“Section 2(22)(c)”
The decision most relied on for Section 2(22)(c) is Earthmoving Equipment Service Corporation v. DCIT 22(2), Mumbai (84 Taxmann.com 51), cited in 263 judgments on BharatTax.
Leading authorities on Section 2(22)(c)
A penalty levied under Section 271(1)(c) for concealment of income or furnishing inaccurate particulars cannot be deleted merely due to technical defects in the penalty notice, such as not ticking the specific default, if the assessee understood the charges.
An appellate authority cannot enhance income on an issue that was not the subject matter of the original assessment proceedings. The appellate authority is empowered to decide any matter arising in the assessment proceedings, even if not raised in the appeal, provided it is covered by the order appealed against.
Interest-free advances are presumed to be given out of owned funds, not borrowed funds, if the assessee has sufficient owned funds. The revenue cannot arbitrarily estimate proportionate interest expenditure when the assessee has the right to appropriate funds.
Decisions of other Coordinate Benches allowing provisions for standard assets are relevant when considering similar issues, even if a specific bench affirmed the AO's view.
Ignorance of complex tax laws, such as Section 2(22)(e) related to deemed dividends, can be considered a reasonable cause for deleting penalties for concealment or furnishing inaccurate particulars of income. The complexity of tax laws means that even specialists may not understand them correctly, making it unjust to penalize assessees for such oversights.
Deemed dividends under Section 2(22)(e) can only be taxed in the hands of shareholders who are both registered and beneficial owners of shares in the paying company.
The Departmental Representative argues that the Discounted Cash Flow (DCF) method is not applicable when a company's project has gone off track, as projections lack a basis and credentials/financials are not established.
The issuance of bonus shares is merely a capitalization of profits and does not constitute a distribution of profits or a gift to shareholders, as they are essentially receiving certificates entitling them to participate in the company's reserves as part of the capital.
