Direct Tax Weekly Round-Up: 11 To 17 August 2024

Update: 2024-08-18 10:20 GMT
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Delhi High Court

Failure Of Dept. To Frame Fresh Assessment Should Not Place Assessee In Disadvantageous Position: Delhi High Court

Case Title: Ramesh Chawla Versus ITO

The Delhi High Court has held that the failure or inability of the department to frame a fresh assessment should not place the assessee in a more disadvantageous position than in what he would have been if a fresh assessment was made.

Interest Receipts From Non-Convertible Debentures Of Indian AE Are Not Subject To Dividend Distribution Tax: Delhi HC

Case Title: Genpact Luxembourg S.A.R.L. vs. ACIT

The Delhi High Court has quashed the reassessment proceedings initiated against the Assessee on the ground that interest income on Nonconvertible debentures (NCDs) derived from Indian AE had been mischaracterized as interest instead of dividend.

Value Of Shares Allotted Under Employees Stock Purchase Scheme Can't Be Treated As Perquisite As Per Sec 17(2)(Iiia): Delhi High Court

Case Title: Ravi Kumar Sinha vs. CIT

While emphasizing that no tax can be levied on notional income, the Delhi High Court held that Valuation Report obtained by employer could have no application to a share which was subject to a lock-in stipulation and could not be sold in the open market.

Common Order Without Satisfactorily Recording Concurrence With AO, Can't Be Considered As Valid Sanction U/s 151: Delhi High Court

Case Title: Vinod Kumar Solanki vs. ACIT

Finding that the order of sanction passed by the Competent Authority is a general order of approval for 111 cases, and there was not even a whisper as to what material had weighed in the grant of approval u/s 151, the Delhi High Court held that although the PCIT is not required to record elaborate reasons, he must record satisfaction after application of mind.

Not Mandatory To File Audit Report Along With Return, Can Be Filed Anytime Before Assessment Completion: Delhi High Court

Case Title: Shree Bhavani Power Projects Pvt. Ltd. Versus ITO

The Delhi High Court has held that the assessee was entitled to claim deductions even where the audit report had not been filed with the return but was submitted before the assessment was completed.

Bombay High Court

Reassessment Notices & Order Passed Contrary To Notified Mandatory Faceless Procedure U/s 151A Are Liable To Be Quashed: Bombay HC

Case Number: W.P (LODG.) NO. 22686 OF 2024

Citation: 2024 LiveLaw (Bom) 423

While observing that the Scheme notified by the Central Government does not envisage exclusion of provisions of Section 148A as the procedure outlined within the said provisions are inextricably linked to Section 148, the Bombay High Court quashed the entire exercise undertaken by the Jurisdiction AO u/s 148A outside the faceless mechanism.

Contribution For Community Services By Employer Under MOU With Workers Union Is Business Expenditure : Bombay HC

Case Title: CIT vs. Tata Engineering & Locomotive

Citation :2024 LiveLaw (Bom) 424

The Bombay High Court recently held that contribution to public welfare fund, if connected with or related to carrying on assessee's business, or if it results in benefits to assessee's business, should be allowable deduction u/s 37.

Best Judgment Assessment Passed U/s 144 Without Giving Seven Day's Time To Taxpayer To Respond To SCN: Bombay HC Quashes Assessment

Case Title: Cheftalk Food and Hospitality Services vs. ITO

Finding that the AO has arbitrarily exercised jurisdiction by granting an extension of only two days to the Assessee in filing reply to the SCN, the Bombay High Court quashed the assessment and remanded the proceedings for passing fresh assessment order u/s 144 read with Section 144B.

VSV Scheme Is Non-Tax Benefit Applicable Even To Medium Enterprise, Clarifies Bombay High Court

Case Title: Marine Electricals India vs. Union of India

While granting benefit under the 'Vivad Se Vishwas I-Relief for MSMEs Scheme' (VSV Scheme) to the Assessee, even when it was re-classified as 'not an MSME', the Bombay High Court held that even though the Petitioner was re-classified as “not an MSME” for a period of three years from May 09, 2023, it was entitled to avail of all non-tax benefits available to a Medium Enterprise.

Kerala High Court

Compensation To Discontinue Commodity Brokerage Business Chargeable To Income Tax: Kerala High Court

Case Title: Geojit Investment Services Ltd. Versus Commissioner Of Income Tax

The Kerala High Court has held that the amount received by the assessee is under an agreement for not carrying out any activity in relation to any business that was carried on by the assessee; it would attract the provisions of Section 28(va)(a) of the Income Tax Act and make the receipt chargeable to income tax under the heading of “Profits and gains of business or profession.”.

Allahabad High Court

Allahabad High Court Holds Deputy Commissioner Of Income Tax Guilty Of Contempt

Case Title: Prashant Chandra v. Harish Gidwani Deputy Commissioner Of Income Tax Range

Case citation: 2024 LiveLaw (AB) 507

The Allahabad High Court has held Retired Deputy Commissioner Of Income Tax Range 2 guilty of contempt of Court under Section 12 of the Contempt of Courts Act, 1971 for assuming jurisdiction in respect of the assesee-applicant in respect of a different assessment year when the Writ Court had directed that he has no jurisdiction in respect of the assesee.

Telangana High Court

NRIs Not Exempted From Mandatory Faceless Procedure: Telangana High Court

Case Title: Sri Venkataramana Reddy Patloola Versus Deputy Commissioner of Income Tax

The Telangana High Court has held that the NRIs are not exempted from following mandatory faceless procedure.

Patna High Court

AO Not Empowered To Summarily Reject Section 197 Application: Patna High Court

Case Title: Infrastructure Development Authority Versus The Assistant Commissioner of Income Tax

The Patna High Court has held that a demand pending against the assessee would not clothe the Assessing Officer with the power to summarily reject an application under Section 197 of the Income Tax Act.

Liquidator Never Informed Of Reassessment Proceedings, Patna High Court Quashes Order

Case Title: M/s Isolux Corsan India Engineering and Construction Private Limited Versus State of Bihar

The Patna High Court has quashed the order as the liquidator was not informed of the reassessment proceedings.

Rajasthan High Court

Rajasthan High Court Quashes Income Tax Reassessment As Income Tax Dept. Failed To Hold Proper Investigation

Case Title: PCIT Versus Smt. Sonal Jain

Citation: 2024 LiveLaw (Raj) 214

The Jaipur Bench of the Rajasthan High Court has quashed the income tax reassessment and held that the Income Tax Department had not done any investigation or held an inquiry. There was no other material except the value determined by the A.O.

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