessment. The Court also found that the discreet inquiry, though its method was not fully revealed, was a severable part of the reasons and did not vitiate the entire notice, as the primary basis for reopening was the information from the Investigation Wing. The Court cited precedents like Phool Chand Bajrang Lal and Bombay Pharma Products to state that the sufficiency of reasons for forming a belief cannot be interfered with by the court in its writ jurisdiction at the stage of issuing notice under Section 148. Therefore, the petition was dismissed.
The High Court held that the Assessing Officer's belief that income chargeable to tax had escaped assessment was based on incorrect facts. The Assessing Officer's reasons for reopening stated that the assessee had not furnished details/explanation to the queries raised. However, the records showed that the assessee had indeed provided a detailed reply on March 6, 2017, explaining the cash deposits from the sale of mango crop, supported by a sale agreement and bank statements. The Court found that the Assessing Officer had ignored this reply and proceeded on the premise that the queries were unreplied. The Court noted that if the Assessing Officer was not satisfied, he could have sought further details or validly discarded the reply, but he could not ignore it. Therefore, the Assessing Officer's satisfaction was tainted by wrong facts. The Court also noted that there was another parallel notice issued by a different Assessing Officer for the same assessment year, which the department had abandoned. Consequently, the impugned notice dated March 28, 2017, was quashed.
The High Court held that the Assessing Officer (AO) was under compulsion from the audit party to reopen the assessment. The AO had recorded his opinion that the audit objection was not valid and did not agree with the suggested disallowance. This indicated that the AO was of the opinion that the original assessment order did not suffer from any defect. The Court noted that it is well-settled through several judgments that reopening of assessment would not be permissible under such circumstances. Therefore, the impugned notice for reopening was quashed. The petition was disposed of accordingly. The Court did not expressly leave any issue undecided.