Loans/advances given by a company to another company, which is not a shareh

Loans/advances given by a company to another company, which is not a shareholder of lender company, can't be treated as deemed dividend

Income-tax : Deeming fiction of s. 2(22)(e) can be applied only in the hands of the shareholder and not the non-shareholder [Section 2(22) of the Income-tax Act, 1961 - Deemed dividend] - [2011] 10 taxmann.com 122 (Indore - ITAT)

Section 194H is not applicable where agreements between assessee-manufactur

Section 194H is not applicable where agreements between assessee-manufacturer and distributors was on principal to principal basis - [2011] 10 taxmann.com 115 (Delhi)

Recent Cases

CASE LAWS

2011-TIOL-300-HC-KOL-IT + theft story

M/s Dheeraj Associates Pvt Ltd Vs CIT, West Bengal (Dated: May 13, 2011)

Income tax – Section 37 – Loss on account of theft – Whether, if assessee claims expenses incurred with respect to theft of goods, onus to disprove the same lies on the AO before it disallows the same - Whether the principle of prepondernance of probability favours assessee if such a claim is made - Whether, if assessee made similar claims in the past, and the same were allowed, it can be presumed that there cannot be further theft in subsequent year - Whether, if police failed to recover goods stolen in the past, the non-performance of the Police can go agaisnt the assessee's claim in the impugned year. - Assessee's appeal allowed: CALCUTTA HIGH COURT;

2011-TIOL-299-HC-DEL-IT

CIT Vs Ashok Logani (Dated: May 11, 2011)

Income tax – Section 263 – Whether when AO fails to make a proper enquiry and has not recorded its satisfaction regarding accepting the claim of the assessee for not disclosing the surrendered income at the time of search in the income tax return filed, the CIT is right in initiating proceedings u/s 263. - Revenue's appeal dismissed: DELHI HIGH COURT;

2011-TIOL-298-HC-DEL-IT

CIT Vs Tulip Star Hotels Ltd (Dated: May 11, 2011)

Income tax – Sections 36(1)(vii), 36(2), 37 – Whether when bank guarantee given by the assessee in the case of a loan taken by the co-promoter under an agreement is adjusted by the bank against the loan in the case of co-promoter's failure to repay the loan, assessee can treat such BG written off as bad debt. - Revenue's appeal dismissed: DELHI HIGH COURT;

2011-TIOL-297-HC-DEL-IT

CIT Vs NHK Japan Broadcasting Corporation (Dated: May 11, 2011)

Income Tax - Sections 192, 201(1), 201(1A) - Whether when TDS issue is debatable, AO is right in holding the assessee-in-default u/s 192 - Whether when Revenue files appeals for 11 AYs together, Tribunal's order holding the same as time-barred is sustainable - Revenue's appeal dismissed: DELHI HIGH COURT;

2011-TIOL-296-HC-ALL-IT

CIT Vs Atma Ram Tulsyan (Dated: May 10, 2011)

Income Tax - Section 45 - Whether AO can doubt the share transactions declared by assessee merely on ground that shares were of lesser known companies and their value cannot appreciate to the level claimed by the assessee - Revenue's appeal dismissed: ALLAHABAD HIGH COURT;

SERVICE TAX SECTION

2011-TIOL-621-CESTAT-DEL + independent story

CST, New Delhi Vs M/s Independent News Services Pvt Ltd (Dated: March 22, 2011)

Service tax - Section 73(3) of Finance Act, 1994 - After making provision in law, the Revenue should respect the provision made rather than feel aggrieved that the provision is too lenient : DELHI CESTAT;

2011-TIOL-620-CESTAT-MAD

M/s International Travel House Ltd Vs CST, Chennai (Dated: February 7, 2011)

Service Tax – Taxability of service – Tour Operator - Stay / Dispensation of pre-deposit service - Service provided by the appellants is planning, scheduling, organizing or arranging tours including arrangements for accommodation, sight-seeing or other similar services for outbound tourism and they are being paid for the said purpose in India. Prima-facie no case made out by the assessee. Pre-deposit ordered: CHENNAI CESTAT;

CENTRAL EXCISE SECTION

2011-TIOL-302-HC-ALL-CX + triveni story

M/s Triveni Glass Ltd Vs CCE, Allahabad (Dated: April 29, 2011)

Central Excise - Department has not proved service of order on the appellant - Limitation to appeal starts from the day the appellant got the order : The respondents have failed to establish that they have served the order or decision in the manner required under Section 37-C (1) (a) of the Act, there is service on 25.02.2009. It is no doubt true that in the matter of service of notice, it being merely procedural, a party has to establish the prejudice occasioned on account of non-service in the matter. However, when the matter arises as to the right of a party in the form of extinguishment of remedy of an appeal, then such provision, though procedural, must be strictly construed or in other words, the strict mandate of the language of the Section must be complied with. Furthermore, between taking a view which permits a party to pursue his remedy and which defeats the right to such remedy, the law must lean in favour of the person, who comes to the Court to pursue his remedy, rather than the person seeking to defeat the remedy, on technicalities.: ALLAHABAD HIGH COURT;

2011-TIOL-301-HC-KAR-CX

CCE, Mysore Vs M/s Sree Chamundeswari Sugars Ltd (Dated: February 11, 2011)

Central Excise - Order of CESTAT - Rectification of Mistake - Condonation of delay in filing application - Application for rectification of mistake filed beyond six months from the date of order.

HELD - Tribunal is right in rejecting the application for rectification on the ground that it is barred by time as Section 35C(2) does not provide for condonation of delay. Legislative intent to be respected.: KARNATAKA HIGH COURT;

2011-TIOL-618-CESTAT-MUM

CCE, Mumbai Vs M/s Goodlas Nerolac Paints Ltd (Dated: February 1, 2011)

Appeal filed by an officer other than the adjudicating authority not maintainable – appeal filed by an Assistant Commissioner challenging the order of Deputy Commissioner not maintainable - Revenue appeal rejected: MUMBAI CESTAT;

CUSTOMS SECTION

2011-TIOL-619-CESTAT-AHM

M/s Rachana Seeds Industries Vs CCE, Bhavnagar (Dated: April 5, 2011)

Customs – Stay/Dispensation of pre-deposit – Goods imported under Duty Free Credit Entitled Certificate sent to job work for conversion – Denial of exemption on the ground that job worker's names were not endorsed on the licences - The only bar is that the sale of imported product cannot be effected to the job worker prior to conversion – Prima facie case made out for waiver of pre-deposit. : AHMEDABAD CESTAT;

Dear Friends : The emails are schedule to be posted in the blog and will sent to the group on carious dates and time fixed. Instead of sending it on one day it is spread on various dates. regards. R R Makwana

Even transactions, which are not speculative within 43(5) should be deemed

Even transactions, which are not speculative within 43(5) should be deemed to be speculative one if those come within purview of Explanation to section 73

Income-tax : Transaction arising from business of purchasing and selling of shares where there has been actual delivery of transfer of scrips comes within ambit and scope of speculative transaction as defined in section 43(5) so as to apply section 73 by taking aid of Explanation to section 73 [Section 73 of the Income-tax Act, 1961 - Losses in speculation business] - [2011] 10 taxmann.com 121 (Cal.)

Donation by a charitable trust to other charitable institution cannot resul

Donation by a charitable trust to other charitable institution cannot result in same becoming income of donor-trust

Income-tax : If the assessee-trust either itself uses any part of its income for charitable purposes or donates the same to any other charitable trust, such income is exempt from inclusion in the total income of the assessee trust for the relevant year [Section 11 of the Income-tax Act, 1961 - Charitable or religious trust - Exemption of income from property held under] - [2011] 10 taxmann.com 128 (Delhi - ITAT)

As TDR has no cost of acquisition, amount received not taxable

ITO vs. Hemandas J. Pariyani (ITAT Mumbai)

The assessee was a member of Rajratan Palace Co-op Hsg Society. The Society entered into an agreement with a developer for redevelopment of the building owned by the Society pursuant to which the Society and its Members received Rs. 3.02 crores “on account of sale of FSI” from the developer. While Rs. 2.99 crores was received directly by the 51 members of the society, the Society received Rs. 2.51 lakhs. The AO took the view that the entire consideration of Rs. 3.02 crores was taxable in the hands of the Society {this was struck down in Raj Ratan Palace Co-op Hsg Soc vs. DCIT (ITAT Mumbai)}. A protective assessment was made in the hands of the Members on the ground that the “share of the assessee in the total FSI available to the CHS was a capital asset held by the assessee and that this was transferred to the developer“. This was reversed by the CIT (A). On appeal by the department, HELD dismissing the appeal:

Transferable Development Rights (TDR) granted by the Development Control Regulations for Greater Mumbai, 1991, qualifying for equivalent Floor Space Index (FSI) have no cost of acquisition and so sale thereof does not give rise to taxable capital gains (Jethalal D. Mehta vs. DCIT 2 SOT 422 (Mum) followed).

Forfeiture of convertible warrant would amount to 'transfer' within meaning

Forfeiture of convertible warrant would amount to `transfer' within meaning of section 2(47) - [2011] 10 taxmann.com 129 (Delhi)

Department is not precluded from taking a correct view of matter in subsequ

Department is not precluded from taking a correct view of matter in subsequent years during reassessment proceedings

Income-tax : Merely on basis of wrong view taken by Assessing Officer in earlier assessment year it cannot be held that the Department is precluded from taking a correct view of matter in subsequent years [Section 148 of the Income-tax Act, 1961 - Income escaping assessment - Issue of notice for] - [2011] 10 taxmann.com 127 (Delhi - ITAT)

Closing stock of an erstwhile firm converted into stock-in-trade by a propr

Closing stock of an erstwhile firm converted into stock-in-trade by a proprietorship concern will have to be valued at the market value

Income-tax : On dissolution of a firm closing stock has to be valued on the basis of real value i.e., market value, which is independent of the fact whether or not the erstwhile partners of a dissolved firm continue to do business with assets received on dissolution [Section 145 of the Income-tax Act, 1961 - Method of accounting - Valuation of stock] - [2011] 10 taxmann.com 126 (Delhi)

Decision regarding territorial jurisdiction of High Court in New India Assu

Decision regarding territorial jurisdiction of High Court in New India Assurance Co. Ltd. v. UOI [AIR 2010 Delhi 43 (FB)] referred to a Larger Bench

Income-tax : Statement of law with regard to `cause of action', `sole cause of action', `forum conveniens' and `the imposition of limitation for exercise of jurisdiction under Article 226 and discretionary exercise of power' have been too broadly stated in all encompassing manner by Full Bench of High Court of Delhi in said case (supra) and, therefore, said decision requires to be reconsidered by a Larger Bench [Article 26 of the Constitution of India - Writ - Maintainability of] - [2011] 10 taxmann.com 120 (Delhi)