Legal Reference Library

In ITO v. Raghu Nandan Modi, the ITAT Kolkata held that rent-Free accommodation received by a Part Time-Director cum Employee from the Company cannot be taxable as “Business Income” under the provisions of Income Tax Act. Assessee, in the instant case, was a part-time Director of M/s Prabhukripa Overseas Ltd. during his tenure, assessee received rent-free accommodation in the flat owned by the Company, POL. AO completed assessment by holding the value of the rent fee accommodation is taxable in the hands of the assessee under Section 2(24)(iv) of the Income Tax Act r.w.s. 17(2)/ 28(iv) of the Income Tax Act. Before the appellate authorities, assessee contended that he was holding the post of part-time director in the company as well as the post of employee to look after the export business of POL. The assessee has received no salary from the company, therefore the perquisites value u/s. 17(2) r.w.s. Rule 3 of the Rules becomes nil. He further contended that s. 28(iv) would not appl...

In Business Strategy Group v. ACIT, the ITAT, Delhi held that the loan obtained from a Company wherein the partners of the Assessee-Firm are the shareholders cannot be termed as ‘deemed dividend’ of the Firm and therefore, it is not taxable in the hands of the Firm under the provisions of Income Tax Act. Assessee-Firm is engaged in the business of rendering Management Consultancy Services. The partners of the Firm are equal share holders in a Private Ltd Company, i.e, M/s TMI Associates Pvt. Ltd. The AO found that the assessee firm had shown a loan of Rs. 3 lakhs from M/s TMI Associates Pvt. Ltd and treated the same as the deemed dividend which is taxable in the hands of the assessee-Firm. Before the Trbunal, the assessee contended that it is not a share holder in the said Company and Section 2(22)(e) has no application to the amounts received from a Company by the non-shareholder. The bench noted the decision in Assistant Commissioner Of Income Tax Vs. Bhaumik Colour (P) Ltd wherein i...

The Amritsar bench of Income Tax Appellate Tribunal has recently rule that a Holding Company is entitled to get deduction in respect of the debt unrecovered from its subsidiary company under the provisions of the Income Tax Act, 1961. Coming to the facts of the case, the assessees, M/s Sarup Tanneries Ltd, is engaged in the business of manufacture and sale of leather goods, Shoe upper, soles etc. The Assessing Officer, while completing assessment for the relevant assessment year, has disallowed the claim made by the assessee in respect of loss written off due to its subsidiary company in US on ground that such losses claimed by assessee were not related to the business of assessee. On appeal, the Commissioner of Income Tax (Appeals) partly allowed the impugned order. The case was brought before the ITAT. The Revenue contended that reliance should be placed on the decision in Amalgamations Pvt. Ltd vs. CIT (1969) 226 ITR 188 (SC). The Tribunal found that the assessee had issued standby ...

In DCIT v. M/s. The Hooghly Mills Co.Ltd, the ITAT Kolkata held that shareholding by Subsidiary Company is irrelevant while considering ‘deemed dividend’ liability of Holding Company under section 2(22)(e) of the Income Tax Act. Assessing Officer, while completing assessment against the assessee-Company, found that assessee had during the previous year accepted the loans of Rs.10,20,00,000/- from M/s. Mega Resources Ltd, in which the subsidiary company of the assessee holds equity shares. The Officer, considering  the shareholding of both the assessee and its subsidiary company and concluded that the assessee held more than 10% of the voting power in M/s. Mega Resources Ltd,. and therefore, the assessee is liable to pay tax on ‘deemed dividend’ under provision of section 2(22)(e) of the Income Tax Act. The first appellate authority allowed the plea of the assessee on first appeal. Aggrieved by the order of the first appellate authority, the department approached the Tribunal relyin...

Customs, Excise and Service Tax Appellate Tribunal Cheema Spintex Ltd. V. Commissioner of Customs (ICD) TKD, New Delhi MANU/CE/0292/2017 21.04.2017 Customs Delay caused in an act required to be done by Government authority cannot be adopted as ground for penalizing innocent Appellant In instant case, Appellant was a 100% EOU engaged in manufacture and export of cotton yarn. Appellant sought permission to opt out of EOU scheme. Development Commissioner gave approval to exit from EOU scheme on payment of duty on capital goods under prevalent EPCG scheme. Said directions of Development Commissioner were complied with by Appellant including calculation of duty liability. Duty so calculated was finally paid by Appellant. Appellant applied for 'No Dues Certificate' which was given by Deputy Commissioner, on 3rd December, 2007. After 'No Dues Certificate', final de-bonding order was issued by Development Commissioner. Thereafter, Appellant had effected 70 exports u...

The Supreme Court, in Kinnari Mullick vs. Ghanshyam Das Damani, has held that Section 34 (4) of the Arbitration and Conciliation Act 1996, does not empower the court to relegate the parties before the Arbitral Tribunal after having set aside the arbitral award in question. A three judge bench of the apex court headed by Justice Dipak Misra held that the limited discretion available to the court under Section 34(4) can be exercised only upon a written application made in that behalf by a party to the arbitration proceedings and the court cannot exercise this limited power of deferring the proceedings before it suo motu. In the instant case, a division bench of the Calcutta High Court, while setting aside the award in question, also directed, without there being any application of either parties, to send back the award to the Arbitral Tribunal for assigning reasons in support of the award. The apex court bench observed that the respondent did not make such a request before the sing...

Customs, Excise and Service Tax Appellate Tribunal Prism Cement Ltd. V.  C.C.E. & S.T., Bhopal MANU/CE/0218/2017 24.03.2017 Excise Immovability of goods is not a criteria for denying credit Appellant is engaged in manufacture of cement. For manufacturing of cement, Appellant requires electricity which is used at various stages of production for conversion of raw material into final products for which Appellant entered into an agreement with Madhya Pradesh Poorva Kshetra Vidyut Vitran Company (Vidyut Company) for supply of electricity to Appellant’s manufacturing plant. Appellant also engaged Contractor for undertaking entire work of erection of dedicated Transmission line from Sitpura Sub-station to Appellant’s manufacturing factory. Appellant availed Cenvat Credit of main components of transmission line like towers or pylons made up of MS duly galvanized, aluminum conductors, insulators and was other hardware like clamp, vibration dampers, cable connectors, etc. Re...

In Aakash Enterprises V. Commissioner of Customs, New Delhi, the  Customs, Excise and Service Tax Appellate Tribunal, Appellant imported various automobile parts under cover of Bill of Entry on declared value. Such goods were cleared from Customs after paying customs duty. Subsequently, Appellants premises were put to search along with his residential premises, two shops and godown and goods imported vide above Bill of Entry was put to seizure on doubt of under valuation. Some other goods lying in the premises were also seized. Thereafter, statements of partner of importer firm were recorded along with statement of other persons. During course of investigations, Appellant took categorical stand that, goods other than one imported vide Bill of Entry dated 29th August, 2013 are locally procured goods and as such cannot be put to seizure. Transaction value declared by importer stand rejected by Commissioner on sole ground that, NIDB data for contemporaneous imports reflects higher v...

In IndiaBulls Financial Services Ltd vs. DCIT, the Hon'ble Delhi High Court, while hearing the appeal  against order of the Appellant Tribunal decided that The fact that the AO did not expressly record his dissatisfaction with the assessee's working under Section 14A and Rule 8D of the IT Act does not mean that he cannot make the disallowance. The AO need not pay lip service and formally record dissatisfaction. It is sufficient if the order shows due application of mind to all aspects.