1 THE CHAMBER OF TAX CONSULTANTS 3, Rewa Chambers, Ground Floor, 31, New Marine Lines, Mumbai - 400 020 zTel.: 2200 1787 / 2209 0423 zFax: 2200 2455 zE-mail: [email protected]zVisit us at: Website: http://www.ctconline.org Study Group Meeting held on – 6 th December, 2013 - CA Dinesh R. Shah 06/12/2013 The Recent Direct Taxes Judgements. CHARITABLE TRUST. (1) 2(15). Charitable purpose- Intention to make profit – Denial of exemption was held to be not justified. (Se. 11,12A) Profit earned by sale of milk fodder and other item by gaushala established by Mahatma Gandhi to breed and keep caws, to improve quality of cows and oxen to produce and sell cow’s milk and its various preparations was entitled to exemption Held intention to make profit was essential to attract disqualification and that some profit incidentally earned is not sufficient (A.Y. 2009-10) Sabarmati Ashram Gaushalla Trust V/s. Addln. DIT (Exemption) (2013) 25 ITR 701 Ahd. Tribunal. (2013) 144 ITD 280 (4) (2) Se.12A. Registration – Amendment in object clause- amended clause to be considered matter remanded Since the denial of registration was based on the pre-amended clause the registration application was to be considered in light of the amended clause. Matter remanded. Vyapari Vyavasayi Ekapuna Samithi Welfare Society V/s. CIT (2013) 24 ITR 528 (Cochin Tribunal) (3) Kodava Samaj V/s. Director of I,.T Exemption ITAT Bangalore C. Bench. (2013) 93 DTR Bangalore (Tribunal) 2909 (issue No 190)
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Where assessee facilitates in providing licence, approval and permission from
various Government t Agencies for setting up of Industries in the State for which
it is charging fees having lost its Character of Charitable organization after
Isertition of proviso to (Se.2 (15) is not eligible for exemption under Se.11.
(9) Charitable Trust; Registration under Se.12A. Cancellation under Se. 12AA
(3)
Madras Motor Sports Club V/s. Director of I.T (Exemption 5) Chennai B.
(2013) 90 DTR (Tribunal) Chennai Bench. 197 (issue No 143)
Director of IT (Exemptions) having accepted that the objects of the assessee-
society use in the nature of advancement of general public utility falling within
the ambit of Se.2(15) the same did not become non- charitable merely because
its aggregate receipts of the nature mentioned in the first proviso to section 2(15)
exceeds Rs.10 lakhs and therefore registration granted to the assessee under
Se.12A (a) can not be cancelled only on that ground.
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10 Exemption under Se. 10 (23c) (iv) Charitable purpose. Applicability of proviso to Se.2 (15) vis-a vis coaching classes and charging of fees:- The ICAI & others V/s. Director general of IT (Exemptions) and ors.
Applicability of amendment of Se.40 (a) (ia) by the Finance Act 2010. [In a case
where the tax was deductible and was so deducted during the last month of
previous year on or before the due date specified in subsection (1) of Se.139.
On which tax is deductible at source under Chapter XVIIB and such tax has not
been deducted or after deduction has not been paid on or before the due date
specified in sub-section (1) of Se.139].
Tribunal was justified in holding that the amendment made to Se. 40 (a) (ia) by
the Finance Act 2010 should be given retrospective effect and applicable to A.Y.
2008-09 in question.
PENALTY. Penalty Under Se.271 (1) (c )
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73. Silver Land Developers (P) Ltd V/s. ITO ITA No 8444 / Mum/ 2010. A.Y. 2005-06. Date of Order 8/3/2013. Se.271 (1) ( c) Penalty cannot be levied when the dispute is not about the genuiness of the expenditure or the bonafides of the claim but only about the year of its allowability.
(2013) TIOL-265-ITAT Mum. (May2013)- BCAJ.
74. Enhancement of Income on estimation basis:- (149 issue) CIT V/s. P. Rojes (2013) 90 DTR (Madras H.C) 399 Penalty under Se.271 (1) (c ) can not be imposed on the basis of Estimation of Income more so, when thee is no specific findings as to whether it is a case of suppression of turnover or of estimation of Income at a lower rate, and the assessee had filed revised P & L A/c showing enhanced net profit before the completion of assessment.
75. Penalty u/s 271 (1) ( c) concealment. N. Ranjit V/s CIT (2013) 91 DTR (Madras H.C) 17 Revised return showing capital gains- Facts clearly point out to the contumacious conduct of the assessee that but for the Investigation and the Enquiry made by the Revenue the revised returns would not have come as regards the Income relating to the Capital gains arising on the sales of shares and therefore, penalty under Se. 271 (1) ( c) was sustainable.
76. Disallowance of claim for deduction:- CIT V/s. DCM Ltd. (2013) 93 DTR (Del. .H.C) 406 Disallowance of claim for deduction- Law does not bar or prohibit an assessee from making a claim. Which he believes may be accepted or is plausible when such a claim is made during the course of regular or scrutiny assessment, liberal view is required to be taken as necessarily the claim is bound to be carefully scrutinized both on facts and in law.
77. Mrs. Maninder Sidhu V/s. ACIT. (2011) 132 ITD 296 (Del.) A.Y. 2004-05. Set off Long Term Capital Loss against Short term Capital Gain wrongly claimed by assessee. Withdrew the claim during the course of assessment- Revenue did not prove or show falsity of facts- as disclosed by assessee in computation of Income- In fact revenue accepted computation of Capital loss and gain. Assessee under bonafide belief that set off is allowed in the absence of any proof of falsity of facts in computation of Income as submitted by the assessee. Penalty not to be levied wrong claim is to be distinguished from false claim.
78. CIT V/s. Bennett Coleman & Co. Ltd. 259 CTR. 383 (Bom) Penalty- Concealment under Se.271 (1) ( c) A.Y. 1999-2000. Inadvertent mistake in claiming exemption. Not justified.
79. (2011) 132 ITD 34 (Allahbad) Asst. CIT V/s. A.H. Wheelers & Co. (P) Ltd. A.Y. 2004-05. Section 271 (1) ( c) Penalty can not be levied in respect of wrong figures claimed by the assessee by mistake.
80. Penalty: CIT V/s. Amit Jain 351 ITR 74 (Delhi H.C) Short term Capital gains assessed as business Income. Penalty u/s. 271 (1)( c) not justified.
81. Se.50C & 271 (1) (c ) (20130TIOL-39- ITAT MADF C. Basker V/s. ACIT A.Y. 2007-08 dated (12.10.2012) The mere fact that the A.O had invoked Se.50C (2) and adopted guideline value for computing Capital Gains- ignoring what was disclosed by the assessee. IPSO facts can not be the sole basis for imposing penalty.
82. (2012) 150 TTJ 159 (Mumbai)
BSEL Infrastructure Realty Ltd V/s. Asst. CIT.
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ITA No 6559/M-2011. (13-4-2012)Penalty can not be levied when additions were made while computing the total Income under normal provisions of the I.T Act but finally the assessee’s Income was determined on the basis of book Profit u/s 115JB.
Section 40 (a) (ia) 271 (1) ( c) Disallowance under Sec. 40 (a) (ia) does not attract penalty under section 271 (1) ( c) . making an incorrect claim in law does not tantamount to furnishing of inaccurate particulars of Income. Levy of penalty is not justified merely because the assessee has claimed certain expenditure that expenditure is not eligible in view of the provisions of Se. 40(a) (ia) of the Act and for that reason, Expenditure is disallowed.
84. Transfer Pricing- Penalty under
Se. 271 (1) ( c ) Michael Aram Exports (P) Ltd. V/s. Income tax Officer.
(2013)27 ITR Tribunal 528 Delhi (4) Concealment of Income. Adjustment applying transfer pricing provisions – not concealment of Income. Cancellation of penalty justified.
85. Dispute as to year of taxability of Income. Dy.CIT V/s. Otuis Elevator Co. (I) Ltd. (2013) 27 ITR (Tribunal) 303 (Mumbai) (3) Penalty furnishing inaccurate particulars of Income. Dispute as to year of taxability of Income. Penalty can not be levied. Se.271 (1) ( c).
86. Kalyan Sarkar V/s. Dy.CIT (2013) 27 ITR (Tribunal) 360 Cuttack.(3) Concealment- Mutual Fund Investment Information from assessee’s portfolio Manager that Capital Investment of assessee was worth mere. Not a case of concealment of Income – decisions favourable to assessee should be accepted. Levy of penalty not justified. I.T Act 1961 271 (1) ( c).
87. Advatia Estate Development (P) Ltd. V/s. ITO (2013) 27 ITR (Tribunal) 112 Mumbai (1) Penalty- Concealment of Income. Admission of substantial question of law by High Court with respect to additions on basis of which penalty levied penalty to be deleted. Income tax Act 1961 Se. 271 (1) ( c)
88. CIT V/s. Smt. Neela Datta. (2013)357 ITR 525 (Delhi ) H.C) (4) Penalty concealment of Income. Furnishing in accurate. Particulars- Employee’s Stock option Scheme. Revenue treating gains not as long term Capital Gains but us short term Capital gains:- Assessee surrendering right to contest issue on condition no penalty would be imposed. Whether gains long term or short term, a contentious issue at material time not a case of furnishing in accurate particulars or concealment of Income No penalty legible.
89. CIT V/s. Rajiv Bhatara. (2013) 94 DTR (P&H High Court) 137 (200) Penalty under Se. 271 (1) (c ) could not be levied merely because assessee’s claim of land being situated beyond 8 Kms of municipal limit was rejected and profit assessed as capital gains.
Delay in furnishing TP Report condoned as assessee had belief that transaction was not covered under T.P.
91. Penalty – PAN CIT V/s. Gail (India) Ltd. (2013) 218 TYaxman 415 (5) Se. 139A read with Section 272B of I.T Act 1961. PAN- Quoting in TDS Certificates Penalty for failure to comply with provisions of Section 139A. A.Y. 2003-04. Whether, where assessee deductor did not mention PAN of deductees on TDS Certificates issued by iot as same was not provided by deductees within as same was not provided by deductees within time prescribed there was reasonable cause for non-compliance of Section 139A (5A) and therefore, penalty under Section 272B could not be imposed. Held ‘YES’.
92. Penalty under Se. 271 (1) ( c) Concealment. Mahaveer Jain V/s. Dty. CIT (2013) 94 DTR Jodhpur Tribunal Page 25 (197) Assessee having surrendered unexplained credits involving small amounts in the return filed under Se.153C in order to avoid litigation and disclosed capital gain which was earlier shown in the return of the subsequent year by mistake and also another capital gain which was wrongly shown on business Income in the original return it can not be said that the assessee had concealed his Income or furnished in accurate particulars of Income in respect of the aforesaid disclosure/ addition and therefore levy of penalty under Se. 271 (1) ( c) was not justified.
93. Disallowance of claim for Loss. CIT V/s. DCM Ltd. (Delhi H.C) 406 (192) Disallowance for deduction. Law does not bar or prohibit an assessee for making a claim, which he believes may be accepted or is plausible- when such a claim is made during the course of regular or scrutiny assessment- liberal view is required to be taken as necessarily the claim is bound to be carefully scrutinized both on facts and in law.
94. S.271B : Penalty – Failure to get accounts audited – Civil contractor is not liable to penalty as theCBDT has not prescribed the books of account, [S.44AA, 44AB, 261A, Rule 6F]