Friday, August 12, 2011

ITR (Trib) HIGHLIGHTS ISSUE DATED 15-08-2011 Volume 10 Part 7


ISSUE DATED 15-08-2011

Volume 10 Part 7


F Where no evidence of service of notice assessment of undisclosed income, notice not valid : Dr. Y. D. Singh v. Dy. CIT (All) p. 698

F AO declining to entertain on doctrine of mutuality that he has no power to entertain proper : Jay Bharat Co-op. Housing Society Ltd. v. ITO (Mumbai) p. 717

F Where no bona fide reason for receipt of loan, imposition of penalty proper : Mahak Singh v. ITO (Delhi) p. 727

F Assessee failing to show purchase details of shares, income from undisclosed justified : Smt. Kusum Lata v. Asst. CIT (Delhi) p. 737

F Production of pilferage proof caps from printed aluminium sheets is manufacture : Asst. CIT v. Pixie Enterprises (Chennai) p. 744

F Advance received for setting up facility before starting of business not chargeable to tax on its forfeiture :Velocient Technologies Ltd. v. ITO (Delhi) p. 750

F Appellate Tribunal : Tribunal cannot interfere through parallel proceedings : G.Venkateswaran v. Asst. CIT (Chennai) p. 770

F Where assessee providing bona fide explanation and furnishing all details, deletion of penalty justified : Deputy CIT v. Nokia India P. Ltd. (Delhi) p. 790


F Income-tax waived on wrongly paid amount

Tax cannot be levied on an amount wrongly paid to a person because of a mistake made by the payer, according to a recent order by a division bench of the Income-tax Appellate Tribunal (ITAT).

In this case, the taxpayer company, Tata Investment Corporation, moved the ITAT after it was levied tax on dividend it received on the shares it had already transferred to other entities. The taxpayer is a non-banking finance company. Since the transfer of shares was not entered in the records of the company whose shares were sold by taxpayer company, the dividend for a particular year was wrongly issued to the taxpayer company.

In its order on July 15, the ITAT pointed out that section 72 of the Indian Contract Act, 1872 stipulates that a person to whom money has been paid, or anything delivered, by mistake or under coercion, must repay or return it and therefore amounts received by the mistake of the paying party cannot be construed as income of the receiver and therefore not liable to be taxed.

All income cannot be taxed, but only those incomes on which the taxpayer has a legitimate and enforceable right is liable to tax, the ITAT held. The ITAT held that income can be considered "accrued" only when the taxpayer has a right to receive the income. Without a legally enforceable right, there cannot be an accrual of income. [Source dated August 5, 2011]

F Government promote convenience of tax offices in foreign countries: Under pressure to bring back unaccounted money stashed abroad, the Government said it will set up tax overseas units in eight countries, including the US, France and Germany, this financial year.

"The proposal is being processed and (eight) Income-tax Overseas Units (ITOUs) are likely to be set up within the present financial year 2011-12," the Minister of State for Finance told the Lok Sabha in a written reply.

Cyprus, Japan, UK, the Netherlands and United Arab Emirates are the other countries where the Government wants to establish ITOUs.

The Government, the Minister said, had earlier set up ITOUs at Mauritius and Singapore.

He said the Government has framed a five-pronged strategy to fight the menace of tax evasion that include joining hands with international bodies like G-20 and United Nations, besides forming appropriate legislations, setting up domestic institutions, and manpower training.

The Government has also approved the cadre restructuring of the Directorate of Enforcement for increasing its effectiveness in implementing the provisions of the Prevention of Money Laundering Act and the Foreign Exchange Management Act.

"The approval includes increase in staff strength from 745 to 2,064 and the number of offices from 22 to 39. This is likely to involve an expenditure of about Rs. 60 crore annually. The restructuring process of the Directorate of Enforcement is likely to be completed in 2-3 years," the Minister said.

The Minister also informed Lok Sabha that Government has commissioned a study to estimate the quantum of unaccounted wealth, both inside and outside the country, and its ramifications on the national security based on recommendations of the Standing Committee on Finance. [Source : dated August 5, 2011]

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