Withholding Tax - certificate under Section 197 of the Income Tax Act, 1961 will be issued in favour of the petitioner, indicating therein, that the rate of tax, on dividend, as applicable qua the petitioner is 5% under India-Swiss DTAA
Income Tax Act - Withholding tax - entitlement to a reduced (5%) withholding tax rate in respect of the dividends paid by their Indian subsidiaries – HELD - dividend payments by the Indian subsidiaries to the taxpayer companies were subject to withholding tax at 5% in accordance with the Protocol to the India-Netherlands Treaty - the MFN clause is to be read as an integral part of the DTAA and does not require any separate notification
Income Tax Act – Section 144C, CBDT Circular 08 of 2021 dated 30.04.2021 – Assessee has challenged the final assessment order passed by the authority u/s 143(3) r. w. Section 144C(3) and 144B of the Act – According to AO, assessee had failed to intimate the AO about the filing of his objections before the DRP, the AO was within its right to complete the assessment on the basis of the Draft Assessment Order and therefore, no fault can be found in the Impugned Final Assessment Order – HELD - In view of the CBDT Circular dated 30.04.2021, the objections filed by the assessee before the DRP were clearly within the time. Keeping in view of the scheme of Section 144C of the Act and relying on the various precedents of High Courts, the Impugned Final Assessment Order is set aside - Authority should act in accordance with the procedure stipulated in Section 144C of the Act. Accordingly, the writ petition along with pending applications stand disposed of.
Income Tax Act – Section 197, India Switzerland DTAA – Writ Petition has been filed by assessee company challenging the impugned order and certificate issued by the authority and seeking fresh certificate u/s 197 of the Act prescribing a tax withholding rate of 5% on dividend in accordance with the India Switzerland DTAA r. w. the protocol and Most Favoured Nation (“MFN”) clause – According to the authority, since no notification has been issued by the Government of India, the assessee is not entitled to lower tax rate of 5% - HELD – Following the judgements of the court on identical issues decided earlier, it is held that no separate notification is required insofar as the applicability of the protocol is concerned and the same forms an integral part of the Convention. The impugned order and certificate are set aside and the Income Tax Officer is directed to issue a certificate u/s 197 of the Act indicating therein that the rate of tax, on dividend, as applicable qua the assessee is 5% in India-Switzerland DTAA. Hence grounds of assessee are accepted and the writ petition is disposed of.
Income Tax Act – Section 151 - The assessee in the petition has challenged notice for reopening assessment, disposing of the objections of Petitioner against the reopening of assessment and notice issued u/s 143(2) and 142(1) of the Act – Assessee had informed the authorities that the objections against the reopening notice have not been disposed off – yet the authorities passed the order of disposing of objections holding that notice u/s 147 is based on tangible material – HELD - the jurisdictional condition of complying with Section 151 of the act was not satisfied by the authorities, resulting in committing of the error of jurisdiction by issuing notice u/s 148 of the Act - therefore Writ of Certiorari or a writ in the nature of Certiorari or any other appropriate writ and order under Article 226 of the Constitution of India is issued calling for the records of the assessee’s case and after examining the legality and validity would thereof quash and set aside the Impugned Notices and order of the authorities.
Income Tax Act – Section 260A – Appeal is filed by revenue on the ground whether Tribunal has misinterpreted and misconstrued the material on record and consequently the impugned order is perverse and deserve to be set aside – Assessing authority during assessment proceedings had made a disallowance of provisions for premium towards leave encashment – this addition was deleted by Tribunal – hence the aggrieved revenue is in appeal – HELD –the Revenue has failed to substantiate its contention regarding perversity of findings recorded by the CIT(A) and Tribunal. The substantial question of law is answered accordingly and the appeal is dismissed.
Income Tax Act –Section 14A - Assessee had filed an appeal before the CIT(A) due to certain additions made in the Assessment order, aggrieved by CIT(A)’s adverse order of disallowance, appeal was filed before Tribunal-during pendency of the appeal, notice u/s 148 of the Act has been issued – aggrieved by such notice assessee is before the Hon’ble HC praying for a writ to quash the notice – HELD - The impugned notice under Section 148 of the said Act has to be set aside considering the third proviso to section 147 of the Act - this Hon'ble Court may be pleased to issue a Writ of Certiorari or a writ in the nature of Certiorari or any other appropriate writ calling for the records of the assessee’s case and after examining the legality and validity thereof quash and set aside the notice issued u/s 148 of the Act seeking to reopen the assessment and order rejecting objections.
Income Tax Act – Section 274 r.w.s 271(1)(c), Rule 10B(4), levy of penalty - The Tribunal has allowed the appeal of the respondent-assessee and set aside the demand of penalty levied by the AO as subsequently upheld by the CIT(A) – instant appeal by Revenue – HELD – For the purpose of invoking Section 271(1)(c) of the Act, there has to be a concealment of particulars in the income of the assessee and the assessee must have furnished inaccurate particulars of his income - Merely because, the assessee had claimed an expenditure, which claim was not acceptable to the Revenue, that by itself would not attract the penalty u/s 271(1)(c) of the Act – the appeal and the pending applications are dismissed
Income Tax Act – Section 253 – Refund, pendency of Revenue appeal before Supreme Court - petition by the assessee-company seeking directions to the Revenue to grant refund of taxes paid/ deposited by the assessee along with applicable interest – HELD - Assessee company prior to the filing of the present petition had made a request to the Revenue to grant refund of income tax due for the assessment years under consideration - However, the said application has not been decided till date despite various reminders – when the Supreme Court has not granted any stay on the operation of the order of High Court refund due to the petitioner cannot be withheld merely on the ground that issue is pending final adjudication before the Supreme Court - Revenue should process the case of the assessee company for refund of taxes paid/deposited for the relevant AYs with applicable interest in accordance with law within three months - the process of refund is subject to the order to be passed by the Apex Court in the appeals already pending before it – writ petition is disposed of
Income Tax Act – Section 260A – Assessee being aggrieved by the various additions and disallowances made and the interest u/s 215 and 139(8) levied by the AO, had filed an appeal before CIT(A). Assessee had filed application for waiver of interest u/s 215(4) of the Act r.w. Rule 40 of the IT Rules. The DCIT passed an order under Rule 40(1) of the Rules holding that the delay in finalisation of the assessment was not attributable to the assessee and waived the interest u/s 215 of the Act beyond one year of the filing of the return of income. DCIT accordingly re-calculated the interest amount chargeable u/s 215 and waived the balance amount – However, the Tribunal by impugned order restored interest levied by assessing officer – hence the instant appeal - HELD –DCIT, by order in the exercise of power under Rule 40 of IT Rules, held that delay in finalization of assessment is not attributable to Assessee and therefore the Assessee is not liable to pay interest u/s 215 of the Act beyond the period of one year from the date of filing of return. The order under Rule 40(1) of the IT Rules has not been challenged by Revenue or Assessee, with the result said order attained finality. Therefore Assessee is not entitled to waiver of interest for a period of one year. Assessee was thus liable to pay the re-calculated interest amount. And the assessee is not entitled to the benefit of judgement of the division bench of the Hon’ble HC in case of CIT Vs. Bennett Coleman & Co. Ltd.
Income Tax Act – Section 148-A – Re-assessment proceedings as per amended Section 148 of the Act - Petition is filed by the assessee challenging the impugned notice issued as per the old provisions for reassessment proceedings - By Finance Act, 2021, Section 148-A was inserted and various other Sections were substituted, laying down a completely different procedure for re-assessment. In view of said amendment, re-assessment proceedings, if undertaken, have to be in accordance with the amended provisions whereas the impugned notice was issued as per the notifications issued by the CBDT which is quite different with the procedure now prescribed – HELD – the notifications issued by CBDT dated 31.03.2021 and 27.04.2021 have to be read as applicable to re-assessment proceedings as may have been in existence on 31.03.2021 i.e. before the amendment made by the Finance Act, 2021 - Insofar as the Explanation appended to Clause A(a), A(b), and the impugned Notifications are concerned, the said Explanations must be applicable to reassessment proceedings as may have been in existence before the substitution of Sections 147, 148, 148A, 149, 151 & 151A of the Act - the reassessment notice in the writ petition is quashed. It is left open to the respective assessing authorities to initiate reassessment proceedings in accordance with the provisions of the Act as amended by Finance Act, 2021, after making all compliances, as required by law – the petition is allowed
Income Tax Act – Section 153C - Appeal is filed by the Revenue against Tribunal’s order contending that ITAT has not recorded any independent reasoning to deviate from the findings recorded in the assessment order that the assessee had failed to discharge its onus to prove the genuineness of the sale transaction – HELD - The name of the assessee nowhere appears in the computer generated loose sheets found from the residence of the alleged broker - The Tribunal had observed that from the seized document it cannot be inferred or concluded that they belong to or has any nexus with the assessee - the Tribunal has given cogent reasons for arriving at its decision, hence the appeal is dismissed
Income Tax Act – Sections 40A(9), 260A - Appeal is filed by Revenue against the Tribunal for reversing the findings of CIT (A) on the following heads under which the assessments of the assessee were completed: a) depreciation claimed separately under the head “Social Overhead” over and above depreciation already claimed u/s 32 of the Act as double claim of depreciation b) deleting the addition against ‘IICM Contribution’ claimed under section 40A(9) of the Act, c) deleting the addition on account of closing stock of coal, d) deleting the addition on account of ‘Guest House Expenses’, e) deleting the addition on account of ‘Grant to sports and recreation’ being non-incidental to the business of the assessee, f) deleting the addition on account of ‘Environmental Expenditure’, g) deleting the addition on account of ‘Miscellaneous Expenses’, h) deleting the addition on account of ‘Current Liabilities’, i) deleting the addition on account of ‘HRA Expenses Arrear’ – HELD - The revenue cannot dispute the position of law that the tribunal is the last fact finding authority and this court exercising jurisdiction u/s 260A of the Act is not expected to re-examine the facts and record a different conclusion merely because it may be of the view that different conclusion would be appropriate - The jurisdiction u/s 260A of the Income Tax Act is to ascertain as to whether any substantial question of law arises for consideration in the appeal and if it so arises, then decide and answer the substantial questions of law one way or the other - As all the issues are entirely factual and the tribunal has re-examined the facts and rendered the findings on the above issues after re-examining the records, such factual findings cannot be denied u/s 260A of the Act- there are no “substantial questions of law” arising in this appeal – hence the appeal by Revenue is dismissed
Income Tax Act – Section 148, Notification No.20 & Notification No.38 - Challenge to validity of Explanations A(a)(ii)/A(b) to the Notification No.20 and Notification No.38 to the extent that the same extend the applicability of the “provisions of Section 148, Section 149 and Section 151 of the Act, as they stood as on the 31st March, 2021, before the commencement of the Finance Act, 2021 to the period beyond 31st March, 2021 on ground of ultra vires the parent legislation viz., The Taxation and Other Laws (Relaxation and Amendment of Certain Provisions) Act, 2020 - the assessees sought quashing of the re-assessment Notices issued post 31st March, 2021 by the Revenue u/s 148 of the Income Tax Act, 1961 - Due to the onset of Covid-19 pandemic followed by nationwide lockdown in March, 2020, the citizens and authorities faced difficulties in complying with the statutory time limits. To provide relaxation as well as to avoid any adverse consequence to either party, the Government of India announced various relaxations by way of The Taxation and Other Laws (Relaxation of Certain Provisions) Ordinance - Revenue contended that the Apex Court by way of a series of orders in ‘Cognizance of Limitation’ extended limitation and Legislature by promulgating Relaxation ordinance in March, 2020 and conversion of Relaxation Ordinance into Relaxation Act, 2020 had extended dates for compliance and issuance of notices – Revenue submitted that even Section 6 of the General Clauses Act, 1897 would allow notices to be issued and proceedings to be instituted, since by operation of Section 3(1) of Relaxation Act, 2020, a right had accrued in favour of the Revenue to re-open the assessment within an extended time period in such cases where limitation to reopen under Section 148/149 expired on 31st March, 2021 – Revenue of the view that by virtue of Section 6(c) of the General Clauses Act, 1897, in all such cases wherein the limitation for issuance of notice under Section 148 was expiring on 31st March, 2021, the Revenue could initiate proceedings for the re-opening of assessment under the erstwhile Section 148, as if the same had not been substituted – HELD - By virtue of Section 1(2)(a) of the Finance Act, 2021, the substituted Sections 147, 148, 149 and 151 of the Income Tax Act pertaining to reopening of assessments came into force on 1st April, 2021. The significance of the expression ‘shall’ in Section 1(2)(a) of the Finance Act, 2021 cannot be lost sight of. This is in contrast to the language under Section 1(2)(b) which states that Sections 108 to 123 of the Finance Act, 2021 shall come into force on such date, as the Central Government may, by Notification in the Official Gazette, appoint - The Memorandum to the Finance Bill, 2021, too, clarifies that its Sections 2 to 88 which included the substituted Sections 147 to 151 of the Income Tax Act, 1961 will take effect from 1st April, 2021 - Had the intention of the Legislature been to keep the erstwhile provisions alive, it would have introduced the new provisions with effect from 1st July, 2021, which has not been done. Accordingly, the notices relating to any assessment year issued u/s 148 on or after 1st April, 2021 have to comply with the provisions of Sections 147, 148, 148A, 149 and 151 of the Income Tax Act as specifically substituted by the Finance Act, 2021 with effect from 1st April, 2021. The intent, purpose and scope of the amendments introduced by the finance act, 2021 was to protect the rights and interests of assessees as well as promote public interest - The Finance Act, 2021 introduces a new regime regarding the procedure to be complied with in respect of the re-opening of an Income-tax assessment and accordingly, the benefit of the new provisions must necessarily be made available even in respect of proceedings relating to past Assessment Years provided, of course, Section 148 notice has been issued on or after 1st April, 2021. Revenue cannot rely on Covid-19 for contending that the new provisions should not operate during the period 1st April, 2021 to 30th June, 2021. Non-obstante clause has to be construed strictly - Section 3(1) of Relaxation Act is expressly confined to and only supersedes the time limits. It does not exclude the applicability of provisions substituted by finance act, 2021. The principle that a special act overrides a general act has no application to the present case because relaxation act and the finance act operate in distinct and separate spheres. The submission of the revenue that section 6 of the general clauses act saves notices issued under section 148 post 1st April, 2021 is untenable in law. As the Legislature has introduced the new provisions, Sections 147 to 151 of the Income Tax Act by way of the Finance Act, 2021 with effect from 1st April, 2021 and as the said Section 147 is not even mentioned in the impugned Explanations, the reassessment notices relating to any Assessment Year issued under Section 148 after 31st March, 2021 had to comply with the substituted Sections - The power of reassessment that existed prior to 31st March, 2021 continued to exist till the extended period i.e. till 30th June, 2021; however, the Finance Act, 2021 has merely changed the procedure to be followed prior to issuance of notice with effect from 1st April, 2021 - Revenue cannot rely on Covid-19 for contending that the new provisions Sections 147 to 151 of the Income Tax Act should not operate during the period 1st April, 2021 to 30th June, 2021 as Parliament was fully aware of Covid-19 Pandemic when it passed the Finance Act, 2021 - the Revenue cannot use the administrative power to issue Notifications u/s 3(1) of the Relaxation Act, 2020 to undermine the expression of Parliamentary supremacy in the form of an Act of Parliament, namely, the Finance Act, 2021 - Explanations A(a)(ii)/A(b) to the Notifications dated 31st March, 2021 and 27th April, 2021 are declared to be ultra vires the Relaxation Act, 2020 and are therefore bad in law and null and void - the impugned reassessment notices issued u/s 148 of the Income Tax Act are quashed – the writ petitions are allowed
Income Tax Act – Appeal is filed by the assessee (ware house keeper) against the Revenue with the claim that the expenditure incurred by him for raising floor height of godown can be rightly considered as revenue expenditure – HELD – appellant by spending the amount did not bring into existing any new asset - The expenditure incurred by Appellant had direct relation to the business with the customer because Appellant also received corresponding increased compensation from the customer - The expenditure was incurred to ensure that the existing business with the customer was continued uninterrupted. It was merely for the purpose of conducting its business and increase in profit. The expenditure, therefore, cannot be treated as capital expenditure but should be treated as revenue expenditure – appeal is dismissed
Income Tax Act – Section 90(4) - Petitioner is a USA national, who has been appointed in India as a Dean-cum-Professor in O.P. Jindal Global University w.e.f. 01.01.2020 - writ petition seeking quashing of order whereby claim of the assessee for grant of certificate of residence has been rejected by the authorities - The assessee prays for further direction to the authorities to award him benefit under the provisions of Article 22 of the India-US Double Taxation Avoidance Treaty – Petitioner was issued Form-16 by his employer under the provisions of Section 203 of the Income Tax Act, 1961 showing tax deducted at source on salary - Aggrieved by deduction of tax at source, the petitioner represented to the authorities invoking Article 22 of the Treaty and claiming exemption - the authorities have rejected the claim of the petitioner - Hence, this writ petition - HELD - in order to claim benefit from double taxation as provided under Article 22 of the Treaty, the assessee is required to submit a certificate of him being a resident in country outside India i.e. USA – The objective of the Treaty is to avoid double taxation and not to avoid taxation. In order to claim benefit in India, the petitioner has to provide TRC from the Government of USA which admittedly he does not possess - Case of the assessee is hit by Section 90(4) of the Act which contemplates that a non-resident assessee claiming benefit under the double taxation avoidance agreement is not entitled for such benefit unless the said assessee obtains TRC from the country of which he is resident - In the absence of TRC as contemplated under Section 90(4) and having his source of income based in India, the assessee cannot claim exemption under Article 22 of the Treaty - the writ petition is dismissed
Income Tax Act – Section 9(1)(vi), Article 13(3) of India-UK DTAA - writ petition filed by the assessee-company and its amalgamated Indian company is to challenge the Rulings/Orders of the Authority for Advance Rulings – Petitioner entered into an agreement with the EYGSL (UK) whereby it receives “Right to benefit from the Deliverables and/or Services‟ from EYGSL (UK) – petitioner case that the payment received from EYGBS (India) by EYGSL (UK) does not amount to royalty under Article 13 of the Double Taxation Avoidance Agreement between India and the United Kingdom - The Revenue’s contention was that the assessee-company procures the computer software from different vendors and provides the same to its member firms – HELD - The rights acquired by the foreign company from the third-party software vendors are not relevant. What is relevant is the Agreement between the foreign company and the Indian company. As the same does not create any right to transfer the copyright in the software, the same would not fall within the ambit of the term ‘royalty’ - the EYGBS (India), in terms of the Service Agreement and the MOU, merely receives the right to use the software procured by the EYGSL (UK) from third-party vendors. The consideration paid for the use of the same therefore, cannot be termed as “royalty‟ as held by the Supreme Court in Engineering Analysis Centre case - the Impugned Rulings passed by the Ld. AAR are set aside and it is held that the payment received by the assessee company for providing access to computer software to its member firms of its Network located in India, does not amount to ‘royalty’ liable to be taxed in India under the provisions of the Income Tax Act and the India-UK DTAA – writ petitions are allowed
Income Tax Act - Sections 143(3), 220(6), 245 – writ petition filed by the assessee seeking refund which was adjusted in excess of 20% of the total disputed tax demand for the relevant Assessment Year against the refunds due for the upcoming AYs - HELD - refunds have been adjusted against outstanding tax demand by the Authority without invoking Section 245 of the Act and/or without following the due procedure prescribed under the said Section in as much as no notice or opportunity of pre-decisional hearing had been provided to the assessee prior to such adjustment of refund - the petitioner is entitled to refund of adjustments made in excess of 20% of the disputed tax demands - the AO is directed to verify the facts and if found correct, refund the excess of 20% of the disputed tax demands to the assessee
Income Tax Act – Sections 115-O, 115R - The liability of the assessee company to pay additional income tax as per Section 115-O of the Income Tax Act was not clear – assessee had also sought clarification about its liability to pay additional income tax as per Section 115-O of the said Act in the light of Section 50 of the SIDBI Act – It received communication from the department that any amount declared or distributed or paid by the assessee by way of dividend is liable for additional income tax u/s 115-O of the said Act – hence the instant petition by the assessee and further directions seeking a refund of income tax paid u/s 115-O of the Income Act – HELD – the charge under sub-section (1) of Section 115-O of the said Act is on the profits of the domestic company and more specifically, on that part of the profits which is declared and distributed by way of dividend - The charge under sub-section (1) of Section 115-O of the said Act is not on income by way of dividend in the shareholder's hands. Therefore, the additional income-tax payable on profits of a domestic company under Section 115-O of the said Act is not a tax on dividend. In our considered opinion, the amount distributed or paid by way of dividend falls in the category of income, profit or gains derived - Once it is held that the amount distributed or paid by Petitioner by way of dividend falls in the category of profits under Section 50 of the SIDBI Act, on any income, profits, gains derived or any amount received, Petitioner shall not be liable to pay income tax or any other tax in the relevant years - Petitioner was not liable to pay additional income tax under Section 115-O of the Act, Petitioner's payments under protest need to be refunded to the petitioner – answered in favor of assessee
Income Tax Act – Sections 115JB, 115JAA, 260A, 263 – relevant date reckoning of period of limitation for the relevant assessment year - Revenue appeal against Tribunal order for the relevant assessment year on the ground, whether the tribunal is justified in law to declare the impugned revision assessment order of the AO as non-est and is justified on allowing the appeal of assessee against order u/s 263 in technical ground without justifying the legislative intention of sec 115JB & 115JAA – HELD – The Tribunal rightly held that the period of limitation for the relevant assessment year has to be reckoned from the date of the order passed by the AO u/s 143(3) read with Section 263 and not from the date of the order passed by the AO under Section 143(3) r/w Section 263 and 251 of the Act - the appeal stands dismissed - answered against the Revenue