January 2023
- Business expenditure — Disallowance u/s 40(a) (ia) — Payments liable to deduction of tax at source — Scope of section 40 — Amount paid to non-resident for technical services — Amount not debited to profit and loss account and not claimed as deduction in computing business income — Amount could not be disallowed.
- Export — Loss — Set off — Scope of section 10B — Section 10B provides for deduction and not exemption — Loss sustained in unit covered by section 10B can be set off against other business income.
- Income — Computation of income — Disallowance of expenditure incurred on exempt income — Amendment providing for disallowance even if assessee has not earned exempt income — Amendment not retrospective — Not applicable for A.Y.: 2013-14 — Tribunal deleting disallowance on ground assessee had not earned exempt income — Proper.
- Reassessment — Notice u/s 148 — Validity — Condition precedent for notice — Notice should be issued by the AO who has jurisdiction over assessee.
- Reassessment — Notice — Change of law — New procedure — Show-cause notice — Mandatory condition — Foundational allegation in respect of share transactions missing in show-cause notice — Cannot be incorporated by issuing supplementary notice
- Reassessment — Powers of AO — Power to assess other income not mentioned in notice of reassessment — Power can be exercised only if notice is valid — Notice found to be invalid on basis of reasons given in it — Other income cannot be assessed on basis of invalid notice.
- Search and seizure — Assessment of undisclosed income — Meaning of “books of account” — Loose sheets and diaries do not constitute books of account — Assessment based only on evidence available in loose sheets and diaries — Not valid.
- Search and seizure — Assessment of undisclosed income — Notice u/s 153A should be based on material seized u/s 132 or documents requisitioned u/s 132A.
- No adjustment can be made u/s 115JB in respect of interest on income-tax refund, which as per consistent practice, was not credited to the profit & loss account but was reduced from advance income-tax paid under 'loans and advances'
- Once a statutory provision provides explicitly that the Tribunal can only grant a stay subject to a deposit of not less than 20 per cent of the disputed demand, or furnishing of security thereof, it is not open to the Tribunal to grant a stay in violation of these basic statutory provisions.
Law itself visualizes that the payment of 20 per cent of the disputed demands, impugned in the appeal before the Tribunal, cannot be viewed as a condition precedent for grant of stay by the Tribunal, in as much as when the applicant “furnishes security of equal amount in respect thereof”, the Tribunal can exercise its powers of granting a stay. - Enhancing the assessed book profit for the amount disallowed u/s 14A is not a mistake apparent on record, which can be rectified by passing an order u/s 154
- The second proviso to section 10(34) categorically states that dividends received on or after 1st April, 2020 alone would be subjected to tax. In the instant case, since the dividend was received during F.Y. 2019-20 relevant to A.Y. 2020-21, there is no case for taxing the said dividend during the year under consideration i.e. A.Y. 2020-21
- Credit for tax deducted at source needs to be allowed even though the amount so deducted is not reflected in Form No. 26AS of the payee.
- There need not be any "occasion" for receipt of gift by the assessee from his relative.
- Where the assessee was hiring trucks from an open market on individual and need basis and payments had not been made to any sub-contractor since the assessee did not have any contract with the truck owner and therefore the question of TDS did not arise in respect of payments towards lorry hire charges
- Where the assessee stated that the source of cash deposit in its bank accounts was the balance of cash in hand brought forward from earlier assessment years, but the AO treated the same as an unexplained investment without assigning any reason, then impugned additions made u/s 69 was not justified.
Where the Department had accepted that the assessee had earned a tuition fee in preceding assessment years then in terms of principle of consistency, the AO had no justifiable reason to disbelieve assessee’s claim of having received income from tuition fee and add the same to assessee’s income as unexplained money u/s 69A.
- Business expenditure - Corporate Social Responsibility (CSR) - Explanation 2 was inserted in Section 37 by Finance (No.2) Act, 2004 w.e.f. 1st April, 2015.
- Stay of demand - open to the tax authorities to grant stay against recovery of demand on deposit of a lesser amount than 20 per cent of the disputed demand, pending disposal of appeal
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