Direct Tax Weekly Round-Up: 14 To 20 January 2024

Supreme Court

Taxpayer Entitled To Hearing On Merits If Appeals Were Dismissed By HC For Delay In Filing Paper-Book: Supreme Court

Case Title: Herbicides India Limited verses ACIT

While setting aside the Rajasthan High Court orders, the Supreme Court restored the assessee's appeals by condoning the delay in filing the paper-book before High Court and observed that the assessee is entitled to have his appeals heard on merits.

Delhi High Court

Transactions Concerning Mutual Funds Not In The Nature Of Investment And Not Motivated By Trade: Delhi High Court

Case Title: PCIT Versus M/S Wig Investment

The Delhi High Court has held that transactions concerning mutual funds were in the nature of investment and not motivated by trade.

Fees Received For Sub-Licensing Sports Broadcasting Rights Attributable To 'Live Feed', Not Taxable As Royalty: Delhi High Court

Case Title: The Commissioner Of Income Tax - International Taxation -1 Versus Fox Network Group Singapore Pte Ltd.

The Delhi High Court has held that fees received by assessees for sub-licensing sports broadcasting rights attributable to 'live feed' is not taxable as royalty.

Bombay High Court

Change Of Opinion Does Not Constitute Justification To Believe Income Chargeable To Tax Has Escaped Assessment: Bombay High Court

Case Title: Geopreneur Realty Private Limited Versus UOI

The Bombay High Court has held that a change of opinion does not constitute justification and/or reasons to believe that income chargeable to tax has escaped assessment.

Madras High Court

Income Tax Act | Penalty U/S 271E Cannot Be Levied On Repayment Of Loan In Absence Of Cash Transaction: Madras HC

While observing that transaction pertaining to loan between two concerns wherein the liability of borrower stood reduced in the books of accounts to an extent of payment made to clear the liability of assessee appears to be in accordance with law, the Madras High Court ruled that penalty under Section 271E of Income tax Act, 1961 cannot be levied on repayment of loan in absence of cash transaction.

Calcutta High Court

Income From Sub-Letting Is 'Business Income' If Object Is Business Of Renting/Licensing Of Shops: Calcutta High Court

Finding that assessee's income from sub-letting/sub-licensing the space in question, has always been accepted by Respondent / Income Tax Department as income from business, the Calcutta High Court held that assessee's income from sub-licensing/sub-letting is chargeable to tax as business income and not as income from house property.

Assessee Attempted To Drag Matter Knowing Well That Assessment Will Be Time Barred: Calcutta High Court Upholds Reassessment

The Calcutta High Court has held that the assessee had repeatedly sought adjournments, which would show that the assessee attempted to drag the matter along, knowing well that the assessment would be time-barred.

Karnataka High Court

Revised Returns Filed Waiving Claim And Paid Taxes: Karnataka High Court Quashes Section 276C(1) Prosecution For Wilful Tax Evasion

Case Title: Anurag Bagaria Versus The Income Tax Department

The Karnataka High Court has quashed the prosecution under Section 276C(1) of the Income Tax Act for wilful tax evasion.

ITAT

S. 54F Exemption Not Available On Property Predominantly Being Used For Religious Purposes: ITAT

Case Title: Asstt. CIT Versus Iqbal Ali Khan

The Hyderabad Bench of Income Tax Appellate Tribunal (ITAT) has held that exemption under Section 54F of the Income Tax Act is not available on property predominantly being used for religious purposes.

ITAT Deletes Addition Of Unexplained Investment In Stock Valuation Difference

Case Title: Ethiraj Hotel Mart Versus DCIT

The Chennai Bench of Income Tax Appellate Tribunal (ITAT) has deleted the addition of unexplained investment in stock as a difference in the valuation of stock.

Indian Chamber Of Commerce Entitled To Claim Exemption In Respect Of Receipts From Seminars And Conferences: ITAT

The Kolkata Bench of the Income Tax Appellate Tribunal (ITAT) has held that the Indian Chamber of Commerce (ICC) is entitled to claim exemption in respect of its entire receipts.

Kolkata ITAT Deletes Addition Made Based On Third-Party Statement Who Was Not Allowed To Be Cross- Examined By Assessee

Case Title: DCIT verses Alom Extrusions Ltd.

Finding that assessee has discharged the burden of proving identity, creditworthiness, and genuineness of the creditors to the loan transaction, the Kolkata ITAT deleted the addition made for alleged unexplained loan under Section 68 of Income Tax Act, 1961 based on the statement of third-party in a post-search assessment whose cross-examination was never allowed to assessee.

CIT(A) Has No Jurisdiction To Enhance Income U/S 251(1) By Disallowing ESOP Expenses In Revised Return If AO Has Not Dealt With It: Mumbai ITAT

While setting aside the CIT(A)'s order enhancing assessee's income under Section 251(1)(a) of Income tax Act, 1961 by disallowing Employees Stock Option Plan (ESOP) expenses under Section 37(1), the Mumbai ITAT held that the CIT(A) has acted beyond his jurisdiction in enhancing assessee's income, since the AO during the course of assessment, has not taken into consideration the assessee's revised return and has not examined the taxability of ESOP expenses.

Right To Broadcast Live Events Is Not 'Copyright', Hence Payment Made In Relation Thereto Cannot Be Taxed As 'Royalty' U/S 9(1)(VI), Clarifies Delhi ITAT

Case Title: Lex Sportel Vision Pvt Ltd Verses Income Tax Officer

Emphasizing that the right to broadcast live events i.e., “Live Rights”, is not “copyright” and therefore any payment made thereto can't be said to be chargeable to tax as royalty under section 9(1)(vi) of the Income tax Act, 1961, the Delhi ITAT holds assessee as not in default for non-deduction of tax at source on foreign remittances made towards acquisition of right to broadcast 'live-events'.

Revisionary Powers U/S 263 Can't Be Exercised For Directing Fuller Inquiry Once Plausible View Taken By AO After Inquiry: Mumbai ITAT

Case Title: The Synthetic & Art Silk Mills Research Association verses Commissioner of Income Tax (Exemption)

While setting aside the revision order passed on the ground that the AO did not conduct any enquiry or verification which should have been made with regards to income from auditorium hire charges, hoarding site & service charges and rent vis-a-vis Trust's objectives and consequential eligibility under Section 10(21), the Bench opined that it is important to show that the view taken by the AO is wholly unsustainable in law before embarking upon exercise of revisionary powers and that the revisionary powers cannot be exercised for directing a fuller inquiry to merely find out if the earlier view taken is erroneous particularly when a view was already taken after inquiry.

Taxpayer Staying In India For Less Than 182 Days As Per Exp 1(A) To Sec 6(1) Of I-T Act, Entitles To 'Non-Resident' Status: Mumbai ITAT

Case Title: Assistant Commissioner of Income Tax verses Nishant Kanodia

While opining that even if the taxpayer has left India for the purpose of business or profession, the same shall be considered for purpose of employment outside India under Explanation 1(a) to Section 6(1) of Income tax Act, 1961, the Mumbai ITAT held that assessee has rightly claimed to be a 'non-resident' as he stayed in India only for a period of 176 days during the year which entitles him to non-resident status as per Explanation 1(a) to Section 6(1).

Assessment Order Passed Beyond Sec 144C(4) Is Time Barred If Objections To Draft Order Were Filed After Expiry Of Limitation As Per Sec 144C(2): Delhi ITAT

Case Title: Mavenir UK Holdings verses ACIT

Noticing that the draft assessment order was passed on Mar 4, 2022 and the assessee filed objection before the DRP on Apr 6, 2022 which was beyond the due date provided for filing objection, the Delhi ITAT held the assessment order to be time-barred being passed beyond Section 144C(4) of Income tax Act, 1961 time-limit.

No Escapement Of Income By Singaporean Entity On Repatriating Rs.203.56 Cr. Arising From Redemption Of NCDs: ITAT

Case Title: BCP V Singapore FVCI Pte. Ltd. Versus ACIT

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) has held that the Singaporean Entity has not escaped the income on repatriating Rs.203.56 Cr. arising from redemption of non-convertible debentures (NCDs).