# DailyTax

> Inspiring Ideas, Driving Business Forward


## Posts

- [Every employee should always claim and retain Salary Slips to secure TDS credit](https://dailytaxreporter.relegal.in/every-employee-should-always-claim-and-retain-salary-slips-to-secure-tds-credit-2/): Salary slips are primary proof of TDS. In the case report [2025] 179 taxmann.com 134 (Bangalore – Trib.)[30-09-2025] the assessee was an employee of Dunzo Digital Pvt. Ltd. From the verification of the salary slips in possession of the employee it was apparent that tax was deducted from the salary by the employer. The employer has however not deposited such tax to the Central Govt. Due to this, there was no credit appearing in Form 26AS of the employee. Due to this, credit was denied by the CPC. Insolvency action is admitted/initiated in this case against the employer company. The […]
- [Every employee should always claim and retain Salary Slips to secure TDS credit](https://dailytaxreporter.relegal.in/every-employee-should-always-claim-and-retain-salary-slips-to-secure-tds-credit/): Salary slips are primary proof of TDS. In the case report [2025] 179 taxmann.com 134 (Bangalore – Trib.)[30-09-2025] the assessee was an employee of Dunzo Digital Pvt. Ltd. From the verification of the salary slips in possession of the employee it was apparent that tax was deducted from the salary by the employer. The employer has however not deposited such tax to the Central Govt. Due to this, there was no credit appearing in Form 26AS of the employee. Due to this, credit was denied by the CPC. Insolvency action is admitted/initiated in this case against the employer company. The […]
- [India Legal](https://dailytaxreporter.relegal.in/india-legal/): Provides in-depth coverage of the Indian legal industry, law firm news, and career guidance for students and professionals.Provides in-depth coverage of the Indian legal industry, law firm news, and career guidance for students and professionals.
- [ITR Filing Deadline Nears](https://dailytaxreporter.relegal.in/itr-filing-deadline-nears/)
- [Unwarranted additions- Need for Provision to Annex Computation of Income and Supporting Notes with ITR and Tax Audit Report](https://dailytaxreporter.relegal.in/unwarranted-additions-need-for-provision-to-annex-computation-of-income-and-supporting-notes-with-itr-and-tax-audit-report/): In [2025] 176 taxmann.com 470 (Calcutta) Britannia Industries acquired land and building from Bombay Dyeing at a price significantly lower to the stamp duty value. In support it held an independent valuation report of an expert. Besides it made a disclosure in tax audit report stating the property was not fully developed and has uneven surfaces and the assessee had to spent substantial money to enable setting up of a mega industrial unit. The assessment went peacefully. Later the Commissioner invoked 56 (2) (x) which technically also failed as the agreement for sale was prior to applicable date of 1.4.2017. […]
- [54F exemption is protected even in multiple ownership of residential properties](https://dailytaxreporter.relegal.in/54f-exemption-is-protected-even-in-multiple-ownership-of-residential-properties/): On the basis of explanations regarding nature and use of various properties held by the assessee the tax officer in [2025] 173 taxmann.com 835 (Gujarat)[15-01-2024 allowed exemption u/s 54F for fresh purchase of residential property against sale of plot. To counter argument that he held more than one residential house other than newly purchased property Dineshchandra Narharishankar Upadhyay, the assessee presented following facts for 5 properties held on the date of transfer of plot: the property at 701, Pancham Heights flat is used by the office staff as rent free accommodation; Flat DVFF25 is rented and occupied by the tenant; […]
- [Club expenditure](https://dailytaxreporter.relegal.in/club-expenditure/): Reporting items in tax audit report by the tax auditor could invite default disallowance. It so happened that the tax auditor reported certain amount as expenditure incurred at clubs being entrance fees & subscriptions as well as cost for club services and facilities used. The tax officer understood such disclosure as qualification and added to returned income. It has been the plea of the assessee company that it had obtained corporate membership of clubs having affiliations across India for its Directors and senior employees to interact with customers and other stakeholders Such clubs provide a perfect platform for interactions, exchange […]
- [Profiteering is not permissible in the field of professional/educational courses](https://dailytaxreporter.relegal.in/profiteering-is-not-permissible-in-the-field-of-professional-educational-courses/): Recently the Delhi High Court came heavy on capitation fee collected for professional/educational courses. In refusing to grant exemption to charitable trust that charged capitation fee from student for admission in its educational courses the Delhi Court in Maharaji Education Trust [2024] 166 taxmann.com 197 (Delhi)/[2024] 468 ITR 634 (Delhi) held that collection of any amount in excess of what has been prescribed as fee would render the object of “charity” a farce and the transaction will have to be treated as a commercial activity, depriving the assessees of the benefits of sections 11 and 12 of the Act. It […]
- [Every assessment year is independent](https://dailytaxreporter.relegal.in/every-assessment-year-is-independent/): Rule of consistency clearly do not play much role in the matter of claim for deduction of business expenditure in a particular assessment year. In [2024] 169 taxmann.com 202 (Delhi)[09-07-2024] the assessee allegedly engaged in money lending business claimed deduction of expenses such as salary, repair and maintenance, vehicle running and maintenance and depreciation etc. even when it earned no interest income during the year. To justify it made a claim that it has been in money lending business and it has earned interest incomes in preceding and succeeding years but in the relevant year the business was dormant. However […]
- [Diversion of loans](https://dailytaxreporter.relegal.in/diversion-of-loans/): Any instance of diversion of bank loan can lend the entire case to income tax scrutiny. The judgement in [2024] 169 taxmann.com 682 (Delhi)[10-07-2024] is a testimony to selection of case to examine diversion of loans to sister concerns. It so happened that in this property developer case loans taken for a project were siphoned off by transfer to sister concerns even when the company owed statutory liabilities and dues to creditors in their financials. In this case most of the information has been perused from the financials of the assessee showing significant liabilities year after year even when loans […]
- [Joint holding of property can be a drawback too](https://dailytaxreporter.relegal.in/joint-holding-of-property-can-be-a-drawback-too/): Section 54F grant exemption from capital gains from sale of capital asset other than a house ( like plot, jewellery etc.) where the amount of proceeds from such sale are reinvested in purchase/construction of house provided no more than one house is held on the date of sale of such capital asset. By the decision of Tribunal in Atul Govindji Shroff v Dy CIT [2024] 166 taxmann.com 246 (Ahmedabad – Trib.)[05-07-2024] even house held jointly with his wife and daughter would be counted as one house so that in this case the assessee was deprived of its claim for exemption […]
- [Bogus Debtors ( unexplained)– A Source of Tax Exposure](https://dailytaxreporter.relegal.in/bogus-debtors-unexplained-a-source-of-tax-exposure/): Having bogus or unexplained debtors in books may result in double jeopardy for a taxpayer. Taxpayers should exercise caution while recording sundry debtors in their books of accounts. The presence of bogus or unexplained debtors may expose the taxpayer more than usual —not only the credits on that account are taxed but also going forward  the amounts held in sundry debtors balances may also be taxed as undisclosed income. In a recent case, the Hon’ble Delhi Tribunal held that bogus debtors can be treated as income in the absence of satisfactory explanation or supporting documentation. [2024] 163 taxmann.com 38 (Delhi […]
- [Cash n All](https://dailytaxreporter.relegal.in/cash-n-all/): If you hold, carry, deposit, invest, borrow or receive cash but can’t conclusively explain by evidence the nature, source and genuineness thereof then be prepared to shell out at least 2/3rd of it in the shape of tax n penalties. In [2025] 170 taxmann.com 343 (Hyderabad – Trib.) the Tribunal did not provide any relief to the taxpayer for having failed to explain by any conclusive evidence the nature and source of cash deposits in bank after the inquiries carried out by AO did not yield any favourable responses.   Cash n All
- [All transactions in shares of penny stock company are not sham transactions](https://dailytaxreporter.relegal.in/all-transactions-in-shares-of-penny-stock-company-are-not-sham-transactions/): The Delhi High Court in case report [2025] 174 taxmann.com 918 (Delhi)[20-05-2025] given a clear signal that all transactions in shares of penny stock company are not sham transactions and that the department cannot go hunting cases of taxpayers who have indulged in market transactions in such scrips. In this case the AO acted on the basis of information from the Investigation Wing which had following flags: (i)                  that DEL was a penny stock listed with BSE and trading in the said scrip was ‘suspicious’; (ii)                that the stock of DEL was being ‘used to facilitate introduction of income of […]
- [Technical objections have no place in appeal proceedings](https://dailytaxreporter.relegal.in/technical-objections-have-no-place-in-appeal-proceedings/): Only because a taxpayer has omitted to file an appeal against a prima facie adjustment u/s 143(1) cannot prevent him to raise such ground against order u/s 143 (3). In case report [2025] 174 taxmann.com 1285 (Mumbai – Trib.)[30-05-2025] the deduction u/s 80IA was disallowed in 143 (1) intimation order. No appeal were filed against such intimation. Subsequent assessment followed u/s 143(3) confirming such disallowance without any discussion or reference to 143(1) intimation order. As the assessee raised this ground in appeal against 143 (3) order the revenue raised a technical objection by stating that the assessee should have filed […]
- [Right to reason HP Court pointer to flaw in section 148A](https://dailytaxreporter.relegal.in/right-to-reason-hp-court-pointer-to-flaw-in-section-148a/): Ss (3) of section 148Astates that the Assessing Officer shall, on the basis of material available on record and taking into account the reply of the assessee furnished under sub-section (2), if any, pass an order with the prior approval of the specified authority determining whether or not it is a fit case to issue notice under section 148. This is similar to clause (d) of previous section 148A. This sub-section has no mention of any requirement to recording of reasons in the order. In the case citation [2025] 174 taxmann.com 732 (Himachal Pradesh) viz a viz source of investment […]
- [Wrong reopening](https://dailytaxreporter.relegal.in/wrong-reopening/): Here is a case of a person who is slapped with a notice of reopening on the basis of search in the case of a person to whom he sold his land. It was alleged that the noticee received cash amount of Rs. 1.3 crores which transaction was not scrutinised during original assessment since the information in that regard has come up to knowledge only subsequent to the original assessment. The AO issued reopening notice stating that he received information in accordance with Risk Management Strategy formulated by CBDT that assessee had received cash receipt of certain amount which was […]
- [In no way the AO has power to question arm’s length pricing in unrelated party transactions](https://dailytaxreporter.relegal.in/in-no-way-the-ao-has-power-to-question-arms-length-pricing-in-unrelated-party-transactions/): Quoting from 288 ITR 1 (SC)- S. A. Builders Ltd.‘s case the Delhi bench of ITAT in UK INDIA BUSINESS COUNCIL INDIA P. LTD. (2024] 120 ITR (Trib) 635 (ITAT[Del]) held that the AO is not powered by the Act to question any agreement on the ground of business expediency or prudence of such agreement entered with the independent unrelated party during the ordinary course of business. It is held that the same is beyond power vested on the AO. In this case the AO went on to analyse facilities management agreement with unrelated party by applying the yardstick of […]
- [House purchase exemption](https://dailytaxreporter.relegal.in/house-purchase-exemption/): Reading from Supreme Court decision in 365ITR389 it appears material date of purchase or date of transfer of immovable property is the date of agreement to sell as in this case the Court held that a right in personam had been created in favour of the vendee, in whose favour the agreement to sell had been executed after payment of earnest money. Date of booking or date allotment or date or possession or date of occupancy or date of sale deed etc. are no reference dates to ascertain whether it is long term or short term or for that matter […]
- [Provision for doubtful debts is held admissible deduction u/s36(1)(vii)](https://dailytaxreporter.relegal.in/provision-for-doubtful-debts-is-held-admissible-deduction-u-s361vii/): By a landmark decision of the ITAT rendered in (2024] 120 ITR (Trib) 295 (ITAT[Bang]) it is held that where the assessee had reduced the provision for doubtful debts from sundry debtors on assets side and shown debtors net of the provision for doubtful debts in the balance-sheet, the provision for doubtful debts debited to profit and loss account in the situation would be an allowable deduction. The bench held that this accounting treatment will amount to actual write off and meet the purpose of accounting requirements of section 36(1)(vii) and explanation there to. This decision is rendered in the […]
- [Total Irony](https://dailytaxreporter.relegal.in/total-irony/): There are two adjoining sections 263 and 264. Whereas section 263 deal with orders prejudicial to the interest of revenue section 264 deals with any other order prejudicial to the interest of the assessee . In the first case orders passed under section 263 by the Principal Commissioner are appealable before the Income Tax Appellate Tribunal whereas the orders passed under section 264 cannot be so appealed before the Tribunal. It is an irony that even when section 264 particularly warns against passing of any order prejudicial to the interest of the assessee there is no remedy available by way […]
- [CSR donations/expenses whether could otherwise qualify for deduction u/s80G](https://dailytaxreporter.relegal.in/csr-donations-expenses-whether-could-otherwise-qualify-for-deduction-u-s80g/): In FDC case ruling by the Mumbai bench of ITAT in (2024] 119 ITR (Trib) 799 (ITAT[Mum]) which while setting aside the revision order by the Commissioner held that there is no statutory bar in claiming the deduction under section 80G of the Act if the CSR expenses are otherwise allowable as deduction under that section as being of the nature of DONATIONS TO CHARITABLE INSTITUTIONS. Before there is any kind of bar imposed in future, which may be likely, it may be prudent to make a claim in past/present returns of income citing this view.   CSR donations/expenses whether […]
- [TDS](https://dailytaxreporter.relegal.in/tds/): Year-end Provisions We often encounter situations where with reference to year-end or month-end provisions taxes are deducted only subsequently at the time of crediting the payee or on payment, which practice may invite payment of interest u/s 201(1A) and further also reporting by the tax auditor as tax deductible but not deducted. The Tribunal in (2024] 120 ITR (Trib) 137 (ITAT[Mum]) confirmed the order of the AO to the extent of charging of the interest having noted that the assessee was making a provision but he had only subsequently deducted tax at source on such payment. TDS
- [Not filing return may trigger notice](https://dailytaxreporter.relegal.in/not-filing-return-may-trigger-notice/): Having a PAN and not filing a return may be a strict NO NO. It can trigger assessment notice. In a case of non resident [2024] 461 ITR 473 (Mad) under employment at Singapore he made a transaction of purchase of immovable property in India from out of his sources of income returned in Singapore. Since he has not filed any return in India he received a notice alleging escapement of income equal to the investment so made in purchase of property in India. This lead to litigation which could have been avoided had he filed his return in India […]
- [Issue of notice at email address not in use and one belonging to old CA](https://dailytaxreporter.relegal.in/issue-of-notice-at-email-address-not-in-use-and-one-belonging-to-old-ca/): By the decision from the Allahabad High Court in (2024] 471 ITR 68 (All) a taxpayer may seek quashing of notice/order of reassessment if the same had not been issued to the registered e-mail address of the assessee in use which had been made available to the authority by the assessee. In this case of a company Assessee the notice u/s 148 and the consequent order had not been issued at the updated email address in the portal as well as one reported in the latest income tax return. The email address at which notice is issued belonged to old […]
- [Jharkhand High Court pointers to taxpayers](https://dailytaxreporter.relegal.in/jharkhand-high-court-pointers-to-taxpayers/): In dismissing writ of TELCO CO-OPERATIVE SOCIETY LTD. in (2024] 471 ITR 285 (Jhar)it is held desirable under the law by the High Court of Jharkhand that before approaching the High Court the taxpayer must make due statutory compliances and avail all statutory remedies and come clean before it. In this case the assessee avoided them all when : 1. It did not comply with notice under section 148, notice under section 142(1) in the reassessment proceedings or with the show-cause notice proposing the claim of deduction under section 80P in the absence of compliance under the provisions of the […]
- [Charitable expenditure](https://dailytaxreporter.relegal.in/charitable-expenditure/): By the decision in Math Gadwaghat Trust( 2024]119 ITR (Trib) 134 (ITAT[Varanasi]) it is held that administrative nature of expenditure is as much an expenditure on charity as any other expenditure for poor or medical purposes. The assessee in this case is a an old charitable trust, which was formed for the welfare of the people and to provide medical facilities to the poor. The AO/CIT(A) formed a point that bulk of the expenditure in the relevant year is majorly for administrative expenses and those for religious purpose such as sadhu sanyasi sewa expenses thus rejected re-registration u/s12AB to the […]
- [Oral advice](https://dailytaxreporter.relegal.in/oral-advice/): In the case citation [2005] 275 ITR 491 (Mad) the assessee incurred consultancy expenditure for subscribing  to  “News Bulletin”/ “Information Bulletin” which covered legal, financial and industrial news and the department point was that it cannot be regarded as a consultancy service, as they are compiled from various information readily available in the newspapers and journals and put it in the form of booklet, viz., “News Bulletin” and “Information Bulletin”, and therefore it would not be considered as a consultancy service. At this the Madras High Court held that advice on legal, financial and industrial matters can be taken locally […]
- [Predeposit prescriptions by DHC](https://dailytaxreporter.relegal.in/predeposit-prescriptions-by-dhc/): The Delhi High Court in (2024] 470 ITR 493 (Del) held that : A. there is no predeposit prescription requiring deposit of tax as a pre condition for grant of stay. B. pending application for stay and its disposal considering factors such as prima facie case, undue hardship and likelihood of success, no adjustment of refund can be made against disputed demand.   Predeposit prescriptions by DHC
- [Huge stakes plus suspense w.r.t. tds defaults qua non -resident payments](https://dailytaxreporter.relegal.in/huge-stakes-plus-suspense-w-r-t-tds-defaults-qua-non-resident-payments/): It is sad that there is no specific period of limitation prescribed for ini tiating action in consequence of any failure to deduct or pay tax w.r.t. transactions with non residents. This has lead to difference of opinion among appellate forums as to what is a reasonable period for reopening TDS matters. In the recent case of ( 2024] 470 ITR 479 (Telangana) the Court held 7 years as applicable in case of payments to residents as a reasonable period relying on previous decision from the division benches of delhi and Telangana court. Even Madras High Court later held likewise. […]
- [Cut and paste reopening](https://dailytaxreporter.relegal.in/cut-and-paste-reopening/): The AO cannot merely do a cut and paste job and go by previous case history for reopening the assessment without independent application of mind or verification or investigation. In report reference (2024] 117 ITR (Trib) 441 (ITAT[Del) the AO attempted to reopen case of the non resident to tax offshore sale transaction only on the basis that the assessee held PE in India in previous case history. Denying any second chance to the revenue to reopen case the bench held that merely because in one year, the assessee had a permanent establishment in India, that by itself cannot lead […]
- [Hasty action by Commissioner](https://dailytaxreporter.relegal.in/hasty-action-by-commissioner/): In the report titled (2024] 117 ITR (Trib) 683 (ITAT[Surat] the poor taxpayer had to face the agony of Commissioner’s action u/s 263 to make a fresh revision even after a previous reassessment only because of failure to mention a particular bank account in the original as well as in the subsequent return of income u/s148. Later it was however found that the assessee did forward such bank to the AO during reassessment who passed the order after considering the reply of the Assessee on alleged credits in such account. Taxpayers now ought to be more cautious in submitting all […]
- [New principle invented w.r.t allowance of business deduction - apprehension of company](https://dailytaxreporter.relegal.in/new-principle-invented-w-r-t-allowance-of-business-deduction-apprehension-of-company/): In a strange case that came before Hon’ble Gujrat High Court, one fertiliser company in tax report [2024] 470 ITR 363 (Guj) using brand name ‘Sardar’ donated INR 10 crores to Sardar Vallabhbhai Rastriya Ekta Trust for “statue of unity” construction claiming the same as business deduction as it held the apprehension that the construction of a statue of Sardar Vallabhbhai Patel would significantly enhance the value of the brand name under which the assessee carries on its business. And that would thus help enhance sales as well as exports of the company’s agro products and as a corollary enhance […]
- [NOTICE SOLELY ON AUDIT OBJECTION WITHOUT INDEPENDENT APPLICATION OF MIND](https://dailytaxreporter.relegal.in/notice-solely-on-audit-objection-without-independent-application-of-mind/): Reopening a closed assessment is a serious business and therefore ought to meet all the tests of reopening. The Supreme Court in [2024] 460 ITR 729 (SC) in dismissing the department SLP held as invalid the action for reopening which was based solely on an audit objection without satisfying the test of independent application of mind of the AO. This mind application test is today even more relevant in the present protocol for reopening which revolves around enquired piece of information from select source/database. AO who merely relies on gathered information in his 148A (b) notice without anything more would […]
- [New window opened January 1 to file/update return for AY 2023-24 with additional 25% taxes](https://dailytaxreporter.relegal.in/new-window-opened-january-1-to-file-update-return-for-ay-2023-24-with-additional-25-taxes/): For those who missed out December 31 deadline to file/ revise file taxes for AY 2023-24 here is another opportunity to them to straighten their taxes . This window is only to collect unpaid taxes with additional tax and not for grant of any refunds. To maintain continuity there is another round of opportunity. A little care in filing up updated form may be critical to filing. Make sure to fill out additional tax field. New window opened January 1 to file/update return for AY 2023-24 with additional 25% taxes
- [Taxes are as certain as death](https://dailytaxreporter.relegal.in/taxes-are-as-certain-as-death/): There is no provision in the law for stop filing of return ! The clock stops only with the death of the taxpayer.  It is therefore always advisable  to maintain continuity.  31 December 2023 is last opportunity to those who have not filed return for AY 2023-24. Taxes are as certain as death
- [31 DECEMBER 2023](https://dailytaxreporter.relegal.in/31-december-2023/): Is also a last opportunity to taxpayers to revise their income tax returns for AY 2023-24 if and only if they have omitted to include any incomes, bank etc no matter the size thereof ! To double check they may additionally log into their income tax account, look for any pointer in e-compliance/e-campaign section in pending actions tab on the dashboard. Also this day is last of the seasons-“ Mann Ki Baat’ of our visionary Prime Minister , not to be missed !! Happy New Year 31 DECEMBER 2023
- [Scope of judicial review in search matters](https://dailytaxreporter.relegal.in/scope-of-judicial-review-in-search-matters/): In search matters it is a settled law that the court cannot go into the sufficiency or adequacy of reasons to believe, which is otherwise the safeguard test. Reasons are formed in direct consequence of information or material in possession of the authorities. The Gauhati High Court in (2023) 459ITR570 held that the Court cannot decide the sufficiency or the adequacy of the materials or information for the formation of belief or opinion. On the other hand only the courts are entitled to review both the reasons/satisfaction and connected information/materials in the possession to come the question of validity of […]
- [December Reminder for advance tax](https://dailytaxreporter.relegal.in/december-reminder-for-advance-tax/): If you are a taxpayer this year and you expect a tax liability at the end of the current financial year ending March 2024  then here is time to fulfill your obligation and pay advance tax   Next due date is 15 December 2023   Better it is to pay in advance to secure peace of mind !!   December Reminder for advance tax
- [Hospital running own pharmacy entitled to exemption on pharmacy incomes](https://dailytaxreporter.relegal.in/hospital-running-own-pharmacy-entitled-to-exemption-on-pharmacy-incomes/): Running of hospital by the society in (2023] 33 ITR (Trib)-OL 797 (ITAT[Raipur]) was considered by the AO as an activity for which exemption under section 11 was granted, minus the activity of purchase and sale of medicine by hospital which was considered as business. The bench of the Tribunal held that such activity shall also be covered by the main charitable activity of the assessee-society, i. e., “medical relief” no matter it yield substantial profits and there shall therefore be no further requirement to maintain separate set of books for the same . Hospital running own pharmacy entitled to […]
- [Income computation based on 26AS entries](https://dailytaxreporter.relegal.in/income-computation-based-on-26as-entries/): 26AS provide details of tax deducted or collected at source for the information of the taxpayer. In preparing return of income he is expected to visit this form and match them with his books of account and bank statements. Here is a typical case of 44AD contractor in which the taxpayer/contractor disputed the assessment framed on the basis of certain entries of tax deductions showing in his 26AS which according to him did not pertained to him. The parties who claimed to have deducted tax however directly confirmed to the tax officer of payments made and taxes deducted in this […]
- [Commissioner has wide powers to help taxpayers to set right any error in return no matter missing any deadlines](https://dailytaxreporter.relegal.in/commissioner-has-wide-powers-to-help-taxpayers-to-set-right-any-error-in-return-no-matter-missing-any-deadlines/): The High Court in (2023] 459 ITR 369 (Bom) held that since section 264 uses the expression ”any order”, it would imply that the section does not limit the power to correct errors committed by the subordinate authorities but could even be exercised where errors are committed by the assessees. It would even cover situations where the assessee because of an error has not put forth a legitimate claim at the time of filing the return and the error is subsequently discovered and is raised for the first time in an application under section 264. In this case the assessee […]
- [No penalty till decision in appeal, is an absolute law](https://dailytaxreporter.relegal.in/no-penalty-till-decision-in-appeal-is-an-absolute-law/): Section 41 of Black Money (undisclosed foreign income and assets) act, 2015 empowers AO to levy penalty three times of the tax computed on undisclosed income or acquired assets that come into notice of tax authorities anytime after july1, 2015. Likewise a resident may run into section 43 penalty of  flat Rs. 10 lacs for failure to furnish in his return of income an information or particulars about an asset (including financial interest in any entity) located outside India. The High Court in [2023] 459 ITR 381 (Mad) directed the AO not to take any coercive measures including penalty impose […]
- [No fetters on AO in dealing with stay applications](https://dailytaxreporter.relegal.in/no-fetters-on-ao-in-dealing-with-stay-applications/): From time to time CBDT issue departmental instructions, administrative circulars or memorandum for guidance of its officers in the matter of grant of stay with certain pre-condition for payment, such as 15%/20% of demand pending appeal.  The Courts have held that the such administrative circulars/instructions would not operate as a fetter on the Commissioner/ Commissioner (Appeals), ITAT and Courts. This time the Telangana High Court in [2023) 458 ITR 750 held that the Assessing Officer is also not confined by any such Departmental instructions.  In this case the ITO has followed instructions of the CBDT dated March 21, 1996 to […]
- [AO not bound by departmental instruction for 20% payment as a precondition for grant of stay pending appeal](https://dailytaxreporter.relegal.in/ao-not-bound-by-departmental-instruction-for-20-payment-as-a-precondition-for-grant-of-stay-pending-appeal/): From time to time CBDT issue departmental instructions, administrative circulars or memorandum for guidance of its officers in the matter of grant of stay with pre-condition for payment of 15%/20% of demand pending appeal.  The Supreme Court in [2018] 12 ITR-OL 334 (SC) held that the administrative circular issued by CBDT would not operate as a fetter on the Commissioner since he is a quasi-judicial authority, so that it would be open to him to grant deposit orders of a lower amount than 20 per cent., pending appeal. The Telangana High Court in [2023] 458 ITR 750 (Telangana) held that […]
- [AO bound to supply/adduce ‘reasons to believe’ to initiate reassessment under the new scheme too, confirms Madras High Court](https://dailytaxreporter.relegal.in/ao-bound-to-supply-adduce-reasons-to-believe-to-initiate-reassessment-under-the-new-scheme-too-confirms-madras-high-court/): On the sole subject of assumption of jurisdiction for reassessment the Madras High Court decision in IDFC Bank case [2023] 459 ITR 169 (Mad) highlight a case where proceedings for reassessment were initiated under the old scheme by issuing notice u/s 148 and also reasons to believe in April 2021.  The petitioner complied with the notice by filing the return of income and preliminary objections too. It further challenged that the notice issued in April 2021 is not in accordance to the new procedure underlined by section 148A, substituted by the Finance Act, 2021 with effect from April 1, 2021. […]
- [GOLAK DONATIONS](https://dailytaxreporter.relegal.in/golak-donations/): Charity is imbibed in every kind of religious faith so did the bench of the Tribunal in (2016] 47 ITR (Trib) 1 (ITAT[Amrit]) thwarted the attempt by the revenue to tax GOLAK DONATIONS under the garb of penal provisions for anonymous donation in section 115BBC. The bench went on to demonstrate that charity is imbibed in all the three religions, Hinduism , Sikhism and Islam and in this regard reproduced few scriptings from Zakaat from Islam, Dasvand from Sikhisim and the recognised concept from Manu-Smriti from the Hinduism. The Tribunal after their reading of few verses, orders, rehmatnamas etc . […]
- [Judicial decision acts retrospectively](https://dailytaxreporter.relegal.in/judicial-decision-acts-retrospectively/): The rectification case report at (2023] 459 ITR 36 (Cal) showcase an interesting situation wherein the non resident assessee mistakenly included a non taxable salary income accruing outside india in his  return only because it was received in NRE account in India but later attempted filing a revised return. As the original was perhaps late filed the revised failed to take effect. He chose a rectification route over appeal and so made an application to CPC u/s154. Eventually the same got dismissed and all the appellate authorities even showed helplessness stating the issue is debatable. The High Court noticed circulars […]
- [Goof-Up by CPC got to have fair recompense](https://dailytaxreporter.relegal.in/goof-up-by-cpc-got-to-have-fair-recompense/): It so happened that in (2023) 108ITR (Trib) 94 (Jodhpur bench) the Assessee having filed a return within due date revised the return well within the statutory time. The return carried a loss in the current year.  The CPC processed the revised return as original return and disallowed loss incurred in the current year as ineligible for carry forward.  With no relief coming from the Commissioner (A) the Assessee running a khadi outlet is forced to fight their case in ITAT for this gross mistake of CPC.  The Tribunal declined to award costs to the assessee who took a specific […]
- [Significance of DIN](https://dailytaxreporter.relegal.in/significance-of-din/): Circulars of the Board bind the Income-tax Officer as well as those holding Administrative authority such as Commissioner, PrCIT/DIT etc. ( other than appellate authorities). It is because of this reason that a notice and order issued u/s263 by Pr CIT ( E) is challenged for not bearing any document identification number nor stating reasons for not issuing a document identification number with the order as required by Central Board of Direct Taxes Circular No. 19 of 2019, dated August 14, 2019 . The ITAT held that failure to comply with these requirements rendered the communication invalid and deemed never […]
- [Illegal form of notice](https://dailytaxreporter.relegal.in/illegal-form-of-notice/): Merely stating in show cause notice u/s148A(b) that there are fictitious or bogus transactions relying on some suspicious transaction report without mentioning complete detail would make such notice bad and also illegal as per law for an AO to proceed further with notice u/s 148 vide (2023] 22 ITR-OL 679 (Guj). So long as the details are not complete and proper it is always a prerogative of the taxpayer to question such notice and reopening. In this case the AO issued the following show cause notice u/s148A (b): “ the information uploaded in the insight portal and flagged as high […]
- [Travel back in time theory challenge](https://dailytaxreporter.relegal.in/travel-back-in-time-theory-challenge/): Covid arrived in the first quarter of 2020 in India and remained even beyond march 2021. To make up for the compliance calendars the guidelines were issued in the form of ordinances/TOLA to extend time for issuing notices u/s 148 where the limitations were expiring  before march 2020/2021 till 30.6.2021. In the meantime FA21 came into effect with new set of time limitations for reopening effective April 1, 2021. Thousands of notices issued during the extended period post April 2021 have come under challenge on the ground of limitations as well as for failing to match the new procedure outlined […]
- [Back-end operations do not constitute Permanent establishment](https://dailytaxreporter.relegal.in/back-end-operations-do-not-constitute-permanent-establishment/): Mere back-end operations outfit is held to be excluded from the term “permanent establishment” and classified as one for the supply of information and not chargeable to tax vide (2023] 21 ITR-OL 369 (Bom). In this case from the scrutiny of documents found during survey there was no any document suggesting that substantial business had been done from the liaison office of Mauritius entity.  In this case the revenue failed to establish that any substantial business has been done from the Mumbai office of Mauritian entity.  Back-end operations do not constitute Permanent establishment
- [Old disputes on Additional depreciation gaining in favour of taxpayer](https://dailytaxreporter.relegal.in/old-disputes-on-additional-depreciation-gaining-in-favour-of-taxpayer/): Before 2016 amendment there have been instances of positions taken by the department in some cases that carry forward of additional depreciation could not be allowed as there was no provision in the Act to allow carry forward of unabsorbed additional depreciation in the next year. The taxpayer’s plea had been that there was no restriction either in claiming the carry forward. Similarly in regard to allowance of additional depreciation on power generation machinery the department denied on the pretext that electricity is not an article or thing for that matter or that it has no operational connectivity to existing […]
- [S.148A do not limit duty of AO to verify facts](https://dailytaxreporter.relegal.in/s-148a-do-not-limit-duty-of-ao-to-verify-facts/): The Bombay High Court in [2023] 458 ITR 486 (Bom) declined to admit the writ stating that the matter involved mere dispute on question of facts and that prima facie, there is some material on the basis of which a notice for reopening of escaped assessment has been issued. Now in this case the assessee omitted to include the transaction of sale of property of which the SDV u/s 50C exceeded 50 lacs. Now the assessee’s claim were that the net capital gains resulting actually fall well below 50 lacs so that the statutory period of reopening crossed 6 years. […]
- [classic case of DRP failure](https://dailytaxreporter.relegal.in/classic-case-of-drp-failure/): The Delhi bench of ITAT in 107ITR( Trib) (SN) 93 encountered non-resident’s case reopening on irrelevant considerations. In the reasons it is alleged by the AO that the non resident assessee has not filed return of income even when it had filed TDS return with respect to payments u/s195/194E. To the contrary the assessee filed objections stating clearly that it had not filed any TDS returns as it had not remitted any payments outside India. Instead of dropping the case the AO framed a draft assessment for the approval of DRP even when admitting to the error in writing about […]
- [Taxpayer need to preserve income tax papers/income statements /bank statements/pay slips etc. for 3 more assessment years](https://dailytaxreporter.relegal.in/taxpayer-need-to-preserve-income-tax-papers-income-statements-bank-statements-pay-slips-etc-for-3-more-assessment-years/): In [2023] 458 ITR 437 (SC) the dispute was whether the taxpayers are required to preserve records beyond 6 years. More particularly this case was a search case and the assessee was a third party having connection with searched person when assessee contended that the period for which they were required to file returns for six preceding years , commenced only from the date the materials were forwarded to their AO. The Revenue, on the other hand, urged that the date (relatable to the period for which six years returns were to be filed by the assessee) was to be from […]
- [Most Favoured Nation clause (MFN) in tax treatise is made most difficult to give effect to](https://dailytaxreporter.relegal.in/most-favoured-nation-clause-mfn-in-tax-treatise-is-made-most-difficult-to-give-effect-to/): In the matter of interpretation of treaties the Supreme Court in their decision in [2021] 432 ITR 471 (SC) held that the DTAAs that have been entered into by India with other contracting States have to be interpreted liberally with a view to implement the true intention of the parties. In their previous ruling in Azadi Bachao Andolan it quoted from the principle of liberal interpretation of tax treaties by the Federal Court in John N. Gladden v. Her Majesty the Queen 85 D.T.C 5188 at 5190 as : “Contrary to an ordinary taxing statute a tax treaty or convention […]
- [Outsourcing/sub-contracting could sense grey area in NR PE factor- IBM case scenario](https://dailytaxreporter.relegal.in/outsourcing-sub-contracting-could-sense-grey-area-in-nr-pe-factor-ibm-case-scenario/): In an interesting situation IBM India obtained a contract to undertake payroll and data management function for P&G India in case reference ( 2023) 458ITR86 (Kar). It outsourced such work to its NR Philippines associate IBM Philippines. IBM Philippines therefore managed to get is receipts without deduction of taxes in India in the absence of any article on fees for technical services.  The High Court also upheld in its favour and exempted IBM India from withholding of tax by stating that the services rendered are business nature of activities and not technical services referring to article 23. Now if we […]
- [Appeal and cross appeals to be heard and decided together](https://dailytaxreporter.relegal.in/appeal-and-cross-appeals-to-be-heard-and-decided-together/): In setting a direct and binding precedence for Income Tax Appellate Tribunal the Bombay High Court in Linklaters case (2023) 458ITR 110 while keeping aside the merits in this case, framed a substantial question of law on ‘whether the appeals and cross appeal from the same order to be consolidated and heard in one go’, and answered it in affirmative. Hence ITAT appeals and cross appeals ought to be fixed for the same day in future and to be decided together. Miscellaneous application may be filed in case this rule is not followed by the ITAT.   Appeal and cross […]
- [JAO is held incompetent to proceed with assessment/reassessment of cases under his permanent jurisdiction](https://dailytaxreporter.relegal.in/jao-is-held-incompetent-to-proceed-with-assessment-reassessment-of-cases-under-his-permanent-jurisdiction/): In a new development the Telangana High Court set aside the notices issued u/s 148/148A and consequent orders passed by JAO u/s 143(3)/147 in one stroke in the common order passed on 13 September 23 in a batch of 52 petitions of 2022/2023. Upon their reading of the twin schemes viz., “Faceless jurisdiction of Income Tax Authorities Scheme, 2022” (Notification No. 15/2022/F. No. 370142/13/2022-TPL] dt 28 March 2022) and “e-assessment of Income Escaping Assessment Scheme 2022” (Notification No. 18/2022/F. No. 370142/16/2022-TPL(Part1) dt 29 March 2022) the Court held the view that there are two mandatory conditions which were required to […]
- [✍️ Depreciation red flag🚩](https://dailytaxreporter.relegal.in/%e2%9c%8d%ef%b8%8f-depreciation-red-flag%f0%9f%9a%a9/): For having registered motor car in the name of director even while showing it as part of fixed assets the company had to suffer a disallowance of 25% of depreciation and car repair costs in (2023) 22ITR OL(419). This treatment of 25% personal or not wholly and exclusively for business is considered apt both by the Hon’ble Tribunal and Hon’ble the Gujarat High Court. It would be wise for the tax auditor to follow this rationale and check registration certificates (RC) before confirming the figure of depreciation admissible under section 32 in their tax audit report as well as 25% […]
- [Discard Form 10F (eform) requirement for unhindered foreign payments](https://dailytaxreporter.relegal.in/discard-form-10f-eform-requirement-for-unhindered-foreign-payments/): 2023 155 taxmann.com 103 (Article) Discard Form 10F (eform) requirement for unhindered foreign payments
- [Both Valuation method and valuation expert should be assesee’s choice](https://dailytaxreporter.relegal.in/both-valuation-method-and-valuation-expert-should-be-assesees-choice/): Section 56(2)(viib) is inserted to tax receipt of consideration that is in excess of fair value of shares issued by the company. FMV meaning value arrived at either by net assets value method or discounted cash flow method. The choice lies with assessee. However when it comes to opting for DCF method there is no choice available in selection of an expert.   The all time settled proposition and also an old saying that the Revenue cannot sit in the armchair of the businessman to decide what is profitable and how business should be carried out has come into focus in […]
- [The 20% payment condition for grant of stay is no hard and fast rule](https://dailytaxreporter.relegal.in/the-20-payment-condition-for-grant-of-stay-is-no-hard-and-fast-rule/): In the matters of recovery of demands the Telangana High Court in [2023] 457 ITR 560 (Telangana) taking note of Supreme Court decision in [2018] 12 ITR-OL 334 (SC) held that It is trite law that when an Income-tax authority like AO , CIT, CIT (A) exercises jurisdiction under section 220(6) of the Act, he exercises quasi-judicial power.   While exercising quasi-judicial powers, the authority is not bound or confined by Departmental instructions. He has to apply his mind which must be reflected in the order. Any order imposing 20% condition in defiance of this maxim would not be in accordance […]
- [Mandate of s 68](https://dailytaxreporter.relegal.in/mandate-of-s-68/): Section 68 provisions is most common to every income tax assessment where the AO could seek confirmation and explanation on the liabilities/creditors shown in the balance sheet. To invoke section 68 it is however incumbent upon the AO to bear in mind the ratio of the decision in CIT v. Orissa Corporation P. Ltd. [1986] 159 ITR 78 (SC) which is to examine and inquire the creditors which are named and disclosed in the documents and disclosures by the assessee. By the Orissa Corp ruling further if the lending parties are income tax assessees and this fact is made known […]
- [amendment of claim at assessment stage is permissible](https://dailytaxreporter.relegal.in/amendment-of-claim-at-assessment-stage-is-permissible/): The assessee with co-generation captive power division using bio fuel advantage,offered an amount as revenue receipt in return and  went on to amend such treatment and claimed the same as a capital receipt at assessment stage in (2023] 106 ITR (Trib) 550 (ITAT[Amrit]).   In this case assessee having realised a value of some Rs.18 odd crores by sale of renewable energy certificates and energy saving certificates offered it to tax at special rate at 10% under section 115BBG (carbon credits sale) in the ITR. The DRP chose to tax it as normal Business income instead without any special rate treatment.  […]
- [Directors of NCLT lead companies held accountable for tax arrears of companies](https://dailytaxreporter.relegal.in/directors-of-nclt-lead-companies-held-accountable-for-tax-arrears-of-companies/): Section 179 provide for recovery of taxes from directors in the event of no recovery possibilities from the company. Taking note of the provisions the Madras High Court in (2023] 22 ITR-OL 189 (Mad) in the case of a company undergoing corporate insolvency resolution process before the National Company Law Tribunal (NCLT) held that the only condition set out under section 179 is to the effect that attempts should be made by the Income-tax Department to recover the tax dues from the company and such attempts should have been unsuccessful and in this case only because the company itself was […]
- [Revised return capping - a statutory handicap](https://dailytaxreporter.relegal.in/revised-return-capping-a-statutory-handicap/): The income tax return once filed can be revised for any missing claims or deductions no later than three months prior to the end of the relevant assessment year. On the other hand if the taxpayer has omitted to include incomes or claimed excess deduction or even failed to have submitted return then he may for once submit a return/updated return with additional amount of taxes upto 50% of normal tax until 24 months from the end of the relevant assessment year. Interestingly on the other side the appellate authorities have been given the power to entertain a new claim […]
- [Revenue has no authority to change stands](https://dailytaxreporter.relegal.in/revenue-has-no-authority-to-change-stands/): An appeal is a continuation of assessment proceedings. On the question whether  payments for interconnect services and bandwidth transfer in foreign countries is chargeable to tax as royalty the ITAT being the final fact finding authority is found to have taken a favourable stand for subsequent years in the Vodafone case of [2023] 457 ITR 189 (Kar). For the straight reason that the Revenue/ITAT has reviewed its earlier stand for the subsequent assessment years the question was answered against the Revenue. The Court also held the assessee entitled to benefits under the Double Taxation Avoidance Agreement while holding as untenable […]
- [Duty of taxpayer](https://dailytaxreporter.relegal.in/duty-of-taxpayer/): The Kerala High Court in Koduvayur Constructions v. Assistant Commissioner-Works Contract [WP(C) No. 21212 of 2023] dated 7 August 2023 held that it was the bounden duty of the taxpayer to have verified its registered account in the common portal that is made available to him as per the GST law provisions. In this case the taxpayer’s GST registration was cancelled so he claimed that he was under the impression that it had no liability to pay to the department. The Court dismissed such plea.    Likewise under income tax the taxpayer is also provided with a registered account address […]
- [Loan waivers - another controversy](https://dailytaxreporter.relegal.in/loan-waivers-another-controversy/): Pune bench in (2023] 106 ITR (Trib) 342 (ITAT[Pune) in a transaction of negotiated settlement of borrowing in the case of real estate business held that the surplus earned on reduction in liability is not chargeable to tax for the following two reasons: That the assessee here is not in the business of lending and borrowing but only real estate ; That the income is not received in the regular course of business of real estate.   This decision raises a controversy as it is settled law that waiver of principal amount of loan amounts to cessation of liability other than trading liability […]
- [Notional Provisions are not taxable even if so appearing in 26AS](https://dailytaxreporter.relegal.in/notional-provisions-are-not-taxable-even-if-so-appearing-in-26as/): Only because the other party has made a notional provision in its books and made a deduction of tax and the amount is reflecting in 26AS and especially when the receipt of such income is fraught with uncertainties as parties are in dispute and litigations are pending for past so many years and there is no likelihood of end of the litigation in near future then it cannot be said that the assessee has received any royalty income qua helicopters lease agreement , either under the domestic law or under the treaty provisions. 106ITR (Trib) (SN) 16.    The AO had […]
- [Unbecoming of Tribunal](https://dailytaxreporter.relegal.in/unbecoming-of-tribunal/): The Kolkata bench of ITAT in [2023] 32 ITR (Trib)-OL 533 (ITAT[Kolk]) held that the income earned from testing services is taxable in India because the result of testing was used by customers in India no matter that the testing is performed  outside india.    On the other hand the Jaipur bench in (2019] 75 ITR (Trib) 13 (ITAT[Jai]) held that there was no liability to deduct tax at source under section 195(1) on the testing charges which have been paid for testing services outside of India and fall outside the scope of total income unless they are linked to any PE in India.  […]
- [Reassessment of reassessment](https://dailytaxreporter.relegal.in/reassessment-of-reassessment/):   In [2023] 456 ITR 709 (Del) the reasons to believe were provided to the taxpayer after a gap of one and a half years. And in the second disaster the reassessment proceedings were actually initiated just seven days before the limitation was set to expire.   The taxpayer challenged both notice and reassessment on gross violation of principles of natural justice and demanded for quashing of the two relying on SC decisions.   On the delay the department assigned reason as state of confusion over jurisdiction to exercise power of reassessment in view of faceless scheme introduction.    Even with this […]
- [Candid stay](https://dailytaxreporter.relegal.in/candid-stay/): In the matters of grant of stay the authorities have to exercise their wisdom keeping into account interest of both parties in dispute.  The higher the authority the greater shall be expectation for wisdom and understanding.    The Delhi ITAT in (2023] 106 ITR (Trib) 130 (ITAT[Del]) stalled recovery proceedings  subject to payment of 20% of demand citing section 254(2A) proviso shackles in a DRP appeal matter with following candid observations:   “At the time of stay application, what is to be seen is whether a prima facie case had been made out by the assessee and whether balance of convenience is in […]
- [Guess inquiry at the instance of Commissioner](https://dailytaxreporter.relegal.in/guess-inquiry-at-the-instance-of-commissioner/): Because of the meticulous keeping of cash book by a credit co-operative society in (2023] 32 ITR (Trib)-OL 378 (ITAT[Bang]) it escaped further inquiry and fresh assessment otherwise directed by the commissioner with reference to deposit of specified bank notes during demonetisation period. The AO in this case has done proper verification of the details of cash deposited and has given a clear finding with respect to the same.   The PCIT in his order however stated that the AO ought to have conducted further enquiry to check whether the deposits satisfied the test of section 68 which according to the Court […]
- [Rule 8D(2) is no less a “guess estimate”](https://dailytaxreporter.relegal.in/rule-8d2-is-no-less-a-guess-estimate/): The company in H. T. MEDIA LTD. Case [2023] 22 ITR-OL 230 (Del) suo motu apportioned total salary cost of executives in corporate finance function in the proportion of income from exempted dividends over total turnover in submitting to a nominal disallowance u/s 14A at Rs. 88632/- and further rounded it off to 1 lac which method of apportionment according to the AO, CIT(A) , ITAT and High Court constituted a mere “guess estimate” rather than it being actually borne out from the records of the assessee. As against company’s guess estimate the Tribunal invoked rule 8D(2) and determined disallowance […]
- [Expenses to defend disciplinary proceedings , defamation cases etc.](https://dailytaxreporter.relegal.in/expenses-to-defend-disciplinary-proceedings-defamation-cases-etc/): The case before Madras High Court in [1976] 104 ITR 458 (Mad) pertained to a company which paid to its auditors a sum incurred by them in defending certain disciplinary proceedings against them initiated at the instance of one of its shareholders in the matter of presentation of its accounts. In denying such claim the Court held that the expenditure incurred for defending those proceedings were purely personal to the auditors as it was only in their interest to defend those proceedings. There would be instances where auditors have to defend them as well as to pay up for fines […]
- [Grand onus upon AO in 68/69 series sections](https://dailytaxreporter.relegal.in/grand-onus-upon-ao-in-68-69-series-sections/): In (2023] 105 ITR (Trib) 610 (ITAT[Amrit]) the assessee claimed to have received excess sale consideration on sale of agricultural land other than as mentioned in the registered sale deed. Such excess cash is deposited by the taxpayer in his bank. Rejecting the explanation that the deposit represented sale value of agricultural land the revenue taxed such excess as unexplained money u/s 69A on the basis of confirmation of the buyer. Admitting that the addition of cash deposit is due to lack of verification by the Revenue authorities the ITAT set aside the case for a further verification on the […]
- [independent inquiry and independent mind application](https://dailytaxreporter.relegal.in/independent-inquiry-and-independent-mind-application/): In the previous system of reopening action the AO initiation solely on the basis of some information received from fellow officer is held improper in (2023] 105 ITR (Trib) 73 (ITAT[Del]).  Even on merits in this case the AO neither even could point to any defect in the maintenance of the books of account while doubting genuineness of purchases.    In the present law there is a bounden duty of the AO to conduct an independent inquiry and follow the procedure laid down in section 148A before issuing notice u/s 148. Only because an inquiry is conducted by investigation etc may not […]
- [Right to withdraw applications, appeal etc](https://dailytaxreporter.relegal.in/right-to-withdraw-applications-appeal-etc/): In the tax report (2023] 22 ITR-OL 198 (MP) it is held that it is trite law that whenever a litigant invokes a particular remedy available under a statute, then the authority before whom the lis is preferred and pending, is ordinarily duty bound to decide the same on merits.  It is also settled in law that the aggrieved person who initiates lis has a right to withdraw the same before it is finally decided.  This right of withdrawal is absolute but it is subject to the fact that withdrawal can be declined if there are cogent reasons.   In […]
- [WHETHER ASSESSEE CAN RESILE FROM MOST APPROPRIATE METHOD ADOPTED IN ITS TP REPORT](https://dailytaxreporter.relegal.in/whether-assessee-can-resile-from-most-appropriate-method-adopted-in-its-tp-report/): The transfer pricing report and the most appropriate method adopted by the assessee is not sacrosanct and may require a relook due to change in market dynamics and market conditions such as in Star India case involving a transaction of purchase of bundle of sport broadcasting rights. Other method were preferred over CUP method in such kind of transactions.  In a unified view the special bench of the Tribunal in Star India case @(2023] 105 ITR (Trib) 1 (ITAT[Mum]) thus held that assessee can resile from the most appropriate method as was adopted in the transfer pricing study report, provided that the […]
- [Share application money pending allotment](https://dailytaxreporter.relegal.in/share-application-money-pending-allotment/): Before the Tribunal in [2023] 32 ITR (Trib)-OL 253 (ITAT[Mum]) the bench had to decide whether the share application money outstanding in the books could be treated as loan to AE and could be subjected to the transfer pricing provisions as in this case the TPO attempted to make an addition of Rs.3,11,09,890/- on account of notional interest on share application money for delayed allotment of shares. In their categorical stand the Tribunal held that AO or the TPO are not empowered to convert and recharacterise a transaction of share application into a loan transaction Further in this case the […]
- [Whether the  appellate Court or Tribunal can admit alternative  claim in appeal ?](https://dailytaxreporter.relegal.in/whether-the-appellate-court-or-tribunal-can-admit-alternative-claim-in-appeal/): The Calcutta High Court in Roma Gupta case @ (2016] 385 ITR 663 (Cal) was confronted with an appeal by a woman who received 50% value realized from sale of immovable property in satisfaction of a Court decree of grant of alimony from her ex-husband.  She offered such amount as capital gains and further claimed exemption under section 54 of the Income-tax Act, 1961 with respect to such long-term capital gains.  The AO on examination found that the property solely belonged to her husband and the assessee was only his nominee. In the result the assessee could not get the […]
- [Tax Terrorism](https://dailytaxreporter.relegal.in/tax-terrorism/): Even before the closing time limit of filing the reply in response to notice , the assessment orders were passed in PayPal case [2023] 456 ITR 189 (Mad).  The Single Judge Court construing this instance a mere violation of natural justice directed the AO to reissue a notice with 7 days time and pass order only  after completing the time, based on the reply if any to be supplied or filed by the petitioner. The sad part remained that no costs are imposed by the Court.  It is time for the revenue to introspect on such kind of unhealthy, ruthless and relentless practices […]
- [TPO Activism](https://dailytaxreporter.relegal.in/tpo-activism/): Vide Case Reference: [2022] 447 ITR 585 (All) the instructions issued by the board u/s 119 need to be implemented truly and effectively. If not then the doors to the court get opened up.    Instruction No. 3 of 2003 admits to the role of the TPO limited to the determination of the arm’s length price in relation to the international transaction(s).    Anything and everything that he experiments to do such as an attempt to change the nature or classification of a transaction different to that in the taxpayer’s books of accounts is beyond his reach and therefore can […]
- [Department has no authority to withhold credit of TDS deductions- this SC decision unfolds the crucial connect between TDS compliance and penalty](https://dailytaxreporter.relegal.in/department-has-no-authority-to-withhold-credit-of-tds-deductions-this-sc-decision-unfolds-the-crucial-connect-between-tds-compliance-and-penalty/): At source amount of deduction of tax has a purpose to release it to the account of deductee immediately upon such deduction to help compute him his advance tax liability accurately during the previous year. If this seamless credit doesn’t happens then the scheme of deduction of tax at source fails. Upon their research on the provisions of the Act and their reading of Board circulars the  Supreme Court in (2023] 453 ITR 644 (SC) arrived at following conclusions : That there shall not be any penalty leviable under section 271C on mere delay in remittance of the tax deducted […]
- [Mis-utilisation of funds may risk exemption](https://dailytaxreporter.relegal.in/mis-utilisation-of-funds-may-risk-exemption/): Income-tax is a welfare legislation for it provides exemptions to charitable trusts etc.  However all said and done charity and luxury cannot go hand in hand in as much as in  (2023] 31 ITR (Trib)-OL 685 (ITAT[Pune) the trust lost on its exemption having utilised funds for purchase of Mercedes Benz for the trustee secretary use.  In this case the assessee failed to prove that the vehicle was used for furtherance of any charitable activity.  Never should a charitable entity purchase luxury cars in their course of rendering charitable activities else it may risk its exemption. Mis-utilisation of funds may risk […]
- [Jurisdiction basis](https://dailytaxreporter.relegal.in/jurisdiction-basis/): Under the law the AO would get jurisdiction over the return of income filed by the assessee only upon service of notice under section 143(2) of the Act, meaning thereby, the AO could not scrutinise the return of income without issuing notice under section 143(2) of the Act in accordance with law. As in (2023] 103 ITR (Trib) 650 (ITAT[Mum]) the DR could not present any proof for service of the notice under section 143(2) of the Act the bench quashed the case for want of jurisdiction.    It is therefore important for the taxpayer to first check receipt of notice […]
- [Domain name Regd , web hosting and sponsorship fee](https://dailytaxreporter.relegal.in/domain-name-regd-web-hosting-and-sponsorship-fee/): Domain name registration and web hosting are not covered in royalty ambit.  Likewise sponsorship fees for hosting conference is not taxable in the absence of any PE in india per [2023] 32 ITR (Trib)-OL 277 (ITAT[Mum]). Domain name Regd , web hosting and sponsorship fee
- [Social media posts](https://dailytaxreporter.relegal.in/social-media-posts/): Some social media posts these days mention that starting AY 2023-24 , the income tax department will conduct the strictest scrutiny of tax returns. To facilitate this process, they have implemented a specially designed, automated and enhanced artificial intelligence software program (AI) for scrutinizing income tax returns (ITR). This software it is said is going to gather information/data linked with PAN and aadhar link and tally the same with the ITR and TDS data in Form 26AS and identify any undeclared accounts or transactions and thereafter demand will be calculated automatically u/s 143 (1) based on such exercise. These posts […]
- [How to fight a case for stay of demand ?](https://dailytaxreporter.relegal.in/how-to-fight-a-case-for-stay-of-demand/): In a demand case scenario all these years the taxpayer move the Assessing Officer as well the Principal Commissioner simultaneously. Often he does not approach appellate commissioner who seldom would grant a stay in his back of the mind. And that perhaps is also the fact as rarely does an appellate commissioner use his powers to grant stay. To a large extent the mistake is that of the taxpayer’s who has all these years moved application before the Commissioner rather than the Commissioner (Appeals).   Here is a case before the Madras High Court in [2021] 18 ITR-OL 120 (Mad) […]
- [Taxpayer’s Stand Caution](https://dailytaxreporter.relegal.in/taxpayers-stand-caution/): Courts may be helpless if the assessee does not update his account on the tax portal for email address and telephone no  etc failing which any plea/claim of non receipt of notice/order communication may not accede.  The Madras High Court in 2023] 151 taxmann.com 410 (Madras) noticed taxpayer’s accounts containing email address no longer in use or email ids of staff/accountants/chartered accountants who have created the profile of the assessee/file the income tax return and who are no longer in the employment /service of the assessee. In this case the taxpayer went to the Court with the plea that it is […]
- [Duty of AO in the conduct of reassessment](https://dailytaxreporter.relegal.in/duty-of-ao-in-the-conduct-of-reassessment/): In the matters of reopening the AO is duty bound to provide copy of the satisfaction note and order of the Principal Commissioner, who granted approval to issuance of the notice with the note of the Assessing Officer in support of his request of approval. So much so that the Court in (2023] 455 ITR 92 (Bom) held that non furnishing of the same will be a contravention of the provisions of article 14 of the Constitution of India. Duty of AO in the conduct of reassessment
- [Affidavits may provide shelter in certain situations during assessments](https://dailytaxreporter.relegal.in/affidavits-may-provide-shelter-in-certain-situations-during-assessments/): Sometimes an affidavit sworn on oath could serve as good and proper material when bills or proofs in support of payments may be hard found  or the third party is not supporting with confirmation etc. Whether thus failure by the AO and CIT(A) to cross-examine the deponent of the affidavits submitted before them will render the assessment illegal and against the law is one question presented before the Tribunal in ( 2023] 104 ITR (Trib) 195 (ITAT[Jodh]) who after noting several precedents deleted the entire additions. The Tribunal held that when the assessee stated on oath by way of an […]
- [Jurisdiction can be a million dollar question](https://dailytaxreporter.relegal.in/jurisdiction-can-be-a-million-dollar-question/): Jurisdiction subject could play notchy sometimes. In (2023] 31 ITR (Trib)-OL 629 (ITAT[Mum]) the taxpayer successfully cracked the assessment on the basis of one additional ground. In that it made a challenge to jurisdiction of the additional/joint commissioner in passing assessment order at the stage of ITAT after 14 years. The assessment got done in 2009 and in 2021 till March 2023 the assessee inquired from the AO about his transferred jurisdiction. As the addl CIT failed to provide/produce order in writing under section 120(4)(b) the Tribunal quashed 142(1) notice and the assessment. Jurisdiction can be a million dollar question
- [Auditors under Sterner lens](https://dailytaxreporter.relegal.in/auditors-under-sterner-lens/): Auditors under sterner lens- [2023] 151 taxmann.com 40 (Article) Auditors under Sterner lens
- [Notice without sharing material available with AO is liable to be quashed](https://dailytaxreporter.relegal.in/notice-without-sharing-material-available-with-ao-is-liable-to-be-quashed/): Citing SC decision in Ashish Agarwal case the High Court in (2023] 454 ITR 326 (Bom) emphasised that it goes without saying that providing information to the petitioner, without furnishing the material based upon which the information is pro vided, would render an assessee handicapped in submitting an effective reply to the show-cause notice, thereby rendering the purpose and spirit of section 148A(b) of the Act totally illusive and ephemeral. In the outcome the Court quashed both notice and order under section 148A with the liberty to supply the relevant material, if it is otherwise permissible keeping in view the issue […]
- [Renovation of convention centre](https://dailytaxreporter.relegal.in/renovation-of-convention-centre/): In [2023] 21 ITR-OL 613 (Ker) hotel meridian spent Rs. 7,13,89,107 for full scale renovation of their Convention Centre which has been held as capital by the revenue.  Even while the CIT(A) allowed it the Tribunal confirmed the disallowance stating that such expenditure lead to a new asset creation or new advantage which cannot fit into current repairs definition u/s 31 while referring to Saravana Spinning Mills (P.) Ltd. [2007] 293 ITR 201 (SC). In the forward the Tribunal held that once such expenditure does not qualify for deduction u/s 31 the same would not quality either u/s 37.  Striking such method of […]

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- [Purchase of own debentures](https://dailytaxreporter.relegal.in/purchase-of-own-debentures/): Purchase of own debentures   In the current day the entire world is grappling with COVID-19 pandemic. The outbreak was declared a Public Health Emergency of International Concern on 30 January 2020 by the World Health Organization. All economic activity has come to a halt.  Revenues have fallen flat. There is national lockdown in the country. Mckinsey and company and various other management firms like Boston Consulting Group and Harvard business Review have had presented their report on global health and economic crisis and advocated companies around the world in the Covid situation to act promptly to protect their employees, […]
- [Grant of stay during lockdown times](https://dailytaxreporter.relegal.in/grant-of-stay-during-lockdown-times/):   Grant of stay during lockdown times   The Hon’ble Mumbai Bench of the Income Tax Appellate Tribunal in hearing a stay petition via web based video conferencing in Stay Application No. 184/Mum/2020 dated 24th April 2020 in the case of Pandhes Infracon Pvt Ltd lifted the attachments/garnishee orders with the following directions:   “We find that in view of the attachment of asessee’s bank accounts and assessee’s debtors, the assessee is stated to be not in a position to perform these obligations. Given this situation, we are satisfied that this situation calls for our interference. In any case, even […]
- [Bestow Liquidity](https://dailytaxreporter.relegal.in/bestow-liquidity/): Bestow Liquidity   In the current times the entire world is grappling with COVID-19 pandemic. The outbreak was declared a Public Health Emergency of International Concern on 30 January 2020 by the World Health Organization. All economic activity has come to a halt.  Revenues have fallen flat. There is national lockdown in the country. Mckinsey and company and various other management firms like Boston Consulting Group and Harvard business Review have had presented their report on global health and economic crisis and advocated companies around the world in the Covid situation to act promptly to protect their employees, customers, supply […]
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- [About](https://dailytaxreporter.relegal.in/about/): About Us Welcome to Daily Tax Reporter, your trusted source for the latest updates, expert analysis, and trends in taxation. About Us COMPLEXITY OF THE SUBJECT OF TAXATION The poet, James Jeffrey Roche, in one of his poem ‘The net of law’ wrote: “The net of law is spread so wide, No sinner from its sweep may hide. Its meshes are so fine and strong, They take in every child of wrong. O wondrous web of mystery! Big fish alone escape from thee!” This poem has become a “Mantra” for the revenue. The Supreme Court in the case of Tekchand […]


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